Advanced Semiconductor Engineering, Inc. Reports Unaudited Consolidated Financial Results for the Second-Quarter of 2008

TAIPEI, Taiwan, Aug. 5 /Xinhua-PRNewswire-FirstCall/ -- Advanced Semiconductor Engineering, Inc. (TAIEX: 2311; NYSE: ASX) ("We", "ASE", or the "Company"), the world s largest independent provider of IC packaging and testing services, today reported unaudited net revenues (Note 1) of $25NT,610 million for the second quarter of 2008 (2Q08), up 10% year-over-year and up 4% sequentially. Net income for the quarter totaled $2NT,412 million, down from $2NT,575 million in 2Q07 and up from $2NT,337 million in 1Q08. Diluted earnings per share for the quarter was $0NT.44 (or $0US.072 per ADS), compared to $0NT.48 for 2Q07 and $0NT.43 for 1Q08.

Note 1:

All financial information presented in this press release is unaudited, consolidated and prepared in accordance with accounting principles generally accepted in the Republic of China, or ROC GAAP. Such financial information is generated internally by us, and has not been subjected to the same review and scrutiny, including internal auditing procedures and review by our independent auditors, to which we subject our audited consolidated financial statements, and may vary materially from the audited consolidated financial information for the same period. Any evaluation of the financial information presented in this press release should also take into account our published audited consolidated financial statements and the notes to those statements. In addition, the financial information presented is not necessarily indicative of our results for any future period.

RESULTS OF OPERATIONS

2Q08 Results Highlights

-- Net revenue contribution from IC packaging operations (including module assembly), testing operations, and substrates sold to third parties was $20NT,033 million, $5NT,102 million and $475NT million, respectively, and each represented approximately 78%, 20% and 2% respectively, of total net revenues for the quarter.

-- Cost of revenues was $19NT,098 million, up 13% year-over-year and up 3% sequentially.

-- As a percentage of total net revenues, cost of revenues was 75% in 2Q08, up from 73% in 2Q07 and relatively unchanged compared to 1Q08.

-- Raw material cost totaled $7NT,695 million during the quarter, representing 30% of total net revenues, compared with $7NT,301 million and 30% of net revenues in the previous quarter.

-- Depreciation, amortization and rental expenses totaled $3NT,972 million during the quarter, down 4% year-over-year and up 1% sequentially.

-- Total operating expenses during 2Q08 were $2NT,928 million, including $980NT million in R&D and $1NT,948 million in SG&A. Compared with operating expenses of $2NT,836 million in 1Q08, the sequential increase was primarily attributable to bonuses paid to employees and compensation to directors and supervisors of one of our subsidiaries in 2Q08. Total operating expenses as a percentage of net revenues for the current quarter were 11%, relatively unchanged compared with 2Q07 and 1Q08.

-- Operating profit for the quarter totaled $3NT,584 million, up from $3NT,352 million in the previous quarter. Operating margin was 14% in 2Q08 and remained unchanged compared with the previous quarter.

-- In terms of non-operating items:

-- Net interest expense was $268NT million, down from $275NT million a quarter ago.

-- Net exchange gain of $294NT million was primarily attributable to exchange gains from the appreciation of the Renminbi against the U.S. dollar.

-- Gain on long-term investment of $28NT million was primarily attributable to investment income of $32NT million from USI and investment loss of $3NT million from Hung Ching Construction.

-- Other non-operating expenses of $76NT million were primarily related to loss from inventory provision adjustment and other miscellaneous expenses. Together with other non-operating expenses, total non-operating expenses for the quarter were $22NT million, compared to $292NT million for 2Q07 and $69NT million for 1Q08.

-- Income before tax was $3NT,562 million for 2Q08, compared with $3NT,283 million in the previous quarter. We recorded an income tax expense of $779NT million during the quarter, compared with an income tax expense of $411NT million in 1Q08. The sequential increase of the income tax expense was primarily due to the undistributed earnings tax of one of our subsidiaries in 2Q08. Minority interest was $371NT million for 2Q08, down from $535NT million in the previous quarter, primarily due to the completion of the ASE Test privatization transaction at the end of May.

