TSMC Reports 18% Sequential Increase in Third Quarter Revenue with EPS of NT$0.99

HSIN-CHU, Taiwan, October 27 /PRNewswire/ -- TSMC today announced revenue and net income for the quarter ended September 30, 2005. Third quarter revenue reached NT$69.26 billion while net income and fully diluted earnings per share came to NT$24.49 billion and NT$0.99 per share (US$0.15 per ADS unit), respectively.

On a sequential basis, third quarter results represent an 18.4% increase in revenue, and a 33.3% increase in both net income and fully diluted EPS. Year-over-year comparison shows decreases in revenue, net income, and fully diluted EPS to be 0.7%, 12.3%, and 12.2%, respectively. All figures were prepared in accordance with R.O.C. GAAP on an unconsolidated basis.

The 18.4% increase in third quarter revenue mainly resulted from a 19.8% increase in wafer shipments. Gross margin for the third quarter jumped 4.4 percentage points to 44.1%, due to higher levels of capacity utilization and more favorable exchange rates. Advanced process technologies (0.13-micron and below) accounted for 43% of wafer revenues, same as in the previous quarter. Meanwhile, revenues from 90-nanometer process technology reached 10% of the total wafer sales. Overall utilization was 96%. Operating margin improved from 30.4% in second quarter to 36% in third quarter, and net margin improved to 35.4% from 31.4% in the last quarter.

"Due primarily to continual demand recovery from our customers, our third quarter business had improved better than we guided previously," said Lora Ho, VP and Chief Financial Officer of TSMC. "We expect a healthy growth for the coming quarter," noted Ho, "and based on the current business outlook, management's expectations for fourth quarter 2005 performance are the following":

-- Revenues to be between NT$77 billion and NT$79 billion; -- Overall utilization rate to be about 100%; -- Gross profit margin to reach between 47% and 49%; -- Operating profit margin to be approximately 40%.

Conference Call & Webcast Notice:

TSMC's quarterly review conference call will be held at 8 a.m. Eastern Time (8 p.m. Taiwan Time) on Thursday, October 27, 2005. 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 +1-617-213-8065 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's first 300mm wafer fab (Fab 12), the first of its kind in Taiwan, commenced commercial production in January 2002. 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 .

3Q05 Quarterly Management Report October 27, 2005 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) 3Q05 2Q05 3Q04 QoQ YoY EPS (NT$ per com. shr.) 0.99 0.74 1.13 33.3% (12.2%) (US$ per ADR unit) 0.15 0.12 0.17 Net Sales 69.26 58.52 69.74 18.4% (0.7%) Gross Profit 30.53 23.21 32.14 31.5% (5.0%) Operating Expense (5.60) (5.42) (6.02) 3.2% (7.0%) Non-Operating Items (0.51) (0.05) 2.01 899.3% Net Income 24.49 18.37 27.93 33.3% (12.3%) Wafers Shipped (kpcs 8 inch-equiv.) 1,527 1,275 1,333 19.8 % 14.5% Capacity Utilization 96% 85% 103% Net Profit Margin 35.4% 31.4% 40.1%

Remarks:

The third quarter EPS of NT$0.99 represents a 33.3% increase compared with 2Q05. The unconsolidated operating results of 3Q05 are summarized below:

Net sales increased 18.4% to NT$69.26 billion compared with NT$58.52 billion in the second quarter of 2005. The increase mainly resulted from a 19.8% increase in wafer shipments, a 2.6% appreciation of the US dollar against the local currency, and a 4.9% decline of the wafer average selling price (ASP).

Gross profit increased to NT$30.53 billion, representing a 31.5% increase from the previous quarter. Gross margin jumped to 44.1% from 39.7% in 2Q05 mainly due to higher levels of capacity utilization and more favorable exchange rates, but a lower ASP partially reduced the magnitude of the improvement.

Operating expenses were NT$5.60 billion, representing 8.1% of revenue. The combined result from non-operating income and long-term investments was a loss of NT$510 million.

Income before tax increased 37.7% sequentially to NT$24.42 billion. The provision for tax expenses of NT$2.80 billion was completely offset by an investment tax credit of NT$2.87 billion. TSMC's 3Q05 net income was NT$24.49 billion with a net margin of 35.4%.

I. Revenue Analysis I - 1. Wafer Sales Analysis By Application 3Q05 2Q05 3Q04 Computer 30% 38% 31% Communication 41% 37% 42% Consumer 23% 18% 20% Industrial/Others 5% 6% 5% Memory 1% 1% 2% By Technology 3Q05 2Q05 3Q04 90nm- 10% 2% 0% 0.11/0.13um 33% 41% 30% 0.15/0.18um 35% 34% 38% 0.25/0.35um 16% 17% 24% 0.50um+ 6% 6% 8% By Customer Type 3Q05 2Q05 3Q04 Fabless/System 71% 74% 69% IDM 29% 26% 31% By Geography 3Q05 2Q05 3Q04 North America 75% 77% 75% Asia Pacific 11% 9% 11% Europe 9% 8% 7% Japan 5% 6% 7%

Revenue Analysis:

Net sales increased 18.4% to NT$69.26 billion compared to NT$58.52 billion in the second quarter 2005. The increase in third quarter revenue mainly resulted from a 19.8% increase of wafer shipments, a 2.6% appreciation of the US Dollar against the local currency, and a 4.9% decline of the wafer average selling price (ASP).

Revenues from communication and consumer applications increased in this quarter mainly due to stronger seasonal demand and introduction of new products. Due to weaknesses in demand experienced in the PC Graphics sector, revenues from computer applications declined.

