STATS ChipPAC Reports Second Quarter 2007 Results


UNITED STATES--(Marketwire - July 25, 2007) - SINGAPORE -- 7/26/2007 -- STATS ChipPAC Ltd. ("STATS ChipPAC" or the "Company") (NASDAQ: STTS) (SGX-ST: STATSChP), a leading independent semiconductor test and advanced packaging service provider, today announced results for the second quarter 2007.

Tan Lay Koon, President and Chief Executive Officer of STATS ChipPAC, said, "Our second quarter was impacted by weak demand from certain large customers. As a result, our revenue declined about 5.2% from prior quarter. In general, we saw strong growth in our consumer and multi-applications market in applications like NAND flash, portable multimedia devices, digital TV and camera. Wireless communications were generally strong. Our personal computer business was weaker but improved towards the end of the second quarter on recovery of storage devices and graphics chipsets."

Revenue for the second quarter of 2007 decreased 11.5% to $370.2 million, compared to $418.1 million in the second quarter of 2006. This represents a sequential decline of 5.2% compared to the first quarter of 2007. Net income for the second quarter of 2007 was $7.4 million or $0.04 per diluted ADS, compared to net income of $18.0 million or $0.09 per diluted ADS in the second quarter of 2006. Net income for the second quarter of 2007 included approximately $2.0 million in share-based compensation expense as required under SFAS 123(R), $4.1 million in non-recurring expenses related to the tender offer from Singapore Technologies Semiconductors Pte Ltd, a wholly owned subsidiary of Temasek Holdings (Private) Limited, $1.7 million in impairment on the Company's assets used to manufacture discrete power packages that are classified as held for sale and $1.0 million in restructuring expenses.

Tham Kah Locke, acting Chief Financial Officer of STATS ChipPAC said, "We continue to focus our capital spending on strategic customer programs and to emphasize the generation of cash flow from our operations. In the second quarter of 2007, we spent approximately $55.4 million in capital expenditures, which was 15.0% of revenue compared to 26.9% of revenue in the second quarter of 2006. Gross margin in this quarter was 18.1% compared to 19.9% in prior quarter. The margin declined due to lower revenue."

Outlook

Tan Lay Koon commented, "For the third quarter, we expect revenue to be approximately in the range of $389.0 million to $408.0 million or in the range of 5% to 10% higher than the second quarter of 2007, with US GAAP net income in the range of $18.0 million to $24.0 million, which represents US GAAP net income per diluted ADS of $0.08 to $0.11, including the impact of approximately $0.01 per diluted ADS for the expensing of share-based compensation."

Investor Conference Call / Webcast Details

A conference call has been scheduled for 8:00 a.m. in Singapore on Thursday, July 26, 2007. This will be 8:00 p.m. in New York on Wednesday, July 25, 2007. During the call, time will be set aside for analysts and interested investors to ask questions of executive officers.

The call may be accessed by dialing +1-201-689-8560. A live webcast of the conference call will be available on STATS ChipPAC's website at www.statschippac.com. A replay of the call will be available 2 hours after the live call through noon on Thursday, August 2, 2007 (in Singapore) or midnight on Wednesday, August 1, 2007 (in New York) at www.statschippac.com and by telephone at +1-201-612-7415. The account number to access the replay is 3055 and the conference ID number is 246519.

About STATS ChipPAC Ltd.

STATS ChipPAC Ltd. ("STATS ChipPAC" or the "Company") (NASDAQ: STTS) (SGX-ST: STATSChP) is a leading service provider of semiconductor packaging design, 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 wafer foundries, integrated device manufacturers (IDMs) and fabless companies in the United States, Europe and Asia. STATS ChipPAC is a leader in mixed signal testing and advanced packaging technology for semiconductors used in diverse end market applications including communications, power, digital consumer and computing. With advanced process technology capabilities and a global manufacturing presence spanning Singapore, South Korea, China, Malaysia 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, Taiwan, Japan, the Netherlands and United Kingdom. STATS ChipPAC's facilities include those of its subsidiary, Winstek Semiconductor Corporation, in Hsinchu 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 both the Nasdaq Stock Market (NASDAQ) and the Singapore Exchange Securities Trading Limited (SGX-ST). In addition, STATS ChipPAC is also included in the Morgan Stanley Capital International (MSCI) Index. Further information is available at www.statschippac.com. Information contained in this website does not constitute a part of this release.