-- In 2Q08, net income was $2NT,412 million, compared to net income of $2NT,575 million for 2Q07 and $2NT,337 million for 1Q08.

-- Our total number of shares outstanding at the end of the quarter was 5,476,949,209, excluding treasury stock. Our diluted EPS for 2Q08 was $0NT.44, or $0US.072 per ADS, based on 5,494,051,808 weighted average number of shares outstanding in 2Q08.

LIQUIDITY AND CAPITAL RESOURCES

-- As of June 30, 2008, our cash and other financial assets totaled $32NT,648 million, compared to $29NT,127 million on March 31, 2008.

-- Capital expenditures in 2Q08 totaled $130US million, of which $71US million was used for IC packaging, $56US million was used for testing, and $3US million was used for interconnect materials.

-- As of June 30, 2008, we had total bank debts of $64NT,687 million, compared to $38NT,794 million as of March 31, 2008. The increase in our bank debt was mainly attributable to the financing of the ASE Test privatization. Total bank debts consisted of $12NT,456 million of revolving working capital loans, $6NT,162 million of the current portion of long-term debts, $1NT,375 million of current portion of bonds payable, $40NT,663 million of long-term debts and $4NT,031 million of long-term bonds payable. Total unused credit lines were $69NT,692 million.

-- Current ratio as of June 30, 2008 was 1.24, compared to 1.57 as of March 31, 2008. Net debt to equity ratio was 0.57 as of June 30, 2008.

-- Total number of employees was approximately 30,363 as of June 30, 2008.

Business Review

IC Packaging Services (Note 2)

-- Net revenues generated from our IC packaging operations were $20NT,033 million during the quarter, up by $2NT,004 million or 11% year-over- year and up by $806NT million or 4% sequentially. On a sequential basis, the increase in packaging net revenue was primarily due to an increase in sales volume.

-- Net revenues from advanced substrate and leadframe-based packaging accounted for 84% of total IC packaging net revenues during the quarter, which equaled the previous quarter.

-- Gross margin for our IC packaging operations was 21%, down by 3% year- over-year and unchanged sequentially.

-- Capital expenditures for our IC packaging operations amounted to $71US million during the quarter, of which $61US million was used for wirebonding packaging capacity, and $10US million was used for wafer bumping and flip chip packaging equipment.

-- As of June 30, 2008, there were 8,426 wirebonders in operation. 358 wirebonders were added, of which 119 wirebonders were obtained from the acquisition of ASE Weihai Inc. and 58 wirebonders were disposed of during the quarter.

-- Net revenues from flip chip packages and wafer bumping services accounted for 10% of total packaging net revenues, up by 1 percentage point from the previous quarter.

Note 2:

IC packaging services include module assembly services. Testing Services

-- Net revenues generated from our testing operations were $5NT,102 million, up by $377NT million or 8% year-over-year and up by $207NT million or 4% sequentially.

-- Final testing contributed 77% to total testing net revenues, and stay unchanged versus previous quarter. Wafer sort contributed 20% to total testing net revenues, up by 1 percentage points from the previous quarter. Engineering testing contributed 3% to total testing net revenues, down by 1 percentage point from the previous quarter.

-- Depreciation, amortization and rental expense associated with our testing operations amounted to $1NT,475 million, down from $1NT,574 million in 2Q07 and up from $1NT,455 million in 1Q08.

-- In 2Q08, gross margin for our testing operations was 38%, up by 3 percentage points year-over-year and up by 1 percentage point sequentially.

-- Capital spending on our testing operations amounted to $56US million during the quarter.

-- As of June 30, 2008, there were 1,622 testers in operations. 130 testers were added, of which 52 testers were obtained from the acquisition of ASE Weihai Inc. and 63 testers were disposed of during the quarter.

Substrate Operations

-- PBGA substrate manufactured by ASE amounted to $2NT,161 million for the quarter, up by $114NT million or 6% from a year-ago quarter, and up by $93NT million or 5% from the previous quarter. Of the total output of $2NT,161 million, $475NT million was from sales to external customers.

-- Gross margin for substrate operations was 15% during the quarter, down by 6 percentage points from a year ago quarter and unchanged from the previous quarter.

-- In 2Q08, the Company s internal substrate manufacturing operations supplied 58% (by value) of our total substrate requirements.