Revenue from advanced technologies -- defined as 0.13-micron and below -- accounted for 43% of total wafer sales. Meanwhile, percentage of revenue from 90nm increased to 10% from 2% previously.

IDM accounted for 29% of wafer sales during the quarter, up from 26% in the previous quarter.

Geographically, North America accounted for 75% of wafer sales, down from 77% in 2Q05. Meanwhile, sales from Asia Pacific increased to 11% of wafer sales from 9% previously.

ASP Trend:

We have some product mix factors that positively contributed to the blended average price, but the general price declines had led to a 4.9% sequential decline in ASP. To view I - 2. ASP Trend, please visit http://www.tsmc.com/uploadfile/ir/quarterly/index_charts.pdf .

II. Utilization & Capacity

Utilization Rate:

Overall capacity utilization improved by 11 percentage points to 96% in this quarter, reflecting stronger demand from customers across the board. To view II - 2. Utilization Rate, please visit http://www.tsmc.com/uploadfile/ir/quarterly/index_charts.pdf .

II - 2. Capacity Fab / (Wafer size) 1Q05 2Q05 3Q05 4Q05 2005 (Act.) (Act.) (Act.) (Fcst.) (Fcst.) Fab-2 (6")(1) 238 249 251 251 989 Fab-3 (8") 234 245 247 247 973 Fab-5 (8") 119 125 126 126 496 Fab-6 (8") 203 214 217 217 850 Fab-7 (8") 36 39 40 40 155 Fab-8 (8") 222 217 227 227 893 Fab-12 (12")(2) 85 103 122 139 448 Fab-14 (12")(2) 18 36 46 56 156 TSMC - owned capacity 8"-equivalent Kpcs 1,180 1,292 1,374 1,437 5,282 WaferTech (8") 95 96 100 100 389 SSMC (8") 41 42 47 49 179 TSMC (Shanghai) (8") 9 22 30 44 105 Total TSMC - managed 8"-equivalent Kpcs 1,324 1,451 1,550 1,629 5,955 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 3Q05 was 1,550K 8-inch equivalent wafers, 6.8% higher than the 1,451K wafers in 2Q05.

TSMC managed capacity in 4Q05 will increases to 1,629K wafers, representing a 5.1% sequential growth. The newly added capacity in 4Q05 will be mainly for the continuing ramp up of advanced capacities in Fab 12 and Fab 14.

Overall installed capacity for year 2005 is expected to reach 5.96 million 8-inch equivalent wafers, a 24% year-over-year growth.

III. Profit & Expense Analysis III - 1. Gross Profit Analysis (Amount: NT$ billion) 3Q05 2Q05 3Q04 COGS 38.7 35.3 37.6 Depreciation 15.5 16.0 13.7 Other MFG Cost 23.2 19.3 23.9 Gross Profit 30.5 23.2 32.1 Gross Margin - TSMC 44.1% 39.7% 46.1% - TSMC w/o affiliates 47.6% 42.9% 51.9%

Gross Profit Analysis:

Gross profit was NT$30.5 billion and gross margin improved to 44.1% from 39.7% in 2Q05. The improvement in gross profit was mainly due to higher levels of capacity utilization and a stronger US dollar against the local currency, partially offset by an unfavorable ASP movement.

During the quarter, the gross margin from TSMC's own fabs increased to 47.6% from 42.9% in 2Q05.

III - 2. Operating Expense Analysis (Amount: NT$ billion) 3Q05 2Q05 3Q04 Total Operating Exp. 5.6 5.4 6.0 SG&A 2.3 2.1 2.9 Research & Development 3.3 3.3 3.1

Operating Expenses:

Operating expenses were NT$5.6 billion in this quarter, representing 8.1% of net sales.

III - 3. Non-Operating Items (Amount: NT$ million) 3Q05 2Q05 3Q04 Non-Operating Income/(Exp.) (19) 537 630 Net Interest Income/(Exp.) (41) 42 228 Other Non-Operating 22 495 402 L-T Investments (491) (588) 1,378 WaferTech(i) 487 352 1,643 SSMC 210 140 268 Vanguard 61 87 326 TSMC (Shanghai) (760) (789) (237) Miscellaneous (489) (378) (622) (i) Operation results only; does not include amortization of impaired assets.

Non-Operating Items:

Combined result from non-operating income and long-term investments was a loss of NT$510 million.

During this quarter, the non-operating expenses were NT$19 million, compared to last quarter's income of NT$537 million. This difference was mainly due to unrealized revaluation losses in certain marketable securities.

Loss from long-term investments was NT$491 million in this quarter, compared to a loss of NT$588 million in 2Q05. The differences were mainly attributable to better performance in WaferTech and SSMC.

IV. Financial Condition Review IV - 1. Liquidity Analysis (Amount: NT$ billion) 3Q05 2Q05 3Q04 Cash & S-T Investments 107.3 128.0 116.5 Accounts Receivable - Trade 37.2 30.1 33.3 Inventory 15.1 14.1 12.6 Total Current Assets 165.1 181.8 169.8 Accounts Payable 20.9 17.8 28.3 Accrued Liabilities and Others 22.0 68.9 16.0 Total Current Liabilities 42.9 86.7 44.3 Current Ratio (x) 3.8 2.1 3.8 Net Working Capital 122.2 95.1 125.5

Liquidity Analysis:

Cash & short-term investments declined NT$20.7 billion in this quarter mainly due to payments of cash dividends and employee profit sharing. Meanwhile, accounts receivable and inventory increased. As a result, total current assets were NT$16.7 billion lower on a sequential basis.

