TSMC Reports 17% Sequential Increase in Fourth Quarter Revenue with EPS of NT$1.37

HSIN-CHU, Taiwan, January 26 /PRNewswire/ -- TSMC today announced revenue of NT$81.16 billion, net income of NT$33.9 billion, and fully diluted earnings per share of NT$1.37 per share (US$0.21 per ADS unit) for the fourth quarter ended December 31, 2005.

On a sequential basis, fourth quarter results represent a 17.2% increase in revenue, and a 38.4% increase in both net income and fully diluted EPS. Year-over-year, fourth quarter revenue increased 27.1% while net income and fully diluted EPS both increased 52.8%. All figures were prepared in accordance with R.O.C. GAAP on an unconsolidated basis.

As a result of stronger than expected demand across all major product segments, fourth quarter revenue surpassed guidance. Gross margin for the fourth quarter climbed 5 percentage points to 49.1%, due to higher levels of capacity utilization and more favorable currency exchange rates. Advanced process technologies (0.13-micron and below) accounted for 49% of wafer revenues while revenues from 90-nanometer process technology alone reached 17% of the total wafer sales. Overall utilization was 104%. Operating margin jumped from 36% in third quarter to 42.2% in fourth quarter, and net margin improved to 41.8% from 35.4% quarter over quarter.

"Due primarily to continued robust demand from our customers, our fourth quarter business exceeded our previous guidance," said Lora Ho, VP and Chief Financial Officer of TSMC. "Meanwhile, we expect our operating performance for the coming quarter to be better than the average seasonal pattern, but an anticipated depreciation of the US Dollar against the NT dollar will impact our revenue by more than 4 percent," said Ho. "Based on our current business and foreign exchange rate expectations, management's expectations for first quarter 2006 performance are as follows":

-- Revenue to be between NT$73 billion and NT$76 billion; -- Gross profit margin to be between 46% and 48%; -- Operating profit margin to be approximately 39%.

Ho said management also expects that 2006 capital expenditure will be in the range of US$2.6 billion to US$2.8 billion.

Conference Call & Webcast Notice:

TSMC's quarterly review conference call will be held at 8 a.m. Eastern Time (9 p.m. Taiwan Time) on Thursday, January 26, 2006. The conference call will also be webcast live on the Internet. Investors wishing to access the live webcast should visit TSMC's web site at http://www.tsmc.com at least 15 minutes prior to the broadcast. Instructions will be provided on the web site to facilitate the download and installation of necessary audio applications. Investors without Internet access may listen to the conference call, in listen-only mode, by dialing +1-617-614-2712 in the U.S., +852-3002-1672 in Hong Kong, +65-6823-2164 in Singapore, and +44-207-365-8426 in the U.K. (Password: TSMC). An archived version of the webcast will be available on TSMC's web site for six months following the Company's quarterly review conference call and webcast.

Profile

TSMC (TAIEX: 2330; NYSE: TSM) is the world's largest dedicated semiconductor foundry, providing the industry's leading manufacturing capacity, process technology, library and IP options, and other leading-edge foundry services. TSMC currently operates two twelve-inch wafer fabs, five eight-inch wafer fabs and one six-inch fab. The Company also has substantial capacity commitments at two wholly owned subsidiaries, WaferTech in the U.S. and TSMC (Shanghai) Company, Ltd. in China, and at a joint-venture fab, SSMC, in Singapore. TSMC is the first foundry to run 65-nanometer customer design prototype wafers. TSMC's corporate headquarters are in Hsin-Chu, Taiwan. More information about TSMC is available through the World Wide Web at http://www.tsmc.com .

4Q05 Quarterly Management Report January 26, 2006 Topics in This Report -- Revenue Analysis -- Utilization & Capacity -- Profit & Expense Analysis -- Financial Condition Review -- Cash Flow & CapEx -- Recap of Recent Important Events & Announcements Operating Results Review: Summary: (Amount in NT$ billion except noted otherwise) 4Q05 3Q05 4Q04 QoQ YoY EPS (NT$ per common share) 1.37 0.99 0.90 38.4% 52.7% (US$ per ADR unit) 0.21 0.15 0.14 Net Sales 81.16 69.26 63.87 17.2% 27.1% Gross Profit 39.86 30.53 27.15 30.6% 46.8% Operating Expenses (5.64) (5.60) (6.12) 0.8% (7.9%) Non-Operating Items 1.18 (0.51) 1.07 10.5% Net Income 33.90 24.49 22.18 38.4% 52.8% Capacity Utilization 104% 96% 88% Net Profit Margin 41.8% 35.4% 34.7%

Remarks:

The fourth quarter EPS of NT$1.37 represents a 38.4% increase compared to 3Q05. The unconsolidated operating results of 4Q05 are summarized below:

Net sales were NT$81.16 billion, up 17.2% compared to net sales of NT$69.26 billion in the previous quarter. Net sales for the quarter surpassed the top end of our guidance by approximately NT$2 billion, driven by stronger than expected demand across all major product segments.

Gross profit was NT$39.86 billion, representing a 30.6% increase from the previous quarter. Gross margin improved by five percentage points sequentially to 49.1%, mainly due to higher levels of capacity utilization and more favorable exchange rates.

Operating expenses were NT$5.64 billion or 6.9% of net sales. The combined result from non-operating income and long-term investments was a gain of NT$1.18 billion, compared to a loss of NT$510 million in the third quarter of 2005.

Net income was NT$33.9 billion, up 38.4% sequentially. Net margin was 41.8%.

I. Revenue Analysis I - 1. Wafer Sales Analysis By Application 4Q05 3Q05 4Q04 Computer 32% 30% 35% Communication 41% 41% 41% Consumer 21% 23% 16% Industrial/Others 5% 5% 6% Memory 1% 1% 2% By Technology 4Q05 3Q05 4Q04 90nm 17% 10% 1% 0.11/0.13um 32% 33% 35% 0.15/0.18um 32% 35% 34% 0.25/0.35um 14% 16% 23% 0.50um+ 5% 6% 7% By Customer Type 4Q05 3Q05 4Q04 Fabless/System 72% 71% 67% IDM 28% 29% 33% By Geography (a) 4Q05 3Q05 4Q04 North America 77% 75% 75% Asia Pacific 11% 11% 10% Europe 8% 9% 7% Japan 4% 5% 8% (a) This does not reflect the actual shipment destination of sales.

Revenue Analysis

Net sales increased 17.2% sequentially to NT$81.16 billion, topping the high end of our guidance by approximately NT$2 billion, driven by stronger than expected demand across all major product segments.

On a quarter over quarter basis, revenues from computer applications increased by 30%, followed by an 18% increase from communications. Revenues from consumer applications also grew by 6% sequentially.