-- As of June 30, 2008, the Company s PBGA capacity was at 52 million units per month.

Customers

-- Our five largest customers together accounted for approximately 28% of our total net revenues in 2Q08, compared to 27% in 2Q07 and in 1Q08. No single customer accounted for more than 10% of our total net revenues.

-- Our top 10 customers contributed 46% of our total net revenues during the quarter, compared to 44% in 2Q07 and 1Q08.

-- Our customers that are integrated device manufacturers, or IDMs, accounted for 40% of our total net revenues during the quarter, compared to 39% in 2Q07 and 42% in 1Q08.

About ASE, Inc.

ASE, Inc. is the world s largest independent provider of IC packaging services and, together with its subsidiary ASE Test Limited, the world s largest independent provider of IC testing services, including front-end engineering testing, wafer probing and final testing services. ASE, Inc. s international customer base of more than 200 customers includes such leading names as ATI Technologies Inc., CSR plc, Freescale Semiconductor, Inc., MediaTek Inc., NEC Corporation, NVIDIA Corporation, NXP Semiconductors, Qualcomm Incorporated, RF Micro Devices Inc., STMicroelectronics N.V. and VIA Technologies, Inc. With advanced technological capabilities and a global presence spanning Taiwan, Korea, Japan, Singapore, Malaysia and the United States, ASE, Inc. has established a reputation for reliable, high quality products and services. For more information, visit our website at http://www.aseglobal.com .

Safe Harbor Notice

This press release contains "forward-looking statements" within the meaning of Section 27A of the United States Securities Act of 1933, as amended, and Section 21E of the United States Securities Exchange Act of 1934, as amended, including statements regarding our future results of operations and business prospects. Although these forward-looking statements, which may include statements regarding our future results of operations, financial condition or business prospects, are based on our own information and information from other sources we believe to be reliable, you should not place undue reliance on these forward-looking statements, which apply only as of the date of this press release. We were not involved in the preparation of these projections. The words "anticipate", "believe", "estimate", "expect", "intend", "plan" and similar expressions, as they relate to us, are intended to identify these forward-looking statements in this press release. Our actual results of operations, financial condition or business prospects may differ materially from those expressed or implied in these forward-looking statements for a variety of reasons, including risks associated with cyclicality and market conditions in the semiconductor industry; demand for the outsourced semiconductor packaging and testing services we offer and for such outsourced services generally; the highly competitive semiconductor industry; our ability to introduce new packaging, interconnect materials and testing technologies in order to remain competitive; international business activities; our business strategy; our future expansion plans and capital expenditures; the strained relationship between the ROC and the PRC; general economic and political conditions; possible disruptions in commercial activities caused by natural or human-induced disasters; fluctuations in foreign currency exchange rates; and other factors. For a discussion of these risks and other factors, please see the documents we file from time to time with the Securities and Exchange Commission, including our 2007 Annual Report on Form 20-F filed on June 30, 2008, as amended.

-- Tables to Follow --

Supplemental Financial Information

Consolidated Operations

Amounts in NT$ Millions 2Q/08 1Q/08 2Q/07 Net Revenues 25,610 24,695 23,362 Revenues by End Application Communication 45% 45% 46% Computer 24% 25% 22% Automotive and Consumers 31% 30% 32% Others 0% 0% 0%

Revenues by Region North America 50% 50% 48% Europe 9% 11% 12% Taiwan 21% 23% 23% Japan 9% 8% 9% Other Asia 11% 8% 8%

IC Packaging Services

Amounts in NT$ Millions 2Q/08 1Q/08 2Q/07 Net Revenues 20,033 19,227 18,029 Revenues by Packaging Type Advanced substrate & leadframe based 84% 84% 85% Traditional leadframe based 4% 4% 5% Module assembly 4% 5% 6% Others 8% 7% 4%

Capacity CapEx (US$ Millions)* 71 78 49 Number of Wirebonders 8,426 8,126 7,040

Testing Services

Amounts in NT$ Millions 2Q/08 1Q/08 2Q/07 Net Revenues 5,102 4,895 4,724 Revenues by Testing Type Final test 77% 77% 76% Wafer sort 20% 19% 20% Engineering test 3% 4% 4%

Capacity CapEx (US$ Millions)* 56 44 20 Number of Testers 1,622 1,555 1,385

* Capital expenditure amounts exclude building construction costs.