Forward-Looking Statements

Certain statements in this release, including statements regarding expected future financial results and industry growth, are forward-looking statements that involve a number of risks and uncertainties that could cause actual events or results to differ materially from those described in this release. Factors that could cause actual results to differ from our expectations include, but are not limited to, general business and economic conditions and the state of the semiconductor industry; level of competition; demand for end-use applications products such as communications equipment and personal computers; decisions by customers to discontinue outsourcing of test and packaging services; reliance on a small group of principal customers; continued success in technological innovations; availability of financing; pricing pressures including declines in average selling prices; ability to meet specific conditions imposed for the continued trading or listing of the Company's securities on the SGX-ST and the NASDAQ; our substantial level of indebtedness; potential impairment charges; adverse tax and other financial consequences if the South Korean taxing authorities do not agree with our interpretation of the applicable tax laws; ability to develop and protect our intellectual property; rescheduling or canceling of customer orders; changes in products mix; intellectual property rights disputes and litigation; 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; 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; significant ownership by Temasek Holdings that may result in conflicting interests with Temasek Holdings and our affiliates; unsuccessful acquisitions and investments in other companies and businesses; our ability to continue to successfully integrate the operations of the former separate STATS and ChipPAC companies and their employees; labor union problems in South Korea; uncertainties of conducting business in China; natural calamities and disasters, including outbreaks of epidemics and communicable diseases; and other risks described from time to time in the Company's SEC filings, including its annual report on Form 20-F dated March 12, 2007. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.


                            STATS ChipPAC Ltd.
              Condensed Consolidated Statements of Operations
      (In thousands of U.S. Dollars, except share and per share data)
                                (Unaudited)


                                 Three Months Ended     Six Months Ended
                                --------------------  --------------------
                                June 25,    July 1,   June 25,    July 1,
                                  2006       2007       2006       2007
                                ---------  ---------  ---------  ---------
Net revenues                    $ 418,133  $ 370,183  $ 803,842  $ 760,653
Cost of revenues                 (331,327)  (303,236)  (640,443)  (616,147)
                                ---------  ---------  ---------  ---------
Gross profit                       86,806     66,947    163,399    144,506

Operating expenses:
     Selling, general and
      administrative               39,914     28,036     79,625     56,035
     Research and development       7,909      8,985     14,882     17,170
     Tender offer expenses              -      4,114          -     10,922
     Held for sale asset
      impairment                        -      1,725          -      1,725
     Restructuring charges              -        990          -        990
                                ---------  ---------  ---------  ---------
       Total operating expenses    47,823     43,850     94,507     86,842
                                ---------  ---------  ---------  ---------

Operating income                   38,983     23,097     68,892     57,664
Other income (expenses), net      (10,575)    (8,503)   (20,005)   (17,222)
                                ---------  ---------  ---------  ---------
Income before income taxes         28,408     14,594     48,887     40,442
Income tax expense                 (7,211)    (5,782)   (13,129)   (13,433)
                                ---------  ---------  ---------  ---------
Income before minority interest    21,197      8,812     35,758     27,009
Minority interest                  (3,177)    (1,383)    (5,722)    (2,533)
                                ---------  ---------  ---------  ---------
Net income                      $  18,020  $   7,429  $  30,036  $  24,476
                                =========  =========  =========  =========

Net income per ordinary share:
     Basic                      $    0.01  $    0.00  $    0.02  $    0.01
     Diluted                    $    0.01  $    0.00  $    0.01  $    0.01

Net income per ADS:
     Basic                      $    0.09  $    0.04  $    0.15  $    0.12
     Diluted                    $    0.09  $    0.04  $    0.14  $    0.12

Ordinary shares (in thousands)
 used in per ordinary share
 calculation:
     Basic                      1,988,133  2,031,435  1,984,671  2,020,633
     Diluted                    2,158,312  2,186,078  2,156,948  2,180,555

ADS (in thousands) used in per
 ADS calculation:
     Basic                        198,813    203,144    198,467    202,063
     Diluted                      215,831    218,608    215,695    218,056

Key Ratios and Information:
Gross Margin                         20.8%      18.1%      20.3%      19.0%
Operating Expenses as a % of
 Revenue                             11.5%      11.9%      11.7%      11.4%
Operating Margin                      9.3%       6.2%       8.6%       7.6%

