6-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934

For the month of April 2009

Commission File Number: 000-29103

STATS CHIPPAC LTD.

(Translation of registrant’s name into English)

10 Ang Mo Kio Street 65
#05-17/20 Techpoint
Singapore 569059
(65) 6824-7777

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:  þ Form 20-F     o Form 40-F

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  o

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  o

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:  o Yes     þ No

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): Not applicable.

TABLE OF CONTENTS

Ex-99.1 Notice of Fifteenth Annual General Meeting and Proxy Statement

Ex-99.2 Annual Report to Shareholders for the Year 2008

Other Events

     On or about April 9, 2009, STATS ChipPAC Ltd. (the “Company”) began distribution of the Company’s Notice of Fifteenth Annual General Meeting to be held on April 27, 2009, Proxy Statement, and Annual Report to Shareholders for the Year 2008.

     The Company’s Annual Report to Shareholders for the Year 2008 is accompanied by its letter to shareholders and consists of an abridged Management Discussion and Analysis, financial statements for the fiscal year ended December 28, 2008 and certain supplementary information.

     The Company’s complete Management Discussion and Analysis and financial statements for the fiscal year ended December 28, 2008 were included in the Company’s annual report on Form 20-F filed with the United States Securities and Exchange Commission on March 9, 2009. Copies of the Company’s Notice of Fifteenth Annual General Meeting and Proxy Statement, and Annual Report to Shareholders for the Year 2008 are attached as Exhibit 99.1 and Exhibit 99.2, respectively.

Exhibits

99.1	Notice of Fifteenth Annual General Meeting and Proxy Statement
99.2	Annual Report to Shareholders for the Year 2008

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.

Date: April 9, 2009

STATS CHIPPAC LTD.
By:	/s/ Tan Lay Koon
Name:	Tan Lay Koon
Title:	President & Chief Executive Officer
By:	/s/ John Lau
Name:	John Lau
Title:	Chief Financial Officer

EXHIBIT INDEX

99.1	Notice of Fifteenth Annual General Meeting and Proxy Statement
99.2	Annual Report to Shareholders for the Year 2008

EX-99.1

Exhibit 99.1

STATS ChipPAC Ltd.

(Incorporated in the Republic of Singapore)

(Company Registration Number 199407932D)

Notice of Fifteenth Annual General Meeting

NOTICE IS HEREBY GIVEN THAT the Fifteenth Annual General Meeting (the “Annual General Meeting”) of STATS ChipPAC Ltd. (the “Company” or “STATS ChipPAC”) will be held at The Grassroots’ Club, 190 Ang Mo Kio Avenue 8, Singapore 568046, on April 27, 2009 at 10.00 a.m. (Singapore time) to transact the following routine and special business:

Routine Business

(1)	To adopt the Audited Financial Statements of the Company for the financial year ended December 28, 2008, together with the Reports of the Directors and the Auditors.
(2)	To appoint Mr. Rohit Sipahimalani as a Director of the Company pursuant to Article 99 of the Articles of Association of the Company.
(3)	To re-elect the following Directors, each of whom will retire pursuant to Article 94 of the Articles of Association of the Company and who, being eligible, offer themselves for re-election:

(a)	Mr. Teng Cheong Kwee; and
(b)	Mr. Tokumasa Yasui.

(4) To re-appoint the following Directors each of whom will retire under Section 153(6) of the Companies Act, Chapter 50 of Singapore (the “Companies Act”), to hold office from the date of this Annual General Meeting until the next annual general meeting of the Company:

(a)	Mr. Charles R. Wofford; and
(b)	Mr. R. Douglas Norby.

(5)	To re-appoint PricewaterhouseCoopers as Auditors to hold office until the conclusion of the next annual general meeting of the Company at a remuneration to be determined by the Board of Directors upon the recommendation of the Audit Committee of the Board of Directors.
(6)	To approve Directors’ fees totalling approximately US$473,000 (approximately S$732,000 based on the exchange rate as of February 27, 2009) for the financial year ending December 27, 2009.

Special Business

(7)	To consider and, if thought fit, to pass, with or without modifications, the following resolutions which will be proposed as ordinary resolutions:
	Ordinary Resolutions

(a)	Authority to Allot and Issue Shares and to Create and Issue Instruments and to Allot and Issue Shares in connection therewith pursuant to Section 161 of the Companies Act.
	That pursuant to Section 161 of the Companies Act, the Directors be and are hereby authorized to:

(I) (i) allot and issue shares in the capital of the Company whether by way of rights, bonus or otherwise; and/or

(ii) make or grant offers, agreements or options (collectively, “Instruments”) that might or would require shares to be issued, including but not limited to the creation and issue of (as well as adjustments to) warrants, debentures or other instruments convertible into shares,

	at any time and upon such terms and conditions and for such purposes and to such persons as the Directors may in their absolute discretion deem fit; and,
(II)	(notwithstanding the authority conferred by this resolution may have ceased to be in force) issue shares pursuant to any Instrument made or granted by the Directors while this Resolution was in force,

provided that:

(1) the aggregate number of shares to be issued pursuant to this resolution (including shares to be

1

issued pursuant to Instruments made or granted under this resolution) does not exceed 50% of the total number of issued shares (excluding treasury shares) in the capital of the Company (as calculated in accordance with subparagraph 2 below), of which the aggregate number of shares to be issued other than on a pro rata basis to shareholders of the Company (including shares to be issued pursuant to Instruments made or granted under this resolution) does not exceed 6% of the total number of issued shares (excluding treasury shares) in the capital of the Company (as calculated in accordance with subparagraph 2 below);

(2) for the purpose of determining the aggregate number of shares that may be issued under subparagraph 1 above, the total number of issued shares (excluding treasury shares) shall be based on the total number of issued shares (excluding treasury shares) in the capital of the Company, at the time this Resolution is passed, after adjusting for:

a.	new shares arising from the exercise of any share options which are outstanding or subsisting at the time this resolution is passed; and
b.	any subsequent bonus issue, consolidation or subdivision of shares;

(3) (unless revoked or varied by the Company in a general meeting) the authority conferred by this resolution shall continue in force until the conclusion of the next annual general meeting of the Company or the date by which the next annual general meeting of the Company is required by law to be held, whichever is the earlier.

(b)	Authority to Allot and Issue Shares pursuant to the STATS ChipPAC Ltd. Substitute Share Purchase and Option Plan and the STATS ChipPAC Ltd. Substitute Equity Incentive Plan (collectively, the “Substitute Plans”).
	That the Directors be and are hereby authorized to allot and issue from time to time such number of shares of the Company as may be required to be issued pursuant to the exercise of the options under the Substitute Plans.
(c)	Authority to Allot and Issue Shares pursuant to the STATS ChipPAC Ltd. Share Option Plan, as amended (the “Share Option Plan”).
	That the Directors be and are hereby authorized to allot and issue from time to time such number of shares of the Company as may be required to be issued pursuant to the exercise of the options under the Share Option Plan.
(d)	The Proposed STATS ChipPAC Ltd. Performance Share Plan 2009.
	THAT:

(i)

a new performance share plan to be known as the “STATS ChipPAC Ltd. Performance Share Plan 2009”, as substantially set forth in Appendix 1 to the Proxy Statement dated April 9, 2009 in respect of the Annual General Meeting (the “PSP 2009”), the rules of which, for the purpose of identification, have been subscribed to by the Chairman of the Annual General Meeting, having been produced at the Annual General Meeting, under which performance shares (“Performance Shares”), which represent unfunded and unsecured rights to receive ordinary shares in the capital of the Company, will be granted, free of payment, to selected employees of the Company and its subsidiaries (“Group”), including the Chief Executive Officer of the Company and directors of the Group who perform an executive function, details of which are set out in the Proxy Statement dated April 9, 2009 in respect of the Annual General Meeting, be and is hereby approved;

(i)

the Directors of the Company be and are hereby authorized:

(ii) (aa) to establish the PSP 2009;

(bb)	to delegate to a committee of Directors the administration of the PSP 2009 in accordance with the provisions of the PSP 2009; and
(cc)	to modify and/or alter the PSP 2009 from time to time, provided that such modification and/or alteration is effected in accordance with the provisions of the PSP 2009, and to do all such acts and to enter into all such transactions and arrangements as may be necessary or expedient in order to give full effect to the PSP 2009; and

(iii) the Directors of the Company be and are hereby authorized to grant Performance Shares in accordance with the provisions of the PSP 2009 and to allot and issue from time to time such number of fully paid-up ordinary shares in the capital of the Company as may be required to be allotted and issued pursuant to the terms of the PSP 2009, provided that the aggregate number of ordinary shares in the capital of the Company allotted and issued under the PSP 2009 shall not exceed the limits specified in the rules of the PSP 2009.

2

(e)	The Proposed STATS ChipPAC Ltd. Equity Grant Plan for Non-Executive Directors
	THAT:

(i)

a new equity grant plan to be known as the “STATS ChipPAC Ltd. Equity Grant Plan for Non-Executive Directors”, as substantially set forth in Appendix 2 to the Proxy Statement dated April 9, 2009 in respect of the Annual General Meeting (the “NED Plan”), the rules of which, for the purpose of identification, have been subscribed to by the Chairman of the Annual General Meeting, having been produced at the Annual General Meeting, under which offers will be made to selected directors of the Company who perform a non-executive function (“Non-Executive Directors”) to participate in the NED Plan, and pursuant thereto, fully paid-up ordinary shares in the capital of the Company may be allotted and issued, free of payment, to such participants, details of which are set out in the Proxy Statement dated April 9, 2009 in respect of the Annual General Meeting, be and is hereby approved;

(ii)

the Directors of the Company be and are hereby authorized:

(aa)	to establish the NED Plan;
(bb)	to delegate to a committee of Directors the administration of the NED Plan in accordance with the provisions of the NED Plan; and
(cc)	to modify and/or alter the NED Plan from time to time, provided that such modification and/or alteration is effected in accordance with the provisions of the NED Plan, and to do all such acts and to enter into all such transactions and arrangements as may be necessary or expedient in order to give full effect to the NED Plan; and

(iii) the Directors of the Company be and are hereby authorized to make offers to selected Non-Executive Directors to participate in the NED Plan in accordance with the NED Plan and to allot and issue from time to time such number of fully paid-up ordinary shares in the capital of the Company as may be required to be allotted and issued pursuant to the terms of the NED Plan, provided that the aggregate number of ordinary shares in the capital of the Company allotted and issued under the NED Plan shall not exceed the limits specified in the rules of the NED Plan.

(f)	The Proposed Renewal of the Share Purchase Mandate
	That:

(i) for the purposes of Sections 76C and 76E of the Companies Act, the exercise by the Directors of the Company of all the powers of the Company to purchase or otherwise acquire issued ordinary shares each fully paid in the capital of the Company (“Shares”) not exceeding in aggregate the Maximum Percentage (as hereafter defined), at such price or prices as may be determined by the Directors from time to time up to the Maximum Price (as hereafter defined), whether by way of:

(aa)	market purchase(s) on the Singapore Exchange Securities Trading Limited (“SGX-ST”) transacted through the SGX-ST’s trading system; and/or
(bb)	off-market purchase(s) (if effected otherwise than on the SGX-ST) in accordance with any equal access scheme(s) as may be determined or formulated by the Directors as they consider fit, which scheme(s) shall satisfy all the conditions prescribed by the Companies Act,

	and otherwise in accordance with all other laws and regulations as may for the time being be applicable, be and is hereby authorized and approved generally and unconditionally (the “Share Purchase Mandate”);
(ii)	unless varied or revoked by the Company in general meeting, the authority conferred on the Directors of the Company pursuant to the Share Purchase Mandate may be exercised by the Directors at any time, and from time to time during the period commencing from the date of the passing of this Resolution and expiring on the earlier of:

(aa)	the date on which the next annual general meeting of the Company is held; and
(bb)	the date by which the next annual general meeting of the Company is required by law to be held;

(iii)	in this Resolution:
	“Market Day” means a day on which the SGX-ST is open for trading in securities;
	“Maximum Percentage” means that number of issued Shares representing 2.5% of the total number of issued Shares of the Company as of the date of the passing of this Resolution (excluding any Shares which are held as treasury shares as of that date); and

3

“Maximum Price” in relation to a Share to be purchased or acquired, means the purchase price (excluding related brokerage, commission, applicable goods and services tax, stamp duties, clearance fees and other related expenses) which shall not exceed 105% of the highest independent bid or the last independent transaction price, whichever is the higher, quoted on the SGX-ST at the time the purchase is effected; and

(iv)

the Directors of the Company and/or any of them be and are hereby authorized to complete and do all such acts and things (including executing such documents as may be required) as they and/or he may consider expedient or necessary to give effect to the transactions contemplated and/or authorized by this Resolution.

(8) To transact any other business as may be properly transacted at any annual general meeting.

BY ORDER OF THE BOARD

Elaine Sin Mei Lin @ Tan Mei Lin

Company Secretary

Date: April 9, 2009

Notes:
(1)	A shareholder is a person whose name appears on the Depository Register of The Central Depository (Pte) Limited in Singapore or a person registered in the Company’s Register of Shareholders (i.e. Members).
(2)	A shareholder entitled to attend and vote at the Annual General Meeting is entitled to appoint a proxy to attend and vote on his behalf. A proxy need not be a shareholder of the Company. Shareholders may appoint any member of the Board or any other person as their proxy. The instrument appointing a proxy must be deposited at the registered office of the Company at 10 Ang Mo Kio Street 65, Techpoint #05-17/20, Singapore 569059 not less than 48 hours before the time appointed for holding the Annual General Meeting or at any adjournment thereof. A proxy may be revoked at any time, not less than 48 hours before the time set for the Annual General Meeting by the shareholder submitting a subsequently dated instrument appointing a proxy or at the Annual General Meeting prior to the vote of the resolution by such shareholder attending the Annual General Meeting and voting in person.
(3)	The Company is subject to applicable U.S. federal securities laws and is not subject to the continuing listing rules of the SGX-ST.
(4)	Since the beginning of financial year 2005, the Company employed financial year reporting periods that end on the Sunday nearest and prior to December 31. The Company’s financial year 2008 ended on December 28, 2008.
(5)	The Company may use the internal sources of funds of the Company and its subsidiaries (the “Group”) or external borrowings or a combination of both to finance the purchase or acquisition of its Shares. The amount of financing required for the Company to purchase or acquire its Shares, and the impact on the Company’s financial position, cannot be ascertained as of the date of this Notice as these will depend on the number of Shares purchased or acquired and the price at which such Shares were purchased or acquired and whether the Shares purchased or acquired are held in treasury or cancelled.
	Based on the existing issued Shares of the Company of 2,202,218,293 Shares as of February 27, 2009, the purchase by the Company of 2.5% of its issued Shares will result in the purchase or acquisition of 55,055,457 Shares.
	Assuming that the Company purchases or acquires the 55,055,457 Shares at the Maximum Price of S$0.373 (approximately US$0.241 based on the exchange rate as of February 27, 2009) for one Share (being the price (excluding related brokerage, commission, applicable goods and services tax, stamp duties, clearance fees and other related expenses) equal to 105% of the highest independent bid or the last independent transaction price, whichever is the higher, quoted on the SGX-ST for the five consecutive Market Days on which the Shares were traded on the SGX-ST immediately preceding February 27, 2009), the maximum amount of funds required for the purchase or acquisition of the 55,055,457 Shares is S$20,536,000 (approximately US$13,275,000 based on the exchange rate as of February 27, 2009).
	The financial effects of the purchase or acquisition of such Shares by the Company pursuant to the proposed Share Purchase Mandate on the audited consolidated financial statements of the Company for the financial year ended December 28, 2008 based on these assumptions are set out in Proposal 7(f) of the Proxy Statement.

4

STATS ChipPAC Ltd.

(Incorporated in the Republic of Singapore)

(Company Registration Number 199407932D)

Proxy Statement

April 9, 2009

The accompanying proxies are solicited on behalf of the Board of Directors (the “Board” or the “Board of Directors”) of STATS ChipPAC Ltd. (the “Company” or “STATS ChipPAC”), a company incorporated in the Republic of Singapore under the Companies Act, Chapter 50 of Singapore (the “Companies Act”), for use at its Fifteenth Annual General Meeting of Shareholders (the “Annual General Meeting”) to be held on April 27, 2009, at 10.00 a.m. (Singapore time), at The Grassroots’ Club, 190 Ang Mo Kio Avenue 8, Singapore 568046, or at any adjournments thereof, for the purposes set out in the accompanying Notice of Annual General Meeting.

The Singapore Exchange Securities Trading Limited (“SGX-ST”) assumes no responsibility for the correctness of any of the statements made or opinions expressed in this Proxy Statement.

Shareholders Entitled to Notice of Annual General Meeting

A shareholder is a person whose name appears on the Depository Register (as defined in the Companies Act) maintained by The Central Depository (Pte) Limited in Singapore or a person registered in STATS ChipPAC’s Register of Shareholders (i.e. Members) as a holder of STATS ChipPAC’s ordinary shares.

We have mailed the Notice of Annual General Meeting, this Proxy Statement and the Annual Report to shareholders who are listed at the close of business on March 11, 2009. These documents were first mailed to shareholders on or about April 9, 2009.

Shareholders are advised to read this Proxy Statement carefully prior to returning their instruments appointing a proxy or proxies.

Quorum

Any two or more shareholders holding or representing in aggregate not less than 33 1/3% of the number of the total issued and fully-paid ordinary shares (excluding treasury shares) of STATS ChipPAC present in person or by proxy at the Annual General Meeting will constitute a quorum for the transaction of business at the Annual General Meeting.

Shareholders Entitled to Vote

Shareholders who are registered with The Central Depository (Pte) Limited or in STATS ChipPAC’s Register of Shareholders (i.e. Members) as at forty-eight (48) hours before the time appointed for holding the Annual General Meeting shall be entitled to vote at the Annual General Meeting.

At the close of business on February 27, 2009, there were 2,202,218,293 ordinary shares issued and outstanding.

Proxies

To be effective, a proxy must be deposited at STATS ChipPAC’s registered office located at 10 Ang Mo Kio Street 65, Techpoint #05-17/20, Singapore 569059, not less than forty-eight (48) hours before the time appointed for holding the Annual General Meeting or at any adjournment thereof. A proxy need not be a shareholder. Shareholders may appoint any member of the Board or any other person as their proxy.

Any shareholder signing a proxy in the form accompanying this Proxy Statement has the power to revoke it either prior to the Annual General Meeting at which the matter voted by proxy is acted upon or at the Annual General Meeting prior to the vote on the matter. A proxy may be revoked by the shareholder at any time not less than forty-eight (48) hours before the time set for the Annual General Meeting by the shareholder submitting a subsequently dated instrument appointing a proxy or at the Annual General Meeting prior to the vote of the resolution by such shareholder attending the Annual General Meeting and voting in person.

1

Voting

On a show of hands, every shareholder present in person or by proxy shall have one vote and on a poll, every shareholder present in person or by proxy shall have one vote for each ordinary share held or represented. A resolution put to the vote of shareholders at the Annual General Meeting will be decided on a show of hands unless a poll is demanded by the Chairman of the Annual General Meeting or by not less than five shareholders present in person or by proxy and entitled to vote at the Annual General Meeting or by a shareholder present in person or by proxy and representing not less than one-tenth of the total voting rights of all the shareholders having the right to vote at the Annual General Meeting or a shareholder present in person or by proxy and holding not less than 10% of the total number of paid-up shares of STATS ChipPAC (excluding treasury shares); provided always that no poll shall be demanded on the choice of a chairman or on a question of adjournment.

Ordinary shares represented by duly executed proxies deposited with STATS ChipPAC will be voted at the Annual General Meeting in accordance with shareholders’ instructions contained in the instrument. In the absence of specific instructions in the proxy, the proxy of a shareholder may vote or abstain as he may think fit.

On a show of hands, each of the resolutions to be proposed at the Annual General Meeting will be duly passed by the affirmative vote of a simple majority of shareholders present in person or by proxy and voting at the Annual General Meeting. If a poll is demanded in accordance with this section, each of the resolutions to be proposed at the Annual General Meeting will be duly passed by the affirmative vote of a simple majority of votes cast at the Annual General Meeting for each ordinary share held or represented.

General Information

Since the beginning of financial year 2005, STATS ChipPAC employed financial year reporting periods that end on the Sunday nearest and prior to December 31. STATS ChipPAC’s financial year 2008 ended on December 28, 2008 and its next financial year will end on December 27, 2009.

The expense of printing and mailing proxy materials will be borne by STATS ChipPAC. In addition to the solicitation of proxies by mail, solicitation may be made by certain directors, officers and other employees of STATS ChipPAC by personal interview, telephone or facsimile. No additional compensation will be paid for such solicitation.

In this Proxy Statement, references to “S$” mean Singapore dollars, the legal currency of the Republic of Singapore, and references to “US$” mean United States dollars, the legal currency of the United States.

Summary of Proposals

Shareholders will be voting on the following proposals at this Annual General Meeting:

1.	Adoption of the Audited Financial Statements of STATS ChipPAC for the financial year ended December 28, 2008, together with the Reports of the Directors and the Auditors.
2.	Appointment of Director pursuant to Article 99 of STATS ChipPAC’s Articles of Association.
3.	Re-election of Directors retiring by rotation pursuant to Article 94 of STATS ChipPAC’s Articles of Association.
4.	Re-appointment of Directors pursuant to Section 153(6) of the Companies Act.
5.	Re-appointment of PricewaterhouseCoopers (“PwC”) as Auditors and authorization to the Board, upon the recommendation of the Audit Committee of the Board, to fix their remuneration.
6.	Approval of Directors’ fees for the financial year ending December 27, 2009.
7.	Authority to the Board of Directors to allot and issue shares and to create and issue instruments, to adopt the new share plans and to renew the share purchase mandate.

2

Proposal No. 1

Adoption of the Audited Financial Statements of STATS ChipPAC for the financial year ended December 28, 2008, together with the Reports of the Directors and the Auditors

STATS ChipPAC’s Annual Report for its financial year ended December 28, 2008 accompanies this Proxy Statement. STATS ChipPAC’s financial statements included in the Annual Report have been prepared in conformity with United States generally accepted accounting principles and are accompanied by an auditors’ report from PwC.

The Board recommends a vote for the adoption of the Audited Financial Statements of STATS ChipPAC for the financial year ended December 28, 2008, together with the Reports of the Directors and the Auditors.

Proposal No. 2

Appointment of Director pursuant to Article 99 of STATS ChipPAC’s Articles of Association

Pursuant to Article 99 of STATS ChipPAC’s Articles of Association, STATS ChipPAC may by Ordinary Resolution appoint any person to be a Director either to fill a casual vacancy or as an additional Director.

Mr. Rohit Sipahimalani, 42, has been Managing Director, Investment of Temasek Holdings (Pte) Ltd (“Temasek”) since November 2008. Prior to joining Temasek, Mr. Sipahimalani was with Morgan Stanley, McKinsey & Co. Inc and Citibank, N.A. He received his Bachelor of Arts (Honors), Economics from St. Stephen’s College, Delhi University and Masters of Business Administration from Indian Institute of Management, Ahmadabad.

The Board, upon the recommendation of the Nominating and Corporate Governance Committee of the Board, recommends a vote for the appointment of Mr. Rohit Sipahimalani as a Director of STATS ChipPAC.

Proposal No. 3

Re-election of Directors retiring by rotation pursuant to Article 94 of STATS ChipPAC’s Articles of Association

According to Article 94 of STATS ChipPAC’s Articles of Association, one-third of the Board (or, if the number of directors on the Board is not a multiple of three, the number nearest to but not less than one-third) will retire at each annual general meeting of STATS ChipPAC. The Directors retiring each year are determined by those who have been in office longest since their re-election or appointment. The retiring Directors are nonetheless eligible for re-election.

Accordingly, pursuant to Article 94 of STATS ChipPAC’s Articles of Association, on the date of this Annual General Meeting, Mr. Teng Cheong Kwee and Mr. Tokumasa Yasui shall retire as Directors by rotation. They have offered themselves for re-election. The Board believes that it is in the best interest of STATS ChipPAC to re-elect Mr. Teng Cheong Kwee and Mr. Tokumasa Yasui as Directors.

The biographies of these Directors and a complete listing of all our Directors are provided on pages 27-28 of this Proxy Statement.

The Board recommends a vote for the re-election of each of Mr. Teng Cheong Kwee and Mr. Tokumasa Yasui as Directors of STATS ChipPAC.

Proposal No. 4

Re-appointment of Directors pursuant to Section 153(6) of the Companies Act

Section 153(1) of the Companies Act provides that, subject to the provisions of Section 153, no person of or over the age of 70 years shall be appointed or shall act as a director of a public company or of a subsidiary of a public company. Section 153(6) allows for the appointment or re-appointment of such a person as a director of the company, by the passing of an ordinary resolution by a simple majority of shareholders of the company as being entitled to vote in person or by proxy at a general meeting of the company. A director appointed or re-appointed pursuant to Section 153(6) of the Companies Act would hold office until the next annual general meeting of the company.

Mr. Charles R. Wofford and Mr. R. Douglas Norby are offering themselves for re-appointment to the Board under Section 153(6) of the Companies Act. The Board believes that it is in the best interest of STATS ChipPAC to re-appoint Mr. Charles R. Wofford and Mr. R. Douglas Norby as Directors.

3

The biographies of these Directors and a complete listing of all our Directors are provided on pages 27-28 of this Proxy Statement.

The Board recommends a vote for the re-appointment of each of Mr. Charles R. Wofford and Mr. R. Douglas Norby as a Director of STATS ChipPAC to hold such office from the date of this Annual General Meeting until the next annual general meeting.

Proposal No. 5

Re-appointment of PwC as Auditors and authorization to the Board, upon the recommendation of the Audit Committee of the Board, to fix their remuneration

The Audit Committee of the Board intends to re-appoint PwC as STATS ChipPAC’s Auditors to perform the audit of its financial statements for the financial year ending December 27, 2009. PwC audited STATS ChipPAC’s financial statements for the financial year ended December 28, 2008. The Board expects that a representative of PwC will be present at the Annual General Meeting. Such representative will be given an opportunity to make a statement at the meeting if he desires to do so, and will be available to respond to appropriate questions. PwC has consented to act as Auditors for the financial year ending December 27, 2009.

The Board, upon the recommendation of the Audit Committee of the Board, recommends a vote for the re-appointment of PwC as Auditors of STATS ChipPAC to hold office until the conclusion of the next annual general meeting and authorization to the Board, upon the recommendation of the Audit Committee of the Board, to fix their remuneration.

Proposal No. 6

Approval of Directors’ fees for the financial year ending December 27, 2009

In Singapore, annual general meetings of listed companies are required to held within 4 months after a financial year ends. Effectively, a director only gets paid for the services rendered about 16 months after the start of the financial year. In countries such as Australia, United Kingdom and the United States, directors get paid for the services rendered during the course of the financial year on an “as earned” basis or quarterly or half-yearly in advance of a financial year rather than in arrears after the financial year ends.

In order to ensure that STATS ChipPAC is able to attract the right calibre of Directors necessary to contribute effectively to the Board, STATS ChipPAC recognizes that, in addition to the right level of remuneration, timely payment to Directors is also needed.

Currently, we have seven Directors on the Board. STATS ChipPAC is proposing the payment of Directors’ fees of approximately US$473,000 (approximately S$732,000 based on the exchange rate as of February 27, 2009) (Year 2008: US$518,000) for services to be rendered during the financial year ending December 27, 2009. Directors’ fees for the financial year ending December 27, 2009 represents a decrease of approximately 9% over the Directors’ fees in 2008. We expect the proposed Directors’ fees for 2009 to be lower due to the projected decrease in the number of meetings of the Directors in 2009.

The Board recommends a vote for the approval of Directors’ fees totaling approximately US$473,000 for the financial year ending December 27, 2009.

Proposal No. 7

In order to limit the possible dilutive effect of the share plans as described below, STATS ChipPAC is committed to limiting the aggregate number of new shares to be issued under all the share plans to no more than 15% of the total number of issued shares of STATS ChipPAC from time to time, on a fully diluted, fully converted basis. In addition, each of the share plans will have a maximum limitation on the number of shares that may be delivered under each such share plan as follows:

(i)	the STATS ChipPAC Ltd. Share Option Plan, as amended (the “Share Option Plan”): no more than 198 million shares (including the 80 million shares subject to the STATS ChipPAC Ltd. Substitute Share Purchase and Option Plan and the STATS ChipPAC Ltd. Substitute Equity Incentive Plan);
(ii)	the proposed STATS ChipPAC Ltd. Performance Share Plan 2009 (the “PSP 2009”): no more than 5.02% of the total number of issued shares as at the adoption date of the PSP 2009. Assuming 2,202,218,293 (being the total number of shares issued as at February 27, 2009) shares were issued (including shares issuable

4

upon conversion of all outstanding convertible bonds as of the adoption date, any shares issued with regard to any future acquisition and any equity grants awarded prior to the adoption date) as at the adoption date, approximately no more than 110,551,358 shares will be delivered under the PSP 2009; and

(iii)

the proposed STATS ChipPAC Ltd. Equity Grant Plan for Non-Executive Directors (the “NED Plan”): no more than 0.45% of the total number of issued shares as at the adoption date of NED Plan. Assuming 2,202,218,293 (being the total number of shares issued as at February 27, 2009) shares were issued (including shares issuable upon conversion of all outstanding convertible bonds as of the adoption date, any shares issued with regard to any future acquisition and any equity grants awarded prior to the adoption date) as at the adoption date, approximately no more than 9,909,982 shares will be delivered under the NED Plan.

Proposals No. 7(a)

Authority to the Board to allot and issue shares and to create and issue instruments and to allot and issue shares in connection therewith.

Under the Companies Act, directors may exercise any power of the company to issue shares only with the prior approval of the shareholders of the company at a general meeting. Such approval, if granted, is effective from the date of the meeting at which it was given to the earlier of the conclusion of the next annual general meeting of shareholders of the company or the expiration of the period within which the next annual general meeting is required by law to be held.

Shareholders’ approval is sought to authorize the Board to allot and issue shares in the capital of the Company whether by way of rights, bonus or otherwise and to make or grant Instruments (such as warrants and debentures) convertible into shares, and to issue shares pursuant to such Instruments, up to a number not exceeding 50% of the total number of issued shares (excluding treasury shares) in the capital of the Company, with a sub-limit of 6% for issues other than on a pro rata basis to shareholders. For the purpose of determining the aggregate number of shares that may be issued, the total number of issued shares (excluding treasury shares) shall be based on the total number of issued shares (excluding treasury shares) in the capital of the Company at the time that this resolution is passed, after adjusting for (a) new shares arising from the exercise of share options which are outstanding or subsisting at the time that this resolution is passed, and (b) any subsequent rights issue, bonus issue, consolidation or subdivision of shares. This approval, if granted, will commence from this annual general meeting and will lapse at the conclusion of the annual general meeting of STATS ChipPAC to be held in the year 2010.

In summary, the shareholders are requested to authorize the Board to allot and issue shares in the capital of STATS ChipPAC whether by way of rights, bonus or otherwise and create and issue instruments and to allot and issue shares in the capital of STATS ChipPAC in connection therewith pursuant to Section 161 of the Companies Act.

The Board recommends a vote for the resolution set out under Proposal No. 7(a) as described above and in the Notice of the Annual General Meeting.

Proposals No. 7(b) and (c)

Authority to the Board to allot and issue shares pursuant to existing share plans.

The requirement for shareholders’ approval under the Companies Act extends to the issue of shares pursuant to the exercise of options under the Share Option Plan, the STATS ChipPAC Ltd. Substitute Equity Incentive Plan (“Substitute EIP”) and the STATS ChipPAC Ltd. Substitute Share Purchase and Option Plan (“Substitute Option Plan”) (collectively, the “Option Plans”).

The shareholders are requested to authorize the Board to:

(i)	under Proposal 7(b), allot and issue shares in the capital of STATS ChipPAC pursuant to the exercise of the options under the Substitute Option Plan and the Substitute EIP; and
(ii)	under Proposal 7(c), allot and issue shares in the capital of STATS ChipPAC pursuant to the exercise of the options granted under the Share Option Plan;

Information concerning past grants under the existing share plans is set forth under the “Compensation of Directors and Senior Management”, “Share Options for Directors” and “Employees’ Share Option Ownership Scheme” sections of this Proxy Statement.

5

The Board recommends a vote for each of the resolutions set out under Proposals No. 7(b) and (c) as described above and in the Notice of the Annual General Meeting.

Proposal No. 7(d)

Adoption of new PSP 2009

STATS ChipPAC is requesting that its shareholders vote in favor of adopting the PSP 2009, as substantially set out in Appendix 1 to the Proxy Statement, to replace the STATS ChipPAC Ltd. Restricted Share Plan and the STATS ChipPAC Ltd. Performance Share Plan, which were adopted and approved at the 12th Annual General Meeting of the shareholders on April 25, 2006 and terminated in March 2008. The PSP 2009 was approved by the Executive Resource and Compensation Committee of the Company (“Committee”) on January 21, 2009, subject to shareholder approval.

General

The following is a summary of the principal features of the PSP 2009. This summary, however, does not purport to be a complete description of all of the provisions of the PSP 2009. It is qualified in its entirety by reference to the full text of the PSP 2009.

Rationale for the PSP 2009

The PSP 2009 is proposed on the basis that it is important to retain staff whose contributions are essential to the well-being and prosperity of the Company and its subsidiaries (“Group”) and to give recognition to senior employees and executive directors of the Group who have contributed to the Group. The PSP 2009 will give participants an opportunity to have a personal equity interest in the Company.

Committee

The PSP 2009 will be administered by the Committee in its absolute discretion with such powers and duties as are conferred on it by the Board. No member of the Committee shall participate in any deliberation or decision in respect of Awards (as defined below) granted to him.

Eligibility

Senior employees of the Group, including the Chief Executive Officer of the Company (“CEO”) and executive directors of the Group, who have attained the age of 21 years and hold such rank as may be designated by the Committee, unless they are also controlling shareholders (as defined in the Listing Manual) of the Company or associates (as defined in the Listing Manual) of such controlling shareholders, shall be eligible to participate in the PSP 2009 at the absolute discretion of the Committee.

Up to 18 individuals may be awarded performance shares (“Performance Shares”) with respect to up to 3.35% of the outstanding Ordinary Shares, with the number of Ordinary Shares available for delivery to be based on, and subject to, the terms and conditions specified in the PSP 2009. In the event that the Performance Multiplier (as defined in, and applied pursuant to, the PSP 2009) is applied up to the maximum permissible under the PSP 2009, an aggregate of up to 5.02% of the Ordinary Shares could be payable and available for delivery.

For these purposes, the term “Ordinary Shares” means the number of outstanding shares in the capital of the Company as at the adoption date of the PSP 2009 on a fully-diluted basis, including shares issuable upon conversion of all outstanding convertible bonds (note that there are none outstanding) as of the adoption date, any shares issued with regard to any future acquisition and any equity grants awarded prior to the adoption date, but does not include any adjustments due to dilution that may result from future share issuances (other than in the context of any future acquisitions involving the issuance of shares and issuance of shares with regard to equity grants awarded prior to the adoption date), or future grants of share options, restricted share units and performance shares.

Awards

Awards granted under the PSP 2009 (each, an “Award”) represent a grant of Performance Shares to participants. Performance Shares represent unfunded and unsecured rights to receive Ordinary Shares. No consideration is payable by the participant for Awards or for Ordinary Shares receivable upon vesting of the Performance Shares.

An Award is personal to the participant to whom it is granted and, prior to the allotment to the participant of the Ordinary Shares to which the Award relates, shall not be transferred (other than to a participant’s representative on the death of that participant), charged, assigned, pledged or otherwise disposed of, except with the prior approval of the Committee. If a participant does anything as a result of which he would or might be deprived of any rights under an Award without the prior approval of the Committee, the Award shall immediately lapse.

6

Details of Awards

The Committee shall, on the recommendation of the management of the Company, decide in relation to an Award:

(a)	the participant;
(b)	the date on which the Award is granted (“Award Date”);
(c)	the number of Performance Shares which are the subject of the Award; and
(d)	any other condition which the Committee may determine in relation to that Award.

Events Prior to Vesting

Termination of Employment

Special provisions for the vesting and lapsing of Awards apply in certain circumstances, including the following:

(a)	the termination of a participant’s employment with the Group for Cause (as defined in the PSP 2009);
(b)	the termination of a participant’s employment with the Group due to such participant’s death or disability, or the termination of his employment by the Group without Cause; and
(c)	the termination of a participant’s employment with the Group for any reason other than as set out in paragraphs (a) and (b) above.

Upon the termination of a participant’s employment with the Group under paragraph (a) above, an Award then held by a participant shall, to the extent not yet vested, immediately lapse without any claim against the Company, and the participant immediately forfeits all unvested Performance Shares comprised in such Award.

Upon the termination of a participant’s employment with the Group under paragraph (b) above before the Performance Shares comprised in a participant’s Award have vested, such participant shall earn a pro-rata portion of the Performance Shares based on the length of the participant’s employment with the Group during the period beginning on January 1, 2007 and ending on December 31, 2011, with the number of Ordinary Shares deliverable to be determined and paid as and when the same is determined and paid for the other participants, and subject to the terms and conditions of the PSP 2009. Where vesting of the pro-rata portion of the Performance Shares occurs on December 31, 2011, the Committee shall have the discretion as to whether or not 100% of the Ordinary Shares deliverable in payment of the pro-rata portion of the Performance Shares shall become immediately payable, or whether 50% of the pro-rata portion of the Performance Shares will be forfeited.

Upon the termination of a participant’s employment with the Group for any reason other than those stated in paragraphs (a) and (b) above before the Performance Shares comprised in such participant’s Award have vested, the Committee shall have the discretion to determine whether such participant shall be entitled to vesting and payment with respect to any portion of the unvested Performance Shares.

The Committee shall have the discretion to decide on the treatment of any unvested Performance Shares which have been forfeited pursuant to the termination of a participant’s employment for any reason and may reallocate such Performance Shares to any current, new or replacement participants.

Change in Control

In the event of a Change in Control (as defined in the PSP 2009), vesting of all Performance Shares and determination of the number of Ordinary Shares deliverable shall accelerate immediately prior to such Change in Control event. Participants shall then have the right to participate in any sale transaction with Temasek or any of its subsidiaries (as the case may be) on a tag-along basis in any transaction resulting in a Change in Control with respect to all Ordinary Shares deliverable.

In the event of a sale of shares of the Company by Temasek or any of its subsidiaries in certain circumstances which does not result in a Change in Control, a pro-rata vesting of the Performance Shares comprised in outstanding Awards shall occur, and the participants shall have the right to participate in any sale transaction with Temasek or any of its subsidiaries (as the case may be) on a tag-along basis with respect to all Ordinary Shares deliverable.

Vesting of Performance Shares and Determination of Ordinary Shares Deliverable

Unless as otherwise provided in the PSP 2009, vesting of the Performance Shares comprised in outstanding Awards shall occur on December 31, 2011 and determination of the number of Ordinary Shares deliverable with

7

respect to such Performance Shares shall occur thereafter in accordance with the PSP 2009, subject to the participant then being employed by the Group.

The delivery of Ordinary Shares is subject to the Company achieving the economic profit targets (“EP Targets”) set by the Committee. The number of Ordinary Shares deliverable ranges from between 50% to 150% of the Performance Shares which are the subject of an Award, with the actual number of Ordinary Shares deliverable to be determined by the Committee and subject to the Performance Multiplier. The minimum number of Ordinary Shares deliverable is 50% of the Performance Shares which are the subject of an Award for economic profits (“EP”) of at least a prescribed amount below the relevant EP Target, and the maximum number of Ordinary Shares deliverable is 150% of the Performance Shares which are the subject of an Award for EP of a prescribed amount or more above the relevant EP Target, rounded down to the nearest whole share.

In relation to all participants other than the CEO, the EP Targets have been correlated to EBITDA targets and free cash flow targets set by the Committee so that, subject to the Company achieving a minimum of the prescribed amount below the applicable EP Target, the number of Ordinary Shares deliverable is calculated according to a weighted performance target formula, with 70% of such Ordinary Shares to be determined using the EBITDA target and the remaining 30% of such Ordinary Shares to be determined using the free cash flow target, in each case applying the Performance Multiplier in accordance with the provisions of the PSP 2009. If the relevant EBITDA target and free cash flow target are met but a minimum of the prescribed amount below the applicable EP Target is not met, the Committee shall have the power to determine the number of Ordinary Shares deliverable in respect of the relevant Performance Shares.

In relation to the CEO, subject to the Company achieving a minimum of the prescribed amount below the applicable EP Target, the number of Ordinary Shares deliverable is calculated based on the applicable EP Target, applying the Performance Multiplier in accordance with the provisions of the PSP 2009. If the Company fails to achieve a minimum of the prescribed amount below the applicable EP Target, the Committee shall have the power to determine the number of Ordinary Shares deliverable in respect of the relevant Performance Shares.

Payment

Subject to the participant then being employed by the Group, and on the basis that there is no event triggering full vesting of the Performance Shares and payout (or pro-rata vesting of the Performance Shares and payout in excess of 50%), 50% of the unissued Ordinary Shares deliverable in payment of the Performance Shares shall become immediately payable upon vesting of the Performance Shares on December 31, 2011. Should the Ordinary Shares be unavailable for payment as marketable securities, such participants shall receive, in the form of cash from the Company, the value of such Ordinary Shares that would be otherwise payable, determined in accordance with the EBITDA Valuation Formula prescribed under the PSP 2009. The remaining 50% of the vested Performance Shares shall remain as Ordinary Shares which have not been issued and shall be carried forward into a new share incentive plan to be adopted by the Company.

New shares allotted shall rank in full for all entitlements, including dividends or other distributions declared or recommended in respect of the then existing shares, the record date for which is on or after the relevant vesting date of the Performance Shares, and shall in all other respects rank pari passu with other existing shares then in issue.

Shares allotted and issued pursuant to the PSP 2009 are subject to certain restrictions and rights, involving a right of first refusal by Temasek or any of its subsidiaries, as the case may be, who is then a shareholder of the Company, on any sale by a participant of such shares, and a call right by Temasek or any of its subsidiaries, as the case may be, who is then a shareholder of the Company, and a put right by the participant (or, at the discretion of the Committee, the beneficiaries of such participant in the event of the participant’s death) upon termination of the participant’s employment with the Group. These restrictions and rights do not apply as long as the shares of the Company are listed and traded on the SGX-ST and/or any other internationally recognized stock exchange.

Adjustment Events

In the event of any dividend, share split, combination, or acquisition involving a share issuance or any exchange of shares, amalgamation, arrangement or consolidation, spin-off, recapitalization or other distribution of the assets of the Company to shareholders, or any other change affecting the ordinary shares of the Company or the share price, the Committee shall make such proportionate adjustments as necessary to reflect such change with respect to the aggregate number and type of shares that may be delivered under the PSP 2009, and the terms and conditions of any outstanding grants. Any adjustment, except in relation to a capitalization issue, must be confirmed in writing by the auditors of the Company to be in their opinion, fair and reasonable.

8

Size and Duration of the PSP 2009

The total number of shares which may be issued pursuant to Awards granted on any date:

(i)	when added to the total number of new Shares issued and issuable pursuant to Awards granted under the PSP 2009, shall not exceed 5.02% of the total number of the outstanding Ordinary Shares; and
(ii)	when added to the total number of new Shares issued and issuable pursuant to Awards granted under the PSP 2009 and any other equity grant plans adopted by the Company on or after the date of adoption of the PSP 2009, shall not exceed 15% of the total number of issued shares from time to time (excluding treasury shares).

The PSP 2009 shall continue to be in force at the discretion of the Committee, subject to a maximum period of ten (10) years commencing on the adoption date. The PSP 2009 may continue beyond the stipulated 10-year period with the approval of the Company’s shareholders by ordinary resolution in general meeting and of any relevant authorities. The expiry or termination of the PSP 2009 shall not affect Awards which have been granted prior to such expiry or termination, whether such Awards have vested or not.

Modifications to the PSP 2009

Any or all of the Rules of the PSP 2009 may be modified and/or altered at any time and from time to time by a resolution of the Committee, subject to the prior approval of the SGX-ST and such other regulatory authorities as may be necessary.

However, no modification or alteration shall adversely affect the rights attached to any Award granted prior to such modification or alteration except with the consent in writing of not less than three-quarters in number of those participants whose rights would be so adversely affected.

No alteration shall be made to certain Rules of the PSP 2009 to the advantage of participants except with the prior approval of the Company’s shareholders in general meeting.

Governing Law

The PSP 2009 shall be governed by, and construed in accordance with, the laws of Singapore. Participants, by accepting grants of Awards in accordance with the PSP 2009, and the Company submit to the exclusive jurisdiction of the Singapore courts.

Disclosures in Annual Report

The Company will make such disclosures in its annual report for so long as the PSP 2009 continues in operation as required by the Listing Manual including the following (where applicable):

(a)	the names of the members of the Committee administering the PSP 2009;
(b)	in respect of the following participants of the PSP 2009:

(i)	Directors of the Company; and
(ii)	participants (other than those in paragraph (i) above) who have received shares pursuant to the vesting of Awards granted under the PSP 2009 which, in aggregate, represent 5% or more of the aggregate of the total number of new shares available under the PSP 2009; and

the following information:

(aa)	the name of the participant; and
(bb)	the number of new shares issued to such participant during the financial year under review; and

(c) in relation to the PSP 2009, the following particulars:

(i)	the aggregate number of Performance Shares comprised in Awards granted under the PSP 2009 since the commencement of the PSP 2009 to the end of the financial year under review;
(ii)	the aggregate number of Performance Shares comprised in Awards which have vested under the PSP 2009 since the commencement of the PSP 2009 to the end of the financial year under review; and
(iii)	the aggregate number of Performance Shares comprised in Awards granted under the PSP 2009 which have not vested as at the end of the financial year under review,

or as otherwise required under the Listing Manual from time to time.

Financial Effects of the PSP 2009

Participants may receive Ordinary Shares or should the Ordinary Shares be unavailable for payment as marketable securities, participants shall receive, in the form of cash from the Company, the value of such Ordinary Shares that

9

would be otherwise payable, determined in accordance with the EBITDA Valuation Formula prescribed under the PSP 2009. In the event that the participants receive Ordinary Shares, the Awards would be accounted for based on the provisions of SFAS No. 123(R) “Share-Based Payment” (“SFAS 123(R)”) as described in the following paragraph.

SFAS 123(R) requires the measurement of share-based compensation expense based on estimated fair value. The Company measures grant-date fair value estimates and recognizes the share-based compensation expense net of estimated forfeitures as a charge to the profit and loss account over the period between the grant date and the vesting date of the Awards.

The following sets out the financial effects of the PSP 2009:

Share Capital

The PSP 2009 will result in an increase in the Company’s issued Shares as a consequence of the issuance of new Ordinary Shares to the participants. The number of new Ordinary Shares issued will depend on, inter alia, the size of the Awards granted under the PSP 2009. In any case, the PSP 2009 provides that, when added to the total number of new Ordinary Shares issued and issuable pursuant to Awards granted under the PSP 2009 and any other future equity grant plans the Company may adopt after the date of adoption of the PSP 2009, the total number of Ordinary Shares which may be issued pursuant to Awards shall not exceed 15% of the total number of issued Shares from time to time (excluding treasury shares).

Net Tangible Assets (“NTA”)

As described below in the following paragraph on earnings per share (“EPS”), the PSP 2009 is likely to result in a charge to the Company’s profit and loss account over the period from the Award Date to the date the Performance Shares vest. The amount of the charge will be computed in accordance with SFAS 123(R). If new Ordinary Shares are issued under the PSP 2009, there would be no effect on the NTA.

EPS

The PSP 2009 is likely to result in a charge to earnings over the period from the grant date to the vesting date, computed in accordance with SFAS 123(R).

It should again be noted that the delivery of Ordinary Shares to participants under the 2009 PSP will generally be contingent upon the Company and the participants meeting the prescribed performance targets and conditions.

Dilutive Impact

It is expected that the dilutive impact of the PSP 2009 on the NTA per Share and EPS will not be significant as explained below.

The PSP 2009 provides that, when added to the total number of new Ordinary Shares issued and issuable pursuant to Awards granted under the PSP 2009 and any other future equity grant plans adopted by the Company on or after the date of adoption of the PSP 2009, the total number of Ordinary Shares which may be issued pursuant to Awards shall not exceed 15% of the total number of issued Shares from time to time (excluding treasury shares). Accordingly, there will be no significant dilution of shareholder’s shareholding percentages as a result of the introduction of the PSP 2009 as such plan provides that the number of Ordinary Shares available for delivery under the plan is limited to up to 3.35% of the outstanding Ordinary Shares and that in the event that the Performance Multiplier (as defined in, and applied pursuant to, the PSP 2009) is applied, only an aggregate of up to 5.02% of the Ordinary Shares could be payable and available for delivery.

Previous Schemes

Terminated STATS ChipPAC Ltd. Restricted Share Plan

The STATS ChipPAC Ltd. Restricted Share Plan (“Terminated RSP”) was implemented after the approval of shareholders of the Company was obtained at the annual general meeting held on April 25, 2006. The Terminated RSP was terminated in March 2008. During the subsistence of the Terminated RSP, an aggregate of 50 million shares in the capital of the Company were reserved for allotment and issuance under the Terminated RSP, out of which 6,969,854 shares were subject to grants of restricted share units (“RSUs”) under the Terminated RSP. A total of 2,083,453 shares have been allotted and issued pursuant to RSUs that have been granted under the Terminated

10

RSP. There are 3,481,084 subsisting RSUs granted under the Terminated RSP as at January 31, 2009. All subsisting RSUs will be paid, upon vesting, in cash and all RSUs will vest by 2010.

The material conditions to which RSUs under the Terminated RSP were subject to are as follows:

(i)	employees, directors and Consultants1 of the Company, a Parent2 or a Subsidiary3 or an Affiliated Company,4 are eligible to participate in the Terminated RSP;
(ii)	only RSUs could have been granted under the Terminated RSP. An RSU represents an unfunded, unsecured promise of the company to issue or transfer shares of the company in the future to grantees. RSUs were granted with no exercise or purchase price. The concept of a discount to the exercise price is therefore not applicable in the context of the Terminated RSU. Shares offered under the Terminated RSP may be unissued shares or existing shares which will be issued or transferred to the grantee upon satisfaction of the applicable terms and conditions as set forth in the RSU agreement. The Board or the committee, as applicable, may provide for time-based vesting or vesting upon satisfaction of performance goals and/or other conditions. RSUs may be paid in cash or shares, as determined in the sole discretion of the Board or the committee;
(iii)	subject to certain permitted adjustments under the Terminated RSP, the maximum number of shares that may be issued or transferred under the Terminated RSP cannot exceed 50 million shares; and
(iv)	one-third of the RSUs vest after each of the first, second and third anniversaries of the date of grant.

There were a total of 491 participants in the Terminated RSP.

Details of RSUs granted under the Terminated RSP to the Directors and to participants who are controlling shareholders and their associates are as follows:

			Number of shares
		Number of shares	allotted and issued upon
Name	Date of grant of RSUs	subject to RSUs	vesting of RSUs
Directors
Tan Lay Koon	February 16, 2007	322,000	107,333
Charles Wofford	February 16, 2007	27,600	9,200
Peter Seah	February 16, 2007	20,700	6,900
R. Douglas Norby	February 16, 2007	20,700	6,900
Controlling shareholders and their associates
NIL	NIL	NIL	NIL

Terminated STATS ChipPAC Ltd. Performance Share Plan

The STATS ChipPAC Ltd. Performance Share Plan (“Terminated PSP”) was implemented after the approval of shareholders of the Company was obtained at the annual general meeting held on April 25, 2006. The Terminated PSP was terminated in March 2008. During the subsistence of the Terminated PSP, an aggregate of 15 million shares in the capital of the Company were reserved for allotment and issuance under the Terminated PSP, out of

¹ “Consultant” means a person who performs bona fide services for the Company, a Parent or a Subsidiary or an Affiliated Company as a consultant or advisor, excluding employees and directors.

² “Parent” means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company, if each of the corporations other than the Company owns shares possessing more than 50% of the total combined voting power of all classes of shares in one of the other corporations in such chain.

³ “Subsidiary” means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company, if each of the corporations other than the last corporation in the unbroken chain owns shares possessing more than 50% of the total combined voting power of all classes of shares in one of the other corporations in such chain.

⁴ “Affiliated Company” means any corporation (other than the Company, a Parent or Subsidiary) in an unbroken chain of corporations beginning with a Parent, if each of the corporations other than the last corporation in the unbroken chain owns shares possessing more than 50% of the total combined voting power of all classes of shares in one of the other corporations in such chain.

11

which no awards of performance shares were granted; and accordingly, no shares were issued or transferred, under the Terminated PSP.

The material conditions to which awards of performance shares under the Terminated PSP were subject to are as follows:

(i)	employees, directors and Consultants1 of the Company, a Parent2 or a Subsidiary3 or an Affiliated Company,4 were eligible to participate in the Terminated PSP;
(ii)	only performance shares could have been granted under the Terminated PSP. A performance share represents an award of shares payable upon satisfaction of specific performance criteria. If granted, awards of performance shares would have been made with no exercise or purchase price. The concept of a discount to the exercise price is therefore not applicable in the context of the Terminated PSP. Shares offered under the Terminated PSP may be unissued shares or existing shares which will be issued or transferred to the grantee upon satisfaction of the applicable terms and conditions as set forth in a performance share agreement; and
(iii)	subject to certain permitted adjustments under the Terminated PSP, the maximum number of shares that may be issued or transferred under the Terminated PSP cannot exceed 15 million shares.

There are no participants in the Terminated PSP and no awards of performance shares were granted to Directors and to participants who are controlling shareholders and their associates thereunder.

Abstention from Voting

Any shareholder of the Company who is eligible to participate in the PSP 2009 must abstain from voting in the Annual General Meeting to approve the ordinary resolution relating to the adoption of the PSP 2009. Such shareholder should also not accept nominations to act as proxy, corporate representative or attorney to vote at the Annual General Meeting, unless the shareholder appointing him indicates clearly how his votes are to be cast in respect of such ordinary resolution.

Directors’ Interest

Save as disclosed herein, none of the Directors of the Company has any interest, direct or indirect, in the PSP 2009.

In-Principle Approval from the SGX-ST

The SGX-ST has granted in-principle approval for the listing and quotation of the new shares to be issued pursuant to the PSP 2009. Admission of new shares to be allotted and issued pursuant to the PSP 2009 to, and quotation of such new shares on, the Main Board of the SGX-ST are in no way reflective of the merits of the Company, the Group or the PSP 2009.

Directors’ Responsibility Statement

The Directors collectively and individually accept responsibility for the accuracy of the information given in this Proxy Statement in relation to the PSP 2009 and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, the facts stated and the opinions expressed in the relevant paragraphs of this Proxy Statement relating to the PSP 2009 are fair and accurate and that there are no material facts the omission of which would make any statement in such paragraphs of this Proxy Statement misleading.

The Board recommends a vote for the resolution set out in Proposal 7(d) as described above and in the Notice of Annual General Meeting.

Proposal No. 7(e)

Adoption of new Equity Grant Plan for Non-Executive Directors

STATS ChipPAC is requesting that its shareholders vote in favor of adopting the STATS ChipPAC Ltd. Equity Grant Plan for Non-Executive Directors (the “NED Plan”), as substantially set out in Appendix 2 to the Proxy Statement. The NED Plan was approved by the Committee on March 4, 2009, subject to shareholder approval.

12

General

The following is a summary of the principal features of the NED Plan. This summary, however, does not purport to be a complete description of all of the provisions of the NED Plan. It is qualified in its entirety by reference to the full text of the NED Plan.