Revenue from advanced technologies -- defined as 0.13-micron and below -- accounted for 49% of total wafer sales, up from 43% in the previous quarter. Revenue from 90nm was up strongly and accounted for 17% of total wafer sales during the quarter, compared to 10% in the third quarter of 2005.

IDM accounted for 28% of total wafer sales during the quarter, down slightly from 29% in the previous quarter.

Geographically, North America accounted for 77% of wafer sales, up from 75% in 3Q05. Meanwhile, sales from Europe and Japan declined by one percentage point sequentially to 8% and 4% of wafer sales, respectively.

II. Utilization & Capacity

Utilization Rate:

Overall capacity utilization improved by eight percentage points to 104% in this quarter, reflecting strong demand from customers across the board and operational efficiencies. To view II - 1. Utilization Rate, please visit http://www.tsmc.com/uploadfile/ir/quarterly/index_charts.pdf .

II - 2. Capacity 3Q05 4Q05 2005 1Q06 Fab / (Wafer size) (Act.) (Act.) (Act.) (Fcst.) Fab-2 (6")(1) 251 251 989 244 Fab-3 (8") 247 247 973 246 Fab-5 (8") 126 126 496 135 Fab-6 (8") 217 217 850 215 Fab-7 (8") 40 40 155 33 Fab-8 (8") 227 227 893 231 Fab-12 (12")(2) 122 139 448 142 Fab-14 (12")(2) 46 56 156 61 TSMC - owned capacity 8" - equivalent Kpcs 1,374 1,437 5,282 1,455 WaferTech (8") 100 100 389 99 SSMC (8") 47 49 179 49 TSMC (Shanghai)(8") 30 44 105 48 Total TSMC - Managed 8"-equivalent Kpcs 1,550 1,629 5,955 1,651 Note: 1. Figures represent number of 6" wafers. Conversion to 8-equivalent wafers is by dividing this number by 1.78 2. Figures represent number of 12" wafers. Conversion to 8-equivalent wafers is by multiplying this number by 2.25

Capacity:

Total TSMC managed capacity in 4Q05 was 1,629K 8-inch equivalent wafers, 5.1% higher than the 1,550K wafers in 3Q05.

Overall installed capacity for year 2005 was 5.96 million 8-inch equivalent wafers, up 24.4% on a year-over-year basis. Majority of the capacity increase was dedicated to advanced technologies.

TSMC managed capacity in 1Q06 will increase slightly to 1,651K 8-inch equivalent wafers, representing a 1.3% sequential growth.

III. Profit & Expense Analysis III - 1. Gross Profit Analysis (Amount: NT$ billion) 4Q05 3Q05 4Q04 COGS 41.3 38.7 36.7 Depreciation 14.9 15.5 14.9 Other MFG Cost 26.4 23.2 21.8 Gross Profit 39.9 30.5 27.2 Gross Margin - TSMC 49.1% 44.1% 42.5% - TSMC w/o affiliates 53.6% 47.6% 47.8%

Gross Profit Analysis:

Gross profit for the fourth quarter of 2005 was NT$39.9 billion. Gross margin climbed by five percentage points sequentially to 49.1%. The improvement in gross margin was mainly due to higher levels of capacity utilization and a 3.8% appreciation of US dollar against the local currency.

During the quarter, the gross margin for TSMC's own fabs increased to 53.6% from 47.6% in 3Q05.

III - 2. Operating Expense Analysis (Amount: NT$ billion) 4Q05 3Q05 4Q04 Total Operating Exp. 5.6 5.6 6.1 SG&A 2.2 2.3 2.5 Research & Development 3.4 3.3 3.6

Operating Expenses:

Operating expenses were essentially flat from the previous quarter at NT$5.6 billion. Total operating expenses represented 6.9% of net sales, down from 8.1% in the third quarter of 2005.

III - 3. Non-Operating Items (Amount: NT$ million) 4Q05 3Q05 4Q04 Non-Operating Income/(Exp.) 952 (19) 457 Net Interest Income/(Exp.) 142 (41) 227 Other Non-Operating 810 22 230 Equity-Method Investments 225 (491) 609 WaferTech 793 487 891 SSMC 348 210 31 Vanguard 177 61 423 TSMC (Shanghai) (414) (760) (359) Others (679) (489) (377)

Non-Operating Items:

Combined result from non-operating income and long-term investments was a gain of NT$1.2 billion.

During the fourth quarter of 2005, the non-operating income was NT$952 million, compared to a loss of NT$19 million in the previous quarter. The increase in non-operating income was mainly due to an increase in gains on sale of fixed assets, scheduled settlement payment from the lawsuit against SMIC, and a smaller valuation loss under lower of cost or market method for short-term investments.

Net investment income recognized by equity method was NT$225 million in this quarter, compared to a loss of NT$491 million in 3Q05. This was primarily attributable to improved operating performance at TSMC's manufacturing affiliates.

IV. Financial Condition Review IV - 1. Liquidity Analysis (Amount: NT$ Billion) 4Q05 3Q05 4Q04 Cash & S-T Investments 132.4 107.3 118.5 Accounts Receivable - Trade 36.4 37.2 27.2 Inventory 16.3 15.1 14.2 Total Current Assets 197.6 165.1 173.7 Accounts Payable 20.2 20.9 40.8 Accrued Liabilities and others 12.0 22.0 19.8 Total Current Liabilities 32.2 42.9 60.6 Current Ratio (x) 6.1 3.8 2.9 Net Working Capital 165.4 122.2 113.0

Liquidity Analysis:

Cash & short-term investments increased by NT$25.1 billion in this quarter, mainly due to strong cash flow from operating activities. Accounts receivable decreased slightly while inventory increased from the levels at 3Q05. As a result, TSMC ended the quarter with total current assets of NT$197.6 billion, NT$32.5 billion higher on a sequential basis.

Total current liabilities were NT$32.2 billion at the end of the quarter, NT$10.7 billion lower sequentially, mainly due to an NT$10.5 billion pay down of corporate bond.

As a result, net working capital increased to NT$165.4 billion and current ratio jumped to 6.1x.

Receivable/Inventory Days Trend:

Days of Receivable decreased to 42 days in 4Q05 compared to 46 days in the previous quarter.

Days of Inventory increased slightly to 42 days from 40 days in the third quarter of 2005. To view IV - 2. Receivable/Inventory Days Trend, please visit http://www.tsmc.com/uploadfile/ir/quarterly/index_charts.pdf .

IV - 3. Debt Service (Amount: NT$ billion) 4Q05 3Q05 4Q04 Cash & S-T Investments 132.4 107.3 118.5 Interest-Bearing Debt 19.5 30.0 30.0 Net Cash Reserves 112.9 77.3 88.5

Debt Service:

As a result of strong operating performance during the quarter, net cash reserves -- defined as the excess of cash and short-term investments over interest-bearing debt -- increased by NT$35.6 billion to NT$112.9 billion in 4Q05.