Depreciation & Amortization,
 including
     Amortization of Debt
      Issuance Costs            $  72,036  $  62,687  $ 141,556  $ 124,084
     Capital Expenditures       $ 112,453  $  55,373  $ 245,307  $ 112,159

Share-based compensation
 expense included under
 SFAS 123(R) were as follows:
     Cost of revenues           $   1,629  $   1,069  $   3,143  $   2,557
     Selling, general and
      administrative                  763        722      3,233      1,740
     Research and development         391        196        852        572
                                ---------  ---------  ---------  ---------
                                $   2,783  $   1,987  $   7,228  $   4,869
                                =========  =========  =========  =========






                            STATS ChipPAC Ltd.
                  Condensed Consolidated Balance Sheets
                      (In thousands of U.S. Dollars)



                                                     December
                                                        31,       July 1,
                                                       2006        2007
                                                    ----------- -----------
                                                                (Unaudited)
ASSETS
Current assets:
  Cash, cash equivalents and marketable securities  $   216,583 $   229,832
  Accounts receivable, net                              243,779     224,354
  Inventories                                           111,614      89,645
  Other current assets                                   27,845      23,635
                                                    ----------- -----------
  Total current assets                                  599,821     567,466

  Marketable securities                                  15,358      15,133
  Property, plant and equipment, net                  1,192,830   1,171,505
  Investment in equity investee                          10,292      10,171
  Goodwill and intangible assets                        555,358     553,078
  Other non-current assets *                             84,621      78,367
                                                    ----------- -----------
    Total assets                                    $ 2,458,280 $ 2,395,720
                                                    ----------- -----------

LIABILITIES AND SHAREHOLDERS'  EQUITY
Current liabilities:
  Accounts and other payables                       $   201,999 $   168,504
  Other current liabilities                             104,482      93,017
  Short-term debts                                       65,373     152,024
                                                    ----------- -----------
    Total current liabilities                           371,854     413,545
Long-term debts                                         697,523     534,052
Other non-current liabilities                            84,807      92,200
                                                    ----------- -----------
    Total liabilities                                 1,154,184   1,039,797
                                                    ----------- -----------
Minority interest                                        57,946      54,115
                                                    ----------- -----------
Shareholders' equity                                  1,246,150   1,301,808
                                                    ----------- -----------
    Total liabilities and shareholders' equity      $ 2,458,280 $ 2,395,720
                                                    ----------- -----------


  * Includes $980 and $981 of non-current restricted cash as of July 1,
    2007 and December 31, 2006, respectively.




                            STATS ChipPAC Ltd.
                      Other Supplemental Information
                                (Unaudited)



                                            2Q 2006    1Q 2007    2Q 2007
Net Revenues by Product Line
Packaging - array                               55.3%      58.6%      56.0%
Packaging - leaded                              18.4%      16.9%      18.6%
Test and other services                         26.3%      24.5%      25.4%
                                           ---------  ---------  ---------
                                               100.0%     100.0%     100.0%
                                           =========  =========  =========
Net Revenues by End User Market
Communications                                  57.3%      52.5%      50.0%
Personal Computers                              19.1%      16.1%      14.8%
Consumer, Multi-applications and Others         23.6%      31.4%      35.2%
                                           ---------  ---------  ---------
                                               100.0%     100.0%     100.0%
                                           =========  =========  =========
Net Revenues by Region
United States of America                        72.3%      77.1%      71.6%
Europe                                           2.9%       2.2%       3.5%
Asia                                            24.8%      20.7%      24.9%
                                           ---------  ---------  ---------
                                               100.0%     100.0%     100.0%
                                           =========  =========  =========

Number of Testers                                996        938        912
Number of Wirebonders                          3,801      3,808      3,759

Overall Equipment Utilization Rate                77%        75%        74%


Contact Information: Singapore Contact: Tham Kah Locke Vice President, Corporate Finance Tel: (65) 6824 7788, Fax: (65) 6720 7826 email: US Contacts: Lisa Lavin Marcom Manager Tel: (208) 939 3104, Fax: (208) 939 4817 email: The Ruth Group David Pasquale - Executive Vice President Tel: (646) 536 7006 email:

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