Rationale for the NED Plan

The NED Plan is proposed on the basis that it is important to give recognition to non-executive directors of the Company who have contributed to the Group. The NED Plan will give participants an opportunity to have a personal equity interest in the Company and will help to:

(a)	align the interests of the participants with the interests of the shareholders of the Company;
(b)	motivate each participant to maintain a high level of contribution to the Group; and
(c)	give recognition to the contributions made or to be made by directors of the Company who perform a non-executive function (“Non-Executive Directors” and each, a “Non-Executive Director”) to the Group.

The NED Plan is open to Directors who are non-employees of the Company. The Company recognizes the contributions made by Non-Executive Directors as well as the important role undertaken by them in the overall management of the Company. The participation of Non-Executive Directors in the NED Plan will therefore enable the Company to foster an ownership culture which aligns the interests of the Non-Executive Directors with the interests of Shareholders.

Committee

The NED Plan will be administered by the Committee in its absolute discretion with such powers and duties as are conferred on it by the Board. No member of the Committee shall participate in any deliberation or decision in respect of Ordinary Shares (as defined below) issuable to him under the NED Plan.

Eligibility

Non-Executive Directors shall, unless they are also controlling shareholders (as defined in the Listing Manual) of the Company or associates (as defined in the Listing Manual) of such controlling shareholders, be eligible to participate in the NED Plan at the absolute discretion of the Committee.

Offer to Participate

The Committee may extend an offer to any of the Non-Executive Directors to participate in the NED Plan as the Committee may select in its absolute discretion, at any time during the period when the NED Plan is in force. No consideration shall be payable for an offer to participate in the NED Plan made to, or for Ordinary Shares received by, Non-Executive Directors under the NED Plan.

For these purposes, the term “Ordinary Shares” means the number of outstanding shares in the capital of the Company as at the adoption date of the NED Plan on a fully-diluted basis, including shares issuable upon conversion of all outstanding convertible bonds (note that there are none outstanding) as of the adoption date, any shares issued with regard to any future acquisition and any equity grants awarded prior to the adoption date, but does not include any adjustments due to dilution that may result from future share issuances (other than in the context of any future acquisitions involving the issuance of shares and issuance of shares with regard to equity grants awarded prior to the adoption date), or future grants of share options, restricted share units and performance shares.

An offer extended to a selected Non-Executive Director to participate in the NED Plan is personal to the participant to whom it is extended and, prior to the allotment to the participant of the Ordinary Shares under the NED Plan, shall not be transferred (other than to a participant’s personal representative on the death of that participant), charged, assigned, pledged or otherwise disposed of, except with the prior approval of the Committee. If a participant does anything as a result of which he would or might be deprived of any rights under an offer extended to such Non-Executive Director to participate in the NED Plan without the prior approval of the Committee, his participation in the NED Plan shall immediately cease.

13

Events Prior to Issuance of Ordinary Shares

Cessation as Non-Executive Director

In the event that a participant ceases to be a Non-Executive Director for any reason whatsoever, his participation in the NED Plan shall, unless otherwise determined by the Committee, immediately cease without any claim against the Company.

Where the Committee exercises its discretion and determines that the participation of a participant in the NED Plan shall not cease even though such participant has ceased to be a Non-Executive Director, that participant may, at the discretion of the Committee, earn a pro-rata portion of the Ordinary Shares based on the length of the participant’s service as a Non-Executive Director during the period beginning on January 1, 2007 and ending on December 31, 2011, with the number of Ordinary Shares issuable to be determined as and when the same is determined and paid for the other participants, and subject to the terms and conditions of the NED Plan. In the event the Ordinary Shares are issuable on or after December 31, 2011, the Committee shall have discretion as to whether or not 100% of the Ordinary Shares issuable in payment of the pro-rata portion of the Ordinary Shares issuable shall become immediately payable, or whether 50% of the pro-rata portion of the Ordinary Shares issuable will be forfeited.

Change in Control

In the event of a Change in Control (as defined in the NED Plan), determination of the number of Ordinary Shares issuable shall accelerate immediately prior to such Change in Control event. Participants shall then have the right to participate in any sale transaction with Temasek or any of its subsidiaries (as the case may be) on a tag-along basis in any transaction resulting in a Change in Control with respect to all Ordinary Shares issuable.

In the event of a sale of shares of the Company by Temasek or any of its subsidiaries in certain circumstances which does not result in a Change in Control, a pro-rata issuance of Ordinary Shares shall occur, and the participants shall have the right to participate in any sale transaction with Temasek or any of its subsidiaries (as the case may be) on a tag-along basis with respect to all Ordinary Shares issuable.

Determination of Number of Ordinary Shares Issuable

Unless as otherwise provided in the NED Plan, determination of the number of Ordinary Shares issuable under the NED Plan shall occur on or after December 31, 2011 and in accordance with the NED Plan, subject to the participant then holding office as a Non-Executive Director on December 31, 2011.

The number of Ordinary Shares to be issued to each participant shall be determined by the Committee, and shall depend on the extent to which the EP Targets set by the Committee are achieved or exceeded as well as any other criteria and considerations deemed appropriate by the Committee.

The number of Ordinary Shares which may be issued under the NED Plan shall be calculated based on 0.30% of the outstanding Ordinary Shares (“Base Number”) with the aggregate number of the Ordinary Shares available for delivery to be subject to the NED Plan and to the Performance Multiplier (as defined in, and applied pursuant to, the NED Plan) at each time of payment, whether on a pro-rata basis or completely, the minimum of which would be 50% of the Base Number to be issued for EP of at least a prescribed amount below the relevant EP Target, and the maximum of which would be 150% of the Base Number to be issued for EP of a prescribed amount or more above the relevant EP Target (and proportionately between 50% and 150% of EP Target). Where a minimum of the prescribed amount below the relevant EP Target is not met, the Committee shall have the power, in its good faith and reasonable discretion, to determine the aggregate number of Ordinary Shares that may be deliverable. In the event that the Performance Multiplier is applied to the maximum extent permissible under the NED Plan, an aggregate of up to 0.45% of the Ordinary Shares could be payable and issued.

Payment

Subject to the Rules of the NED Plan, to the participant’s then holding office as a Non-Executive Director as of December 31, 2011 and on the basis that there is no event triggering full issuance of Ordinary Shares and payout (or pro-rata issuance of the Ordinary Shares and payout in excess of 50%), upon determination of the number of Ordinary Shares issuable on or after December 31, 2011, 50% of the unissued Ordinary Shares issuable shall become immediately payable by way of an allotment to the participant of the relevant number of Ordinary Shares. Should the Ordinary Shares be unavailable for payment as marketable securities, such participants shall receive, in the form of cash from the Company, the value of such Ordinary Shares that would be otherwise payable, determined in accordance with the EBITDA Valuation Formula prescribed under the NED Plan. The remaining 50% of the Ordinary Shares issuable shall remain as unissued Ordinary Shares and shall be carried forward into a new share incentive plan to be adopted by the Company.

14

New shares allotted and issued shall rank in full for all entitlements, including dividends or other distributions declared or recommended in respect of the then existing shares, the record date for which is on or after the date the Ordinary Shares are issued pursuant to the NED Plan, and shall in all other respects rank pari passu with other existing shares then in issue.

Shares allotted and issued pursuant to the NED Plan are subject to certain restrictions and rights, including a right of first refusal by Temasek or any of its subsidiaries, as the case may be, who is then a shareholder of the Company, on any sale by a participant of his shares, and a call right by Temasek or any of its subsidiaries, as the case may be, who is then a shareholder of the Company, and a put right by the participant (or, at the discretion of the Committee, the beneficiaries of such participant in the event of the participant’s death) upon a participant ceasing to hold office as a Non-Executive Director. These restrictions and rights do not apply as long as the shares of the Company are listed and traded on the SGX-ST and/or any other internationally recognized stock exchange.

Adjustment Events

In the event of any dividend, share split, combination, or acquisition involving a share issuance or any exchange of shares, amalgamation, arrangement or consolidation, spin-off, recapitalization or other distribution of the assets of the Company to its shareholders, or any other change affecting the Ordinary Shares or the share price, the Committee shall make such proportionate adjustments, if any, as necessary to reflect such change with respect to the aggregate number and type of shares that may be issued under the NED Plan and the applicable performance targets or criteria with respect thereto. Any adjustment, except in relation to a capitalization issue, must be confirmed in writing by the auditors of the Company to be in their opinion, fair and reasonable.

Size and Duration of the NED Plan

The total number of shares which may be issued under the NED Plan on any date:

(i)	when added to the total number of new Shares issued and issuable under the NED Plan, shall not exceed 0.45% of the total number of the outstanding Ordinary Shares; and
(ii)	when added to the total number of new Shares issued and issuable (i) under the NED Plan, and (ii) pursuant to awards granted under the PSP 2009, shall not exceed 15% of the total number of issued Shares from time to time (excluding treasury shares).

The NED Plan shall continue to be in force at the discretion of the Committee, subject to a maximum period of ten (10) years commencing on the adoption date. The NED Plan may continue beyond the stipulated 10-year period with the approval of the Company’s shareholders by ordinary resolution in general meeting and of any relevant authorities.

Modifications to the NED Plan

Any or all of the Rules of the NED Plan may be modified and/or altered at any time and from time to time by a resolution of the Committee, subject to the prior approval of the SGX-ST and such other regulatory authorities as may be necessary.

However, no modification or alteration shall adversely affect the rights of any participant except with the consent in writing of not less than a majority in number of those Participants whose rights would be so adversely affected.

No alteration shall be made to certain Rules of the NED Plan to the advantage of participants except with the prior approval of the Company’s shareholders in general meeting.

Governing Law

The NED Plan shall be governed by, and construed in accordance with, the laws of Singapore. Participants, by accepting an offer to participate in accordance with the NED Plan, and the Company submit to the exclusive jurisdiction of the Singapore courts.

Disclosures in Annual Report

The Company will make such disclosures in its annual report for so long as the NED Plan continues in operation as required by the Listing Manual including the following (where applicable):

(a)	the names of the members of the Committee administering the NED Plan;
(b)	in respect of all the participants of the NED Plan, the following information:

15

(aa)	the name of the participant; and
(bb)	the number of new Shares issued to such participant during the financial year under review; and

(c) in relation to the NED Plan, the aggregate number of Ordinary Shares that have been allotted and issued under the NED Plan since the commencement of the NED Plan to the end of the financial year under review,

or as otherwise required under the Listing Manual from time to time.

Financial Effects of the NED Plan

Participants may receive Ordinary Shares or should the Ordinary Shares be unavailable for payment as marketable securities, participants shall receive, in the form of cash from the Company, the value of such Ordinary Shares that would be otherwise payable, determined in accordance with the EBITDA Valuation Formula prescribed under the NED Plan. In the event that the participants receive Ordinary Shares, the awards would be accounted for based on the provisions of SFAS 123(R) as described in the following paragraph.

SFAS 123(R) requires the measurement of share-based compensation expense based on estimated fair value. The Company measures grant-date fair value estimates and recognizes the share-based compensation expense net of estimated forfeitures as a charge to the profit and loss account over the period between the grant date and the delivery date of the respective grants. Generally, the grant date is determined based on the communication date of the key terms and conditions of the share plan to the recipient.

The following sets out the financial effects of the NED Plan:

Share Capital

The NED Plan will result in an increase in the Company’s issued shares as a consequence of the issuance of new Ordinary Shares to the participants. The number of new Ordinary Shares issued will depend on the extent to which the EP Targets are achieved or exceeded, as well as other criteria and considerations deemed appropriate by the Committee. In any case, the NED Plan provides that, when added to the total number of new shares issued and issuable (i) under the NED Plan and (ii) pursuant to awards granted under the PSP 2009, the total number of shares which may be issued under the NED Plan shall not exceed 15% of the total number of issued shares from time to time (excluding treasury shares).

NTA

As described below in the following paragraph on EPS, the NED Plan is likely to result in a charge to the Company’s profit and loss account over the period between the grant date and the delivery date of the respective grants. Generally, the grant date is determined based on the communication date of the key terms and conditions of the share plan to the recipient. The amount of the charge will be computed in accordance with SFAS 123(R). If new Ordinary Shares are issued under the NED Plan, there would be no effect on the NTA.

EPS

The NED Plan is likely to result in a charge to earnings over the period between the grant date and the delivery date of the respective grants, computed in accordance with SFAS 123(R). Generally, the grant date is determined based on the communication date of the key terms and conditions of the share plan to the recipient.

It should again be noted that the delivery of Ordinary Shares to participants under the NED Plan will generally be contingent upon the Company and the participants meeting the prescribed performance targets and conditions.

Dilutive Impact

It is expected that the dilutive impact of the NED Plan on the NTA per Share and EPS will not be significant as explained below.

The NED Plan provides that, when added to the total number of new Shares issued and issuable (i) under the NED Plan, and (ii) pursuant to awards granted under the PSP 2009, the total number of Shares which may be issued under the NED Plan on any date shall not exceed 15% of the total number of issued Shares from time to time (excluding treasury shares). Accordingly, there will be no significant dilution of shareholders’ shareholding percentages as a result of the introduction of the NED Plan as such plan provides that the number of Ordinary Shares available for issuance under the NED Plan is limited to up to 0.30% of the outstanding Ordinary Shares and that in the event that the Performance Multiplier is applied to the maximum extent permissible under the NED Plan, only an aggregate of up to 0.45% of the Ordinary Shares could be payable and issued.

16

Abstention from Voting

Any shareholder of the Company who is eligible to participate in the NED Plan must abstain from voting in the Annual General Meeting to approve the ordinary resolution relating to the adoption of the NED Plan. Such shareholder should also not accept nominations to act as proxy, corporate representative or attorney to vote at the Annual General Meeting, unless the shareholder appointing him indicates clearly how his votes are to be cast in respect of such ordinary resolution.

Directors’ Interest

Save as disclosed herein, none of the Directors of the Company has any interest, direct or indirect, in the NED Plan.

In-Principle Approval from the SGX-ST

The SGX-ST has granted in-principle approval for the listing and quotation of the new shares to be issued pursuant to the NED Plan. Admission of new shares to be allotted and issued pursuant to the NED Plan to, and quotation of such new shares on, the Main Board of the SGX-ST are in no way reflective of the merits of the Company, the Group or the NED Plan.

Directors’ Responsibility Statement

The Directors collectively and individually accept responsibility for the accuracy of the information given in this Proxy Statement in relation to the NED Plan and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, the facts stated and the opinions expressed in the relevant paragraphs of this Proxy Statement relating to the NED Plan are fair and accurate and that there are no material facts the omission of which would make any statement in such paragraphs of this Proxy Statement misleading.

The Board recommends a vote for the resolution set out in Proposal 7(e) as described above and in the Notice of Annual General Meeting.

Proposal No. 7(f)

Renewal of the Share Purchase Mandate

1.	Background
	It is a requirement that a Singapore incorporated company such as STATS ChipPAC which wishes to purchase or acquire its own shares should obtain approval of its shareholders to do so at a general meeting of its shareholders. Accordingly, approval was sought from shareholders at the last Annual General Meeting held on April 23, 2008 for a general and unconditional mandate (the “Share Purchase Mandate”) to be given for the purchase or acquisition by STATS ChipPAC of its issued shares.
	As approved by shareholders at the last annual general meeting held on April 23, 2008, the authority conferred by the Share Purchase Mandate will continue in force until the next annual general meeting of STATS ChipPAC, which is scheduled to be held on April 27, 2009 (whereupon it will lapse, unless renewed at such meeting). As of December 28, 2008, the Company has not repurchased any shares.
2.	Rationale for the Renewal of the Share Purchase Mandate
	The rationale for STATS ChipPAC to undertake a purchase or acquisition of its is as follows:

(a)	In managing our business, management strives to increase shareholders’ value. In addition to growth and expansion of the business, share purchases may be considered as one of the ways through which shareholders’ value may be enhanced.
(b)	The Share Purchase Mandate will provide us with greater flexibility in managing our capital and maximising returns to our shareholders. To the extent that STATS ChipPAC has capital and surplus funds that are in excess of its financial needs, taking into account its growth and expansion plans, the Share Purchase Mandate will facilitate the return of excess cash and surplus funds to shareholders in an expedient, effective and cost-efficient manner.
(c)	A share repurchase program will also allow management to effectively manage and minimise the dilutive impact (if any) associated with employee or share compensation schemes.

17

(d)	Share repurchase programs help buffer short-term share price volatility.
(e)	The Share Purchase Mandate will provide STATS ChipPAC the flexibility to undertake share repurchases at any time, subject to market conditions and applicable laws, during the period when the Share Purchase Mandate is in force.

The purchase or acquisition of shares will only be undertaken if it can benefit STATS ChipPAC and shareholders. Shareholders should note that purchases or acquisitions of shares pursuant to the Share Purchase Mandate may not be carried out to the full limit as authorized. No purchase or acquisition of shares will be made in circumstances which would have or may have a material adverse effect on the liquidity and capital adequacy position of STATS ChipPAC and its subsidiaries (the “Group”) as a whole.

3.

Authority and Limits of the Share Purchase Mandate. The authority and limitations placed on the purchases or acquisitions of shares by STATS ChipPAC under the Share Purchase Mandate, if renewed at the Annual General Meeting, are summarised below. STATS ChipPAC intends to effect repurchases of shares in compliance with all applicable laws.

3.1	Maximum number of shares
	Only shares which are issued and fully paid-up may be purchased or acquired by STATS ChipPAC. The total number of shares which may be purchased or acquired by STATS ChipPAC pursuant to the Share Purchase Mandate is limited to that number of shares representing not more than 2.5% of the total number of issued ordinary shares of STATS ChipPAC as of the date of the forthcoming Annual General Meeting at which the Share Purchase Mandate is renewed. Any shares which are held as treasury shares will be disregarded for the purposes of computing the 2.5% limit.
3.2	Duration of authority
	Purchases or acquisitions of shares may be made, at any time and from time to time, on and from the date of the Annual General Meeting, at which the Share Purchase Mandate is renewed, up to:

(a)	the date on which the next annual general meeting of STATS ChipPAC is held or required by law to be held; or
(b)	the date on which the authority conferred by the Share Purchase Mandate is revoked or varied,

	whichever is the earlier.
3.3	Manner of purchases or acquisitions of shares
	Purchases or acquisitions of shares may be made by way of:

(a)	on-market purchases (“Market Purchases”), in respect of shares transacted through the SGX-ST’s trading system or on any other securities exchange on which the shares may for the time being be listed and quoted, through one or more duly licensed dealers appointed by STATS ChipPAC for the purpose; and/or
(b)	off-market purchases (“Off-Market Purchases”), otherwise than on a securities exchange, in accordance with an equal access scheme or schemes.

The Company may or may not effect any Off-Market Purchases. If it does so, the Directors may impose such terms and conditions which are not inconsistent with the Share Purchase Mandate, applicable U.S. federal securities law and the Companies Act as they consider fit in the interests of STATS ChipPAC in connection with or in relation to any equal access scheme or schemes. An equal access scheme must, however, satisfy all the following conditions:

(i)	offers for the purchase or acquisition of shares shall be made to every person who holds shares to purchase or acquire the same percentage of their shares;
(ii)	all of those persons shall be given a reasonable opportunity to accept the offers made; and
(iii)	the terms of all the offers are the same, except that there shall be disregarded (1) differences in consideration attributable to the fact that offers may relate to shares with different accrued dividend entitlements and (2) differences in the offers introduced solely to ensure that each person is left with a whole number of shares.

If STATS ChipPAC wishes to make an Off-Market Purchase in accordance with an equal access scheme, it will comply with all applicable U.S federal securities laws and the Companies Act and will issue an offer document containing at least the following information:

(i)	the terms and conditions of the offer;
(ii)	the period and procedures for acceptances; and

18

(iii) the information required under Rules 883(2), (3), (4) and (5) of the SGX-ST Listing Manual and required by applicable U.S federal securities laws regulating tender offers.

3.4

Purchase Price

The purchase price (excluding related brokerage, commission, applicable goods and services tax, stamp duties, clearance fees and other related expenses) to be paid for a share will be determined by the Directors. The purchase price to be paid for the shares as determined by the Directors pursuant to the Share Purchase Mandate (both Market Purchases and Off-Market Purchases) must not exceed 105% of the highest independent bid or the last independent transaction price, whichever is the higher, quoted on the SGX-ST at the time the purchase is effected (excluding related brokerage, commission, applicable goods and services tax, stamp duties, clearance fees and other related expenses) (the “Maximum Price”).

4.

Status of Purchased Shares. A share purchased or acquired by STATS ChipPAC is deemed cancelled immediately on purchase or acquisition (and all rights and privileges attached to the share will expire on such cancellation) unless such share is held by STATS ChipPAC as a treasury share. Accordingly, the total number of issued shares will be diminished by the number of shares purchased or acquired by STATS ChipPAC and which are not held as treasury shares.

5.

Treasury Shares. Under the Companies Act, shares purchased or acquired by STATS ChipPAC may be held or dealt with as treasury shares. Some of the provisions on treasury shares under the Companies Act are summarised below:

5.1	Maximum Holdings
	The number of shares held as treasury shares cannot at any time exceed 10% of the total number of issued shares.
5.2	Voting and Other Rights
	STATS ChipPAC cannot exercise any right in respect of treasury shares. In particular, STATS ChipPAC cannot exercise any right to attend or vote at meetings and for the purposes of the Companies Act, STATS ChipPAC shall be treated as having no right to vote and the treasury shares shall be treated as having no voting rights.
	In addition, no dividend may be paid, and no other distribution of STATS ChipPAC’s assets may be made, to STATS ChipPAC in respect of treasury shares. However, the allotment of shares as fully paid bonus shares in respect of treasury shares is allowed. Also, a subdivision or consolidation of any treasury share into treasury shares of a smaller amount is allowed so long as the total value of the treasury shares after the subdivision or consolidation is the same as before.
5.3	Disposal and Cancellation
	Where shares are held as treasury shares, STATS ChipPAC may at any time:

(a)	sell the treasury shares for cash;
(b)	transfer the treasury shares for the purposes of or pursuant to an employees’ share scheme;
(c)	transfer the treasury shares as consideration for the acquisition of shares in or assets of another company or assets of a person;
(d)	cancel the treasury shares; or
(e)	sell, transfer or otherwise use the treasury shares for such other purposes as may be prescribed by the Minister for Finance.

6.	Source of Funds. STATS ChipPAC may purchase or acquire its own shares out of capital, as well as from its profits.
	The Company will use internal resources or external borrowings or a combination of both to fund purchases or acquisitions of shares pursuant to the Share Purchase Mandate.
7.	Financial Effects. The financial effects on the Group arising from purchases or acquisitions of shares which may be made pursuant to the Share Purchase Mandate will depend on, inter alia, whether such shares are purchased or acquired out of profits and/or capital of the Company, the number of such shares purchased or acquired, the price paid for such shares and whether such shares purchased or acquired are held as treasury

19

shares or cancelled. The financial effects on the Group, based on the audited consolidated financial statements of STATS ChipPAC for the financial year ended December 28, 2008, are based on the assumptions set out below.

7.1	Purchase or Acquisition out of Capital or Profits
	Under the Companies Act, purchases or acquisitions of shares by STATS ChipPAC may be made out of STATS ChipPAC’s capital or profits so long as STATS ChipPAC is solvent.
	Where the consideration paid by STATS ChipPAC for the purchase or acquisition of shares is made out of profits, such consideration (excluding related brokerage, goods and services tax, stamp duties and clearance fees) will correspondingly reduce the amount available for the distribution of cash dividends by STATS ChipPAC. Where the consideration paid by STATS ChipPAC for the purchase or acquisition of shares is made out of capital, the amount available for the distribution of cash dividends by STATS ChipPAC will not be reduced.
7.2	Information as of February 27, 2009 (the “Latest Practicable Date”)
	As at the Latest Practicable Date, the issued capital of STATS ChipPAC comprised 2,202,218,293 shares. In addition, as at the Latest Practicable Date, there were outstanding and remaining unexercised share options to subscribe for 13,749,307 shares. Except in respect of shares which are issuable pursuant to the Option Plans, no shares are reserved for issue by STATS ChipPAC as at the Latest Practicable Date.
	Purely for illustrative purposes, on the basis of 2,202,218,293 shares in issue as at the Latest Practicable Date and assuming no further shares are issued, the purchase by STATS ChipPAC of 2.5% of its issued shares will result in the purchase or acquisition of 55,055,457 shares.
	Assuming that STATS ChipPAC purchases or acquires the 55,055,457 shares at the Maximum Price of S$0.373 (approximately US$0.241 based on the exchange rate as of February 27, 2009) for one share (being the price (excluding related brokerage, commission, applicable goods and services tax, stamp duties, clearance fees and other related expenses) equal to 105% of the highest independent bid or the last independent transaction price, whichever is the higher, quoted on the SGX-ST for the five consecutive market days on which the shares were traded on the SGX-ST immediately preceding the Latest Practicable Date), the maximum amount of funds required for the purchase or acquisition of the 55,055,457 shares is S$20,536,000 (approximately US$13,275,000 based on the exchange rate as of February 27, 2009). As of the Latest Practicable Date, the exchange rate was US$1.00 to S$1.5469.
	Although the Share Purchase Mandate would authorize the Company to purchase or acquire up to 2.5% of its issued shares as at the date on which the Share Purchase Mandate is renewed at the Annual General Meeting, the Company may not necessarily purchase or acquire or be able to purchase or acquire the entire 2.5% of its issued shares. As set out above, the Company may purchase or acquire its own shares out of capital, as well as from its profits so long as the Company is solvent. With effect from January 30, 2006, all amounts standing to the credit of the Company’s share premium account and any amount standing to the credit of the Company’s capital redemption reserve has become part of the Company’s share capital and can be used for the purchase of its own shares.
	As STATS ChipPAC does not have accumulated profits as at December 28, 2008, we have not provided the financial effects on STATS ChipPAC arising from purchases or acquisitions of shares made out of STATS ChipPAC’s profits.
7.3	Illustrative Financial Effects
	The financial effects on the Group arising from purchases or acquisitions of shares which may be made pursuant to the Share Purchase Mandate will depend on, inter alia, the aggregate number of shares purchased or acquired, whether the purchase or acquisition is made out of capital or profits, and the consideration paid at the relevant time and whether the shares purchased or acquired are cancelled or held as treasury shares. The assumptions include the following:

(a)	the Share Purchase Mandate had been effective since the beginning of the financial year ended December 28, 2008 and STATS ChipPAC had purchased 55,055,457 shares as at that date.
(b)	no issuance of shares from the exercise of share options after the Latest Practicable Date; and
(c)	the purchase consideration of S$20,536,000 (approximately US$13,275,000 based on the exchange rate as of February 27, 2008) had been funded from external borrowings at an effective interest rate of 3.57% per annum.

For illustrative purposes only and on the basis of the assumptions set out above, the financial effects of the:

20

(i)	acquisition of 55,055,457 shares by STATS ChipPAC pursuant to the Share Purchase Mandate by way of purchases made entirely out of capital and held as treasury shares; and
(ii)	acquisition of 55,055,457 shares by STATS ChipPAC pursuant to the Share Purchase Mandate by way of purchases made entirely out of capital and cancelled,

based on the audited consolidated financial statements of STATS ChipPAC for the financial year ended December 28, 2008 would be as set out on the following pages:

21

(a) Purchases made entirely out of capital and held as treasury shares

	Before			After
	Share Purchase			Share Purchase
	(In US$’000, except per share data and ratios)
Share Capital		2,035,235			2,035,235
Accumulated Other Comprehensive Loss		(12,308	)		(12,308	)
Accumulated Deficit		(474,270	)		(474,744	)
		1,548,657			1,548,183
Treasury Shares		—			(13,275	)
Total Shareholders’ Equity		1,548,657			1,534,908
Net Tangible Assets		1,011,805			998,056
Current Assets		571,308			571,308
Current Liabilities		378,720			392,469
Total Borrowings		473,453			486,728
Cash and Cash Equivalents		295,916			295,916
Net Debt		177,537			190,812
Number of Shares (’000)		2,202,218			2,202,218	*
Financial Ratios
Net Tangible Assets per Share (US$)		0.46			0.46
Gross Debt Gearing (%)(i)		30.6			31.7
Net Debt Gearing (%)(ii)		11.5			12.4
Current Ratio (times)(iii)		1.51			1.46
Basic Earnings Per Share (US cents)		0.01			0.01
Diluted Earnings Per Share (US cents)		0.01			0.01

*	Includes 55,055,457 shares that are held as treasury shares and is computed based on 2,202,218,293 shares in issue as at the Latest Practicable Date.
Notes:
(i)	Gross Debt Gearing is equal to Total Borrowings divided by Total Shareholders’ Equity.
(ii)	Net Debt Gearing is equal to Total Borrowings (net of Cash and Cash Equivalents) divided by Total Shareholders’ Equity.
(iii)	Current Ratio is equal to Current Assets divided by Current Liabilities.

22

(b) Purchases made entirely out of capital and cancelled

	Before			After
	Share Purchase			Share Purchase
	(In US$’000, except per share data and ratios)
Share Capital		2,035,235			2,021,960
Accumulated Other Comprehensive Loss		(12,308	)		(12,308	)
Accumulated Deficit		(474,270	)		(474,744	)
		1,548,657			1,534,908
Treasury Shares		—			—
Total Shareholders’ Equity		1,548,657			1,534,908
Net Tangible Assets		1,011,805			998,056
Current Assets		571,308			571,308
Current Liabilities		378,720			392,469
Total Borrowings		473,453			486,728
Cash and Cash Equivalents		295,916			295,916
Net Debt		177,537			190,812
Number of Shares (’000)		2,202,218			2,147,163	*
Financial Ratios
Net Tangible Assets per Share (US$)		0.46			0.46
Gross Debt Gearing (%)(i)		30.6			31.7
Net Debt Gearing (%)(ii)		11.5			12.4
Current Ratio (times)(iii)		1.51			1.46
Basic Earnings Per Share (US cents)		0.01			0.01
Diluted Earnings Per Share (US cents)		0.01			0.01

*	Excludes 55,055,457 shares cancelled and is computed based on 2,202,218,293 shares in issue as at the Latest Practicable Date.
Notes:
(i)	Gross Debt Gearing is equal to Total Borrowings divided by Total Shareholders’ Equity.
(ii)	Net Debt Gearing is equal to Total Borrowings (net of Cash and Cash Equivalents) divided by Total Shareholders’ Equity.
(iii)	Current Ratio is equal to Current Assets divided by Current Liabilities.

23

The financial effects set out above are for illustrative purposes only and based on the aforementioned assumptions. It is important to note that the above analysis is based on the historical numbers in respect of the financial year ended December 28, 2008 and is not necessarily indicative of future performances. Although the Share Purchase Mandate would authorize STATS ChipPAC to purchase or acquire up to 2.5% of the issued, STATS ChipPAC may not necessarily purchase or acquire or be able to purchase or acquire the entire 2.5% of the issued shares. In addition, STATS ChipPAC may cancel all or part of the shares repurchased or hold all or part of the shares repurchased in treasury.

8. Shares Repurchased

8.1	Disclosure of total number of shares repurchased
	STATS ChipPAC, as a foreign private issuer, is required to file an annual report on Form 20-F with the U.S. Securities and Exchange Commission, which requires disclosure, among other things, for each of the preceding twelve months during its most recently completed financial year, of the total number of shares repurchased as part of a publicly announced program and the maximum number (or approximate dollar value) of shares that may yet be purchased under the program.
8.2	Insider Trading Policy
	STATS ChipPAC has an Insider Trading Policy (the “Insider Trading Policy”) which guides and assists the Company and its Directors, officers and employees in the handling of corporate information and to prevent violations, whether inadvertent or otherwise, of the restrictions on insider trading under applicable laws and stock exchange rules. STATS ChipPAC will undertake any purchase or acquisition of shares pursuant to the Share Purchase Mandate in compliance with applicable insider trading laws and regulations.
8.3	Public Shareholders
	As at January 31, 2009, approximately 16.2% of the Shares are held by shareholders other than Temasek and our directors. In undertaking purchases or acquisitions of its Shares through Market Purchases, STATS ChipPAC’s intention is that the number of Shares remaining in the hands of the public will not fall to such a level as to cause market illiquidity, to affect orderly trading or to affect the listing of the shares on the SGX-ST.

9. Take-over Implications. Appendix 2 of the Singapore Code on Take-overs and Mergers (the “Code”) contains the Share Buy-Back Guidance Note applicable as at the Latest Practicable Date. The take-over implications arising from any purchase or acquisition by STATS ChipPAC of its shares are set out below:

9.1	Obligation to make a Take-over Offer
	If, as a result of any purchase or acquisition by STATS ChipPAC of its shares, a shareholder’s proportionate interest in the voting capital of STATS ChipPAC increases, such increase will be treated as an acquisition for the purposes of Rule 14 of the Code. If such increase results in a change of effective control, or, as a result of such increase, a shareholder or group of shareholders acting in concert obtains or consolidates effective control of STATS ChipPAC, such shareholder or group of shareholders acting in concert could become obliged to make a take-over offer for STATS ChipPAC under Rule 14 of the Code.
9.2	Persons Acting in Concert
	Under the Code, persons acting in concert comprise individuals or companies who, pursuant to an agreement or understanding (whether formal or informal), cooperate, through the acquisition by any of them of shares in a company, to obtain or consolidate effective control of that company.
	Unless the contrary is established, the Code presumes, inter alia, the following individuals and companies to be persons acting in concert with each other:

(a)

a company with any of its directors (together with their close relatives, related trusts as well as companies controlled by any of the directors, their close relatives and related trusts); and

(b)

a company, its parent, subsidiaries and fellow subsidiaries, and their associated companies and companies of which such companies are associated companies, and any person who has provided financial assistance (other than a bank in the ordinary course of business) to any of the aforementioned for the purchase of voting rights, all with each other. For this purpose, a company is an associated company of another company if the second company owns or controls at least 20% but not more than 50% of the voting rights of the first-mentioned company.

24

The circumstances under which shareholders of STATS ChipPAC (including Directors of STATS ChipPAC) and persons acting in concert with them respectively will incur an obligation to make a take-over offer under Rule 14 after a purchase or acquisition of shares by STATS ChipPAC are set out in Appendix 2 of the Code.

9.3	Effect of Rule 14 and Appendix 2
	In general terms, the effect of Rule 14 and Appendix 2 is that, unless exempted, Directors of STATS ChipPAC and persons acting in concert with them will incur an obligation to make a take-over offer for STATS ChipPAC under Rule 14 if, as a result of STATS ChipPAC purchasing or acquiring its shares, the voting rights of such Directors and their concert parties would increase to 30% or more, or if the voting rights of such Directors and their concert parties fall between 30% and 50% of STATS ChipPAC’s voting rights, the voting rights of such Directors and their concert parties would increase by more than 1% in any period of six months.
	Under Appendix 2, a shareholder not acting in concert with the Directors of STATS ChipPAC will not be required to make a take-over offer under Rule 14 if, as a result of STATS ChipPAC purchasing or acquiring its shares, the voting rights of such shareholder in STATS ChipPAC would increase to 30% or more, or, if such shareholder holds not less than 30% but not more than 50% of STATS ChipPAC’s voting rights, the voting rights of such shareholder would increase by more than 1% in any period of six months. Such shareholder need not abstain from voting in respect of Resolution 7(f) authorising the Share Purchase Mandate. In calculating the percentages of voting rights of such Directors and their concert parties, treasury shares shall be excluded.
	Based on substantial shareholder notifications received by the STATS ChipPAC under Division 4, Part IV of the Companies Act as at the Latest Practicable Date as set out in the “Shareholdings and Share Trading” section of this Proxy Statement, none of the substantial shareholders of STATS ChipPAC would become obliged to make a take-over offer for STATS ChipPAC under Rule 14 of the Code as a result of the purchase by STATS ChipPAC of the maximum limit of 2.5% of its issued shares as at the Latest Practicable Date.

Shareholders are advised to consult their professional advisers and/or the Securities Industry Council at the earliest opportunity as to whether an obligation to make a take-over offer would arise by reason of any purchase or acquisition of shares by STATS ChipPAC.

The Board recommends a vote for the resolution set out under Proposal No. 7(f) as described above and in the Notice of the Annual General Meeting.

Other Business

The Board does not presently intend to bring any other business before the Annual General Meeting, and so far as is known to the Board, no matters will be brought before the Annual General Meeting except as is specified in this Proxy Statement. As to any business that may properly come before the Annual General Meeting, however, it is intended that proxies, in the form enclosed, will be voted in respect thereof in accordance with the judgment of those persons voting such proxies.

25

Directors and Senior Management

The following table sets forth the name, age (as of January 31, 2009) and position of each Director and member of senior management. The business address of our Directors and senior management is our registered office in Singapore.

Name	Age	Position
Board of Directors
Charles R. Wofford (1)(2)(3)(4)	75	Chairman of our Board of Directors
Tan Lay Koon	50	Director, President and Chief Executive Officer
Peter Seah Lim Huat (5)(6)	62	Director
R. Douglas Norby (1)(5)(7)	73	Director
Teng Cheong Kwee (1)(6)(8)(9)	55	Director
Tokumasa Yasui (1)(9)	64	Director
Phoon Siew Heng (8)	45	Director
Senior Management
Wan Choong Hoe	55	Executive Vice President, Chief Operating Officer
Han Byung Joon	49	Executive Vice President, Chief Technology Officer
Hal Lasky (10)	46	Executive Vice President, Chief Sales Officer
John Lau Tai Chong	49	Senior Vice President, Chief Financial Officer
Janet T. Taylor	51	Senior Vice President, General Counsel

Notes:
(1)	Determined by our Board of Directors to be independent for the purposes of the Singapore Code of Corporate Governance 2005.
(2)	Chairman of the Executive Committee.
(3)	Chairman of the Executive Resource and Compensation Committee.
(4)	Chairman of the Nominating and Corporate Governance Committee.
(5)	Member of the Executive Resource and Compensation Committee.
(6)	Member of the Nominating and Corporate Governance Committee.
(7)	Chairman of the Audit Committee.
(8)	Member of the Executive Committee.
(9)	Member of the Audit Committee.
(10)	Appointed with effect from March 27, 2008.

Our Board of Directors held four meetings in person and three meetings by teleconference in 2008. The average attendance by Directors at Board of Directors meetings they were scheduled to attend was 90%.

Mr. R. Douglas Norby was nominated for election as our Director pursuant to the terms of the merger agreement governing our merger with ChipPAC and elected as our Director at our extraordinary general meeting on August 4, 2004.

Other than with respect to Mr. R. Douglas Norby, there are no arrangements or understandings with any person pursuant to which any of our Directors or members of senior management were selected. There are no familial relationships among any of our Directors, senior management or substantial shareholders. In January 2005, Mr. Seah became a member of the Temasek advisory panel. Mr. Phoon was appointed Senior Managing Director, Strategy, of Temasek in November 2008. While employed by Temasek, Director’s fees paid by us with regard to Mr. Phoon’s service on our Board are paid directly to Temasek.

26

Board of Directors

Charles R. Wofford

Mr. Charles Richard Wofford has been a member of our Board of Directors since February 1998 and the Chairman of our Board of Directors since August 2002. Mr. Wofford was with Texas Instruments, Inc. for 33 years before leaving as Senior Vice-President to join Farr Company in 1991. He was the Chairman, Chief Executive Officer and President of Farr Company from 1992 to 1995 and Executive Vice Chairman of FSI International from 1996 to 1998. He received his Bachelor of Arts from Texas Western College.

Tan Lay Koon

Mr. Tan Lay Koon has been our President and Chief Executive Officer and a member of our Board of Directors since June 2002. Mr. Tan joined us in May 2000 as our Chief Financial Officer and in August 2004, he led the formation of STATS ChipPAC with the acquisition of ChipPAC and became our founding President and Chief Executive Officer. Prior to joining us, he was an investment banker with Salomon Smith Barney, the global investment banking unit of Citigroup Inc. Before that, he held various senior positions in government and financial institutions in Singapore. Mr. Tan graduated with a Bachelor of Engineering (First Class Honors) from the University of Adelaide, Australia as a Colombo Plan Scholar. He also has a Master of Business Administration (Distinction) from the Wharton School, University of Pennsylvania where he was elected a Palmer scholar.

Peter Seah Lim Huat

Mr. Peter Seah Lim Huat has been a member of our Board of Directors since July 2002. He has also been a member of the Temasek Advisory Panel since January 1, 2005. He was, until December 31, 2004, the President and Chief Executive Officer of Singapore Technologies Pte. Ltd. and a member of its board of directors. He was a banker for 33 years before retiring as the Vice Chairman and Chief Executive Officer of Overseas Union Bank Limited in 2001. Mr. Seah is the Chairman of SembCorp Industries Ltd and Singapore Technologies Engineering Ltd and sits on the boards of CapitaLand Limited, Chartered and StarHub Ltd. His other appointments include being a member of S. Rajaratnam School of International Studies, Vice President of the Singapore Chinese Chamber of Commerce and Industry Pte Ltd. Mr. Seah also serves on the board of the Government of Singapore Investment Corporation. He was awarded the Public Service Star (Bintang Bakti Masyarakat) in 1999. Mr. Seah graduated from the University of Singapore in 1968 with an honors degree in Business Administration.

R. Douglas Norby

Mr. R. Douglas Norby has been a member of our Board of Directors since August 2004. Mr. Norby was a member of the board of directors of ChipPAC, Inc. prior to the merger. He was Senior Vice President and Chief Financial Officer of Tessera from July 2003 to January 2006. Mr. Norby worked as a consultant for Tessera from May to July 2003. Mr. Norby was Senior Vice President and Chief Financial Officer of Zambeel, Inc. from March 2002 to February 2003. From December 2000 to March 2002, Mr. Norby was Senior Vice President and Chief Financial Officer of Novalux, Inc., and from 1996 to 2000, he was Executive Vice President and Chief Financial Officer of LSI Logic Corporation. Mr. Norby is a director of Alexion Pharmaceuticals, Inc., Neterion, Inc., Nexx Systems, Inc. and Intellon Corporation, and serves as the Chairman of each of such companies’ audit committee. Mr. Norby also serves as a consultant to Nanosolar, Inc., a private company. He received his Bachelor of Arts in Economics from Harvard University and Master of Business Administration from Harvard Business School.

Teng Cheong Kwee

Mr. Teng Cheong Kwee has been a member of our Board of Directors since October 2006. He was previously a member of our Board of Directors from January 2001 to August 2004 and was appointed as a member and the Chairman of our Audit Committee in January 2001 and January 2003, respectively. Mr. Teng was the head of Risk Management & Regulatory Division of the Singapore Exchange Limited and has held various positions in regulatory and financial institutions including the Monetary Authority of Singapore. Mr. Teng has more than 20 years of experience in the finance industry. He is also a non-executive Director of several other companies listed on the SGX-ST. Mr. Teng received his Bachelor of Engineering (Industrial) (First Class Honors) and Bachelor of Commerce from the University of Newcastle in Australia.

Tokumasa Yasui

Mr. Tokumasa Yasui has been a member of our Board of Directors since January 2007. Mr. Yasui was an Advisor and Special Advisor to the President of Renesas Solutions Corp., a subsidiary of Renesas Technology Corp., which is a joint venture between Hitachi Ltd. and Mitsubishi Ltd, from September 2007 to December 2008 and September 2006 to August 2007, respectively. Prior to that, he was a Managing Director of Renesas Semiconductor (Malaysia) Sdn. Bhd. He has also held various senior management positions with Hitachi Ltd. where he last served as Group Executive of the Semiconductor Division. He has also served as Executive Vice President of Elpida Memory, Inc. which started as a joint venture between Hitachi Ltd. and NEC Corp. Mr. Yasui holds a Bachelor of Engineering and a Master of Engineering in Electrical Engineering from Kyoto University.

27

Phoon Siew Heng

Mr. Phoon Siew Heng has been a member of our Board of Directors since August 2007. Mr. Phoon has been Senior Managing Director, Strategy of Temasek since November 2008. He was Executive Advisor in Wah Hin & Co. (Pte.) Ltd from January 2008 to October 2008. He was with Temasek from 1999 to September 2007 and was appointed Chief Investment Officer at Temasek in December 2006. Prior to joining Temasek, Mr. Phoon was with Standard Chartered Merchant Bank Asia Ltd. He was a Deputy Director in the Ministry of Finance, Singapore, from 1988 to 1992. He also sits on the board of directors of Alliance Financial Group Berhad, Alliance Bank Malaysia Berhad and Alliance Investment Bank Berhad. He was previously a director of Shin Corporation Public Company Limited, SP PowerGrid Limited, SMRT Corporation Ltd, Singapore Airport Terminal Services Limited and SIA Engineering Company Limited, and a Board Commissioner in PT Bank Internasional Indonesia Tbk and PT Bank Danamon Indonesia Tbk. Mr. Phoon holds a Bachelor of Economics (Honors) from Monash University in Australia.

Committees of our Board of Directors

Audit Committee

The Audit Committee currently consists of three members, all of whom are non-executive Directors and determined by our Board of Directors to be independent under applicable SEC rules and for purposes of the Singapore Code of Corporate Governance 2005. The current members of the Audit Committee are Mr. R. Douglas Norby (Chairman), Mr. Teng Cheong Kwee and Mr. Tokumasa Yasui.

The Audit Committee serves as an independent and objective party to review the integrity and reliability of the financial information presented by management to shareholders, regulators and the general public. It oversees the establishment, documentation, maintenance and periodic evaluation of the system of our internal controls and is responsible for the appointment, compensation, independence, retention, termination and oversight of the work of our external auditors. The Audit Committee also reviews and evaluates the performance and policies of our internal audit function and of its external auditors. Under Singapore law, only board members of a company may serve on its Audit Committee.

The Audit Committee held five meetings in 2008.

Executive Resource and Compensation Committee

The current members of the Executive Resource and Compensation Committee are Mr. Charles R. Wofford (Chairman), Mr. Peter Seah Lim Huat and Mr. R. Douglas Norby.

The Executive Resource and Compensation Committee oversees the development of leadership and management talent in our Company, ensures that we have appropriate remuneration policies and designs competitive compensation packages with a focus on long-term sustainability of business and long-term shareholders’ return.

The Executive Resource and Compensation Committee is comprised entirely of non-executive Directors, the majority of whom, including the Chairman, qualify as independent Directors under the Singapore Code of Corporate Governance 2005. Our Board of Directors has determined that Mr. Charles R. Wofford and Mr. R. Douglas Norby are independent directors under the Singapore Code of Corporate Governance 2005.

In July 2008, our Board of Directors adopted a new charter for our Executive Resource and Compensation Committee. Our Board of Directors has resolved, with effect from July 29, 2008, to delegate to the Executive Resource and Compensation Committee the power to review, vary (if necessary) and approve the entire specific remuneration package and service contract terms for the Chief Executive Officer and the key management executives of our Company that are at the job level of Executive Vice President and Senior Vice President and who report directly to the Chief Executive Officer as well as the plant managing directors (“Senior Management Executives”).

The Executive Resource and Compensation Committee has delegated to the Chief Executive Officer the power to approve awards to employees at the job level of Senior Vice President and below who do not report directly to the Chief Executive Officer.

Specifically, the duties and responsibilities of the Executive Resource and Compensation Committee include the following:

• consider, review, vary and approve our Company’s policy for determining executive remuneration including the remuneration policy with regard to Senior Management Executives;

• consider, review, vary (if necessary) and approve the entire specific remuneration package and service contract terms for each Senior Management Executive;

28

• review and approve all of our option plans, stock plans and other equity-based plans;

• review and make recommendations to the Board with regard to each award to Senior Management Executives under each equity based plan;

• review and approve each award as well as the total proposed awards under each equity based plan in accordance with the rules governing each such plan, including awards to Directors; and

• approve the remuneration framework, including Director’s fees for our non-executive Directors.

The Executive Resource and Compensation Committee held five meetings in 2008.

Executive Committee

The Executive Committee currently consists of Mr. Charles R. Wofford (Chairman), Mr. Teng Cheong Kwee and Mr. Phoon Siew Heng.

The main objective of the Executive Committee is to enable our Board of Directors to delegate some of its powers and functions regarding the governing of our affairs and the affairs of our subsidiaries to the Executive Committee in order to facilitate timely decision-making processes within the limits of authority as determined by our Board of Directors. The Executive Committee also meets with our senior management to review our annual budget and financial performance.

The Executive Committee held four meetings in 2008.

Nominating and Corporate Governance Committee

The current members of the Nominating and Corporate Governance Committee are Mr. Charles R. Wofford (Chairman), Mr. Peter Seah Lim Huat and Mr. Teng Cheong Kwee. The Nominating and Corporate Governance Committee’s responsibilities include identifying suitable candidates for appointment to our Board, with a view to ensuring that the individuals comprising our Board of Directors can contribute in the relevant strategic areas of our business and are able to discharge their responsibilities as directors having regard to the law and high standards of governance.

We adopt the following practices which are consistent with the Singapore Code of Corporate Governance 2005:

• The Nominating and Corporate Governance Committee comprises not less than three Directors, the majority of whom, including the Chairman, qualify as independent Directors under the Singapore Code of Corporate Governance 2005. Our Board of Directors has determined that Mr. Charles R. Wofford and Mr. Teng Cheong Kwee are independent directors under the Singapore Code of Corporate Governance 2005.

• The Nominating and Corporate Governance Committee’s duties and responsibilities include the following:

(i)	the identification of qualified candidates to become members of our Board of Directors;
(ii)	the selection of nominees for election as directors at the next annual meeting of shareholders (or extraordinary general meeting of shareholders at which Directors are to be elected);
(iii)	the selection of candidates to fill any vacancies on our Board of Directors;
(iv)	the development and recommendation to our Board of Directors of a set of corporate governance guidelines and principles applicable to our Company (being our Code of Business Conduct and Ethics); and
(v)	the oversight of the evaluation of our Board of Directors and its committees.

The Nominating and Corporate Governance Committee held two meetings in 2008.

29

Senior Management

Wan Choong Hoe

Mr. Wan Choong Hoe joined us as our Chief Operating Officer in September 2004. Mr. Wan was previously Vice President and Managing Director responsible for Singapore and China operations for National Semiconductor Manufacturer Singapore Pte. Ltd. (“National Semiconductor”), a position he held since 2000. From 1994 to 2000, Mr. Wan served as National Semiconductor’s Vice President and Managing Director responsible for Singapore, and previously held positions as Director of Operations and Director of QRA/Logistics. Prior to joining National Semiconductor in 1986, Mr. Wan held various positions at Texas Instruments Singapore Pte. Ltd., and from 1997 to 2001, served as Chairman of the Gintic Research Institute Management Board. Mr. Wan holds a Bachelor of Electrical and Electronics Engineering from the University of Singapore.

Han Byung Joon

Dr. Han Byung Joon joined us as our Chief Technology Officer in December 1999. Prior to joining us, Dr. Han was Director of Product Development at Anam Semiconductor, Inc. and, prior to that, held various engineering positions with IBM Corporation (“IBM”) and AT&T Bell Labs in Murray Hill, New Jersey. He is credited with the invention of several wafer and chip-scale semiconductor packaging technologies which have been patented. Dr. Han received his Doctorate in Chemical Engineering from Columbia University, New York in 1988. Dr. Han attended the Harvard Business School’s Executive Advanced Management Program in 2008.

Hal Lasky

Mr. Hal Lasky joined us as our Chief Sales Officer in March 2008. Prior to joining us, he spent 24 years at IBM where he held a number of key leadership positions, most recently as Vice President of Worldwide Semiconductor Sales for IBM’s Microelectronics group with responsibility for worldwide semiconductor revenue, sales strategy and strategic relationships with clients in the consumer, communications and information technology markets. Prior to that, he held various senior management positions in IBM’s Systems and Technology Group, Microelectronics Business Line and Interconnect Products Business Line. Mr. Lasky holds a Bachelor of Science degree in Ceramic Engineering from Rutgers University and a Master’s degree in Materials Science and Engineering from Columbia University. He is also a graduate of the IBM Client Executive Program at Harvard Business School.

John Lau Tai Chong

Mr. John Lau Tai Chong joined us as our Chief Financial Officer in October 2007. Prior to joining us, he was Chief Financial Officer at Abacus International Pte Ltd with overall responsibility for spearheading strategic and financial planning, management and statutory reporting, controllership, tax planning, treasury and risk management, legal, mergers and acquisitions, strategic investments and strategic operations of Abacus International Pte Ltd and its subsidiaries. Prior to that, Mr. Lau was Vice President, Finance for Praxair Asia Inc. and held various senior management positions with Sembawang Corporation Ltd. Mr. Lau graduated with a Bachelor of Accountancy from National University of Singapore. He also holds a Master of Business Administration from Golden Gate University in San Francisco, California.

Janet T. Taylor

Ms. Janet T. Taylor joined us as our General Counsel in June 2005. Prior to joining our Company, Ms. Taylor practiced as a Foreign Legal Consultant at the law firm of Kartini Muljadi & Rekan in Indonesia. Ms. Taylor was counsel in the U.S. Securities Practice Group of Sidley Austin Brown & Wood’s Singapore office from 2000 to 2002 and prior to that, a partner in the U.S. Securities Practice Group of Baker & McKenzie’s Singapore office. In 1999, she joined the U.S. Securities Practice Group of Norton Rose’s London office until she returned to Singapore in 2000. In 1993, she joined LeBoeuf, Lamb, Greene & MacRae’s New York office until 1996 when she joined Baker & McKenzie’s New York office and subsequently worked in Baker & McKenzie’s Singapore and London offices. Ms. Taylor began her legal career in 1989 at Debevoise & Plimpton in New York. Ms. Taylor was admitted to the New York Bar in 1990. She holds a Juris Doctor from Harvard Law School, a Bachelor of Arts (History) from the University of Texas and a Bachelor of Business Administration (Accounting) from Sam Houston State University.

30

Compensation of Directors and Senior Management

The following table sets forth the aggregate amount of compensation, including bonus paid or proposed to be paid, for all of our Directors and senior management with respect to services rendered in 2008.

	Executive		Non-executive
	Director		Directors (1)			Total (2)
	(In US$)		(In US$)			(In US$)
Charles R. Wofford			$	132,000		$	132,000
Tan Lay Koon	$	1,767,252					1,767,252
Peter Seah Lim Huat				46,000			46,000
R. Douglas Norby				69,000			69,000
Teng Cheong Kwee				56,000			56,000
Tokumasa Yasui				58,000			58,000
Phoon Siew Heng				44,000	(3)		44,000	(3)
Senior management (excluding our Chief Executive Officer) as a group							2,946,638
	$	1,767,252	$	405,000		$	5,118,890

Notes:
(1)	We have sought advance approval, at our annual general meeting in April 2008, for the payment of directors’ fees of approximately US$518,000 for 2008.
(2)	Does not include compensation given in the form of share options and restricted share units. For more information on share options and restricted share units granted to our directors and senior management, see “Share Ownership for Directors and Senior Management.” Includes US$98,175 representing payment of one-third of the notional Economic Value Added (“EVA”) bank account. See discussion below.
(3)	Including the amount paid directly to Temasek during Mr. Phoon Siew Heng’s employment at Temasek.

We currently have seven Directors on our Board. Our executive Director does not receive any Director fees. Our non-executive Directors are paid Directors’ fees. Our non-executive Directors are also reimbursed for reasonable expenses they incur in attending meetings of our Board of Directors and its committees and company-sponsored training from time to time. They may receive compensation for performing additional or special duties at the request of the Board. Our directors’ fees for 2008 had been approved by our shareholders at our annual general meeting in April 2008. We intend to seek advance approval, at our general meeting to be held in April 2009, for the payment of Directors’ fees of approximately US$473,000 for 2009.

We provided to our Directors and officers customary directors’ and officers’ liability insurance coverage in 2008.

At our last annual general meeting of shareholders held in April 2008, we obtained shareholders’ approval for the renewal of the share repurchase program within specified mandates relating to maximum repurchase price, volume, timing and manner of repurchases. We intend to effect any such repurchases in compliance with Rule 10b-18 under the Exchange Act. The share repurchase program, among other things, allows us the flexibility to deliver repurchased ordinary shares held in treasury (instead of issuing new shares) for our employee share plans. We intend to seek shareholders’ approval for the renewal of the share repurchase program at our annual general meeting to be held in April 2009.

