"Chartered revenues and revenues including our share of SMP were up approximately 19 percent in third quarter 2009 compared to the previous quarter. Revenues from 65-nanometer (nm) and below technologies, including those from 45nm, grew around 27 percent and accounted for approximately 31 percent of our total business base revenues. We ended the quarter with a net loss attributable to Chartered of $4.7 million, including transaction costs of $8.4 million relating to the proposed acquisition of Chartered by Advanced Technology Investment Company (ATIC) of Abu Dhabi, which is a substantial improvement of approximately $35 million over the prior quarter," said George Thomas, senior vice president and CFO of Chartered.

Summary of Third Quarter 2009 Performance

Revenues were $415.2 million in third quarter 2009, down 10.4 percent from $463.7 million in third quarter 2008. Revenues including Chartered's share of SMP were $439.8 million, down 9.7 percent from $487.2 million in the year-ago quarter, primarily due to a decline in semiconductor demand across all sectors. Sequentially, revenues were up 19.0 percent compared to $349.0 million in second quarter 2009. Revenues including Chartered's share of SMP were up 19.2 percent from $368.8 million in second quarter 2009, primarily due to strength in the communications sector and to a lesser extent the computer sector.

Gross profit was $88.0 million, or 21.2 percent of revenues, compared to a gross profit of $65.6 million, or 14.1 percent of revenues in the year-ago quarter. The increase was primarily due to a favorable product mix arising from higher shipments of certain advanced technologies and lower cost per wafer resulting from higher production volumes in these advanced technologies over which fixed costs are allocated, partially offset by lower selling prices. The fixed costs in third quarter 2009 included the impact of an upward revision of projected useful lives and a corresponding elimination of projected residual values for 12-inch process equipment used for leading-edge technologies. This upward revision of projected useful lives and elimination of projected residual values, which was made in fourth quarter 2008, resulted in a favorable impact of $27.1 million for third quarter 2009. Gross profit in third quarter 2009 also included an income of $8.9 million relating to unfulfilled purchase obligations from a customer. Compared to the previous quarter, gross profit was up from $30.9 million, or 8.9 percent, primarily due to higher revenues resulting from higher shipments and lower cost per wafer resulting from higher production volumes over which fixed costs are allocated, partially offset by lower selling prices.

Research and development (R&D) expenses were $43.9 million, a decrease of 0.7 percent from $44.2 million in the year-ago quarter, primarily due to lower depreciation on R&D equipment and lower payroll-related expenses, partially offset by lower reimbursement of expenses from grants and higher cost of development activities related to the advanced 32nm and 28nm technologies. Compared to the previous quarter, R&D expenses were down 4.2 percent from $45.8 million in second quarter 2009, primarily due to lower depreciation on R&D equipment.

Sales and marketing expenses were $14.9 million, down 23.5 percent compared to $19.5 million in the year-ago quarter, primarily due to lower Electronic Design Automation (EDA) expenses, lower financial support for pre-contract customer design validation activities and lower payroll-related expenses. Compared to the previous quarter, sales and marketing expenses were up 9.4 percent from $13.6 million, primarily due to higher financial support for pre-contract customer design validation activities, partially offset by lower payroll-related expenses.

General and administrative (G&A) expenses were $18.5 million, up 65.1 percent compared to $11.2 million in the year-ago quarter and up 76.3 percent from $10.5 million in second quarter 2009, primarily due to investment banking and legal fees and other expenses amounting to $8.4 million related to the proposed acquisition of Chartered by ATIC.

Other operating expenses, net, were $6.5 million, compared to $1.4 million in the year-ago quarter and $5.6 million in the previous quarter. Other operating expenses, net, included an accounting charge of $3.2 million relating to a write-off of guaranteed capacity in a vendor's facility due to the planned closure of their facility and an exchange loss of $2.5 million in third quarter 2009.

Equity in income of Chartered's minority-owned joint-venture fab, SMP (Fab 5), was $8.9 million compared to equity in income of $8.7 million in the year-ago quarter and $6.7 million in the previous quarter, primarily due to higher revenues resulting from higher shipments and lower cost per wafer resulting from higher production volumes over which fixed costs are allocated, partially offset by lower selling prices.

