TSMC Reports 95% Increase in Record Year Profit Quarterly Net Income Reached NT$22 Billion
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TSMC Reports 95% Increase in Record Year Profit Quarterly Net Income Reached NT$22 Billion

/PRNewswire/ -- HSIN-CHU, Taiwan, Jan. 27 /Xinhua-PRNewswire-FirstCall/ -- Taiwan Semiconductor Manufacturing Company, Ltd. today announced revenue and net income for the quarter ended December 31, 2004. Fourth quarter revenue reached NT$63.87 billion, while net income and fully diluted earnings per share came to NT$22.18 billion and NT$0.96 per share (US$0.15 per ADS unit), respectively. For the full year of 2004, TSMC's revenue set a new record, NT$255.99 billion, 26.8% higher than in year 2003. Net income for the entire year grew 95.3% to NT$92.32 billion, also a new record. In US dollar terms, revenue for 2004 was US$7.65 billion, an increase of 30.3% while net income grew to US$2.76 billion, an increase of 100%. Fully diluted earnings per share jumped 96.8% to NT$3.97 (US$0.59 per ADS unit).

On a sequential basis, fourth quarter results represent an 8.4% decline in revenue, a 20.6% decrease in net income and a 20.5% decrease in fully diluted EPS. Year-over-year, fourth quarter revenue, net income, and fully diluted EPS increased 11%, 39%, and 40%, respectively. All figures were prepared in accordance with R.O.C. GAAP on an unconsolidated basis.

The 8.4% sequential decline in revenue in the fourth quarter mainly resulted from an 8.5% decrease in wafer shipments and a 2.9% depreciation of US dollar against local currency, ameliorated by a 1.7% increase in wafer average selling price (ASP). Revenues from advanced process technologies (0.13-micron and below) increased significantly in the fourth quarter and reached 36 percent of total wafer sales. Gross profit margin for the quarter declined by 3.6 percentage points to 42.5%, due to lower levels of wafer output, an unfavorable movement of the exchange rate, and the ramp-up of Fab14. Net margin for the quarter was 34.7%.

"Due primarily to customers' continuing inventory digestion, our fourth quarter business had declined as we expected," said Lora Ho, VP and Chief Financial Officer of TSMC. "First quarter business conditions are likely to exhibit a normal seasonal pattern in the end market," noted Ho, "and based on the current outlook, management's expectations for the first quarter 2005 performance are as follows:"

  -- Wafer shipments to decrease by a single digit percentage point
     sequentially;
  -- Overall utilization rate to be about 78%;
  -- Gross profit margin to be in the range of 38% to 40%;
  -- ASP to remain about the same sequentially.

Ho said management also expects that 2005 capital expenditure will be in the range of US$2.5 billion to US$2.7 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 27, 2004. 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 1-866-321-1799 in the U.S., 0080-161-5105 in Taiwan and 61-2-8228-7003 in other locations (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/ .

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 28, 2004 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.

  Operating Results Review:

  Summary:

  (Amount in NT$ billion except noted
  otherwise)                             4Q04   3Q04   4Q03     QoQ     YoY

  EPS (NT$ per com. shr.)                0.96   1.20   0.68  -20.5%   40.1%
         (US$ per ADR unit)              0.15   0.18   0.10

  Net Sales                             63.87  69.74  57.78   -8.4%   10.5%
  Gross Profit                          27.15  32.14  22.71  -15.5%   19.6%
  Operating Expense                     (6.12) (6.02) (6.08)   1.8%    0.7%
  Non-Operating Items                    1.07   2.01   0.94  -46.9%   13.0%
  Net Income                            22.18  27.93  16.00  -20.6%   38.6%

  Wafers Shipped (kpcs 8 inch-equiv.)   1,220  1,333  1,127   -8.5%    8.3%
  Capacity Utilization                    88%   103%   101%  -14.7%  -12.6%

  Net Profit Margin                     34.7%  40.1%  27.7%


  Remarks:

The fourth quarter EPS of NT$0.96 represents a 20.5% decrease compared with 3Q04. The unconsolidated operating results of 4Q04 are summarized below:

Net sales declined 8.4% to NT$63.9 billion compared with NT$69.7 billion in the third quarter. The decrease in fourth quarter revenue mainly reflected an 8.5% decrease in wafer shipments and a 2.9% depreciation of the US dollar against local currency, ameliorated by a 1.7% increase in wafer average selling price (ASP).

Gross profit decreased to NT$27.2 billion, representing a 15.5% decline from the previous quarter. Gross margin reduced to 42.5% from 46.1% in 3Q04 due mainly to lower levels of wafer output, an unfavorable exchange rate, and the ramp-up of Fab 14, a new 12-inch wafer fab.

Operating expenses increased slightly to NT$6.1 billion from the previous quarter's NT$6.0 billion. The increase is the result of 14.3% higher R&D expenses netted by an 11.7% decline of SG&A expenses.

Combined non-operating income and long-term investment gains of NT$1.1 billion was 46.9% lower than in the previous quarter. The reduction was mainly the result of less profitable operating performance by TSMC subsidiary/affiliates and lower gains from other non-operating items.