Our overall compensation scheme continues to include a short-term (annual) cash incentive plan to reward our senior executives and other eligible employees for their performance and contributions. The short-term incentive plan is funded by a pool of monies that we set aside based on a predetermined aggregate percentage of payroll. Payment in 2009 with respect to services rendered in 2008 is dependant on the participant’s level of achievement measured against corporate financial targets, as well as plant and functional goals. Each participant has a bonus target measured as a percentage of base salary.

In addition to the short-term incentive plan, the Directors, senior executives and other designated employees were eligible to participate in a restricted share plan until it was terminated in March 2008. See “Share Ownership for Directors and Senior Management — Employees’ Share Ownership Schemes.”

Our Board of Directors is considering a long-term equity grant plan for non-executive Directors under which ordinary shares or cash may be awarded depending on our Company’s performance measured against specific targets over

31

a period of time. The awards under such proposed plan may take the form of ordinary shares or cash depending on the form of the plan to be determined by our Board of Directors and approved by shareholders.

Finally, Mr. Tan Lay Koon and a very limited group of the most senior executives are eligible to participate in a modified long-term cash incentive plan based on measuring EVA. EVA improvement year over year funds a group EVA pool. If the group EVA pool has a net positive balance in a given year, individual EVA bonuses would be distributed to eligible participants (one-third is paid directly to the participant and two-thirds is held in an individual EVA bank account for each participant).

The amount of the group incentive EVA pool is derived from the annual wage increments of the participants and a sharing of the positive EVA and the change in EVA over the preceding year (which can result in a negative incentive pool if the change in EVA is significantly negative). The amount allocated to the individuals from this pool is based on the collective achievement of the corporate goals, achievement of individual performance targets and individual scoring on corporate values. Each eligible senior executive has his or her own notional EVA bank account. The bonus earned each year is added to his or her notional EVA bank account, and payment is made only when there was a positive EVA bank balance in the notional EVA bank account. This incentive plan was suspended for the year 2005 while our compensation plan was under review and was resumed in year 2006. Payments were made under this plan in 2006, 2007 and 2008. Payments may continue to be made under this incentive plan but there have been no additional amounts allocated to the notional EVA bank accounts since 2006.

Pension, Retirement or Similar Benefits

We do not provide any post-retirement benefits other than those pursuant to the plans required or permitted by local regulations and described below.

Under the Labor Standards Law of South Korea, employees with more than one year of service are entitled to receive a lump-sum payment upon termination of their employment with STATS ChipPAC Korea Ltd. based on their length of service and rate of pay at the time of termination. Accrued severance benefits are adjusted annually for all eligible employees based on their employment as of the balance sheet date. The expense for severance benefits for 2006, 2007 and 2008 was approximately US$9.1 million, US$10.7 million and US$8.2 million, respectively. In accordance with the National Pension Act of South Korea, a certain portion of these severance benefits are deposited with the Korean National Pension Fund.

Additionally, under the National Pension Act of South Korea, STATS ChipPAC Korea Ltd. is required to contribute a certain percentage for pension based on each employee’s salary to the Korean National Pension Fund. The expense for the pension benefits in 2006, 2007 and 2008 was approximately US$2.8 million, US$3.3 million and US$3.3 million, respectively.

Under Singapore law, we make monthly contributions based on the statutory funding requirement into a Central Provident Fund for substantially all of our Singapore employees who are Singapore citizens or Singapore permanent residents. The aggregate expenses under this plan were approximately US$5.3 million in 2006, US$6.1 million in 2007 and US$6.9 million in 2008.

Under Chinese law and Shanghai municipal government regulations, we make monthly contributions based on the statutory funding requirement into the Pension Fund Center and Provident Fund Center of Shanghai for all of our employees in China. In 2006, 2007 and 2008, the aggregate expenses under this plan were approximately US$2.2 million, US$3.1 million and US$3.4 million, respectively.

Under Malaysian law, we make monthly contributions based on statutory requirements to the Employee Provident Fund for all employees in Malaysia except for contract and foreign workers. STATS ChipPAC Malaysia Sdn. Bhd.’s total expenses under this plan in 2006, 2007 and 2008 were approximately US$2.0 million, US$2.2 million and US$2.2 million, respectively. Each employee with more than 20 years of service with STATS ChipPAC Malaysia Sdn Bhd is entitled to a single sum payment of US$3,012 upon his or her mandatory retirement from his or her employment at age 55 years. We paid approximately US$51,600, US$84,500 and US$88,400 for such retirement payments in 2006, 2007 and 2008, respectively. Accrued gratuity benefits for eligible employees are adjusted annually.

Under Thai law, we make monthly contributions based on the statutory funding requirement into the Employee Provident Fund for substantially all of our employees in Thailand. The aggregate expenses under this plan were approximately US$153,000 in the period from October 2, 2007 (when we acquired LSI’s assembly and test operations in Thailand) to December 31, 2007 and US$632,000 in 2008.

Under the Labor Standards Law in Thailand, employees with more than 120 days of service are entitled to receive a lump sum payment upon retirement or involuntary termination of their employment with STATS ChipPAC (Thailand) Limited based on their length of service and latest salary at the time of retirement or involuntary termination. The expense for severance benefits in 2007 and 2008 was approximately US$1.4 million and US$0.7 million, respectively.

32

ChipPAC and STATS ChipPAC Test Services, Inc. have a 401(k) savings plan where our Company matches 50% of employee contributions up to 6% of eligible employee compensation. Our matching contributions under the 401(k) plan were approximately US$457,000, US$470,000 and US$471,000 in 2006, 2007 and 2008, respectively. The matching contributions are accrued monthly based upon actual employee contribution. The expenses relating to the plan are a minimum annual charge of US$2,000 and US$28 per person and are accrued on a monthly basis. Returns on the 401(k) plan from investments in mutual funds are calculated daily by an external administrator who administers the plan.

Under Taiwanese law, STATS ChipPAC Taiwan Semiconductor Corporation and STATS ChipPAC Taiwan Co., Ltd. are required to make monthly contributions based on the statutory funding requirement for substantially all of the employees in Taiwan into the employee’s individual pension account overseen by the Bureau of Labor Insurance. In 2006, 2007 and 2008, the aggregate expenses under this plan for STATS ChipPAC Taiwan Semiconductor Corporation were approximately US$364,000, US$334,000 and US$315,000, respectively, and for STATS ChipPAC Taiwan Co., Ltd. were approximately US$99,000, US$141,000 and US$174,000, respectively.

STATS ChipPAC Taiwan Semiconductor Corporation operates a defined benefit retirement plan for a substantial portion of its employees in Taiwan in accordance with the Labor Standards Law in Taiwan. Pension benefits are generally based on years of service and average salary for the six months prior to the approved retirement date. STATS ChipPAC Taiwan Semiconductor Corporation contributes 2% of eligible wages and salaries on a monthly basis to a pension fund maintained with the Central Trust of China, as required by the Labor Standards Law. At each year end, STATS ChipPAC Taiwan Semiconductor Corporation actuarially determines pension benefit costs and obligations using the projected unit credit method, and the amounts calculated depend on a variety of assumptions. These assumptions include discount rates, rates for expected returns on plan assets, mortality rates and retirement rates. The funding of the pension plan is determined in accordance with statutory funding requirements. STATS ChipPAC Taiwan Semiconductor Corporation is obligated to make up any shortfall in the plan’s assets in meeting the benefits accrued to the participating staff. As of December 28, 2008, there was no shortfall in the plan’s assets. Total pension plan expenses in 2006, 2007 and 2008 were approximately US$5,000, US$7,000 and US$19,000, respectively.

Share Ownership for Directors and Senior Management

Based on an aggregate of 2,202,218,293 ordinary shares outstanding as of January 31, 2009, each of our Directors and senior management officers had a beneficial ownership of less than 1% of our outstanding ordinary shares, including ordinary shares held directly and share options granted as of such date.

Beneficial ownership is determined in accordance with rules of the SEC and includes shares over which the indicated beneficial owner exercises voting and/or investment power or receives the economic benefit of ownership of such securities. Ordinary shares subject to options currently exercisable or exercisable within 60 days are deemed outstanding for computing the percentage ownership of the person holding the options but are not deemed outstanding for computing the percentage ownership of any other person.

All of our ordinary shares have identical rights in all respects and rank equally with one another.

Share Options for Directors

The following table contains information pertaining to share options held by our Directors as of January 31, 2009.

	Number of Ordinary Shares		Per Share Exercise
	Issuable on Exercise of Option		Price (S$)		Exercisable Period
Tan Lay Koon		700,000		2.826	10/19/2001 to 10/18/2010
		325,000		2.885	04/29/2003 to 04/28/2012
		2,000,000		2.2	06/26/2003 to 06/25/2012
		700,000		1.99	08/06/2004 to 08/05/2013
		500,000		1.91	02/17/2005 to 02/16/2014
Peter Seah Lim Huat		70,000		1.99	08/06/2004 to 08/05/2013
		35,000		1.91	02/17/2005 to 02/16/2014
Teng Cheong Kwee		35,000		1.91	02/17/2005 to 02/16/2009

Employees’ Share Ownership Schemes

In March 2008, we terminated the STATS ChipPAC Ltd. Restricted Share Plan (the “RSP”) and the STATS ChipPAC Ltd. Performance Share Plan (the “PSP”), which were adopted in April 2006, and the STATS ChipPAC

33

Ltd. Employee Share Purchase Plan 2004 (the “ESPP”) which was adopted in August 2004. The STATS ChipPAC Share Option Plan, as amended, was phased out as of December 2006 and replaced by the RSP. Upon the termination of the PSP, we cancelled the 2,935,000 unvested performance share units, which resulted in a non-cash charge of US$1.6 million of accelerated share-based compensation expense in 2008.

Our Board of Directors is considering a replacement long-term compensation strategy for senior level employees, including our Chief Executive Officer, under which ordinary shares or cash may be awarded depending on our Company’s performance measured against specified targets over a period of time. The awards may take the form of performance shares or cash bonuses depending on the final form of the plan to be determined by our Board of Directors and approved by shareholders.

In December 2007, consistent with our plans to terminate our ADR program, we amended our plans (where necessary) to eliminate the participants’ option to elect to receive ADSs in lieu of ordinary shares. We terminated our ADR program with effect from April 30, 2008.

At our annual shareholders’ meeting in April 2008, we obtained shareholders’ approval for amendments to, and renewal of, our share purchase mandate, authorizing the repurchase of up to 2.5% of the issued ordinary share capital as of the date of the annual general meeting to allow us the flexibility to deliver repurchased ordinary shares held in treasury (instead of issuing new shares) under our equity incentive plans. The shareholders’ mandate was renewed at our annual general meeting held in April 2008. The shareholders’ mandate will terminate on the earlier of the date on which the next annual general meeting is held or the date on which the approval is revoked or varied. As of December 28, 2008, we had not repurchased any shares. We intend to seek renewal of the shareholders’ mandate in our next annual general meeting to be held in April 2009.

STATS ChipPAC Ltd. Restricted Share Plan

We terminated, as of March 2008, the RSP which was adopted in April 2006. The purpose of the RSP was to replace the STATS ChipPAC Share Option Plan commencing 2007 and to offer selected individuals an opportunity to acquire a proprietary interest or to increase their interest in the success of our Company through the grant of Restricted Share Units (“RSUs”).

The RSP was administered by the Executive Resource and Compensation Committee. Employees, directors and consultants were eligible to participant in the RSP.

Each RSU represents an unfunded, unsecured promise of our Company to issue or transfer ordinary shares of our Company with no exercise or purchase price as the award vests in accordance with a schedule determined by the Executive Resource and Compensation Committee. RSUs were granted subject to performance conditions. Each RSU has a value equal to the fair market value of an ordinary share and the Executive Resource and Compensation Committee has the authority to settle RSUs in cash or shares. RSUs granted under the plan are generally not transferable. Unvested portions of RSUs are generally subject to forfeiture if employment terminates prior to vesting. A grantee of RSUs has no rights as a shareholder with respect to any ordinary shares covered by the grantee’s RSU award until such ordinary shares have been issued or transferred pursuant to the terms of such award.

The number of ordinary shares that may be issued under the RSP may not exceed, in the aggregate, 50 million ordinary shares of our Company (subject to anti-dilution adjustments pursuant to the RSP).

In 2007, we granted to our directors, officers and employees RSUs representing 6,976,754 ordinary shares in seven separate grants: two grants in February 2007 aggregating 6,711,754 RSUs; two grants in April 2007 aggregating 56,000 RSUs; two grants in May 2007 aggregating 56,000 RSUs; and one grant in October 2007 for 153,000 RSUs. One-third of the RSUs granted will vest on the anniversary of the grant date over the next three years.

As of January 31, 2009, RSUs representing 3,481,084 ordinary shares were outstanding, out of which RSUs representing 554,575 ordinary shares were held by our directors and executive officers as a group.

We intend to settle all future vested RSUs in cash. Unvested RSUs representing 65,940 ordinary shares of resigned directors were cancelled and RSUs representing 1,405,317 ordinary shares have lapsed.

STATS ChipPAC Ltd. Employee Share Purchase Plan 2004

We terminated, as of March 2008, the ESPP which was adopted in August 2004. We adopted the ESPP to provide our employees the opportunity to purchase our ordinary shares in order to encourage broad employee ownership, encourage employees to remain in our employ, enhance the ability to attract new employees by providing an opportunity to acquire a vested interest in our success and provide a performance incentive to our employees.

The ESPP had been administered by the Executive Resource and Compensation Committee. Employees of our Company and designated subsidiaries were eligible to participant in the ESPP.

34

Prior to the amendments to the ESPP adopted in 2006, substantially all employees could purchase our Company’s ordinary shares at a price equal to 85% of the lower of the fair market value at the beginning or the end of specified six-month purchase periods. Share purchases were limited to 15% of an employee’s eligible compensation.

In April 2006, changes to the terms of the ESPP were approved by the shareholders. We eliminated the provision that the purchase price of the shares to be purchased under the ESPP be determined by reference to the lower of the fair market value at the beginning or the end of the specified purchase period and instead provided that the purchase price be determined by reference to the fair market value of the shares based on the quoted market price on the date of the purchase or, if the shares are acquired through an open market purchase, the price actually paid for the shares. Further, instead of providing for a 15% discount on the purchase price, we may match up to 20% of the contributions of ESPP participants by transferring or issuing shares or providing cash contribution for the purchase of shares. As a result of these changes, the ESPP no longer qualifies under Section 423 of the United States Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”).

In addition, in 2006, the maximum aggregate number of ordinary shares that may be issued under the ESPP was revised from 130 million ordinary shares to no more than 92 million ordinary shares of our Company (subject to anti-dilution adjustment pursuant to the ESPP). As of January 31, 2009, there were no outstanding employees share purchase rights under the ESPP.

STATS ChipPAC Ltd. Substitute Share Purchase and Option Plan (the “Substitute Option Plan”) and STATS ChipPAC Ltd. Substitute Equity Incentive Plan (the “Substitute EIP”, and together with the Substitute Option Plan, the “Substitute Plans”)

In connection with the merger between STATS and ChipPAC, we adopted the Substitute Plans to enable substitute options to be granted to holders of options granted under the ChipPAC 1999 Stock Purchase and Option Plan and the ChipPAC 2000 Equity Incentive Plan. The number of our ordinary shares that may be issued under the Substitute Option Plan and the Substitute EIP, may not exceed, in the aggregate, approximately 7 million and 73 million ordinary shares, respectively.

As of January 31, 2009, substitute options representing 1,182,914 ordinary shares were outstanding.

STATS ChipPAC Share Option Plan, as amended

Effective May 28, 1999, we adopted the ST Assembly Test Services Ltd Share Option Plan 1999 (the “STATS 1999 option plan”). The STATS 1999 option plan was amended from time to time to accomplish various varying objectives including, among other things, to comply with changes in applicable laws and to bring the plan in line with current market practices. Subsequently, the STATS 1999 option plan was re-named the STATS ChipPAC Share Option Plan. The STATS ChipPAC Share Option Plan, as amended, was phased out as of December 2006 and replaced by the RSP. Since December 2006, no options have been granted under the STATS ChipPAC Share Option Plan.

The purpose of the STATS ChipPAC Share Option Plan was to offer selected individuals an opportunity to acquire or increase an ownership interest in our Company through the grant of options to purchase our ordinary shares. Options granted under the STATS ChipPAC Share Option Plan may be either nonqualified options or incentive stock options (“ISO”) intended to qualify under Section 422 of the Internal Revenue Code.

The number of ordinary shares that may be issued under the STATS ChipPAC Share Option Plan may not exceed, in the aggregate, 198 million ordinary shares (subject to anti-dilution adjustments pursuant to the plan), including 80 million ordinary shares that may be issued under the Substitute Plans.

The STATS ChipPAC Share Option Plan was administered by the Executive Resource and Compensation Committee. Subject to certain exceptions as provided in the plan, employees, directors and consultants are eligible for the grant of options.

The exercise price of an ISO must not be less than 100% of the fair market value of our ordinary share on the date of grant. An individual who owns more than 10% of the total combined voting power of all classes of the outstanding shares of the Company or any of our subsidiaries is not eligible to be granted ISOs unless (i) the exercise price of the ISO is at least 110% of the fair market value of the ordinary shares on the date of the grant and (ii) such ISO by its terms is not exercisable after the expiration of five years from the date of grant.

The options typically vest over a four-year period. The term of an option granted to an employee may not exceed seven years from the date of grant. The term of an option granted to a non-employee may not exceed five years from the date of the grant.

As of January 31, 2009, options (under the STATS ChipPAC Share Option Plan and the Substitute Plans combined) to purchase an aggregate of 13,815,900 ordinary shares were outstanding, out of which options to purchase 6,400,000 ordinary shares were held by our directors and executive officers as a group. The exercise prices of these options range from S$0.25 to S$6.93. The expiration dates of these options range from February 2009 to October 2015.

35

Shareholdings and Share Trading

The following table sets forth certain information regarding the ownership of our ordinary shares as of January 31, 2009 by each person who is known by us to own beneficially more than 5% of our outstanding ordinary shares. Beneficial ownership is determined in accordance with the rules of the SEC and includes shares over which the indicated beneficial owner exercises voting and/or investment power or receives the economic benefit of ownership of such securities. Ordinary shares subject to options currently exercisable or exercisable within 60 days are deemed outstanding for the purposes of computing the percentage ownership of the person holding the options but are not deemed outstanding for the purposes of computing the percentage ownership of any other person.

	Number of Shares		Percentage
Name of Beneficial Owner	Beneficially Owned		Beneficially Owned
Temasek(1)		1,845,715,689		83.8	%

(1) As notified to our Company by Temasek, a private limited company incorporated in Singapore, wholly-owned by the Minister for Finance (Incorporated) of Singapore, a body corporate constituted by the Minister for Finance (Incorporation) Act (Cap. 183), which owns 100% of the ordinary shares of STSPL. Temasek is therefore deemed to beneficially own 1,845,715,689 of our ordinary shares, which are owned directly by STSPL. The percentage beneficially owned is based on an aggregate 2,202,218,293 ordinary shares outstanding as of January 31, 2009.

The following summarizes the significant changes in the percentage ownership held by our major shareholders during the past three years:

• Prior to the tender offer by STSPL in March 2007, Temasek beneficially owned, and its wholly-owned subsidiary, STSPL, directly owned, approximately 712,228,050 ordinary shares, which represented approximately 35.6% of our outstanding ordinary shares at that time. Upon the consummation of the tender offer in May 2007, Temasek beneficially owned, and STSPL directly owned, 1,838,819,759 ordinary shares (including ordinary shares represented by ADSs and ordinary shares issuable upon conversion of the US$134.5 million aggregate principal amount of our 2.5% convertible notes acquired by STSPL in the tender offer), which represented approximately 84.2% of our outstanding ordinary shares at that time. On May 22, 2008, STSPL converted into US145.1 million ordinary shares its entire US$134.5 million of our 2.5% convertible notes that it acquired in connection with its tender offer in 2007.

All our ordinary shares have identical rights in all respects and rank equally with one another.

Our ordinary shares have been traded on the SGX-ST since January 31, 2000. Our ADSs were traded on Nasdaq from January 28, 2000 to December 28, 2007. We voluntarily delisted our ADSs from Nasdaq with effect from December 31, 2007 and terminated our ADR program effective April 30, 2008.

As of January 31, 2009, 119,003 of our ordinary shares, representing less than 0.01% of our outstanding shares, were held by a total of 32 holders of record with addresses in the United States. Because many of our ordinary shares were held by brokers and other institutions on behalf of shareholders in street name, we believe that the number of beneficial holders of our ordinary shares is higher.

The closing price of our ordinary shares on the SGX-ST was S$0.43 per ordinary share on January 30, 2009.

Related Party Transactions

Temasek is a holding company with investments in a group of companies (the “Temasek Group”). We engage in transactions with companies in the Temasek Group in the ordinary course of business. Such transactions are generally entered into on normal commercial terms.

We entered into a turnkey contract with Chartered in March 2000 pursuant to which we agreed to provide wafer sort, packaging and test services to Chartered. The term of this agreement, which was due to expire in March 2003, was extended to March 2005 by an amendment agreement dated October 30, 2002 and is automatically renewed on an annual basis unless otherwise terminated. This agreement governed the conduct of business between the parties relating to, among other things, our provision of sort, packaging and test services to Chartered which were previously governed solely by purchase orders executed by Chartered. The agreement did not contain any firm commitment from Chartered to purchase or from us to supply services covered thereunder. In April 2004, we entered into another test services agreement with Chartered pursuant to which we agreed to give Chartered priority to use six of our testers, and access to six additional testers, for which Chartered guaranteed minimum loading and issuance of purchase orders of US$450,000 per month. This test services agreement expired in March 2005. In March 2005, we entered into a three-year partnership agreement with Chartered pursuant to which we agreed to provide wafer sort, assembly and test services to Chartered. This is not a firm commitment from Chartered to purchase from us nor is it a firm commitment from us to supply services covered thereunder. In August 2007, we entered into a three-year joint development agreement with Chartered pursuant to which we agreed to jointly

36

develop packaging technology including, but not limited to, the flip-chip assembly technology for Chartered’s advanced wafer technologies. The joint development agreement may be terminated by either of us upon 60 days’ written notice.

We have US$9.0 million and US$8.6 million of cash and cash equivalents, and US$7.0 million and US$19.4 million of short and long term marketable securities placed with Temasek affiliated financial institutions as of December 30, 2007 and December 28, 2008, respectively. Interest income earned were US$0.3 million and US$0.2 million in 2007 and 2008, respectively.

In June 2006, we entered into a strategic joint venture with CR Logic to sell packaging and test equipment related to specific low lead count packages to CR Logic’s indirect wholly-owned subsidiary, ANST. ANST, an assembly and test company based in Wuxi, China, is a wholly-owned subsidiary of MAT and, in connection with the transaction, we acquired a 25% shareholding in MAT with CR Logic owning a 75% interest. Under the agreements entered into in connection with the joint venture, ANST has agreed to purchase more than 1,000 sets of key assembly and test equipment from STATS ChipPAC Shanghai Co., Ltd. for US$35 million, to be settled in cash instalments over a four year period until 2010. STATS ChipPAC Shanghai Co., Ltd. has agreed to continue to provide sales and technical support to our existing customers on specific low lead count packages until December 31, 2009. In addition, STATS ChipPAC Shanghai Co., Ltd. has agreed to refer customers to ANST for which ANST has agreed to pay a commission on the aggregate amount of revenues generated from such orders on a quarterly basis in 2007, 2008 and 2009 and a goodwill payment of US$5.0 million if the transferred revenues exceed US$180 million over the four year period. The joint venture agreement entered into in connection with our share subscription and sale of assets regulates the relationships, rights and obligations of the shareholders of MAT. CR Logic proposes to assign these agreements to its sister subsidiary, CSMC Technologies Corporation, and we have consented to such assignment.

In April 2007, we entered into a letter agreement with STSPL relating to STSPL’s options proposal in connection with its tender offer for equity securities of our Company. This agreement governed the procedures for settlement of the options proposal, including payment mechanics. The agreement terminated automatically on June 30, 2007.

Our operations in Singapore are conducted in a building constructed on land held on a long-term operating lease from a statutory board of the Government of Singapore. The lease is for a 30-year period commencing March 1, 1996 and is renewable for a further 30 years subject to the fulfilment of certain conditions.

All new related party transactions (as defined in Item 404 of Regulation S-K under the Securities Act) require approval by the Audit Committee of our Board of Directors. In addition, more significant related party transactions must be separately approved by a majority of our Board of Directors. We also engage in transactions with other companies directly or indirectly controlled by Temasek, in the ordinary course of business. These transactions, which include transactions for gas, water and electricity, facilities management, transportation and telecommunication services are at their prevailing market rates/prices (including where appropriate, preferential rates and discounts) and on customary terms and conditions, and are generally not subject to review by the Audit Committee. These expenses amounted to approximately US$18.4 million, US$19.8 million and US$16.7 million for 2006, 2007 and 2008, respectively.

37

APPENDIX 1

STATS CHIPPAC LTD.

PERFORMANCE SHARE PLAN 2009

TABLE OF CONTENTS

Contents		Page
1.	Name of the Plan		1
2.	Definitions		1
3.	Objectives of the Plan		5
4.	Eligibility of Participants, Eligible Participants as at Adoption Date		5
5.	Grant of Awards		5
6.	Consequences of Termination of Employment, Change in Control or Sale		6
7.	Vesting of Performance Shares, Determination of Ordinary Shares Deliverable, Payment and Other Provisions		7
8.	Limitations on the Size of the Plan		10
9.	Adjustment Events		10
10.	Administration of the Plan		10
11.	Notices		11
12.	Modifications to the Plan		12
13.	Terms of Employment Unaffected		13
14.	Duration of the Plan		13
15.	Taxes and Deductions		13
16.	Costs and Expenses of the Plan		13
17.	Disclaimer of Liability		13
18.	Disclosures in Annual Report		13
19.	Governing Law		14
20.	Contracts (Rights of Third Parties) Act, Chapter 53B		14

RULES OF
THE STATS CHIPPAC LTD. PERFORMANCE SHARE PLAN 2009

1. NAME OF THE PLAN

The Plan shall be called the “STATS ChipPAC Ltd. Performance Share Plan 2009”.

2. DEFINITIONS

2.1 In the Plan, unless the context otherwise requires, the following words and expressions shall have the following meanings:

“Act”	:	The Companies Act, Chapter 50 of Singapore.
“Adoption Date”	:	The date on which the Plan is adopted by the Company in general meeting.
“Articles”	:	The Articles of Association of the Company, as amended from time to time.
“Auditors”	:	The auditors of the Company for the time being.
“Award”	:	A contingent award of Performance Shares granted under Rule 5.
“Award Date”	:	In relation to an Award, the date on which the Award is granted pursuant to Rule 5.
“Board”	:	The board of directors of the Company for the time being.
“Cause”	:	Means:
		(a)	the Participant’s conduct constituting fraud, bad faith, misconduct, breach of fiduciary duty, gross negligence, material violation of applicable securities laws, conduct that is the subject of a criminal proceeding in connection with his employment with the Group;
		(b)	the Participant’s failure or refusal to follow any lawful directive of the Board or CEO, provided that the Participant shall have received written notice from the Company of the specific acts of failure or refusal and shall have continued to engage in such acts or failures after receiving such notice;
		(c)	the Participant engaging in any act of dishonesty, misrepresentation or other moral turpitude against the Company; or
		(d)	the Participant’s failure to perform his duties and responsibilities in connection with his employment with the Group, provided that the Participant shall have received written notice from the Company of the failure and shall have continued to engage in such failure after receiving such notice.
“CDP”	:	The Central Depository (Pte) Limited.
“CEO”	:	The chief executive officer of the Company for the time being.

1

“Change in Control”	:	Means:
		(a)	an acquisition by any person or group of persons acting together of Shares which hold more of the voting power of the Company’s voting Shares than do the Shares owned by Temasek or any of its subsidiaries;
		(b)	a merger or reorganisation of the Company which results in a shareholder of the Company other than Temasek or any of its subsidiaries holding more than 50% of the voting power of the Company’s voting Shares;
		(c)	a sale of all or substantially all of the Company’s assets; or
		(d)	a dissolution or liquidation of the Company.
“Committee”	:	The Executive Resource and Compensation Committee of the Company for the time being.
“Communication”	:	An Award and/or any correspondence made or to be made under the Plan (individually or collectively).
“Company”	:	STATS ChipPAC Ltd., a company incorporated in Singapore.
“EBITDA”	:	The Company’s financial statement net income, subject to add backs for the following items:
		(a)	tax expenses;
		(b)	interest expenses;
		(c)	depreciation and amortisation; and
		(d)	one-time and non-cash items (including but not limited to stock based compensation, equity grant expenses, restructuring and impairment).
“EBITDA Targets”	:	The EBITDA targets set by the Committee.
“EBITDA Valuation Formula”	:	Has the meaning ascribed to it in Rule 7.6.2.
“EP”	:	The Company’s economic profits determined as EBITDA less the following items:
		(a)	depreciation and amortisation;
		(b)	tax expenses; and
		(c)	cost of capital.
		For these purposes, “cost of capital” means 11.295% of the aggregate of:
		(i)	net working capital (meaning, current assets (excluding cash and cash equivalents) less non-interest bearing liabilities);

2

		(ii)	net fixed assets (meaning, gross fixed assets less accumulated depreciation);
		(iii)	goodwill; and
		(iv)	other non-current assets.
“EP Targets”	:	The EP targets set by the Committee.
“Free Cash Flow” or “FCF”	:	The Company’s EBITDA less the following items:
		(a)	tax expense;
		(b)	increase in working capital;
		(c)	capital expenditure and intangibles; and
		(d)	investment in the acquisition of the Bangkok facility from LSI (Thai) Ltd, a corporation incorporated in Thailand.
“FCF Targets”	:	The Free Cash Flow targets set by the Committee.
“Group”	:	The Company and its subsidiaries.
“Group Employee”	:	Any senior employee of the Group, including the CEO and any Group Executive Director.
“Group Executive Director”	:	A director of the Company and/or any of its subsidiaries, as the case may be, who performs an executive function.
“Listing Manual”	:	The listing manual of the Singapore Exchange.
“Market Day”	:	A day on which the Singapore Exchange is open for trading in securities.
“Ordinary Shares”	:	The number of outstanding Shares as of the Adoption Date on a fully-diluted basis, including Shares issuable upon conversion of all outstanding convertible bonds as of the Adoption Date, any Shares issued with regard to any future acquisition and any equity grants awarded prior to the Adoption Date, but for the avoidance of doubt does not include any adjustments due to dilution that may result from future share issuances (other than in the context of any future acquisitions involving the issuance of Shares and issuance of Shares with regard to equity grants awarded prior to the Adoption Date), or future grants of share options, restricted share units and performance shares. For the avoidance of doubt, the number of Ordinary Shares may not be varied by the Committee unless otherwise provided by these Rules.
“Participant”	:	The holder of an Award (including, where applicable, the executor or personal representative of such holder).
“Performance Multiplier”	:	Has the meaning ascribed to it in Rules 7.2.3(a), Rule 7.2.3(b) or Rule 7.2.4, as applicable.
“Performance Shares”	:	Represent unfunded and unsecured rights to receive Ordinary Shares.
“Performance Target Formula”	:	Has the meaning ascribed to it in Rule 7.2.3.

3

“Plan”	:	The STATS ChipPAC Ltd. Performance Share Plan 2009, as modified or altered from time to time.
“Prescribed Higher Amount”	:	Such dollar amount as set by the Committee.
“Prescribed Lower Amount”	:	Such dollar amount as set by the Committee.
“Qualified Public Offering”	:	Any public offering of the Shares on any stock exchange of recognized international reputation and standing duly approved by the Board.
“Qualified Termination”	:	In relation to a Participant, the termination of his employment with the Group due to that Participant’s death or disability, or the termination of his employment by the Group without Cause.
“Record Date”	:	The date fixed by the Company for the purposes of determining entitlements to dividends or other distributions to, or rights of, holders of Shares.
“Security Device”	:	Any smartcard, digital certificate, digital signature, encryption device, electronic key, logon identifier, password, personal identification number, and/or other code or any access procedure incorporating any one or more of the foregoing, designated by the Company for use in conjunction with the Plan.
“Shares”	:	Ordinary shares in the capital of the Company.
“Singapore Exchange”	:	The Singapore Exchange Securities Trading Limited.
“Syndication”	:	Means:
		(a)	any transfer and/or assignment of only economic interests underlying part or all of the Shares held by Temasek or any of its subsidiaries, pursuant to an agreement between Temasek or any of its subsidiaries and a third party(ies), whereby Temasek or any of its subsidiaries retains full voting power of such Shares; or
		(b)	any transfer and/or assignment of interests in part or all of the Shares held by Temasek or any of its subsidiaries to a third party(ies) pursuant to an agreement, whereby such third party(ies) agree to exercise its voting power in concert with Temasek or any of its subsidiaries.
“Temasek”	:	Temasek Holdings (Private) Limited, a company incorporated in Singapore.
“year”	:	Calendar year, unless otherwise stated.
“%”	:	Per centum or percentage.

4

2.2	Words importing the singular number shall, where applicable, include the plural number and vice versa. Words importing the masculine gender shall, where applicable, include the feminine and neuter gender.
2.3	Any reference to a time of a day in the Plan is a reference to Singapore time.
2.4	Any reference in the Plan to any enactment is a reference to that enactment as for the time being amended or re-enacted. Any word defined under the Act or any statutory modification thereof and not otherwise defined in the Plan and used in the Plan shall have the meaning assigned to it under the Act or any statutory modification thereof, as the case may be.

3. OBJECTIVES OF THE PLAN

The Plan is a share incentive scheme. The Plan is proposed on the basis that it is important to retain staff whose contributions are essential to the well-being and prosperity of the Group and to give recognition to senior employees and executive directors of the Group who have contributed to the growth of the Group. The Plan will give Participants an opportunity to have a personal equity interest in the Company and will help to achieve the following positive objectives:

(a)	to align the interests of the Participants with the interests of the shareholders of the Company;
(b)	to retain key employees and executive directors of the Group whose contributions are essential to the long-term growth and profitability of the Group;
(c)	to instil loyalty to, and a stronger identification by Participants with the long-term prosperity of, the Group;
(d)	to attract potential employees with relevant skills to contribute to the Group and to create value for the shareholders of the Company; and
(e)	to motivate each Participant to optimise his performance standards and efficiency and to maintain a high level of contribution to the Group.

4. ELIGIBILITY OF PARTICIPANTS, ELIGIBLE PARTICIPANTS AS AT ADOPTION DATE

4.1	Group Employees who have attained the age of 21 years and hold such rank as may be designated by the Committee from time to time shall, unless they are also controlling shareholders (as defined in the Listing Manual) of the Company or associates (as defined in the Listing Manual) of such controlling shareholders, be eligible to participate in the Plan at the absolute discretion of the Committee.
4.2	Up to 18 Group Employees may be awarded Performance Shares with respect to up to 3.35% of the outstanding Ordinary Shares, with the number of the Ordinary Shares available for delivery to be based on, subject as otherwise provided in these Rules and (in the case of the Group Employees other than the CEO) the Performance Target Formula, and further subject to:

(a)	the Company achieving the EP Targets; and
(b)	the Performance Multiplier,

at each time of vesting of the Performance Shares, whether on a pro-rata basis or completely. In the event that the Performance Multiplier is applied up to the maximum permissible under the Plan, an aggregate of up to 5.02% of the Ordinary Shares could be payable and available for delivery in respect of the Performance Shares.

5. GRANT OF AWARDS

5.1	The Committee may grant Awards to such eligible Group Employees as the Committee may, on the recommendation of the management of the Company, select in its absolute discretion, at any time during the period when the Plan is in force.
5.2	The number of Performance Shares to be granted to a Participant in accordance with the Plan shall be recommended by the management of the Company and determined at the absolute discretion of the Committee, which shall take into account such criteria as it considers fit.
5.3	The Committee shall, on the recommendation of the management of the Company, decide in

5

relation to an Award:

(a)	the Participant;
(b)	the Award Date;
(c)	the number of Performance Shares which are the subject of the Award; and
(d)	any other condition which the Committee may determine in relation to that Award.

5.4

No consideration shall be payable for Awards or for Ordinary Shares receivable upon vesting of the Performance Shares.

5.5

An Award shall be personal to the Participant to whom it is granted and, prior to the allotment to the Participant of the Shares to which the Award relates, shall not be transferred (other than to a Participant’s personal representative on the death of that Participant), charged, assigned, pledged or otherwise disposed of, in whole or in part, except with the prior approval of the Committee and if a Participant shall do, suffer or permit any such act or thing as a result of which he would or might be deprived of any rights under an Award without the prior approval of the Committee, that Award shall immediately lapse.

6. CONSEQUENCES OF TERMINATION OF EMPLOYMENT, CHANGE IN CONTROL OR SALE

6.1	Consequences of Termination of Employment
6.1.1	An Award shall, to the extent not yet vested, immediately lapse without any claim whatsoever against the Company, and a Participant shall immediately forfeit all unvested Performance Shares comprised in any Award, in the event of termination of that Participant’s employment with the Group for Cause.
6.1.2	In the event of termination of a Participant’s employment with the Group in a Qualified Termination before the Performance Shares comprised in his Award have vested, then:

(a)

the Participant shall earn a pro-rata portion of the Performance Shares based on the length of the Participant’s employment with the Group during the period beginning on 1 January 2007 and ending on 31 December 2011, with the number of Ordinary Shares deliverable to be determined as and when the same is determined for the other Participants. Such pro-rata portion shall be determined in accordance with the same criteria and subject to the same performance metrics that such Participant’s Performance Shares would have been subject had the Participant continued his employment with the Company through 31 December 2011. Such terminated Participant shall receive payment with regard to his vested pro-rata portion of the Performance Shares on the same date the remaining Participants receive their vested Performance Share payments; and

(b)

in the event the vesting of the pro-rata portion of the Performance Shares occurs on 31 December 2011, the Committee shall have discretion as to whether or not 100% of the Ordinary Shares deliverable in payment of the pro-rata portion of the Performance Shares shall become immediately payable, or whether 50% of the pro-rata portion of the Performance Shares will be forfeited. Should the Ordinary Shares be unavailable for payment as marketable securities, such Participants shall receive, in the form of cash from the Company, the value of such Ordinary Shares that would be otherwise payable, as determined in accordance with the EBITDA Valuation Formula.

6.1.3 In the event of termination of a Participant’s employment with Group before the Performance Shares have vested:

(a)	otherwise than for Cause; or
(b)	otherwise than in a Qualified Termination,

	the Committee shall have the discretion to determine whether or not such Participant shall be entitled to vesting and payment with respect to any portion of the unvested Performance Shares.
6.1.4	The Committee shall have the discretion to decide on the treatment of any unvested Performance Shares which have been forfeited pursuant to Rule 6.1. Without prejudice to the provisions of Rules 5.1, 5.2 and 5.3, such Performance Shares may be reallocated to any current, new or replacement Participants, taking into consideration the recommendations of the management of the Company.

6

6.2 Consequences of Change in Control or Sale

6.2.1	In the event of a Change in Control, vesting of all Performance Shares and determination of the number of Ordinary Shares deliverable shall accelerate immediately prior to such Change in Control event, and the Participants shall have the right to participate in any sale transaction with Temasek or any of its subsidiaries (as the case may be) on a tag-along basis in any transaction resulting in a Change in Control with respect to all Ordinary Shares deliverable.
6.2.2	In the event of a sale of Shares by Temasek or any of its subsidiaries which does not result in a Change in Control (including in any Qualified Public Offering but excluding in any Syndication), a pro-rata vesting of the Performance Shares comprised in outstanding Awards shall occur, and the Participants shall have the right to participate in any sale transaction with Temasek or any of its subsidiaries (as the case may be) on a tag-along basis with respect to all Ordinary Shares deliverable.
6.2.3	The consideration for the sale of any Shares pursuant to any transaction contemplated by Rule 6.2 shall be in the form of marketable securities. However, if marketable securities are not available, the Participants shall receive, in the form of cash from the Company, the value of such Ordinary Shares that would be otherwise payable, as determined in accordance with the EBITDA Valuation Formula.

7. VESTING OF PERFORMANCE SHARES, DETERMINATION OF ORDINARY SHARES DELIVERABLE, PAYMENT AND OTHER PROVISIONS

7.1	Vesting of Performance Shares
	Unless as otherwise provided in Rule 6, vesting of the Performance Shares comprised in outstanding Awards shall occur on 31 December 2011 and determination of the number of Ordinary Shares deliverable with respect to such Performance Shares shall occur thereafter in accordance with this Rule 7, subject to the Participant then being employed by the Group.
7.2	Determination of Number of Ordinary Shares Deliverable
7.2.1	The delivery of Ordinary Shares shall be subject to the Company achieving the EP Targets. If vesting of the Performance Shares occurs:

(a)	on 31 December 2011, only the EP Target for 2011 is applicable; and
(b)	before 31 December 2011, the EP Target for the most recently completed financial year or for the most recently completed four financial quarters, as determined by the Committee, is applicable.

7.2.2

The number of Ordinary Shares to be delivered shall be determined by the Committee and shall, subject as otherwise provided in Rule 7.2.4, be subject to the Performance Multiplier at each time of vesting of the Performance Shares, whether on a pro-rata basis or completely, the minimum of which would be 50% of the number of Performance Shares which are the subject of the Award for EP of at least the Prescribed Lower Amount below the relevant EP Target and the maximum of which would be 150% of the number of Performance Shares which are the subject of the Award for EP of the Prescribed Higher Amount or more above the relevant EP Target, rounded down to the nearest whole Ordinary Share. In the event that the Performance Multiplier is applied up to the maximum permissible under the Plan, an aggregate of up to 5.02% of the Ordinary Shares could be payable and available for delivery in respect of the Performance Shares.

7.2.3

In relation to all Participants other than the CEO, the EP Targets have been correlated to the EBITDA Targets and the Free Cash Flow Targets so that, subject to the Company achieving a minimum of the Prescribed Lower Amount below the applicable EP Target, the number of Ordinary Shares deliverable shall be calculated according to a weighted Performance Target Formula, with 70% of such Ordinary Shares to be determined using the EBITDA Target and the remaining 30% of such Ordinary Shares to be determined using the Free Cash Flow Target, both as set forth below:

(a) EBITDA. 70% of the total number of Ordinary Shares earned and payable in respect of the Performance Shares comprised in an Award shall be based on an EBITDA Target for the financial year ending on 31 December 2011 as set by the Committee, applying the following Performance Multiplier:

(i) 100% at EBITDA Target;

7

(ii)	50% at an EBITDA Target derived from the level of the Prescribed Lower Amount below the corresponding EP Target;
(iii)	150% at an EBITDA Target derived from the level of the Prescribed Higher Amount above the corresponding EP Target,

	and proportionately between 50% and 150% of the EBITDA Target, in each case rounded down to the nearest whole Ordinary Share.
	In the event that the Performance Shares vest before 31 December 2011, 70% of the number of Ordinary Shares deliverable shall be based on the EBITDA Target for the most recently completed financial year as set by the Committee, or for the most recently completed four financial quarters, as determined by the Committee.
(b)	Free Cash Flow. 30% of the total number of Ordinary Shares earned and payable in respect of the Performance Shares comprised in an Award shall be based on a Free Cash Flow Target for the financial year ending on 31 December 2011 as set by the Committee, applying the following Performance Multiplier:

(i)	100% at FCF Target;
(ii)	50% at an FCF Target derived from the level of the Prescribed Lower Amount below the corresponding EP Target;
(iii)	150% at an FCF Target derived from the level of the Prescribed Higher Amount above the corresponding EP Target,

and proportionately between 50% and 150% of the FCF Target, in each case rounded down to the nearest whole Ordinary Share.

In the event that the Performance Shares vest before 31 December 2011, 30% of the number of Ordinary Shares deliverable shall be based on the FCF Target for the most recently completed financial year as set by the Committee, or for the most recently completed four financial quarters, as determined by the Committee.

7.2.4 In relation to the CEO, subject to the Company achieving a minimum of the Prescribed Lower Amount below the applicable EP Target, the number of Ordinary Shares deliverable shall be calculated based on an EP Target for the financial year ending 31 December 2011 as set by the Committee, applying the following Performance Multiplier:

(a)	100% at EP Target;
(b)	50% at the Prescribed Lower Amount below the EP Target;
(c)	150% at the Prescribed Higher Amount above the EP Target,

	and proportionately between 50% and 150% of EP Target, in each case rounded down to the nearest whole Ordinary Share.
	In the event that the Performance Shares vest before 31 December 2011, the number of Ordinary Shares deliverable shall be based on the EP Target for the most recently completed financial year as set by the Committee, or for the most recently completed four financial quarters, as determined by the Committee.
7.2.5	Notwithstanding any other provision of these Rules:

(a)	in relation to all Participants other than the CEO, where the relevant EBITDA Target and FCF Target are met but a minimum of the Prescribed Lower Amount below the applicable EP Target is not met; and
(b)	in relation to the CEO, where a minimum of the Prescribed Lower Amount below the applicable EP Target is not met,

	the Committee shall have the power, in its good faith and reasonable discretion, to determine the number of Ordinary Shares deliverable in respect of the Performance Shares comprised in an Award.
7.3	Payment
7.3.1	Subject to these Rules, to the Participant’s then being employed by the Group and on the basis that there is no event triggering full vesting of the Performance Shares and payout (or pro-rata vesting of the Performance Shares and payout in excess of 50%), upon vesting of the Performance Shares on 31 December 2011, 50% of the unissued Ordinary Shares deliverable in payment of the

8

	Performance Shares comprised in an Award as determined pursuant to Rule 7.2 shall become immediately payable by way of an allotment to the Participant of the relevant number of Ordinary Shares. Should the Ordinary Shares be unavailable for payment as marketable securities, such Participants shall receive, in the form of cash from the Company, the value of such Ordinary Shares that would be otherwise payable, determined in accordance with the EBITDA Valuation Formula. The remaining 50% of the vested Performance Shares comprised in that Award shall remain as Ordinary Shares which have not been issued and shall be carried forward into a new share incentive plan to be adopted by the Company.
7.3.2	Payment shall be made as provided in these Rules no later than 15 March 2012, provided that the audited financial statements of the Company are then available. Otherwise, payment shall be made on such date as the Committee may determine to be appropriate.
7.4	Listing and Quotation of Shares
7.4.1	Where new Shares are allotted pursuant to these Rules at a time when the Shares are listed or quoted on the Singapore Exchange (and/or such other stock exchange upon which the Shares may be listed and quoted), the Company shall, as soon as practicable after such allotment, apply to the Singapore Exchange (and/or such other stock exchange upon which the Shares may be listed and quoted) for permission to deal in and for quotation of such Shares.
7.4.2	In the event that the Shares are then listed or quoted on the Singapore Exchange, Shares which are allotted to a Participant pursuant to these Rules shall, unless otherwise determined by the Committee, be issued in the name of, or transferred to, CDP to the credit of the securities account of that Participant maintained with CDP or the securities sub-account of that Participant maintained with a depository agent, in each case, as designated by that Participant.
7.5	Ranking of Shares
	New Shares allotted and issued pursuant to these Rules shall:

(a)	be subject to all the provisions of the Articles and the Memorandum of Association of the Company; and
(b)	rank in full for all entitlements, including dividends or other distributions declared or recommended in respect of the then existing Shares, the Record Date for which is on or after the relevant vesting date of the Performance Shares, and shall in all other respects rank pari passu with other existing Shares then in issue.

7.6	Restrictions on Shares
7.6.1	Prior to a Qualified Public Offering, Shares allotted and issued pursuant to these Rules shall be subject to the following restrictions and rights:

(a)	a right of first refusal by Temasek or any of its subsidiaries, as the case may be, who is then a shareholder of the Company, on any sale by a Participant of his Shares; and
(b)	a call right by Temasek or any of its subsidiaries, as the case may be, who is then a shareholder of the Company, and a put right by the Participant (or, at the discretion of the Committee, the beneficiaries of such Participant in the event of the Participant’s death) upon termination of the Participant’s employment with the Group.

7.6.2 The price for the transfer of Shares pursuant to this Rule 7.6 shall be based on the following EBITDA Valuation Formula:

(a)	EBITDA of the Company multiplied by the ratio of enterprise value/EBITDA trailing twelve (12) months for the Company’s listed peers equals enterprise value* of the Company (“EV”).
	* Enterprise value of Company’s listed peers is calculated based on the average share price during the last two fiscal quarters prior to the valuation date.
(b)	EV minus net debt of the Company and minority interest of the Company equals equity value at exit.
(c)	Price of shares equals equity value at exit divided by the Ordinary Shares at exit.

7.6.3 The restrictions and rights set out in this Rule 7.6 do not apply as long as the Shares are listed and traded on the Singapore Exchange and/or any other internationally recognized stock exchange, and shall lapse on any Qualified Public Offering of the Shares.

9

8 LIMITATIONS ON THE SIZE OF THE PLAN

8.1 The total number of Shares which may be issued pursuant to Awards granted under the Plan on any date:

(a)	when added to the total number of new Shares issued and issuable pursuant to Awards granted under the Plan, shall not exceed 5.02% of the total number of the outstanding Ordinary Shares; and
(b)	when added to the total number of new Shares issued and issuable pursuant to (i) Awards granted under the Plan, and (ii) any other equity grant plans adopted by the Company on or after the Adoption Date, shall not exceed 15% of the total number of issued Shares from time to time (excluding treasury shares).

8.2	The Ordinary Shares available for delivery under the Plan shall be authorized by the Company’s shareholders and all Ordinary Shares deliverable under the Plan will be authorized and approved by the Board.
8.3	Without prejudice to the provisions of Rule 6.1.4, Shares which are the subject of Awards which have lapsed for any reason whatsoever may be the subject of further Awards granted by the Committee under the Plan.

9. ADJUSTMENT EVENTS

9.1 In the event of any dividend, share split, combination, or acquisition involving a share issuance or any exchange of shares, amalgamation, arrangement or consolidation, spin-off, recapitalisation or other distribution (other than ordinary cash dividends) of the assets of the Company to its shareholders, or any other change affecting the Ordinary Shares or the Share price, the Committee shall make such proportionate adjustments, if any, as necessary to reflect such change with respect to:

(a)	the aggregate number and type of shares (subject to compliance with applicable laws) that may be delivered under the Plan; and
(b)	the terms and conditions of any outstanding grants (including, without limitation, any applicable performance targets or criteria with respect thereto).

9.2	Notwithstanding the provisions of Rule 9.1, any adjustment (except in relation to a capitalisation issue) must be confirmed in writing by the Auditors (acting only as experts and not as arbitrators) to be in their opinion, fair and reasonable.
9.3	Upon any adjustment made pursuant to this Rule 9, the Company shall notify the Participants in writing and deliver statements setting forth the class and/or number of shares which are the subject of the adjusted Awards to such Participants. Any adjustment shall take effect upon such written notification being given or on such date as may be specified in such written notification.

10. ADMINISTRATION OF THE PLAN

10.1

The Plan shall be administered by the Committee (or any other committee and/or persons duly authorized and appointed by the Board to administer the Plan) in its absolute discretion with such powers and duties as are conferred on it by the Board, provided that no member of the Committee shall participate in any deliberation or decision in respect of Awards granted or to be granted to him.

10.2

Except to the extent certain terms and conditions are required by the Plan, the Committee shall have the power to make and vary such arrangements, guidelines and/or regulations (not being inconsistent with the Plan) for the implementation and administration of the Plan, to give effect to the provisions of the Plan and/or to enhance the benefit of the Awards to the Participants, as it may, in its absolute discretion, think fit. Without prejudice to the generality of the foregoing, the Committee has the broad discretion to select the Participants at any time the Plan is in effect, determine the terms and conditions of each Award and reallocate any forfeited Performance Shares to any current, new or replacement Participants, taking into consideration the recommendations of the management of the Company. Any matter pertaining or pursuant to the Plan and any dispute, difference or uncertainty as to the interpretation of the Plan or any rule, regulation or procedure thereunder or any rights under the Plan shall be determined by the Committee and binding in all respects.

10

10.3 Neither the Plan nor Awards granted under the Plan shall impose on the Company or the Committee or any of its members any liability whatsoever in connection with:

(a)	the lapsing of any Awards pursuant to any provision of the Plan;
(b)	the failure or refusal by the Committee to exercise, or the exercise by the Committee of, any discretion under the Plan; and/or
(c)	any decision or determination of the Committee made pursuant to any provision of the Plan.

10.4 Any decision or determination of the Committee made pursuant to any provision of the Plan (other than a matter to be certified by the Auditors) shall be final, binding and conclusive (including for the avoidance of doubt, any decisions pertaining to disputes as to the interpretation of the Plan or any rule, regulation or procedure hereunder or the application of any formula hereunder or as to any rights under the Plan). The Committee shall not be required to furnish any reasons for any decision or determination made by it.

11. NOTICES

11.1	Any notice required to be given by any Participant to the Company shall be sent or made to the registered office of the Company or such other address (including an electronic mail address) or facsimile number, and marked for the attention of the Committee (c/o the General Counsel of the Company), as may be notified by the Company to the Participant in writing.
11.2	Any notices or documents required to be given to a Participant or any correspondence to be made between the Company and a Participant shall be given or made by the Committee (or such person(s) as it may from time to time direct) on behalf of the Company and shall be delivered to a Participant by hand or sent to a Participant at his home address, electronic mail address or facsimile number according to the records of the Company or the last known address, electronic mail address or facsimile number provided by the Participant to the Company.
11.3	Any notice or other communication from a Participant to the Company shall be irrevocable, and shall not be effective until received by the Company. Any notice or communication from the Company to a Participant shall be deemed to be received by the Participant, when left at the address specified in Rule 11.2 or, if sent by post, on the day following the date of posting or, if sent by electronic mail or facsimile transmission, on the day of despatch.
11.4	Any Communication under the Plan may be communicated electronically through the use of a Security Device, or through an electronic page, site, or environment designated by the Company which is accessible only through the use of a Security Device, and such Communication shall thereby be deemed to have been sent by the designated holder of such Security Device.
11.5	The Company may accept and act upon any Communication issued and/or transmitted through the use of the Participant’s Security Device pursuant to Rule 11.4 (whether actually authorized by the Participant or not) as his authentic and duly authorized Communication and the Company shall be under no obligation to investigate the authenticity or authority of persons effecting the Communication or to verify the accuracy and completeness of the Communication and the Company may treat the Communication as valid and binding on the Participant, notwithstanding any error, fraud, forgery, lack of clarity or misunderstanding in the terms of such Communication.
11.6	All Communications issued and/or transmitted through the use of a Participant’s Security Device pursuant to Rule 11.4 (whether authorized by the Participant or not) are irrevocable and binding on the Participant upon transmission to the Company and the Company shall be entitled to effect, perform or process such Communications without the Participant’s further consent and without any further reference or notice to the Participant.
11.7	It shall be the Participant’s sole responsibility to ensure that all information contained in a Communication to the Company is complete, accurate, current, true and correct.
11.8	Participants shall ensure (and shall take all necessary precautions to ensure) that:

(a)	they comply with the Company’s procedural and/or operational guidelines relating to Security Devices;
(b)	all their Security Devices are kept completely confidential and secure; and
(c)	there is no unauthorized use or abuse of their Security Devices.