Total current liabilities were NT$43.8 billion lower sequentially, mainly due to the payment of NT$46.5 billion for cash dividends and NT$3.1 billion for employee profit sharing.

As a result, net working capital increased to NT$122.2 billion and current ratio increased to 3.8x.

Receivable/Inventory Days Trend:

Days of Receivable increased to 46 days in 3Q05 compared to 43 days in the previous quarter.

Days of Inventory decreased to 40 days from 41 days in the second quarter 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) 3Q05 2Q05 3Q04 Cash & S-T Investments 107.3 128.0 116.5 Interest-Bearing Debt 30.0 30.0 35.0 Net Cash Reserves 77.3 98.0 81.5

Debt Service:

Due to lower levels of cash & short-term investments, net cash reserves --defined as the excess of cash and short-term investments over interest-bearing debt -- decreased by NT$20.7 billion to NT$77.3 billion in 3Q05.

Interest-bearing debt remained at the same level of NT$30.0 billion as in the previous quarter.

V. Cash Flow & CapEx V - 1. Cash Flow Analysis (Amount: NT$ billion) 3Q05 2Q05 3Q04 Net Income 24.5 18.4 27.9 Depreciation & Amortization 17.1 17.7 15.4 Other Op Sources/(Uses) (3.7) (8.4) (5.1) Total Op Sources/(Uses) 37.9 27.7 38.2 Capital Expenditure (9.1) (13.0) (16.5) Short Term Inves 0.6 2.2 (4.9) Long Term Investment (0.7) (0.6) (11.9) Other Investing Sources/(Uses) (0.2) 1.1 (0.3) Net Investing Sources/(Uses) (9.4) (10.3) (33.6) Cash dividends-common stocks (46.5) 0.0 (12.2) Employees Bonus (3.1) 0.0 (0.7) Other Financing Sources/(Uses) 0.9 1.0 (0.1) Net Financing Sources/(Uses) (48.7) 1.0 (12.9) Net Cash Position Changes (20.1) 18.4 (8.3) Ending Cash Balance 58.5 78.6 70.4

Summary of Cash Flow:

During this quarter, TSMC generated NT$37.9 billion operating cash inflow, mainly from net income of NT$24.5 billion and depreciation & amortization of NT$17.1 billion, partially offset by changes in working capital.

Net cash used in investment activities totaled NT$9.4 billion, mainly resulting from NT$9.1 billion of capital spending.

A net financing charge of NT$48.7 billion during this quarter was largely attributable to the payments of NT$46.5 billion for cash dividends and NT$3.1 billion for employee profit sharing.

As a result, TSMC ended the quarter with a cash balance of NT$58.5 billion, NT$20.1 billion lower than in 2Q05.

Operating Cash Flow Trend:

Operating cash flow of NT$37.9 billion was higher than the NT$27.7 billion generated in the previous quarter, mainly due to the increase of 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 TSMC US$ 275 m TSMC (Shanghai) US$ 44 m WaferTech US$ 0 m TSMC & Affiliates US$ 319 m

Capital Spending:

Capital expenditures for TSMC alone during the quarter totaled US$275 million. Most of the spending was for purchasing 12-inch production equipment. Capital spending for TSMC (Shanghai) in this quarter was US$44 million.

For year 2005, total capital expenditure for TSMC and affiliates is expected to be in the range of US$2.5 billion to US$2.7 billion, as guided.