Interest-bearing debt declined by NT$10.5 billion from the previous quarter due to the pay down of corporate bond.

V. Cash Flow & CapEx V - 1. Cash Flow Analysis (Amount: NT$ billion) 4Q05 3Q05 4Q04(a) Net Income 33.9 24.5 22.2 Depreciation & Amortization 16.6 17.1 16.6 Other Op Sources/(Uses) (1.6) (3.7) (2.1) Total Op Sources/(Uses) 48.9 37.9 36.7 Capital Expenditure (13.3) (9.1) (20.5) Short Term Investment 1.8 0.6 (6.9) Long Term Investment (1.0) (0.7) (9.1) Other Investing Sources/(Uses) 0.4 (0.2) 0.0 Net Investing Sources/(Uses) (12.1) (9.4) (36.5) Cash dividends-common stocks 0.0 (46.5) 0.0 Employees Bonus 0.0 (3.1) 0.0 Repayment of Corporate Bonds (10.5) 0.0 (5.0) Other Financing Sources/(Uses) 0.6 0.9 (0.1) Net Financing Sources/(Uses) (9.9) (48.7) (5.1) Net Cash Position Changes 26.9 (20.1) (4.8) Ending Cash Balance 85.4 58.5 65.5 (a) Certain amounts have been reclassified to conform with the current period presentation.

Summary of Cash Flow:

During this quarter, TSMC generated NT$48.9 billion from operating activities, mainly from net income of NT$33.9 billion and depreciation & amortization of NT$16.6 billion.

Net cash used in investment activities totaled NT$12.1 billion, mainly resulting from NT$13.3 billion of capital spending.

Net cash used in financing activities was NT$9.9 billion during this quarter, largely attributable to an NT$10.5 billion pay down of corporate bond.

As a result, TSMC ended the quarter with a cash balance of NT$85.4 billion, NT$26.9 billion higher than in 3Q05.

Operating Cash Flow Trend:

Operating cash flow of NT$48.9 billion was higher than the NT$37.9 billion generated in the previous quarter, mainly due to increased net income. To view V - 2. Operating Cash Flow Trend, please visit http://www.tsmc.com/uploadfile/ir/quarterly/index_charts.pdf .

V - 3. Capital Expenditure (In US$ million) 4Q05 2005 TSMC $389 2,291 TSMC (Shanghai) 4 187 WaferTech & Others 3 7 TSMC & Affiliates $396 2,485

Capital Spending:

Capital expenditures for TSMC alone during the quarter totaled US$389 million. Most of the spending was for the purchase of 12-inch production equipment. Capital spending for TSMC (Shanghai) in this quarter was US$4 million.

For year 2005, total capital expenditure for TSMC and affiliates was approximately US$2.5 billion, including US$2.3 billion for TSMC and US$0.2 billion for TSMC (Shanghai).

VI. Recap of Recent Important Events & Announcements -- TSMC has entered full production of its 80 nanometer process technology for high-performance designs (2006/01/18) -- TSMC has pledged NT$120 million for the phase II project of the Chemistry Research Center at National Taiwan University (2005/12/16) -- TSMC successfully manufactured industry's first network search engine using its 90 nanometer process technology for Integrated Device Technology, Inc., achieving new levels of performance, cost and power consumption (2005/12/07) -- TSMC was voted The Best Large Cap Company in Taiwan region by AsiaMoney (2005/12/01) -- TSMC board of directors approved capital appropriation of US$706.5 million to expand its 65 nanometer, 0.18 micron and 0.15 micron capacities (2005/11/08) -- TSMC board of directors approved the investment of up to US$75 million in establishing a new venture capital fund (2005/11/08) -- TSMC won 6 out of 11 award categories at the IR Magazine Hong Kong and Taiwan Awards, including Grand Prix for Best Overall Investor Relations -- Large Cap and Best Corporate Governance (2005/11/04) -- TSMC was ranked No. 8 of the Top 50 Management Teams in Asia by CFO Asia magazine (2005/10) - Please visit TSMC's Web site ( http://www.tsmc.com ) for details about these and other announcements. - Starting from 1Q05, TSMC will post quarterly consolidated financial statements, in addition to the unconsolidated financial statements, on our web site. TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED Condensed Balance Sheets (Unconsolidated) (Figures in Million of New Taiwan Dollars (NTD) and U.S. Dollars (USD)) (1) December 31, 2005 ASSETS USD NTD % Current Assets Cash and Cash Equivalents $2,599 $85,384 16.8 Short Term Investments, Net 1,432 47,055 9.3 Accounts Receivable - Trade, Net 1,108 36,396 7.2 Inventories, Net 495 16,258 3.2 Other Current Assets 380 12,469 2.4 Total Current Assets 6,014 197,562 38.9 Long Term Investments 2,455 80,660 15.9 Properties, Plant and Equipment 17,453 573,337 113.0 Less: Accumulated Depreciation (10,934) (359,191) (70.8) Properties, Plant and Equipment, Net 6,519 214,146 42.2 Other Assets 462 15,172 3.0 Total Assets $15,450 $507,540 100.0 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts Payables $344 $11,294 2.2 Payables to Contractors and Equipment Suppliers 270 8,859 1.7 Accrued Expenses and Other Current Liabilities 366 12,031 2.4 Current Portion of Bonds Payable 0 0 0.0 Total Current Liabilities 980 32,184 6.3 Bonds Payable 594 19,500 3.8 Other Long Term Liabilities 311 10,225 2.1 Total Liabilities 1,885 61,909 12.2 Shareholders' Equity Capital Stock 7,528 247,300 48.7 Capital Surplus 1,739 57,118 11.3 Retained Earnings 4,346 142,771 28.1 Treasury Stock (28) (918) (0.2) Others (20) (640) (0.1) Total Shareholders' Equity 13,565 445,631 87.8 Total Liabilities & Shareholders' Equity $15,450 $507,540 100.0 Note: (1) Amounts in NTD have been translated into USD at the rate of NT$32.85 as of December 31, 2005. (2) Certain prior period balances have been reclassified to conform with the current period presentation.

