ASE TEST LIMITED November 2002
Investment Highlights
Beneficiary of outsourcing trend
World’s largest independent IC test house offering end-toend total testing solution
Diversified global customer base in 3C sectors with global operation
Growth through internal expansion/strategic acquisitions
Strong financial track record
World's Dominant IC Testing House 1
Outsourcing by IDMs IDMs Increasing the Use of Semiconductor Manufacturing Service Providers
IDMs are increasingly adopting a fab-lite business model to focus on core competencies--design and marketing
Industry downturns weakened IDMs’ financial capacity for investment in advanced capacity
Technology/quality gap is narrowing or reversing between IDMs and subcontractors due to latter’s continuous investments
Particularly, most IDMs do not have sufficient business scale to build and support their own 300-mm fabs and will have to outsource wafer fabrication
Same pattern for advanced assembly and test 2
Who Can Justify Owning A 12” Fab? Rank
Company
1
Intel
2
2001 Revenue
Rank
Company
2001 Revenue
24,927
11
IBM
3,892
Toshiba
6,783
12
Mitsubishi
3,876
3
STM
6,360
13
Fujitsu
3,786
4
Samsung
6,303
14
AMD
3,701
5
TI
6,060
15
Agere
2,975
6
NEC
5,389
16
Matsushita
2,804
7
Motorola
4,828
17
Sony
2,570
8
Hitachi
4,724
18
Sharp
2,519
9
Infineon
4,512
19
Hynix
2,426
10
Philips
4,402
20
Micron
2,410
Source: Gartner, 2002
3
Semiconductor Back-End Market US$ Million 60,000
2005: Total $50bn 40%
50,000 40,000
2000: Total $34bn 2001: Total $25bn
30,000
32%
$20bn
29%
Outsourcing Market
OEM / IDM Packaging and Test Market
20,000 10,000 0 1999 Source: Gartner, 2002
2000
2001
2002
2003
2004
2005 4
Worldwide Semiconductor Volume Million Units 120,000
2002 Q2 volume = 89% of 2000 Q3 volume
100,000 19% 80,000
10%
60,000 40,000 20,000 0 1Q98 2Q98 3Q98 4Q98 1Q99 2Q99 3Q99 4Q99 1Q00 2Q00 3Q00 4Q00 1Q01 2Q01 3Q01 4Q01 1Q02 2Q02
Source: SIA
5
Technology Roadmap Wafer Geometry
0.35um
0.25um
0.18um
0.13um
0.09um
70um
60um
50um
45um
40um
2 Row Staggered 80/45um
80/40um
70/35um
60/30um
50/25um
3 Row Staggered
90/45um
80/40um
70/35um 60/30um
100/200
200/400
200/800 400/1600
Single-InLine
Wirebond Pad Pitch
Tester
Tester Speed (Clock/ Data Rate) Tester Channels
50/100
(Mhz/Mbps) 256
384
448
512
768 6
ASE Test Strategy
Maintain unquestioned market leadership
Strategic expansions through internal growth and acquisitions
Leverage front-end testing expertise
Work closely with equipment vendors
Offer complete test solutions
To provide leading edge turnkey testing solutions/accelerate the outsourcing of test for semiconductor manufacturing 7
IC Manufacturing Value Chain Design Cycle Production Cycle Front-End Testing Wafer Fab
Probing
“Front End” Program Development
Sort Die
Packaging
Testing
Final Test Burn In Lead Scan
Drop Ship/ Distribution
ASE Test provides services in all stages of the testing cycle 8
Ranking
Awarded No. 1 in the Fabless Segment! Assembly
Probe
Burn-In
1
Other
ISE Labs
ASE
Other
2
ASE
Other
Other
ASE
3
TSMC
ASE
Amkor
Amkor
4
Amkor
Viko
SPIL
STATS
5
STATS
Amkor
ASAT
SPIL
6
ISE Labs
Carsem
STATS
ISE Labs
7
ASAT
In-house
OSE
Fujitsu
8
Fujitsu
Hana
Carsem
King Yuan
9
In-house
ASAT
Hana
OSE
King Yuan
STATS
Atlantic
ChipPac
10
Source: Fabless Semiconductor Association – Wafer and Packaging Demand Survey 2001
Test
9
Global Business Platform ASE Chung Li ASE Korea All close to foundry, IDM, and assembly
ISE Labs Engineering and production testing services for Silicon Valley customers
Test Assembly
ISE Hong Kong ISE Singapore Near distribution centers for drop shipment ASE Malaysia Provides both testing and assembly services
ASE Taiwan Focuses on advanced logic/mixed signal testing. Offer turnkey services with ASE Inc. assembly at the same location
10
Leverage Front-End Expertise
Only front-end/back-end combination; 80% market share in Silicon Valley
Proximity to design centers allows ASE Test to become customer’s test center
Influence customers on test platform choice; jointly save time and cost for customers
Early involvement means better understanding of customers’ products to improve test yield
Design cycle is “door opener” to secure volume production
11
Close Ties to Equipment Vendors
Technology Center in Silicon Valley attracts customers and equipment vendors Agilent
NP Test (Schlumberger)
Credence
Teradyne
LTX
12
Corporate Structure
ASE INC.