Income before tax declined 21.5% sequentially to NT$22.1 billion. The Company's provision for tax expenses of NT$2.6 billion was more than offset by an investment tax credit of NT$2.7 billion. TSMC's 4Q04 net income was NT$22.2 billion with a net margin of 34.7%.

  I.  Revenue Analysis


  I - 1.  Wafer Sales Analysis
      By Application                      4Q04        3Q04        4Q03
      Computer                             35%         31%         35%
      Communication                        41%         42%         42%
      Consumer                             16%         20%         17%
      Industrial/Others                     6%          5%          4%
      Memory                                2%          2%          2%

      By Technology                       4Q04        3Q04        4Q03
      0.13um-                              36%         30%         18%
      0.15/0.18um                          34%         38%         45%
      0.25um                               14%         14%         20%
      0.35um+                               9%         10%         10%
      0.50um+                               7%          8%          7%

      By Customer Type                    4Q04        3Q04        4Q03
      Fabless                              66%         69%         71%
      IDM                                  33%         31%         29%
      System                                1%          0%          0%

      By Geography                        4Q04        3Q04        4Q03
      North America                        75%         75%         75%
      Asia Pacific                         10%         11%         12%
      Europe                                7%          7%          5%
      Japan                                 8%          7%          8%


  Revenue Analysis:

Net sales decreased 8.4% to NT$63.9 billion compared with NT$69.7 billion in the third quarter. The decrease in fourth quarter revenue mainly resulted from an 8.5% decrease in wafer shipments and a 2.9% depreciation of the US dollar against local currency, ameliorated by a 1.7% increase in wafer average selling price (ASP).

Revenues from computer applications continued to grow in this quarter while revenues from both communication applications and consumer applications declined.

Demand from advanced technologies -- defined as 0.13-micron and below -- strengthened further in 4Q04 with 90nm commencing volume production with very high yield and good quality. Revenue contribution from advanced technology wafers increased to 36% of total wafer sales, compared to 30% in the previous quarter.

IDM wafer sales weighting during the quarter rose to 33% from 31% in the previous quarter while Fabless accounted for 66%. The increase in IDM weighting was mainly attributable to continuous IDM outsourcing in advanced technology.

  Geographically, the distribution remained similar to the previous quarter.

  ASP Trend:

Continuing from 3Q04's 1.4% increase, ASP rose again by 1.7% in this quarter. This quarter's ASP increase was attributable to a better product mix. 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 decreased to 88% in this quarter from 103% in the third quarter. To view II-1. Utilization Rate, please visit http://www.tsmc.com/uploadfile/ir/quarterly/index_charts.pdf

  II - 2. Capacity
                                           4Q04       2004        1Q05
      Fab / (Wafer size)                  (Act.)     (Act.)      (Est.)
      Fab-2           (6")1                248        930         238
      Fab-3           (8")                 247        922         234
      Fab-5           (8")                 124        470         119
      Fab-6           (8")                 217        813         203
      Fab-7           (8")                  40        165          36
      Fab-8           (8")                 224        823         215
      Fab-12         (12")2                 80        244          85
      Fab-14         (12")2                  6          6          18
      TSMC - owned capacity
       8"-equivalent Kpcs                1,184      4,279       1,172
      Wafer Tech        (8")                97        373          95
      SSMC              (8")                39        136          41
      TSMC (Shanghai)   (8")                 1          1           9
      Total TSMC - managed
       8"-equivalent Kpcs                1,320      4,788       1,317

         Note: 1. Figues represent number of 6 wafers.  Conversion to
                  8-equivalent wafers is by dividing this number by 1.78.

               2. Figues represent number of 12 wafers.  Conversion to
                  8-equivalent wafers is by multiplying this number by
                  2.25.


  Capacity:

Total TSMC managed capacity in 4Q04 was 1,320 kpcs/quarter in terms of 8- inch equivalent wafers, representing 4.8% sequential capacity growth, where 12-inch wafer capacity increased 24.6% sequentially.

Overall installed capacity for year 2004 was about 4.8 million 8-inch equivalent wafers.

While the majority of TSMC fabs will conduct annual maintenance in 1Q05, TSMC managed capacity is expected to remain about the same at 1,317 kpcs 8- inch equivalent wafers.

Overall installed capacity for year 2005 is expected to reach 5.95 million 8-inch equivalent wafers, representing 24% year-on-year growth. Capacity for 90 nanometers, which are produced only from 12-inch wafers, will increase 18 times, and the overall 12-inch wafer capacity will more than double.

  III. Profit & Expense Analysis

  III - 1. Gross Profit Analysis
    (Amount: NT$ billion)                  4Q04        3Q04        4Q03

    COGS                                   36.7        37.6        35.1
    Depreciation                           14.9        13.7        13.9
    Other MFG Cost                         21.8        23.9        21.2

    Gross Profit                           27.2        32.1        22.7

    Gross Margin
      -- TSMC                              42.5%       46.1%       39.3%
      -- TSMC w/o affiliates               47.8%       51.9%       44.2%

  Gross Profit Analysis:

Gross profit decreased to NT$27.2 billion, representing a 15.5% decline from the previous quarter. Gross margin reduced to 42.5% from 46.1% in 3Q04 mainly due to lower levels of wafer output, an unfavorable exchange rate, and the ramp-up of Fab 14.