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED Condensed Balance Sheets (Unconsolidated) (Figures in Million of New Taiwan Dollars (NTD) and U.S. Dollars (USD)) (1) September 30, 2005 December 31, 2004 (2) ASSETS NTD % NTD % Current Assets Cash and Cash Equivalents $58,467 12.1 $65,532 13.4 Short Term Investments, Net 48,822 10.1 52,979 10.9 Accounts Receivable - Trade, Net 37,248 7.7 27,155 5.6 Inventories, Net 15,070 3.1 14,172 2.9 Other Current Assets 5,447 1.2 13,829 2.8 Total Current Assets 165,054 34.2 173,667 35.6 Long Term Investments 78,958 16.3 73,293 15.0 Properties, Plant and Equipment 565,426 117.0 527,982 108.4 Less: Accumulated Depreciation (346,517) (71.7) (300,006) (61.6) Properties, Plant and Equipment, Net 218,909 45.3 227,976 46.8 Other Assets 20,185 4.2 12,617 2.6 Total Assets $483,106 100.0 $487,553 100.0 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts Payables $10,042 2.1 $9,687 2.0 Payables to Contractors and Equipment Suppliers 10,815 2.2 31,154 6.4 Accrued Expenses and Other Current Liabilities 11,547 2.4 9,298 1.9 Current Portion of Bonds Payable 10,500 2.2 10,500 2.2 Total Current Liabilities 42,904 8.9 60,639 12.5 Bonds Payable 19,500 4.0 19,500 4.0 Other Long Term Liabilities 9,591 2.0 8,449 1.7 Total Liabilities 71,995 14.9 88,588 18.2 Shareholders' Equity Capital Stock 247,273 51.2 232,520 47.7 Capital Surplus 56,777 11.7 56,537 11.6 Retained Earnings 108,871 22.6 113,730 23.3 Treasury Stock (1,550) (0.3) (1,595) (0.3) Others (260) (0.1) (2,227) (0.5) Total Shareholders' Equity 411,111 85.1 398,965 81.8 Total Liabilities & Shareholders' Equity $483,106 100.0 $487,553 100.0 Note: (1) Amounts in NTD have been translated into USD at the rate of NT$32.85 as of December 31, 2005. (2) Certain prior period balances have been reclassified to conform with the current period presentation.

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED Condensed Balance Sheets (Unconsolidated) (Figures in Million of New Taiwan Dollars (NTD) and U.S. Dollars (USD)) (1) QoQ YoY ASSETS Amount % Amount % Current Assets Cash and Cash Equivalents $26,917 46.0 $19,852 30.3 Short Term Investments, Net (1,767) (3.6) (5,924) (11.2) Accounts Receivable - Trade, Net (852) (2.3) 9,241 34.0 Inventories, Net 1,188 7.9 2,086 14.7 Other Current Assets 7,022 128.9 (1,360) (9.8) Total Current Assets 32,508 19.7 23,895 13.8 Long Term Investments 1,702 2.2 7,367 10.1 Properties, Plant and Equipment 7,911 1.4 45,355 8.6 Less: Accumulated Depreciation (12,674) 3.7 (59,185) 19.7 Properties, Plant and Equipment, Net (4,763) (2.2) (13,830) (6.1) Other Assets (5,013) (24.8) 2,555 20.3 Total Assets $24,434 5.1 $19,987 4.1 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts Payables $1,252 12.5 $1,607 16.6 Payables to Contractors and Equipment Suppliers (1,956) (18.1) (22,295) (71.6) Accrued Expenses and Other Current Liabilities 484 4.2 2,733 29.4 Current Portion of Bonds Payable (10,500) (100.0) (10,500) (100.0) Total Current Liabilities (10,720) (25.0) (28,455) (46.9) Bonds Payable 0 0.0 0 0.0 Other Long Term Liabilities 634 6.6 1,776 21.0 Total Liabilities (10,086) (14.0) (26,679) (30.1) Shareholders' Equity Capital Stock 27 0.0 14,780 6.4 Capital Surplus 341 0.6 581 1.0 Retained Earnings 33,900 31.1 29,041 25.5 Treasury Stock 632 (40.8) 677 (42.4) Others (380) 146.3 1,587 (71.2) Total Shareholders' Equity 34,520 8.4 46,666 11.7 Total Liabilities & Shareholders' Equity $24,434 5.1 $19,987 4.1 Note: (1) Amounts in NTD have been translated into USD at the rate of NT$32.85 as of December 31, 2005. (2) Certain prior period balances have been reclassified to conform with the current period presentation.

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED Condensed Income Statements (Unconsolidated) For the Three Months Ended December 31, 2005, September 30, 2005 and December 31, 2004 (Expressed in Million New Taiwan Dollars (NTD) and U.S. Dollars (USD) (1) Except for Per Share Amounts and Shares Outstanding) Q4 2005 USD NTD % Net Sales $2,426 $81,161 100.0 Cost of Sales (1,234) (41,296) (50.9) Gross Profit 1,192 39,865 49.1 Operating Expenses Research and Development Expenses (102) (3,423) (4.2) General and Administrative Expenses (56) (1,860) (2.3) Sales and Marketing Expenses (11) (358) (0.4) Total Operating Expenses (169) (5,641) (6.9) Income from Operations 1,023 34,224 42.2 Non-Operating Incomes (Expenses), Net 28 952 1.1 Investment Gains (Losses) 7 225 0.3 Income before Income Tax 1,058 35,401 43.6 Income Tax Benefits (Expenses) (45) (1,501) (1.8) Net Income $1,013 $33,900 41.8 Earnings per Common Shares - Diluted 0.04 1.37 Earnings per ADR (2) 0.21 6.86 Weighted Average Outstanding Shares ('M) (3) 24,693 Note: (1) Amounts in NTD have been translated into USD at the weighted average rate of NTD33.456 for the fourth quarter of 2005. (2) 1 ADR equals 5 ordinary shares. (3) Total diluted weighted average outstanding shares were 24,693M shares for 4Q05 and 24,724M shares for 4Q04 after the retroactive adjustments for stock dividends and stock bonus.

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED Condensed Income Statements (Unconsolidated) For the Three Months Ended December 31, 2005, September 30, 2005 and December 31, 2004 (Expressed in Million New Taiwan Dollars (NTD) and U.S. Dollars (USD) (1) Except for Per Share Amounts and Shares Outstanding) Q3 2005 Q4 2004 NTD % NTD % Net Sales $69,258 100.0 $63,875 100.0 Cost of Sales (38,733) (55.9) (36,722) (57.5) Gross Profit 30,525 44.1 27,153 42.5 Operating Expenses Research and Development Expenses (3,341) (4.8) (3,568) (5.6) General and Administrative Expenses (1,881) (2.8) (2,153) (3.4) Sales and Marketing Expenses (373) (0.5) (404) (0.6) Total Operating Expenses (5,595) (8.1) (6,125) (9.6) Income from Operations 24,930 36.0 21,028 32.9 Non-Operating Incomes (Expenses), Net (19) 0.0 457 0.7 Investment Gains (Losses) (491) (0.7) 609 1.0 Income before Income Tax 24,420 35.3 22,094 34.6 Income Tax Benefits (Expenses) 68 0.1 90 0.1 Net Income $24,488 35.4 $22,184 34.7 Earnings per Common Shares - Diluted 0.99 0.90 Earnings per ADR (2) 4.96 4.49 Weighted Average Outstanding Shares ('M) (3) 24,690 24,724 Note: (1) Amounts in NTD have been translated into USD at the weighted average rate of NTD33.456 for the fourth quarter of 2005. (2) 1 ADR equals 5 ordinary shares. (3) Total diluted weighted average outstanding shares were 24,693M shares for 4Q05 and 24,724M shares for 4Q04 after the retroactive adjustments for stock dividends and stock bonus.