50.5% ASE TEST LIMITED NASDAQ listed: ASTSF
70% 30%
100%
ASE CHUNG LI (Taiwan)
ISE LABS, INC. (Silicon Valley)
100% ASE ELECTRONICS (M) SDH, BHD. (Malaysia)
70% 99.98%
30%
ASE TEST INC. (Taiwan)
ASE KOREA (S. Korea)
*Black text indicates subsidiaries that are fully consolidated by ASE Test Limited.
13
2001 Result: Revenues (US$MM) 500
a 5-Ye
400
r
(1)
440.3
= 21% R G CA
298.4 276.3
300 176.5
200 101.8 100
0
184.7
112.8
61.3
1994
1995
1996 Test
1997
1998
1999
2000
2001
Packaging
Note:(1) Reported 2000 revenues exclude Manteca packaging sales
14
2001 Result: Operating Income (US$MM) 150 114.9
130 110 90
63.1
70
46.8
50 30
17.6
51.4
22.1
10 -10 -30
1995
1996
1997
1998
1999
2000
2001 (24.1)
15
2001 Result: Operating Margin 30%
24.9%
20%
26.3%
26.0% 22.8%
17.9% 14.7%
10%
0% 1995 -10%
1996
1997
1998
1999
2000
2001 -8.1%
16
2001 Result: Net Income (US$MM)
101.2
120 100 (1)
80
45.9
60 40
15.1
55.4
49.6
22.7
20 0 (20)
1995
1996
1997
1998
1999
2000
2001
(40) (60)
(45.8)
Notes: (1)1999 net income included one-time capital gain of USD 6.6 million
17
2001 Result: Gross Cash Earnings (US$MM) 250
233
200 133
150 100 50 0
73 34
1995
120
86
44
1996
1997
1998
1999
2000
2001
Gross Cash Earnings = Operating Income + Depreciation + Amortization
18
2001: Revenue Segmentation Assembly ($75 MM) TQFP/ LQFP SO 18% and others 5%
QFP 25%
BGA 26%
Test ($223 MM)
Logic 75% Memory 2% Engineering 11%
PDIP 14% PLCC 12%
Hardware 1%
Wafer & Others 11%
QFP includes QFP, MQFP, and PQFP. SO includes SOP, SOJ, SSOP, and TSOP.
19
Comparison: 2001 Test Revenues World’s Largest Test House
($MM) 400
286 MM 300
Includes 100% of ASE Chung Li and ASE Korea
200
223 MM
88 MM
100
67 MM
46 MM 5 MM
0
ASE TEST
AMKR
STATS
CHIPPAC
ASAT 20
3Q02 Result: Revenues (US$MM) 140
31% Growth
3% Growth
120 100 80 60 40
61
80
78
80
3Q02
2Q02
3Q02
20 0
3Q01
21
3Q02 Result: Revenues (US$MM)
140
121 125
120 100
95
103
100
80
67
67
61
69
78
80 29%
60 40
71%
20 0
Q1
Q2 Q3
Q4
Q1
2000 Test Reported 2000 revenues exclude Manteca packaging sales.
Q2 Q3 2001
Q4
Q1 Q2
Q3
2002
Packaging 22
3Q02 Result: Quarterly Margins 45% 40 30%
26
42
41
28
39 29
27 22
14
15%
9
6 -2
0% -15% -30%
1
-24
Gross Margin
4
-11 -12
-13
Q1 Q2 Q3 Q4 2000
8
-19
Q1 Q2 Q3 Q4 2001
-18
Q1 Q2 Q3 2002
Operating Margin 23
3Q02 Result: Operating Income (US$MM)
40 30 20 10 0 -10 -20
-15
3Q01
-10
-8
-10
3Q02
2Q02
3Q02 24
3Q02 Result: Net Income (US$MM)
20 10 0 -10
-11
-10
-11
3Q02
2Q02
3Q02
-20 -21 -30
3Q01
Figures are in US GAAP.