During the quarter, the gross margin from TSMC's own fab manufacturing activities declined to 47.8% from 51.9% in 3Q04.

  III - 2. Operating Expense Analysis
    (Amount: NT$ billion)                  4Q04        3Q04        4Q03
        Total Operating Exp.               6.12        6.02        6.08
    SG&A                                   2.56        2.90        2.03
    Research & Development                 3.57        3.12        4.06

  Operating Expenses:

Operating expenses increased slightly to NT$6.1 billion. R&D expenditures were sequentially higher due mainly to further development efforts related to 65-nm process technology and more engineering wafers to support the Fab14 ramp-up. SG&A expenditures were sequentially lower mainly because Fab14 stopped incurring opening expenses as it commenced commercial production during 4Q04. Overall, operating expenses represented 9.6% of net sales, compared to last quarter's 8.6%.

  III - 3. Non-Operating Items
    (Amount: NT$ million)                    4Q04        3Q04        4Q03

    Non-Operating Income/(Exp.)               457         630        (193)
       Net Interest Income/(Exp.)             227         228         (14)
       Other Non-Operating                    230         402        (178)
    L-T Investments                           609       1,378       1,135
       WaferTech*                             891       1,643         549
       SSMC                                    31         268         131
       Vanguard                               423         326          99
       TSMC (Shanghai)                       (359)       (237)         (1)
       Miscellaneous                         (377)       (622)        357

  Total Non-Operating Items                 1,066       2,008         942

    * Operation results only; does not include amortization of impaired
      assets.


  Non-Operating Items:

Combined non-operating income and long-term investment gains decreased 46.9% to NT$1.1 billion from NT$2.0 billion in the previous quarter.

During the quarter, non-operating income amounted to NT$457 million, NT$173 million lower than last quarter's income of NT$630 million. This decrease was due mainly to lower royalty income accrued and the revaluation losses of short-term investments in marketable securities, offset partially by higher foreign exchange gains from hedging activities.

Long-term investment gains declined to NT$609 million, compared to NT$1,378 million in 3Q04. The decrease mainly resulted from lower utilization levels at WaferTech and SSMC, and higher expenses incurred at TSMC (Shanghai). These were offset partially by the continuous improvement in Vanguard and smaller losses in miscellaneous others.

  IV. Financial Condition Review


  IV - 1. Liquidity Analysis
     (Amount: NT$ billion)                    4Q04        3Q04        4Q03

     Cash & S-T Investments                  118.5       124.4       110.8
     Accounts Receivable - Trade              27.2        33.4        25.6
     Inventory                                14.2        12.6        10.9
     Deferred Income Tax Assets                8.8         2.5         8.3
     Total Current Assets                    173.7       177.7       158.5
     Accounts Payable                         40.8        28.3        17.7
     Current Portion of Bonds Payable         10.5         5.0         5.0
     Accrued Liabilities and Others            9.3        11.0         7.8
     Total Current Liabilities                60.6        44.2        30.5
     Current Ratio (x)                         2.9         4.0         5.2
     Net Working Capital                     113.0       133.4       128.0


  Liquidity Analysis:

Total current assets were NT$4.0 billion lower on a sequential basis. The decrease was mainly attributable to lower cash & short-term investment and accounts receivable, partially offset by higher inventory and deferred income tax assets. The NT$5.9 billion decrease in cash and short-term investment was due mainly to a long-term investment of NT$5.6 billion in a structured note during this quarter, and a reclassification of NT$4.9 billion of such notes from short-term to long-term investment made in the previous quarter.

Meanwhile, total current liabilities increased significantly due mainly to the increase of accounts payable resulting from the faster move-in of 12-inch production equipment in this quarter and the increase of the current portion of bonds payable.

As a result, the Company's current ratio declined to 2.9x and net working capital reduced to NT$113.0 billion, a decrease of NT$20.4 billion over the previous quarter.

Receivable/Inventory Days Trend:

Days of receivables increased to 45 days compared with 43 days in 3Q04, reflecting slower business activities during 4Q04.

Days of Inventory increased to 41 days as compared to 38 days in the previous quarter. The increase was due mainly to the combination of higher values of WIP for increased 12-inch production and higher finished goods. 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)                    4Q04        3Q04        4Q03
     Cash & S-T Investments                  118.5       124.4       110.8
     Interest-Bearing Debt                    30.0        35.0        35.0
     Net Cash Reserves                        88.5        89.4        75.8

  Debt Service:

Net cash reserves, defined as the excess of cash and short-term investments over interest-bearing debt, decreased by NT$0.9 billion to NT$88.5 billion in 4Q04.

Interest-bearing debt reduced to NT$30 billion as NT$5 billion bonds were redeemed in this quarter.