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED Condensed Income Statements (Unconsolidated) For the Three Months Ended December 31, 2005, September 30, 2005 and December 31, 2004 (Expressed in Million New Taiwan Dollars (NTD) and U.S. Dollars (USD) (1) Except for Per Share Amounts and Shares Outstanding) QoQ YoY Amount % Amount % Net Sales $11,903 17.2 $17,286 27.1 Cost of Sales (2,563) 6.6 (4,574) 12.5 Gross Profit 9,340 30.6 12,712 46.8 Operating Expenses Research and Development Expenses (82) 2.5 145 (4.1) General and Administrative Expenses 21 (1.1) 293 (13.6) Sales and Marketing Expenses 15 (4.2) 46 (11.3) Total Operating Expenses (46) 0.8 484 (7.9) Income from Operations 9,294 37.3 13,196 62.8 Non-Operating Incomes (Expenses), Net 971 (5,319.4) 495 108.3 Investment Gains (Losses) 716 (145.8) (384) (63.0) Income before Income Tax 10,981 45.0 13,307 60.2 Income Tax Benefits (Expenses) (1,569) (2,337.1) (1,591)(1,758.6) Net Income $9,412 38.4 $11,716 52.8 Earnings per Common Shares - Diluted 0.38 38.4 0.09 52.7 Earnings per ADR (2) Weighted Average Outstanding Shares ('M) (3) Note: (1) Amounts in NTD have been translated into USD at the weighted average rate of NTD33.456 for the fourth quarter of 2005. (2) 1 ADR equals 5 ordinary shares. (3) Total diluted weighted average outstanding shares were 24,693M shares for 4Q05 and 24,724M shares for 4Q04 after the retroactive adjustments for stock dividends and stock bonus.

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED Condensed Income Statements (Unconsolidated) For the Twelve Months Ended December 31, 2005 and 2004 (Expressed in Million New Taiwan Dollars (NTD) and U.S. Dollars (USD) (1) Except for Per Share Amounts and Shares Outstanding) 2005 USD NTD % Net Sales $8,228 $264,588 100.0 Cost of Sales (4,644) (149,344) (56.4) Gross Profit 3,584 115,244 43.6 Operating Expenses Research and Development Expenses (417) (13,396) (5.1) General and Administrative Expenses (233) (7,485) (2.8) Sales and Marketing Expenses (42) (1,349) (0.5) Total Operating Expenses (692) (22,230) (8.4) Income from Operations 2,892 93,014 35.2 Non-Operating Incomes (Expenses), Net 59 1,857 0.7 Investment Gains (Losses) (33) (1,052) (0.4) Income before Income Tax 2,918 93,819 35.5 Income Tax Benefits (Expenses) (8) (244) (0.1) Net Income $2,910 $93,575 35.4 Diluted Earnings Per Ordinary Share 0.12 3.79 Earnings Per ADR (2) 0.59 18.95 Weighted Average Outstanding Shares ('M) (3) 24,693 Note: (1) Amounts in NTD have been translated into USD at the weighted average rate of NTD 32.157 for the twelve months of 2005. (2) 1 ADR equals 5 ordinary shares. (3) Total weighted average outstanding shares were 24,693M shares for the twelve months ended December 31, 2005 and 24,724M shares for the twelve months ended December 31, 2004 after the retroactive adjustments for stock dividends and stock bonus.

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED Condensed Income Statements (Unconsolidated) For the Twelve Months Ended December 31, 2005 and 2004 (Expressed in Million New Taiwan Dollars (NTD) and U.S. Dollars (USD) (1) Except for Per Share Amounts and Shares Outstanding) 2004 YoY NTD % Amount % Net Sales $255,992 100.0 $8,596 3.4 Cost of Sales (145,831) (57.0) (3,513) 2.4 Gross Profit 110,161 43.0 5,083 4.6 Operating Expenses Research and Development Expenses (12,516) (4.9) (880) 7.0 General and Administrative Expenses (9,367) (3.7) 1,882 (20.1) Sales and Marketing Expenses (1,455) (0.6) 106 (7.2) Total Operating Expenses (23,338) (9.1) 1,108 (4.7) Income from Operations 86,823 33.9 6,191 7.1 Non-Operating Incomes (Expenses), Net 916 0.4 941 102.9 Investment Gains (Losses) 4,040 1.6 (5,092) (126.0) Income before Income Tax 91,779 35.9 2,040 2.2 Income Tax Benefits (Expenses) 537 0.2 (781) (145.5) Net Income $92,316 36.1 $1,259 1.4 Diluted Earnings Per Ordinary Share 3.73 0.06 1.5 Earnings Per ADR (2) 18.67 Weighted Average Outstanding Shares ('M) (3) 24,724 Note: (1) Amounts in NTD have been translated into USD at the weighted average rate of NTD 32.157 for the twelve months of 2005. (2) 1 ADR equals 5 ordinary shares. (3) Total weighted average outstanding shares were 24,693M shares for the twelve months ended December 31, 2005 and 24,724M shares for the twelve months ended December 31, 2004 after the retroactive adjustments for stock dividends and stock bonus.