25
3Q02 Result: Capital Expenditure (US$MM)
(US$MM)
500
60
$417
450 400
50
350 300
$30
250
30
200
$129
150 100 50 0
$36
40
$128
$104 $100 20
$81 $48 1996
$21
10
1997
1998
1999
2000
2001
2002 (F) 0 1Q02
2Q02
3Q02
26
2001 & 3Q02: End Market Segmentation 2001 Communications 32%
Other 2% Industrial 7%
3Q02 PC 29%
Consumer / Automotive 30%
Communications 31%
Other 4% Industrial 6%
PC 33%
Consumer / Automotive 26%
27
Top Customers (3Q02)
Agilent
LSI Logic
Altera
Marvell
ATI Technology
Motorola
Atmel
Nvidia
DSP Group
Philips
ESS Technology
S.I.S.
Genesis Microchip
VIA Technologies
Legerity
28
Comparison: ASE Test & Industry Revenues 80%
66%
59%
57%
60%
50%
42%
37%
40% 19%
20%
11%
4%
5%
0% 1995 -20%
1996
1997
-9%
1998 -8%
1999
2000
2001
-32% -32%
-40%
ASE Test
Semiconductor Industry 29
Capital Structure
(US$MM)
1999
2000
2001
3Q02
Cash
$57
$157
$138
$124
Short-Term debt
$28
$40
$29
$97
$165 CB Other $100
$176 $89
$187 $63
$196 $30
$295
$643
$598
$583
Long-Term debt Shareholders’ equity
30
ASE Test Monthly Revenues (US$MM)
40 35 30 25 20
18.9 20.2
21.4
22.7 23.3
25.9 24.9
26.0 26.8 26.4
27.5
26.2 25.9
21.5 22.4 20.7
15 10 5 0
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct
2001
2002 31
Investment Highlights
Beneficiary of outsourcing trend
World’s largest independent IC test house offering end-to-end total testing solution
Diversified global customer base in 3C sectors with global operation
Growth through internal expansion/strategic acquisitions
Excellent financial track record
World's Dominant IC Testing House 32
ASE TEST LIMITED May 2002
Enormous Upside in Test Outsourcing Outsourced Market Comparisons (1999) Total Packaging Market Size: US$18.3Bn 39.4%
IC Package Assembly (1)
Total Fab Market Size: US$46.5 billion
Total Testing Market Size: US$10.0 billion 8.0%
11.0%
Foundry(2)
IC Testing (3)
Notes: (1) ETP (2) Company estimate (3) Company estimate
34
Purest Play in Test 1Q2002 Test Revenues as a % of Total Revenues
1Q2002 Test Revenues
100% 80%
40
49.5
60%
21.0 20
45%
40%
17.5
12.1
20%
1.0(1)
6%
15% 4%(1)
Note: (1) CSFB Equity Research Estimate
TE ST A M K R ST A TS C H IP PA C
A
SE
A
SA
T
0%
SE
TE ST A M K R ST A TS C H IP PA C
0
A
72%
T
13.0
SA
60
Includes 100% of ASE Chung Li and ASE Korea
A
($MM)
35
Comparison: Annualized Cash Return on PP&E 4Q01
1Q02
ASE Test
16%
18%
AMKOR
5%
6%
CHIPPAC
-36%
14%
SPIL
21%
24%
STATS
-36%
-4%
Source: company data and public earning releases (operating income + depreciation & amortization) / average PP&E
36
1Q02 Result: Revenue Segmentation Assembly ($20MM) TQFP/ LQFP SO 18% and others 2%
BGA 23%
Test ($49 MM) Logic 76% Memory 1% Engineering 12%
PDIP 21%
QFP 25% PLCC 11%
Wafer & Hardware 2% Others 9%
QFP includes QFP, MQFP, and PQFP. SO includes SOP, SOJ, SSOP, and TSOP.
37