11

11.9 Participants shall notify and/or contact the Company immediately if they become aware, have reason to believe, or suspect that any Security Device has become compromised, including but not limited to where:

(a)	the security or integrity of any Security Device may have been compromised;
(b)	such Security Device has become known or been revealed to any other person;
(c)	there has been unauthorized use of the Security Device; and/or
(d)	such Security Device is lost, damaged, defective or stolen,

	and Participants shall immediately cease to use such compromised Security Device until further notice from the Company. Participants shall be bound by all Communications and transactions resulting from any Communications made which are referable to any compromised Security Device until such time as the Company has received a notification from such Participants under this Rule 11.9.
11.10	The Company’s records of the Communications, and its record of any transactions maintained by any relevant person authorized by the Company relating to or connected with the Plan, whether stored in electronic or printed form, shall be binding and conclusive on a Participant and shall be conclusive evidence of such Communications and/or transactions. All such records shall be admissible in evidence and the Participant shall not challenge or dispute the admissibility, reliability, accuracy or the authenticity of the contents of such records merely on the basis that such records were incorporated and/or set out in electronic form or were produced by or are the output of a computer system, and the Participant waives any of his rights (if any) to so object.
11.11	Any provision in these Rules requiring a Communication to be signed by a Participant may be satisfied in the case of an electronic Communication, by the execution of any on-line act, procedure or routine designated by the Company to signify the Participant’s intention to be bound by such Communication.

12. MODIFICATIONS TO THE PLAN

12.1 Any or all of the Rules of the Plan may be modified and/or altered at any time and from time to time by a resolution of the Committee, except that:

(a)	no modification or alteration shall adversely affect the rights attached to any Award granted prior to such modification or alteration except with the consent in writing of not less than three-quarters in number of those Participants whose rights would be so adversely affected;
(b)	the definitions of “Committee”, “Group” “Group Employee”, “Group Executive Director”, “Ordinary Shares” and “Participant” and the provisions of Rules 4, 5, 6, 7, 8, 9, 10 and this Rule 12 shall not be altered to the advantage of Participants except with the prior approval of the Company’s shareholders in general meeting; and
(c)	no modification or alteration shall be made without the prior approval of the Singapore Exchange and such other regulatory authorities as may be necessary.

	For the purposes of Rule 12.1(a), the opinion of the Committee as to whether any modification or alteration would adversely alter the rights attached to any Award shall be final, binding and conclusive. For the avoidance of doubt, nothing in this Rule 12.1 shall affect the right of the Committee under any other provision of the Plan to amend or adjust any Award.
12.2	Notwithstanding anything to the contrary contained in Rule 12.1, the Committee may at any time by a resolution (and without other formality, save for the prior approval of the Singapore Exchange, if necessary) amend or alter the Plan in any way to the extent necessary or desirable, in the opinion of the Committee, to cause the Plan to comply with, or take into account, any statutory provision (or any amendment or modification thereto, including amendment of or modification to the Act) or the provision or the regulations of any regulatory or other relevant authority or body (including the Singapore Exchange, if applicable).
12.3	Written notice of any modification or alteration made in accordance with this Rule 12 shall be given to all Participants.

12

13. TERMS OF EMPLOYMENT UNAFFECTED

The terms of employment of a Participant shall not be affected by his participation in the Plan, which shall neither form part of such terms nor entitle him to take into account such participation in calculating any compensation or damages on the termination of his employment for any reason.

14. DURATION OF THE PLAN

14.1	The Plan shall continue to be in force at the discretion of the Committee, subject to a maximum period of ten years commencing on the Adoption Date, provided always that the Plan may continue beyond the above stipulated period with the approval of the Company’s shareholders by ordinary resolution in general meeting and of any relevant authorities which may then be required.
14.2	The Plan may be terminated at any time by the Committee or, at the discretion of the Committee, by resolution of the Company in general meeting, subject to all relevant approvals which may be required and if the Plan is so terminated, no further Awards shall be granted by the Committee hereunder.
14.3	The expiry or termination of the Plan shall not affect Awards which have been granted prior to such expiry or termination, whether such Awards have vested (whether fully or partially) or not.

15. TAXES AND DEDUCTIONS

All taxes (including income tax) arising from the granting, vesting or delivery of any Award granted to any Participant under the Plan shall be borne by that Participant. There shall be deducted or withheld from any payment to be made under the Plan any amounts which the Company or any of its subsidiaries is entitled, authorized or bound to deduct or withhold pursuant to applicable laws to account of income tax or other levies payable on the payment or any other applicable law or regulation. Without prejudice to the generality of the foregoing, if the payment should be subject to contributions in connection with any mandatory public savings plan administered by any governmental authority or statutory board, the Company shall be entitled to reduce the payment by an amount equal to such contribution amounts required to be made.

16. COSTS AND EXPENSES OF THE PLAN

16.1	Each Participant shall be responsible for all fees of CDP relating to or in connection with the issue and allotment of any Shares pursuant to the vesting of any Award in CDP’s name, the deposit of share certificate(s) with CDP, the Participant’s securities account with CDP, or the Participant’s securities sub-account with a CDP depository agent.
16.2	Save for the taxes referred to in Rule 15 and such other costs and expenses expressly provided in the Plan to be payable by the Participants, all fees, costs and expenses incurred by the Company in relation to the Plan including but not limited to the fees, costs and expenses relating to the allotment and issue of Shares pursuant to the vesting of any Award shall be borne by the Company.

17. DISCLAIMER OF LIABILITY

Notwithstanding any provisions herein contained, the Committee and the Company and the directors and employees of the Company shall not under any circumstances be held liable for any costs, losses, expenses and damages whatsoever and howsoever arising in any event, including but not limited to the delay by the Company in issuing the Shares or applying for or procuring the listing of new Shares on the Singapore Exchange (and/or such other stock exchange upon which the Shares may be listed or quoted) in accordance with Rule 7.4.1.

18. DISCLOSURES IN ANNUAL REPORT

The Company will make such disclosures in its annual report for as long as the Plan continues in operation as required by the Listing Manual including the following (where applicable):

(a)	the names of the members of the Committee administering the Plan;
(b)	in respect of the following Participants of the Plan:

(i) Directors of the Company; and

13

(ii) Participants (other than those in paragraph (i) above) who have received Shares pursuant to the vesting of Awards granted under the Plan which, in aggregate, represent 5% or more of the aggregate of the total number of new Shares available under the Plan,

the following information:

(aa)	the name of the Participant; and
(bb)	the number of new Shares issued to such Participant during the financial year under review; and

(c) in relation to the Plan, the following particulars:

(i)	the aggregate number of Performance Shares comprised in Awards granted under the Plan since the commencement of the Plan to the end of the financial year under review;
(ii)	the aggregate number of Performance Shares comprised in Awards which have vested under the Plan since the commencement of the Plan to the end of the financial year under review; and
(iii)	the aggregate number of Performance Shares comprised in Awards granted under the Plan which have not vested as at the end of the financial year under review,

or as otherwise required under the Listing Manual from time to time.

19. GOVERNING LAW

The Plan shall be governed by, and construed in accordance with, the laws of the Republic of Singapore. The Participants, by accepting grants of Awards in accordance with the Plan, and the Company submit to the exclusive jurisdiction of the courts of the Republic of Singapore.

20. CONTRACTS (RIGHTS OF THIRD PARTIES) ACT, CHAPTER 53B

No person other than the Company or a Participant shall have any right to enforce any provision of the Plan or any Award by virtue of the Contracts (Rights of Third Parties) Act, Chapter 53B of Singapore.

14

APPENDIX 2

STATS CHIPPAC LTD.

EQUITY GRANT PLAN FOR NON-EXECUTIVE DIRECTORS

TABLE OF CONTENTS

Contents		Page
1.	Name of the Plan		1
2.	Definitions		1
3.	Objectives of the Plan		3
4.	Eligibility of Participants		3
5.	Offer to Participate		4
6.	Consequences of Cessation as Non-Executive Director due to Death or Disability, Change in Control or Sale		4
7.	Determination of Ordinary Shares Issuable, Payment and Other Provisions		5
8.	Limitations on the Size of the Plan		6
9.	Adjustment Events		6
10.	Administration of the Plan		7
11.	Notices		7
12.	Modifications to the Plan		8
13.	Duration of the Plan		8
14.	Taxes and Deductions		8
15.	Costs and Expenses of the Plan		9
16.	Disclaimer of Liability		9
17.	Disclosures in Annual Report		9
18.	Governing Law		9
19.	Contracts (Rights of Third Parties) Act, Chapter 53B		9

RULES OF
THE STATS CHIPPAC LTD. EQUITY GRANT PLAN FOR NON-EXECUTIVE DIRECTORS

1. NAME OF THE PLAN

The Plan shall be called the “STATS ChipPAC Ltd. Equity Grant Plan for Non-Executive Directors”.

2. DEFINITIONS

2.1 In the Plan, unless the context otherwise requires, the following words and expressions shall have the following meanings:

“Act”	:	The Companies Act, Chapter 50 of Singapore.
“Adoption Date”	:	The date on which the Plan is adopted by the Company in general meeting.
“Articles”	:	The Articles of Association of the Company, as amended from time to time.
“Auditors”	:	The auditors of the Company for the time being.
“Board”	:	The board of directors of the Company for the time being.
“CDP”	:	The Central Depository (Pte) Limited.
“Change in Control”	:	Means:
		(a)	an acquisition by any person or group of persons acting together of Shares which hold more of the voting power of the Company’s voting Shares than do the Shares owned by Temasek or any of its subsidiaries;
		(b)	a merger or reorganisation of the Company which results in a shareholder of the Company other than Temasek or any of its subsidiaries holding more than 50% of the voting power of the Company’s voting Shares;
		(c)	a sale of all or substantially all of the Company’s assets; or
		(d)	a dissolution or liquidation of the Company.
“Committee”	:	The Executive Resource and Compensation Committee of the Company for the time being.
“Communication”	:	Any correspondence made or to be made under the Plan (individually or collectively).
“Company”	:	STATS ChipPAC Ltd., a company incorporated in Singapore.
“EBITDA”	:	The Company’s financial statement net income, subject to add backs for the following items:
		(a)	tax expenses;
		(b)	interest expenses;
		(c)	depreciation and amortisation; and
		(d)	one-time and non-cash items (including but not limited to stock based compensation, equity grant expenses, restructuring and impairment).
“EBITDA Valuation Formula”	:	Has the meaning ascribed to it in Rule 7.6.2.

1

“EP”	:	The Company’s economic profits determined as EBITDA less the following items:
		(a)	depreciation and amortisation;
		(b)	tax expenses; and
		(c)	cost of capital.
		For these purposes, “cost of capital” means 11.295% of the aggregate of:
		(i)	net working capital (meaning, current assets (excluding cash and cash equivalents) less non-interest bearing liabilities);
		(ii)	net fixed assets (meaning, gross fixed assets less accumulated depreciation);
		(iii)	goodwill; and
		(iv)	other non-current assets.
“EP Targets”	:	The EP targets set by the Committee.
“Group”	:	The Company and its subsidiaries.
“Listing Manual”	:	The listing manual of the Singapore Exchange.
“Non-Executive Directors”	:	A director of the Company who performs a non-executive function.
“Ordinary Shares”	:	The number of outstanding Shares as of the Adoption Date on a fully-diluted basis, including Shares issuable upon conversion of all outstanding convertible bonds as of the Adoption Date, any Shares issued with regard to any future acquisition and any equity grants awarded prior to the Adoption Date, but for the avoidance of doubt does not include any adjustments due to dilution that may result from future share issuances (other than in the context of any future acquisitions involving the issuance of Shares and issuance of Shares with regard to equity grants awarded prior to the Adoption Date), or future grants of share options, restricted share units and performance shares. For the avoidance of doubt, the number of Ordinary Shares may not be varied by the Committee unless otherwise provided by these Rules.
“Participant”	:	A Non-Executive Director to whom an offer to participate in the Plan has been extended pursuant to Rule 5 (including, where applicable, the executor or personal representative of such Non-Executive Director).
“Performance Multiplier”	:	Has the meaning ascribed to it in Rule 7.
“Performance Share Plan 2009”	:	The STATS ChipPAC Ltd. Performance Share Plan 2009, as modified or altered from time to time.
“Plan”	:	The STATS ChipPAC Ltd. Equity Grant Plan for Non-Executive Directors, as modified or altered from time to time.
“Prescribed Higher Amount”	:	Such dollar amount as set by the Committee.
“Prescribed Lower Amount”	:	Such dollar amount as set by the Committee.

2

“Qualified Public Offering”	:	Any public offering of the Shares on any stock exchange of recognized international reputation and standing duly approved by the Board.
“Record Date”	:	The date fixed by the Company for the purposes of determining entitlements to dividends or other distributions to, or rights of, holders of Shares.
“Shares”	:	Ordinary shares in the capital of the Company.
“Singapore Exchange”	:	The Singapore Exchange Securities Trading Limited.
“Syndication”	:	Means:
		(a)	any transfer and/or assignment of only economic interests underlying part or all of the Shares held by Temasek or any of its subsidiaries, pursuant to an agreement between Temasek or any of its subsidiaries and a third party(ies), whereby Temasek or any of its subsidiaries retains full voting power of such Shares; or
		(b)	any transfer and/or assignment of interests in part or all of the Shares held by Temasek or any of its subsidiaries to a third party(ies) pursuant to an agreement, whereby such third party(ies) agree to exercise its voting power in concert with Temasek or any of its subsidiaries.
“Temasek”	:	Temasek Holdings (Private) Limited, a company incorporated in Singapore.
“year”	:	Calendar year, unless otherwise stated.
“%”	:	Per centum or percentage.

2.2	Words importing the singular number shall, where applicable, include the plural number and vice versa. Words importing the masculine gender shall, where applicable, include the feminine and neuter gender.
2.3	Any reference to a time of a day in the Plan is a reference to Singapore time.
2.4	Any reference in the Plan to any enactment is a reference to that enactment as for the time being amended or re-enacted. Any word defined under the Act or any statutory modification thereof and not otherwise defined in the Plan and used in the Plan shall have the meaning assigned to it under the Act or any statutory modification thereof, as the case may be.

3. OBJECTIVES OF THE PLAN

The Plan is a share incentive scheme. The Plan is proposed on the basis that it is important to give recognition to non-executive directors of the Company who have contributed to the Group. The Plan will give Participants an opportunity to have a personal equity interest in the Company and will help to achieve the following positive objectives:

(a)	to align the interests of the Participants with the interests of the shareholders of the Company;
(b)	to motivate each Participant to maintain a high level of contribution to the Group; and
(c)	to give recognition to the contributions made or to be made by Non-Executive Directors to the Group.

4. ELIGIBILITY OF PARTICIPANTS

Non-Executive Directors shall, unless they are also controlling shareholders (as defined in the Listing Manual) of the Company or associates (as defined in the Listing Manual) of such controlling shareholders, be eligible to participate in the Plan at the absolute discretion of the Committee.

3

5. OFFER TO PARTICIPATE

5.1	The Committee may extend an offer to participate in the Plan to such Non-Executive Directors as the Committee may select in its absolute discretion, at any time during the period when the Plan is in force.
5.2	No consideration shall be payable for an offer to participate in the Plan made to, or for Ordinary Shares received by, Non-Executive Directors under the Plan.
5.3	An offer to participate in the Plan shall be personal to the Participant to whom it is extended and, prior to the allotment to the Participant of the Ordinary Shares under the Plan, shall not be transferred (other than to a Participant’s personal representative on the death of that Participant), charged, assigned, pledged or otherwise disposed of, in whole or in part, except with the prior approval of the Committee and if a Participant shall do, suffer or permit any such act or thing as a result of which he would or might be deprived of any rights under an offer to participate in the Plan without the prior approval of the Committee, his participation in the Plan shall immediately cease.

6. CONSEQUENCES OF CESSATION AS NON-EXECUTIVE DIRECTOR AND CHANGE IN CONTROL OR SALE

6.1	Consequences of Cessation as Non-Executive Director
6.1.1	In the event that a Participant ceases to be a Non-Executive Director for any reason whatsoever, his participation in the Plan shall, unless otherwise determined by the Committee, immediately cease without any claim whatsoever against the Company.
6.1.2	Where the Committee exercises its discretion and determines that, a Participant’s participation in the Plan shall not cease even though such Participant has ceased to be a Non-Executive Director:

(a)

that Participant may, at the discretion of the Committee, earn a pro-rata portion of the Ordinary Shares based on the length of the Participant’s service as a Non-Executive Director during the period beginning on 1 January 2007 and ending on 31 December 2011, with the number of Ordinary Shares issuable to be determined as and when the same is determined for the other Participants. Any such pro-rata portion shall be determined in accordance with the same criteria that such Participant would have been subject had the Participant continued to serve as a Non-Executive through 31 December 2011. Such Participant shall receive payment with regard to his pro-rata portion of the Ordinary Shares on the same date the remaining Participants receive their Ordinary Shares; and

(b)

in the event the Ordinary Shares are issuable on or after 31 December 2011, the Committee shall have discretion as to whether or not 100% of the Ordinary Shares issuable in payment of the pro-rata portion of the Ordinary Shares issuable shall become immediately payable, or whether 50% of the pro-rata portion of the Ordinary Shares issuable will be forfeited. Should the Ordinary Shares be unavailable for payment as marketable securities, such Participants shall receive, in the form of cash from the Company, the value of such Ordinary Shares that would be otherwise payable, as determined in accordance with the EBITDA Valuation Formula.

6.2	Consequences of Change in Control or Sale
6.2.1	In the event of a Change in Control, determination of the number of Ordinary Shares issuable shall accelerate immediately prior to such Change in Control event, and the Participants shall have the right to participate in any sale transaction with Temasek or any of its subsidiaries (as the case may be) on a tag-along basis in any transaction resulting in a Change in Control with respect to all Ordinary Shares issuable.
6.2.2	In the event of a sale of Shares by Temasek or any of its subsidiaries which does not result in a Change in Control (including in any Qualified Public Offering but excluding in any Syndication), a pro-rata issuance of Ordinary Shares shall occur, and the Participants shall have the right to participate in any sale transaction with Temasek or any of its subsidiaries (as the case may be) on a tag-along basis with respect to all Ordinary Shares issuable.
6.2.3	The consideration for the sale of any Ordinary Shares pursuant to any transaction contemplated by Rule 6.2 shall be in the form of marketable securities. However, if marketable securities are not available, the Participants shall receive, in the form of cash from the Company, the value of such Ordinary Shares that would be otherwise payable, as determined in accordance with the EBITDA Valuation Formula.

4

7. DETERMINATION OF ORDINARY SHARES ISSUABLE, PAYMENT AND OTHER PROVISIONS

7.1 Determination of Number of Ordinary Shares Issuable

7.1.1	Unless as otherwise provided in Rule 6, determination of the number of Ordinary Shares issuable under the Plan shall occur on or after 31 December 2011 and in accordance with this Rule 7, subject to the Participant then holding office as a Non-Executive Director on 31 December 2011.
7.1.2	The number of Ordinary Shares to be issued to each Participant shall be determined by the Committee, and shall depend on the extent to which the EP Targets are achieved or exceeded as well as any other criteria and considerations deemed appropriate by the Committee. If issuance of the Ordinary Shares occurs:

(a)	on or after 31 December 2011, only the EP Target for 2011 is applicable; and
(b)	before 31 December 2011, the EP Target for the most recently completed financial year or for the most recently completed four financial quarters, as determined by the Committee, is applicable.

7.1.3	The number of Ordinary Shares which may be issued under the Plan shall be calculated based on 0.30% of the outstanding Ordinary Shares (the “Base Number”), with the aggregate number of the Ordinary Shares available for delivery to be subject to these Rules and to the Performance Multiplier at each time of payment, whether on a pro-rata basis or completely, the minimum of which would be 50% of the Base Number to be issued for EP of at least the Prescribed Lower Amount below the relevant EP Target and the maximum of which would be 150% of the Base Number to be issued for EP of the Prescribed Higher Amount or more above the relevant EP Target (and proportionately between 50% and 150% of EP Target), rounded down to the nearest whole Ordinary Share. Where a minimum of the Prescribed Lower Amount below the relevant EP Target is not met, the Committee shall have the power, in its good faith and reasonable discretion, to determine the aggregate number of Ordinary Shares that may be deliverable. In the event that the Performance Multiplier is applied to the maximum extent permissible under the Plan, an aggregate of up to 0.45% of the Ordinary Shares could be payable and issued.
7.2	Payment
7.2.1	Subject to these Rules, to the Participant’s then holding office as a Non-Executive Director as of 31 December 2011 and on the basis that there is no event triggering full issuance of Ordinary Shares and payout (or pro-rata issuance of the Ordinary Shares and payout in excess of 50%), upon determination of the number of Ordinary Shares issuable on or after 31 December 2011, 50% of the unissued Ordinary Shares issuable shall become immediately payable by way of an allotment to the Participant of the relevant number of Ordinary Shares. Should the Ordinary Shares be unavailable for payment as marketable securities, such Participants shall receive, in the form of cash from the Company, the value of such Ordinary Shares that would be otherwise payable, determined in accordance with the EBITDA Valuation Formula. The remaining 50% of the Ordinary Shares issuable shall remain as unissued Ordinary Shares and shall be carried forward into a new share incentive plan to be adopted by the Company.
7.2.2	Payment shall be made as provided in these Rules no later than 15 March 2012, provided that the audited financial statements of the Company are then available. Otherwise, payment shall be made on such date as the Committee may determine to be appropriate.
7.3	Listing and Quotation of Shares
7.3.1	Where new Shares are allotted pursuant to these Rules at a time when the Shares are listed or quoted on the Singapore Exchange (and/or such other stock exchange upon which the Shares may be listed and quoted), the Company shall, as soon as practicable after such allotment, apply to the Singapore Exchange (and/or such other stock exchange upon which the Shares may be listed and quoted) for permission to deal in and for quotation of such Shares.
7.3.2	In the event that the Shares are then listed or quoted on the Singapore Exchange, Shares which are allotted to a Participant pursuant to these Rules shall, unless otherwise determined by the Committee, be issued in the name of, or transferred to, CDP to the credit of the securities account of that Participant maintained with CDP or the securities sub-account of that Participant maintained with a depository agent, in each case, as designated by that Participant.

5

7.4	Ranking of Shares
	New Shares allotted and issued pursuant to these Rules shall:

(a)	be subject to all the provisions of the Articles and the Memorandum of Association of the Company; and
(b)	rank in full for all entitlements, including dividends or other distributions declared or recommended in respect of the then existing Shares, the Record Date for which is on or after the date the Ordinary Shares are issued pursuant to the Plan, and shall in all other respects rank pari passu with other existing Shares then in issue.

7.5	Restrictions on Shares
7.5.1	Prior to a Qualified Public Offering, Shares allotted and issued pursuant to these Rules shall be subject to the following restrictions and rights:

(a)	a right of first refusal by Temasek or any of its subsidiaries, as the case may be, who is then a shareholder of the Company, on any sale by a Participant of his Shares; and
(b)	a call right by Temasek or any of its subsidiaries, as the case may be, who is then a shareholder of the Company, and a put right by the Participant (or, at the discretion of the Committee, the beneficiaries of such Participant in the event of the Participant’s death) upon a Participant ceasing to hold office as a Non-Executive Director.

7.5.2 The price for the transfer of Shares pursuant to this Rule 7.6 shall be based on the following EBITDA Valuation Formula:

(a)	EBITDA of the Company multiplied by the ratio of enterprise value/EBITDA trailing twelve (12) months for the Company’s listed peers equals enterprise value* of the Company (“EV”).
	* Enterprise value of Company’s listed peers is calculated based on the average share price during the last two fiscal quarters prior to the valuation date.
(b)	EV minus net debt of the Company and minority interest of the Company equals equity value at exit.
(c)	Price of shares equals equity value at exit divided by the Ordinary Shares at exit.

7.5.3 The restrictions and rights set out in this Rule 7.6 do not apply as long as the Shares are listed and traded on the Singapore Exchange and/or any other internationally recognized stock exchange, and shall lapse on any Qualified Public Offering of the Shares.

8 LIMITATIONS ON THE SIZE OF THE PLAN

8.1 The total number of Shares which may be issued under the Plan on any date:

(a)	when added to the total number of new Shares issued and issuable under the Plan, shall not exceed 0.45% of the total number of the outstanding Ordinary Shares; and
(b)	when added to the total number of new Shares issued and issuable (i) under the Plan, and (ii) pursuant to awards granted under the Performance Share Plan 2009, shall not exceed 15% of the total number of issued Shares from time to time (excluding treasury shares).

8.2 The Ordinary Shares available for issuance under the Plan shall be authorized by the Company’s shareholders and all Ordinary Shares issuable under the Plan will be authorized and approved by the Board.

9. ADJUSTMENT EVENTS

9.1 In the event of any dividend, share split, combination, or acquisition involving a share issuance or any exchange of shares, amalgamation, arrangement or consolidation, spin-off, recapitalisation or other distribution (other than ordinary cash dividends) of the assets of the Company to its shareholders, or any other change affecting the Ordinary Shares or the Share price, the Committee shall make such proportionate adjustments, if any, as necessary to reflect such change with respect to the aggregate number and type of shares (subject to compliance with applicable laws) that may be issued under the Plan and the applicable performance targets or criteria with respect thereto.

6

9.2	Notwithstanding the provisions of Rule 9.1, any adjustment (except in relation to a capitalisation issue) must be confirmed in writing by the Auditors (acting only as experts and not as arbitrators) to be in their opinion, fair and reasonable.
9.3	Upon any adjustment made pursuant to this Rule 9, the Company shall notify the Participants in writing. Any adjustment shall take effect upon such written notification being given or on such date as may be specified in such written notification.

10. ADMINISTRATION OF THE PLAN

10.1	The Plan shall be administered by the Committee (or any other committee and/or persons duly authorized and appointed by the Board to administer the Plan) in its absolute discretion with such powers and duties as are conferred on it by the Board, provided that no member of the Committee shall participate in any deliberation or decision in respect of Ordinary Shares issuable to him under the Plan.
10.2	Except to the extent certain terms and conditions are required by the Plan, the Committee shall have the power to make and vary such arrangements, guidelines and/or regulations (not being inconsistent with the Plan) for the implementation and administration of the Plan and/or to give effect to the provisions of the Plan, as it may, in its absolute discretion, think fit. Without prejudice to the generality of the foregoing, the Committee has the broad discretion to select the Participants at any time the Plan is in effect and each Participant’s participation in the Plan. Any matter pertaining or pursuant to the Plan and any dispute, difference or uncertainty as to the interpretation of the Plan or any rule, regulation or procedure thereunder or any rights under the Plan shall be determined by the Committee and binding in all respects.
10.3	The Plan shall not impose on the Company or the Committee or any of its members any liability whatsoever in connection with:

(a)	the failure or refusal by the Committee to exercise, or the exercise by the Committee of, any discretion under the Plan; and/or
(b)	any decision or determination of the Committee made pursuant to any provision of the Plan.

10.4 Any decision or determination of the Committee made pursuant to any provision of the Plan (other than a matter to be certified by the Auditors) shall be final, binding and conclusive (including for the avoidance of doubt, any decisions pertaining to disputes as to the interpretation of the Plan or any rule, regulation or procedure hereunder or the application of any formula hereunder or as to any rights under the Plan). The Committee shall not be required to furnish any reasons for any decision or determination made by it.

11. NOTICES

11.1	Any notice required to be given by any Participant to the Company shall be sent or made to the registered office of the Company or such other address (including an electronic mail address) or facsimile number, and marked for the attention of the Committee (c/o the General Counsel of the Company), as may be notified by the Company to the Participant in writing.
11.2	Any notices or documents required to be given to a Participant or any correspondence to be made between the Company and a Participant shall be given or made by the Committee (or such person(s) as it may from time to time direct) on behalf of the Company and shall be delivered to a Participant by hand or sent to a Participant at his home address, electronic mail address or facsimile number according to the records of the Company or the last known address, electronic mail address or facsimile number provided by the Participant to the Company.
11.3	Any notice or other communication from a Participant to the Company shall be irrevocable, and shall not be effective until received by the Company. Any notice or communication from the Company to a Participant shall be deemed to be received by the Participant, when left at the address specified in Rule 11.2 or, if sent by post, on the day following the date of posting or, if sent by electronic mail or facsimile transmission, on the day of despatch.
11.4	It shall be the Participant’s sole responsibility to ensure that all information contained in a Communication to the Company is complete, accurate, current, true and correct.
11.5	The Company’s records of the Communications, and its record of any transactions maintained by any relevant person authorized by the Company relating to or connected with the Plan, whether stored in electronic or printed form, shall be binding and conclusive on a Participant and shall be conclusive evidence of such Communications and/or transactions. All such records shall be admissible in evidence and the Participant shall not challenge or dispute the admissibility, reliability, accuracy or the authenticity of the contents of such records merely on the basis that such records were incorporated and/or set out in

7

	electronic form or were produced by or are the output of a computer system, and the Participant waives any of his rights (if any) to so object.
11.6	Any provision in these Rules requiring a Communication to be signed by a Participant may be satisfied in the case of an electronic Communication, by the execution of any on-line act, procedure or routine designated by the Company to signify the Participant’s intention to be bound by such Communication.

12. MODIFICATIONS TO THE PLAN

12.1 Any or all of the Rules of the Plan may be modified and/or altered at any time and from time to time by a resolution of the Committee, except that:

(a)	no modification or alteration shall adversely affect the rights of any Participant except with the consent in writing of not less than a majority in number of those Participants whose rights would be so adversely affected;
(b)	the definitions of “Committee”, “Group”, “Non-Executive Director”, “Ordinary Shares” and “Participant” and the provisions of Rules 4, 5, 6, 7, 8, 9, 10 and this Rule 12 shall not be altered to the advantage of Participants except with the prior approval of the Company’s shareholders in general meeting; and
(c)	no modification or alteration shall be made without the prior approval of the Singapore Exchange and such other regulatory authorities as may be necessary.

	For the purposes of Rule 12.1(a), the opinion of the Committee as to whether any modification or alteration would adversely alter the rights of any Participant shall be final, binding and conclusive. For the avoidance of doubt, nothing in this Rule 12.1 shall affect the right of the Committee under any other provision of the Plan to amend or adjust any provision of the Plan or any offer to participate in the Plan.
12.2	Notwithstanding anything to the contrary contained in Rule 12.1, the Committee may at any time by a resolution (and without other formality, save for the prior approval of the Singapore Exchange, if necessary) amend or alter the Plan in any way to the extent necessary or desirable, in the opinion of the Committee, to cause the Plan to comply with, or take into account, any statutory provision (or any amendment or modification thereto, including amendment of or modification to the Act) or the provision or the regulations of any regulatory or other relevant authority or body (including the Singapore Exchange, if applicable).
12.3	Written notice of any modification or alteration made in accordance with this Rule 12 shall be given to all Participants.

13. DURATION OF THE PLAN

13.1	The Plan shall continue to be in force at the discretion of the Committee, subject to a maximum period of ten years commencing on the Adoption Date, provided always that the Plan may continue beyond the above stipulated period with the approval of the Company’s shareholders by ordinary resolution in general meeting and of any relevant authorities which may then be required.
13.2	The Plan may be terminated at any time by the Committee or, at the discretion of the Committee, by resolution of the Company in a general meeting, subject to all relevant approvals which may be required and if the Plan is so terminated, no further Ordinary Shares shall be issued by the Committee hereunder.

14. TAXES AND DEDUCTIONS

All taxes (including income tax) arising from the allotment and issuance of Ordinary Shares to any Participant under the Plan shall be borne by that Participant. There shall be deducted or withheld from any payment to be made under the Plan any amounts which the Company or any of its subsidiaries is entitled, authorized or bound to deduct or withhold pursuant to applicable laws to account of income tax or other levies payable on the payment or any other applicable law or regulation. Without prejudice to the generality of the foregoing, if the payment should be subject to contributions in connection with any mandatory public savings plan administered by any governmental authority or statutory board, the Company shall be entitled to reduce the payment by an amount equal to such contribution amounts required to be made.

8

15. COSTS AND EXPENSES OF THE PLAN

15.1	Each Participant shall be responsible for all fees of CDP relating to or in connection with the issue and allotment of any Shares in CDP’s name, the deposit of share certificate(s) with CDP, the Participant’s securities account with CDP, or the Participant’s securities sub-account with a CDP depository agent.
15.2	Save for the taxes referred to in Rule 14 and such other costs and expenses expressly provided in the Plan to be payable by the Participants, all fees, costs and expenses incurred by the Company in relation to the Plan including but not limited to the fees, costs and expenses relating to the allotment and issue of Shares shall be borne by the Company.

16. DISCLAIMER OF LIABILITY

Notwithstanding any provisions herein contained, the Committee and the Company and the directors and employees of the Company shall not under any circumstances be held liable for any costs, losses, expenses and damages whatsoever and howsoever arising in any event, including but not limited to the delay by the Company in issuing the Shares or applying for or procuring the listing of new Shares on the Singapore Exchange (and/or such other stock exchange upon which the Shares may be listed or quoted) in accordance with Rule 7.4.1.

17. DISCLOSURES IN ANNUAL REPORT

The Company will make such disclosures in its annual report for as long as the Plan continues in operation as required by the Listing Manual including the following (where applicable):

(a)	the names of the members of the Committee administering the Plan;
(b)	in respect of all the Participants of the Plan, the following information:

(aa)	the name of the Participant; and
(bb)	the number of new Shares issued to such Participant during the financial year under review; and

(c) in relation to the Plan, the aggregate number of Ordinary Shares that have been allotted and issued under the Plan since the commencement of the Plan to the end of the financial year under review,

or as otherwise required under the Listing Manual from time to time.

18. GOVERNING LAW

The Plan shall be governed by, and construed in accordance with, the laws of the Republic of Singapore. Each Participant, by accepting an offer to participate in accordance with the Plan, and the Company submit to the exclusive jurisdiction of the courts of the Republic of Singapore.

19. CONTRACTS (RIGHTS OF THIRD PARTIES) ACT, CHAPTER 53B

No person other than the Company or a Participant shall have any right to enforce any provision of the Plan or any offer to participate in the Plan by virtue of the Contracts (Rights of Third Parties) Act, Chapter 53B of Singapore.

9

STATS ChipPAC Ltd.

(Incorporated in the Republic of Singapore)
(Company Registration Number 199407932D)

Proxy Form

— Fifteenth Annual General Meeting

IMPORTANT

1.	For Investors who have used their CPF moneys to buy shares of STATS ChipPAC Ltd., the Annual Report 2008 is forwarded to them at the request of their CPF Approved Nominees and is sent solely FOR INFORMATION ONLY.
2.	This Proxy Form is not valid for use by CPF Investors and shall be ineffective for all intents and purposes if used or purported to be used by them.
3.	CPF Investors who wish to vote should contact their CPF Approved Nominees.

I/We,	(Name) of
		(Address)
being a shareholder(s) of STATS ChipPAC Ltd. (the “Company”) hereby appoint:-

Name	Address	NRIC/ Passport No.	Proportion of Shareholding
			(%)
*and/or

as my/our proxy, to attend and to vote for me/us on my/our behalf and, if necessary, to demand a poll, at the Fifteenth Annual General Meeting (“Fifteenth AGM”) of the Company to be held at The Grassroots’ Club, 190 Ang Mo Kio Avenue 8, Singapore 568046, on April 27, 2009 at 10.00 a.m. (Singapore time), and at any adjournment thereof.

(Please indicate with an “X” in the spaces provided whether you wish your vote(s) to be cast for or against the Resolutions as set out in the Notice of the Fifteenth AGM and summarised below. In the absence of any specific directions, the proxy/proxies will vote or abstain as he/they may think fit, as he/they will on any other matter arising at the Fifteenth AGM.)

	No.	Routine Business — Ordinary Resolutions	For	Against
1		To adopt the Audited Financial Statements of the Company for the year ended December 28, 2008, together with the Reports of the Directors and the Auditors.
2		To appoint Mr. Rohit Sipahimalani as a Director of the Company pursuant to Article 99 of the Company’s Articles of Association.
3(a)		To re-elect Mr. Teng Cheong Kwee as a Director of the Company pursuant to Article 94 of the Company’s Articles of Association.
3(b)		To re-elect Mr. Tokumasa Yasui as a Director of the Company pursuant to Article 94 of the Company’s Articles of Association.
4(a)		To re-appoint Mr. Charles R. Wofford as a Director of the Company pursuant to Section 153(6) of the Companies Act, Chapter 50.
4(b)		To re-appoint Mr. R. Douglas Norby as a Director of the Company pursuant to Section 153(6) of the Companies Act, Chapter 50.
5		To re-appoint PricewaterhouseCoopers as Auditors and to authorize the Directors to fix their remuneration.
6		To approve Directors’ fees totalling approximately US$473,000 for the year ending December 27, 2009.
		Special Business — Ordinary Resolutions
7(a)		To authorize the Directors to allot and issue shares in the capital of the Company and to create and issue instruments and to allot and issue shares in the capital of the Company in connection therewith pursuant to Section 161 of the Companies Act, Chapter 50.
7(b)		To authorize the Directors to allot and issue shares in the capital of the Company pursuant to the exercise of the options under the STATS ChipPAC Ltd. Substitute Share Purchase and Option Plan and the STATS ChipPAC Ltd. Substitute Equity Incentive Plan.
7(c)		To authorize the Directors to allot and issue shares in the capital of the Company pursuant to the exercise of the options granted under the STATS ChipPAC Ltd. Share Option Plan, as amended.

1

	No.	Special Business — Ordinary Resolutions
7(d)		To adopt the STATS ChipPAC Ltd. Performance Share Plan 2009 (“PSP 2009”) as substantially set out in Appendix 1 to the Proxy Statement and authorize the Directors to inter alia grant Performance Shares, which represent unfunded and unsecured rights to receive ordinary shares in the capital of the Company, in accordance with the provisions of PSP 2009 and to allot and issue for time to time such number of fully paid-up ordinary shares in the capital of the Company as may be required to be allotted and issued pursuant to the terms of the PSP 2009.
7(e)		To adopt the STATS ChipPAC Ltd. Equity Grant Plan for Non-Executive Directors (“NED Plan”) as substantially set out in Appendix 2 to the Proxy Statement and authorize the Directors to inter alia make offers to selected Non-Executive Directors to participate in the NED Plan, in accordance with the NED Plan and to allot and issue from time to time such number of fully paid-up ordinary shares in the capital of the Company as may be required to be allotted and issued pursuant to the terms of the NED Plan.
7(f)		To approve the renewal of the Share Purchase Mandate.

Dated this _________ day of _________________  2009.

Total Number of Shares Held

IMPORTANT
Please read Notes

Signature(s) of Shareholder(s)/Common Seal

*Please delete accordingly.

Notes:-

1.	Please insert the total number of ordinary shares (“Shares”) held by you. If you have Shares entered against your name in the Depository Register (as defined in Section 130A of the Companies Act, Chapter 50 of Singapore), you should insert that number of Shares. If you have Shares registered in your name in the Register of Shareholders (i.e. Members), you should insert that number of Shares. If you have Shares entered against your name in the Depository Register and Shares registered in your name in the Register of Shareholders (i.e. Members), you should insert the aggregate number of Shares entered against your name in the Depository Register and registered in your name in the Register of Shareholders (i.e. Members). If no number is inserted, the instrument appointing a proxy or proxies shall be deemed to relate to all the Shares held by you.
2.	A shareholder is a person whose name appears on the Depository Register of The Central Depository (Pte) Limited in Singapore or a person registered in the Company’s Register of Shareholders (i.e. Members). A shareholder of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint one or two proxies to attend and vote instead of him. A proxy need not be a shareholder of the Company.
3.	Where a shareholder appoints two proxies, the appointments shall be invalid unless he specifies the proportion of his shareholding (expressed as a percentage of the whole) to be represented by each proxy.
4.	The instrument appointing a proxy or proxies must be deposited at registered office of the Company at 10 Ang Mo Kio Street 65, TechPoint #05-17/20, Singapore 569059 not less than 48 hours before the time appointed for the Fifteenth Annual General Meeting.
5.	The instrument appointing a proxy or proxies must be under the hand of the appointor or of his attorney duly authorized in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed either under its seal or under the hand of an officer or attorney duly authorized.
6.	A corporation which is a shareholder may authorize by resolution of its directors or other governing body such person as it thinks fit to act as its representative at the Fifteenth Annual General Meeting, in accordance with Section 179 of the Companies Act, Chapter 50 of Singapore.

General:

The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completed or illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified in the instrument appointing a proxy or proxies. In addition, in the case of Shares entered in the Depository Register, the Company may reject any instrument appointing a proxy or proxies lodged if the shareholder, being the appointor, is not shown to have Shares entered against his name in the Depository Register as at 48 hours before the time appointed for holding the Fifteenth Annual General Meeting, as certified by The Central Depository (Pte) Limited to the Company.

2

EX-99.2

Exhibit 99.2

Corporate Profile

STATS ChipPAC Ltd. (“STATS ChipPAC” or “the Company” — SGX-ST: STATSChP) is a leading service provider of semiconductor packaging design, bump, probe, assembly, test and distribution solutions. A trusted partner and supplier to leading semiconductor companies worldwide, STATS ChipPAC provides fully integrated, multi-site, end-to-end packaging and testing solutions that bring products to the market faster.

Our customers are some of the largest semiconductor companies in the world. STATS ChipPAC is a leader in mixed signal testing and advanced packaging technology for semiconductors used in diverse end market applications, including communications, consumer and computing.

With advanced process technology capabilities and a global manufacturing presence spanning Singapore, South Korea, China, Malaysia, Thailand and Taiwan, STATS ChipPAC has a reputation for providing dependable, high quality test and packaging solutions. The Company’s customer support offices are centered in the United States (California’s Silicon Valley, Arizona, Texas, Massachusetts, Colorado and North Carolina). Our offices outside the United States are located in South Korea, Singapore, China, Malaysia, Thailand, Taiwan, Japan, the Netherlands and United Kingdom. STATS ChipPAC’s facilities include those of its subsidiary, STATS ChipPAC Taiwan Semiconductor Corporation, in Hsin-Chu District, Taiwan. These facilities offer new product introduction support, pre-production wafer sort, final test, packaging and other high volume preparatory services. Together with our research and development centers in South Korea, Singapore, Malaysia, China, Taiwan and the United States as well as test facilities in the United States, this forms a global network providing dedicated test engineering development and product engineering support for customers from design to volume production.

STATS ChipPAC is listed on the Singapore Exchange Securities Trading Limited (SGX-ST). Further information is available at www.statschippac.com. Information contained in this website does not constitute a part of this Annual Report 2008 (the “Annual Report”).

Forward Looking Statements

Certain of the statements in this Annual Report are forward-looking statements that are based on management’s current views and assumptions and involve a number of risks and uncertainties which could cause actual results to differ materially. These include statements regarding the timing and extent of our restructuring plan and the restructuring charge to be incurred in connection therewith, our intention to terminate the registration of our ordinary shares and reporting obligations under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the continued trading and listing of our ordinary shares on the SGX-ST, our financial condition and results of operations, cash flows, dividends, financing plans, business strategies, operating efficiencies and synergies, budget, capital and other expenditures, competitive positions, growth opportunities for existing products, benefits from new technology, plans or objectives of management, outcome of litigation, industry growth, the impact of regulatory initiatives, markets for our securities and other statements on underlying assumptions, other than statements of historical fact, including but not limited to those that are identified by the use of words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “projects” and similar expressions.

Factors that could cause actual results to differ include, but are not limited to, extent of deterioration in general business and economic conditions and the state of the semiconductor industry; prevailing market conditions; demand for end-use applications products such as communications equipment, consumer and multi-applications and personal computers; decisions by customers to discontinue outsourcing of test and packaging services; level of competition; our reliance on a small group of principal customers; our continued success in technological innovations; customer credit risks; possible future application of push-down accounting; pricing pressures, including declines in average selling prices; intellectual property rights disputes and litigation; our ability to control operating expenses; our substantial level of indebtedness and access to credit markets; potential impairment charges; availability of financing; adverse tax and other financial consequences if the South Korean taxing authorities do not agree with our interpretation of the applicable tax laws; classification of our Company as a passive foreign investment company; our ability to develop and protect our intellectual property; rescheduling or canceling of customer orders; changes in our product mix; our capacity utilization; delays in acquiring or installing new equipment; limitations imposed by our financing arrangements which may limit our ability to maintain and grow our business; returns from research and development investments; changes in customer order patterns; shortages in supply of key components; disruption of our operations; loss of key management or other personnel; defects or malfunctions in our testing equipment or packages; changes in environmental laws and regulations; exchange rate fluctuations; regulatory approvals for further investments in our subsidiaries; majority ownership by Temasek Holdings (Private) Limited (“Temasek”) that may result in conflicting interests with Temasek and our affiliates; unsuccessful acquisitions and investments in other companies and businesses; labor union problems in South Korea; uncertainties of conducting business in China and changes in laws, currency policy and political instability in other countries in Asia; natural calamities and disasters, including outbreaks of epidemics and communicable diseases; and other risks described from time to time in the Company’s filings with the U.S. Securities and Exchange Commission, including its annual report on Form 20-F dated March 9, 2009. You should not unduly rely on such statements. We do not intend, and do not assume any obligation, to update any forward-looking statements to reflect subsequent events or circumstances.

Annual Report to Shareholders
for the Year 2008*

Contents

Management Discussion and Analysis

Management’s Annual Report on Internal Control over Financial Reporting

Report of Independent Registered Public Accounting Firm

Financial Statements

Supplementary Information

*

This Annual Report has been prepared by STATS ChipPAC Ltd. (“STATS ChipPAC”) for the purpose of complying with the laws of Singapore. The financial information in this Annual Report is derived (unless otherwise indicated) from the consolidated financial statements of STATS ChipPAC which are prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and included in this Annual Report. The Company’s complete Year 2008 annual report on Form 20-F, as filed with the U.S. Securities and Exchange Commission (“SEC”) on March 9, 2009, is available on STATS ChipPAC’s website at www.statschippac.com.

All amounts are expressed in United States dollars unless otherwise indicated.

1

Management Discussion and Analysis

     The following discussion of our business, financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes included elsewhere in this Annual Report. 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 certain factors, such as those set forth in our annual report on Form 20-F filed with the SEC and elsewhere in this Annual Report. Our consolidated financial statements are reported in U.S. dollars and have been prepared in accordance with U.S. GAAP. Since the beginning of fiscal 2005, we have employed quarterly and fiscal year reporting periods. Our 52-53 week fiscal year ends on the Sunday nearest and prior to December 31. Our fiscal quarters end on a Sunday and are generally thirteen weeks in length. Our first three quarters of 2008 ended on March 30, June 29 and September 28, respectively, and our fourth quarter and fiscal year 2008 ended on December 28. Our first three quarters of 2007 ended on April 1, July 1 and September 30, respectively, and our fourth quarter and fiscal year 2007 ended on December 30. Unless otherwise stated, all years and dates refer to STATS ChipPAC’s fiscal years.

Overview

     We are a leading service provider of semiconductor packaging design, bump, probe, assembly, test and distribution solutions. We have the scale to provide a comprehensive range of semiconductor packaging and test solutions to a diversified global customer base servicing the computing, communications, consumer, automotive and industrial markets.

     In August 2004, we completed the merger with ChipPAC, Inc. which resulted in ChipPAC, Inc. becoming a wholly-owned subsidiary of ST Assembly Test Services Ltd. The merger was accounted for using the purchase method. Under the purchase method of accounting, the cost of approximately $1.1 billion to acquire ChipPAC, including transaction costs, was allocated to ChipPAC’s net assets based on their respective estimated fair values. The excess of the purchase price over the estimated fair values of the net assets acquired was recorded as goodwill. We have included the financial results of ChipPAC in our financial results since August 5, 2004.

     We voluntarily delisted from Nasdaq with effect from December 31, 2007 and terminated our ADR program with effect from April 30, 2008. We intend to seek to terminate the registration of our ordinary shares and our reporting obligations under the Exchange Act if and when we become eligible to do so.

Global Market Conditions

     The United States and other countries have been experiencing deteriorating economic conditions, including unprecedented financial market disruption. If these trends in global economic conditions continues or deteriorates further, it may result in decreases in demand for our services. The current uncertainty in global economic conditions may also make it difficult for our customers to accurately forecast and plan future business activities. There can be no assurance that the continuing or deteriorating trends in global economic conditions will not adversely impact our results of operations, cash flow, financial position and or/prospects.

     Furthermore, restrictions on credit globally and foreign currency exchange rate fluctuations in countries in which we have operations may impact economic activity and our results. Credit risk associated with our customers and our investment portfolio may also be adversely impacted. Financial market disruption may also result in increased interest expense or inability to obtain short-term financing for our operations.

Proposed Capital Reduction and Cash Distribution

     In January 2008, we announced our intention to effect a proposed capital reduction to return surplus share capital in an amount of up to $813.0 million to our shareholders. At an extraordinary general meeting held on March 17, 2008, our shareholders approved the proposed capital reduction.

2

     Among other conditions, the proposed capital reduction was subject to and conditional upon our Company being able to obtain adequate debt financing to fund the cash distribution pursuant to the capital reduction and the repayment of certain of our outstanding debt (including the redemption or repurchase of our senior notes that would otherwise restrict our ability to make the cash distribution and to finance the cash distribution) on terms and conditions acceptable to us. The amount of the cash distribution would accordingly have been determined based on the proceeds of such debt financing made available to us. In furtherance of the proposed capital reduction, we commenced a cash tender offer and consent solicitation in respect of our senior notes in June 2008 but terminated it in August 2008 because the financing condition under the tender offer and consent solicitation was not satisfied.

     In February 2009, we announced that we will not be proceeding with the proposed capital reduction as previously approved at the March 2008 shareholders’ meeting, given the current economic environment, we have not been able to obtain debt financing to fund the proposed cash distribution on terms and conditions acceptable to us.

Temasek’s Subsidiary, STSPL’s, Tender Offer

     In March 2007, Singapore Technologies Semiconductors Pte Ltd (STSPL), a wholly-owned subsidiary of Temasek, launched a voluntary conditional cash tender offer for our ordinary shares and ADSs that STSPL did not already own. Temasek, a private limited company incorporated in Singapore, is wholly-owned by the Minister for Finance (Incorporated) of Singapore, a body corporate constituted by the Minister for Finance (Incorporation) Act (Cap. 183). The tender offer also included an offer by STSPL for our outstanding $115.0 million aggregate principal amount of our zero coupon convertible notes and $150.0 million aggregate principal amount of our 2.5% convertible notes. Concurrently with the tender offer, STSPL made an options proposal to all holders of options granted under STATS ChipPAC’s share option plans.

     In May 2007, the tender offer closed with STSPL and its concert parties holding 83.1% of the outstanding ordinary shares (including ordinary shares represented by ADSs, but excluding the ordinary shares issuable upon conversion of the $134.5 million aggregate principal amount of our 2.5% convertible notes acquired by STSPL) and $134.5 million aggregate principal amount of our 2.5% convertible notes. The balance $15.5 million outstanding principal amount of our 2.5% convertible notes were converted into ADSs in May 2007.

     As of January 31, 2009, Temasek through STSPL, beneficially owned 1,845.7 million ordinary shares, representing approximately 83.8% of our Company’s ordinary shares following STSPL’s conversion of its entire $134.5 million of our 2.5% convertible notes into 145.1 million ordinary shares on May 22, 2008.

     In 2007, we recorded tender offer expenses of $10.9 million, consisting of investment banking, legal, accounting, insurance, printing and other costs associated with the tender offer.

     Changes in share ownership by shareholder may result in a limitation on the amount of the net operating losses and unutilized capital allowances that are available as carryforwards for use by us. We reviewed the tax effect of such a shareholder change in connection with the tender offer by STSPL in 2007. In January 2008, the Singapore tax authorities confirmed that the limitations relating to our ability to carryforward certain Singapore tax losses and capital allowances for offset against our future taxable profits in connection with the tender offer by STSPL were not affected subject to the fulfillment of certain continuing conditions. Concurrently, approximately $311.6 million of such tax losses and capital allowance carry forwards continued to be made available to our Company’s operations in Singapore.

3

Results of Operations and Selected Data

	Year Ended
	December 31, 2006						December 30, 2007						December 28, 2008
	(In millions, except for ratio)
				% of net						% of net						% of net
				revenues						revenues						revenues
Net revenues	$	1,616.9			100.0		$	1,651.6			100.0		$	1,658.2			100.0
Cost of revenues		(1,290.8	)		(79.8	)		(1,330.3	)		(80.5	)		(1,383.8	)		(83.5	)
Gross profit		326.1			20.2			321.3			19.5			274.4			16.5
Operating expenses:
Selling, general and administrative		139.5			8.6			112.6			6.8			118.3			7.1
Research and development		30.4			1.9			34.9			2.1			37.8			2.3
Restructuring charges		1.9			0.1			1.0			0.1			19.8			1.2
Equipment impairment		—			—			—			—			21.1			1.2
Accelerated share-based compensation		—			—			—			—			1.6			0.1
Tender offer expenses		—			—			10.9			0.7			—			—
Held for sale asset impairment		—			—			1.7			0.1			—			—
Total operating expenses		171.8			10.6			161.1			9.8			198.6			11.9
Operating income		154.3			9.6			160.2			9.7			75.8			4.6
Total other income (expense), net		(41.7	)		(2.6	)		(31.1	)		(1.9	)		(26.5	)		(1.6	)
Income (loss) before income taxes		112.6			7.0			129.1			7.8			49.3			3.0
Income tax expense		(25.8	)		(1.6	)		(29.6	)		(1.8	)		(19.2	)		(1.1	)
Income (loss) before minority interest		86.8			5.4			99.5			6.0			30.1			1.9
Minority interest		(10.0	)		(0.6	)		(5.8	)		(0.3	)		(4.4	)		(0.3	)
Net income (loss)	$	76.8			4.8		$	93.7			5.7		$	25.7			1.6

Year Ended December 28, 2008 Compared to Year Ended December 30, 2007

Net Revenues

     We derive revenues primarily from packaging and testing of laminate and leaded packages. Net revenues were $1,658.2 million in 2008, an increase of 0.4% compared to $1,651.6 million in 2007. The net revenues increase in 2008 was primarily due to increased packaging revenue from contribution from our factory in Pathumthani, Thailand, which we acquired in October 2007.

     Our packaging revenues in 2008 increased 0.2% to $1,236.0 million, compared to 2007. Unit volumes of our total packaging in 2008 were 1.0% lower compared to 2007 and resulted in $12.5 million decrease in packaging revenues. Average selling prices per pin for packaging services in 2008 increased 1.2%, compared to 2007 due to favorable changes in product mix and contributed to an increase of $15.0 million in revenue. Revenues from test and other services in 2008 increased 1.0% to $422.2 million, compared to 2007.

     In 2008, revenue contribution from the communications market decreased 0.7% over 2007 to $858.5 million and represented 51.8% of our revenues in 2008, compared to 52.5% of our net revenues in 2007. Revenue contribution from consumer, multi-applications and other markets in 2008 decreased 0.4% to $524.3 million and represented 31.6% of our net revenues in 2008 compared to 32% of our net revenues in 2007. Revenue contribution from the PC market in 2008 increased 1.1% to $275.4 million and represented 16.6% of our net revenues in 2008 compared to 15.5% of our net revenues in 2007. We expect to continue to depend on the communications, consumer and multi-applications, and PC markets for substantially all of our net revenues.

Gross Profit

     Gross profit in 2008 was $274.4 million, a decrease of $46.9 million compared to $321.3 million in 2007. Gross profit as a percentage of net revenues was 16.5% in 2008, compared to 19.5% in 2007. In 2008, gross margin decreased primarily due to lower equipment utilization and higher material cost. Overall equipment utilization was approximately 64% in 2008 compared to approximately 75% in 2007. Gross profit in 2008 included share-based compensation expense under SFAS 123(R) of $0.9 million in 2008 compared to $4.8 million in 2007, which reduced the gross margin by 0.1% in 2008. Our cost of revenues consist principally of fixed costs such as depreciation expenses, facility rental, utilities and facility operating costs and variable costs such as materials, payroll and operating supplies. We continue to experience higher cost as a result of external global economic factors, such as higher substrate, gold and oil prices which affected our cost of materials, and

4

the adverse effect of the strengthening of the Singapore dollar, Chinese Renminbi and Malaysian Ringgit against the U.S. dollar, particularly in the nine months ended September 28, 2008.