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED Condensed Statement of Cash Flows (Unconsolidated) For the Twelve Months Ended December 31, 2005 (Figures in Million of New Taiwan Dollars (NTD) and U.S. Dollars (USD)) (1) 4Q 2004 12 Months 2005 4Q 2005 3Q 2005 (2) USD NTD NTD NTD NTD Cash Flows from Operating Activities: Net Income 2,910 93,575 33,900 24,488 22,184 Depreciation & Amortization 2,114 67,991 16,554 17,107 16,615 Deferred Income Tax (102) (3,279) (950) (1,179) (226) Investment Loss(Income) Recognized by Equity Method 33 1,052 (225) 491 (608) Changes in Working Capital & Others (275) (8,859) (422) (2,959) (1,231) Net Cash Provided from Operating Activities 4,680 150,480 48,857 37,948 36,734 Cash Flows from Investing Activities: Decrease(Increase) in Short Term Investments 184 5,924 1,767 587 (6,851) Increase in Long Term Investments (530) (17,038) (6,936) (3,683) (9,091) Acquisition of Properties, Plant and Equipment (2,291) (73,659) (13,323) (9,142)(20,521) Proceeds from Disposal of Long Term Investments 326 10,474 5,945 3,014 - Proceeds from Disposal of Properties, Plant and Equipment 65 2,087 585 71 1,404 Decrease in Others (26) (846) (112) (229) (1,407) Net Cash Used By Investing Activities (2,272) (73,058) (12,074) (9,382)(36,466) Cash Flows from Financing Activities: Cash Dividend - Common Shares (1,446) (46,504) - (46,504) - Bonus Paid to Employees, Directors and Supervisors (103) (3,318) - (3,086) - Repayment of Long Term Bonds Payable (327) (10,500) (10,500) - (5,000) Increase(Decrease) in Guarantee Deposits 77 2,481 529 845 (112) Proceeds from Exercise of Stock Options 8 271 105 49 4 Net Cash Used By Financing Activities (1,791) (57,570) (9,866) (48,696) (5,108) Net Increase (Decrease) in Cash and Cash Equivalents 617 19,852 26,917 (20,130) (4,840) Cash and Cash Equivalents at Beginning of Period 2,038 65,532 58,467 78,597 70,372 Cash and Cash Equivalents at End of Period 2,655 85,384 85,384 58,467 65,532 Note: (1) Amounts in NTD have been translated into USD at the rate of NTD32.157 , the weighted average rate for the twelve months ended December 31, 2005. (2) Certain prior period amounts have been reclassified to conform with the current period presentation.

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED AND SUBSIDIARIES Condensed Balance Sheets (Consolidated) (Figures in Million of New Taiwan Dollars (NTD) and U.S. Dollars (USD)) (1) December 31, 2005 ASSETS USD NTD % Current Assets Cash and Cash Equivalents $2,937 $96,484 18.6 Short Term Investments, Net 1,443 47,399 9.1 Accounts Receivable - Trade, Net 1,171 38,478 7.4 Inventories, Net 540 17,728 3.4 Other Current Assets 370 12,166 2.4 Total Current Assets 6,461 212,255 40.9 Long Term Investment 1,292 42,428 8.2 Properties, Plant and Equipment 19,572 642,948 123.8 Less: Accumulated Depreciation (12,119) (398,125) (76.7) Properties, Plant and Equipment, Net 7,453 244,823 47.1 Other Assets 609 20,003 3.8 Total Assets $15,815 $519,509 100.0 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Short-term loan payable $10 $328 0.1 Accounts Payables 340 11,165 2.1 Payables to Contractors and Equipment Suppliers 276 9,066 1.7 Accrued Expenses and Other Current Liabilities 443 14,558 2.8 Current Portion of Bonds Payable 0 5 0.1 Total Current Liabilities 1,069 35,122 6.8 Bonds Payable 594 19,500 3.8 Other Long Term Liabilities 567 18,649 3.5 Total Liabilities 2,230 73,271 14.1 Shareholders' Equity Attributable to Shareholders of the Parent Common Stock 7,528 247,300 47.6 Capital Surplus 1,739 57,118 11.0 Retained Earnings 4,346 142,771 27.5 Treasury Stock (28) (918) (0.2) Others (19) (641) (0.1) Total equity attributable to shareholders of the parent 13,566 445,630 85.8 Minority interest 19 608 0.1 Total shareholders' equity 13,585 446,238 85.9 Total Liabilities & Shareholders' Equity $15,815 $519,509 100.0 Note: (1) Amounts in NTD have been translated into USD at the rate of NT$32.85 as of December 31, 2005 (2) Certain prior period balances have been reclassified to conform to the current period presentation.

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED AND SUBSIDIARIES Condensed Balance Sheets (Consolidated) (Figures in Million of New Taiwan Dollars (NTD) and U.S. Dollars (USD)) (1) September 30, 2005 December 31, 2004 ASSETS NTD % NTD % Current Assets Cash and Cash Equivalents $69,582 14.0 $74,303 14.9 Short Term Investments, Net 49,260 9.9 54,108 10.8 Accounts Receivable - Trade, Net 39,140 7.9 27,544 5.5 Inventories, Net 16,239 3.3 15,556 3.1 Other Current Assets 4,880 1.0 12,938 2.6 Total Current Assets 179,101 36.1 184,449 36.9 Long Term Investment 40,331 8.1 38,102 7.6 Properties, Plant and Equipment 635,513 128.1 590,166 118.3 Less: Accumulated Depreciation (384,200) (77.4) (331,255) (66.4) Properties, Plant and Equipment, Net 251,313 50.7 258,911 51.9 Other Assets 25,371 5.1 17,992 3.6 Total Assets $496,116 100.0 $499,454 100.0 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Short-term loan payable $1,125 0.2 $382 0.1 Accounts Payables 9,852 2.0 9,481 1.9 Payables to Contractors and Equipment Suppliers 11,247 2.3 33,428 6.7 Accrued Expenses and Other Current Liabilities 13,846 2.8 10,128 2.1 Current Portion of Bonds Payable 10,505 2.1 10,500 2.1 Total Current Liabilities 46,575 9.4 63,919 12.9 Bonds Payable 19,500 3.9 19,500 3.9 Other Long Term Liabilities 18,144 3.7 16,994 3.3 Total Liabilities 84,219 17.0 100,413 20.1 Shareholders' Equity Attributable to Shareholders of the Parent Common Stock 247,273 49.8 232,520 46.6 Capital Surplus 56,777 11.3 56,537 11.3 Retained Earnings 108,871 22.0 113,730 22.8 Treasury Stock (1,550) (0.3) (1,595) (0.3) Others (260) (0.1) (2,227) (0.5) Total equity attributable to shareholders of the parent 411,111 82.7 398,965 79.9 Minority interest 786 0.3 76 0.0 Total shareholders' equity 411,897 83.0 399,041 79.9 Total Liabilities & Shareholders' Equity $496,116 100.0 $499,454 100.0 Note: (1) Amounts in NTD have been translated into USD at the rate of NT$32.85 as of December 31, 2005 (2) Certain prior period balances have been reclassified to conform to the current period presentation.