Net interest expense was $13.2 million, compared to $13.6 million in the year-ago quarter. Interest income in third quarter 2009 included recognition of an accelerated amount of $2.2 million in imputed interest on the deposit placed with a vendor for guaranteed capacity in the vendor's facility. Due to the planned closure of their facility, the deposit is expected to be repayable by the vendor in January 2010. The decline in net interest expense in third quarter 2009 compared to the year-ago quarter was primarily due to lower interest expense arising from lower interest rates and higher interest income, partially offset by lower interest capitalization associated with the ramp of Fab 7. Compared to the previous quarter, net interest expense was down 5.5 percent from $14.0 million, primarily due to higher interest income and lower interest expense arising from lower interest rates and lower outstanding debt, partially offset by lower interest capitalization associated with the ramp of Fab 7.

The net profit of Chartered's consolidated joint venture fab, Chartered Silicon Partners (CSP or Fab 6), was $15.0 million. As a result of the adoption of Financial Accounting Standards Board Accounting Standards Codification (ASC 810) on noncontrolling interests in consolidated financial statements with effect from January 1, 2009, a 49 percent share of CSP's profit amounting to $7.4 million was allocated to the noncontrolling interest in CSP. No profit or loss was allocated to the noncontrolling interest in CSP in third quarter 2008. In second quarter 2009, a 49 percent share of CSP's loss amounting to $2.1 million was allocated to the noncontrolling interest in CSP.

Net income was $2.7 million, or 0.6 percent of revenues, compared to a net loss of $24.4 million, or negative 5.3 percent of revenues in the year-ago quarter, and a net loss of $41.5 million or negative 11.9 percent of revenues in the previous quarter. Net loss attributable to Chartered was $4.7 million in third quarter 2009.

Net loss for third quarter 2008 included a tax expense of $10.8 million, which was due primarily to the provision of additional valuation allowance on a portion of existing deferred tax assets which were assessed, based on the projection of future taxable income, to be not realizable. Net loss for second quarter 2009 included a tax benefit of $8.8 million. This tax benefit arose primarily from recognition of deferred tax assets for Fab 3E's unabsorbed wear-and-tear allowances and tax losses, which became available for carry forward upon approval from the Singapore tax authorities in second quarter 2009. This tax benefit is net of valuation allowances against a portion of the deferred tax assets that is assessed to be not realizable for offset against future taxable income. Such future taxable income is based on Chartered's projection, which is contingent upon future market conditions.

Basic and diluted loss per American Depositary Share (ADS) and basic and diluted loss per share in third quarter 2009 were ($0.08) and ($0.01) respectively, compared with basic and diluted loss per ADS and basic and diluted loss per share of ($0.70) and ($0.07) respectively in third quarter 2008. The basic and diluted loss per ADS and loss per share figures have been adjusted for the 27-for-10 rights offering and the 10-into-1 share consolidation which were completed during second quarter 2009.

Wafer Shipments and Average Selling Prices (eight-inch equivalent)

Shipments in third quarter 2009 were 449.3 thousand wafers, a decrease of 12.6 percent compared to 514.3 thousand wafers in third quarter 2008. Shipments in third quarter 2009 increased by 25.2 percent compared to 358.9 thousand wafers shipped in second quarter 2009. Shipments including Chartered's share of SMP were 482.4 thousand wafers, a decrease of 11.4 percent compared to 544.5 thousand wafers in third quarter 2008. Shipments including Chartered's share of SMP in third quarter 2009 increased by 25.3 percent compared to 385.1 thousand wafers shipped in second quarter 2009.

ASP was $879 per wafer in third quarter 2009, compared to $921 per wafer in second quarter 2009. ASP including Chartered's share of SMP was $870 per wafer in third quarter 2009 compared to $910 per wafer in second quarter 2009.

Capacity and Utilization

Capacity utilization in third quarter 2009 was 75 percent compared to 85 percent in the year-ago quarter, and 60 percent in second quarter 2009. Capacity utilization is based on total shipments and total capacity, both of which include Chartered's share of SMP.