Advanced Semiconductor Engineering, Inc. Summary of Consolidated Income Statements Data (In NT$ millions, except per share data) (Unaudited)

For the three months ended For the period ended Jun. 30 Mar. 31 Jun. 30 Jun. 30 Jun. 30 2008 2008 2007 2008 2007 Net revenues: IC Packaging 20,033 19,227 18,029 39,260 34,312 Testing 5,102 4,895 4,724 9,997 9,049 Others 475 573 609 1,048 1,094 Total net revenues 25,610 24,695 23,362 50,305 44,455 Cost of revenues 19,098 18,507 16,958 37,605 33,055 Gross profit 6,512 6,188 6,404 12,700 11,400 Operating expenses: Research and development 980 1,096 720 2,076 1,409 Selling, general and administrative 1,948 1,740 1,795 3,688 3,332 Total operating expenses 2,928 2,836 2,515 5,764 4,741 Operating income 3,584 3,352 3,889 6,936 6,659 Net non-operating (income) expenses: Interest expenses -- net 268 275 306 543 659 Foreign exchange gain (294) (301) (147) (595) (165) Gain on long-term investment (28) (104) (65) (133) (141) Others 76 199 198 276 439 Total non-operating expenses 22 69 292 91 792 Income before tax 3,562 3,283 3,597 6,845 5,867 Income tax expense 779 411 866 1,191 1,185 Income from continuing operations and before minor interest 2,783 2,872 2,731 5,654 4,682 Minority interest 371 535 156 906 446 Net income 2,412 2,337 2,575 4,748 4,236 Per share data: Earnings (loss) per share --Basic $0NT.46 $0NT.44 $0NT.50 $0NT.90 $0NT.82 --Diluted $0NT.44 $0NT.43 $0NT.48 $0NT.86 $0NT.79 Earnings (loss) per equivalent ADS --Basic $0US.075 $0US.070 $0US.075 $0US.146 $0US.125 --Diluted $0US.072 $0US.067 $0US.073 $0US.138 $0US.120 Number of weighted average shares used in diluted EPS calculation (in thousands) 5,494,052 5,460,822 5,433,905 5,479,984 5,463,437

Exchange rate (NT$ per $1US) 30.36 31.74 33.11 31.05 32.94

Advanced Semiconductor Engineering, Inc. Summary of Consolidated Balance Sheet Data (In NT$ millions) (Unaudited)

As of Jun. 30, As of Mar. 31, 2008 2008 Current assets: Cash and cash equivalents 23,305 16,589 Financial assets -- current 9,343 12,538 Notes and accounts receivable 17,633 16,994 Inventories 5,598 5,439 Others 3,232 4,312 Total current assets 59,111 55,872 Financial assets -- non current 4,568 4,818 Properties -- net 83,209 81,297 Others 17,432 9,118 Total assets 164,320 151,105 Current liabilities: Short-term debts -- revolving credit 12,456 10,573 Short-term debts -- current portion of long-term debts 6,162 6,060 Short-term debts -- current portion of bonds payable 1,375 1,375 Notes and accounts payable 8,339 7,762 Others 19,492 9,785 Total current liabilities 47,824 35,555 Long-term debts 40,663 16,602 Long-term bonds payable 4,031 4,184 Other liabilities 2,808 2,949 Total liabilities 95,326 59,290 Minority interest 2,980 14,958 Shareholders equity 66,014 76,857 Total liabilities & shareholders equity 164,320 151,105 Current Ratio 1.24 1.57 Net Debt to Equity 0.57 0.11

Contact:

ASE, Inc. Joseph Tung, CFO or Vice President Freddie Liu, Vice President Allen Kan, Manager Tel: +886-2-8780-5489 Fax: +886-2-2757-6121 Email: ir@aseglobal.com Website: http://www.aseglobal.com

US contact:

Clare Lin, Director Tel: +1-408-986-6524 Email: clare.lin@aseus.com

SOURCE Advanced Semiconductor Engineering, Inc.