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED AND SUBSIDIARIES Condensed Balance Sheets (Consolidated) (Figures in Million of New Taiwan Dollars (NTD) and U.S. Dollars (USD)) (1) QoQ YoY ASSETS Amount % Amount % Current Assets Cash and Cash Equivalents $26,902 38.7 $22,181 29.9 Short Term Investments, Net (1,861) (3.8) (6,709) (12.4) Accounts Receivable - Trade, Net (662) (1.7) 10,934 39.7 Inventories, Net 1,489 9.2 2,172 14.0 Other Current Assets 7,286 149.3 (772) (6.0) Total Current Assets 33,154 18.5 27,806 15.1 Long Term Investment 2,097 5.2 4,326 11.4 Properties, Plant and Equipment 7,435 1.2 52,782 8.9 Less: Accumulated Depreciation (13,925) 3.6 (66,870) 20.2 Properties, Plant and Equipment, Net (6,490) (2.6) (14,088) (5.4) Other Assets (5,368) (21.2) 2,011 11.2 Total Assets $23,393 4.7 $20,055 4.0 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Short-term loan payable ($797.00) (70.8) ($54) (14.2) Accounts Payables 1,313 13.3 1,684 17.7 Payables to Contractors and Equipment Suppliers (2,181) (19.4) (24,362) (72.9) Accrued Expenses and Other Current Liabilities 712 5.1 4,430 43.8 Current Portion of Bonds Payable (10,500) (99.9) (10,495) (99.9) Total Current Liabilities (11,453) (24.6) (28,797) (45.1) Bonds Payable 0 0.0 0 0.0 Other Long Term Liabilities 505 2.8 1,655 9.7 Total Liabilities (10,948) (13.0) (27,142) (27.0) Shareholders' Equity Attributable to Shareholders of the Parent Common Stock 27 0.0 14,780 6.4 Capital Surplus 341 0.6 581 1.0 Retained Earnings 33,900 31.1 29,041 25.5 Treasury Stock 632 (40.8) 677 (42.4) Others (381) 146.3 1,586 (71.2) Total equity attributable to shareholders of the parent 34,519 8.4 46,665 11.7 Minority interest (178) (22.6) 532 703.3 Total shareholders' equity 34,341 8.3 47,197 11.8 Total Liabilities & Shareholders' Equity $23,393 4.7 $20,055 4.0 Note: (1) Amounts in NTD have been translated into USD at the rate of NT$32.85 as of December 31, 2005 (2) Certain prior period balances have been reclassified to conform to the current period presentation.

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED AND SUBSIDIARIES Condensed Income Statements (Consolidated) For the Three Months Ended December 31, 2005 and September 30, 2005 (Expressed in Million New Taiwan Dollars (NTD) and U.S. Dollars (USD) (1) Except For Per Share Amount and Shares Outstanding) Q4 2005 USD NTD % Net Sales $2,508 $80,661 100.0 Cost of Sales (1,223) (39,347) (48.8) Gross Profit 1,285 41,314 51.2 Operating Expenses Research and Development Expenses (111) (3,570) (4.4) General and Administrative Expenses (60) (1,911) (2.4) Sales and Marketing Expenses (44) (1,424) (1.8) Total Operating Expenses (215) (6,905) (8.6) Income from Operations 1,070 34,409 42.6 Non-Operating Incomes (Expenses), Net 21 640 0.8 Investment Gains (Losses) 16 540 0.7 Income before Income Tax 1,107 35,589 44.1 Income Tax Benefits (Expenses) (53) (1,692) (2.1) Net Income $1,054 $33,897 42.0 Attributable to: Shareholders of the parent $1,054 $33,900 42.0 Minority Interest - (3) 0.0 $1,054 $33,897 42.0 Earnings per Common Shares - Diluted $0.04 $1.37 Earnings per ADR (2) $0.21 $6.86 Weighted Average Outstanding Shares ('M) (3) 24,693 Note:(1) Amounts in NTD have been translated into USD at the weighted average rate of NTD33.456 for the fourth quarter of 2005. (2) 1 ADR equals 5 ordinary shares. (3) Total diluted weighted average outstanding shares were 24,693M shares for 4Q05 and 24,690M shares for 3Q05 after the retroactive adjustments for stock dividends and stock bonus.

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED AND SUBSIDIARIES Condensed Income Statements (Consolidated) For the Three Months Ended December 31, 2005 and September 30, 2005 (Expressed in Million New Taiwan Dollars (NTD) and U.S. Dollars (USD) (1) Except For Per Share Amount and Shares Outstanding) Q3 2005 QoQ NTD % Amount % Net Sales $70,502 100.0 $10,159 14.4 Cost of Sales (39,545) (56.1) 198 (0.5) Gross Profit 30,957 43.9 10,357 33.5 Operating Expenses Research and Development Expenses (3,473) (4.9) (97) 2.8 General and Administrative Expenses (2,410) (3.5) 499 (20.8) Sales and Marketing Expenses (898) (1.3) (526) 58.7 Total Operating Expenses (6,781) (9.7) (124) 1.8 Income from Operations 24,176 34.2 10,233 42.3 Non-Operating Incomes (Expenses), Net 20 0.1 620 3,162.4 Investment Gains (Losses) 271 0.4 269 98.9 Income before Income Tax 24,467 34.7 11,122 45.5 Income Tax Benefits (Expenses) 57 0.1 (1,749)(3,049.9) Net Income $24,524 34.8 $9,373 38.2 Attributable to: Shareholders of the parent $24,488 34.7 $9,412 27.8 Minority Interest 36 0.1 (39) 1,300.0 $24,524 34.8 $9,373 27.7 Earnings per Common Shares - Diluted $0.99 Earnings per ADR (2) $4.97 Weighted Average Outstanding Shares ('M) (3) 24,690 Note:(1) Amounts in NTD have been translated into USD at the weighted average rate of NTD33.456 for the fourth quarter of 2005. (2) 1 ADR equals 5 ordinary shares. (3) Total diluted weighted average outstanding shares were 24,693M shares for 4Q05 and 24,690M shares for 3Q05 after the retroactive adjustments for stock dividends and stock bonus.

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED AND SUBSIDIARIES Condensed Income Statements (Consolidated) For the Twelve Months Ended December 31, 2005 and 2004 (Expressed in Million New Taiwan Dollars (NTD) and U.S. Dollars (USD) (1) Except for Per Share Amount and Shares Outstanding) 2005 USD NTD % Net Sales $8,334 $267,998 100.0 Cost of Sales (4,658) (149,795) (55.9) Gross Profit 3,676 118,203 44.1 Operating Expenses Research and Development Expenses (436) (14,016) (5.2) General and Administrative Expenses (283) (9,086) (3.4) Sales and Marketing Expenses (128) (4,132) (1.5) Total Operating Expenses (847) (27,234) (10.1) Income from Operations 2,829 90,969 34.0 Non-Operating Incomes (Expenses), Net 57 1,861 0.8 Investment Gains (Losses) 45 1,433 0.5 Income before Income Tax 2,931 94,263 35.3 Income Tax Benefits (Expenses) (19) (630) (0.2) Net Income $2,912 $93,633 35.1 Attributable to: Shareholders of the parent $2,910 $93,575 35.0 Minority Interest 2 58 0.1 $2,912 $93,633 35.1 Diluted Earnings Per Ordinary Share $0.12 $3.82 Earnings Per ADR (2) $0.59 $19.10 Weighted Average Outstanding Shares ('M) (3) 24,693 Note: (1) Amounts in NTD have been translated into USD at the weighted average rate of NTD 32.157 for the twelve months of 2005. (2) 1 ADR equals 5 ordinary shares. (3) Total diluted weighted average outstanding shares were 24,693M shares for the twelve months ended December 31, 2005 and 24,724M shares for the twelve months ended December 31, 2004 after the retroactive adjustments for stock dividends and stock bonus.

