Chartered Reports Results for Second Quarter 2006

Recent Highlights and Events

-- Chartered signed an agreement with Microsoft for the manufacturing of CPU products - using 65nm Silicon-on-Insulator (SOI) semiconductor technology - for Microsoft's Xbox 360 game consoles. Production is expected to begin in the first quarter of 2007. This follows Chartered's successful manufacturing of 90nm SOI CPU products for Xbox 360 game consoles, through an agreement with IBM.

-- Chartered announced the licensing of 90nm SOI technology from IBM. The agreement enables Chartered to expand the use of the technology to areas such as consumer, multi-media, communications, automotive and industrial applications, thereby delivering more choice and flexibility to foundry customers for manufacturing their leading-edge products.

-- Chartered began first revenue shipments of AMD64 processors in June 2006. AMD and Chartered ramped 300mm production at Fab 7 in record time, hitting all major milestones and starting production at mature yields. Initial shipments out of Chartered consisted of microprocessors manufactured on 90nm process technology.

Review and Outlook

"As we go into the third quarter, we are seeing changes in outlook from our customers," said Thomas. "We believe customers are cautious about their inventory positions, and some are reacting to softer-than-usual seasonality in some of the end markets. As a result of this, our outlook for the third quarter 2006 is now weaker than what we had anticipated earlier. However, this weakness is offset to a significant extent by the new businesses such as the AMD microprocessor ramp in the third quarter.

"Based on our current outlook, we expect Chartered revenues for third quarter 2006 to be essentially flat and revenues including our share of SMP to be slightly down, compared to the second quarter. In comparison to the second quarter, we see significant weakness in the consumer sector, primarily due to decline in revenues from video game devices. The communications sector is expected to be weaker to a lesser extent, offset by strength in the computer sector. We expect a utilization rate of approximately 75 percent for the third quarter, after comprehending a sequential increase in capacity of approximately five percent. Revenues from 0.13-micron and below technologies, including 90nm, are expected to represent around 51 percent of our total business base revenues. 90nm revenues alone are expected to grow approximately 25 percent sequentially and contribute approximately 28 percent of our total business base revenues."

The outlook for third quarter 2006 is as follows:

                              2Q 2006         3Q 2006 Guidance
                              --------  -----------------------------
                               Actual     Midpoint and     Sequential
                                              range          change
----------------------------- --------  ----------------- -----------
                                                          Down 2% to
Revenues                      $364.8M     $362M, +/- $6M     up 1%
----------------------------- --------  -----------------  ----------
Revenues including                                          Flat to
 Chartered's share of SMP     $393.7M     $387M, +/- $7M    down 3%
----------------------------- --------  -----------------  ----------
                                                           Up 1% to
ASP (c)                        $1,089    $1,117, +/- $20     up 5%
----------------------------- --------  -----------------  ----------
ASP including Chartered's                                   Flat to 
 share of SMP (c)              $1,082    $1,102, +/- $25     up 4%
----------------------------- --------  -----------------  ----------
Utilization                        82%        75%, +/- 3%          -
----------------------------- --------  -----------------  ----------
Gross profit (loss)            $87.9M      $90M, +/- $6M           -
----------------------------- --------  -----------------  ----------
Net income (loss) (d)          $12.3M      $11M, +/- $5M           -
----------------------------- --------  -----------------  ----------
Basic earnings (loss) per ADS   $0.04   $0.03, +/- $0.02           -
----------------------------- --------  -----------------  ----------
    (c) Eight-inch equivalent wafers.
    (d) Net income includes the negative profit impact from losses
    attributable to minority interest, which was $3.8 million in 
    second quarter 2006, and is projected to be approximately $4.0 
    million in third quarter 2006.

CEO Closing Comments

"The recent change in the semiconductor market outlook is largely unanticipated. While we are on track to capitalize on new engagements such as AMD and customers using our value-added solutions, we do see the general market weakness slowing our overall growth plan for this year," said Chia Song Hwee, president & CEO of Chartered.

"There are near-term challenges that we need to address due to the current market environment. However, we remain committed to our growth strategy and the direction of our company remains unchanged. As we execute on our 90nm engagements, we are also currently engaging multiple customers at the 65nm node and are pursuing opportunities from new markets and customers," concluded Chia.

Webcast Conference Call Today

Chartered will be discussing its second quarter 2006 results and third quarter 2006 outlook on a conference call today, July 21, 2006, at 8:30 a.m. Singapore time (US time 5:30 p.m. PT/8:30 p.m. ET, Thursday, July 20, 2006). A webcast of the conference call will be available to all interested parties on Chartered's Web site at, under Investor Relations, or at

Mid-Quarter Guidance

The Company provides a guidance update midway through each quarter. For third quarter 2006, the Company anticipates issuing its mid-quarter guidance update, via news release, on Wednesday, September 6, 2006, Singapore time.

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