ChipPAC and Grace Semiconductor Announce Alliance in China; ChipPAC Adds To its Partner Program

FREMONT, Calif., March 26 /PRNewswire-FirstCall/ -- ChipPAC, Inc. (Nasdaq: CHPC - news) and Grace Semiconductor Manufacturing Corp. (GSMC) today announced a non-exclusive alliance designed to support customers with end-to-end solutions from wafer fab to packaging and test and final distribution in China and the global market. The scope of the relationship covers wafer probe, packaging, assembly and test of semiconductor devices. ChipPAC is one of the world's largest and most diversified providers of semiconductor assembly and test services. Located in Shanghai, China, GSMC's $1.6 billion 8-inch, sub-micron fab in China is scheduled to move into mass production in 2003.

Dennis McKenna, Chairman and CEO of ChipPAC, Inc., commented, "ChipPAC is working with all of China's major fabs and those coming on-line, including Grace. Our commitment of financial and technical resources over the past 7 years has given us a 2-year lead-time over our competitors -- many of which are only now starting to invest in China. We have invested over $150 million in manufacturing capability, giving us more than 2.5 times the scale of our nearest competitors. It is our strategic plan to double this investment over the next three years as customers and the IDM industry build capacity to meet demand. We are confident that ChipPAC is positioned to maintain its number one position in China, in both revenue and unit volume."

By 2005, China's IC consumption is expected to nearly triple, rising from $15 billion this year to $41 billion, according to the China Center of Information Industry Development. More conservative estimates predict at least a doubling in that same time period.

Dr. Nasa Tsai, President and COO of GSMC, said, "We are moving aggressively to put the partners in place necessary to support the production levels we are forecasting. We are targeting growth markets like cell-phones, where China is already number one globally and is projected to see its subscriber base double by 2005. We believe we are bringing on needed silicon capacity to meet a new demand cycle for semiconductors, overall. China will play a growing and significant role. We are impressed with ChipPAC's broad product offering in its Shanghai facility, its manufacturing scale and its investment commitment in the future of the China market. This is the world's fastest growing market. This is consistent with our vision and will lead to the mutual development of customer business."

ChipPAC has relationships with all of China's major wafer foundries, including Grace Semiconductor Manufacturing Corp. (GSMC), and Semiconductor Manufacturing International Corp. (SMIC). In 2001, ChipPAC initiated production in China with chip scale packages EconoCSPs(TM). To support the needs of its cell phone manufacturers, ChipPAC has developed a full product pipeline and is in the process of qualifying a variety of chip scale packages ranging from 1.2 mm thick same die stacked to those incorporating three and four chips in the same CSP. The company also has expanded its products in China to address consumer products, such as DVD with packages like QFP, TQFP, and the analog market with SSOP, TSSOP and other SOIC packages. All of these products are supported with Test services to support the computer industry which is growing at 23% CAGR in China compared to a projected worldwide growth of less than 10%. Other investments are being made in the area of advanced packages and innovative applications, such as moving BGA technology into China to package and test PC graphic and chipset devices.

About GSMC

Grace Semiconductor Manufacturing Corporation is building a globally prominent China based wafer foundry company serving the world-wide semiconductor market and especially the rapidly growing Chinese integrated circuit market. Groundbreaking began on November of 2000 in the Zhangjiang Hi-Tech Park in Pudong, Shanghai and our first fab is expected to be operational by the end of 2002.

Through the adoption of technologies from strategic partners in Japan and the US, GSMC will produce the equivalent of 50,000 eight-inch wafers a month at 0.25-micron, 0.18-micron and more advanced technology as its first plant reaches full capacity. The total investment for the first fab is expected to total roughly $1.6 billion. Within the next ten years, GSMC is planning to build four fabs on its 360,000 square meter site(120,000 square meter site for living area), and total investment will likely exceed $7.5 billion.

About ChipPAC, Inc.

ChipPAC is a full-portfolio provider of semiconductor packaging design, assembly, test and distribution services. The company combines a history of innovation and service with more than a decade of experience satisfying some of the largest -- and most demanding -- customers in the industry. With advanced process technology capabilities and a global manufacturing presence spanning Korea, China, Malaysia and the United States, ChipPAC has a reputation for providing dependable, high quality packaging solutions. For more information, visit the company's Web site at http://www.chippac.com.

     CONTACTS:
     FOR CHIPPAC:
     David Pasquale, 646-536-7006
     or Jim Olecki, 646-536-7021
     Both with The Ruth Group, http://www.TheRuthGroup.com

     FOR GSMC:
     Ms. Angela Chen
     PR Department
     Tel: 86 21 58958888 Ext: 87011
     angelachen@gsmcthw.com

Forward-Looking Statements:

This press release includes forward-looking statements, as that term is defined in the Private Securities Reform Act of 1995, which are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. These forward-looking statements include statements regarding the Company's alliance with Semiconductor Manufacturing International Corporation (SMIC), and its ability to increase market share in the Chinese market. Some of these risks and uncertainties are detailed in documents filed with the Securities and Exchange Commission, and include, but may not necessarily be limited to, timing and success of new product and service introductions, competitive conditions in the semiconductor foundry industry, general market conditions, general economic and political conditions, customer demand, the ongoing quality of the Company's services, and the ability of the Company's principal suppliers to provide materials and equipment on a timely and cost competitive basis. Additional risks and uncertainties are discussed in Exhibit 99.1 (Risk Factors) to our annual report on Form 10-K for the period ended December 31, 2000. The Company undertakes no obligation to update the information in this press release.