  V. Cash Flow & CapEx

  V - 1. Cash Flow Analysis
     (Amount: NT$ billion)                    4Q04        3Q04        4Q03

     Net Income                               22.2        27.9        16.0
     Depreciation & Amortization              16.6        15.4        15.5
     Other Op Sources/(Uses)                  (2.1)       (5.1)       (0.0)
     Total Op Sources/(Uses)                  36.7        38.2        31.5
     Capital Expenditure                     (20.5)      (16.5)      (12.8)
     Short Term Investment                    (6.9)       (4.9)       (0.9)
     Long Term Investment                    (17.0)       (7.3)       (2.0)
     Other Investing Sources/(Uses)           (0.0)       (0.4)       (0.2)
     Net Investing Sources/(Uses)            (44.4)      (29.1)      (15.9)
     Cash dividends paid to common
      stocks                                   0.0       (12.2)        0.0
     Bonus paid to Employees                   0.0        (0.7)        0.0
     Payment on long-term bonds payable       (5.0)        0.0         0.0
     Other Financing Sources/(Uses)           (0.1)       (0.1)       (0.1)
     Net Financing Sources/(Uses)             (5.1)      (12.9)       (0.1)
     Net Cash Position Changes               (12.8)       (3.9)       15.6
     Cash Balance                             65.5        78.3        98.3


  Summary of Cash Flow:

During the quarter, TSMC generated NT$36.7 billion operating cash inflow mainly from net income of NT$22.2 billion and depreciation & amortization of NT$16.6 billion. This was partially offset by increases in working capital.

Net cash used in investing activities totaled NT$44.4 billion including (i) capital spending of NT$20.5 billion, (ii) a continued accumulation of NT$6.9 billion in short-term investments, and (iii) long-term investments of NT$3.5 billion in government and corporate bonds, NT$2.9 billion capital injection to TSMC (Shanghai), and NT$5.6 billion in a structured note and a NT$4.9 billion reclassification of such notes.

A net cash outflow of NT$5.1 billion in financing activities was largely attributable to the Company's NT$5.0 billion bond redemption.

  As a result, TSMC ended the quarter with a cash balance of NT$65.5 billion.

  Operating Cash Flow Trend:

Operating cash flow of NT$36.7 billion was slightly lower than the previous quarter due mainly to lower net income. To view V-2. Operating Cash Flow Trend, please visit http://www.tsmc.com/uploadfile/ir/quarterly/index_charts.pdf .

        CapEx
   (in US$ million)             1Q04   2Q04   3Q04   4Q04    2004
   TSMC                          489    683    484    621   2,277
   WaferTech                      14     27     26      5      72
   TSMC (Shanghai)                 1      9      8     51      69
                  Total          504    719    518    677   2,418

  Capital Spending:

Capital expenditures for TSMC alone during the quarter totaled US$621 million. Most of the spending was for 12-inch capacity ramp-up in Fab 12 and Fab 14.

Capital spending for WaferTech was US$5 million, and US$51 million for TSMC (Shanghai).

For Year 2004, total capital expenditures for TSMC as a group amounted to US$2.4 billion, including US$2.3 billion for TSMC, US$72 million for WaferTech, and US$69 million for TSMC (Shanghai).

  VI. Recap of Recent Important Events & Announcements

  -- TSMC Verifies Fully Functional 90 Nanometer Chips Using Immersion
     Lithography Tools (2004/12/22)

  -- TSMC Holds A Special Shareholders' Meeting To Approve Amendment of
     Dividend Policy (2004/12/21)

  -- TSMC 0.18-Micron High-Voltage Technology Goes to Volume Production
     (2004/11/23)

  -- TSMC Is Awarded Best IR by A Taiwan Company by IR Magazine (2004/11/04)

  -- TSMC Board of Directors Proposes Amendment of Dividend Policy
     (2004/11/02)

  -- TSMC Aims to be Best Partner in "Invented/Made in China" Arena
     (2004/10/28)

  -- Freescale and TSMC to Develop Silicon-on-Insulator Technology
     (2004/10/12)

Please visit TSMC's Web site ( http://www.tsmc.com/ ) for details about these and other announcements.

               TAIWAN SEMICONDUCTOR MANUFACTURING CO., LTD.
                       Unconsolidated Balance Sheet
                     As of December 31, 2004 and 2003
                    (Figures in Million of New Taiwan
                Dollars (NTD) and U.S. Dollars (USD)) (1)

                                                    December 31, 2004
                ASSETS                        USD          NTD           %
    Cash                                     2,053        65,532       13.4
    Short Term Investment                    1,660        52,979       10.9
    Accounts Receivable - Trade                852        27,205        5.6
    Inventories                                444        14,172        2.9
    Other Current Assets                       432        13,779        2.8
       Total Current Assets                  5,441       173,667       35.6

    Long Term Investment                     2,297        73,293       15.0

    Fixed Assets                            16,543       527,982      108.4
    Less Accumulated Depreciation           (9,400)     (300,006)     (61.6)
       Net Fixed Assets                      7,143       227,976       46.8

    Other Assets                               395        12,617        2.6
       Total Assets                         15,276       487,553      100.0

