Despite reporting significant deterioration, Advanced Semiconductor Engineering, Inc.’s (ASE) 1Q 09 operating income and adjusted net income outperformed our expectations. Going forward, it is likely that we will improve our margin estimates to reflect better-than-expected cost efficiency in 1Q 09. Hence, at current price levels, we moderate our rating for the common stock from a SELL to a HOLD. We will reassess the common stock target price and rating for ASE in our next update report. We maintain our ADR rating in line with our fundamental outlook and anticipated negative currency impact over our 6-12 month investment horizon. We will reassess the ADR (1 ADR=5 common shares) rating for ASE in our next update report.

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