Selling, General and Administrative

     Selling, general and administrative expenses were $118.3 million in 2008, an increase of 5.1% compared to $112.6 million in 2007. As a percentage of net revenues, selling, general and administrative expenses was 7.1% in 2008 compared to 6.8% in 2007. The increase in selling, general and administrative expenses in 2008 was primarily due to our acquisition of our factory in Pathumthani, Thailand in October 2007 and the Asian currencies appreciation against the U.S. dollar, particularly in the nine months ended September 28, 2008, partially offset by lower share-based compensation expense. In 2008, share-based compensation expense under SFAS 123(R) was $0.9 million, compared to $3.1 million in 2007.

Research and Development

     Research and development expenses were $37.8 million in 2008, an increase of $2.9 million, compared to $34.9 million in 2007. Research and development expenses increased primarily due to the establishment of a facility for the research and development of advanced wafer integration technology in May 2007. As a percentage of net revenues, research and development expenses were 2.3% in 2008, compared to 2.1% in 2007.

Equipment Impairment

     In 2008, we recorded an impairment charge of $21.1 million as a result of our ongoing assessment of property, plant and equipment for impairment. The $21.1 million equipment impairment was taken because continued softness in demand in the end-markets to which certain of our equipment was dedicated had reduced the anticipated future usage of such equipment.

     We did not recorded any impairment charge in 2007 from our ongoing assessment of property, plant and equipment in connection with demand and anticipated future usage.

Restructuring Expenses

     We recorded restructuring expenses of $19.8 million in 2008, compared to $1.0 million in 2007. The restructuring expenses in 2008 consisted of severance and related charges of $6.0 million in connection with our reduction of our workforce by 335 employees in the nine months ended September 28, 2008 and a further severance and related charges of $13.8 million in connection with our restructuring plan involving the reduction of approximately 1,600 employees, representing approximately 12% of our global workforce, which we announced in December 2008. We implemented the restructuring plan to aggressively reduce our operating costs in response to the severe operating environment. The workforce reduction is expected to be completed in the first quarter of 2009.

     In 2007, certain restructuring plans were executed to reduce operating costs to better align our expenses with revenues, which resulted in a total reduction in workforce of 143 employees, related to the restructuring. Severance and related charges of $1.0 million were incurred and expensed in 2007.

Accelerated Share-based Compensation

     The STATS ChipPAC Ltd. Performance Share Plan was terminated in 2008. As a result, we recorded $1.6 million of accelerated share-based compensation expense in 2008. No accelerated share-based compensation expense was incurred in 2007.

Tender Offer Expenses

     In 2007, we incurred $10.9 million, consisting of investment banking, legal, accounting, insurance, printing and other costs associated with the tender offer from STSPL, a wholly-owned subsidiary of Temasek. No tender offer expenses were incurred in 2008.

Held for Sale Asset Impairment

     In 2007, we recorded a $1.7 million held for sale asset impairment loss on the sale of our packaging and test assets related to our discrete power business. No held for sale asset impairment was made in 2008.

5

Net Interest Income (Expense)

     Net interest expense was $30.3 million in 2008, compared to $33.2 million in 2007. Interest income was $5.7 million in 2008, compared to $7.3 million in 2007. The decrease in interest income in 2008 was primarily due to lower interest rates, partially offset by higher cash balances in 2008 compared to 2007.

     Interest expense was $36.0 million in 2008, compared to $40.5 million in 2007. The decrease in interest expense was primarily due to our redemption of $115.0 million aggregate principal amount of our zero coupon notes from November 2007 through June 2008, the conversion of $134.5 million aggregate principal amount of our 2.5% convertible notes into ordinary shares by Temasek, through its wholly-owned subsidiary, STSPL, and decreases in short-term and long-term debts in Thailand, Taiwan and South Korea, in the aggregate of $191.1 million. Total outstanding interest-bearing debt was $473.5 million and $664.6 million as of December 28, 2008 and December 30, 2007, respectively.

Foreign Currency Exchange Gain (Loss)

     Net foreign currency exchange gain was $5.2 million in 2008, compared to $2.5 million in 2007. These cash and non-cash gains were due primarily to the fluctuations in 2008 compared to the same periods in 2007 between the exchange rates of the U.S. Dollar and the Singapore dollar, the South Korean Won, the Chinese Renminbi and the Thai Baht.

Other Non-Operating Income (Expense), Net

     Net other non-operating income was $0.03 million in 2008 compared to net other non-operating expense of $0.4 million in 2007.

Income Tax Expense

     We record a valuation allowance to reduce deferred tax assets to the amount we believe is more likely than not to be realized. In the event that deferred tax asset would be realizable in the future in excess of the net recorded amount, an adjustment to the deferred tax asset would increase income in the period such determination is made. In 2008, we increased valuation allowance on our deferred tax assets by $25.4 million. Our consolidated income tax expense was $19.2 million in 2008, compared to $29.6 million in 2007 based on the mix of tax rates and taxable income across the various jurisdictions in which we do business. Our primary tax jurisdictions are Singapore, South Korea, China, Malaysia, Taiwan, Thailand and the United States.

Year Ended December 30, 2007 Compared to Year Ended December 31, 2006

Net Revenues

     We derive revenues primarily from test and packaging of laminate and leaded packages. Net revenues were $1,651.6 million in 2007, an increase of 2.1% compared to $1,616.9 million in 2006. The increase was primarily due to the contribution from our factory in Pathumthani, Thailand, acquired in October 2007. This was partially offset by weak demand from certain large customers.

     Our packaging revenue in 2007 increased 3.3% to $1,233.6 million compared to 2006. Unit volumes of our total packaging in 2007 were 1.4% higher compared to 2006 and resulted in an increase of $16.8 million in revenue. The average selling prices for our services have generally decreased over product life cycles. Our ability to maintain or increase our average selling price will continue to be dependent upon our ability to selectively increase pricing and shift to higher margin packaging and test services. Average selling prices per pin for packaging services in 2007 increased 1.9% compared to 2006, primarily due to changes in product mix, and contributed to an increase of $22.5 million in revenue. Revenue from test and other services in 2007 decreased 1.1% to $418.0 million compared to 2006.

     In 2007, revenue contribution from the communications market decreased 4.2% over 2006 to $867.2 million and represented 52.5% of our revenues compared to 56.7% of our revenues in 2006. The revenue from the communications market remained relatively strong with continued demand for more complex, higher functionality mobile phone and infrastructure products. Revenue contribution from consumer, multi-applications and other markets increased 7.3% over 2006 to $528.5 million and represented 32.0% of our revenues in 2007 compared to 24.7% of our revenues in 2006. Revenue contribution from the PCs market decreased 3.2% over 2006 to $255.8 million and represented 15.5% of our revenues in 2007 compared to 18.7% of our revenues in

6

2006. We expect to continue to depend on the communications, consumer and multi-applications, and the PCs market for substantially all of our net revenues.

Gross Profit

     Gross profit in 2007 was $321.3 million, a decrease of $4.9 million compared to $326.2 million in 2006. Gross profit as a percentage of net revenues was 19.5% in 2007, compared to 20.2% in 2006. Gross profit in 2007 included $4.8 million of share-based compensation expense related to share options and employee share purchase rights under SFAS 123(R), which reduced gross margin by 0.3% in 2007. Overall equipment utilization was approximately 75% in both 2007 and 2006. Our cost of revenues consist principally of fixed costs such as depreciation and leasing expenses and variable costs such as direct and indirect labor, materials and overhead expenses. We continue to experience higher cost as a result of external global economic factors, such as higher substrate, gold and oil prices which affected our cost of materials, and the adverse effect of the strengthening of the Singapore dollar, South Korean Won, Chinese Renminbi, Thai Baht and Malaysian Ringgit against the U.S. dollar in 2007 when compared to 2006.

Selling, General and Administrative

     Selling, general and administrative expenses were $112.6 million in 2007, a decrease of 19.3% compared to $139.5 million in 2006. As a percentage of net revenues, selling, general and administrative expenses were 6.8% in 2007 compared to 8.6% in 2006. The decrease in selling, general and administrative expenses in 2007 was primarily due to certain intangible assets related to the merger of former STATS and ChipPAC becoming fully amortized, lower Sarbanes-Oxley Act compliance related expenses and lower share-based compensation expense partially offset by higher payroll expense resulting from an increased number of employees and increased cost of general business support. In 2007, share-based compensation expense was $3.1 million under SFAS 123(R) compared to $6.1 million in 2006.

Research and Development

     Research and development expenses were $34.9 million in 2007 compared to $30.4 million in 2006, an increase of $4.5 million. Research and development expenses increased primarily due to an increase in headcount and the establishment of a new facility for the research and development of advanced wafer integration technology. As a percentage of net revenues, research and development expenses were 2.1% in 2007 compared to 1.9% in 2006.

Held for Sale Asset Impairment

     In 2007, we recorded a $1.7 million held for sale asset impairment loss on the sale of our packaging and test equipment related to our discrete power packaging business. We did not record any held for sale asset impairment charge in 2006.

Restructuring Charges

     In 2007 and 2006, certain restructuring plans were executed to reduce operating costs to better align our expenses with revenues, which resulted in a total reduction in workforce of 143 and 556 employees, respectively, related to the restructuring. Severance and related charges of $1.0 million and $1.9 million were incurred and expensed in 2007 and 2006, respectively.

Tender Offer Expenses

     In 2007, we incurred $10.9 million in expense in connection with the tender offer by STSPL which consisted of investment banking, legal, accounting, insurance, printing and other costs.

Net Interest Income (Expense)

     Net interest expense was $33.2 million in 2007 compared to $40.4 million in 2006. Interest income was $7.3 million in 2007 compared to $5.4 million in 2006. The increase in interest income in 2007 was primarily due to an increase in cash equivalents and marketable securities held by us compared to 2006.

     Interest expense was $40.5 million in 2007 compared to $45.8 million in 2006. The decrease in interest expense was primarily due to the decrease in outstanding indebtedness as a result of our repurchase of $50.0 million aggregate principal amount of our 8.0% convertible subordinated notes due 2011 in October 2006, the redemption of our remaining $31.5 million aggregate principal amount of our 1.75% convertible notes upon maturity in March 2007, the redemption of $96.4 million aggregate principal amount of our zero coupon convertible notes and a decrease in long-term debts in Taiwan, partially offset by an increase in long-term debts

7

in South Korea. Total outstanding interest-bearing debt was $664.6 million and $762.9 million as of December 30, 2007 and December 31, 2006, respectively.

Foreign Currency Exchange Gain (Loss)

     Net foreign currency exchange gain was $2.5 million in 2007 compared to a net foreign currency exchange loss of $1.6 million in 2006. The non-cash gain in 2007 and loss in 2006 were due primarily to the fluctuations of the exchange rate between the U.S. dollar and the Singapore dollar, South Korean Won, Chinese Renminbi and, in the case of 2007, Thai Baht.

Other Non-Operating Income (Expense)

     Net other non-operating expense was $0.4 million in 2007 compared to net other non-operating income of $0.1 million in 2006.

Income Tax Expense

     We record a valuation allowance to reduce deferred tax assets to the amount we believe is more likely than not to be realized. In the event that deferred tax assets would be realizable in the future in excess of the net recorded amount, an adjustment to the deferred tax asset would increase income in the period such determination was made. Our consolidated income tax expense was $29.6 million in 2007 compared to $25.8 million in 2006 based on the mix of tax rates and taxable income across the various jurisdictions in which we do business. Our primary tax jurisdictions are Singapore, South Korea, China, Malaysia, Taiwan, Thailand and the United States.

Liquidity and Capital Resources

     Our principal source of liquidity consists of cash flows from operating activities, bank facilities, debt financing, and our existing cash and cash equivalents and marketable securities. As of December 28, 2008, we had cash, cash equivalents and marketable securities of $352.8 million. We also have available lines of credit and banking facilities consisting of loans, overdrafts, letters of credit and bank guarantees, including those available to our consolidated subsidiaries, which amounted to an aggregate of $263.2 million, of which $88.6 million was utilized as of December 28, 2008. Our liquidity needs arise primarily from servicing our outstanding debts, working capital needs and the funding of capital expenditures and investments. Our capital expenditures are largely driven by the demand for our services, primarily to increase our packaging and testing capacity, to replace packaging and testing equipment from time to time, and to expand our facilities and service offerings. We spent $239.0 million on capital expenditures in 2008, compared to $268.8 million in 2007. Our capital expenditure in 2008 was lower than 2007 due to the impact of the deterioration in the global economic condition to our business outlook.

     In March 2007, we redeemed the remaining outstanding $31.5 million aggregate principal amount of our 1.75% convertible notes due 2007 (including accrued interest) for an aggregate consideration of $36.8 million. The repurchase was financed with our cash and cash equivalents.

     In October 2007, we consummated the previously announced definitive agreement with LSI pursuant to which STATS ChipPAC (Thailand) Limited acquired LSI’s assembly and test operations in Thailand for an aggregate purchase price of approximately $100.0 million payable over the next four years commencing October 2, 2008. We funded $50.0 million of the purchase price with our working capital, including our cash and cash equivalents, and issued a promissory note bearing interest of 6.0% per annum for the balance $46.8 million purchase price, after taking into account a contractual net-off of $3.2 million of receivables from LSI. The first annual installment of $20.0 million was paid to LSI on October 2, 2008.

     In November 2007, we paid a total of $114.1 million (including accrued yield-to-maturity interest up to November 7, 2007) to redeem $96.4 million aggregate principal amount of our zero coupon convertible notes. We financed the redemption with cash and short-term borrowings. In January and February 2008, we repurchased $12.4 million and $2.5 million aggregate principal of our zero coupon convertible notes for $14.7 million (including accrued yield-to-maturity interest) and $2.9 million (including accrued yield-to-maturity interest), respectively. We financed the repurchases with our cash and cash equivalents. In June 2008, we redeemed the remaining $3.7 million principal amount, representing 3.2% of the original principal amount of our zero coupon

8

convertible notes. We paid an aggregate consideration of $4.5 million (including accrued yield-to-maturity interest) and financed the redemption with cash in hand.

     In May 2008, Temasek, through its wholly-owned subsidiary, STSPL, converted its holding of all of the outstanding $134.5 million principal amount of our 2.5% convertible notes into 145.1 million of our ordinary shares.

     In January 2008, we announced our intention to effect a proposed capital reduction to return surplus share capital in an amount of up to $813.0 million to our shareholders. At an extraordinary general meeting held on March 17, 2008, our shareholders approved the proposed capital reduction.

     Among other conditions, the proposed capital reduction was subject to and conditional upon us being able to obtain adequate debt financing to fund the cash distribution pursuant to the capital reduction and the repayment of certain of our outstanding debt on terms and conditions acceptable to us. The amount of the cash distribution would accordingly have been determined based on the proceeds of such debt financing made available to us. In furtherance of the proposed capital reduction, we commenced a cash tender offer and consent solicitation in respect of our senior notes in June 2008 but terminated it in August 2008 because the financing condition under the tender offer and consent solicitation was not satisfied.

     In February 2009, we announced that we will not be proceeding with the proposed capital reduction as previously approved at the March 2008 shareholders’ meeting, given the current economic environment, we has not been able to obtain debt financing to fund the proposed cash distribution on terms and conditions acceptable to us.

     At the annual general meeting in April 2008, our shareholders approved the amendments to, and renewal of, our share purchase mandate, authorizing the repurchase of up to 2.5% of the issued ordinary shares in the capital of our Company as of the date of the annual general meeting. The approved amount for share repurchases under this shareholders’ mandate will terminate on the earlier of the date on which the next annual general meeting is held or required to be held or the date which the approval is revoked or varied. As of December 28, 2008, we have not repurchased any shares. We may use our available funds, draw down on our available lines of credit or seek additional financing or a combination of these to finance any repurchase of our ordinary shares.

     We believe that our cash on hand, existing credit facilities and anticipated cash flows from operations will be sufficient to meet our currently anticipated capital expenditure requirements, investment requirements, share repurchases, as well as debt service repayment obligations for 2009. However, under the current extreme market conditions as discussed under “— Global Market Conditions,” there can be no assurance that our business activity would be maintained at the expected level to generate the anticipated cash flows from operations.

     If the current market conditions persist or further deteriorate, we may experience a decrease in demand for our services, resulting in our cash flows from operations being lower than anticipated. If our cash flows from operations is lower than anticipated, including as a result of the ongoing downturn in the market conditions generally or in the semiconductor industry more specifically or otherwise, or our capital requirements exceed our expectations as a result of higher than anticipated growth in the semiconductor industry, acquisition or investment opportunities, or the expansion of our business or otherwise, we may have to seek additional financing. In such events, there can be no assurance that additional financing will be available or, if available, that such financings can be obtained on terms favorable to us or that any additional financing will not be dilutive to our shareholders or detrimental to our creditors.

Total Borrowings

     As of December 28, 2008, our total debt outstanding consisted of $473.5 million of borrowings, which included $215.0 million of our 6.75% senior notes due 2011, $150.0 million of our 7.5% senior notes due 2010, and other long-term and short-term borrowings.

9

     In March 2007, we redeemed the remaining outstanding $31.5 million aggregate principal amount of our 1.75% convertible notes due 2007 (including accrued interest) for an aggregate consideration of $36.8 million. The repurchase was financed with our cash and cash equivalents.

     In May 2007, we issued 16.7 million ordinary shares upon conversion of $15.5 million aggregate principal amount of our 2.5% convertible notes.

     In October 2007, we consummated the previously announced definitive agreement with LSI pursuant to which STATS ChipPAC (Thailand) Limited acquired LSI’s assembly and test operations in Thailand for an aggregate purchase price of approximately $100.0 million. We funded the initial payment of $50.0 million of the aggregate purchase consideration with our cash and cash equivalents. STATS ChipPAC (Thailand) Limited issued a promissory note bearing interest of 6.0% per annum, payable annually, for the balance of the purchase price. The amount payable to LSI under the promissory note after contractual netting of certain receivables from LSI of $3.2 million amounted to $26.8 million as of December 28, 2008. The promissory note is payable in annual installments of $20.0 million, $10.0 million, $10.0 million and $6.8 million over four years commencing October 2, 2008. The first annual installment of $20.0 million was paid on October 2, 2008.

     In November 2007, we redeemed $96.4 million aggregate principal amount of our zero coupon convertible notes pursuant to demands for redemption from note holders in accordance with the indenture governing these notes. We paid a total amount of $114.1 million (including yield-to-maturity interest accrued up to November 7, 2007) in respect of the convertible notes redemption. We financed the redemption with cash and short-term borrowings.

     In January and February 2008, we repurchased the $12.4 million and $2.5 million aggregate principal of our zero coupon convertible notes for $14.7 million (including accrued yield-to-maturity interest) and $2.9 million (including accrued yield-to-maturity interest) respectively. We financed the repurchase of the $12.4 million and $2.5 million aggregate principal amount of these convertible notes with our cash and cash equivalents.

     In May 2008, Temasek, through its wholly-owned subsidiary, STSPL, converted its holding of all of the outstanding $134.5 million principal amount of our 2.5% convertible notes into 145.1 million of our ordinary shares.

     In June 2008, we redeemed the remaining $3.7 million principal amount, representing approximately 3.2% of the original principal amount, of our zero coupon convertible notes. We paid an aggregate consideration of $4.5 million (including accrued yield-to-maturity interest) and financed the redemption with cash in hand.

     STATS ChipPAC Korea Ltd. has a line of credit from Hana Bank in South Korea with a credit limit of $25.0 million. During 2006, we borrowed $12.0 million under this facility to finance our purchase of a building and land in South Korea. In 2007, we borrowed an additional $3.6 million under this facility. As of December 28, 2008, the interest rate for our $12.0 million loan was 3.7% per annum and the interest rate for our $3.6 million loan was 3.5% per annum. Interest is payable on a monthly basis. The principal on the $12.0 million loan is repayable over eight equal quarterly installments from September 2007 to June 2009. The principal on our $3.6 million loan is repayable at maturity in June 2009. As of December 28, 2008, $0.6 million was held as a restricted deposit with the bank. These loans are secured by a pledge of land and a building with a combined net book value of $26.4 million as of December 28, 2008. As of December 28, 2008, $6.6 million of the loans was outstanding.

     STATS ChipPAC Taiwan Semiconductor Corporation has a NT$3.6 billion floating rate New Taiwan dollar term loan facility ($106.9 million based on the exchange rate as of January 30, 2009) with a syndicate of lenders, with Taishin Bank as the sponsor bank. The loan drawdowns must be made within 24 months from the date of first drawdown which took place on February 18, 2007. As of December 28, 2008, STATS ChipPAC Taiwan Semiconductor Corporation has drawn down NT$0.7 billion ($20.8 million based on the exchange rate as of January 30, 2009) under the term loan facility. The term loan facility bore interest at a rate of 3.6% per annum in 2008 and interest is payable on a quarterly basis. The principal and interest on the loan is payable in nine quarterly installments commencing 24 months from first draw down date with the first eight quarterly installments each repaying 11% of the principal and the last quarterly installment repaying 12% of the principal. As of December 28, 2008, the outstanding balance on this facility was $21.2 million.

10

     Additionally, STATS ChipPAC Taiwan Semiconductor Corporation has NT$1.0 billion ($29.7 million based on the exchange rate as of January 30, 2009) of bank and credit facilities from various other banks and financial institutions, of which $3.9 million borrowings was outstanding as of December 28, 2008. These credit facilities have varying interest rates ranging from 2.2% to 2.7% per annum and maturities ranging from 2009 through 2012.

     We have a line of credit from Bank of America with a credit limit of $50.0 million of which $50.0 million was outstanding as of December 28, 2008. The principals and interest of the $50.0 million were initially payable at maturity in March 2009. We rolled-forward the principal into two loan tranches of $25.0 million each at maturity for a further period of three months.

     In 2008, we had other facilities with Hana Bank and the National Agricultural Cooperation Federation Bank in South Korea in the aggregate of $25.0 million. These facilities expired during the year.

     At December 28, 2008, we had other undrawn banking and credit facilities consisting of loans, overdrafts, letters of credit and bank guarantees of $41.6 million with financial institutions.

11

Cash Flow Information

	Year Ended
	December 31, 2006			December 30, 2007			December 28, 2008
				(In millions)
Net cash provided by operating activities	$	427.8		$	411.5		$	419.5
Net cash used in investing activities		(425.8	)		(299.1	)		(283.7	)
Net cash used in financing activities	$	(54.9	)	$	(70.5	)	$	(53.5	)

Cash Flows From Operating Activities

     In 2008, cash provided by operations was $419.5 million compared to $411.5 million in 2007. Cash provided by operations is calculated by adjusting our net income by non-cash related items such as depreciation and amortization, amortization of leasing prepayments, amortization of debt issuance cost, equipment impairment charges, loss or gain from sale of assets, impairment of assets, accretion of discount on certain of our outstanding convertible notes, deferred income taxes, foreign currency exchange loss or gain, share-based compensation expense, minority interest, share of equity income and by changes in assets and liabilities. In 2008, non-cash related items included $286.4 million related to depreciation and amortization (including amortization of capitalized debt issuance costs and leasing prepayments), $21.1 million of equipment impairment charges, $1.1 million loss from the sale of equipment, $0.1 million from the accretion of discount on certain of our convertible notes, $1.6 million from foreign currency exchange gains, $3.6 million related to share-based compensation expense, $5.5 million from deferred taxes, $4.4 million from the minority interest in income of one of our subsidiaries and $1.4 million equity loss from equity investment.

     Working capital uses of cash included decreases in accounts payables, accrued operating expense and other payables, and amount due to affiliates and increases in amount due from affiliates, and other receivables, prepaid expenses and other assets. Working capital source of cash included decreases in accounts receivable and inventories. Inventories as of December 28, 2008 were lower as compared to December 30, 2007. Accounts receivables were lower compared to December 30, 2007 mainly due to faster collections. Additionally, accounts payables, accrued operating expenses and other payables increased as compared to December 30, 2007 primarily due to timing of quarterly purchases.

     In 2007, cash provided by operations was $411.5 million compared to $427.8 million in 2006. Cash provided and used by operations is calculated by adjusting our net income or loss by non-cash related items such as depreciation and amortization, share-based compensation expense, amortization of leasing prepayments, accretion of discount on certain of our outstanding convertible notes, amortization of debt issuance cost, loss or gain from sale of assets, deferred income taxes, foreign currency exchange loss or gain, minority interest, share of equity income and by changes in certain assets and liabilities. In 2007, non-cash related items included $256.9 million related to depreciation and amortization (including amortization of capitalized debt issuance costs and leasing prepayments), $8.9 million related to share-based compensation expense, $4.8 million from the accretion of discount on certain of our convertible notes, $3.7 million from deferred taxes, $5.8 million from the minority interest in income of one of our subsidiaries, $1.7 million from impairment of assets held for sale, and $0.1 million income from investment in an equity investee. In 2006, non-cash related items included $276.1 million related to depreciation and amortization (including amortization of capitalized debt issuance costs and leasing prepayments), $13.7 million related to share-based compensation expense, $6.6 million from the accretion of discount on certain of our convertible notes, $0.5 million from loss on repurchase and redemption of our 8.0% convertible subordinated notes due 2011, $19.9 million from deferred taxes, $10.0 million from the minority interest in income of one of our subsidiaries and $0.2 million income from investment in an equity investee.

     Working capital uses of cash included increases in account receivables and amounts due from affiliates. Working capital sources of cash included decreases in inventories, other receivables, prepaid expenses and other assets, and increases in accounts payable, accrued operating expenses and other payables, and amounts due to affiliates. Inventories as of December 30, 2007 were lower as compared to December 31, 2006 as a result of better inventory management. Accounts receivables as of December 30, 2007 were higher compared to December 31, 2006 mainly due to slower cash collections.

12

Cash Flows From Investing Activities

     In 2008, cash used in investing activities was $283.7 million compared to $299.1 million in 2007. The primary usage of cash in investing activities was related to the acquisition of property and equipment, net of changes in payables related to property, plant and equipment purchases, of $278.9 million in 2008 compared to $232.3 million in 2007. We increased our capital expenditure in 2008 compared to 2007 primarily to meet the demand from our customers and support growth strategy such as the new wafer bump line investment in the third quarter of 2008. In 2008, we received $19.1 million from the proceeds from sale of assets held for sale. In 2008 and 2007, we invested $12.9 million and $6.8 million, respectively, in the acquisition of software, licenses and other intangible assets. In 2008 and 2007, we purchased marketable securities of $93.1 million and $27.5 million, respectively. In 2008 and 2007, we received proceeds from the sale and maturity of our marketable securities of $79.9 million and $43.3 million, respectively.

     In 2007, cash used in investing activities was $299.1 million compared to $425.8 million in 2006. The primary usage of cash in investing activities related to the acquisition of property and equipment, net of changes in payables related to property, plant and equipment purchases, amounting to $232.3 million in 2007 and $393.6 million in 2006. Our capital expenditure in 2006 was higher than 2007 because we experienced greater expansion across the various geographic operating locations in 2006. In 2007, we acquired LSI’s assembly and test operations in Thailand for approximately $100.0 million. In 2007 and 2006, we received $21.8 million and $4.0 million from the proceeds from sale of assets held for sale. In 2006, we acquired a 25% shareholding in MAT for $10.2 million. In 2007 and 2006, we invested $6.8 million and $6.4 million, respectively, in the acquisition of software, licenses and other intangible assets. In 2007 and 2006, we invested in marketable securities which amounted to $27.5 million and $80.9 million, respectively, and received proceeds from the sale and maturity of our marketable securities of $43.3 million and $56.2 million, respectively.

Cash Flows From Financing Activities

     In 2008, cash used in financing activities was $53.5 million compared to $70.5 million in 2007. In 2008, $4.7 million borrowings were made and $38.9 million of our borrowings and debts was repaid compared to $82.9 million and $177.1 million in 2007, respectively. In 2008, we repurchased $18.6 million aggregate principal amount of our zero coupon convertible notes (including accretion of discount on convertible notes and interest) at an aggregate consideration of $22.1 million. In 2007, we redeemed the remaining $31.5 million aggregate principal amount of our 1.75% convertible notes due 2007 (including interest) at an aggregate consideration of $36.8 million. We made $3.7 million of capital lease payments in 2007. In 2008 and 2007, we reduced our restricted cash by $0.6 million and increased our restricted cash by $0.6 million, respectively. In 2008 and 2007, we received $6.2 million and $19.9 million, respectively, from the issuance of new ordinary shares through our share plans. The total numbers of ordinary shares issued in 2008 and 2007 were 9.7 million and 27.8 million, respectively, which excluded the issuance of 145.1 million ordinary shares from the conversion of $134.5 million aggregate principal of our 2.5% convertible notes in May 2008.

     In 2007, cash used in financing activities was $70.5 million compared to $54.9 million in 2006. In 2007, $82.9 million was borrowed and $177.1 million of our borrowings and debts was repaid, compared to $60.3 million and $69.9 million, respectively, in 2006. In 2007, we redeemed the remaining outstanding $31.5 million aggregate principal amount of our 1.75% convertible notes due 2007 (including accrued interest) for an aggregate consideration of $36.8 million. The repurchase was financed with our cash and cash equivalents. In 2007, we also redeemed $96.4 million aggregate principal of our zero coupon convertible notes at an aggregate consideration of $114.1 million, pursuant to demands for redemption from note holders in accordance with indenture governing the zero coupon convertible notes. In January and February 2008, we repurchased $12.4 million and $2.5 million aggregate principal amount of our zero coupon convertible notes, respectively. We paid an aggregate consideration of $14.7 million (including accrued interest) and $2.9 million (including accrued interest), respectively, for the repurchases. We financed the repurchases with our cash and cash equivalents. In 2006, we repurchased the outstanding $50.0 million aggregate principal amount of our 8.0% convertible subordinated notes due 2011 at an aggregate consideration of $50.5 million. In 2007 and 2006, we increased our restricted cash by $0.6 million and reduced our restricted cash by $1.6 million, respectively. In addition, $3.7 million and $7.1 million of capital lease payments were made in 2007 and 2006, respectively. In 2007 and 2006, $19.9 million and $13.3 million, respectively, was provided by the issuance of new ordinary shares of our Company through the employee share option plan and the employee share purchase plan. The total number of ordinary shares issued in 2007 and 2006 were 27.8 million and 26.5 million, respectively.

13

Off-Balance Sheet Arrangements

     We provided tax guarantee to the South Korean tax authorities as discussed below under “— Contingencies.” We have no significant investment in any unconsolidated entities. Our off-balance sheet commitments are limited to operating leases, royalty/license agreements, and purchase obligations. Our total off-balance sheet obligations were approximately $170.4 million as of December 28, 2008.

Contractual Obligations

     Our total commitments on our loans, operating leases, other obligations and other agreements as of December 28, 2008 were as follows. We had no capital lease obligations as of December 28, 2008.

	Payments Due
	Within						More Than
	1 Year		1-3 Years		3-5 Years		5 Years		Total
	(In thousands)
On balance sheet commitments:
6.75% senior notes due 2011 (1)	$	—	$	215,000	$	—	$	—	$	215,000
7.5% senior notes due 2010 (1)		—		150,000		—		—		150,000
6% promissory note (1)		10,000		16,800		—		—		26,800
Long-term loans (1)		16,953		13,927		773		—		31,653
Short-term loans (1)		50,000		—		—		—		50,000
Retirement benefits		177		545		848		7,250		8,820
Other non-current liabilities (2)		—		—		—		—		—
Total on balance sheet commitments	$	77,130	$	396,272	$	1,621	$	7,250	$	482,273
Off balance sheet commitments:
Operating leases	$	12,610	$	19,755	$	16,685	$	27,115	$	76,165
Royalty/licensing agreements		6,286		12,455		11,898		—		30,639
Purchase obligations:
— Capital commitments		35,709		—		—		—		35,709
— Inventory purchase commitments		27,848		—		—		—		27,848
Total off balance sheet commitments	$	82,453	$	32,210	$	28,583	$	27,115	$	170,361
Total commitments	$	159,583	$	428,482	$	30,204	$	34,365	$	652,634

Notes :
(1)	Our senior notes, promissory note payable, short-term and long-term loans agreements contain provisions for the payment of interest either on a monthly, quarterly, semi-annual or annual basis at a stated rate of interest over the term of the debt. These payment obligations are not reflected in the table above. The interest payments due within one year, 1-3 years and 3-5 years amount to $28.0 million, $41.8 million and $0.01 million, respectively.
(2)	Our other non-current liabilities as of December 28, 2008 were $64.1 million, including $8.8 million related to retirement and severance benefits for our employees in Malaysia and Thailand, respectively. Also included in the other non-current liabilities is $13.9 million related to severance benefits for our employees in South Korea which were not included in the table due to lack of contractual certainty as to the timing of payments. Further, included in the other non-current liabilities as of December 28, 2008 was $7.5 million of liability for uncertain tax positions under Financial Accounting Standards Board (“FASB”) Interpretations 48. We are unable to reasonably estimate the timing of the amount, therefore, the liability is excluded from the table.

14

Critical Accounting Policies

     We believe the following accounting policies are critical to our business operations and the understanding of our results of operations. Our preparation of our financial statements requires us to make estimates and assumptions that affect the reported amount of assets and liabilities, and disclosure of contingent assets and liabilities at the date of our financial statements and the reported amounts of revenues and expenses during the reporting period. If actual results differ significantly from the estimates and assumptions, there could be a material adverse effect on our financial statements.

Revenue Recognition, Allowance For Doubtful Debts, Trade Discounts and Allowances and Sales Returns

     We derive revenue primarily from wafer probe and bumping, packaging and testing of semiconductor integrated circuits. Net revenues represent the invoiced value of services rendered, net of returns, trade discounts and allowances, and excluding goods and services tax.

     Revenue is recognized when there is evidence of an arrangement, fees are fixed or determinable, collectibility is reasonably assured, the service has been rendered, the revenue to be recognized is billable under the terms of the arrangement and not contingent upon completion of undelivered services, and, where applicable, delivery has occurred and risk of loss has passed to the customer. Such policies are consistent with the provisions in SEC Staff Accounting Bulletin No. 104, “Revenue Recognition in Financial Statements.”

     We generally do not take ownership of customer supplied semiconductors as these materials are sent to us on a consignment basis. Accordingly, the value of the customer supplied materials is neither reflected in revenue nor in cost of revenue.

     We are subject to credit risk of our customers and we make estimates of the collectibility of our accounts receivable. We review the accounts receivable on a periodic basis and make specific allowance when there is doubt as to the collectibility of individual accounts. In evaluating the collectibility of individual receivable balances, we consider the age of the balance, the customer’s historical payment history, its current creditworthiness and current economic trends. We mitigate our credit risk through our credit evaluation process, credit policies, and credit control and collection procedures but these methods cannot eliminate all potential credit risk losses. Additional allowances may be required in the future if the financial condition of our customers or general economic conditions deteriorate. Our actual uncollectible accounts have not historically been significantly different from our estimates.

     Similarly, we make estimates of potential sales returns and discounts which we allow for volume purchases and early payments as a deduction from gross revenue based on our historical experience and expectations of our customers’ ultimate purchase levels and payment timing. Actual revenues may differ from our estimates if future customer purchases or payment timing differ from our estimates, which may happen as a result of changes in general economic conditions, market demand for our customers’ products, or desire by our customers’ interest in achieving payment timing discounts. Our actual returns and discounts have not historically been significantly different from our estimates.

Valuation of Inventory

     The valuation of inventory requires us to estimate obsolete or excess inventory as well as inventory that are not of saleable quality. The determination of obsolete or excess inventory requires us to estimate the future demand from our customers within specific time horizons, generally six months or less. The estimates of future demand that we use in the valuation of inventories are the forecasts provided by our customers. If our inventory for specific customer forecast is greater than actual demand, we may be required to record additional inventory reserves, which would have a negative impact on our gross margin.

     Our inventories are stated at the lower of cost, determined on the weighted average basis, and market value, as estimated by us. Cost is generally computed on a standard cost basis, based on normal capacity utilization, with unrecoverable costs arising from underutilization of capacity expensed when incurred.

15

Depreciation and Amortization

     Our operations are capital intensive and we have significant investment in testing and packaging equipment. We depreciate our property, plant and equipment based on our estimate of the period that we expect to derive economic benefits from their use. Our estimates of economic useful lives are set based on historical experience, future expectations and the likelihood of technological obsolescence arising from changes in production techniques or in market demand for the use of our equipment and machinery. However, business conditions, underlying technology and customers’ requirements may change in the future which could cause a change in the useful lives. Any change in useful lives could have a significant effect on our future operating results.

     We believe that our principal competitors depreciate their packaging assets over periods of six to eight years.

Valuation of Property, Plant and Equipment

     We review property, plant and equipment for impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. Management judgment is critical in assessing whether events have occurred that may impact the carrying value of property, plant and equipment.

     Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the asset to the future undiscounted net cash flows expected to be generated from the asset. If the carrying amount of the asset exceeds the future undiscounted net cash flows, such assets are considered to be impaired and an impairment charge is recognized for the amount that the carrying value of the asset exceeds its fair value. In determining the fair value of equipment and machinery, we consider offers to purchase such equipment and expected future discounted cash flows. Due to the nature of our business, which may include sudden changes in demand in the end markets, and due to the fact that certain equipment is dedicated to specific customers, we may not be able to anticipate declines in the utility of our equipment and machinery. Generally, we consider consecutive quarterly utilization rate declines or projected utilization deterioration as principal factors for our impairment review. Consequently, additional impairment charges may be necessary in the future and this could have a significant negative impact on our future operating results.

     We did not record any impairment charges in 2006. In 2007, we recorded impairment charges of $1.7 million on the disposal of the packaging and test equipment related to discrete power packages to Mingxin. In 2008, we recorded equipment impairment charges of $21.1 million as a result of our Company’s ongoing assessment of property, plant and equipment for impairment.

Deferred Tax Asset and Uncertain Income Tax Positions

     We record a deferred tax asset when we believe that it is more likely than not that the deferred tax asset will be realized. The deferred tax effects of the tax losses, unutilized capital allowances carried forward and temporary differences arising primarily from property, plant and equipment are recognized because they are expected to be offset against future taxable income.

     In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. We consider the scheduled reversal of deferred tax liabilities, projected future taxable income based on our business plan and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, the assessment will be made if it is more likely than not that the deferred tax assets will realized. The amount of the deferred tax asset considered realizable could be reduced in the near term if estimates of future taxable income during the carry forward period differ materially from current estimates. In the event that we are not able to realize the deferred tax assets, an adjustment to the deferred tax asset would be charged to income in the period such determination was made which would result in a reduction of our net income.

16

     We account for uncertainty in income taxes by prescribing a recognition threshold and measurement process for financial statement recognition and measurement of uncertain tax positions taken or expected to be taken in a tax return. We recognize liabilities for uncertain income tax positions based on our estimate of whether, and the extent to which, additional taxes will be required. We also report interest and penalties related to uncertain income tax positions as income taxes.

     For a discussion of significant items in deferred tax asset and uncertain tax positions, see Note 13 to our audited consolidated financial statements.

Valuation of Goodwill

     We review goodwill for impairment annually and whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. We determine the fair value based on a weighting of income or market approaches, or combination of both. Under the income approach, we calculate the fair value of a reporting unit based on the present value of estimated future cash flows. Under the market approach, we estimate the fair value based on market multiples of revenue or earnings for comparable companies. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that unit, goodwill is not impaired and we are not required to perform further testing. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, then we must perform the second step of the impairment test in order to determine the implied fair value of the reporting unit’s goodwill. If the carrying value of a reporting unit’s goodwill exceeds its implied fair value, then we record an impairment loss equal to the difference.

     Determining the fair value of a reporting unit is judgmental in nature and involves the use of significant estimates and assumptions. These estimates and assumptions include revenue growth rates and operating margins used to calculate projected future cash flows, risk-adjusted discount rates, future economic and market conditions, and determination of appropriate market comparables. We base our fair value estimates on assumptions we believe to be reasonable but that are unpredictable and inherently uncertain. Actual future results may differ from those estimates.

     We performed an impairment review of the goodwill associated with the acquisition of ChipPAC at the end of 2004, with the determination of fair value supplemented by independent appraisal and recorded an impairment charge of $453.0 million to our results of operations in 2004. In 2006, 2007 and 2008, we completed our annual test for impairment and determined that the fair value of the reporting units exceeds their carrying value, and therefore goodwill was not impaired.

Contingencies

     We are subject to claims and litigations, which arise in the normal course of business. These claims and litigations may include allegations of infringement of intellectual property rights of others, disputes over tax assessments, environmental liability, labor, products, as well as other claims of liabilities.

     We assess the likelihood of an adverse judgment or outcome for these matters, as well as the range of potential losses. A determination of the reserves required, if any, is made after careful analysis. The required reserves may change in the future due to new developments impacting the probability of a loss, the estimate of such loss, and the probability of recovery of such loss from third parties.

17

Market Risks

     We are exposed to financial market risks, including changes in currency exchange rates and interest rates. To mitigate the currency exchange risks, a substantial majority of our revenue, material and equipment supplies are transacted in U.S. dollars. We may employ derivative instruments such as forward foreign currency swaps, foreign currency contracts and options and interest rate swaps to manage our foreign exchange and interest rate exposures. These instruments are generally used to reduce or eliminate the financial risks associated with our assets and liabilities and not for trading purposes.

Investment and Interest Rates

     Our exposure to market risk associated with changes in interest rates primarily relates to our investment portfolio and debt obligations. We place our investments in time deposits and marketable securities. We mitigate default risk by investing in marketable securities that are of at least an “A” rating, as assigned by an internationally recognized credit rating organization, and major Singapore banks and government-linked companies. We have no material cash flow exposure due to rate changes for cash equivalents and short-term investments. The fair value of fixed rate debts will vary as interest rates change. As of December 28, 2008, our short-term and long-term debt obligations for the $215.0 million of 6.75% senior notes due 2011 and $150.0 million of 7.5% senior notes due 2010 bear fixed interest rate. The 6.75% senior notes due 2011 and 7.5% senior notes due 2010 bear interest of 6.75% and 7.5% per annum, respectively.

Currency Exchange Rates

     A portion of our costs is denominated in various foreign currencies, like the Singapore dollar, the South Korean Won, the Chinese Renminbi, the Malaysian Ringgit, the Thai Baht, the New Taiwan dollar and the Japanese Yen. As a result, changes in the exchange rates of these currencies or any other applicable currencies to the U.S. dollar will affect our cost of goods sold and operating margins and could result in exchange losses. We have entered into foreign currency contracts to mitigate financial risks associated with payroll costs, materials costs and other costs denominated in Singapore dollars, South Korean Won and Malaysia Ringgit to reduce our exposure from future exchange rate fluctuations.

     Based on our overall currency rate exposure, we have adopted a foreign currency hedging policy for committed or forecasted currency exposures. As of December 28, 2008, we had a series of foreign currency forward contracts with total outstanding contract value of approximately $59.5 million to hedge against fluctuation in Singapore dollars, South Korean Won, Malaysian Ringgit and Chinese Renminbi. We may utilize foreign currency swaps as well as foreign exchange forward contracts and options. These programs reduce, but do not always entirely eliminate, the impact of currency exchange movements. The goal of the hedging policy is to effectively manage risk associated with fluctuations in the value of the foreign currency, thereby making financial results more stable and predictable. However, we cannot assure you that any hedging policy we implement will be effective and we may experience reduced operating margins if any such policies are unsuccessful.

     We have performed sensitivity analyses as of December 30, 2007 and December 28, 2008 by measuring the change in fair values arising from a hypothetical 10% adverse movement in the exchange rates for all the currencies relative to the U.S. dollar, with all other variables held constant. The analyses cover our foreign currencies monetary denominated assets and liabilities. The foreign currency exchange rates we used were based on our closing exchange rates as of December 31, 2007 and December 28, 2008. The sensitivity analyses indicated that a hypothetical 10% adverse movement, after taking into account offsetting positions, would result in a foreign exchange gain of $0.7 million and a foreign exchange gain of $0.5 million as of December 30, 2007 and December 28, 2008, respectively.

     Currency, maturity, interest rate and fair value information relating to our marketable securities and, short-term and long-term debt are disclosed in Notes 1(l), 4, 14, 15 and 25 to our audited consolidated financial statements, respectively.

Commodity Price

     We purchase certain raw materials in the normal course of business, which are affected by commodity prices. Therefore, we are exposed to some price volatility related to various market conditions outside our control.

18

However, we employ various purchasing and pricing contract techniques in an effort to minimize volatility. Generally these techniques include setting in advance the price for products to be delivered in the future. We do not generally make use of financial instruments to hedge commodity prices, partly because of the contract pricing utilized. While price volatility can occur, which would impact profit margins, there are generally alternative suppliers available.

Limitations

     Fair value estimates are made at a specific point in time and are based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

19

MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Rule 13a-15(f) under the Exchange Act.

Internal control over financial reporting refers to a process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

• pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;

• provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and members of our Board of Directors; and

• provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on our financial statements.

Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process, and it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management evaluated the effectiveness of our internal control over financial reporting as of December 28, 2008 using the framework set forth in the report of the Treadway Commission’s Committee of Sponsoring Organizations (“COSO”), “Internal Control — Integrated Framework.”

Based on the foregoing, management has concluded that our internal control over financial reporting was effective as of December 28, 2008. Our independent registered public accounting firm, PwC, has issued an audit report on our internal control over financial reporting, which is included herein.

Tan Lay Koon
President and Chief Executive Officer

John Lau Tai Chong
Chief Financial Officer

Singapore
March 9, 2009

20

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders
STATS ChipPAC Ltd.:

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, of comprehensive income, of shareholders’ equity and of cash flows present fairly, in all material respects, the financial position of STATS ChipPAC Ltd. and its subsidiaries at December 28, 2008 and December 30, 2007, and the results of their operations and their cash flows for each of the three years in the period ended December 28, 2008 in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 28, 2008, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on these financial statements and on the Company’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

As discussed in Notes 1(bb) and 13 to the financial statements, the Company changed its method of accounting for uncertain tax positions in 2007 and as discussed in Notes 1(w) and 21 to the financial statements, the Company changed the manner in which it accounts for share-based compensation in 2006.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

PricewaterhouseCoopers LLP

Singapore
March 9, 2009

21

STATS CHIPPAC LTD. AND SUBSIDIARIES

INDEX TO FINANCIAL STATEMENTS

	Page
FINANCIAL STATEMENTS
Consolidated Balance Sheets	F-2
Consolidated Statements of Operations	F-3
Consolidated Statements of Comprehensive Income (Loss)	F-4
Consolidated Statements of Shareholders’ Equity	F-5
Consolidated Statements of Cash Flows	F-6
Notes to the Consolidated Financial Statements	F-7
Independent Auditor’s Report to the Members of STATS ChipPAC Ltd.	F-49
Unconsolidated Balance Sheet	F-50
Notes to the Unconsolidated Balance Sheet	F-51

F-1

STATS CHIPPAC LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
In thousands of U.S. Dollars (except per share data)

		December 30,			December 28,
	Note	2007			2008
ASSETS
Current assets:
Cash and cash equivalents	3	$	213,461		$	295,916
Short-term marketable securities	4		29,230			41,314
Accounts receivable, net	5		271,360			139,520
Short-term amounts due from affiliates	2		9,292			10,791
Other receivables	6		6,877			8,357
Inventories	7		83,312			60,717
Prepaid expenses and other current assets	8		22,320			14,693
Total current assets			635,852			571,308
Long-term marketable securities	4		15,296			15,587
Long-term amounts due from affiliates	2		6,852			13,726
Property, plant and equipment, net	9		1,276,490			1,216,342
Investment in equity investee	2		10,350			9,001
Intangible assets	10		40,754			44,762
Goodwill	11		547,958			551,132
Long-term restricted cash			1,612			1,012
Prepaid expenses and other non-current assets	8		61,790			24,193
Total assets		$	2,596,954		$	2,447,063
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts and other payable		$	164,300		$	118,227
Payables related to property, plant and equipment purchases			70,744			30,704
Accrued operating expenses	12		109,516			148,069
Income taxes payable			17,250			3,379
Short-term borrowings	14		50,300			50,000
Short-term amounts due to affiliates	2		1,651			1,388
Current installments of long-term debts	15		190,481			26,953
Total current liabilities			604,242			378,720
Long-term debts, excluding current installments	15		423,853			396,500
Other non-current liabilities	17		125,093			64,144
Total liabilities			1,153,188			839,364
Minority interest			59,797			59,042
Share capital:
Ordinary shares — Issued ordinary shares — 2,047,333,663 in 2007 and 2,202,218,293 in 2008	18, 19		1,891,546			2,035,235
Accumulated other comprehensive loss	20		(7,605	)		(12,308	)
Accumulated deficit			(499,972	)		(474,270	)
Total shareholders’ equity			1,383,969			1,548,657
Commitments and contingencies	22
Total liabilities and shareholders’ equity		$	2,596,954		$	2,447,063

See accompanying notes to consolidated financial statements.

F-2

STATS CHIPPAC LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
In thousands of U.S. Dollars (except per share data)

		Year Ended
		December 31,			December 30,			December 28,
	Note	2006			2007			2008
Net revenues		$	1,616,933		$	1,651,560		$	1,658,188
Cost of revenues			(1,290,773	)		(1,330,284	)		(1,383,797	)
Gross profit			326,160			321,276			274,391
Operating expenses:
Selling, general and administrative			139,466			112,593			118,337
Research and development			30,446			34,918			37,825
Restructuring charges	23		1,938			990			19,790
Equipment impairment			—			—			21,091
Accelerated share-based compensation			—			—			1,562
Tender offer expenses			—			10,922			—
Held for sale asset impairment			—			1,725			—
Total operating expenses			171,850			161,148			198,605
Operating income			154,310			160,128			75,786
Other income (expense), net:
Interest income			5,401			7,258			5,685
Interest expense			(45,816	)		(40,450	)		(35,986	)
Foreign currency exchange gain (loss)			(1,578	)		2,487			5,247
Equity income (loss) from investment in equity investee			152			102			(1,437	)
Other non-operating income (expense), net	24		108			(442	)		27
Total other expense, net			(41,733	)		(31,045	)		(26,464	)
Income before income taxes			112,577			129,083			49,322
Income tax expense	13		(25,759	)		(29,581	)		(19,172	)
Income before minority interest			86,818			99,502			30,150
Minority interest			(10,010	)		(5,818	)		(4,448	)
Net income		$	76,808		$	93,684		$	25,702
Net income per ordinary share:
— basic		$	0.04		$	0.05		$	0.01
— diluted		$	0.04		$	0.04		$	0.01
Net income per ADS:
— basic		$	0.39		$	0.46			—
— diluted		$	0.37		$	0.44			—
Ordinary shares (in thousands) used in per ordinary share calculation:
— basic			1,991,110			2,032,962			2,143,934
— diluted			2,161,545			2,188,687			2,146,249
ADS (in thousands) used in per ADS calculation:
— basic			199,111			203,296			—
— diluted			216,154			218,869			—

See accompanying notes to consolidated financial statements.

F-3

STATS CHIPPAC LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
In thousands of U.S. Dollars

	Year Ended
	December 31,			December 30,			December 28,
	2006			2007			2008
Net income	$	76,808		$	93,684		$	25,702
Other comprehensive income (loss)
Unrealized gain (loss) on available-for-sale marketable securities		(5	)		9			327
Realized (gain) loss on available-for-sale marketable securities included in net income		(5	)		131			(36	)
Unrealized gain (loss) on hedging instruments		3,058			1,736			(14,463	)
Realized (gain) loss on hedging instruments included in net income		(3,157	)		(2,034	)		9,972
Foreign currency translation adjustment		967			267			(503	)
Comprehensive income	$	77,666		$	93,793		$	20,999

See accompanying notes to consolidated financial statements.

F-4

STATS CHIPPAC LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
In thousands of U.S. Dollars

									Accumulated
						Additional			Other						Total
						Paid-in			Comprehensive			Accumulated			Shareholders’
	Ordinary Shares					Capital			Loss			Deficit			Equity
	No.
	(In thousands)
Balances at December 26, 2005		1,976,292	$	303,052		$	1,517,118		$	(8,572	)	$	(669,946	)	$	1,141,652
Share issuances		26,522		13,197			57			—			—			13,254
Share-based compensation		—		13,688			—			—			—			13,688
Effect of abolition of the share par value		—		1,517,175			(1,517,175	)		—			—			—
Effect of subsidiary’s equity transaction		—		(110	)		—			—			—			(110	)
Net income		—		—			—			—			76,808			76,808
Other comprehensive income		—		—			—			858			—			858
Balances at December 31, 2006		2,002,814		1,847,002			—			(7,714	)		(593,138	)		1,246,150
Adjustment for initial adoption of FIN 48		—		—			—			—			(518	)		(518	)
Balances at January 1, 2007, as adjusted		2,002,814		1,847,002			—			(7,714	)		(593,656	)		1,245,632
Share issuances		27,794		19,851			—			—			—			19,851
Conversion of convertible subordinated notes		16,726		15,500			—			—			—			15,500
Share-based compensation		—		8,869			—			—			—			8,869
Effect of subsidiary’s equity transaction		—		324			—			—			—			324
Net income		—		—			—			—			93,684			93,684
Other comprehensive income		—		—			—			109			—			109
Balances at December 30, 2007		2,047,334		1,891,546			—			(7,605	)		(499,972	)		1,383,969
Share issuances		9,745		7,833			—			—			—			7,833
Conversion of convertible subordinated notes		145,139		134,500			—			—			—			134,500
Share-based compensation		—		3,570			—			—			—			3,570
Reclassification of share-based compensation to liability		—		(2,154	)		—			—			—			(2,154	)
Net income		—		—			—			—			25,702			25,702
Effect of subsidiary’s equity transaction		—		(60	)		—			—			—			(60	)
Other comprehensive income		—		—			—			(4,703	)		—			(4,703	)
Balances at December 28, 2008		2,202,218	$	2,035,235		$	—		$	(12,308	)	$	(474,270	)	$	1,548,657

See accompanying notes to consolidated financial statements.

F-5

STATS CHIPPAC LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
In thousands of U.S. Dollars

	Year Ended
	December 31,			December 30,			December 28,
	2006			2007			2008
Cash Flows From Operating Activities
Net income	$	76,808		$	93,684		$	25,702
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		266,317			254,352			283,691
Amortization of leasing prepayments		7,386			11			—
Debt issuance cost amortization		2,371			2,561			2,737
Equipment impairment		—			—			21,091
(Gain) loss on sale of property, plant and equipment		1,251			(17	)		1,123
Impairment of assets held for sale		—			1,725			—
Accretion of discount on convertible notes		6,618			4,830			66
Loss from repurchase and redemption of senior and convertible notes		500			—			—
Foreign currency exchange (gain) loss		758			724			(1,555	)
Share-based compensation expense		13,688			8,869			3,570
Deferred income taxes		19,853			(3,675	)		5,511
Minority interest in income of subsidiary		10,010			5,818			4,448
Equity loss (income) from investment in equity investee		(152	)		(102	)		1,437
Others		1,004			1,604			4,178
Changes in operating working capital:
Accounts receivable		(2,789	)		(27,581	)		131,840
Amounts due from affiliates		4,304			(13,638	)		(8,373	)
Inventories		(32,268	)		29,599			22,595
Other receivables, prepaid expenses and other assets		7,355			7,112			(2,951	)
Accounts payable, accrued operating expenses and other payables		44,774			44,030			(75,322	)
Amounts due to affiliates		(17	)		1,606			(263	)
Net cash provided by operating activities		427,771			411,512			419,525
Cash Flows From Investing Activities
Proceeds from sales of marketable securities	$	35,391		$	19,660		$	29,755
Proceeds from maturity of marketable securities		20,841			23,599			50,141
Purchases of marketable securities		(80,866	)		(27,450	)		(93,094	)
Investment in equity investee		(10,154	)		—			—
Acquisition of intangible assets		(6,419	)		(6,762	)		(12,871	)
Acquisition of business		—			(100,000	)		—
Purchases of property, plant and equipment		(393,643	)		(232,288	)		(278,899	)
Proceeds from sale of assets held for sale		4,027			21,829			19,108
Others, net		5,040			2,324			2,146
Net cash used in investing activities		(425,783	)		(299,088	)		(283,714	)
Cash Flows From Financing Activities
Repayment of short-term debts	$	(42,290	)	$	(6,549	)	$	(5,035	)
Repayment of long-term debts		(27,627	)		(170,518	)		(33,888	)
Proceeds from issuance of shares, net of expenses		13,254			19,851			6,152
Repurchase and redemption of senior and convertible notes		(50,500	)		(36,800	)		(22,057	)
Proceeds from promissory notes		—			50,000			—
Proceeds from bank borrowings		60,308			82,857			4,735
(Increase) decrease in restricted cash		1,627			(631	)		600
Grants received		—			—			340
Capital lease payments		(7,091	)		(3,680	)		—
Distribution to minority interest in subsidiary		(2,542	)		(4,980	)		(4,312	)
Net cash used in financing activities		(54,861	)		(70,450	)		(53,465	)
Net increase (decrease) in cash and cash equivalents		(52,873	)		41,974			82,346
Effect of exchange rate changes on cash and cash equivalents		(390	)		30			109
Cash and cash equivalents at beginning of the year		224,720			171,457			213,461
Cash and cash equivalents at end of the year	$	171,457		$	213,461		$	295,916
Supplementary Cash Flow Information
Interest paid	$	28,307		$	31,652		$	31,497
Income taxes paid		1,418			6,158			14,280
Non-cash items
Issuance of shares on conversion of convertible notes	$	—		$	15,500		$	134,500

See accompanying notes to consolidated financial statements.