             LIABILITIES
     Accounts Payable                          304         9,687        2.0
     Payables to Contractors and
      Equipment Suppliers                      976        31,154        6.4
     Accrued Expenses and Other Current
      Liabilities                              291         9,298        1.9
     Current Portion of Bonds Payable          329        10,500        2.2
        Total Current Liabilities            1,900        60,639       12.5
     Bonds Payable                             611        19,500        4.0
     Other Long Term Liabilities               265         8,449        1.7
        Total Liabilities                    2,776        88,588       18.2

         SHAREHOLDERS' EQUITY
     Capital Stock                           7,285       232,520       47.7
     Capital Surplus                         1,771        56,537       11.6
     Legal Reserve                             800        25,528        5.2
     Special Reserve                            --            --         --
     Retained Earnings                       2,763        88,202       18.1
     Treasury Stock                            (50)       (1,595)      (0.3)
     Unrealized Loss on Long-term
      Investments                               --            --         --
     Cumulated Translation Adjustment          (69)       (2,227)      (0.5)
        Total Equity                        12,500       398,965       81.8
     Total Liabilities & Shareholders'
      Equity                                15,276       487,553      100.0

     Note: (1) New Taiwan dollar amounts have been translated into U.S.
           dollars at the rate of NT$31.92 per U.S. dollar as of December 31,
           2004.


               TAIWAN SEMICONDUCTOR MANUFACTURING CO., LTD.
                       Unconsolidated Balance Sheet
                     As of December 31, 2004 and 2003
                    (Figures in Million of New Taiwan
                Dollars (NTD) and U.S. Dollars (USD)) (1)

                                             December 31,         YoY
                                                 2003              Inc.(Dec.)
                 ASSETS                      NTD       %     Move        %
    Cash                                    98,288   24.8  (32,756)   (33.3)
    Short Term Investment                   12,559    3.2   40,420    321.8
    Accounts Receivable - Trade             25,643    6.5    1,562      6.1
    Inventories                             10,907    2.8    3,265     29.9
    Other Current Assets                    11,129    2.7    2,650     23.8
       Total Current Assets                158,526   40.0   15,141      9.6

    Long Term Investment                    37,965    9.6   35,328     93.1

    Fixed Assets                           435,801  109.9   92,181     21.2
    Less Accumulated Depreciation         (247,514) (62.4) (52,492)    21.2
       Net Fixed Assets                    188,287   47.5   39,689     21.1

    Other Assets                            11,639    2.9      978      8.4
       Total Assets                        396,417    100   91,136     23.0

              LIABILITIES
     Accounts Payable                       10,584    2.7     (897)    (8.5)
     Payables to Contractors and
      Equipment Suppliers                    7,118    1.8   24,036    337.7
     Accrued Expenses and Other Current
      Liabilities                            7,836    1.9    1,462     18.7
     Current Portion of Bonds Payable        5,000    1.3    5,500     31.9
        Total Current Liabilities           30,538    7.7   30,101     98.6
     Bonds Payable                          30,000    7.6  (10,500)   (35.0)
     Other Long Term Liabilities             6,665    1.7    1,784     26.8
        Total Liabilities                   67,203   17.0   21,385     31.8

          SHAREHOLDERS' EQUITY
     Capital Stock                         202,666   51.1   29,854     14.7
     Capital Surplus                        56,856   14.3     (319)    (0.6)
     Legal Reserve                          20,802    5.2    4,726     22.7
     Special Reserve                            69    0.0      (69)      --
     Retained Earnings                      50,229   12.7   37,973     75.6
     Treasury Stock                         (1,633)  (0.4)      38     (2.3)
     Unrealized Loss on Long-term
      Investments                               (0)  (0.0)       0       --
     Cumulated Translation Adjustment          225    0.1   (2,452)      --
        Total Equity                       329,214   83.0   69,751     21.2
     Total Liabilities & Shareholders'
      Equity                               396,417    100   91,136     23.0

     Note: (1) New Taiwan dollar amounts have been translated into U.S.
           dollars at the rate of NT$31.92 per U.S. dollar as of December 31,
           2004.


               TAIWAN SEMICONDUCTOR MANUFACTURING CO., LTD.
                       Unconsolidated Balance Sheet
                 As of December 31 and September 30, 2004
                        (Figures in Million of New
             Taiwan Dollars (NTD) and U.S. Dollars (USD)) (1)

                                                   December 31, 2004
                ASSETS                        USD          NTD           %
    Cash                                     2,053        65,532       13.4
    Short Term Investment                    1,660        52,979       10.9
    Accounts Receivable - Trade                852        27,205        5.6
    Inventories                                444        14,172        2.9
    Other Current Assets                       432        13,779        2.8
       Total Current Assets                  5,441       173,667       35.6

    Long Term Investment                     2,297        73,293       15.0

    Fixed Assets                            16,543       527,982      108.4
    Less Accumulated Depreciation           (9,400)     (300,006)     (61.6)
       Net Fixed Assets                      7,143       227,976       46.8

    Other Assets                               395        12,617        2.6
       Total Assets                         15,276       487,553      100.0