VI. Recap of Recent Important Events & Announcements -- TSMC ranks #11 of BusinessWeek's "Top 150 Leading Asian Companies" ( 2005/10/24 ) -- TSMC joins IMEC's sub-45nm CMOS R&D project ( 2005/10/18 ) -- TSMC is voted the "Most Admired Company" by CommonWealth Magazine ( 2005/10/13 ) -- TSMC produces industry's first 1.3 megapixel CMOS image sensor for Agilent Technologies with Enhanced-Performance Pixel Architecture ( 2005/10/10 ) -- TSMC September 2005 sales set record high ( 2005/10/07 ) -- TSMC launches foundry industry's first 65nm prototype run ( 2005/10/05 ) -- TSMC announces production-ready 90nm X Architecture ( 2005/10/04 ) -- TSMC enters volume production of 90nm graphics chips for ATI ( 2005/09/26 ) -- TSMC R&D team receives first Outstanding Nano-Tech Award from Ministry of Economic Affairs of Republic of China ( 2005/09/21 ) -- TSMC recognizes its suppliers at 2005 SCM Forum ( 2005/09/15 ) -- TSMC completes secondary offering of 151.655 million ADSs at US$8.60 per share ( 2005/08/05 ) - 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, LTD. Unaudited Condensed Balance Sheet (Unconsolidated) As of September 30, 2005 and 2004 (Figures in Millions of New Taiwan Dollars (NTD) and U.S. Dollars (USD)) (1) September 30, 2005 ASSETS USD NTD % Cash and Cash Equivalents 1,762 58,467 12.1 Short Term Investments 1,471 48,822 10.1 Accounts Receivable - Trade 1,122 37,248 7.7 Inventories 454 15,070 3.1 Other Current Assets 164 5,447 1.2 Total Current Assets 4,973 165,054 34.2 Long Term Investment 2,379 78,958 16.3 Fixed Assets 17,037 565,426 117.0 Less Accumulated Depreciation (10,441) (346,517) (71.7) Net Fixed Assets 6,596 218,909 45.3 Other Assets 609 20,185 4.2 Total Assets 14,557 483,106 100.0 LIABILITIES Accounts Payables 303 10,042 2.1 Payables to Contractors and Equipment Suppliers 326 10,815 2.2 Accrued Expenses and Other Current Liabilities 348 11,547 2.4 Current Portion of Bonds Payable 316 10,500 2.2 Total Current Liabilities 1,293 42,904 8.9 Bonds Payable 588 19,500 4.0 Other Long Term Liabilities 288 9,591 2.0 Total Liabilities 2,169 71,995 14.9 SHAREHOLDERS' EQUITY Capital Stock 7,451 247,273 51.2 Capital Surplus 1,711 56,777 11.7 Legal Reserve 1,035 34,348 7.1 Special Reserve 67 2,226 0.5 Unappropriated Retained Earnings 2,178 72,297 15.0 Treasury Stock (47) (1,550) (0.3) Unrealized Loss on Long-term Investments -- -- -- Cumulated Translation Adjustment (7) (260) (0.1) Total Equity 12,388 411,111 85.1 Total Liabilities & Shareholders' Equity 14,557 483,106 100.0 TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD. Unaudited Condensed Balance Sheet (Unconsolidated) As of September 30, 2005 and 2004 (Figures in Millions of New Taiwan Dollars (NTD) and U.S. Dollars (USD)) (1) September 30, 2004 (2) YoY ASSETS NTD % Amount % Cash and Cash Equivalents 70,372 15.2 (11,905) (16.9) Short Term Investments 46,128 10.0 2,694 5.8 Accounts Receivable - Trade 33,335 7.2 3,913 11.7 Inventories 12,629 2.7 2,441 19.3 Other Current Assets 7,300 1.6 (1,853) (25.4) Total Current Assets 169,764 36.7 (4,710) (2.8) Long Term Investment 66,104 14.3 12,854 19.4 Fixed Assets 492,964 106.6 72,462 14.7 Less Accumulated Depreciation (285,808) (61.8) (60,709) 21.2 Net Fixed Assets 207,156 44.8 11,753 5.7 Other Assets 19,484 4.2 701 3.6 Total Assets 462,508 100.0 20,598 4.5 LIABILITIES Accounts Payables 12,997 2.8 (2,955) (22.7) Payables to Contractors and Equipment Suppliers 15,261 3.3 (4,446) (29.1) Accrued Expenses and Other Current Liabilities 10,974 2.4 573 5.2 Current Portion of Bonds Payable 5,000 1.1 5,500 110.0 Total Current Liabilities 44,232 9.6 (1,328) (3.0) Bonds Payable 30,000 6.5 (10,500) (35.0) Other Long Term Liabilities 9,013 1.9 578 6.4 Total Liabilities 83,245 18.0 (11,250) (13.5) SHAREHOLDERS' EQUITY Capital Stock 232,519 50.3 14,754 6.3 Capital Surplus 56,529 12.2 248 0.4 Legal