F-6

STATS CHIPPAC LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
In thousands of U.S. Dollars (except per share data)

1. Background and Summary of Significant Accounting Policies

     (a) Business and Organization

STATS ChipPAC Ltd. (“STATS ChipPAC” and together with its subsidiaries, the “Company”) is an independent provider of a full range of semiconductor test and packaging services. The Company has operations in Singapore, South Korea, China, Malaysia, Thailand, Taiwan, the United Kingdom, the Netherlands, Japan and in the United States of America, its principal market.

In 2007, Winstek Semiconductor Corporation changed its name to STATS ChipPAC Taiwan Semiconductor Corporation. The Company owned approximately 52% of STATS ChipPAC Taiwan Semiconductor Corporation’s total shares outstanding as of December 28, 2008.

Temasek Holdings (Private) Limited (“Temasek”), through its wholly-owned subsidiary, Singapore Technologies Semiconductors Pte Ltd (“STSPL”), beneficially owned approximately 83.8% of the Company as of December 28, 2008. Temasek, a private limited company incorporated in Singapore, is wholly-owned by the Minister for Finance (Incorporated) of Singapore, a body constituted by the Minister for Finance (Incorporation) Act (Cap. 183).

Proposed Capital Reduction Exercise and Related Financing Transaction

In January 2008, the Company announced its intention to effect a proposed capital reduction to return surplus share capital in an amount of up to $813,000 to the shareholders. At an extraordinary general meeting held on March 17, 2008, the shareholders approved the proposed capital reduction.

Among other conditions, the proposed capital reduction was subject to and conditional upon the Company being able to obtain adequate debt to fund the cash distribution pursuant to the capital reduction and the repayment of certain of the outstanding debt on terms and conditions acceptable to the Company. The amount of the cash distribution would accordingly have been determined based on the proceeds of such debt financing made available to the Company. In furtherance of the proposed capital reduction, the Company commenced a cash tender offer and consent solicitation in respect of its senior notes in June 2008 but terminated it in August 2008 because the financing condition under the tender offer and consent solicitation was not satisfied.

In February 2009, the Company announced that it will not proceed with the proposed capital reduction as previously approved at the March 2008 shareholders’ meeting, given the current economic environment, the Company has not been able to obtain financing to fund the cash distribution and the repayment of certain outstanding debts on terms and conditions acceptable to the Company.

Acquisition of LSI Corporation’s assembly and test facility in Thailand

In October 2007, the Company consummated the previously announced definitive agreement with LSI Corporation (“LSI”) to acquire LSI’s assembly and test operation in Thailand for an aggregate purchase price of approximately $100,000, payable over the next four years. The Company financed the initial payment of $50,000 of the purchase consideration with the Company’s cash and cash equivalents, and issued promissory notes bearing interest of 6.0% per annum for the balance of the purchase price. The purchase price was assigned primarily to property, plant and equipment, and goodwill. The impact of the acquisition was not material to the Company’s consolidated financial position and results of operations.

Temasek’s Subsidiary, Singapore Technologies Semiconductors Pte Ltd’s Tender Offer

In March 2007, STSPL, a wholly-owned subsidiary of Temasek, announced its intention to launch a voluntary conditional cash tender offer for the ordinary shares and American Depositary Shares (“ADSs”) of the Company that STSPL did not already own. The tender offer also included an offer by STSPL for the Company’s outstanding $115,000 aggregate principal amount of zero coupon convertible notes due 2008 and $150,000 aggregate principal amount of 2.5% convertible subordinated notes due 2008. Concurrently with the tender offer, STSPL made an options proposal to all holders of options granted under STATS ChipPAC share option plans.

F-7

STATS CHIPPAC LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)

In May 2007, the tender offer closed with STSPL and its concert parties holding 83.1% of the outstanding ordinary shares and ADSs (excluding the ordinary shares from the potential conversion of the $134,500 aggregate principal amount of the 2.5% convertible subordinated notes due 2008 acquired by STSPL) and $134,500 aggregate principal amount of the 2.5% convertible subordinated notes due 2008. The balance $15,500 outstanding principal amount of the 2.5% convertible subordinated notes due 2008 was converted by its holder into ADS in May 2007.

As of December 28, 2008, Temasek, through its wholly-owned subsidiary, STSPL, beneficially owned 1,845,715,689 ordinary shares, representing 83.8% of the Company’s ordinary shares, following STSPL’s conversion of its entire $134,500 of the Company’s 2.5% convertible subordinated notes due 2008 into 145,138,660 ordinary shares in May 2008.

In 2007, the Company recorded tender offer expenses of $10,922, consisting of investment banking, legal, accounting, insurance, printing and other costs associated with the tender offer. No tender offer expenses were incurred in 2008.

     (b) Fiscal Year

Since the beginning of fiscal 2005, the Company has employed fiscal year and fiscal quarter reporting periods. STATS ChipPAC’s 52-53 week fiscal year ends on the Sunday nearest and prior to December 31. STATS ChipPAC’s fiscal quarters end on a Sunday and are generally thirteen weeks in length. Fiscal year 2008, a 52-week year, ended on December 28, 2008, fiscal year 2007, a 52-week year, ended on December 30, 2007, and fiscal year 2006, a 53-week year, ended on December 31, 2006. Unless otherwise stated, all years and dates refer to STATS ChipPAC’s fiscal years.

     (c) Accounting Principles

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) consistently applied for all periods.

     (d) Principles of Consolidation

The consolidated financial statements include the consolidated accounts of STATS ChipPAC and its majority-owned subsidiaries. Significant intercompany accounts and transactions have been eliminated in consolidation.

     (e) Issuances of Stock by Subsidiaries

Changes in the Company’s proportionate share of the underlying net equity of a subsidiary, which result from the issuance of additional stock to third parties, are recognized as increases or decreases to shareholders’ equity.

     (f) Use of Estimates

The preparation of the consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported revenues and expenses during the reporting period. Significant estimates made by management include: the useful lives of property, plant and equipment and intangible assets as well as future cash flows to be generated by those assets; discounts and allowances relating to volume purchases and other incentive programs offered to customers, allowances for doubtful accounts, sales returns; valuation allowances for deferred tax assets; provision for inventory losses; fair value of reporting units; and contingent liabilities, among others. Determining the fair value of purchased intangible asset is judgmental in nature and involves the use of significant estimates and assumptions. These estimates and assumptions include revenue growth rates and operating margins used to calculate projected future cash flows, risk-adjusted discount rates, assumed royalty rates, future economic and market conditions and determination of appropriate market comparables. Actual results could differ from these estimates.

F-8

STATS CHIPPAC LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)

     (g) Foreign Currency Transactions

The Company predominantly utilizes the U.S. dollar as its functional currency. Assets and liabilities which are denominated in foreign currencies are converted into the functional currency at the rates of exchange prevailing at the balance sheet date. Income and expenses which are denominated in foreign currencies are converted at the average rates of exchange prevailing during the period. Foreign currency transaction gains or losses are included in results of operations.

STATS ChipPAC Taiwan Semiconductor Corporation designates the New Taiwan Dollar as its functional currency. Where the functional currency of a subsidiary is other than the Company’s U.S. dollar reporting currency, the financial statements are translated into U.S. dollars using exchange rates prevailing at the balance sheet date for assets and liabilities and average exchange rates for the reporting period for the results of operations. Adjustments resulting from translation of such foreign subsidiary financial statements are reported within accumulated other comprehensive loss, which is reflected as a separate component of shareholders’ equity.

     (h) Certain Risks and Concentrations

The Company’s customers are comprised of companies in the semiconductor industry located primarily in the United States of America, Europe and Asia. The semiconductor industry is highly cyclical and experiences significant fluctuations in customer demand, evolving industry standards, competitive pricing pressure that leads to steady declines in average selling prices, rapid technological changes, risk associated with foreign currencies and enforcement of intellectual property rights. Additionally, the market in which the Company operates is very competitive. As a result of these industry and market characteristics, key elements of competition in the independent semiconductor packaging market include breadth of packaging offerings, time-to-market, technical competence, design services quality, production yields, reliability of customer service and price.

The Company’s largest customer accounted for approximately 11%, 10% and 12% of revenues in 2006, 2007 and 2008, respectively. The Company’s ten largest customers collectively accounted for approximately 65%, 67% and 67% of revenues in 2006, 2007 and 2008, respectively. The Company mitigates the concentration of credit risk in trade receivables through the Company’s credit evaluation process, credit policies, credit control and collection procedures but these methods cannot eliminate all potential credit risk losses. The withdrawal of commitment from any major customer for products, or reduced or delayed demand or the loss of or default by any of these major customers could have an adverse effect upon the Company’s financial position, results of operations and cash flows.

Cash and cash equivalents are deposited with financial institutions primarily in Singapore, Taiwan, the United States of America, Thailand, South Korea, China, Malaysia and British Virgin Islands. Deposits in the financial institutions may exceed the amount of insurance provided on such deposits, if any. The Company utilizes forward contracts to protect against the effects of foreign currency fluctuations. Such contracts involve the risk of non-performance by the counterparty, which could result in a material loss. The Company has not experienced any such losses to date from non-performance by its counterparties.

South Korean, Chinese, Malaysian and Thailand foreign currency exchange regulators may place restrictions on the flow of foreign funds into and out of those countries. The Company is required to comply with these regulations when entering into transactions in foreign currencies in South Korea, China, Malaysia and Thailand.

     (i) Cash and Cash Equivalents

Cash equivalents consist of highly liquid investments that are readily convertible into cash and have original maturities of three months or less. Cash and cash equivalents consisted of cash, deposit accounts and money market funds as of December 28, 2008.

F-9

STATS CHIPPAC LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)

     (j) Restricted Cash

Restricted cash consists of time deposits and government bonds held in connection with foreign regulatory requirement and as collateral for bank loans. As of December 30, 2007 and December 28, 2008, there were $1,612 and $1,012 of long-term restricted cash, respectively.

     (k) Derivative Instruments and Hedging Activities

The Company recognizes all derivatives as either assets or liabilities in the statement of financial position and measures those instruments at fair value. Changes in the fair value of those instruments will be reported in earnings or other comprehensive income depending on the use of the derivative and whether it qualifies for hedge accounting. The accounting for gains and losses associated with changes in the fair value of derivatives and the effect on the consolidated financial statements will depend on the derivatives’ hedge designation and whether the hedge is highly effective in achieving offsetting changes in the fair values of cash flows of the asset or liability hedged. Ineffectiveness of the hedge or termination of the hedged transaction may result in amounts be classified from other comprehensive income (loss).

The Company operates in various countries, and accordingly, is subject to the inherent risks associated with foreign exchange rate movements. The Company has established risk management policies for committed or forecasted exposures to protect against volatility of future cash flows. These programs reduce, but do not always entirely eliminate, the impact of the currency exchange or commodity price movements.

In 2007 and 2008, the Company entered into foreign currency forward contracts to protect the Company from fluctuations in exchange rates. At December 30, 2007, and December 28, 2008, the Company had a series of foreign currency forward contracts with total contract value of approximately $206,000 and $59,000, respectively, qualifying as cash flow hedges as defined by SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.” The duration of these instruments are generally less than 12 months. At December 28, 2008, the Company had realized and unrealized loss of $9,972 and $14,463, respectively, on its foreign currency forward contracts. At December 30, 2007, the Company had realized and unrealized gain of $2,034 and $1,736, respectively, on its foreign currency forward contracts. In 2008, the Company have included in earnings, loss on hedging instruments of $9,469 due to termination of certain of its foreign currency forward contracts and unrecoverable hedging loss. Certain foreign currency forward contracts to economically hedge certain committed exposures are not designated as hedges. Accordingly, the changes in fair value of these foreign currency forward contracts are reported in earnings.

     (l) Marketable Securities

Marketable securities at December 30, 2007 and December 28, 2008 consist of corporate debt securities and certificates of deposits denominated in U.S. dollars, Chinese Renminbi and New Taiwan dollars. The Company classifies its securities in one of three categories: trading, available-for-sale, or held-to-maturity. Trading securities are bought and held principally for the purpose of selling them in the near term. Held-to-maturity securities are those securities in which the Company has the ability and intent to hold the security until maturity. All securities not included in trading or held-to-maturity are classified as available-for-sale.

Trading and available-for-sale securities are recorded at fair value. Held-to-maturity securities are recorded at amortized cost, adjusted for the amortization or accretion of premiums or discounts. Unrealized holding gains and losses on trading securities are included in earnings. Unrealized holding gains and losses, net of the related tax effect, if any, on available-for-sale securities are excluded from earnings and are reported as a separate component of other comprehensive loss until realized. Realized gains and losses from the sale of available-for-sale securities are determined on a specific identification basis.

A decline in the market value of individual available-for-sale or held-to-maturity securities below cost that is deemed to be other than temporary results in a reduction in its carrying amount to fair value, with the impairment charged to earnings and a new cost basis for the security being established. Premiums and discounts are amortized or accreted over the life of the related held-to-maturity security as an adjustment to yield using the effective interest method. Dividend and interest income are recognized when earned.

F-10

STATS CHIPPAC LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)

     (m) Inventories

Inventories are stated at the lower of standard cost, which approximates actual cost determined on the weighted average basis, or market value. Reserves are established for excess and obsolete inventories based on estimates of salability and forecasted future demand. The Company generally does not take ownership of customer supplied semiconductors, and accordingly does not include them as part of the Company’s inventories.

     (n) Equity Method Investments

Investments in entities in which the Company can exercise significant influence, but owns less than a majority equity interest, are accounted for using the equity method of accounting. The Company’s unrealized profit arising from sales by the Company to equity method investee are eliminated to the extent of the Company’s ownership. In 2006, the Company acquired a 25% shareholding in Micro Assembly Technologies Limited (“MAT”) for $10,154.

     (o) Business Combination

Business combinations are accounted for using the purchase method accounting. Business combinations which are accounted for under the purchase method accounting include the results of operations of the acquired business from the effective date of acquisition. Any excess of the purchase price over estimated fair values of the net assets acquired is recorded as goodwill.

     (p) Goodwill

The Company tests goodwill for impairment on an annual basis in the designated quarters for its different reporting units, and whenever circumstances indicate the carrying value of the goodwill may have been impaired. The impairment test is performed by first comparing the fair value of the applicable reporting unit to its carrying value. If the carrying value of the reporting unit exceeds its fair value, the second step of the impairment test is performed to determine the amount of impairment loss, if any. The second step of the test involves the comparison of the implied fair value of the goodwill to its carrying value. If the carrying value of reporting unit goodwill exceeds its implied fair value, an impairment loss is recognized for an amount equal to the excess. The implied fair value of reporting unit is determined in the same manner as the amount of goodwill recognized in a purchase business combination.

The estimates of fair value of a reporting unit are determined using various valuation techniques with the primary technique being a discounted cash flow analysis. A discounted cash flow analysis requires the Company to make various judgmental assumptions including assumptions about future cash flows, growth rates and discount rates. The assumptions about future cash flows and growth rates are based on the Company’s budget and long-term plans. In estimating fair values of its reporting units, the Company also uses comparable market analyses.

     (q) Intangible Assets

The Company capitalizes direct costs associated with acquisition, development or purchase of patent rights and technology licenses for use in its processes. These costs are amortized over the shorter of the useful life or license period. In addition, intangible assets acquired in business combinations accounted for under the purchase method of accounting are recorded at fair value on the Company’s consolidated balance sheet at the date of acquisition. In connection with the merger with ChipPAC, Inc. (“ChipPAC”), the cost of intangible assets acquired comprising tradenames, technology, intellectual property and customer relationships, software and licenses, were recorded based on the fair values of those intangible assets on August 5, 2004 based on management’s estimate of the fair value of these intangible assets. Management considered a number of factors when estimating fair value, including appraisals, discounted cash flow analysis, estimated royalty rates and appropriate market comparables.

Acquired intangible assets are stated at cost less accumulated amortization. Amortization is calculated on the straight-line method over the following periods:

F-11

STATS CHIPPAC LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)

Tradenames	7 years
Technology and intellectual property	10 years
Customer relationships	2 years
Software and licenses	3 to 5 years

     (r) Property, Plant and Equipment

Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation is calculated on the straight-line method over the following periods:

Land use rights	50 to 99 years
Building, mechanical and electrical installation	3 to 25 years
Equipment	2 to 8 years

No depreciation is provided on property, plant and equipment under installation or construction and freehold land. Repairs and replacements of a routine nature are expensed, while those that extend the life of an asset are capitalized.

Plant and equipment under capital leases are stated at the present value of minimum lease payments and are amortized straight-line over the estimated useful life of the assets.

     (s) Long-Lived Assets

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. Recoverability of a long-lived asset is measured by a comparison of the carrying amount to the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. If such asset is considered to be impaired, the impairment loss is measured as the amount by which the carrying amount of a long-lived asset exceeds its fair value. In determining the fair value of the long-lived asset, the Company considers the estimated market value from vendor and prices of similar assets.

For long-lived assets held for sale, the carrying value is measured at the lower of its carrying amount or fair value less cost to sell and depreciation is ceased. Long-lived assets to be abandoned will be considered held and used until it is disposed of.

     (t) Comprehensive Income (Loss)

The Company applies SFAS No. 130, “Reporting Comprehensive Income” with respect to reporting and presentation of comprehensive income (loss) and its components in a full set of financial statements. Comprehensive income (loss) consists of net income, foreign currency translation adjustments and unrealized gain or loss on available-for-sale marketable securities and hedging instruments, and is presented in the consolidated statements of comprehensive income (loss).

     (u) Revenue Recognition

Revenue is derived primarily from wafer probe and bumping, packaging and testing of semiconductor integrated circuits. Net revenues represent the invoiced value of services rendered net of returns, trade discounts and allowances, and excluding goods and services tax.

Revenue is recognized when there is evidence of an arrangement, fees are fixed or determinable, collectibility is reasonably assured, the service has been rendered, the revenue to be recognized is billable under the terms of the arrangement and not contingent upon completion of undelivered services, and, where applicable, delivery has occurred and risk of loss has passed to the customer. Such policies are consistent with the provisions in Securities Exchange Commission’s Staff Accounting Bulletin No. 104, “Revenue Recognition in Financial Statements.”

F-12

STATS CHIPPAC LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)

The Company generally does not take ownership of customer supplied semiconductors as these materials are sent to the Company on a consignment basis. Accordingly, the values of the customer supplied materials are neither reflected in revenue nor in cost of revenue.

Provisions are made for estimates of potential sales returns and discounts allowance for volume purchases and early payments and are recorded as a deduction from gross revenue based upon historical experience and expectations of customers’ ultimate purchase levels and timing of payment. Actual revenues may differ from estimates if future customer purchases or payment timing differ, which may happen as a result of changes in general economic conditions, market demand for the customers’ products, or by customers’ desire to achieve payment timing discounts. Actual returns and discounts have not historically been significantly different from estimates. In addition, specific returns and discounts are provided for at the time their existence is known and the amounts are estimable.

The following sets forth the percentage of net revenues by packaging products group and testing services:

	Year Ended
	December 31,			December 30,			December 28,
	2006			2007			2008
Revenue
— packaging — laminate		55.5	%		56.3	%		56.5	%
— packaging — leaded		18.3			18.4			18.0
— test and other services		26.2			25.3			25.5
Total		100.0	%		100.0	%		100.0	%

Provisions are made for collectibility of accounts receivable when there is doubt as to the collectibility of individual accounts. Collectibility is assessed based on the age of the balance, the customer’s historical payment history, its current credit-worthiness and current economic trends.

     (v) Grants

Asset-related government grants consist of grants for the purchase of equipment used for research and development activities. Asset-related grants are presented in the consolidated balance sheet as deferred grants and are credited to income on the straight-line basis over the estimated useful lives of the relevant assets.

Income-related government grants are subsidies of training and research and development expenses. Income-related grants are credited to income when it becomes probable that expenditures already incurred will constitute qualifying expenditures for purposes of reimbursement under the grants, which is typically substantially concurrent with the expenditures.

There are no restrictions on transferring technology or manufacturing products developed with government grants.

     (w) Share-Based Compensation

Share-based compensation represents the cost related to share-based awards made to employees and directors. In 2006, the Company adopted the provisions of SFAS No. 123(R), “Share-Based Payment” (“SFAS 123(R)”), which requires the measurement of share-based compensation expense for all share-based payment awards based on estimated fair value. The Company measures grant-date fair value estimates and recognizes the share-based compensation expense on a graded vesting basis net of estimated forfeitures over the requisite service period. Prior to 2006, the Company measured share-based employee compensation expense in accordance with the intrinsic method of APB No. 25, “Accounting for Stock Issued to Employees” (“APB 25”), and its related interpretations, and included pro forma information in accordance with SFAS No. 123, “Accounting for Stock-Based Compensation” (“SFAS 123”) as amended by SFAS No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosure.”

F-13

STATS CHIPPAC LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)

In March 2005, the Securities and Exchange Commission released SEC Staff Accounting Bulletin No. 107, “Share-Based Payment” (“SAB 107”). SAB 107 contains interpretive guidance related to the interaction between SFAS 123(R) and certain SEC rules and regulations, as well as provides the SEC’s views regarding the valuation of share-based payment. The Company has applied the provisions of SAB 107 in its adoption of SFAS 123(R). At December 28, 2008, the Company has two share-based compensation plans, which are more fully described in Note 21. The Company terminated two share-based compensation plans in 2008.

     (x) Employee Benefit Plans

STATS ChipPAC Taiwan Semiconductor Corporation operates a defined benefit retirement plan for a substantial portion of its employees in Taiwan in accordance with the Labor Standards Law in Taiwan. Pension benefits are generally based on years of service and average salary for the six months prior to the approved retirement date. STATS ChipPAC Taiwan Semiconductor Corporation contributes 2% of eligible wages and salaries on a monthly basis to a pension fund maintained with the Central Trust of China, as required by the Labor Standards Law. At each year end, STATS ChipPAC Taiwan Semiconductor Corporation actuarially determines pension benefit costs and obligations using the projected unit credit method, and the amounts calculated depend on a variety of assumptions. These assumptions include discount rates, rates for expected returns on plan assets, mortality rates and retirement rates. The funding of the pension plan is determined in accordance with statutory funding requirements. STATS ChipPAC Taiwan Semiconductor Corporation is obligated to make up any shortfall in the plan’s assets in meeting the benefits accrued to the participating staff. As of December 28, 2008, there was no shortfall in the plan’s assets. Total pension plan expenses in 2006, 2007 and 2008 were approximately $5, $7 and $19, respectively.

STATS ChipPAC, Inc. and STATS ChipPAC Test Services, Inc. have a 401(k) savings plan where the Company matches 50% of employee contributions up to 6% of eligible employee compensation. The Company’s matching contributions under the 401(k) plan were $457, $470 and $471 in 2006, 2007 and 2008, respectively. The matching contributions are accrued monthly based upon actual employee contribution. The expenses relating to the plan are a minimum annual charge of $2 and $0.028 per person and are accrued on a monthly basis. Returns of the 401(k) plan from investments in mutual funds are calculated daily by an external administrator who administers the plan.

Under the Labor Standards Law of South Korea, employees with more than one year of service are entitled to receive a lump-sum payment upon termination of their employment with STATS ChipPAC Korea Ltd. (“STATS ChipPAC Korea”), based on their length of service and rate of pay at the time of termination. Accrued severance benefits are adjusted annually for all eligible employees based on their employment as of balance sheet date. The expense for severance benefits in 2006, 2007 and 2008 was approximately $9,119, $10,671 and $8,196, respectively.

Under the Labor Standards Law in Thailand, employees with more than 120 days of service are entitled to receive a lump sum payment upon retirement or involuntary termination of their employment with STATS ChipPAC (Thailand) Limited, based on their length of service and the latest salary at the time of retirement or involuntary termination. The expense for severance benefits in 2007 and 2008 were approximately $1,360 and $690, respectively.

The Company participates in a number of defined contribution retirement benefit plans in certain countries of operations. Contributions are based on a percentage of each eligible employee’s salary and are expensed as the related salaries are incurred. The Company incurred expenses of approximately $12,849, $15,331 and $16,825 with respect to these retirement plans in 2006, 2007 and 2008, respectively.

     (y) Operating Leases

Rental payments under operating leases are expensed on a straight-line basis over the periods of the respective leases.

     (z) Product Warranties

The Company guarantees that work performed will be free from any defects in workmanship, materials and manufacture generally for a period ranging from three to twelve months to meet the stated functionality as

F-14

STATS CHIPPAC LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)

agreed to in each sales arrangement. Products are tested against specified functionality requirements prior to delivery, but the Company nevertheless from time to time experiences claims under its warranty guarantees. The Company accrues for estimated warranty costs under those guarantees based upon historical experience, and for specific items at the time their existence is known and the amounts are determinable. Warranty costs incurred in 2006, 2007 and 2008 were insignificant.

     (aa) Research and Development

Research and development costs are expensed as incurred.

     (bb) Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the carrying amounts of existing assets and liabilities in the financial statements and their respective tax bases, and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recorded for loss carryforwards and other deferred tax assets where it is more likely than not that such loss carryforwards and deferred tax assets will not be realized.

In the ordinary course of business there is inherent uncertainty in quantifying the Company’s income tax positions. The Company assesses, its income tax positions and record tax benefits for all years subject to examination based upon evaluation of the facts, circumstances, and information available at the reporting dates. For those tax positions where it is more-likely-than-not that a tax benefit will be sustained, the Company records the tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where it is not more-likely-than-not that a tax benefit will be sustained, no tax benefit has been recognized in the financial statements. The Company recognizes interest accrued and penalties related to unrecognized tax benefits in income tax expense.

The Company adopted the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 48, “Accounting for Uncertainty in Income Taxes,” (FIN 48) in 2007. As a result of this adoption, the Company recognized a charge of approximately $518 to the January 1, 2007 accumulated deficit balance.

     (cc) Net Income (Loss) Per Share

Basic net income (loss) per share is computed using the weighted average number of ordinary shares outstanding. Diluted net income (loss) per share is computed using the weighted average number of ordinary shares outstanding and dilutive potential ordinary shares from the assumed exercise of share options outstanding during the period, if any, using the treasury stock method plus other potentially dilutive securities outstanding, such as convertible notes.

The Company excluded certain potentially dilutive securities for each period presented from its diluted net income per share computation because the exercise price of the securities exceeded the average fair value of the Company’s ordinary shares and therefore these securities were anti-dilutive.

A summary of the excluded potentially dilutive securities outstanding and the range of related exercise prices follows:

	December 31,		December 30,		December 28,
	2006		2007		2008
Convertible notes		82,454		10,613		—
Share plans		103,508		15,609		14,310

F-15

STATS CHIPPAC LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)

In 2007, the conversion price of convertible notes outstanding was approximately $0.93 to $1.75 per share. The weighted average exercise prices of share options outstanding were approximately $0.99, $1.70 and $1.83 in 2006, 2007 and 2008, respectively. The excluded share options have per share exercise prices ranging from approximately $0.68 to $3.99 as of December 31, 2006, $1.07 to $3.99 as of December 30, 2007 and $0.72 to $3.99 as of December 28, 2008.

The following is a reconciliation of the numerators and denominators of the basic and diluted net income per ordinary share computations for the periods presented below:

	Year Ended
	December 31,		December 30,		December 28,
	2006		2007		2008
Net income	$	76,808	$	93,684	$	25,702
Adjusted net income		79,058		95,702		25,702
Weighted average number of ordinary shares outstanding (basic)		1,991,110		2,032,962		2,143,934
Weighted average dilutive shares from share plans		8,564		10,581		2,315
Weighted average dilutive convertible notes		161,871		145,144		—
Weighted average number of ordinary shares and equivalent ordinary shares outstanding (diluted)		2,161,545		2,188,687		2,146,249

     (dd) Reclassifications

Certain reclassifications have been made to prior period amounts to conform with classifications used in the current year.

     (ee) New Accounting Pronouncements

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS 157”), which defines fair value, establishes guidelines for measuring fair value and expands disclosures regarding fair value measurements. SFAS 157 does not require any new fair value measurements but rather eliminates inconsistencies in guidance found in various prior accounting pronouncements. SFAS 157 is effective for fiscal years beginning after November 15, 2007. The Company adopted SFAS 157 for financial assets and financial liabilities in 2008 and its adoption did not have a material impact on the Company’s consolidated financial position and results of operations. In February 2008, the FASB issued staff position No. 157-2 (“FSP 157-2”) which delays the effective date of SFAS 157 for nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (annually). FSP 157-2 is effective for fiscal years beginning after November 15, 2008. In October 2008, the FASB issued staff position No. 157-3 (“FSP 157-3”) which clarifies the application of SFAS 157 in a market that is not active and provides an example to illustrate key considerations in determining the fair value of financial asset when the market for that financial asset is not active. FSP 157-3 is effective upon its issuance on October 10, 2008, including prior periods for which financial statements have not been issued. The adoption of FSP 157-3 did not have an effect on the Company’s consolidated financial position and results of operations.

The Company is currently assessing the impact of SFAS 157 for nonfinancial assets and nonfinancial liabilities on its consolidated financial position and results of operations. SFAS 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). SFAS 157 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. Refer to Note 25 for fair value information of the Company’s financial assets and liabilities.

F-16

STATS CHIPPAC LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)

In September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans an amendment of FASB Statements No. 87, 88, 106, and 132(R)” (“SFAS 158”). This standard requires employers to recognize the underfunded or overfunded status of a defined benefit postretirement plan as an asset or liability in its statement of financial position and to recognize changes in the funded status in the year in which the changes occur through accumulated other comprehensive income, which is a component of stockholders’ equity. The new reporting requirements and related new footnote disclosure rules of SFAS 158 are effective for fiscal years ending after December 15, 2006. Additionally, SFAS 158 requires employers to measure the funded status of a plan as of the date of its year-end statement of financial position effective for fiscal year ending after December 15, 2008. The adoption of SFAS 158 does not have a material impact on the Company’s consolidated financial statements.

In February 2007, the FASB issued SFAS No. 159 “The Fair Value Option for Financial Assets and Financial Liabilities — including an Amendment of SFAS No. 115” (“SFAS 159”), which permits companies to measure certain financial assets and financial liabilities at fair value. SFAS 159 requires that unrealized gains and losses are reported in earnings for items measured using the fair value option. SFAS 159 amends previous guidance to extend the use of the fair value option to available-for-sale and held-to-maturity securities. SFAS 159 is effective as of the beginning of the first fiscal year beginning after November 15, 2007. The adoption of SFAS 159 in 2008 did not have a material effect on the Company’s financial statements.

In December 2007, the FASB issued SFAS No. 141(R), “Business Combinations” (“SFAS 141(R)”), which replaces SFAS No. 141, “Business Combinations.” SFAS 141(R) retains the underlying concepts of SFAS 141 in that all business combinations are still required to be accounted for at fair value under the acquisition method of accounting but SFAS 141(R) changed the method of applying the acquisition method in a number of significant aspects. Acquisition costs will generally be expensed as incurred; noncontrolling interests will be valued at fair value at the acquisition date; in-process research and development will be recorded at fair value as an indefinite-lived intangible asset at the acquisition date; restructuring costs associated with a business combination will generally be expensed subsequent to the acquisition date; and changes in deferred tax asset valuation allowances and income tax uncertainties after the acquisition date generally will affect income tax expense. SFAS 141(R) is effective on a prospective basis for all business combinations for which the acquisition date is on or after the beginning of the first annual period subsequent to December 15, 2008, with the exception of the accounting for valuation allowances on deferred taxes and acquired tax contingencies. SFAS 141(R) amends SFAS 109 such that adjustments made to valuation allowances on deferred taxes and acquired tax contingencies associated with acquisitions that closed prior to the effective date of SFAS 141(R) would also apply the provisions of SFAS 141(R). If such liabilities are settled for lesser amounts prior to the adoption of SFAS 141(R), the reversal of any remaining liability will affect goodwill. If such liabilities reverse subsequent to the adoption of SFAS 141(R), such reversals will affect the income tax provision in the period of reversal. Early adoption is not permitted. The Company is currently evaluating the effects, if any, that SFAS 141(R) may have on its financial statements; however, since the Company acquired significant deferred tax assets for which valuation allowances were recorded at the acquisition date, SFAS 141(R) could significantly affect the results of operations if changes in the valuation allowances occur subsequent to adoption. As of December 28, 2008, the Company has established deferred tax valuation allowances of $33,913 in purchase accounting. Refer to Note 13 for information on deferred tax valuation allowances.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 51” (“SFAS 160”). SFAS 160 requires the recognition of a noncontrolling (minority) interest as equity in the consolidated financial statements and separate from the parent’s equity. The amount of net income attributable to the noncontrolling (minority) interest will be included in consolidated net income on the face of the income statement. It also amends certain of ARB No. 51’s consolidation procedures for consistency with the requirements of SFAS 141(R). This statement also includes expanded disclosure requirements regarding the interests of the parent and its noncontrolling interest. SFAS 160 is effective for annual periods beginning after December 15, 2008 and should be applied prospectively. However, the presentation and disclosure requirements of the statement shall be applied retrospectively for all periods presented. The Company is currently evaluating the effect of SFAS 160 on its consolidated financial statements and anticipates that SFAS 160 will not have a significant impact on the reporting of its results of operations.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities — an amendment of SFAS No. 133” (“SFAS 161”), which is intended to improve financial reporting

F-17

STATS CHIPPAC LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)

about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance and cash flows. This Statement is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. The Company is currently evaluating the effect of SFAS 161 on its consolidated financial statements.

2. Related Party Transactions

As of December 28, 2008, Temasek, through its wholly-owned subsidiary, STSPL, beneficially owned 1,845,715,689 ordinary shares, representing 83.8% of the Company’s ordinary shares, following STSPL’s conversion of its entire $134,500 of the Company’s 2.5% convertible subordinated notes due 2008 into 145,138,660 ordinary shares on May 22, 2008. In 2007 and 2008, related interest expense of $2,091 and $1,308 were incurred on these convertible subordinated notes.

The Company’s operations in Singapore are conducted in a building constructed on land held on a long-term operating lease from a statutory board of the Government of Singapore. The lease is for a 30-year period commencing March 1, 1996 and is renewable for a further 30 years subject to the fulfillment of certain conditions.

The Company has contracts with Chartered Semiconductor Manufacturing Ltd (“Chartered”), majority owned by Temasek through STSPL, to provide wafer sort, packaging and test services and priority usage of the Company’s testers in return for minimum loads and orders. Net revenues earned from Chartered in 2006, 2007 and 2008 were $11,109, $9,008 and $7,376, respectively.

The Company has $9,000 and $8,561 of cash and cash equivalents, and $6,968 and $19,376 of short and long term marketable securities placed with Temasek affiliated financial institutions as of December 30, 2007 and December 28, 2008, respectively. Interest income earned were $271 and $188 in 2007 and 2008, respectively.

The Company also engages in transacting with other companies, directly or indirectly controlled by Temasek, in the ordinary course of business. These transactions which include transactions for gas, water and electricity, facilities management, transportation and telecommunication services are at their prevailing market rates or prices and on customary terms and conditions. These expenses amounted to $18,375, $19,808 and $16,728 in 2006, 2007 and 2008, respectively.

The amounts owing by (to) affiliates were as follows:

	December 30,			December 28,
	2007			2008
Short-term and long-term amounts due from affiliates
Accounts receivable, net of allowance for sales returns	$	2,859		$	1,955
Receivables on assets transfer due from affiliate		13,285			22,562
	$	16,144		$	24,517
Short-term amounts due to affiliates
Accounts payable	$	(1,651	)	$	(1,388	)

In 2006, the Company entered into an agreement to sell packaging and test equipment related to specific low lead count packages to Wuxi CR Micro-Assembly Technology Ltd. (“ANST”) for $35,000 payable over 4 years and a performance-based contingent earn-out of $5,000. ANST is a wholly owned subsidiary of MAT, of which the Company has a 25% shareholding. As a result of the planned sale of these assets to ANST, the Company had separately classified the related assets of $29,638 in 2006 to assets held for sale, a component of other non-current assets. During 2007 and 2008, $17,145 and $10,021 of the related assets, respectively, have been transferred to ANST and $1,154 and $168 of gains have been recognized in 2007 and 2008, respectively. In addition to the transfer of assets, the Company entered into an agreement to provide sales and technical support to ANST on a quarterly commission basis from 2007 to 2009, of which $208 and $1,253 were earned in 2007 and 2008, respectively.

F-18

STATS CHIPPAC LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)

3. Cash and Cash Equivalents

Cash and cash equivalents consist of the following:

	December 30,		December 28,
	2007		2008
Cash at banks and on hand	$	110,756	$	88,800
Cash equivalents
Bank fixed deposits		23,022		141,924
Money market funds		79,056		65,192
Foreign government treasury bills		627		—
	$	213,461	$	295,916

4. Marketable Securities

Marketable securities consist of the following:

	December 30, 2007									December 28, 2008
			Gross		Gross							Gross		Gross
	Amortized		Unrealized		Unrealized			Fair		Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value		Cost		Gains		Losses			Value
Available-for-sale corporate debt securities and certificates of deposits	$	45,423	$	—	$	(897	)	$	44,526	$	57,507	$	—	$	(606	)	$	56,901

Maturities of marketable securities (at fair value) are as follows:

	December 30,		December 28,
	2007		2008
Marketable securities:
Due in one year or less	$	29,230	$	41,314
Due after one year through five years		1,064		15,587
Due after five years		14,232		—
	$	44,526	$	56,901

Gross realized gains and losses in 2006 were $5 and $nil, respectively. Gross realized gains and losses in 2007 were $127 and $258, respectively. Gross realized gains and losses in 2008 were $36 and $nil, respectively. Proceeds from the sales or maturities of available-for-sale marketable securities in 2006, 2007 and 2008 were $56,232, $43,259 and $79,896, respectively.

5. Accounts Receivable

Accounts receivable consists of the following:

	December 30,			December 28,
	2007			2008
Accounts receivable — third parties	$	277,628		$	145,628
Allowance for sales returns		(6,268	)		(6,108	)
	$	271,360		$	139,520

F-19

STATS CHIPPAC LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)

Movements in the allowance for sales returns are as follows:

	Year Ended
	December 31,			December 30,			December 28,
	2006			2007			2008
Beginning	$	2,840		$	3,406		$	6,268
Utilized during the year		—			(98	)		(4,122	)
Charged during the year		3,034			4,681			4,144
Writeback during the year		(2,468	)		(1,721	)		(182	)
Ending	$	3,406		$	6,268		$	6,108

6. Other Receivables

Other receivables consist of the following:

	December 30,		December 28,
	2007		2008
Deposits and staff advances	$	923	$	911
Forward contract receivable		299		—
Taxes receivable		1,969		833
Grants receivables		—		117
Other receivables		3,686		6,496
	$	6,877	$	8,357

7. Inventories

Inventories consist of the following:

	December 30,		December 28,
	2007		2008
Raw materials	$	65,877	$	50,775
Work-in-progress		14,872		8,328
Finished goods		2,563		1,614
	$	83,312	$	60,717

8. Prepaid Expenses and Other Assets

Prepaid expenses and other current assets consist of the following:

	December 30,		December 28,
	2007		2008
Other prepayments and assets	$	8,241	$	9,999
Deferred income tax assets		1,207		4,694
Loans to a vendor		3,529		—
Assets held for sale		9,343		—
	$	22,320	$	14,693

Prepaid expenses and other non-current assets consist of the following:

	December 30,		December 28,
	2007		2008
Deferred income tax assets	$	39,609	$	13,095
Other deposits		303		295
Loans to a vendor		882		—
Debt issuance cost, net of accumulated amortization of $7,958 and $5,547		6,949		4,212
Leasing prepayments		248		—
Assets held for sale		10,544		43
Others		3,255		6,548
	$	61,790	$	24,193

F-20

STATS CHIPPAC LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)

The Company extended $5,000 and $15,000 loans to a vendor in June 2003 and January 2004, respectively, to secure a specified minimum quantity of substrates up to December 2008. The loans are interest-free and are collateralized by equipment purchased by the loan monies, mortgage on the factory of the vendor and 2,400 shares of the vendor. The 2,400 shares of the vendor’s equity were released in April 2008 and no longer form part of the collateral. The loans of $5,000 and $15,000 were fully repaid in June 2007 and December 2008, respectively.

In May 2007, the Company entered into an agreement to sell packaging and test equipment related to discrete power packages to Ningbo Mingxin Microelectronics Co. Ltd. (“Mingxin”) for an aggregate consideration of $10,000 payable approximately over two years. The Company has separately classified the related assets of $10,000 in 2007 as assets held for sale, a component of other current assets. In 2007 and 2008, $657 and $9,343 of the assets have been transferred to Mingxin, respectively. These held for sale assets were recorded at the lower of carrying amount or fair value less cost to sell. As a result, the Company recognized an impairment loss of $1,725 in 2007.

9. Property, Plant and Equipment

Property, plant and equipment consist of the following:

	December 30,		December 28,
	2007		2008
Cost:
Freehold land	$	11,010	$	10,703
Land and land use rights		19,864		19,864
Buildings, mechanical and electrical installation		262,186		269,046
Equipment		2,145,503		2,216,667
Total cost	$	2,438,563	$	2,516,280
Total accumulated depreciation	$	1,162,073	$	1,299,938
Property, plant and equipment, net	$	1,276,490	$	1,216,342

Depreciation charged to results of operations, including depreciation related to assets under capital leases, amounted to $229,067, $246,554 and $275,044 in 2006, 2007 and 2008, respectively.

The Company routinely reviews the remaining estimated useful lives of its equipment to determine if such lives should be adjusted due to the likelihood of technological obsolescence arising from changes in production techniques or in market demand for the use of its equipment. However, due to the nature of the packaging and testing operations, which may include sudden changes in demand in the end markets, and due to the fact that certain equipment is dedicated to specific customers, the Company may not be able to accurately anticipate declines in the utility of its equipment.

Equipment impairment charges of $21,091 were recorded in 2008 as a result of the Company’s ongoing assessment of property, plant and equipment for impairment. The equipment impairment charges were taken because continued softness in demand in the end-markets to which certain of the equipment was dedicated had reduced the anticipated future usage of such equipment.

Land use rights represent payments to secure, on a fully-paid up basis, the use of properties where the Company’s facilities are located in Shanghai, China and Kuala Lumpur, Malaysia for a period of 50 and 99 years, respectively. The land use rights expire in the year 2044 for Shanghai, China and in the year 2086 for Kuala Lumpur, Malaysia. The Company’s Singapore facilities are located in a building constructed on land held on a 30-year operating lease which is renewable for a further 30-year period subject to the fulfillment of certain conditions. The facilities in Hsin-Chu Hsien, Taiwan, Incheon City, South Korea and Pathumthani, Thailand are located on freehold land.

There was no equipment under capital lease as of December 30, 2007 and December 28, 2008.

F-21

STATS CHIPPAC LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)

10. Intangible Assets

Intangible assets consist of the following:

	December 30, 2007							December 28, 2008
	Gross		Accumulated			Net		Gross		Accumulated			Net
	Assets		Amortization			Assets		Assets		Amortization			Assets
Tradenames	$	7,700	$	(3,758	)	$	3,942	$	7,700	$	(4,858	)	$	2,842
Technology and intellectual property		32,000		(10,933	)		21,067		32,000		(14,133	)		17,867
Customer relationships		99,300		(99,300	)		—		99,300		(99,300	)		—
Patent costs, software, licenses and others		31,469		(15,724	)		15,745		43,990		(19,937	)		24,053
	$	170,469	$	(129,715	)	$	40,754	$	182,990	$	(138,228	)	$	44,762

Amortization expense related to finite-lived intangible assets is summarized as follows:

	Year Ended
	December 31, 2006		December 30, 2007		December 28, 2008
Tradenames	$	1,100	$	1,100	$	1,100
Technology and intellectual property		3,200		3,200		3,200
Customer relationships		28,962		—		—
Software, licenses and others		3,988		3,498		4,347
	$	37,250	$	7,798	$	8,647

Finite-lived intangible assets are generally being amortized over estimated useful lives of two to ten years. Estimated future amortization expense as of December 28, 2008 is summarized as follows:

2009	$	9,286
2010		8,042
2011		6,631
2012		4,063
2013		3,912
Thereafter		12,828
Total	$	44,762

11. Goodwill

The changes in the carrying value of goodwill are as follows:

	December 30,		December 28,
	2007		2008
Beginning	$	513,512	$	547,958
Goodwill relating to acquisition		24,809		—
Purchase adjustments		9,637		3,174
Ending	$	547,958	$	551,132

As of December 28, 2008, the Company had goodwill of $2,209 related to the acquisition of STATS ChipPAC Taiwan Semiconductor Corporation, $524,114 related to the acquisition of ChipPAC and $24,809 related to acquisition of the assembly and test operations in Thailand. In 2007 and 2008, purchase adjustments of $9,637 and $3,174 related to the deferred taxes valuation and other tax liabilities were recorded, respectively.

F-22

STATS CHIPPAC LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)

In 2006, 2007 and 2008, the Company performed its annual test for impairment and determined that the fair value of the reporting units exceeds their carrying value, and therefore goodwill was not impaired.

The Company cannot predict the occurence of certain events or circumstances that might adversely affect the carrying value of goodwill in future. Such events may include, but are not limited to, strategic decisions made in response to economic and competitive conditions and the impact of the economic environment on the Company’s business.

12. Accrued Operating Expenses

Accrued operating expenses consist of the following:

	December 30,		December 28,
	2007		2008
Staff costs and accrued restructuring charges	$	40,276	$	49,224
Purchase of raw materials		18,639		4,636
Maintenance fees, license fees and royalties		4,146		5,025
Interest expense		7,535		7,536
Provision for vacation liability		5,048		4,697
Liability for uncertain tax positions		—		34,621
Others		33,872		42,330
	$	109,516	$	148,069

13. Income Taxes

Income before income taxes consists of the following:

	Year Ended
	December 31,		December 30,			December 28,
	2006		2007			2008
Singapore	$	951	$	(9,416	)	$	(9,652	)
Foreign		111,626		138,499			58,974
	$	112,577	$	129,083		$	49,322

Income tax expense consists of the following:

	Year Ended
	December 31,			December 30,			December 28,
	2006			2007			2008
Current tax:
Singapore	$	—		$	—		$	—
Foreign		(5,935	)		(23,192	)		(13,679	)
Total current tax	$	(5,935	)	$	(23,192	)	$	(13,679	)
Deferred tax:
Singapore	$	(1,400	)	$	(2,000	)	$	(5,804	)
Foreign		(18,424	)		(4,389	)		311
Total deferred tax	$	(19,824	)	$	(6,389	)	$	(5,493	)
	$	(25,759	)	$	(29,581	)	$	(19,172	)

F-23

STATS CHIPPAC LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)

A reconciliation of the expected tax expense at the Singapore statutory rate of tax to actual tax expense is as follows:

	Year Ended
	December 31,			December 30,			December 28,
	2006			2007			2008
Income tax expense computed at Singapore statutory rate of 18.0% (2007: 18.0% and 2006: 20.0%)	$	22,515		$	23,235		$	8,878
Non-deductible expenses		4,892			4,948			9,018
Non-taxable income, including income exemption		(461	)		(1,558	)		(9,287	)
Differences in tax rates		5,550			10,239			7,411
Effect of recognizing deferred tax assets at concessionary tax rate and tax credits		(13,926	)		(14,660	)		(3,694	)
Change in statutory tax rate		(651	)		—			—
Tax benefits from employee share option plans		(665	)		(90	)		(100	)
Reinvestment allowance		(5,632	)		(4,516	)		(1,392	)
Change in valuation allowance		9,114			12,163			25,446
Taxable foreign exchange adjustment		4,575			(3,645	)		(17,293	)
All other items, net		448			3,465			185
Income tax expense	$	25,759		$	29,581		$	19,172

Deferred income taxes reflect the net tax effects of (a) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and (b) operating loss, unutilized capital allowance and investment tax credit carryforwards. The tax effect of significant items comprising the Company’s deferred income tax assets and liabilities at December 30, 2007 and December 28, 2008 are as follows:

	December 30,			December 28,
	2007			2008
Deferred income tax assets:
Operating loss carryforwards	$	21,833		$	26,335
Investment, and research and development tax credits		59,811			50,609
Reinvestment allowance		39,484			40,876
Property, plant and equipment		42,859			42,312
Others		8,777			15,051
		172,764			175,183
Valuation allowance		(131,948	)		(157,394	)
	$	40,816		$	17,789
Deferred income tax liabilities:
Property, plant and equipment	$	42,868		$	27,212
Allowances and reserves		21,777			1,989
		64,645			29,201
Net deferred income tax assets (liabilities)	$	(23,829	)	$	(11,412	)

In 2004, as part of the acquisition of ChipPAC, the Company acquired approximately $103,351 of net operating loss carryforwards, $32,185 of tax credit carryforwards and $47,023 of reinvestment allowance that were recognized as deferred tax assets upon acquisition. The Company established a valuation allowance of $53,973 against all of the net operating loss carryforwards and reinvestment allowance, and a portion of the Korean tax credit carryforwards in 2004. If utilized, these attributes will be treated as a reduction in acquired goodwill in accordance with the requirements of SFAS 141 and prior to the effectiveness of SFAS 141(R). In 2007 and 2008, $4,040 and $991 of the United States, South Korea and China net operating loss carryforwards and tax credit carryforwards, respectively, were utilized and accordingly the goodwill related to the acquisition of ChipPAC was reduced by $4,040 and $991, respectively. Subsequent to the adoption of FAS141(R) effective date January 1, 2009, the above rule will no longer apply and any benefit realized will be recorded as a reduction of income tax expense. As of December 28, 2008, the Company has established deferred tax valuation allowances of $33,913 in purchase accounting.

The deferred tax assets as of December 30, 2007 and December 28, 2008 arose principally as a result of the deferred tax benefit associated with operating loss carryforwards, investment, and research and development tax credits, reinvestment allowance and deductible temporary differences on property, plant and equipment.

F-24

STATS CHIPPAC LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)

As of December 28, 2008, the Company had approximately $122,119 of tax loss carryforwards available to offset against future taxable income, certain amounts of which will expire in varying amounts from 2009 to 2025.

As of December 28, 2008, the Company had approximately $5,011, $304,780, $34,424 and $163,503 of research and development, unutilized capital allowances, investment tax credits and reinvestment allowance, respectively, which can be used to offset income tax payable in future years. Certain credits will expire in varying amounts from 2009 through 2013.

The Company recorded a valuation allowance of $131,948 and $157,394 as of December 30, 2007 and December 28, 2008, respectively, which represents an increase of $12,163 and $25,446 in 2007 and 2008, respectively, to reduce the assets to the amounts that the Company deemed, more likely than not, that the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income based on business plans, and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods which the deferred tax assets are deductible, the Company established a partial valuation allowance against its gross deferred tax assets to reduce the assets to the amount the Company deemed, more likely than not, that the deferred tax assets will be realized.

The Company’s subsidiary in China, STATS ChipPAC Shanghai Co., Ltd. qualifies for a tax holiday from State Department of China under the foreign investment policy. STATS ChipPAC Shanghai Co., Ltd. is exempted from tax for two years followed by three years of 50% tax exemption, commencing from the first profitable year of operations (2006). This tax holiday will expire on December 31, 2010.

Changes in share ownership by shareholder may result in a limitation on the amount of the Singapore net operating losses and unutilized capital allowances that are available as carryforwards for use by the Company. The Company reviewed the tax effect of such a shareholder change in connection with the tender offer by STSPL in 2007. In 2008, the Singapore tax authorities confirmed that the limitations relating to the Company’s ability to carryforward certain Singapore tax losses and capital allowances for offset against future taxable profits of the Company in connection with the tender offer by STSPL were not affected subject to the fulfillment of certain continuing conditions. Concurrently, approximately $311,611 of such tax losses and capital allowance carryforwards continued to be made available to the Company’s operations in Singapore.

The Company adopted the provisions of FIN 48 in 2007. As a result of the implementation of FIN 48, the Company recognized an additional $518 liability on unrecognized tax benefits for uncertain tax positions in various jurisdictions and accounted for the increase as a cumulative effect of a change in accounting principle that resulted in an increase to accumulated deficit of $518 as of January 1, 2007. In 2007 and 2008, the Company recorded a $13,677 and $4,165 increase in tax reserves relating to certain tax matters prior to August 2004. This increased the goodwill related to the acquisition of ChipPAC accordingly by $13,677 and $4,165 in 2007 and 2008, respectively. In addition, the Company reclassified $17,930 relating to certain tax matters prior to August 2004 from deferred tax liabilities to liability for unrecognized tax benefits in 2008. A reconciliation of the unrecognized tax benefits is as follows:

	December 30,		December 28,
	2007		2008
Unrecognized tax benefits:
Beginning	$	518	$	21,422
Increases related to prior year tax positions		13,521		24,211
Increases related to current year tax positions		7,383		927
Decreases related to current year tax positions		—		(4,111	)
Decreases related to settlements with taxing authorities		—		(150	)
Decreases as a result of lapse of applicable statute limitations		—		(179	)
Ending	$	21,422	$	42,120

F-25

STATS CHIPPAC LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)

In 2007 and 2008, $7,383 and $8,787 have been further reserved as a liability on unrecognized tax benefits for uncertain tax positions and is accounted for as a current income tax adjustment due to an increase of the current period activity related to uncertain tax positions. It is estimated that the uncertain tax position will increase by approximately $1,932 in the next twelve months given the same level of future taxable profit as 2008. The Company also expects the uncertain tax position to decrease by approximately $34,621 in the next twelve months due to settlements with taxing authorities. Included in the unrecognized tax benefits is an amount of $7,383 and $16,170 which if recognized, would impact the effective tax rate for 2007 and 2008, respectively.

The Company recognizes interest and penalties related to the unrecognized tax benefits in the income tax expense. In 2008, the Company recognized $7,860 of interest and penalties in earnings. As of December 28, 2008, the Company has approximately $11,523 of such accrued interest and penalties.

Annually, the Company files income tax returns in various jurisdictions. The Company is under tax examination in certain of these jurisdictions and is engaged with the South Korean National Tax Service (the “NTS”) through a Mutual Agreement Procedure (“MAP”) relating to withholding tax not collected on the interest income on the loan between the ChipPAC’s subsidiaries in South Korea and Hungary for the period from 1999 to 2002. The years still open to audit by the foreign tax authorities, which represent the years still subject to the statute of limitations, in major jurisdictions include Singapore (2001 onward), South Korea (2002 onward), Malaysia (2002 onward), United States (1999 onward), China (2002 onward) and Taiwan (2006 onward). Audit resolutions could potentially reduce the Company’s unrecognized tax benefits, either because the tax positions are not sustained on audit or because the Company agrees to tax disallowances.

