PSE Circular for Brokers No. 1735-98

July 27, 1998 PSE CIRCULAR FOR BROKERS NO. 1735-98 Philippine Stock Exchange Inc.. Phil. Stock Exchange Center Exchange Road, Ortigas Center Pasig City Attention: Reynold P . Ong Vice President Listing & Disclosure Group Dear Sir : We wish to make a clarification on the articles, "IBM, Ionics drop $1-B project in RP" and "Ionics shelves $1-B wafer project with IBM" that appeared in today's issues of the Philippine Daily Inquirer and Manila Bulletin respectively. Yesterday in the press briefing conducted by the Semiconductor & Electronics Industry Foundation, Inc. (SEIFI) in which our President, Mr. Lawrence Qua, was present, he was asked to confirm an information of a reporter gathered from BOI about Ionics' involvement in the government's planned wafer fab project. Mr. Qua explained it was an old issue and gave the backgrounder. About two years, the Board of Investments and the Department of Trade & Industry approached Ionics to assist in its interest to set up a wafer fab facility. President Ramos was looking at a wafer-fabrication project to jumpstart the semiconductor industry in the country. Ionics learned that IBM was embarking on a new wafer fab technology and phasing out the old line. When Mr. Qua approached IBM, they were willing to give the Philippine government priority consideration, owing to their relationship with Ionics, and even offered an attractive package. Ionics undertook a viability study but eventually recommended to the government to junk the idea. Three main reasons were cited: 1. There was, and still is, an excess capacity in the wafer fab facilities all over the world. 2. Philippine has no infrastructure to support the setting up of this facility. 3. An enormous amount of investment as well as full government support would be required. Undertaking the project could be an exercise in futility. The feedback was the government did shelve the project. Ionics was never intending to invest in it. Its role was to assist and package if the study would yield favorable outcome. This clarification is made to prevent any misinterpretation of the event. Thank you and best regards, (SGD.) HECTOR CHAM Manager, Sales and Investment