Reserve 25,528 5.5 8,820 34.6 Special Reserve -- -- 2,226 -- Unappropriated Retained Earnings 66,007 14.3 6,290 9.5 Treasury Stock (1,617) (0.4) 67 (4.1) Unrealized Loss on Long-term Investments (3) -- 3 (100.0) Cumulated Translation Adjustment 300 0.1 (560) (186.6) Total Equity 379,263 82.0 31,848 8.4 Total Liabilities & Shareholders' Equity 462,508 100.0 20,598 4.5 Note: (1) Amounts in new Taiwan dollars have been translated into U.S. dollars at the rate of NT$33.19 per U.S. dollar as of September 30, 2005. (2) Certain prior period balances have been reclassified to conform to the current period presentation. TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD. Unaudited Condensed Balance Sheet (Unconsolidated) As of September 30, 2005 and June 30, 2005 (Figures in Millions of New Taiwan Dollars (NTD) and U.S. Dollars (USD)) (1) September 30, 2005 ASSETS USD NTD % Cash and Cash Equivalents 1,762 58,467 12.1 Short Term Investments 1,471 48,822 10.1 Accounts Receivable - Trade 1,122 37,248 7.7 Inventories 454 15,070 3.1 Other Current Assets 164 5,447 1.2 Total Current Assets 4,973 165,054 34.2 Long Term Investment 2,379 78,958 16.3 Fixed Assets 17,037 565,426 117.0 Less Accumulated Depreciation (10,441) (346,517) (71.7) Net Fixed Assets 6,596 218,909 45.3 Other Assets 609 20,185 4.2 Total Assets 14,557 483,106 100.0 LIABILITIES Accounts Payables 303 10,042 2.1 Payables to Contractors and Equipment Suppliers 326 10,815 2.2 Accrued Expenses and Other Current Liabilities 348 11,547 2.4 Current Portion of Bonds Payable 316 10,500 2.2 Total Current Liabilities 1,293 42,904 8.9 Bonds Payable 588 19,500 4.0 Other Long Term Liabilities 288 9,591 2.0 Total Liabilities 2,169 71,995 14.9 SHAREHOLDERS' EQUITY Capital Stock 7,451 247,273 51.2 Capital Surplus 1,711 56,777 11.7 Legal Reserve 1,035 34,348 7.1 Special Reserve 67 2,226 0.5 Unappropriated Retained Earnings 2,178 72,297 15.0 Treasury Stock (47) (1,550) (0.3) Cumulated Translation Adjustment (7) (260) (0.1) Total Equity 12,388 411,111 85.1 Total Liabilities & Shareholders' Equity 14,557 483,106 100.0 TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD. Unaudited Condensed Balance Sheet (Unconsolidated) As of September 30, 2005 and June 30, 2005 (Figures in Millions of New Taiwan Dollars (NTD) and U.S. Dollars (USD)) (1) June 30, 2005 QoQ ASSETS NTD % Amount % Cash and Cash Equivalents 78,597 15.8 (20,130) (25.6) Short Term Investments 49,409 9.9 (587) (1.2) Accounts Receivable - Trade 30,116 6.0 7,132 23.7 Inventories 14,114 2.8 956 6.8 Other Current Assets 9,591 1.9 (4,144) (43.2) Total Current Assets 181,827 36.4 (16,773) (9.2) Long Term Investment 76,434 15.3 2,524 3.3 Fixed Assets 555,917 111.3 9,509 1.7 Less Accumulated Depreciation (330,854) (66.2) (15,663) 4.7 Net Fixed Assets 225,063 45.1 (6,154) (2.7) Other Assets 16,108 3.2 4,077 25.3 Total Assets 499,432 100.0 (16,326) (3.3) LIABILITIES Accounts Payables 7,827 1.6 2,215 28.3 Payables to Contractors and Equipment Suppliers 10,004 2.0 811 8.1 Accrued Expenses and Other Current Liabilities 58,393 11.7 (46,846) (80.2) Current Portion of Bonds Payable 10,500 2.1 -- -- Total Current Liabilities 86,724 17.4 (43,820) (50.5) Bonds Payable 19,500 3.9 -- -- Other Long Term Liabilities 9,008 1.8 583 6.5 Total Liabilities 115,232 23.1 (43,237) (37.5) SHAREHOLDERS' EQUITY Capital Stock 247,261 49.5 12 -- Capital Surplus 56,721 11.3 56 0.1 Legal Reserve 34,348 6.9 -- -- Special Reserve 2,226 0.4 -- -- Unappropriated Retained Earnings 47,809 9.6 24,488 51.2 Treasury Stock (1,552) (0.3) 2 0.2 Cumulated Translation Adjustment (2,613) (0.5) 2,353 90.0 Total Equity 384,200 76.9 26,911 7.0 Total Liabilities & Shareholders' Equity 499,432 100.0 (16,326) (3.3) Note: (1) Amounts in new Taiwan dollars have been translated into U.S. dollars at the rate of NT$33.19 per U.S. dollar as of September 30, 2005.