In 2008, the Singapore Economic Development Board (“EDB”) offered the Company a five year tax incentive for its Singapore operations commencing July 1, 2007, whereby certain qualifying income will be subject to a concessionary tax rate of 5% instead of the Singapore statutory rate of 18%, subject to the fulfillment of certain continuing conditions.

14. Short-Term Borrowings

The Company has a line of credit from Bank of America with credit limit of $50,000, of which $50,000 was outstanding as of December 28, 2008. The facility bore average interest rates of 5.6% in 2007 and 3.6% in 2008, respectively. The line of credit is subject to periodic review by the lender for the continued use of the facility. In 2008, we had facilities with Hana Bank and the National Agricultural Cooperation Federation Bank in South Korea in the aggregate of $25,000. These facilities expired during the year.

15. Long-Term Debts

Long-term debts consist of the following:

	December 30,			December 28,
	2007			2008
6.75% senior fixed-rate notes	$	215,000		$	215,000
7.5% senior fixed-rate notes		150,000			150,000
2.5% convertible subordinated fixed-rate notes		134,500			—
0% convertible senior fixed-rate notes		18,551			—
6% promissory note		46,800			26,800
U.S. dollars bank loan at floating rates		12,600			6,600
Taiwan dollar loans at floating rates		32,315			25,053
Taiwan dollar loans and commercial papers at fixed rates		1,128			—
Accrued yield-to-maturity interest on convertible notes		3,440			—
		614,334			423,453
Less current amounts		(190,481	)		(26,953	)
	$	423,853		$	396,500

On November 18, 2004, the Company issued $215,000 of senior unsecured notes due November 15, 2011, for net proceeds of $210,458. The senior notes bears interest of 6.75% per annum payable semi-annually on May 15 and November 15 of each year. At the maturity date, 100.0% of the principal amount will be due and payable. Prior to November 15, 2008, the Company may redeem all or a part of the senior notes at any time by paying a “make whole” premium plus accrued and unpaid interest. The Company may redeem all, but not less than all, of these notes at any time in the event of certain changes affecting withholding taxes at 100% of

F-26

STATS CHIPPAC LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)

their principal amount plus accrued and unpaid interest. On or after November 15, 2008, the Company may redeem all or a part of these notes at any time at the redemption prices specified under the terms and conditions of the senior notes plus accrued and unpaid interest. In addition, prior to November 15, 2007, the Company may redeem up to 35% of these notes with the net proceeds of certain equity offerings. Upon a change of control, the Company will be required to offer to purchase these notes at 101.0% of their principal amount plus accrued and unpaid interest.

On July 19, 2005, the Company issued $150,000 of senior unsecured notes due July 19, 2010 for net proceeds of $146,535. The senior notes bear interest rate of 7.5% per annum payable semi-annually on January 19 and July 19 of each year. At the maturity date, 100.0% of the principal amount will be due and payable. Prior to July 19, 2010, the Company may redeem all or a part of the senior notes at any time by paying a “make whole” premium plus accrued and unpaid interest. The Company may redeem all, but not less than all, of these notes at any time in the event of certain changes affecting withholding taxes at 100% of their principal amount plus accrued and unpaid interest and liquidated damages, if any. In addition, prior to July 19, 2008, the Company may redeem up to 35% of these notes at a redemption price of 107.5% of the principal amount, plus accrued and unpaid interest and liquidated damages, if any, to the redemption date, with the net proceeds of certain equity offerings. Upon a change of control, the Company will be required to offer to purchase these notes at 101.0% of their principal amount plus accrued and unpaid interest. A portion of the net proceeds were used to repay the then outstanding $99,000 short-term debts with Overseas-Chinese Banking Corporation Limited and Bank of America N.A.

On November 7, 2003, the Company issued $115,000 of senior, unsecured and unsubordinated convertible notes due November 7, 2008, for net proceeds of $112,345. The convertible notes have a yield to maturity of 4.25%. At the maturity date, 123.4% of the principal amount, comprising principal and redemption interest, will be due and payable. The notes can be converted into the Company’s ordinary shares or, subject to certain limitations, ADSs, each of which currently represents ten ordinary shares, at an initial conversion price of S$3.05 per ordinary share (equivalent to an initial number of 570.5902 ordinary shares per $1,000 principal amount of convertible notes, based on a fixed exchange rate of US$1.00 = S$1.7403). The Company may elect to satisfy its obligations to deliver ordinary shares or ADSs through the payment of cash in accordance with the terms of the notes. The Company may redeem all or a portion of the convertible notes at any time on or after November 7, 2006 at a price to yield of 4.25% per annum to the redemption date if the Company’s shares or ADSs trade at or above 130% of the conversion price for a period of 20 trading days in any 30 consecutive trading day period. The note holders may require the Company to repurchase all or a portion of their notes on November 7, 2007 at a price equal to 118.32% (to arrive at effective yield of 4.25%) of the principal amount of the notes being redeemed, plus any accrued and unpaid interest accrued to the date of redemption. In addition, upon the occurrence of certain repayment events, including a change in control, on or prior to November 7, 2008, each note holder may require the Company to repurchase all or a portion of such holder’s notes at a price to yield of 4.25% per year to the redemption date. In 2007, the Company redeemed $96,449 aggregate principal amount of the zero coupon convertible notes due 2008 pursuant to demands for redemption from note holders in accordance with the indenture governing the zero coupon convertible notes. The Company paid a total amount of $114,118 (including accretion of yield-to-maturity interest on the convertible notes) in respect of the convertible notes redemption. The Company financed the redemption with cash and short-term borrowings. In 2008, the Company repurchased the outstanding $18,551 aggregate principal amount of the zero coupon convertible notes for $22,057 (including accretion of yield-to-maturity interest on the convertible notes). We financed the repurchase with cash in hand.

The conversion price of the zero coupon convertible senior notes may be subject to adjustments upon occurrence of the following: (1) on share distribution, share split or share consolidation; (2) on issue or distribution of the Company’s ordinary shares, or subsidiaries’ issue of any securities or rights which are convertible into or exchangeable for the Company’s ordinary shares, to all or substantially all holders of the Company’s ordinary shares for below the reasonable range of fair market value; (3) on issue or distribution to all or substantially all holders of the Company’s ordinary shares of warrants or rights to purchase or subscribe for the Company’s ordinary shares for below the reasonable range of fair market value; (4) on issue or distribution to all or substantially all holders of the Company’s ordinary shares of assets or other securities, including rights to acquire those assets or other securities, for below the reasonable range of the assets or other securities’ fair market value; (5) on issue or distribution of “extraordinary dividends” (defined as a total dividend that is equal to or exceeds (i) 2% of the one year average closing price of the Company’s ordinary shares if the Company has never paid cash dividends, or (ii) the lower of (a) two times the largest

F-27

STATS CHIPPAC LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)

aggregate cash dividends in any previous year, and (b) the largest aggregate cash dividends in any previous year plus 1% of the one year average closing price of the Company’s ordinary shares if the Company has paid cash dividends at least once); and (6) on spin-off of any of the Company’s subsidiaries or other business units. The terms of the indentures governing the zero coupon convertible senior notes provide that the ordinary shares deliverable upon conversion would not be registered under the Securities Act of 1933.

The $150,000 2.5% convertible subordinated notes due 2008 are ChipPAC’s unsecured and subordinated obligations. These convertible notes will mature on June 1, 2008 and bear interest at a rate of 2.5% per annum payable semi-annually on June 1 and December 1 of each year. On the maturity date of these convertible notes, ChipPAC will pay to the note holders of these convertible notes 100% of the principal amount. These convertible notes can be converted into the Company’s ADSs at a conversion price of $9.267 per ADS. These convertible notes are not redeemable at the option of ChipPAC. Upon the occurrence of specified change in control events, each holder of these notes may require ChipPAC to repurchase all or a portion of such holder’s notes at a purchase price equal to 100% of the principal amount thereof on the date of purchase plus accrued and unpaid interest. On October 11, 2004, STATS ChipPAC, ChipPAC and the trustee for these convertible notes entered into a second supplemental indenture to provide for an unconditional guarantee of these convertible notes on a subordinated basis by STATS ChipPAC (but not by any of its subsidiaries). On October 18, 2004, ChipPAC commenced a consent solicitation from holders of these convertible notes to amend the indenture governing these convertible notes to replace ChipPAC’s obligation to file with the SEC annual reports and such other information, documents and reports specified in Section 13 and 15(d) of the Exchange Act of 1934 with an obligation of STATS ChipPAC to file all such reports with the SEC as are applicable to a foreign private issuer. The consent solicitation expired on November 1, 2004. ChipPAC received valid deliveries of consents from holders of approximately $130,500 aggregate principal amount, or 87%, of these convertible notes outstanding. Accordingly, ChipPAC obtained the requisite consents authorizing the adoption of the proposed amendment to the indenture. The consents were accepted and the amendments to the indenture became effective on November 2, 2004.

In May 2007, in connection with the tender offer by STSPL for equity securities of our Company, STSPL acquired $134,500 aggregate principal amount of these convertible notes. The balance $15,500 principal amount of the 2.5% convertible subordinated notes were converted into 1,672,601 ADSs (equivalent to 16,726,010 ordinary shares) in May 2007. In November 2007, we entered into a letter agreement with STSPL pursuant to which STSPL agreed to the following: (1) the conversion right of these convertible notes will be satisfied by a delivery of our ordinary shares in lieu of ADSs upon conversion of these convertible notes, (2) we have no obligation to list or cause to have quoted the ADSs on Nasdaq or another national securities exchange or over-the-counter market or any other market, (3) if our reporting obligations under the Exchange Act are terminated, we have no obligation to file with the SEC or provide the trustee for these convertible notes any reports, information or documents or comply with the provisions of the U.S. Trust Indenture Act of 1939, as amended, and (4) before STSPL transfers any of these convertible notes, it will procure the transferee to deliver a letter substantially in the form of the November 2007 letter or consent to the Company, STATS ChipPAC, Inc. and the trustee entering into a supplemental indenture to amend the indenture to effect the foregoing. In 2008, STSPL converted its entire $134,500 aggregate principal amount into ordinary share as discussed in Note 2.

The conversion price of the 2.5% convertible subordinated notes may be subject to adjustments upon occurrence of the following: (1) on share distribution, share split or share consolidation; (2) on issue or distribution to all or substantially all holders of the Company’s ordinary shares of warrants or rights to subscribe for or purchase the Company’s ordinary shares, or securities convertible into the Company’s ordinary shares, at a price per share or a conversion price per share below the reasonable range of fair market value; (3) on issue or distribution to all or substantially all holders of the Company’s ordinary shares any shares of capital stock of the Company, evidences of indebtedness or other non-cash assets (excluding (i) dividends, distributions and rights or warrants referred to above, and (ii) dividends or distributions paid in cash), or rights or warrants to subscribe for, or purchase any of the Company’s securities (excluding those rights or warrants referred to above); (4) on issue or distribution to all or substantially all holders of the Company’s ordinary shares of all cash distributions in an aggregate amount that, together with (a) any cash and any other consideration payable in respect of any purchase by the Company of the Company’s ordinary shares consummated within the preceding 12 months not triggering a conversion price adjustment and (b) all cash distributions to all or substantially all holders of the Company’s ordinary shares made within the preceding 12 months not triggering a conversion price adjustment, exceeds 10% of the Company’s then market capitalization; and (5) on purchase by the Company of the Company’s ordinary shares to the extent it

F-28

STATS CHIPPAC LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)

involves aggregate consideration that, together with (a) any cash and any other consideration payable in respect of any purchase by the Company of the Company’s ordinary shares consummated within the preceding 12 months not triggering a conversion price adjustment and (b) all cash distributions to all or substantially all holders of the Company’s ordinary shares made within the preceding 12 months not triggering a conversion price adjustment, exceeds 10% of the Company’s then market capitalization.

The terms of the indentures governing the 2.5% convertible subordinated notes permit only issuance of new shares. There is no net cash or net share settlement provisions. Also, pursuant to the registration rights agreement relating to the 2.5% convertible subordinated notes, shelf registration was required to be maintained for a period of two years. The shelf registration requirement of the 2.5% convertible subordinated notes has been continued via a registration statement on Form F-3/S-3 filed on October 13, 2004 and which offering had been terminated on October 11, 2006.

The various provisions of the convertible notes were evaluated by the Company to determine whether any specific conversion features should be bifurcated from the debt host instrument and accounted for as separate derivatives. The Company concluded that conversion options, conversion price adjustments, option to settle for cash upon conversion, the Company’s call option and note holders’ put option embedded in the convertibles notes may be classified as equity and therefore do not need to be accounted for separately from the debt host instruments. The change in control put options are determined to be clearly and closely related to the debt host instrument and are not required to be accounted for separately. Further, the conversion prices were out-of-the-money at the commitment dates and did not result in bifurcation of beneficial conversion features.

On October 2, 2007, the Company issued a $50,000 promissory note carrying interest, payable annually, of 6% per annum to LSI in connection with the acquisition of an assembly and test operations in Thailand. The amount payable to LSI after contractual netting of certain receivables from LSI of $3,200 amounted to $46,800 as of December 30, 2007. The promissory note is payable over 4 yearly installments of $20,000, $10,000, $10,000 and $6,800 over the next 4 years. The first installment of $20,000 was paid to LSI in 2008.

STATS ChipPAC Korea Ltd. has a line of credit from Hana Bank in South Korea with a credit limit of $25,000. In 2006, STATS ChipPAC Korea Ltd. borrowed $12,000 under this facility to finance its purchase of a building and land in South Korea. In 2007, STATS ChipPAC Korea Ltd. borrowed an additional $3,600 under this facility. As of December 28, 2008, the interest rate for the $12,000 loan was 3.7% per annum and the interest rate for the $3,600 loan was 3.5% per annum. Interest is payable on a monthly basis. The principal on the $12,000 loan is repayable over eight equal quarterly installments from September 2007 to June 2009. The principal on the $3,600 loan is repayable at maturity in June 2009. As of December 28, 2008, $634 was held as a restricted deposit with the bank. These loans are secured by a pledge of land and a building with a combined net book value of $26,353 as of December 28, 2008. As of December 28, 2008, $6,600 of the loans was outstanding.

STATS ChipPAC Taiwan Semiconductor Corporation has a NT$3.6 billion ($106,872 based on the exchange rate as January 30, 2009) with a syndicate of lenders, with Taishin Bank as the sponsor bank. The loan drawdowns must be made within 24 months from the date of first drawdown which took place on February 18, 2007. As of December 28, 2008, STATS ChipPAC Taiwan Semiconductor Corporation has drawn down NT$0.7 billion ($20,781 based on the exchange rate as of January 30, 2009) under the term loan facility. The term loan facility bore interest at a rate of 3.4% per annum in 2008 and interest on the loan is payable on a quarterly basis. The principal and interest on the loan is payable in nine quarterly installments commencing 24 months from first draw down date with first eight quarterly installments each repaying 11% of the principal and the last quarterly installment repaying 12% of the principal. As of December 28, 2008, the outstanding balance on this facility was $21,186.

Additionally, STATS ChipPAC Taiwan Semiconductor Corporation has NT$1.0 billion ($29,687 based on the exchange rate as January 30, 2009) of bank and credit facilities from various other banks and financial institutions, of which $3,867 borrowings was outstanding as of December 28, 2008. These credit facilities have varying interest rates ranging from 2.2% to 2.7% per annum and maturities ranging from 2009 through 2012.

F-29

STATS CHIPPAC LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)

Annual maturities of long-term debts as of December 28, 2008 are as follows:

Payable in year
2009		26,953
2010		170,353
2011		225,374
2012		773
	$	423,453

The STATS ChipPAC consolidated group, with the exception of STATS ChipPAC Taiwan Semiconductor Corporation, the China non-guarantor entities (comprising STATS ChipPAC Shanghai Co., Ltd. and STATS ChipPAC Semiconductor Shanghai Co., Ltd.), and, in the case of the 7.5% Senior Notes due 2010, STATS ChipPAC Korea Ltd., fully and unconditionally guaranteed the obligations under the indentures of the 6.75% Senior Notes due 2011 and the 7.5% Senior Notes due 2010, on an unsecured senior basis. See Note 28, Condensed Consolidating Financial Information. The STATS ChipPAC consolidated group, with the exception of STATS ChipPAC Taiwan Semiconductor Corporation, are subject to the covenant restrictions under the terms of the 6.75% Senior Notes due 2011 and the 7.5% Senior Notes due 2010, which, among other things, limit their ability to incur additional indebtedness, prepay subordinated debts, make investments, declare or pay dividends, enter into transactions with affiliates, sell assets, enter into sale and leaseback transactions, incur liens and encumbrances, enter into merger and consolidations and other customary restrictions. The 6.75% Senior Notes due 2011 and the 7.5% Senior Notes due 2010 are cross-defaulted to the Company’s other indebtedness. At December 28, 2008, the Company was in compliance with all covenants.

16. Unutilized Credit Facilities

As of December 30, 2007 and December 28, 2008, the Company have other undrawn banking and credit facilities consisting of short-term loans, long-term loans and bank guarantees of $30,826 and $41,571, respectively, with financial institutions in various countries. The notional letters of credit amounts outstanding as of December 30, 2007 and December 28, 2008 were $3,250 and $884, respectively.

17. Other Non-Current Liabilities

Other non-current liabilities consist of the following:

	December 30,		December 28,
	2007		2008
Deferred tax liabilities	$	64,463	$	29,191
Accrued retirement and severance benefits		38,985		22,908
Liability for uncertain tax positions		16,604		7,499
Others		5,041		4,546
	$	125,093	$	64,144

Changes in accrued retirement and severance benefits in 2006, 2007 and 2008 are as follows:

	Year Ended
	December 31,			December 30,			December 28,
	2006			2007			2008
Beginning	$	20,210		$	27,154		$	39,237
Increase due to acquisition		—			7,677			—
Provision for retirement and severance benefits		9,119			12,031			8,166
Severance payments		(4,172	)		(7,348	)		(15,752	)
Foreign currency loss		1,997			(277	)		(8,568	)
Ending	$	27,154		$	39,237		$	23,083
Payments on deposits with Korean National Pension Fund		(262	)		(252	)		(175	)
Ending, net of payments on deposits	$	26,892		$	38,985		$	22,908

F-30

STATS CHIPPAC LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)

18. Share Capital and Additional Paid-in Capital

The Company is incorporated in Singapore. Under Singapore law, all increases in share capital (including rights issues) require prior shareholders’ approval. Effective January 30, 2006, the Company was subjected to the amendments promulgated under the Companies (Amendment) Act of 2005 of Singapore. These amendments included the abolition of the ordinary share par value and authorized capital. The relevant amendments have resulted in all ordinary shares being recorded with no par value. The amendments do not affect the actual number of ordinary shares issued and the paid up capital of the Company. As a result of the abolition of the ordinary share par value, the balance of the additional paid-in capital amounting to $1,517,175 became part of the share capital as of January 30, 2006 which increased the share capital account on that date to $1,820,277.

As a result of the employees exercising their share options and purchase rights in 2006, 2007 and 2008, 26,522,092, 27,793,536 and 9,745,970 ordinary shares were issued, respectively.

In 2007 and 2008, the Company issued 1,672,601 ADSs (equivalent to 16,726,010 ordinary shares) and 145,138,660 ordinary shares upon conversion of $15,500 and $134,500 aggregate principal amount of its 2.5% convertible subordinated notes due 2008, respectively.

19. Share Repurchase

The Companies (Amendment) Act 2005 of Singapore was made effective on January 30, 2006. As a result of these amendments, a Singapore company can now repurchase shares out of capital, as well as from distributable profits, and ordinary shares repurchased by a company can be held by that company as treasury shares instead of being cancelled. At the annual general meeting in April 2007, the Company obtained shareholders’ approval for the repurchase of up to approximately 51 million ordinary shares (2.5% of the issued ordinary share capital as of the date of the annual general meeting). The approved amount for share repurchases under this shareholders’ mandate will terminate on the earlier of the date on which the next annual general meeting is held or the date which the approval is revoked or varied. As of December 28, 2008, the Company had not repurchased any shares.

20. Accumulated Other Comprehensive (Loss) Income

The components of accumulated other comprehensive loss are as follows:

	December 30,			December 28,
	2007			2008
Currency translation loss	$	(7,086	)	$	(7,589	)
Unrealized gain (loss) on hedging instruments		378			(4,113	)
Unrealized loss on available-for-sale marketable securities		(897	)		(606	)
	$	(7,605	)	$	(12,308	)

21. Share Options and Incentive Plans

As of December 28, 2008, the Company had outstanding grants under two share-based compensation plans. Two of the Company’s share-based compensation plans were terminated in 2008 pursuant to the Company’s consideration on replacement of its long term compensation strategy.

The Company adopted the fair value recognition provisions of SFAS 123(R) in 2006. For share-based awards, the Company recognizes compensation expense on a graded vesting basis over the requisite service period of the award. The share-based compensation expense under SFAS 123(R) was as follows:

F-31

STATS CHIPPAC LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)

	Year Ended
	December 31,		December 30,		December 28,
	2006		2007		2008
Cost of revenues	$	5,965	$	4,783	$	905
Selling, general and administrative		6,143		3,118		875
Research and development		1,580		968		228
Accelerated share-based compensation		—		—		1,562
	$	13,688	$	8,869	$	3,570

The Company issued Restricted Shares Units (“RSUs”) and contingent Performance Share Plan (“PSP”) awards in 2007 pursuant to the Restricted Share Plan (“RSP”) and the PSP, respectively. No share options were granted in 2007, as the RSP is intended to replace the grants of share options under the STATS ChipPAC Ltd. Share Option Plan, as amended. In January 2008, the Company decided to terminate the STATS ChipPAC Ltd. Performance Share Plan (the “PSP”) and the STATS ChipPAC Ltd. Employee Share Purchase Plan 2004 (the “ESPP”). The termination became effective in end March 2008. The STATS ChipPAC Share Option Plan, as amended, was phased out in 2006 and replaced by the RSP. No Restricted Share Units (“RSUs”), contingent Performance Share Plan awards, employee share purchase rights or share options were granted in 2008.

SFAS 123(R) requires the cash flows resulting from the tax benefits for tax deductions in excess of the compensation expense recorded for those options (excess tax benefits) to be classified as financing cash flows. In 2007 and 2008, the windfall tax benefit realized from exercised employee share options was insignificant.

Concurrently with the tender offer (refer to “Temasek’s Subsidiary, Singapore Technologies Semiconductors Pte Ltd’s Tender Offer” in Note 1(a)), STSPL made an options proposal to all holders of options granted under the STATS ChipPAC share option plans whereby the participating holders would agree not to exercise their options for new shares or to exercise their rights as option holders. During the tender offer period, 85,348,090 options were surrendered pursuant to the options proposal.

The following table summarizes share option activity in 2006, 2007 and 2008:

				Weighted
				Average		Aggregate
	Options			Exercise Price		Intrinsic Value
	(In thousands)					(In thousands)
Options outstanding at December 26, 2005		124,175			1.01
Granted		16,498			0.68
Lapsed and forfeited		(17,596	)		1.11
Exercised		(6,277	)		0.41
Options outstanding at December 31, 2006		116,800			0.99
Lapsed and forfeited		(4,222	)		1.25
Surrendered in tender offer		(85,348	)		1.02
Exercised		(11,244	)		0.62
Options outstanding at December 30, 2007		15,986		$	1.70
Lapsed and forfeited		(1,559	)		1.60
Exercised		(37	)		0.55
Options outstanding at December 28, 2008		14,390		$	1.83	$	3
Exercisable at December 31, 2006		70,732		$	1.19
Exercisable at December 30, 2007		15,328		$	1.53
Exercisable at December 28, 2008		14,303		$	1.53	$	3

The aggregate intrinsic value in the table above is based on the difference between the market price and the price payable by option holders to exercise their share options. In 2007 and 2008, the total amount of cash received from the exercise of share options was $6,907 and $21, respectively.

F-32

STATS CHIPPAC LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)

The following table summarizes information about share options outstanding at December 28, 2008:

	Options Outstanding					Options Exercisable
			Weighted					Weighted
			Average	Weighted				Average	Weighted
Range of	Number		Remaining	Average		Number		Remaining	Average
Exercise	Outstanding at		Contractual	Exercise		Exercisable at		Contractual	Exercise
Prices	12/28/2008		Life	Price		12/28/2008		Life	Price
	(In thousands)					(In thousands)
$0.14 to $0.15		13	0.8 years	$	0.14		13	0.8 years	$	0.14
$0.22 to $0.29		28	4.0 years	$	0.29		28	4.0 years	$	0.29
$0.43 to $0.47		1	2.3 years	$	0.46		1	2.2 years	$	0.46
$0.55 to $0.87		525	3.8 years	$	0.76		438	3.5 years	$	0.79
$0.91 to $1.07		1	2.5 years	$	1.07		1	2.5 years	$	1.07
$1.16 to $1.64		12,797	3.3 years	$	1.39		12,797	3.3 years	$	1.39
$2.04 to $2.61		208	1.0 years	$	2.09		208	1.0 years	$	2.09
$3.99		817	1.3 years	$	3.99		817	1.3 years	$	3.99
		14,390	3.1 years				14,303	3.1 years

The following table summarizes information on RSUs and contingent PSP awards activity in 2007 and 2008:

	RSUs							Contingent PSP awards
				Weighted							Weighted
				Average							Average
				Grant-							Grant-
	Number of			Date Fair		Aggregate		Number of			Date Fair		Aggregate
	shares			Value		Intrinsic Value		shares			Value		Intrinsic Value
	(In thousands)					(In thousands)		(In thousands)					(In thousands)
Granted in 2007		6,970		$	0.86				3,450		$	0.85
Lapsed and forfeited		(668	)		0.86				(470	)		0.85
Outstanding as of December 30, 2007		6,302			0.86				2,980			0.85
Lapsed and forfeited		(655	)		0.86				(45	)		0.85
Cancelled		—			—				(2,935	)		0.85
Vested		(2,083	)		0.86				—			—
Outstanding as of December 28, 2008		3,564		$	0.85	$	1,922		—		$	—	$	—

The aggregate intrinsic value in the table above represents the value of the shares on the date that the RSUs and contingent PSP awards vest.

In 2008, 2.1 million ordinary shares were issued pursuant to the RSP. No issue of shares pursuant to RSP awards were made in 2007.

No issue of shares pursuant to contingent PSP awards was made in 2007 and 2008. Upon the termination of the PSP in March 2008, the Company cancelled the 2,935,000 unvested Contingent PSP awards in 2008. As a result, the Company recorded $1,562 of accelerated share-based compensation expense in 2008.

The fair value of the contingent PSP awards for 2007 was calculated with the following assumptions:

	Year Ended
	December 30, 2007
Expected term	3 years
Dividend yield	0.0%
Risk free interest rate	3.0%
Weighted average volatility	40.0%

F-33

STATS CHIPPAC LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)

For the employee share purchase rights under the terms of the ESPP granted prior to its termination in March 2008, the total number of shares purchased under the plan and the Company’s matching contribution of 20% of the contribution of the ESPP participants by issuing shares, can vary as the purchase price per share was determined based on the fair market value at the end of the purchase period. Therefore the final measure of compensation cost for these rights was determined at the end of the purchase period, on which the number of shares an employee was entitled and the purchase price were determinable. The Company calculated estimated compensation cost as of the balance sheet date prior to the end of the purchase period based on the current estimation of the number of shares to be purchased under the plan and the level of contribution, as determined in accordance with the terms of the ESPP.

The Company estimated the grant-date fair value of share options using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model incorporated various and highly subjective assumptions including expected volatility, expected term and interest rates. The expected volatility was based on the implied volatility and trading history of the Company’s shares over the most recent period that commensurate with the estimated expected term of the Company’s share options. The estimated term of the Company’s share options was derived from historical experience. Estimates of fair value are not intended to predict actual future events or the value ultimately realized by persons who receive equity awards.

The fair value of share options granted in 2006 is estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions:

	Year Ended
	December 31, 2006
Expected term		3 - 7 years
Dividend yield		0.0	%
Risk free interest rate		3.0% - 3.4	%
Weighted average volatility		39.1	%

The Company estimated the fair value of RSUs based on the market price of ordinary shares on the date of grant. The fair value of contingent PSP awards was calculated using the market price of ordinary shares on the date of award, adjusted to the market-based performance conditions represented by total shareholders’ return on a certain set of absolute and relative to benchmark company criteria.

As of December 30, 2007 and December 28, 2008, there were $29 and $2,510, and $5 and $683 of unrecognized share-based compensation expenses, respectively, related to approximately 658,456 and 86,766 of unvested share option awards and 6,302 and 3,564 of unvested RSUs, respectively, net of $24 and $1 of estimated share option award forfeitures and $160 and $113 of estimated RSU forfeitures, respectively. In 2008, these costs are expected to be recognized over a weighted-average period of 1.0 and 1.1 years for share options and the RSUs, respectively. In 2007, these costs are expected to be recognized over a weighted-average period of 1.0 and 1.6 years for share options and the RSUs, respectively.

In 2007 and 2008, the total grant-date fair value of share options that vested were $11,114 and $6,003. The total intrinsic value of share options exercised in 2007 and 2008 were $6,699 and $12, respectively. In 2007 and 2008, the value of the 16,549,520 and 7,625,760 shares issued for ESPP purchases were $12,944 and $6,132 and employees contributed $12,968 and $4,704 to the ESPP, respectively.

22. Commitments and Contingencies

     (a) Commitments

As of December 30, 2007 and December 28, 2008, unconditional purchase obligations consist of the following:

F-34

STATS CHIPPAC LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)

	December 30,		December 28,
	2007		2008
Capital commitments
Building, mechanical and electrical installation	$	9,137	$	2,187
Plant and equipment		55,094		33,522
Other commitments
Inventories	$	49,925	$	27,848

These unconditional purchase obligations include agreements to purchase goods or services that are enforceable and legally binding on the Company and specify all significant terms, including fixed or minimum quantities to be purchased, fixed or variable price provisions and the approximate timing of transactions. The duration of these purchase obligations are generally less than 12 months.

The Company is party to certain royalty and licensing agreements which have anticipated payments of approximately $6,128 per annum for 2009 through 2013.

The Company leases certain of its facilities in Singapore, South Korea and the United States under operation lease arrangements and has lease agreements for the land located in Singapore, Malaysia and China related to its facilities in these locations. Operating lease rental expense in 2006, 2007 and 2008 was $11,084, $11,277 and $11,794, respectively.

The Company has leased certain plant and equipment under operating leases. These leases extend through 2010. Operating lease rental expenses, including amortization of lease prepayments, in respect of these leases in 2006, 2007 and 2008 were $21,749, $1,954 and $4,662, respectively.

Future minimum lease payments under non-cancelable operating leases as of December 28, 2008 were:

Payable in year
2009		12,610
2010		10,323
2011		9,432
2012		8,355
2013		8,330
Thereafter		27,115
	$	76,165

     (b) Contingencies

The Company is subject to claims and litigations, which arise in the normal course of business. These claims may include allegations of infringement of intellectual property rights of others as well as other claims of liability. The Company accrues liability associated with these claims and litigations when they are probable and reasonably estimable.

In February 2006, the Company, ChipPAC and STATS ChipPAC (BVI) Limited were named as defendants in a patent infringement lawsuit filed in United States Federal Court for the Northern District of California (the “California Litigation”). The plaintiff, Tessera Technologies, Inc. (“Tessera”), has asserted that semiconductor chip packaging, specifically devices having Ball Grid Array (“BGA”) and multi-chip BGA configurations used by the defendants infringe certain patents of Tessera. Tessera has further asserted that the Company is in breach of an existing license agreement entered into by Tessera with ChipPAC, which agreement has been assigned by ChipPAC to the Company.

In May 2007, at Tessera’s request, the United States International Trade Commission (the “ITC”) instituted an investigation (the “First ITC Investigation”) of certain of the Company’s co-defendants in the California Litigation and other companies, including certain of the Company’s customers. In addition, in April 2007, Tessera instituted an action in the Federal District Court for the Eastern District of Texas (the “Texas Action”) against certain of the Company’s co-defendants in the California Litigation and other companies. In the First ITC Investigation, Tessera seeks an order preventing the named companies from importing certain packaged semiconductor chips and products containing them into the United States. The Texas Action seeks damages and injunctive relief against the named defendants. Both the First ITC Investigation and the Texas Action

F-35

STATS CHIPPAC LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)

allege infringement of two of the same patents asserted by Tessera in the California Litigation, and may involve some of the same products packaged by the Company that are included in the California Litigation. The target date currently set by the ITC for the conclusion of the First ITC Investigation is April 2009.

In May 2008, the ITC instituted an investigation (the “Second ITC Investigation”) of the Company and other semiconductor package assembly service providers that are included in the California Litigation. In the Second ITC Investigation, Tessera seeks an order to prevent the Company and other named companies (collectively, the “Respondents”) from providing packaging or assembly services for certain packaged semiconductor chips incorporating small format non-tape BGA semiconductor packages and products containing them, for importation into the United States. In addition, Tessera seeks a general exclusion order excluding from importation all small format non-tape BGA semiconductor packages (and downstream products containing such packages), regardless of whether such packages are assembled by the Respondents. The Second ITC Investigation alleges infringement of three of the same patents asserted by Tessera in the California Litigation. The Company responded to the complaint in June 2008. In February 2009, the Second ITC Investigation was stayed pending the outcome of the First ITC Investigation. The target date currently set by the ITC for the conclusion of the Second ITC Investigation is February 2010.

The district court in the California Litigation has vacated the trial schedule and stayed all proceedings pending a final resolution of the First ITC Investigation. The U.S. Patent and Trademark Office (“PTO”) has also instituted reexamination proceedings on all of the patents Tessera has asserted in the California Litigation and the Second ITC Investigation. It is not possible to predict the outcome of the California Litigation or the Second ITC Investigation, the total costs of resolving the California Litigation and the Second ITC Investigation, or when the stay in the California Litigation will be lifted; nor is it possible to predict the outcome of the First ITC Investigation or the Texas Action.Nor is it possible to predict the outcome of the PTO proceedings or their impact on the California Litigation, the First ITC Investigation and the Second ITC Investigation.

The Company believes that it has a meritorious defense to these claims and intend to defend the lawsuit(s) vigorously. A court or ITC determination that the Company’s products or processes infringe the intellectual property rights of others could result in significant liability and/or require the Company to make material changes to its products and/or processes. Due to the inherent uncertainties of the lawsuit(s) and investigation(s), the Company cannot accurately predict the ultimate outcome and it could result in significant liability and/or injunction and could have a material adverse effect on the business, financial condition and the results of operations of the Company.

In addition, the Company is subject to various taxes in the different jurisdictions in which it operates. These include taxes on income, property, goods and services, and other taxes. The Company submits tax returns and claims with the appropriate government taxing authorities, which are subject to examination and agreement by those taxing authorities. The Company regularly assesses the likelihood of adverse outcomes resulting from these examinations to determine adequacy of provision for taxes.

In connection with the merger of STATS and ChipPAC, the Company assumed certain contingent liabilities. In 2002, an assessment of approximately 16.0 billion South Korean Won (approximately $11,617 based on the exchange rate as of January 30, 2009) was made by the South Korean National Tax Service (the “NTS”), relating to withholding tax not collected on the interest income on the loan from ChipPAC’s Hungarian subsidiary to its South Korean subsidiary for the period from 1999 to September 2001. The Company does not believe that the prevailing tax treaty requires withholding tax on the transaction in question. ChipPAC has appealed this assessment through the NTS’s Mutual Agreement Procedure (“MAP”). In July 2002, the Icheon tax office of the NTS approved a suspension of the proposed assessment until resolution of the disputed assessment. The NTS required a corporate guarantee amounting to the tax assessment in exchange for the suspension. ChipPAC complied with the guarantee request in July 2002. A further assessment of 2.7 billion South Korean Won (approximately $1,935 based on the exchange rate as of January 30, 2009) was made against ChipPAC in January 2004 for interest expense from October 2001 to May 2002. ChipPAC engaged in a MAP and obtained suspension of the additional proposed assessment by providing a corporate guarantee in the amount of the additional assessment. The MAP was due to terminate on July 3, 2007 if not extended by the NTS. Prior to the termination, NTS extended the MAP on June 4, 2007. Based on South Korean tax law, the extension period should not exceed three years. In the event that the Company is not successful with its appeal, the Company estimates that the maximum amount payable by the Company,

F-36

STATS CHIPPAC LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)

including potential interest and local surtax, as of December 28, 2008 to be 35.2 billion South Korean Won (approximately $25,514 based on the exchange rate as of January 30, 2009). The final outcome of the resolution of this matter could result in significant liability and could have a material adverse effect on the business, financial condition and results of operations of the Company.

23. Restructuring Charges

The restructuring charges of $19,790 in 2008 consist of severance and related charges in connection with the reduction of the Company’s workforce including the reduction of approximately 335 employees in the first quarter 2008 and approximately 1,600 employees which the Company announced in December 2008 in response to the global economic downturn. The workforce reduction announced in December 2008 is expected to be completed in the first quarter of 2009.

The restructuring charges of $1,938 and $990 in 2006 and 2007 consist of severance and related charges in connection with the reduction in workforce by 556 and 143 employees, respectively.

24. Other Non-Operating Income (Expense)

	Year Ended
	December 31,			December 30,			December 28,
	2006			2007			2008
Gain (loss) on sale and maturity of marketable securities	$	5		$	(131	)	$	36
Loss from repurchase and redemption of senior and convertible notes		(500	)		—			—
Other income (expense), net		603			(311	)		(9	)
	$	108		$	(442	)	$	27

25. Fair Value of Financial Instruments

As more fully discussed in Note 1 (ee), effective in 2008, the Company adopted SFAS 157 for measuring financial assets and liabilities and non-financial assets and liabilities that are recognized at fair value in the financial statements. The following information as it pertains to 2008 is presented in accordance with the requirements of SFAS 157. Information pertaining to 2007 is presented in accordance with the disclosure requirements in effect prior to the adoption of SFAS 157.

The Company utilizes the market approach to measure fair value for its financial assets and liabilities. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

The following table sets forth the fair value of the Company’s financial assets and liabilities that were accounted for, at fair value on a recurring basis as of December 28, 2008:

	Fair value measurement
	December 28, 2008
	Level 1		Level 2		Level 3
Assets:
Marketable securities	$	56,901	$	—	$	—
	$	56,901	$	—	$	—
Liabilities:
Foreign currency forward contracts	$	—	$	7,078	$	—
	$	—	$	7,078	$	—

F-37

STATS CHIPPAC LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)

The carrying amounts of marketable securities and foreign currency forward contracts are equal to their fair value. Unrealized gains or losses on marketable securities and foreign currency forward contracts are recorded in accumulated other comprehensive gain (loss) at each measurement date. The carrying amounts of cash and cash equivalents, restricted cash, short-term borrowings and long-term debts are equal to their fair value.

The following table sets forth the estimated fair value of the Company’s financial liabilities that are not measured at fair value on a recurring basis as of December 28, 2008:

	Estimated Fair Value
	December 28, 2008
	Level 1		Level 2		Level 3
Liabilities:
Senior notes	$	—	$	268,250	$	—
	$	—	$	268,250	$	—

The carrying values of the senior notes as of December 28, 2008 were $365,000.

The estimated fair value of financial instruments has been determined by the Company using available market information and appropriate methodologies. However, considerable judgment is required in interpreting market data to develop the estimates for fair value. Accordingly, these estimates are not necessarily indicative of the amounts that the Company could realize in a current market exchange. Certain of these financial instruments are with major financial institutions and expose the Company to market and credit risks and may at times be concentrated with certain counterparties or groups of counterparties. The creditworthiness of counterparties is continually reviewed, and full performance is anticipated.

The following methods and assumptions were used to estimate the fair value disclosures of significant classes of financial instruments as of December 30, 2007:

Cash and cash equivalents

Cash and cash equivalents are due on demand or carry a maturity date of less than three months when purchased. The carrying amount of these financial instruments is a reasonable estimate of fair value.

Marketable securities

The fair value is estimated based upon the quoted market price on the last business day of the fiscal year. For securities where there are no quoted market prices, the carrying amount is assumed to be its fair value.

Restricted cash

The fair value is based on current interest rates available to the Company for time deposits and government bonds of similar terms and remaining maturities.

Short-term borrowings and long-term debts

The fair value is based on current interest rates available to the Company for issuance of debts of similar terms and remaining maturities.

Senior and convertible notes

The fair value is estimated by obtaining quotes from market and brokers or based on current rates offered to the Company or similar issues for debt of the same remaining maturities.

F-38

STATS CHIPPAC LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)

Limitations

Fair value estimates are made at a specific point in time, and are based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

The following table set forth the carrying amounts and fair values of the Company’s financial instruments as of December 30, 2007 prior to the adoption of SFAS 157:

	December 30, 2007
	Carrying		Estimated
	Amount		Fair Value
Financial Assets:
Cash and cash equivalents	$	213,461	$	213,461
Marketable securities		44,526		44,526
Restricted cash		1,612		1,612
Financial Liabilities:
Short-term borrowings	$	50,300	$	50,300
Long-term debts, excluding senior and convertible notes		92,843		92,805
Senior and convertible notes		521,491		540,862

26. Business Segment, Geographic and Major Customer Data

Operating segments, as defined under SFAS No. 131, “Disclosures About Segments of an Enterprise and Related Information” (“SFAS 131”) are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company has identified its individual geographic operating locations as its operating segments. All material geographical operating locations qualify for aggregation under SFAS 131 due to similarities in economic characteristics, nature of services, market base and production process. Accordingly, the operating segments have been aggregated into one reportable segment.

Revenues by major service line and by geographical areas (identified by location of customer headquarters) were:

	Year Ended
	December 31,		December 30,		December 28,
	2006		2007		2008
United States
— packaging — laminate		648,258		690,297		692,734
— packaging — leaded		265,012		259,732		230,434
— test and other services		269,939		283,735		279,348
		1,183,209		1,233,764		1,202,516
Asia
— packaging — laminate		231,946		213,857		189,742
— packaging — leaded		21,861		32,576		55,869
— test and other services		132,720		121,410		126,855
		386,527		367,843		372,466
Europe
— packaging — laminate		17,585		25,928		55,027
— packaging — leaded		9,610		11,154		12,170
— test and other services		20,002		12,871		16,009
		47,197		49,953		83,206
Total
— packaging — laminate		897,789		930,082		937,503
— packaging — leaded		296,483		303,462		298,473
— test and other services		422,661		418,016		422,212
	$	1,616,933	$	1,651,560	$	1,658,188

F-39

STATS CHIPPAC LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)

Long-lived assets by geographical area were:

	Year Ended
	December 30,		December 28,
	2007		2008
Singapore	$	280,371	$	227,636
United States		20,110		17,666
Rest of Asia		976,009		971,040
Total	$	1,276,490	$	1,216,342

Net assets by geographical area were:

	Year Ended
	December 30,		December 28,
	2007		2008
Singapore	$	495,100	$	493,739
United States		96,369		136,536
Rest of Asia		792,500		918,382
Total	$	1,383,969	$	1,548,657

In 2008, Qualcomm, Inc. (“Qualcomm”) contributed 11.6% of our net revenues. In 2007, Analog Devices, Inc. (“ADI”) contributed 10.1% of our net revenues. In 2006, Freescale Semiconductor Inc. (“Freescale”) and Intel Corporation (“Intel”) each contributed 10.7% and 10.1% of our net revenues, respectively.

27. Recent Event

In February 2009, the Company announced that it will not proceed with its proposed capital reduction as previously approved at the March 2008 shareholders’ meeting, given the current economic environment, the Company has not been able to obtain financing to fund the cash distribution and the repayment of certain outstanding debts on terms and conditions acceptable to the Company.

28. Condensed Consolidating Financial Information

In November 2004, the Company issued $215,000 of 6.75% Senior Notes due 2011. The senior notes issued by STATS ChipPAC are fully and unconditionally guaranteed, jointly and severally, on a senior basis, by the following wholly owned subsidiaries, (1) STATS ChipPAC, Inc., STATS ChipPAC (Barbados) Ltd., STATS ChipPAC (BVI) Limited, ChipPAC International Company Limited, STATS ChipPAC Malaysia Sdn. Bhd., STATS ChipPAC (Thailand) Limited, STATS ChipPAC Test Services, Inc., STATS Holdings Limited, ChipPAC Luxembourg S.a.R.L., ChipPAC Liquidity Management Hungary Limited Liability Company and STATS ChipPAC Taiwan Co., Ltd. (the “Guarantor Subsidiaries”) and (2) STATS ChipPAC Korea Ltd. STATS ChipPAC Shanghai Co., Ltd., STATS ChipPAC Semiconductor Shanghai Co., Ltd. and STATS ChipPAC Taiwan Semiconductor Corporation (the “Non-Guarantor Subsidiaries”) did not provide guarantees.

In July 2005, the Company issued $150,000 of 7.5% Senior Notes due 2010. The senior notes are fully and unconditionally guaranteed, jointly and severally, on a senior basis, by the Guarantor Subsidiaries. The Non-Guarantor Subsidiaries and STATS ChipPAC Korea Ltd did not provide guarantees.

The following is the consolidated financial information segregated between STATS ChipPAC Ltd. as the issuer of the $215,000 6.75% Senior Notes due 2011 and the $150,000 7.5% Senior Notes due 2010; STATS ChipPAC Korea Ltd. as a guarantor of the $215,000 6.75% Senior Notes due 2011 and non-guarantor of the $150,000 7.5% Senior Notes due 2010; the other Guarantor Subsidiaries and other Non-Guarantor Subsidiaries of the $215,000 6.75% Senior Notes due 2011 and the $150,000 7.5% Senior Notes due 2010.

F-40

STATS CHIPPAC LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
For the Year Ended December 31, 2006

				STATS						Non -
	STATS			ChipPAC			Guarantor			Guarantor
	ChipPAC			Korea			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Net revenues	$	501,660		$	573,502		$	1,083,906		$	289,434		$	(831,569	)	$	1,616,933
Cost of revenues		(400,330	)		(490,533	)		(950,997	)		(240,838	)		791,925			(1,290,773	)
Gross profit		101,330			82,969			132,909			48,596			(39,644	)		326,160
Operating expenses:
Selling, general and administrative		57,018			12,453			90,176			12,030			(32,211	)		139,466
Research and development		10,253			10,408			15,962			1,334			(7,511	)		30,446
Restructuring charges		1,938			—			—			—			—			1,938
Total operating expenses		69,209			22,861			106,138			13,364			(39,722	)		171,850
Operating income		32,121			60,108			26,771			35,232			78			154,310
Other income (expense), net:
Interest income		3,468			389			2,803			811			(2,070	)		5,401
Interest expense		(35,198	)		(3,507	)		(7,145	)		(2,036	)		2,070			(45,816	)
Foreign currency exchange gain (loss)		89			(2,874	)		2,303			(1,142	)		46			(1,578	)
Equity gain from investment in equity investee		152			—			—			—			—			152
Equity gain from investment in subsidiaries		74,478			—			12,741			—			(87,219	)		—
Dividend income from subsidiary		2,903			—			—			—			(2,903	)		—
Other non-operating income (expense), net		195			(2	)		(381	)		296			—			108
Total other income (expense), net		46,087			(5,994	)		10,321			(2,071	)		(90,076	)		(41,733	)
Income before income taxes		78,208			54,114			37,092			33,161			(89,998	)		112,577
Income tax expense		(1,400	)		(19,624	)		(3,291	)		(1,444	)		—			(25,759	)
Income before minority interest		76,808			34,490			33,801			31,717			(89,998	)		86,818
Minority interest		—			—			—			—			(10,010	)		(10,010	)
Net income	$	76,808		$	34,490		$	33,801		$	31,717		$	(100,008	)	$	76,808

F-41

STATS CHIPPAC LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
For the Year Ended December 31, 2006

				STATS						Non-
	STATS			ChipPAC			Guarantor			Guarantor
	ChipPAC			Korea			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Cash Flows From Operating Activities
Net income	$	76,808		$	34,490		$	33,801		$	31,717		$	(100,008	)	$	76,808
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		86,748			53,207			76,871			49,570			(79	)		266,317
Amortization of leasing prepayments		7,386			—			—			—			—			7,386
Debt issuance cost amortization		2,262			—			109			—			—			2,371
Loss (gain) on sale of property, plant and equipment		852			(16	)		(58	)		473			—			1,251
Accretion of discount on convertible notes		6,618			—			—			—			—			6,618
Loss on redemption of convertible notes		—			—			500			—			—			500
Foreign currency exchange loss (gain)		(220	)		—			—			1,024			(46	)		758
Share-based compensation		4,150			5,244			3,191			1,103			—			13,688
Deferred income taxes		1,400			19,515			(769	)		(293	)		—			19,853
Minority interest in income of subsidiary		—			—			—			—			10,010			10,010
Equity income from investment in subsidiaries		(74,479	)		—			(12,741	)		—			87,220			—
Equity income from investment in equity investee		(152	)		—			—			—			—			(152	)
Gain on sale of marketable securities		—			—			—			(5	)		—			(5	)
Others		487			175			137			210			—			1,009
Changes in operating working capital:
Accounts receivable		15,170			—			(23,298	)		5,339			—			(2,789	)
Amounts due from affiliates		(120,238	)		(6,398	)		4,780			(12,221	)		138,381			4,304
Inventories		(11,631	)		(9,984	)		(1,893	)		(8,760	)		—			(32,268	)
Other receivables, prepaid expenses and other assets		6,358			(451	)		(298	)		1,746			—			7,355
Accounts payable, accrued operating expenses and other payables		2,973			10,070			415			31,316			—			44,774
Amounts due to affiliates		10,052			(13,953	)		137,559			4,706			(138,381	)		(17	)
Net cash provided by operating activities		14,544			91,899			218,306			105,925			(2,903	)		427,771
Cash Flows From Investing Activities
Proceeds from sales of marketable securities	$	—		$	—		$	—		$	35,391		$	—		$	35,391
Proceeds from maturity of marketable securities		—			—			—			20,841			—			20,841
Purchases of marketable securities		—			—			—			(80,866	)		—			(80,866	)
Cash injection in subsidiaries		(7,517	)		—			(54,500	)		—			62,017			—
Investment in equity investee		(10,154	)		—			—			—			—			(10,154	)
Acquisition of intangible assets		(1,835	)		(1,151	)		(3,012	)		(421	)		—			(6,419	)
Purchases of property, plant and equipment		(96,176	)		(94,167	)		(72,208	)		(157,913	)		26,821			(393,643	)
Proceeds from sale of assets held for sale		—			—			—			4,027			—			4,027
Others, net		12,100			6,139			7,199			6,423			(26,821	)		5,040
Net cash used in investing activities		(103,582	)		(89,179	)		(122,521	)		(172,518	)		62,017			(425,783	)
Cash Flows From Financing Activities
Repayment of short-term debts	$	—		$	(21,496	)	$	—		$	(20,794	)	$	—		$	(42,290	)
Repayment of long-term debts		—			(690	)		—			(26,937	)		—			(27,627	)
Proceeds from issuance of shares, net of expenses		13,254			—			—			62,017			(62,017	)		13,254
Repurchase and redemption of senior and convertible notes		—			—			(50,500	)		—			—			(50,500	)
Proceeds from bank borrowings		—			16,653			—			43,655			—			60,308
Decrease in restricted cash		—			116			—			1,511			—			1,627
Capital lease payments		—			(7,091	)		—			—			—			(7,091	)
Distribution to minority interest in subsidiary		—			—			—			(5,445	)		2,903			(2,542	)
Net cash provided by (used in) financing activities		13,254			(12,508	)		(50,500	)		54,007			(59,114	)		(54,861	)
Net increase (decrease) in cash and cash equivalents		(75,784	)		(9,788	)		45,285			(12,586	)		—			(52,873	)
Effect of exchange rate changes on cash and cash equivalents		—			—			—			(390	)		—			(390	)
Cash and cash equivalents at beginning of the year		144,841			32,291			10,500			37,088			—			224,720
Cash and cash equivalents at end of the year	$	69,057		$	22,503		$	55,785		$	24,112		$	—		$	171,457

F-42

STATS CHIPPAC LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)

CONDENSED CONSOLIDATING BALANCE SHEETS
As of December 30, 2007

			STATS				Non -
	STATS		ChipPAC		Guarantor		Guarantor
	ChipPAC		Korea		Subsidiaries		Subsidiaries		Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	91,813	$	25,224	$	65,945	$	30,479	$	—		$	213,461
Short-term marketable securities		—		—		—		29,230		—			29,230
Accounts receivable, net		72,827		—		183,486		15,047		—			271,360
Short-term amounts due from affiliates		440,518		38,005		141,656		65,932		(676,819	)		9,292
Other receivables		2,527		2,716		904		730		—			6,877
Inventories		19,614		38,516		11,680		13,502		—			83,312
Prepaid expenses and other current assets		5,276		2,589		11,170		3,285		—			22,320
Total current assets		632,575		107,050		414,841		158,205		(676,819	)		635,852
Long-term marketable securities		15,296		—		—		—		—			15,296
Long-term amounts due from affiliates		—		—		—		6,852		—			6,852
Property, plant and equipment, net		280,371		382,420		289,828		323,871		—			1,276,490
Investment in equity investee		10,350		—		—		—		—			10,350
Investment in subsidiaries		995,948		—		111,167		—		(1,107,115	)		—
Intangible assets		5,646		1,586		30,495		3,027		—			40,754
Goodwill		—		316,067		125,800		103,882		2,209			547,958
Long-term restricted cash		—		629		614		369		—			1,612
Prepaid expenses and other non-current assets		15,055		27,061		1,406		18,268		—			61,790
Total assets	$	1,955,241	$	834,813	$	974,151	$	614,474	$	(1,781,725	)	$	2,596,954
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts and other payables	$	14,024	$	76,254	$	28,780	$	45,242	$	—		$	164,300
Payables related to property, plant and equipment purchases		13,422		35,486		11,350		10,486		—			70,744
Accrued operating expenses		48,028		12,091		37,554		11,843		—			109,516
Income taxes payable		—		7,682		2,718		6,850		—			17,250
Short-term borrowings		50,000		—		—		300		—			50,300
Short-term amounts due to affiliates		58,447		87,560		485,123		47,340		(676,819	)		1,651
Current installments of long-term debts		21,991		6,000		154,500		7,990		—			190,481
Total current liabilities		205,912		225,073		720,025		130,051		(676,819	)		604,242
Long-term debts, excluding current installments		365,000		6,600		26,800		25,453		—			423,853
Other non-current liabilities		360		95,377		19,067		10,289		—			125,093
Total liabilities		571,272		327,050		765,892		165,793		(676,819	)		1,153,188
Minority interest		—		—		—		—		59,797			59,797
Total shareholders’ equity		1,383,969		507,763		208,259		448,681		(1,164,703	)		1,383,969
Total liabilities and shareholders’ equity	$	1,955,241	$	834,813	$	974,151	$	614,474	$	(1,781,725	)	$	2,596,954

F-43

STATS CHIPPAC LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
For the Year Ended December 30, 2007

