ASX

Business Context and Reporting Period

Company: Advanced Semiconductor Engineering, Inc. (ASE)

Filing Type: Form 6-K (Report of Foreign Private Issuer)

Reporting Period: Fourth Quarter (4Q) and Full Year ended December 31, 2010

Release Date: January 28, 2011

ASE is the world's largest independent provider of IC packaging and testing services. The financial results presented are unaudited and prepared in accordance with ROC GAAP. The reporting includes consolidated results reflecting the acquisition of Universal Scientific Industrial Co., Ltd. (USI), which was consolidated starting in February 2010.

Key Financial Metrics

Consolidated Results (Actual Basis)

Segment Performance (4Q 2010)

• IC Packaging: NT$26,003 million (49% of total revenue); Gross margin 21%.
• Testing: NT$5,989 million (11% of total revenue); Gross margin 37%.
• EMS (USI): NT$17,226 million (32% of total revenue); Gross margin 11%.
• Substrates: NT$583 million (1% of total revenue); Gross margin 23%.
• Others (Real Estate): NT$3,482 million (7% of total revenue).

Material Changes vs. Prior Period

Quarter-over-Quarter (4Q10 vs. 3Q10)

• Revenue: Increased 3% sequentially to NT$53,283 million.
• Net Income: Decreased 9% sequentially to NT$4,962 million, primarily due to higher income tax expenses (NT$1,777 million vs. NT$771 million) and lower operating income in the IC ATM segment.
• Operating Income: Increased to NT$7,290 million (up from NT$6,665 million), driven by the EMS segment and real estate sales, despite a decline in IC ATM operating income.
• Cost of Revenue: Increased 2% sequentially.

Year-over-Year (4Q10 vs. 4Q09)

• Revenue: Surged 103% to NT$53,283 million, largely driven by the consolidation of USI (EMS operations) and strong demand in IC packaging.
• Net Income: Increased 44% to NT$4,962 million.
• Operating Margin: Improved to 14% from 13% in 4Q09.
• Full Year 2010 vs. 2009: Revenue grew 120% to NT$188,743 million; Net Income grew 173% to NT$18,430 million.

Guidance, Outlook, and Risks

Management Commentary: Management highlighted strong recovery in the semiconductor industry. The IC packaging segment saw a 23% year-over-year revenue increase, while the EMS segment (USI) grew 15% year-over-year. Capital expenditures for 4Q10 totaled US$133 million, with significant investment in wirebonding and testing capacity.

Forward-Looking Statements: The filing contains forward-looking statements regarding future results and business prospects. Management cautions that actual results may differ materially due to various risks.

Key Risks and Contingencies:

• Market Cyclicality: Risks associated with the cyclicality and market conditions of the semiconductor industry.
• Competition: Highly competitive nature of the semiconductor packaging and testing industry.
• Geopolitical Factors: Strained relationship between the Republic of China and the People's Republic of China.
• Currency Fluctuations: Exposure to foreign currency exchange rate fluctuations (USD, RMB, NT$).
• Customer Concentration: Top 5 customers accounted for 30% of total revenue (IC ATM basis) and 65% of EMS revenue in 4Q10.

Investor Verification Checklist

• Unaudited Status: Verify that all financial figures are unaudited and prepared under ROC GAAP, which may differ from US GAAP.
• USI Consolidation Impact: Confirm the extent to which year-over-year growth is driven by the consolidation of USI (acquired Feb 2010) versus organic growth.
• Real Estate Sales: Note that 4Q10 revenue includes NT$3,482 million from real estate sales, which is a non-recurring item affecting margins and comparability.
• Customer Concentration: Review the high concentration of revenue in the EMS segment (top 5 customers = 65%) and potential risks associated with key client demand.
• Currency Exposure: Assess the impact of the NT$ exchange rate against the US$ on reported earnings, particularly given the US$ ADS listing.
• Capital Expenditures: Monitor the heavy CapEx spend (US$954 million in 2010) and its impact on future depreciation and cash flow.