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED AND SUBSIDIARIES Condensed Income Statements (Consolidated) For the Twelve Months Ended December 31, 2005 and 2004 (Expressed in Million New Taiwan Dollars (NTD) and U.S. Dollars (USD) (1) Except for Per Share Amount and Shares Outstanding) 2004 YoY NTD % Amount % Net Sales $257,213 100.0 $10,785 4.2 Cost of Sales (141,394) (55.0) (8,401) 5.9 Gross Profit 115,819 45.0 2,384 2.1 Operating Expenses Research and Development Expenses (12,515) (4.9) (1,501) 12.0 General and Administrative Expenses (11,454) (4.5) 2,368 (20.7) Sales and Marketing Expenses (3,368) (1.3) (764) 22.7 Total Operating Expenses (27,337) (10.7) 103 (0.4) Income from Operations 88,482 34.3 2,487 2.8 Non-Operating Incomes (Expenses), Net 1,391 0.5 470 33.9 Investment Gains (Losses) 2,093 0.8 (660) (31.6) Income before Income Tax 91,966 35.6 2,297 2.5 Income Tax Benefits (Expenses) 363 0.1 (993) (273.5) Net Income $92,329 35.7 $1,304 1.4 Attributable to: Shareholders of the parent $92,316 35.7 $1,259 1.3 Minority Interest 13 0.0 45 77.6 $92,329 35.7 $1,304 1.4 Diluted Earnings Per Ordinary Share $3.95 Earnings Per ADR (2) $19.75 Weighted Average Outstanding Shares ('M) (3) 24,724 Note: (1) Amounts in NTD have been translated into USD at the weighted average rate of NTD 32.157 for the twelve months of 2005. (2) 1 ADR equals 5 ordinary shares. (3) Total diluted weighted average outstanding shares were 24,693M shares for the twelve months ended December 31, 2005 and 24,724M shares for the twelve months ended December 31, 2004 after the retroactive adjustments for stock dividends and stock bonus.

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED AND SUBSIDIARIES Condensed Statements of Cash Flows (Consolidated) For the Twelve Months Ended December 31, 2005 (Figures in Million of New Taiwan Dollars (NTD) and U.S. Dollars (USD))(1) 12 Months 2005 4Q 2005 3Q 2005 USD NTD NTD NTD Cash Flows from Operating Activities: Net Income $2,910 $93,575 $33,900 $24,488 Net Income attributable to minority interest 2 58 (3) 36 Depreciation & Amortization 2,352 75,649 18,664 19,006 Deferred Income Tax (104) (3,354) (953) (1,220) Investment Loss(Income) From Equity Method Investees (45) (1,433) (539) (271) Changes in Working Capital & Others (232) (7,482) (983) (2,125) Net Cash Provided from Operating Activities 4,883 157,013 50,086 39,914 Cash Flows from Investing Activities: Decrease(Increase) in Short Term Investments 216 6,954 1,779 424 Increase in Long Term Investments (456) (14,675) (7,615) (3,697) Acquisition of Properties, Plant and Equipment (2,484) (79,879) (13,618)(10,599) Proceeds from Disposal of Long Term Investments 328 10,534 5,965 3,035 Proceeds from Disposal of Properties, Plant and Equipment 15 481 206 147 Decrease in Others (27) (855) (101) (231) Net Cash Used By Investing Activities (2,408) (77,440) (13,384)(10,921) Cash Flows from Financing Activities: Cash Dividend - Common Shares (1,444) (46,420) - (46,420) Bonus Paid to Employees, Directors and Supervisors (103) (3,318) - (3,086) Repayment of Long Term Bonds Payable (327) (10,500) (9,504) (49) Increase(Decrease) in Guarantee Deposits 77 2,484 531 847 Proceeds from Exercise of Stock Options 8 271 105 166 Increase(Decrease) in Others (15) (486) (1,150) 549 Net Cash Used By Financing Activities (1,804) (57,969) (10,018)(47,993) 0 Net Increase (Decrease) in Cash and Cash Equivalents 671 21,604 26,684 (19,000) Effect of exchange rate changes on cash and cash equivalents and others 11 349 363 33 Effect of first inclusion for consolidation of certain subsidiaries 7 229 (145) 144 Cash and Cash Equivalents at Beginning of Period 2,311 74,302 69,582 88,405 Cash and Cash Equivalents at End of Period $3,000 $96,484 $96,484 $69,582 Note: (1) Amounts in NTD have been translated into USD at the rate of NTD32.157, the weighted average rate for the twelve months ended December 31, 2005. (2) Certain prior period amounts have been reclassified to conform to the current period presentation.

Safe Harbor Notice:

The statements included in this press release that are not historical in nature are "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. TSMC cautions readers that forward-looking statements are subject to significant risks and uncertainties and are based on TSMC's current expectations. Actual results may differ materially from those contained in such forward-looking statements for a variety of reasons including, among others, risks associated with cyclicality and market conditions in the semiconductor industry; demand and supply for TSMC's foundry manufacturing capacity in particular and for foundry manufacturing capacity in general; intense competition; the failure of one or more significant customers to continue to place the same level of orders with us; TSMC's ability to remain a technological leader in the semiconductor industry; TSMC's ability to manage its capacity; TSMC's ability to obtain, preserve and defend its intellectual property rights; natural disasters and other unexpected events which may disrupt production; and exchange rate fluctuations. Additional information as to these and other risk factors that may cause TSMC's actual results to differ materially from TSMC's forward-looking statements may be found in TSMC's Annual Report on Form 20-F, filed with the United States Securities and Exchange Commission (the "SEC") on May 16, 2005, TSMC's registration statement on Form F-3, filed with the SEC on July 5, 2005, and such other documents as TSMC may file with, or submit to, the SEC from time to time. Except as required by law, we undertake no obligation to update any forward-looking statement, whether as a result of new information, future events, or otherwise.

CONTACT Elizabeth Sun / Eric Chiang / Harrison Hsueh / Julie Wei Investor Relations Division TSMC Email: invest@tsmc.com Tel: +886-3-568-2085/2087/2088/2086 Web sites: http://www.tsmc.com http://www.tsmc.com/uploadfile/ir/quarterly/index_charts.pdf