				STATS						Non -
	STATS			ChipPAC			Guarantor			Guarantor
	ChipPAC			Korea			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Net revenues	$	432,058		$	613,248		$	1,199,553		$	333,329		$	(926,628	)	$	1,651,560
Cost of revenues		330,428			526,608			1,077,722			278,235			(882,709	)		1,330,284
Gross profit		101,630			86,640			121,831			55,094			(43,919	)		321,276
Operating expenses:
Selling, general and administrative		54,715			15,336			65,966			9,887			(33,311	)		112,593
Research and development		13,931			10,262			19,522			1,833			(10,630	)		34,918
Tender offer expenses		10,119			—			803			—			—			10,922
Impairment of assets held for sale		—			—			1,725			—			—			1,725
Restructuring charges		990			—			—			—			—			990
Total operating expenses		79,755			25,598			88,016			11,720			(43,941	)		161,148
Operating income		21,875			61,042			33,815			43,374			22			160,128
Other income (expense), net:
Interest income		3,807			425			4,086			971			(2,031	)		7,258
Interest expense		(33,904	)		(3,094	)		(4,187	)		(1,296	)		2,031			(40,450	)
Foreign currency exchange gain		1,968			322			179			18			—			2,487
Equity gain from investment in equity investee		102			—			—			—			—			102
Equity gain from investment in subsidiaries		99,636			—			24,735			—			(124,371	)		—
Dividend income from subsidiary		5,486			—			—			—			(5,486	)		—
Other non-operating income (expense), net		(3,286	)		3,429			(877	)		292			—			(442	)
Total other income (expense), net		73,809			1,082			23,936			(15	)		(129,857	)		(31,045	)
Income before income taxes		95,684			62,124			57,751			43,359			(129,835	)		129,083
Income tax expense		2,000			11,402			7,583			8,596			—			29,581
Income before minority interest		93,684			50,722			50,168			34,763			(129,835	)		99,502
Minority interest		—			—			—			—			(5,818	)		(5,818	)
Net income	$	93,684		$	50,722		$	50,168		$	34,763		$	(135,653	)		93,684

F-44

STATS CHIPPAC LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
For the Year Ended December 30, 2007

				STATS						Non-
	STATS			ChipPAC			Guarantor			Guarantor
	ChipPAC			Korea			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Cash Flows From Operating Activities
Net income		93,684			50,722			50,168			34,763			(135,653	)		93,684
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		84,095			65,509			54,937			49,818			(7	)		254,352
Amortization of leasing prepayments		11			—			—			—			—			11
Debt issuance cost amortization		2,446			—			115			—			—			2,561
Loss (gain) on sale of property, plant and equipment		1,090			(1	)		(36	)		(1,070	)		—			(17	)
Impairment of assets held for sale		—			—			1,725			—			—			1,725
Accretion of discount on convertible notes		4,830			—			—			—			—			4,830
Foreign currency exchange loss (gain)		(16	)		—			—			755			(15	)		724
Share-based compensation		3,192			3,958			1,531			188			—			8,869
Deferred income taxes		2,000			(9,079	)		2,490			914			—			(3,675	)
Minority interest in income of subsidiary		—			—			—			—			5,818			5,818
Equity income from investment in subsidiaries		(99,636	)		—			(24,735	)		—			124,371			—
Equity income from investment in equity investee		(102	)		—			—			—			—			(102	)
Others		280			(17	)		59			1,282			—			1,604
Changes in operating working capital:
Accounts receivable		2,828			—			(30,059	)		(350	)		—			(27,581	)
Amounts due from affiliates		55,562			(23,032	)		(40,574	)		(46,951	)		41,357			(13,638	)
Inventories		17,382			3,354			(3,868	)		12,731			—			29,599
Other receivables, prepaid expenses and other assets		4,091			6,597			(2,239	)		(1,337	)		—			7,112
Accounts payable, accrued operating expenses and other payables		(21,209	)		36,516			41,981			(12,996	)		(262	)		44,030
Amounts due to affiliates		40,330			12,162			(20,287	)		10,758			(41,357	)		1,606
Net cash provided by operating activities		190,858			146,689			31,208			48,505			(5,748	)		411,512
Cash Flows From Investing Activities
Proceeds from sales of marketable securities	$	—		$	—		$	—		$	19,660		$	—		$	19,660
Proceeds from maturity of marketable securities		2,614			—			—			20,985			—			23,599
Purchases of marketable securities		—			—			—			(27,450	)		—			(27,450	)
Cash injection in subsidiaries		(60,214	)		—			—			—			60,214			—
Acquisition of intangible assets		(2,247	)		(446	)		(2,500	)		(1,569	)		—			(6,762	)
Acquisition of business		—			—			(100,000	)		—			—			(100,000	)
Purchases of property, plant and equipment		(43,237	)		(145,307	)		(31,319	)		(46,525	)		34,100			(232,288	)
Proceeds from sale of assets held for sale		—			—			657			21,172			—			21,829
Others, net		16,049			6,983			4,228			9,164			(34,100	)		2,324
Net cash used in investing activities		(87,035	)		(138,770	)		(128,934	)		(4,563	)		60,214			(299,088	)
Cash Flows From Financing Activities
Repayment of short-term debts	$	—		$	(48	)	$	—		$	(6,501	)	$	—		$	(6,549	)
Repayment of long-term debts		(114,118	)		(5,070	)		—			(51,330	)		—			(170,518	)
Proceeds from issuance of shares, net of expenses		19,851			—			58,500			1,452			(59,952	)		19,851
Repurchase and redemption of senior and convertible notes		(36,800	)		—			—			—			—			(36,800	)
Proceeds from promissory notes		—			—			50,000			—			—			50,000
Proceeds from bank borrowings		50,000			3,600			—			29,257			—			82,857
Increase in restricted cash		—			—			(614	)		(17	)		—			(631	)
Capital lease payments		—			(3,680	)		—			—			—			(3,680	)
Distribution to minority interest in subsidiary		—			—			—			(10,466	)		5,486			(4,980	)
Net cash provided by (used in) financing activities		(81,067	)		(5,198	)		107,886			(37,605	)		(54,466	)		(70,450	)
Net increase in cash and cash equivalents		22,756			2,721			10,160			6,337			—			41,974
Effect of exchange rate changes on cash and cash equivalents		—			—			—			30			—			30
Cash and cash equivalents at beginning of the year		69,057			22,503			55,785			24,112			—			171,457
Cash and cash equivalents at end of the year	$	91,813		$	25,224		$	65,945		$	30,479		$	—		$	213,461

F-45

STATS CHIPPAC LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)

CONDENSED CONSOLIDATING BALANCE SHEETS
As of December 28, 2008

			STATS				Non -
	STATS		ChipPAC		Guarantor		Guarantor
	ChipPAC		Korea		Subsidiaries		Subsidiaries		Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	146,281	$	12,807	$	95,239	$	41,589	$	—		$	295,916
Short-term marketable securities		—		—		—		41,314		—			41,314
Accounts receivable, net		52,301		—		79,313		7,906		—			139,520
Short-term amounts due from affiliates		645,175		662		212,407		13,157		(860,610	)		10,791
Other receivables		2,490		1,343		3,881		643		—			8,357
Inventories		13,306		26,284		11,237		9,890		—			60,717
Prepaid expenses and other current assets		1,773		8,488		2,866		1,566		—			14,693
Total current assets		861,326		49,584		404,943		116,065		(860,610	)		571,308
Long-term marketable securities		15,587		—		—		—		—			15,587
Long-term amounts due from affiliates		—		—		—		13,726		—			13,726
Property, plant and equipment, net		227,636		374,189		297,950		316,567		—			1,216,342
Investment in equity investee		9,001		—		—		—		—			9,001
Investment in subsidiaries		1,030,329		—		92,050		—		(1,122,379	)		—
Intangible assets		12,024		1,406		29,200		2,132		—			44,762
Goodwill		—		319,638		125,605		103,680		2,209			551,132
Long-term restricted cash		—		634		15		363		—			1,012
Prepaid expenses and other non-current assets		9,140		8,205		1,033		5,815		—			24,193
Total assets	$	2,165,043	$	753,656	$	950,796	$	558,348	$	(1,980,780	)	$	2,447,063
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts and other payables	$	11,086	$	44,767	$	30,450	$	31,924	$	—		$	118,227
Payables related to property, plant and equipment purchases		9,264		1,561		13,994		5,885		—			30,704
Accrued operating expenses		52,609		53,136		29,114		13,210		—			148,069
Income taxes payable		—		18		1,792		1,569		—			3,379
Short-term borrowings		50,000		—		—		—		—			50,000
Short-term amounts due to affiliates		128,244		81,588		611,119		41,047		(860,610	)		1,388
Current installments of long-term debts		—		6,600		10,000		10,353		—			26,953
Total current liabilities		251,203		187,670		696,469		103,988		(860,610	)		378,720
Long-term debts, excluding current installments installments		365,000		—		16,800		14,700		—			396,500
Other non-current liabilities		183		33,221		18,458		12,282		—			64,144
Total liabilities		616,386		220,891		731,727		130,970		(860,610	)		839,364
Minority interest		—		—		—		—		59,042			59,042
Total shareholders’ equity		1,548,657		532,765		219,069		427,378		(1,179,212	)		1,548,657
Total liabilities and shareholders’ equity	$	2,165,043	$	753,656	$	950,796	$	558,348	$	(1,980,780	)	$	2,447,063

F-46

STATS CHIPPAC LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
For the Year Ended December 28, 2008

				STATS						Non -
	STATS			ChipPAC			Guarantor			Guarantor
	ChipPAC			Korea			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Net revenues	$	412,730		$	621,020		$	1,241,330		$	263,018		$	(879,910	)	$	1,658,188
Cost of revenues		309,296			560,018			1,089,030			257,536			(832,083	)		1,383,797
Gross profit		103,434			61,002			152,300			5,482			(47,827	)		274,391
Operating expenses:
Selling, general and administrative		57,355			14,002			72,128			10,632			(35,780	)		118,337
Research and development		15,245			10,690			22,133			1,804			(12,047	)		37,825
Equipment impairment		4,940			6,330			6,253			3,568			—			21,091
Accelerated share based compensation		1,027			317			117			101			—			1,562
Restructuring charges		5,912			—			12,763			1,115			—			19,790
Total operating expenses		84,479			31,339			113,394			17,220			(47,827	)		198,605
Operating income (loss)		18,955			29,663			38,906			(11,738	)		—			75,786
Other income (expense), net:
Interest income		2,559			169			3,550			1,438			(2,031	)		5,685
Interest expense		(30,583	)		(2,511	)		(3,897	)		(1,026	)		2,031			(35,986	)
Foreign currency exchange gain (loss)		195			9,809			(4,923	)		166			—			5,247
Equity gain from investment in equity investee		(1,437	)		—			—			—			—			(1,437	)
Equity gain from investment in subsidiaries		37,109			—			(19,118	)		—			(17,991	)		—
Dividend income from subsidiary		4,664			—			—			—			(4,664	)		—
Other non-operating income (expense), net		44			—			(134	)		117			—			27
Total other income (expense), net		12,551			7,467			(24,522	)		695			(22,655	)		(26,464	)
Income (loss) before income taxes		31,506			37,130			14,384			(11,043	)		(22,655	)		49,322
Income tax expense		5,804			8,790			3,616			962			—			19,172
Income (loss) before minority interest		25,702			28,340			10,768			(12,005	)		(22,655	)		30,150
Minority interest		—			—			—			—			(4,448	)		(4,448	)
Net income (loss)	$	25,702		$	28,340		$	10,768		$	(12,005	)	$	(27,103	)	$	25,702

F-47

STATS CHIPPAC LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In thousands of U.S. Dollars (except per share data)

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
For the Year Ended December 28, 2008

				STATS						Non-
	STATS			ChipPAC			Guarantor			Guarantor
	ChipPAC			Korea			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Cash Flows From Operating Activities
Net income (loss)	$	25,702		$	28,340		$	10,768		$	(12,005	)	$	(27,103	)	$	25,702
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		78,253			81,430			69,536			54,472			—			283,691
Debt issuance cost amortization		2,691			—			46			—			—			2,737
Asset impairment written off		4,940			6,330			6,253			3,568			—			21,091
Loss (gain) on sale of property, plant and equipment		1,335			—			9			(221	)		—			1,123
Accretion of discount on convertible notes		66			—			—			—			—			66
Foreign currency exchange loss (gain)		—			—			—			(1,555	)		—			(1,555	)
Share-based compensation		1,933			992			402			243			—			3,570
Deferred income taxes		5,900			930			(684	)		(635	)		—			5,511
Minority interest in income of subsidiary		—			—			—			—			4,448			4,448
Equity (income) loss from investment in subsidiaries		(37,109	)		—			19,118			—			17,991			—
Equity loss from investment in equity investee		1,437			—			—			—			—			1,437
Others		504			2,610			887			177			—			4,178
Changes in operating working capital:
Accounts receivable		20,526			—			104,173			7,141			—			131,840
Amounts due from affiliates		(68,476	)		37,343			(70,751	)		45,901			47,610			(8,373	)
Inventories		6,308			12,232			443			3,612			—			22,595
Other receivables, prepaid expenses and other assets		(257	)		(577	)		(3,956	)		1,839			—			(2,951	)
Accounts payable, accrued operating expenses and other payables		54			(56,801	)		(6,660	)		(11,915	)		—			(75,322	)
Amounts due to affiliates		69,797			(5,972	)		(10,185	)		(6,293	)		(47,610	)		(263	)
Net cash provided by operating activities		113,604			106,857			119,399			84,329			(4,664	)		419,525
Cash Flows From Investing Activities
Proceeds from sales of marketable securities	$	—		$	—		$	—		$	29,755		$	—		$	29,755
Proceeds from maturity of marketable securities		—			—			3,810			46,331			—			50,141
Purchases of marketable securities		—			—			(3,810	)		(89,284	)		—			(93,094	)
Cash injection in subsidiaries		(11,031	)		—			—			—			11,031			—
Acquisition of intangible assets		(6,811	)		(711	)		(4,555	)		(794	)		—			(12,871	)
Purchases of property, plant and equipment		(44,254	)		(126,316	)		(83,279	)		(68,701	)		43,651			(278,899	)
Proceeds from sale of assets held for sale		—			—			9,413			9,695			—			19,108
Proceeds from deregistration of subsidiary		9,654			—			—			(9,654	)		—			—
Others, net		8,871			13,758			7,717			15,451			(43,651	)		2,146
Net cash used in investing activities		(43,571	)		(113,269	)		(70,704	)		(67,201	)		11,031			(283,714	)
Cash Flows From Financing Activities
Repayment of short-term debts	$	—		$	—		$	—		$	(5,035	)	$	—		$	(5,035	)
Repayment of long-term debts		—			(6,000	)		(20,000	)		(7,888	)		—			(33,888	)
Proceeds from issuance of shares, net of expenses		6,152			—			—			11,031			(11,031	)		6,152
Repurchase and redemption of senior and convertible notes		(22,057	)		—			—			—			—			(22,057	)
Proceeds from bank borrowings		—			—			—			4,735			—			4,735
Increase in restricted cash		—			(5	)		599			6			—			600
Distribution to minority interest in subsidiary		—			—			—			(8,976	)		4,664			(4,312	)
Grants received		340			—			—			—			—			340
Net cash used in financing activities		(15,565	)		(6,005	)		(19,401	)		(6,127	)		(6,367	)		(53,465	)
Net increase (decrease) in cash and cash equivalents		54,468			(12,417	)		29,294			11,001			—			82,346
Effect of exchange rate changes on cash and cash equivalents		—			—			—			109			—			109
Cash and cash equivalents at beginning of the year		91,813			25,224			65,945			30,479			—			213,461
Cash and cash equivalents at end of the year	$	146,281		$	12,807		$	95,239		$	41,589		$	—		$	295,916

F-48

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF STATS CHIPPAC LTD.
(In compliance with the requirements of the Singapore Companies Act)

We have completed an integrated audit of STATS ChipPAC Ltd.’s 2008 consolidated financial statements and of its internal control over financial reporting as of December 28, 2008, set out on pages F-2 to F-48 of the Annual Report, in accordance with the auditing standards of the Public Company Accounting Oversight Board (United States). The consolidated financial statements of STATS ChipPac Ltd. (the “Company”) and its subsidiaries (the “Group”) are prepared in accordance with accounting principles generally accepted in the United States of America.

These financial statements are the responsibility of the management. Management is responsible for the preparation and fair presentation of these financial statements in accordance with the provisions of the Singapore Companies Act (Cap. 50) (the “Act”) and accounting principles generally accepted in the United States of America. This responsibility includes:

(a)	devising and maintaining a system of internal accounting control sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair profit and loss accounts and balance sheets and to maintain accountability of assets;
(b)	selecting and applying appropriate accounting policies; and
(c)	making accounting estimates that are reasonable in the circumstances.

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. Our audit of financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

We reported separately on the consolidated financial statements of the Group on March 9, 2009 and our report is included thereon.

Our audit of the consolidated financial statements referred to above includes an audit of the accompanying unconsolidated balance sheet of the Company, which should be read in conjunction with the consolidated financial statements. The unconsolidated balance sheet of the Company as of December 28, 2008 and notes therein as set out on pages F-50 to F-60 are presented as required by the Act.

In our opinion,

(a)

the consolidated financial statements of the Group and the accompanying unconsolidated balance sheet of the Company are properly drawn up in accordance with the provisions of the Act and accounting principles generally accepted in the United States of America, so as to give a true and fair view of the state of affairs of the Group and of the Company as of December 28, 2008, and the results, cash flows and changes in equity of the Group for the financial year ended on that date; and

(b)

the accounting and other records required by the Act to be kept by the Company and by those subsidiaries incorporated in Singapore of which we are the auditor, have been properly kept in accordance with the provisions of the Act.

PricewaterhouseCoopers LLP
Certified Public Accountants

Singapore
March 9, 2009

F-49

STATS CHIPPAC LTD.

UNCONSOLIDATED BALANCE SHEET

In thousands of U.S. Dollars

		December 30,			December 28,
	Note	2007			2008
ASSETS
Current assets:
Cash and cash equivalents	3	$	91,813		$	146,281
Short-term marketable securities	4		—			—
Accounts receivable, net	5		72,827			52,301
Short-term amounts due from affiliates			2,650			1,556
Short-term amounts due from subsidiaries			437,868			643,619
Other receivables	6		2,527			2,490
Inventories	7		19,614			13,306
Prepaid expenses and other current assets	8		5,276			1,773
Total current assets			632,575			861,326
Long-term marketable securities	4		15,296			15,587
Property, plant and equipment, net	9		280,371			227,636
Investment in subsidiaries	10		995,948			1,030,329
Investment in equity investee	11		10,350			9,001
Intangible assets	12		5,646			12,024
Prepaid expenses and other non-current assets	8		15,055			9,140
Total assets		$	1,955,241		$	2,165,043
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts and other payables		$	14,024		$	11,086
Payables related to property, plant and equipment purchases			13,422			9,264
Accrued operating expenses	13		48,028			52,609
Short-term borrowing	14		50,000			50,000
Short-term amounts due to affiliates			1,651			1,304
Short-term amount due to subsidiaries			56,796			126,940
Current installments of long-term debts	16		21,991			—
Total current liabilities			205,912			251,203
Long-term debts, excluding current installments	16		365,000			365,000
Other non-current liabilities	18		360			183
Total liabilities			571,272			616,386
Share capital:
Ordinary shares — Issued ordinary shares —2,047,333,663 in 2007 and 2,202,218,293 in 2008	19		1,891,546			2,035,235
Accumulated other comprehensive loss	20		(7,605	)		(12,308	)
Accumulated deficit			(499,972	)		(474,270	)
Total shareholders’ equity			1,383,969			1,548,657
Commitments and contingencies	21
Total liabilities and shareholders’ equity		$	1,955,241		$	2,165,043

The accompanying notes form an integral part of the unconsolidated balance sheet.

F-50

STATS CHIPPAC LTD.

NOTES TO THE UNCONSOLIDATED BALANCE SHEET

In thousands of U.S. Dollars

1. Background and Summary of Significant Accounting Policies

(a)	Business and Organization
	STATS ChipPAC Ltd. (“STATS ChipPAC” or the “Company”) is incorporated in Singapore and its ordinary shares are listed on the Singapore Exchange (“SGX-ST”). The principal activities of the Company are the provision of a full range of semiconductor packaging design, assembly, test and distribution solutions.
	In 2007, Winstek Semiconductor Corporation changed its name to STATS ChipPAC Taiwan Semiconductor Corporation. The Company owned approximately 52% of STATS ChipPAC Taiwan Semiconductor Corporation’s total shares outstanding as of December 28, 2008.
	The Company is required to prepare the unconsolidated balance sheet of the Company in accordance with the provisions of the Singapore Companies Act, Chapter 50 (the “Act”) for filing with the Accounting and Corporate Regulatory Authority (“ACRA”).
	Under the Companies (Accounting Standards for Listed Companies) Order 2003 of the Singapore Companies (Amendment) Act, where a SGX-ST listed company is also listed on a foreign exchange which requires the company to comply with accounting standards other than Financial Reporting Standards, the company shall apply the alternative accounting standards if they are approved accounting standards by SGX-ST and the company has notified ACRA of its intention. As accounting principles generally accepted in the United States of America (“U.S. GAAP”) is an approved accounting standard and the Company has notified ACRA of its intention, the unconsolidated balance sheet of the Company has been prepared in accordance with U.S. GAAP.
	The unconsolidated balance sheet of the Company should be read in conjunction with the consolidated financial statements, its basis of preparation and summary of significant accounting policies. The consolidated financial statements have been prepared in accordance with U.S. GAAP and are included in the annual report of the Company.
	The financial statements are expressed in U.S. dollars, which is the Company’s functional and presentation currency.
	Proposed Capital Reduction Exercise and Related Financing Transaction
	Refer to Note 1(a) of the consolidated financial statements for information on the Company’s proposed capital reduction exercise and related financing transaction.
	Acquisition of LSI Corporation’s assembly and test facility in Thailand
	In October 2007, the Company consummated the previously announced definitive agreement with LSI Corporation (“LSI”) to acquire LSI’s assembly and test operation in Thailand for an aggregate purchase price of approximately $100,000, payable over the next four years through its wholly-owned subsidiary, STATS ChipPAC (Thailand) Limited. The Company financed the initial payment of $50,000 of the purchase consideration with the Company’s cash and cash equivalents, and issued promissory notes bearing interest of 6.0% per annum for the balance of the purchase price. The purchase price was assigned primarily to property, plant and equipment, and goodwill.

F-51

STATS CHIPPAC LTD.

NOTES TO THE UNCONSOLIDATED BALANCE SHEET (Continued)
In thousands of U.S. Dollars

Temasek’s Subsidiary, Singapore Technologies Semiconductors Pte Ltd’s Tender Offer

Refer to Note 1(a) of the consolidated financial statements for further information.

(b) Subsidiaries and Equity Investee

The Company has subsidiaries in South Korea, China, Malaysia, Thailand, Taiwan, the British Virgin Island, Luxembourg, Barbados, Hungary and in the United States, its principal market. The Company’s equity investee company is based in Bermuda. Investments in subsidiaries and equity investee are accounted for using the equity accounting method.

(c) Fiscal Year

Since the beginning of fiscal 2005, the Company has employed fiscal year and fiscal quarter reporting periods. The Company’s 52-53 week fiscal year ends on the Sunday nearest and prior to December 31. The Company’s fiscal quarters end on a Sunday and are generally thirteen weeks in length. Fiscal year 2008, a 52-week year, ended on December 28, 2008 and fiscal year 2007, a 52-week year, ended on December 30, 2007. Unless otherwise stated, all years and dates refer to the Company’s fiscal years.

2. Related Parties

As of December 28, 2008, Temasek Holdings (Private) Limited (“Temasek”), through its wholly-owned subsidiary, Singapore Technologies Semiconductors Pte Ltd (“STSPL”), beneficially owned 1,845,715,689 ordinary shares, representing 83.8% of the Company’s ordinary shares, following STSPL’s conversion of its entire $134,500 of the 2.5% Convertible Subordinated Notes due 2008, issued by STATS ChipPAC, Inc. (“ChipPAC”), a wholly-owned subsidiary company, into 145,138,660 ordinary shares in May 2008. Refer to Note 2 of the consolidated financial statements for details of transactions with affiliates.

3.	Cash and Cash Equivalents
	Cash and cash equivalents consist of the following:

	December 30,		December 28,
	2007		2008
Cash at banks and on hand	$	43,932	$	17,091
Cash equivalents
Bank fixed deposits		13,248		106,897
Money market funds		34,633		22,293
	$	91,813	$	146,281

4.	Marketable Securities
	Marketable securities consist of the following:

	December 30,									December 28,
	2007									2008
			Gross		Gross							Gross		Gross
	Amortized		Unrealized		Unrealized			Fair		Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value		Cost		Gains		Losses			Value
Available-for-sale corporate debt securities	$	16,193	$	—	$	(897	)	$	15,296	$	16,193	$	—	$	(606	)	$	15,587

F-52

STATS CHIPPAC LTD.

NOTES TO THE UNCONSOLIDATED BALANCE SHEET (Continued)
In thousands of U.S. Dollars

Maturities of marketable securities (at fair value) are as follows:

	December 30,		December 28,
	2007		2008
Marketable securities:
Due in one year or less	$	—	$	—
Due after one year through five years		1,064		15,587
Due after five years		14,232		—
Total	$	15,296	$	15,587

5.	Accounts Receivable
	Accounts receivable consist of the following:

	December 30,			December 28,
	2007			2008
Accounts receivable — third parties	$	76,980		$	57,123
Allowance for sales returns		(4,153	)		(4,822	)
	$	72,827		$	52,301

6.	Other Receivables
	Other receivables consist of the following:

	December 30,		December 28,
	2007		2008
Deposits and staff advances	$	4	$	12
Other receivables		2,523		2,478
	$	2,527	$	2,490

7.	Inventories
	Inventories consist of the following:

	December 30,		December 28,
	2007		2008
Raw materials	$	13,447	$	8,503
Work-in-progress		5,909		4,427
Finished goods		258		376
	$	19,614	$	13,306

8.	Prepaid Expenses and Other Assets
	Prepaid expenses and other current assets consist of the following:

	December 30,		December 28,
	2007		2008
Other prepayments and assets	$	1,656	$	1,773
Leasing prepayments		91		—
Loans to a vendor		3,529		—
	$	5,276	$	1,773

F-53

STATS CHIPPAC LTD.

NOTES TO THE UNCONSOLIDATED BALANCE SHEET (Continued)
In thousands of U.S. Dollars

Prepaid expenses and other non-current assets consist of the following:

	December 30,		December 28,
	2007		2008
Debt issuance cost, net of accumulated amortization of $7,677 and $5,547	$	6,903	$	4,212
Deferred income tax assets (Note 15)		5,900		—
Loans to a vendor		882		—
Others		1,370		4,928
	$	15,055	$	9,140

Details of the loans to a vendor as of December 30, 2007 are provided in Note 8 of the consolidated financial statements.

9.	Property, Plant and Equipment
	Property, plant and equipment consist of the following:

	December 30,			December 28,
	2007			2008
Cost:
Buildings, mechanical and electrical installation	$	63,964		$	64,119
Equipment		854,450			792,909
Total cost		918,414			857,028
Total accumulated depreciation		(638,043	)		(629,392	)
Property, plant and equipment, net	$	280,371			227,636

Equipment impairment charges of $4,940 were recorded in 2008 as a result of the Company’s ongoing assessment of property, plant and equipment for impairment. The equipment impairment charges were taken because continued softness in demand in end-markets to which certain of the equipment was dedicated had reduced the anticipated future usage of such equipment.

10.	Investment in Subsidiaries
	Investment in subsidiaries is summarized as follows:

	December 30,			December 28,
	2007			2008
Unquoted equity shares at cost	$	1,275,013		$	1,274,164
Quoted equity shares at cost		40,894			40,894
		1,315,907			1,315,058
Less: share of net losses of subsidiaries		(319,959	)		(284,729	)
	$	995,948		$	1,030,329

11.	Investment in Equity Investee
	Investment in equity investee is summarized as follows:

	December 30,			December 28,
	2007			2008
Unquoted equity shares at cost	$	10,154		$	10,154
Currency translation differences		(58	)		30
Add: share of profits of equity investee		254			(1,183	)
	$	10,350		$	9,001

F-54

STATS CHIPPAC LTD.

NOTES TO THE UNCONSOLIDATED BALANCE SHEET (Continued)
In thousands of U.S. Dollars

In 2006, the Company acquired a 25% shareholding in Micro Assembly Technologies Limited, which wholly-owns Wuxi CR Micro-Assembly Technology Ltd. (“ANST”), for $10,154. Refer to Note 2 of the consolidated financial statements for details of the transfer of the assembly and test equipment to ANST.

12.	Intangible Assets
	Intangible assets consist of the following:

	December 30,							December 28,
	2007							2008
			Accumulated			Net		Gross		Accumulated			Net
	Gross Assets		Amortization			Assets		Assets		Amortization			Assets
Patent costs, software, licenses and others	$	6,889	$	(1,243	)	$	5,646	$	13,700	$	(1,676	)	$	12,024

13.	Accrued Operating Expenses
	Accrued operating expenses consist of the following:

	December 30,		December 28,
	2007		2008
Staff costs and accrued restructuring charges	$	13,811	$	21,524
Purchase of raw materials		11,742		3,942
Maintenance fees, license fees and royalties		825		1,628
Interest expense		7,113		7,034
Provision for vacation liability		3,776		2,472
Others		10,761		16,009
	$	48,028	$	52,609

14.	Short -Term Borrowing
	The Company has a line of credit from Bank of America with credit limit of $50,000, of which $50,000 was outstanding as of December 28, 2008. The facility bore average interest rate of 5.6% in 2007 and 3.6% in 2008. The line of credit is subject to periodic review by the lender for the continued use of the facility.

15.	Income Taxes
	In 2008, the Singapore Economic Development Board (“EDB”) offered the Company a five year tax incentive for its Singapore operations commencing on July 1, 2007, whereby, certain qualifying income will be subject to a concessionary tax rate of 5% instead of the Singapore statutory rate of 18%, subject to the fulfillment of certain continuing conditions.

F-55

STATS CHIPPAC LTD.

NOTES TO THE UNCONSOLIDATED BALANCE SHEET (Continued)
In thousands of U.S. Dollars

Deferred income taxes reflect the net tax effects of (a) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and (b) operating loss and unutilized capital allowance carryforwards. The tax effect of significant items comprising the Company’s deferred income tax assets are as follows:

	December 30,			December 28,
	2007			2008
Deferred income tax assets:
Operating loss carryforwards	$	4,285		$	4,285
Property, plant and equipment		42,985			43,335
Others		332			405
		47,602			48,025
Valuation allowance		(41,702	)		(48,025	)
Net deferred income tax assets	$	5,900		$	—

The Company recorded a valuation allowance of $41,702 and $48,025 as of December 30, 2007 and December 28, 2008, respectively, which represents an increase of $6,323 in 2008 to reduce the assets to the amounts that the Company deemed, more likely than not, that the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income based on business plans, and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods which the deferred tax assets are deductible, the Company established a full valuation allowance against its gross deferred tax assets to reduce the assets to the amount the Company deemed, more likely than not that the deferred tax assets will be realized.

The Company adopted the provisions of FIN 48 in 2007. As a result of the implementation of FIN 48, the Company recognized an additional $360 liability on unrecognized tax benefits for uncertain tax positions and accounted for the increase as a cumulative effect of a change in accounting principle that resulted in an increase to accumulated deficit of $360 as of January 1, 2007. In 2008, the Company decreased its unrecognized tax benefits for uncertain tax positions by $177 as a result of lapse of statute limitation.

Changes in share ownership by shareholder may result in a limitation on the amount of the Singapore net operating losses and unutilized capital allowances that are available as carryforwards for use by the Company. The Company reviewed the tax effect of such a shareholder change in connection with the tender offer by STSPL in 2007. In January 2008, the Singapore tax authorities confirmed that the limitations relating to the Company’s ability to carryforward certain Singapore tax losses and capital allowances for offset against future taxable profits of the Company in connection with the tender offer by STSPL were not affected subject to fulfillment of certain continuing conditions. Concurrently, approximately $311,611 of such tax losses and capital allowance carryforwards continued to be made available to the Company operations in Singapore. As of December 28, 2008, the Company has approximately $23,805 and $287,806 of tax loss carryforwards and unutilized capital allowances which can, subject to the relevant provision of the Singapore Income Tax Act, be carried forward and utilized against future taxable profits.

F-56

STATS CHIPPAC LTD.

NOTES TO THE UNCONSOLIDATED BALANCE SHEET (Continued)
In thousands of U.S. Dollars

16.	Long-term Debts
	Long-term debts consist of the following:

	December 30,			December 28,
	2007			2008
6.75% fixed-rate notes	$	215,000		$	215,000
7.5% fixed-rate notes		150,000			150,000
0% convertible fixed-rate notes		18,551			—
Accrued yield-to-maturity interest on convertible notes		3,440			—
		386,991			365,000
Less : current amounts		(21,991	)		—
	$	365,000		$	365,000

Refer to Note 15 of the consolidated financial statements for details of the long-term debts.

Annual maturities of long-term debts as of December 28, 2008 are as follows:

Payable in year
2009	$	—
2010		150,000
2011		215,000
	$	365,000

17.	Unutilized Credit Facilities
	As of December 30, 2007 and December 28, 2008, the Company have undrawn banking and credit facilities consisting of short-term and long-term loans and bank guarantees of $21,759 and $23,574 with financial institutions, respectively.
	The notional letters of credit amounts outstanding as of December 30, 2007 and December 28, 2008 were $3,250 and $884, respectively.

18.	Other Non-Current Liabilities
	Other non-current liabilities consist of the following:

	December 30,		December 28,
	2007		2008
Liability for uncertain tax positions	$	360	$	183

19.	Share Capital, Additional Paid-in Capital, and Share Options and Incentive Plans
	The Company is incorporated in Singapore. Under Singapore law, all increases in share capital (including rights issues) require prior shareholders’ approval. Effective January 30, 2006, the Company was subjected to the amendments promulgated under the Companies (Amendment) Act 2005 of Singapore. These amendments included the abolition of the ordinary share par value and authorized capital. The relevant amendments have resulted in all ordinary shares being recorded with no par value. The amendments do not affect the actual number of ordinary shares issued and the paid up capital of the Company. As a result of the abolition of the ordinary share par value, the balance of the additional paid-in capital amounting to $1,517,175 became part of the share capital account as of January 30, 2006 and increased the share capital account on that date to $1,820,277.
	Refer to Note 18 and 21 of the consolidated financial statements for details of the Share Capital and Additional Paid-in Capital, and Share Options and Incentive Plans, respectively.

F-57

STATS CHIPPAC LTD.

NOTES TO THE UNCONSOLIDATED BALANCE SHEET (Continued)
In thousands of U.S. Dollars

20.	Accumulated Other Comprehensive Loss
	The components of accumulated other comprehensive loss are as follows:

	December 30,			December 28,
	2007			2008
Loss arising from change in functional currency	$	(9,732	)	$	(9,732	)
Unrealized gain on hedging instruments		620			—
Unrealized loss on available-for-sale marketable securities		(897	)		(606	)
Share of subsidiaries’ other comprehensive income		2,462			(1,940	)
Share of currency translation loss on equity investee		(58	)		(30	)
	$	(7,605	)	$	(12,308	)

21. Commitments and Contingencies

(a)	Commitments
	As of December 30, 2007 and December 28, 2008, unconditional purchase obligations consist of the following:

	December 30,		December 28,
	2007		2008
Capital commitments
Plant and equipment	$	13,750	$	3,021
Other commitments
Inventories	$	4,876	$	3,467

These unconditional purchase obligations include agreements to purchase goods or services that are enforceable and legally binding on the Company and specify all significant terms, including fixed or minimum quantities to be purchased, fixed or variable price provisions and the approximate timing of transactions. The duration of these purchase obligations are generally less than 12 months.

The Company is party to certain royalty and licensing agreements which have anticipated payments of approximately $1,870 per annum for 2009 through 2013.

The Company leases two facilities in Singapore under operating lease arrangement and has a lease agreement for the land located in Singapore related to its production facility. The Company has also leased certain production equipment under operating leases.

Future minimum lease payments under non-cancelable operating leases as of December 28, 2008 were:

Payable in year
2009	$	1,973
2010		1,556
2011		1,351
2012		465
2013		448
Thereafter		5,440
	$	11,233

(b)	Contingencies
	The Company is subject to claims and litigations, which arise in the normal course of business. These claims may include allegations of infringement of intellectual property rights of others as well as other claims of liability. The Company accrues liability associated with these claims and litigations when they are probable and reasonably estimable.

F-58

STATS CHIPPAC LTD.

NOTES TO THE UNCONSOLIDATED BALANCE SHEET (Continued)
In thousands of U.S. Dollars

In February 2006, the Company, ChipPAC and STATS ChipPAC (BVI) Limited were named as defendants in a patent infringement lawsuit filed in United States Federal Court for the Northern District of California (the “California Litigation”). The plaintiff, Tessera Technologies, Inc. (“Tessera”), has asserted that semiconductor chip packaging, specifically devices having Ball Grid Array (“BGA”) and multi-chip BGA configurations used by the defendants infringe certain patents of Tessera. Tessera has further asserted that the Company is in breach of an existing license agreement entered into by Tessera with ChipPAC, which agreement has been assigned by ChipPAC to the Company.

In May 2007, at Tessera’s request, the United States International Trade Commission (the “ITC”) instituted an investigation (the “First ITC Investigation”) of certain of the Company’s co-defendants in the California Litigation and other companies, including certain of the Company’s customers. In addition, in April 2007, Tessera instituted an action in the Federal District Court for the Eastern District of Texas (the “Texas Action”) against certain of the Company’s co-defendants in the California Litigation and other companies. In the First ITC Investigation, Tessera seeks an order preventing the named companies from importing certain packaged semiconductor chips and products containing them into the United States. The Texas Action seeks damages and injunctive relief against the named defendants. Both the First ITC Investigation and the Texas Action allege infringement of two of the same patents asserted by Tessera in the California Litigation, and may involve some of the same products packaged by the Company that are included in the California Litigation. The target date currently set by the ITC for the conclusion of the First ITC Investigation is April 2009.

In May 2008, the ITC instituted an investigation (the “Second ITC Investigation”) of the Company and other semiconductor package assembly service providers that are included in the California Litigation. In the Second ITC Investigation, Tessera seeks an order to prevent the Company and other named companies (collectively, the “Respondents”) from providing packaging or assembly services for certain packaged semiconductor chips incorporating small format non-tape BGA semiconductor packages and products containing them, for importation into the United States. In addition, Tessera seeks a general exclusion order excluding from importation all small format non-tape BGA semiconductor packages (and downstream products containing such packages), regardless of whether such packages are assembled by the Respondents. The Second ITC Investigation alleges infringement of three of the same patents asserted by Tessera in the California Litigation. The Company responded to the complaint in June 2008. In February 2009, the Second ITC Investigation was stayed pending the outcome of the First ITC Investigation. The target date currently set by the ITC for the conclusion of the Second ITC Investigation is February 2010.

The district court in the California Litigation has vacated the trial schedule and stayed all proceedings pending a final resolution of the First ITC Investigation. The U.S. Patent and Trademark Office (“PTO”) has also instituted reexamination proceedings on all of the patents Tessera has asserted in the California Litigation and the Second ITC Investigation. It is not possible to predict the outcome of the California Litigation or the Second ITC Investigation, the total costs of resolving the California Litigation and the Second ITC Investigation, or when the stay in the California Litigation will be lifted; nor is it possible to predict the outcome of the First ITC Investigation or the Texas Action.Nor is it possible to predict the outcome of the PTO proceedings or their impact on the California Litigation, the First ITC Investigation and the Second ITC Investigation.

The Company believes that it has a meritorious defense to these claims and intend to defend the lawsuit(s) vigorously. A court or ITC determination that the Company’s products or processes infringe the intellectual property rights of others could result in significant liability and/or require the Company to make material changes to its products and/or processes. Due to the inherent uncertainties of the lawsuit(s) and investigation(s), the Company cannot accurately predict the ultimate outcome and it could result in significant liability and/or injunction and could have a material adverse effect on the business, financial condition and the results of operations of the Company.

In addition, the Company is subject to various taxes in the different jurisdictions in which it operates. These include taxes on income, property, goods and services, and other taxes. The Company submits tax returns and claims with the appropriate government taxing authorities, which are subject to examination and agreement by those taxing authorities. The Company regularly assesses the

F-59

STATS CHIPPAC LTD.

NOTES TO THE UNCONSOLIDATED BALANCE SHEET (Continued)
In thousands of U.S. Dollars

likelihood of adverse outcomes resulting from these examinations to determine adequacy of provision for taxes.

22. Fair Value of Financial Instruments

Refer to Note 25 of the consolidated financial statements for further information on the fair value of the financial instruments.

The following table set forth the fair value of the Company’s financial assets and liabilities as of December 28, 2008:

	Fair value measurement
	December 28, 2008
	Level 1		Level 2		Level 3
Assets:
Marketable securities	$	15,587	$	—	$	—
	$	15,587	$	—	$	—
Liabilities:
Foreign currency forward contracts	$	—	$	480	$	—
	$	—	$	480	$	—

The following table sets forth the carrying amounts and fair values of the Company’s financial instruments as of December 30, 2007 prior to the adoption of SFAS 157:

	December 30,
	2007
	Carrying		Estimated
	Amount		Fair Value
Financial Assets:
Cash and cash equivalents	$	91,813	$	91,813
Long-term marketable securities		15,296		15,296
Financial Liabilities:
Short-term borrowing	$	50,000	$	50,000
Senior and convertible notes		386,991		379,701

The following table sets forth the estimated fair value of the Company’s financial liabilities that are not measured at fair value on a recurring basis as of December 28, 2008:

	Estimated Fair Value
	December 28, 2008
	Level 1		Level 2		Level 3
Liabilities:
Senior notes	$	—	$	268,250	$	—
	$	—	$	268,250	$	—

23.	Recent Event
	In February 2009, the Company announced that it will not proceed with its proposed capital reduction as previously approved at the March 2008 shareholders’ meeting, given the current economic environment, the Company has not been able to obtain financing to fund the cash distribution and the repayment of certain outstanding debts on terms and conditions acceptable to the Company.

F-60

STATS CHIPPAC LTD. AND SUBSIDIARIES

INDEX TO SUPPLEMENTARY INFORMATION

	Page
SUPPLEMENTARY INFORMATION
Report of the Directors	S-2
Statement by Directors	S-8

S-1

STATS CHIPPAC LTD. AND ITS SUBSIDIARIES

DIRECTORS’ REPORT
For the financial year ended December 28, 2008

The directors present their report to the members together with the audited consolidated financial statements of the Group for the financial year ended December 28, 2008 and the unconsolidated balance sheet of the Company as at December 28, 2008.

Directors

The directors of the Company in office at the date of this report are:

Charles R. Wofford	(Chairman)
Tan Lay Koon	(President and Chief Executive Officer)
Peter Seah Lim Huat
R. Douglas Norby
Teng Cheong Kwee
Tokumasa Yasui
Phoon Siew Heng

Arrangements to enable directors to acquire shares and debentures

Neither at the end of nor at any time during the financial year was the Company a party to any arrangement whose object is to enable the directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate, other than as disclosed under “Directors’ interests in shares or debentures” of this report.

Directors’ interests in shares or debentures

According to the register of directors’ shareholdings, none of the directors holding office at the end of the financial year had any interest or was deemed to have any interest in the shares or debentures of the Company or its related corporations, except as follows :

The Company — Fully paid ordinary shares

	At Beginning		At End
	of Year		of Year
Charles R. Wofford		—		9,200
Tan Lay Koon		—		107,333
Peter Seah Lim Huat		—		6,900
R. Douglas Norby		—		6,900

The Company — Options to acquire ordinary shares

					Per Share
	At Beginning		At End		Exercise
	of Year		of Year		Price S$		Exercisable Period
Tan Lay Koon		700,000		700,000		2.826	19/10/2001 to 18/10/2010
		325,000		325,000		2.885	29/04/2003 to 28/04/2012
		2,000,000		2,000,000		2.20	26/06/2003 to 25/06/2012
		700,000		700,000		1.99	06/08/2004 to 05/08/2013
		500,000		500,000		1.91	17/02/2005 to 16/02/2014
Peter Seah Lim Huat		70,000		70,000		1.99	06/08/2004 to 05/08/2013
		35,000		35,000		1.91	17/02/2005 to 16/02/2014
Teng Cheong Kwee		70,000		—		1.99	06/08/2004 to 05/08/2008
		35,000		35,000		1.91	17/02/2005 to 16/02/2009

S-2

STATS CHIPPAC LTD. AND ITS SUBSIDIARIES

DIRECTORS’ REPORT
For the financial year ended December 28, 2008

Directors’ interests in shares or debentures (continued)

The Company — Restricted share units granted

	At Beginning		At End
	of Year		of Year		Vesting Dates
Charles R. Wofford		27,600		18,400	16/02/2008, 16/02/2009 and 16/02/2010
Tan Lay Koon		322,000		214,667	16/02/2008, 16/02/2009 and 16/02/2010
Peter Seah Lim Huat		20,700		13,800	16/02/2008, 16/02/2009 and 16/02/2010
R. Douglas Norby		20,700		13,800	16/02/2008, 16/02/2009 and 16/02/2010

Singapore Telecommunications Limited — Fully paid ordinary shares

	At Beginning		At End
	of Year		of Year
Tan Lay Koon		190		190
Peter Seah Lim Huat		3,040		3,040
Phoon Siew Heng		4,133		4,133

Chartered Semiconductor Manufacturing Ltd — Fully paid ordinary shares

	At Beginning		At End
	of Year		of Year
Peter Seah Lim Huat		—		6,730

Chartered Semiconductor Manufacturing Ltd — Options to acquire ordinary shares

					Per Share
	At Beginning		At End		Exercise
	of Year		of Year		Price S$		Exercisable Period
Peter Seah Lim Huat		40,000		—		0.72	28/02/2004 to 28/02/2008
		45,000		—		1.10	29/08/2004 to 29/08/2008
		85,000		85,000		1.70	27/02/2005 to 27/02/2009
		85,000		85,000		1.16	26/08/2006 to 26/08/2010
		95,000		95,000		1.21	25/08/2007 to 25/08/2011
		47,500		47,500		1.07	31/08/2008 to 31/08/2012

Chartered Semiconductor Manufacturing Ltd — Conditional award of restricted share units granted

	At Beginning		At End
	of Year		of Year		Vesting Dates
Peter Seah Lim Huat		20,190		48,570		—	(1)

S-3

STATS CHIPPAC LTD. AND ITS SUBSIDIARIES

DIRECTORS’ REPORT
For the financial year ended December 28, 2008

Directors’ interests in shares or debentures (continued)

Global Crossing Limited — Common stock of US$0.01 each

	At Beginning		At End
	of Year		of Year
Peter Seah Lim Huat		7,771		13,532

Global Crossing Limited — Options to acquire common stock of US$0.01 each

					Per Stock
	At Beginning		At End		Exercise
	of Year		of Year		Price US$		Exercisable Period
Peter Seah Lim Huat		40,000		40,000		10.16	12/01/2005 to 12/01/2014

Global Crossing Limited — Restricted stock units of common stock of US$0.01 each

	At Beginning		At End
	of Year		of Year		Vesting Dates
Peter Seah Lim Huat		4,125		2,250	08/03/2005 to 08/03/2009
		2,420		—		12/06/2008
		—		4,176		24/06/2009

Singapore Technologies Engineering Limited — Fully paid ordinary shares

	At Beginning		At End
	of Year		of Year
Peter Seah Lim Huat		307,500		307,500

Singapore Technologies Engineering Limited — Options to acquire ordinary shares

					Per Share
	At Beginning		At End		Exercise
	of Year		of Year		Price S$		Exercisable Period
Peter Seah Lim Huat		11,125		11,125		2.09	10/02/2005 to 09/02/2009
		11,125		11,125		2.12	11/08/2005 to 10/08/2009
		22,250		22,250		2.37	08/02/2006 to 07/02/2010
		22,250		22,250		2.57	11/08/2006 to 10/08/2010
		33,375		33,375		3.01	10/02/2007 to 09/02/2011
		33,375		33,375		2.84	11/08/2007 to 10/08/2011
		44,500		44,500		3.23	16/03/2008 to 15/03/2012
		44,500		44,500		3.61	11/08/2008 to 10/08/2012

S-4

STATS CHIPPAC LTD. AND ITS SUBSIDIARIES

DIRECTORS’ REPORT
For the financial year ended December 28, 2008

Directors’ interests in shares or debentures (continued)

Singapore Technologies Engineering Limited — Conditional award of restricted shares granted

	At Beginning		At End
	of Year		of Year			Vesting Dates
Peter Seah Lim Huat		—		0 to 45,750	(2)		—	(2)

Starhub Ltd — Fully paid ordinary shares

	At Beginning		At End
	of Year		of Year
Peter Seah Lim Huat		147,560		447,560

Starhub Ltd — Options to acquire ordinary shares

					Per Share
	At Beginning		At End		Exercise
	of Year		of Year		Price S$		Exercisable Period
Peter Seah Lim Huat		6,250		6,250		0.985	27/11/2005 to 26/11/2009
		8,500		8,500		1.52	31/05/2006 to 30/05/2010

Starhub Ltd — Conditional award of restricted shares granted

	At Beginning	At End
	of Year	of Year	Vesting Dates
Peter Seah Lim Huat	0 to 17,200(3)	0 to 17,200(3)	— (3)
	—	0 to 19,000(3)	— (3)

Telechoice International Limited — Fully paid ordinary shares

	At Beginning		At End
	of Year		of Year
Peter Seah Lim Huat		50,000		50,000

Notes:
(1)	The restricted share units will vest over a period of three years starting from the first anniversary of grant.
(2)	A minimum threshold performance over the period from January 1, 2008 to December 31, 2008 is required for any restricted shares to be released. A specified number of restricted shares to be released will depend on the extent of achievement of all performance conditions and will be delivered in phases according to the stipulated vesting periods.
(3)	The actual number of shares to be delivered under the conditional award will depend on the level of achievement of set performance targets in Starhub Ltd over a specified two-year period. No shares will

S-5

STATS CHIPPAC LTD. AND ITS SUBSIDIARIES

DIRECTORS’ REPORT
For the financial year ended December 28, 2008

be delivered if the threshold performance targets are not achieved, while up to 1.5 times the number of shares that are the subject of the award will be delivered if the stretched performance targets are met or exceeded. Shares will be delivered in phases according to the stipulated vesting periods.

Directors’ contractual benefits

Since the end of the previous financial year, no director has received or become entitled to receive a benefit by reason of a contract made by the Company or a related corporation with the director or with a firm of which he is a member or with a company in which he has a substantial financial interest.

Share options — options granted

During the financial year, no options were granted by the Company to any persons to take up shares of the Company.

Issue of shares

During the financial year, the Company issued a total of 154,884,630 fully paid ordinary shares (“Shares”) comprising:-

(a)	26,250 Shares pursuant to the exercise of options granted under the Company’s Share Option Plan at exercise price of S$0.993 per share for cash;
(b)	10,507 Shares pursuant to the exercise of options granted under the Company’s Substitute Equity Incentive Plan and Substitute Share Purchase and Option Plan at exercise prices ranging from S$0.25 to S$0.50 per share for cash;
(c)	2,083,453 Shares pursuant to the vesting of restricted share units granted under the Company’s Restricted Share Plan;
(d)	7,625,760 Shares pursuant to the Company’s Employee Share Purchase Plan 2004; and
(e)	145,138,660 Shares pursuant to the conversion of US$134,500,000 aggregate principal amount of the Company’s 2.5% convertible subordinated notes due 2008.

Unissued shares under option

At the end of the financial year, there were options to acquire 14,390,151 new shares of the Company under the Share Option Plan, Substitute Share Purchase and Option Plan and Substitute Equity Incentive Plan. The exercise prices of these options range from S$0.25 to S$6.93. The expiration dates of the options range from February 2009 to October 2015.

The options granted by the Company do not entitle the holders of the options, by virtue of such holdings, to any right to participate in any share issue of any other company.

Other details of the Company’s Share Option and Incentive Plans are set out in the accompanying consolidated financial statements.

S-6

STATS CHIPPAC LTD. AND ITS SUBSIDIARIES

DIRECTORS’ REPORT
For the financial year ended December 28, 2008

Audit Committee

The members of the Audit Committee (all of whom are independent non-executive directors) at the date of this report are as follows:

R. Douglas Norby (Chairman)
Teng Cheong Kwee
Tokumasa Yasui

The Audit Committee performs the functions specified by Section 201B of the Companies Act, Cap. 50. It meets with the Company’s external auditors, and reviews the audit plans, the results of their examination and findings on their evaluation of the system of internal controls, the scope and results of the internal control procedures and the response from the Company’s management and the assistance given by the officers of the Company to the auditors. It also reviews related party transactions and the Company’s relationship with the auditors, including their independence and objectivity. The Audit Committee reviews the consolidated financial statements of the Group and the unconsolidated balance sheet of the Company and the auditors’ report thereon and submits them to the Board of Directors for approval. The Audit Committee has full access to and the cooperation of the management and has been given the resources required for it to discharge its functions. The Audit Committee has full discretion to invite any Director and executive officer to attend its meetings.

The Audit Committee has recommended to the Board of Directors that the auditors, PricewaterhouseCoopers LLP, be nominated for re-appointment as auditor of the Company at the forthcoming Annual General Meeting of the Company.

Auditors

The auditors, PricewaterhouseCoopers LLP, has expressed its willingness to accept re-appointment.

On behalf of the Board of Directors

Charles R. Wofford
Chairman

Tan Lay Koon
President and Chief Executive Officer

Singapore

March 9, 2009

S-7

STATS CHIPPAC LTD. AND ITS SUBSIDIARIES

STATEMENT BY DIRECTORS
For the financial year ended December 28, 2008

In the opinion of the directors,

(a)	the consolidated financial statements of the Group and the unconsolidated balance sheet of the Company as set out in the Annual Report are drawn up so as to give a true and fair view of the state of affairs of the Group and the Company at December 28, 2008, and of the results of the business, changes in equity and cash flows of the Group for the financial year then ended; and
(b)	at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due.

On behalf of the Board of Directors

Charles R. Wofford
Chairman

Tan Lay Koon
President and Chief Executive Officer

Singapore

March 9, 2009

S-8

Corporate Information

CHAIRMAN
Charles R. Wofford

DIRECTORS
Tan Lay Koon
Peter Seah Lim Huat
R. Douglas Norby
Teng Cheong Kwee
Tokumasa Yasui
Phoon Siew Heng

SENIOR MANAGEMENT
Tan Lay Koon
President and Chief Executive Officer

Wan Choong Hoe
Executive Vice President
Chief Operating Officer

Dr. Han Byung Joon
Executive Vice President
Chief Technology Officer

Hal Lasky
Executive Vice President
Chief Sales Officer

John Lau Tai Chong
Senior Vice President
Chief Financial Officer

Janet T. Taylor
Senior Vice President
General Counsel

REGISTERED OFFICE AND
CORPORATE HEADQUARTERS
10 Ang Mo Kio Street 65
#05-17/20 Techpoint
Singapore 569059
Tel : (65) 6824 7777
Fax : (65) 6720 7829

SHAREHOLDER SERVICES FOR
ORDINARY SHARES
M & C Services Private Limited
183 Robinson Road #17-00
The Corporate Office
Singapore 068906
Tel : (65) 6227 6660
Fax : (65) 6225 1452

SHARE LISTING
STATS ChipPAC Ltd.’s ordinary
shares are traded on the Singapore
Exchange Securities Trading
Limited under the symbol
“STATSChP”.

INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP
8 Cross Street #17-00
PWC Building
Singapore 048424

CORPORATE AND INVESTOR
INFORMATION
Financial analysts, shareholders,
interested investors and the financial
media can find additional information
about STATS ChipPAC Ltd.
Through our website, located at
www.statschippac.com

INVESTOR RELATIONS
Investor Relations
10 Ang Mo Kio Street 65
#05-17/20 Techpoint
Singapore 569059
Tel : (65) 6824 7788 (Singapore)
kahlocke.tham@statschippac.com

MEDIA CONTACT
Corporate Communications
47400 Kato Road
Fremont CA 94538
United States
Tel : (1) 208 867 9859
lisa.lavin@statschippac.com

ANNUAL GENERAL MEETING
The 15^th Annual General Meeting
will be held at 10.00 a.m. local time,
Monday, April 27, 2009 at The
Grassroots’ Club, 190 Ang Mo Kio
Avenue 8, Singapore 568046