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD. Unaudited Condensed Income Statement (Unconsolidated) For the Three Months Ended September 30, 2005, September 30, 2004 and June 30, 2005 (Expressed in Millions New Taiwan Dollars (NTD) and U.S. Dollars (USD) (1) Except for Per Share Amounts and Shares Outstanding) Year over Year Comparison Q3 2005 % of Q3 2004 YoY USD NTD Sales NTD % Net Sales 2,149 69,258 100.0 69,735 (0.7) Cost of Sales (1,202) (38,733) (55.9) (37,595) 3.0 Gross Profit 947 30,525 44.1 32,140 (5.0) Operating Expenses Research and Development Expenses (104) (3,341) (4.8) (3,123) 7.0 General and Administrative Expenses (58) (1,881) (2.8) (2,578) (27.0) Sales and Marketing Expenses (12) (373) (0.5) (318) 17.8 Total Operating Expenses (174) (5,595) (8.1) (6,019) (7.0) Income from Operations 773 24,930 36.0 26,121 (4.6) Net Non-Operating Income(Expenses) -- (19) -- 630 (102.9) Investment Gains (Losses) (15) (491) (0.7) 1,378 (135.6) Income before Income Tax 758 24,420 35.3 28,129 (13.2) Income Tax Benefits (Expenses) 2 68 0.1 (196) 134.3 Net Income 760 24,488 35.4 27,933 (12.3) Diluted Earnings Per Ordinary Share 0.03 0.99 1.13 (12.2) Earnings Per ADR (2) 0.15 4.96 5.65 Diluted Weighted Average Outstanding Shares ('M) (3) 24,690 24,739 TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD. Unaudited Condensed Income Statement (Unconsolidated) For the Three Months Ended September 30, 2005, September 30, 2004 and June 30, 2005 (Expressed in Millions New Taiwan Dollars (NTD) and U.S. Dollars (USD) (1) Except for Per Share Amounts and Shares Outstanding) Sequential Comparison Q3 2005 % of Q2 2005 QoQ USD NTD Sales NTD % Net Sales 2,149 69,258 100.0 58,516 18.4 Cost of Sales (1,202) (38,733) (55.9) (35,311) 9.7 Gross Profit 947 30,525 44.1 23,205 31.5 Operating Expenses Research and Development Expenses (104) (3,341) (4.8) (3,283) 1.7 General and Administrative Expenses (58) (1,881) (2.8) (1,799) 4.6 Sales and Marketing Expenses (12) (373) (0.5) (339) 10.2 Total Operating Expenses (174) (5,595) (8.1) (5,421) 3.2 Income from Operations 773 24,930 36.0 17,784 40.2 Net Non-Operating Income(Expenses) -- (19) -- 537 (103.4) Investment Gains (Losses) (15) (491) (0.7) (588) (16.4) Income before Income Tax 758 24,420 35.3 17,733 37.7 Income Tax Benefits (Expenses) 2 68 0.1 636 (89.5) Net Income 760 24,488 35.4 18,369 33.3 Diluted Earnings Per Ordinary Share 0.03 0.99 0.74 33.3 Earnings Per ADR (2) 0.15 4.96 3.72 Diluted Weighted Average Outstanding Shares ('M) (3) 24,690 24,687 Note: (1) Amounts in new Taiwan dollars have been translated into U.S. dollars at the weighted average rate of NTD32.23 per U.S. dollar for the third quarter of 2005. (2) 1 ADR equals 5 ordinary shares. (3) Total diluted weighted average outstanding shares were 24,690M shares for 3Q05 and 24,739M shares for 3Q04 after the retroactive adjustments for stock dividends and stock bonus. TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD. Unaudited Condensed Income Statement (Unconsolidated) For the Nine Months Ended September 30, 2005 and 2004 (Expressed in Millions New Taiwan Dollars (NTD) and U.S. Dollars (USD) (1) Except for Per Share Amounts and Shares Outstanding) 9 months ended September 30 2005 2005 % of 2004 YoY USD NTD Sales NTD % Net Sales 5,782 183,427 100.0 192,117 (4.5) Cost of Sales (3,406) (108,048) (58.9) (109,109) (1.0) Gross Profit 2,376 75,379 41.1 83,008 (9.2) Operating Expenses Research and Development Expenses (314) (9,973) (5.4) (8,948) 11.5 General and Administrative Expenses (178) (5,625) (3.1) (7,214) (22.0) Sales and Marketing Expenses (31) (991) (0.5) (1,051) (5.6) Total Operating Expenses (523) (16,589) (9.0) (17,213) (3.6) Income from Operations 1,853 58,790 32.1 65,795 (10.6) Net Non-Operating Expenses 28 905 0.4 458 97.6 Investment Gains (Losses) (40) (1,277) (0.7) 3,432 (137.2) Income before Income Tax 1,841 58,418 31.8 69,685 (16.2) Income Tax Benefits 40 1,257 0.7 447 181.1 Net Income 1,881 59,675 32.5 70,132 (14.9) Diluted Earnings Per Ordinary Share 0.08 2.42 2.83 (14.7) Earnings Per ADR (2) 0.38 12.08 14.17 Diluted Weighted Average Outstanding Shares ('M) (3) 24,690 24,739 Note: (1) Amounts in new Taiwan dollars have been translated into U.S. dollars at the weighted