             LIABILITIES
     Accounts Payable                          304         9,687        2.0
     Payables to Contractors and
      Equipment Suppliers                      976        31,154        6.4
     Accrued Expenses and Other Current
      Liabilities                              291         9,298        1.9
     Current Portion of Bonds Payable          329        10,500        2.2
        Total Current Liabilities            1,900        60,639       12.5
     Bonds Payable                             611        19,500        4.0
     Other Long Term Liabilities               265         8,449        1.7
        Total Liabilities                    2,776        88,588       18.2

         SHAREHOLDERS' EQUITY
     Capital Stock                           7,285       232,520       47.7
     Capital Surplus                         1,771        56,537       11.6
     Legal Reserve                             800        25,528        5.2
     Special Reserve                            --           --          --
     Retained Earnings                       2,763        88,202       18.1
     Treasury Stock                            (50)       (1,595)      (0.3)
     Unrealized Loss on Long-term
      Investments                               --            --         --
     Cumulated Translation Adjustment          (69)       (2,227)      (0.5)
        Total Equity                        12,500       398,965       81.8
     Total Liabilities & Shareholders'
      Equity                                15,276       487,553      100.0

     Note: (1) New Taiwan dollar amounts have been translated into U.S.
           dollars at the rate of NT$31.92 per U.S. dollar as of December 31,
           2004.


               TAIWAN SEMICONDUCTOR MANUFACTURING CO., LTD.
                       Unconsolidated Balance Sheet
                 As of December 31 and September 30, 2004
                        (Figures in Million of New
             Taiwan Dollars (NTD) and U.S. Dollars (USD)) (1)

                                            September 30,
                                                2004              QoQ
                                                                   Inc.(Dec.)
                 ASSETS                      NTD       %     Move        %
    Cash                                    78,290   16.9  (12,758)   (16.3)
    Short Term Investment                   46,128   10.0    6,851     14.9
    Accounts Receivable - Trade             33,415    7.2   (6,210)   (18.6)
    Inventories                             12,629    2.7    1,544     12.2
    Other Current Assets                     7,220    1.6    6,558     90.8
       Total Current Assets                177,682   38.4   (4,015)    (2.3)

    Long Term Investment                    58,186   12.6   15,107     26.0

    Fixed Assets                           492,964  106.6   35,018      7.1
    Less Accumulated Depreciation         (285,808) (61.8) (14,198)     5.0
       Net Fixed Assets                    207,156   44.8   20,820     10.1

    Other Assets                            19,484    4.2   (6,867)   (35.2)
       Total Assets                        462,508  100.0   25,045      5.4

              LIABILITIES
     Accounts Payable                       12,997    2.8   (3,310)   (25.5)
     Payables to Contractors and
      Equipment Suppliers                   15,261    3.3   15,893    104.1
     Accrued Expenses and Other Current
      Liabilities                           10,974    2.4   (1,676)   (15.3)
     Current Portion of Bonds Payable        5,000    1.1    5,500    110.0
        Total Current Liabilities           44,232    9.6   16,407     37.1
     Bonds Payable                          30,000    6.5  (10,500)   (35.0)
     Other Long Term Liabilities             9,013    1.9     (564)    (6.3)
        Total Liabilities                   83,245   18.0    5,343      6.4

          SHAREHOLDERS' EQUITY
     Capital Stock                         232,519   50.2        1      0.0
     Capital Surplus                        56,529   12.2        8      0.0
     Legal Reserve                          25,528    5.5       --      0.0
     Special Reserve                            --     --       --       --
     Retained Earnings                      66,007   14.3   22,195     33.6
     Treasury Stock                         (1,617)  (0.3)      22     (1.4)
     Unrealized Loss on Long-term
      Investments                               (3)  (0.0)       3       --
     Cumulated Translation Adjustment          300    0.1   (2,528)      --
        Total Equity                       379,263   82.0   19,702      5.2
     Total Liabilities & Shareholders'
      Equity                               462,508  100.0   25,045      5.4

     Note: (1) New Taiwan dollar amounts have been translated into U.S.
           dollars at the rate of NT$31.92 per U.S. dollar as of December 31,
           2004.


               TAIWAN SEMICONDUCTOR MANUFACTURING CO., LTD.
                     UNCONSOLIDATED INCOME STATEMENT
     For the Three Months Ended December 31, 2004, December 31, 2003
                          and September 30, 2004
            (Expressed in Million New Taiwan Dollars (NTD) and
                          U.S. Dollars (USD) (1)
           Except for Per Share Amounts and Shares Outstanding)

                                             Year over Year Comparison
                                         Q4 2004      % of     Q4      YoY
                                                              2003     Inc.
                                                                      (Dec.)
                                       USD      NTD   Sales    NTD       %
    Net Sales                         1,936   63,875  100.0   57,780   10.5
    Cost of Sales                    (1,113) (36,722) (57.5) (35,073)   4.7
       Gross Profit                     823   27,153   42.5   22,707   19.6
    Operating Expenses
      Research and Development
       Expenses                        (108)  (3,568)  (5.6)  (4,055) (12.0)
      General and Administrative
       Expenses                         (65)  (2,153)  (3.4)  (1,765)  21.9
      Selling and Marketing Expenses    (13)    (404)  (0.6)    (262)  54.4
    Total Operating Expenses           (186)  (6,125)  (9.6)  (6,082)   0.7

