TSMC 2004 Third Quarter Report: 20% Increase in Sequential EPS

Hsinchu, Taiwan, R.O.C., October 26, 2004 -- Taiwan Semiconductor Manufacturing Company, Ltd. today announced revenue and net income for the quarter ended September 30, 2004. Third quarter revenue reached NT$69.74 billion while net income and fully diluted earnings per share came to NT$27.93 billion and NT$1.20 per share (US$0.18 per ADS unit), respectively.

On a sequential basis, third quarter results represent a 7.5% increase in revenue, a 19.3% increase in net income and a 19.5% increase in fully diluted EPS. Year-over-year comparison shows the increases in revenue, net income, and fully diluted EPS to be 27%, 84%, and 85%, respectively. All figures were prepared in accordance with R.O.C. GAAP on an unconsolidated basis.

The 7.5% increase in third quarter revenue mainly resulted from a 4.0% increase in wafer shipments and a 1.4% increase in wafer average selling price (ASP), further helped by a 1.8% weaker local currency to US dollar exchange rate. Gross margin for the third quarter rose to 46.1%, another significant increase sequentially from the previous quarter’s 43.4%, due to higher levels of wafer output, continuing improvement on 12-inch wafer yield, and a better product mix. Revenues from advanced process technologies (0.13-micron and below) reached 30 percent of total wafer sales. Net margin for the quarter rose to 40.1% from 36.1% in the previous quarter.

“Building upon five consecutive quarters of strong financial performance, TSMC has delivered another set of record-breaking financial results for both the top-line and the bottom-line,” said Lora Ho, VP and Chief Financial Officer of TSMC.

Ms. Ho also noted that there has been some near-term softening in customer demand. The Company’s fourth quarter revenues would decline slightly versus the third quarter of 2004.

TSMC’s 2004 third quarter results: (Unit: NT$million, except for EPS)

	3Q’04 Amount*	3Q’03 Amount	YoY Change %	2Q’04 Amount	QoQ Change %
Net sales	69,735	54,877	27.1	64,869	7.5
Gross profit	32,140	21,447	49.9	28,139	14.2
Income from operations	26,121	16,487	58.4	22,134	18.0
Income before tax	28,129	16,708	68.4	23,121	21.7
Net income	27,933	15,169	84.1	23,410	19.3
EPS(NT$)	1.20**	0.65***	84.6	1.00****	19.5

* 2004 third quarter figures have not been approved by Board of Directors
** Based on 23,270 million weighted average outstanding shares
*** Based on 23,331 million weighted average outstanding shares
****Based on 23,301 million weighted average outstanding share