average rate of NTD 31.73 per U.S. dollar for the nine months ended September 30, 2005. (2) 1 ADR equals 5 ordinary shares. (3) Total diluted weighted average outstanding shares were 24,690M shares for the nine months ended September 30, 2005 and 24,739M shares for the nine months ended September 30, 2004 after the retroactive adjustments for stock dividends and stock bonus. TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD. Unaudited Condensed Statement of Cash Flows (Unconsolidated) For the Nine Months Ended September 30, 2005 (Figures in Millions of New Taiwan Dollars (NTD) and U.S. Dollars (USD)) (1) 3Q 2004 9 Months 2005 3Q 2005 2Q 2005 (2) USD NTD NTD NTD NTD Cash Flows from Operating Activities: Net Income 1,881 59,675 24,488 18,369 27,933 Depreciation & Amortization 1,621 51,437 17,107 17,661 15,370 Deferred Income Tax (73) (2,329) (1,179) (597) 47 Investment Loss(Income) Recognized by Equity Method 40 1,277 491 588 (1,378) Changes in Working Capital & Others (266) (8,436) (2,959) (8,301) (3,813) Net Cash Provided from Operating Activities 3,203 101,624 37,948 27,720 38,159 Cash Flows from Investing Activities: Decrease(Increase) in Short-Term Investments 131 4,157 587 2,229 (4,929) Increase in Long- Term Investments (318) (10,102) (3,683) (2,142) (11,892) Acquisition of Fixed Assets (1,902) (60,336) (9,142) (13,033) (16,471) Proceeds from Sales of Long-Term Investments 143 4,529 3,014 1,515 (243) Proceeds from Disposal of Properties 47 1,502 71 1,310 302 Increase in Deferred Assets (23) (736) (233) (217) (413) Decrease(Increase) in Deposit-Out -- 2 4 (2) (3) Net Cash Used in Investing Activities (1,922) (60,984) (9,382) (10,340) (33,649) Cash Flows from Financing Activities: Cash Dividend - Common Shares (1,466) (46,504) (46,504) -- (12,159) Bonus Paid to Employees (97) (3,086) (3,086) -- (682) Increase(Decrease) in Guarantee Deposits & Others 61 1,950 845 1,147 (75) Bonus Paid to Directors and Supervisors (7) (231) -- (231) -- Proceeds from Exercise of Stock Options 5 166 49 82 -- Net Cash Provided(Used) in Financing Activities (1,504) (47,705) (48,696) 998 (12,916) Net Increase (Decrease) in Cash and Cash Equivalents (223) (7,065) (20,130) 18,378 (8,406) Cash and Cash Equivalents at Beginning of Period 2,066 65,532 78,597 60,219 78,778 Cash and Cash Equivalents at End of Period 1,843 58,467 58,467 78,597 70,372 Note: (1) Amounts in new Taiwan dollars have been translated into U.S. dollars at the rate of NTD31.73 per U.S. dollar, the weighted average rate for the nine months ended September 30, 2005. (2) Certain prior period amounts have been reclassified to conform to the current period presentation. TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD. Unaudited Condensed Balance Sheets (Consolidated) As of September 30, 2005 and June 30, 2005 (Figures in Million of New Taiwan Dollars (NTD) and U.S. Dollars (USD)) (1) September 30, 2005 ASSETS USD NTD % Cash 2,097 69,582 14.0 Short Term Investment 1,484 49,260 9.9 Accounts Receivable-Trade 1,180 39,140 7.9 Inventories 489 16,239 3.3 Other Current Assets 147 4,879 1.0 Total Current Assets 5,397 179,100 36.1 Long Term Investment 1,215 40,331 8.1 Fixed Assets 19,149 635,513 128.1 Less Accumulated Depreciation (11,576) (384,200) (77.4) Net Fixed Assets 7,573 251,313 50.7 Other Assets 765 25,372 5.1 Total Assets 14,950 496,116 100.0 LIABILITIES Short-term Bank Loans 34 1,124 0.2 Accounts Payable 297 9,851 2.0 Payables to Contractors and Equipment Suppliers 339 11,247 2.3 Accrued Expenses and Other Current Liabilities 417 13,848 2.8 Current Portion of Bonds Payable 317 10,505 2.1 Total Current Liabilities 1,404 46,575 9.4 Long-term Bank Loans 30 1,003 0.2 Bonds Payable 588 19,500 3.9 Other Long Term Liabilities 516 17,141 3.5 Total Liabilities 2,538 84,219 17.0 SHAREHOLDERS' EQUITY Shareholder's Equity-Parent Company Capital Stock 7,451 247,274 49.9 Capital Surplus 1,711 56,777 11.4 Legal Reserve 1,035 34,348 6.9 Special Reserve 67 2,226 0.4 Unappropriated Retained Earnings 2,178 72,296 14.6 Treasury Stock (46) (1,550) (0.3) Cumulated Translation Adjustment (8) (260) (0.1) Total Equity 12,388 411,111 82.8 Minority Interest 24 786 0.2 Total Equity 12,412 411,897 83.0 Total Liabilities & Shareholders' Equity 14,950 496,116 100.0