        Income from Operations          637   21,028   32.9   16,625   26.5

    Net Non-operating Income
     (Expenses)                          15      457    0.7     (192)    --
    Investment Gain (Loss)               18      609    1.0    1,135  (46.4)
        Income before Income Tax        670   22,094   34.6   17,568   25.8

    Income Tax Credit (Expenses)          2       90    0.1   (1,566)    --

        Net Income                      672   22,184   34.7   16,002   38.6

    Diluted Earnings Per Ordinary
     Share                             0.03     0.96            0.68   40.1
    Earnings Per ADR (2)               0.15     4.77            3.40

    Weighted Average Outstanding
     Shares ('M) (3)                          23,255          23,337


     Note: (1) New Taiwan dollars have been translated into U.S. dollars at
               the weighted average rate of NTD32.99 per U.S. dollar for the
               fourth quarter of 2004.
           (2) 1 ADR equals 5 ordinary shares.
           (3) Total weighted average outstanding shares for 4Q '03 has
               been retroactively adjusted for stock dividends and stock
               bonus.


               TAIWAN SEMICONDUCTOR MANUFACTURING CO., LTD.
                     UNCONSOLIDATED INCOME STATEMENT
     For the Three Months Ended December 31, 2004, December 31, 2003
                          and September 30, 2004
            (Expressed in Million New Taiwan Dollars (NTD) and
                          U.S. Dollars (USD) (1)
           Except for Per Share Amounts and Shares Outstanding)

                                               Sequential Comparison
                                         Q4 2004      % of     Q4      YoY
                                                              2003     Inc.
                                                                      (Dec.)
                                       USD      NTD   Sales     NTD      %
    Net Sales                         1,936   63,875  100.0   69,735   (8.4)
    Cost of Sales                    (1,113) (36,722) (57.5) (37,595)  (2.3)
       Gross Profit                     823   27,153   42.5   32,140  (15.5)
    Operating Expenses
      Research and Development
       Expenses                        (108)  (3,568)  (5.6)  (3,123)  14.3
      General and Administrative
       Expenses                         (65)  (2,153)  (3.4)  (2,578) (16.5)
      Selling and Marketing Expenses    (13)    (404)  (0.6)    (318)  27.1
    Total Operating Expenses           (186)  (6,125)  (9.6)  (6,019)   1.8

        Income from Operations          637   21,028   32.9   26,121  (19.5)

    Net Non-operating Income
     (Expenses)                          15      457    0.7      630  (27.4)
    Investment Gain (Loss)               18      609    1.0    1,378  (55.8)
        Income before Income Tax        670   22,094   34.6   28,129  (21.5)

    Income Tax Credit (Expenses)          2       90    0.1     (196)    --

        Net Income                      672   22,184   34.7   27,933  (20.6)

    Diluted Earnings Per Ordinary
     Share                             0.03     0.96            1.20  (20.5)
    Earnings Per ADR (2)               0.15     4.77            3.72

    Weighted Average Outstanding
     Shares ('M) (3)                          23,255          23,270

     Note: (1) New Taiwan dollars have been translated into U.S. dollars at
               the weighted average rate of NTD32.99 per U.S. dollar for the
               fourth quarter of 2004.
           (2) 1 ADR equals 5 ordinary shares.
           (3) Total weighted average outstanding shares for 4Q '03 has
               been retroactively adjusted for stock dividends and stock
               bonus.


               TAIWAN SEMICONDUCTOR MANUFACTURING CO., LTD.
                     UNCONSOLIDATED INCOME STATEMENT
          For the Twelve Months Ended December 31, 2004 and 2003
     (Expressed in Million New Taiwan Dollars (NTD) and U.S. Dollars
                                (USD) (1)
           Except for Per Share Amounts and Shares Outstanding)

                                       2004        % of     2003     YoY
                                                                     Inc.
                                                                    (Dec.)
                                   USD      NTD    Sales     NTD       %
    Net Sales                     7,653   255,992  100.0   201,904   26.8
    Cost of Sales                (4,360) (145,831) (57.0) (129,012)  13.0
      Gross Profit                3,294   110,161   43.0    72,892   51.1
    Operating Expenses
      Research and Development
       Expenses                    (374)  (12,516)  (4.9)  (12,713)  (1.5)
      General and Administrative
       Expenses                    (280)   (9,367)  (3.7)   (6,338)  47.8
      Selling and Marketing
       Expenses                     (43)   (1,455)  (0.6)   (1,193)  21.9
    Total Operating Expenses       (698)  (23,338)  (9.1)  (20,244)  15.3

        Income from Operations    2,596    86,823   33.9    52,648   64.9

    Net Non-operating Expenses       27       916    0.4    (2,411)    --
    Investment Loss                 121     4,040    1.6       791  410.5
        Income before Income Tax  2,744    91,779   35.9    51,028   79.9

