TSMC Reports First Quarter EPS of NT$0.73

HSINCHU, Taiwan, April 26 /Xinhua-PRNewswire-FirstCall/ -- TSMC today announced consolidated revenue of NT$64.90 billion, net income of NT$18.84 billion, and diluted earnings per share of NT$0.73 (US$0.11 per ADS unit) for the first quarter ended March 31, 2007.

Year-over-year, first quarter revenue decreased 16.6% while net income and diluted EPS decreased 42.2% and 42.3%, respectively. On a sequential basis, first quarter results represent a 13.4% decrease in revenue, and a decrease of 32.5% both in net income and in diluted EPS. All figures were prepared in accordance with R.O.C. GAAP on a consolidated basis.

First quarter business was affected by inventory correction and seasonality, but revenue slightly exceeded the guidance given on January 25. Advanced process technologies (0.13-micron and below) accounted for 49% of wafer revenues with 90-nanometer process technology accounting for 22% and 65- nanometer about 1% of total wafer sales. Gross margin of 37.9% reached the mid point of the guidance, while operating margin of 27.5% was close to the high end of guidance. Net margin decreased 8.2 percentage points to 29% from the previous quarter.

"A majority of our customers' excess inventory has been worked through in the first quarter and the recovery of our business is already in place," said Lora Ho, VP and Chief Financial Officer of TSMC. "Relative to the first quarter, the communication and consumer segments will rebound quite well while the computer segment will grow at a lower pace," said Ho. "Based on our current business outlook, management's expectations for second quarter 2007 performance are as follows":

    -- Revenue is expected to be between NT$73 billion and NT$75 billion;
    -- Gross profit margin is expected to be between 42% and 44%;
    -- Operating profit margin is expected to be between 32% and 34%.

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, April 26, 2007. 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 1-617-614-2707 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.


TSMC (NYSE: TSM) is the world's largest dedicated semiconductor foundry, providing the industry's leading manufacturing capacity, process technology, and the foundry industry's largest portfolio of process- proven libraries, IP, design tools and reference flows. TSMC currently operates two twelve-inch wafer fabs, four eight-inch fabs and one six-inch fab. The Company also operates two eight-inch fabs at its wholly owned subsidiaries, WaferTech in the U.S. and TSMC (Shanghai) Company, Ltd. in China, and has substantial capacity commitments from a joint-venture fab, SSMC, in Singapore. Total managed capacity in 2006 exceeded seven million eight-inch equivalent wafers. TSMC is the first foundry to provide 65-nanometer production capabilities. TSMC's corporate headquarters are in Hsin-Chu, Taiwan. More information about TSMC is available at http://www.tsmc.com .

                    -Management Report and Tables Follow-

             TSMC 1Q07 Quarterly Management Report April 26, 2007

    Topics in This Report

    -- Revenue Analysis
    -- Capacity
    -- Profit & Expense Analysis
    -- Financial Condition Review
    -- Cash Flow & CapEx
    -- Recap of Recent Important Events & Announcements

    Operating Results Review:


    (Amounts are on consolidated basis
     and are in NT$ billion except         1Q07   4Q06   1Q06    QoQ     YoY
     noted otherwise)
    EPS (NT$ per com. shr.)                0.73   1.08   1.26  (32.5%) (42.3%)
        (US$ per ADR unit)                 0.11   0.16   0.20      --      --

    Consolidated Net Sales                64.90  74.96  77.85  (13.4%) (16.6%)
    Gross Profit                          24.61  34.45  37.73  (28.6%) (34.8%)
    Gross Margin                          37.9%  46.0%  48.5%      --      --
    Operating Expense                     (6.73) (7.05) (6.82)  (4.4%)  (1.3%)
    Non-Operating Items*                   2.19   2.10   3.62    4.3%  (39.5%)
    Net Income                            18.84  27.91  32.61  (32.5%) (42.2%)
    Net Profit Margin                     29.0%  37.2%  41.9%      --      --

    Wafer Shipment (kpcs 8 inch-equiv.)   1,566  1,718  1,738   (8.9%)  (9.9%)

    * 1Q06 non-operating items include cumulative effect of changes in
       accounting principle.


The first quarter diluted earnings per share were NT$0.73, representing a 42.3% decrease over the same period last year and a 32.5% sequential decline from the previous quarter. The consolidated operating results of 1Q07 are summarized below:

First quarter net sales were NT$65 billion, down 16.6% from NT$78 billion in first quarter 2006 and down 13.4% from NT$75 billion in fourth quarter 2006.

Gross profit for 1Q07 was NT$24.6 billion, representing a year-over-year decrease of 34.8% and a quarter-over-quarter decline of 28.6%. Gross margin was 37.9% in the first quarter 2007, down from 46% in the previous quarter.

Operating expenses were NT$6.7 billion or 10.4% of the net sales. The combined result from non-operating income and long-term investments was a gain of NT$2.2 billion.

Consolidated net income attributable to shareholders of the parent company was NT$18.8 billion, down 42.2% over the same period last year and down 32.5% from the previous quarter. Net profit margin was 29% in first quarter 2007.

    I.   Revenue Analysis

         I.Wafer Sales Analysis
         By Application              1Q07        4Q06        1Q06
         Computer                     29%         32%               37%
                  Communication                                42%                  42%                  39%
                  Consumer                                          16%                  16%                  18%
                  Industrial/Others                          9%                    7%                    5%
                  Memory                                                4%                    3%                    1%

                  By  Technology                              1Q07                4Q06                1Q06
                  N90-                                                  23%                  23%                  20%
                  0.11/0.13um                                    26%                  25%                  29%
                  0.15/0.18um                                    30%                  33%                  32%
                  0.25/0.35um                                    15%                  14%                  14%
                  0.50um+                                              6%                    5%                    5%

                  By  Customer  Type                          1Q07              4Q06                1Q06
                  Fabless/System                                70%                72%                  74%
                  IDM                                                      30%                28%                  26%

                  By  Geography                                  1Q07              4Q06                1Q06
                  North  America                                  77%                78%                  78%
                  Asia  Pacific                                    11%                11%                  11%
                  Europe                                                  7%                  7%                    7%
                  Japan                                                    5%                  4%                    4%


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