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD. Unaudited Condensed Balance Sheets (Consolidated) As of September 30, 2005 and June 30, 2005 (Figures in Million of New Taiwan Dollars (NTD) and U.S. Dollars (USD)) (1) June 30, 2005 QoQ ASSETS USD NTD % Amount % Cash 2,796 88,405 17.3 (18,823) (21.3) Short Term Investment 1,567 49,558 9.7 (298) (0.6) Accounts Receivable-Trade 1,015 32,095 6.3 7,045 22.0 Inventories 479 15,159 3.0 1,080 7.1 Other Current Assets 277 8,740 1.7 (3,861) (44.2) Total Current Assets 6,134 193,957 37.9 (14,857) (7.7) Long Term Investment 1,241 39,251 7.7 1,080 2.8 Fixed Assets 19,673 622,025 121.6 13,488 2.2 Less Accumulated Depreciation (11,545) (365,019) (71.4) (19,181) 5.3 Net Fixed Assets 8,128 257,006 50.3 (5,693) (2.2) Other Assets 671 21,207 4.1 4,165 19.6 Total Assets 16,174 511,421 100.0 (15,305) (3.0) LIABILITIES Short-term Bank Loans 10 316 0.1 808 255.6 Accounts Payable 241 7,605 1.5 2,246 29.5 Payables to Contractors and Equipment Suppliers 360 11,384 2.2 (137) (1.2) Accrued Expenses and Other Current Liabilities 1,906 60,251 11.8 (46,403) (77.0) Current Portion of Bonds Payable 332 10,505 2.1 0 0.0 Total Current Liabilities 2,849 90,061 17.6 (43,486) (48.3) Long-term Bank Loans 30 958 0.2 45 4.7 Bonds Payable 617 19,500 3.8 0 0.0 Other Long Term Liabilities 505 15,961 3.1 1,180 7.4 Total Liabilities 4,001 126,480 24.7 (42,261) (33.4) SHAREHOLDERS' EQUITY Shareholder's Equity-Parent Company Capital Stock 7,820 247,261 48.3 13 0.0 Capital Surplus 1,794 56,721 11.1 56 0.1 Legal Reserve 1,086 34,348 6.7 0 0.0 Special Reserve 70 2,226 0.4 0 0.0 Unappropriated Retained Earnings 1,512 47,809 9.3 24,487 51.2 Treasury Stock (49) (1,552) (0.3) 2 (0.2) Cumulated Translation Adjustment (83) (2,613) (0.5) 2,353 (90.0) Total Equity 12,150 384,200 75.1 26,911 7.0 Minority Interest 23 741 0.2 45 6.0 Total Equity 12,173 384,941 75.3 26,956 7.0 Total Liabilities & Shareholders' Equity 16,174 511,421 100.0 (15,305) (3.0) Note: (1) New Taiwan dollar amounts have been translated into U.S. dollars at the rate of NT$33.19 per U.S. dollar as of September 30, 2005. TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD. Unaudited Condensed Income Statements (Consolidated) For the Three Months Ended September 30 and June 30, 2005 (Expressed in Million New Taiwan Dollars (NTD) and U.S. Dollars (USD) (1) Except for Per Share Amounts and Shares Outstanding) Sequential Comparison Q3 2005 % of Q2 2005 % of QoQ Inc. USD NTD Sales NTD Sales (Dec.)% Net Sales 2,187 70,501 100.0 59,978 100.0 17.5 Cost of Sales (1,227) (39,544) (56.1) (35,724) (59.6) 10.7 Gross Profit 960 30,957 43.9 24,254 40.4 27.6 Operating Expenses Research and Development Expenses (107) (3,473) (4.9) (3,561) (5.9) (2.5) General and Administrative Expenses (75) (2,410) (3.4) (2,253) (3.8) 7.0 Sales and Marketing Expenses (28) (897) (1.3) (1,227) (2.0) (26.9) Total Operating Expenses (210) (6,780) (9.6) (7,041) (11.7) (3.7) Income from Operations 750 24,177 34.3 17,213 28.7 5.2 Net Non-operating Income (Expenses) 1 19 0.0 464 0.8 (96.0) Investment Gain 8 271 0.4 226 0.4 -- Income before Income Tax and Minority Interest 759 24,467 34.7 17,903 29.8 36.7 Income Tax Credit 2 57 0.1 491 0.8 (88.3) Income before Minority Interest 761 24,524 34.8 18,394 30.7 33.3 Minority Interest in Loss of Subsidiaries (1) (36) (0.1) (25) (0.0) 47.4 Consolidated Net Income 760 24,488 34.7 18,369 30.6 33.3 Note: (1) New Taiwan dollars have been translated into U.S. dollars at the weighted average rate of NTD 32.23 per U.S. dollar for the third quarter of 2005. TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD. Unaudited Condensed Income Statements (Consolidated) For the Nine Months Ended September 30, 2005 (Expressed in Million New Taiwan Dollars (NTD) and U.S. Dollars (USD) (1) Except for Per Share Amounts and Shares Outstanding) 9 months ended September 30, 2005 % of USD NTD Sales Net Sales 5,905 187,337 100.0 Cost of Sales (3,481) (110,448) (59.0) Gross Profit 2,424 76,889 41.0 Operating Expenses Research and Development Expenses (329) (10,446) (5.6) General and Administrative Expenses (226) (7,176) (3.8) Sales and Marketing Expenses (86) (2,708) (1.4) Total Operating Expenses (641) (20,330) (10.9) Income from Operations 1,783 56,559 30.2 Net Non-operating Income (Expenses) 39 1,222 0.6 Investment Gain 28 894 0.5 Income before Income Tax and Minority Interest 1,850 58,675 31.3 Income Tax Credit 33 1,061 0.6 Income before Minority Interest 1,883 59,736 31.9 Minority Interest in Loss of Subsidiaries (2) (61) (0.0) Consolidated Net Income 1,881 59,675 31.9 Diluted Earnings Per Ordinary Share 0.08 2.42 Earnings Per ADR (2) 0.38 12.08 Weighted Average Outstanding Shares ('M) 24,690 Note: (1) New Taiwan dollars have been translated into U.S. dollars at the weighted average rate of NTD 31.73 per U.S. dollar for the nine months of 2005. TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD. Unaudited Condensed Statements of Cash Flows (Consolidated) For the Nine Months and Six Months Ended September 30 and June 30, 2005 (Figures in Million of New Taiwan Dollars (NTD) and U.S. Dollars (USD))(1) 9 Months 2005 Q3 2005 6 Months 2005 USD NTD NTD USD NTD Cash Flows from Operating Activities: Consolidated Net Income 1,881 59,675 24,488 1,118 35,187 Depreciation & Amortization 1,796 56,986 19,006 1,207 37,980 Deferred Income Tax (76) (2,400) (1,220) (37) (1,180) Investment Gain Recognized by Equity Method (28) (894) (271) (20) (623) Accrued Pension Cost 11 350 39 10 311 Changes in Working Capital & Others (214) (6,790) (2,128) (148) (4,662) Net Cash Provided from Operating Activities 3,370 106,927 39,914 2,130 67,013 Cash Flows from Investing Activities: Decrease in Short-Term Investments 163 5,175 424 151 4,751 Increase in Long-Term Investments (223) (7,061) (3,697) (107) (3,364) Acquisition of Fixed Assets (2,089) (66,260) (10,598) (1,769) (55,662) Proceeds from Sales of Long-Term Investments 144 4,568 3,035 49 1,533 Proceeds from Disposal of Properties 9 274 147 4 127 Increase in Deferred Assets (23) (744) (226) (16) (518) (Increase)Decrease in Deposit-Out 0 (0) 7 0 (7) (Increase)Decrease in Other Assets 0 (9) (14) 0 5 Net Cash Used in Investing Activities (2,019) (64,057) (10,922) (1,688) (53,135) Cash Flows from Financing Activities: Cash Dividend - Common Shares (1,463) (46,420) (46,420) -- 0 Increase(Decrease) in Short-Term Bank Loans 19 611 674 (2) (63) Decrease in Long-Term Bank Loans (31) (996) (50) (30) (946) Bonus Paid to Employees (97) (3,086) (3,086) 0 0 Proceeds From Disposal of Treasury Stocks 2 52 3 2 49 Decrease in Guarantee Deposits & Others 62 1,953 847 35 1,106 Bonus Paid to Directors and Supervisors (7) (231) 0 (7) (231) Increase(Decrease) in Minority Interest 0 0 (11) 0 11 Issuance of Stocks Option 5 166 49 4 117 Net Cash Provided from Financing Activities (1,510) (47,951) (47,994) 2 43 Net Decrease in Cash and Cash Equivalents (159) (5,081) (19,002) 444 13,921 Others 11 360 407 (1) (47) Cash and Cash Equivalents at Beginning of Period 2,342 74,303 (228) 2,368 74,531 Cash and Cash Equivalents at End of Period 2,194 69,582 (18,823) 2,811 88,405 Note: (1) New Taiwan dollar amounts have been translated into U.S. dollars at the rate of NTD31.73 per U.S. dollar, the weighted average exchange rate for the nine months of 2005.

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 +886-3-568-2087 +886-3-568-2088 +886-3-568-2086 Web sites: http://www.tsmc.com http://www.tsmc.com/uploadfile/ir/quarterly/index_charts.pdf