    Income Tax Credit (Expenses)     16       537    0.2    (3,769)    --

        Net Income                2,760    92,316   36.1    47,259   95.3

    Diluted Earnings Per
     Ordinary Share (2)            0.12      3.97             2.02   96.8
    Earnings Per ADR (3)           0.59     19.85            10.09

    Weighted Average Outstanding
     Shares ('M) (4)                       23,255           23,337


      Note: (1) New Taiwan dollars have been translated into U.S. dollars at
                the weighted average rate of NTD 33.45 per U.S. dollar for
                the twelve months of 2004.
            (2) EPS calculation for 2003 is after deducting a cash
                dividend payment on NT$13,000 million of preferred stock
                paying an annual rate of 3.5% at the period from January 1
                to May 29, 2003.  The preferred stock was redeemed on May 29,
                2003.
            (3) 1 ADR equals 5 ordinary shares.
            (4) Total weighted average outstanding shares were 23,255M
                shares for the twelve months ended December 31, 2004 and
                23,337M shares for the twelve months ended December 31, 2003
                after the retroactive adjustments for stock dividends and
                stock bonus.


               TAIWAN SEMICONDUCTOR MANUFACTURING CO., LTD.
                  UNCONSOLIDATED STATEMENT OF CASH FLOWS
              For the Twelve Months Ended December 31, 2004
         (Figures in Million of New Taiwan Dollars (NTD) and U.S.
                            Dollars (USD)) (1)

                                 12 Months 2004   4Q 2004  3Q 2004  4Q 2003
                                  USD      NTD       NTD      NTD      NTD
  Cash Flows from Operating
   Activities:
          Net Income             2,760    92,316   22,184   27,933   16,002
          Depreciation &
           Amortization          1,886    63,072   16,615   15,371   15,495
          Deferred Income Tax      (33)   (1,101)    (226)      46    1,566
          Investment Loss
           (Gain) Recognized by
           Equity Method          (121)   (4,040)    (608)  (1,378)  (1,135)
          Gain on Sale of Long-
           Term Investments         --        (2)      --        0      (13)
          Changes in Working
           Capital & Others       (196)   (6,565)  (1,231)  (3,813)    (432)
          Net Cash Provided
           from Operating
           Activities            4,296   143,680   36,734   38,159   31,483

  Cash Flows from Investing
   Activities:
          Increase in Short-
           Term Investments     (1,310)  (43,823)  (6,851)  (4,929)    (865)
          Increase in Long-Term
           Investments            (906)  (30,291) (17,009)  (7,339)  (1,955)
          Acquisition of Fixed
           Assets               (2,277)  (76,171) (20,521) (16,471) (12,832)
          Proceeds from Sales
           of Long-Term
           Investments              --         8       --        0       18
          Proceeds from
           Disposal of
           Properties               51     1,714    1,404       60       18
          Increase in Deferred
           Assets                  (72)   (2,404)  (1,351)    (412)    (345)
          Decrease (Increase)
           in Deposit-Out            3        92      (56)      (3)     110
          Net Cash Used in
           Investing Activities (4,511) (150,875) (44,384) (29,094) (15,851)

  Cash Flows from Financing
   Activities:
          Cash Dividend -
           Common Shares          (364)  (12,160)      --  (12,160)      --
          Increase in Treasury
           Stocks                 (211)   (7,060)      --       --       --
          Repayment of
           corporate bonds        (149)   (5,000)  (5,000)      --       --
          Bonus Paid to
           Employees               (20)     (682)      --      (682)     --
          Cash Dividend -
           Preferred Shares         (6)     (184)      --       --       --
          Decrease in Guarantee
           Deposits & Others       (10)     (351)    (112)     (75)     (75)
          Bonus Paid to
           Directors and
           Supervisors              (4)     (128)      --       --       --
          Issuance of stocks
           option                              4        4       --       --
          Net Cash Used in
           Financing Activities   (764)  (25,561)  (5,108) (12,917)     (75)

  Net Increase (Decrease) in
   Cash and Cash Equivalents      (979)  (32,756) (12,758)  (3,852)  15,557

  Cash and Cash Equivalents at
   Beginning of Period           2,939    98,288   78,290   82,142   82,731

  Cash and Cash Equivalents at
   End of Period                 1,960    65,532   65,532   78,290   98,288


      Note: (1) New Taiwan dollar amounts have been translated into U.S.
            dollars at the rate of NTD33.45 per U.S. dollar, the weighted
            average exchange rate for the twelve months of 2004.


  CONTACT IN TAIWAN
   Elizabeth Sun / Julie Chan / Eric Chiang
   Investor Relations Division of TSMC
   Tel:    +886-3-568-2085/2080/2087
   Email:  
Email Contact

Web Sites: http://www.tsmc.com/uploadfile/ir/quarterly/index_charts.pdf
http://www.tsmc.com

CONTACT: Elizabeth Sun / Julie Chan / Eric Chiang, Investor Relations
Division of TSMC, +886-3-568-2085/2080/2087, or Email Contact