 Utilization Table                                                                    
                                                                                      
 Data including Chartered's share of SMP                                              
 Thousand 8" equivalent wafers   3Q 2008    4Q 2008    1Q 2009    2Q 2009    3Q 2009  
 Total wafers shipped            544.5      377.7      241.9      385.1      482.4    
 Total capacity                  638.9      645.2      633.1      639.9      641.4    
 Utilization                     85     %   59     %   38     %   60     %   75     % 


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 Capacity by Fab                                                                 
                                                                                 
 Thousand 8" equivalent wafers   3Q 2008   4Q 2008   1Q 2009   2Q 2009   3Q 2009 
 Fab 2                           155.5     155.5     152.2     153.8     155.5   
 Fab 3                           83.1      83.1      81.3      82.2      83.1    
 Fab 3E                          75.1      75.1      73.5      74.3      75.1    
 Fab 5 (Chartered's share)       35.9      35.9      33.7      34.0      34.4    
 Fab 6                           127.4     130.2     130.5     131.9     111.9   
 Fab 7                           161.9     165.4     161.9     163.7     181.4   
 Total                           638.9     645.2     633.1     639.9     641.4   


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Market Dynamics

The following business statistics tables provide information on revenues including Chartered's share of SMP by market sector, region and technology.

 Breakdown by Market Sector                                            
                                                                       
 Revenues including Chartered's share of SMP (Percentage of Total)     
                  3Q 2008   4Q 2008   1Q 2009   2Q 2009   3Q 2009      
 Communications   52   %    48   %    49   %    51   %    54   %       
 Computer         13   %    12   %    8    %    9    %    11   %       
 Consumer         31   %    33   %    37   %    37   %    29   %       
 Other            4    %    7    %    6    %    3    %    6    %       
 Total            100  %    100  %    100  %    100  %    100  %       


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 Breakdown by Region                                                   
                                                                       
 Revenues including Chartered's share of SMP (Percentage of Total)     
                3Q 2008   4Q 2008   1Q 2009   2Q 2009   3Q 2009        
 Americas       60   %    63   %    53   %    56   %    53   %         
 Europe         10   %    10   %    8    %    8    %    10   %         
 Asia-Pacific   21   %    15   %    24   %    30   %    32   %         
 Japan          9    %    12   %    15   %    6    %    5    %         
 Total          100  %    100  %    100  %    100  %    100  %         


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 Breakdown by Technology (micron)                                      
                                                                       
 Revenues including Chartered's share of SMP (Percentage of Total)     
                   3Q 2008   4Q 2008   1Q 2009   2Q 2009   3Q 2009     
 0.045 and below   -         -         3    %    2    %    1    %      
 Up to 0.065       19   %    23   %    21   %    27   %    30   %      
 Up to 0.09        3    %    1    %    1    %    1    %    1    %      
 Up to 0.13        34   %    34   %    38   %    35   %    34   %      
 Up to 0.15        -         1    %    1    %    1    %    1    %      
 Up to 0.18        18   %    17   %    20   %    15   %    13   %      
 Up to 0.25        10   %    9    %    5    %    9    %    6    %      
 Up to 0.35        9    %    8    %    5    %    6    %    8    %      
 Above 0.35        7    %    7    %    6    %    4    %    6    %      
 Total             100  %    100  %    100  %    100  %    100  %      


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Outlook

In light of the proposed acquisition by ATIC, Chartered will not be providing guidance for its fourth quarter ending December 31, 2009 and will not host a conference call or web cast. Considering that Chartered is in the midst of the acquisition, in order to be able to provide fourth quarter guidance, it would need to make several assumptions and estimates which are dependent on whether and when the acquisition will be completed. This can result in significant uncertainty while forecasting its results for the fourth quarter ending December 31, 2009.

APPENDIX A

US GAAP Reconciliation Table

In order to provide investors additional information regarding the company's financial results as determined in accordance with US GAAP, in this report Chartered also provides information on its total business base revenues, which include the Company's share of Silicon Manufacturing Partners ("Revenues including Chartered's share of SMP"). SMP is a minority-owned joint-venture company and under US GAAP reporting, SMP revenues are not consolidated into Chartered's revenues ("Revenues"). References to revenues including Chartered's share of SMP in this report are therefore not in accordance with US GAAP.