TSMC Reports 5% Sequential Increase in Second Quarter Revenue with EPS of NT$0.74

Hsinchu, Taiwan, R.O.C., July 26, 2005 -- TSMC today announced revenue and net income for the quarter ended June 30, 2005. Second quarter revenue reached NT$58.52 billion while net income and fully diluted earnings per share came to NT$18.37 billion and NT$0.74 per share (US$0.12 per ADS unit), respectively.

On a sequential basis, second quarter results represent a 5.1% increase in revenue, a 9.2% increase in net income and fully diluted EPS. Year-over-year comparison shows decreases in revenue, net income, and fully diluted EPS to be 9.8%, 21.5%, and 21.3%, respectively. All figures were prepared in accordance with R.O.C. GAAP on an unconsolidated basis.

The 5.1% increase in second quarter revenue mainly resulted from a 14.5% increase in wafer shipments and a 5.4% decline in average wafer selling price (ASP). Gross margin for the second quarter improved to 39.7% from the previous quarter’s 38.9%, due to higher levels of capacity utilization, but a lower ASP partially reduced the magnitude of the improvement. Revenues from advanced process technologies (0.13-micron and below) accounted for 43% of total wafer sales, compared to 45% previously. Net margin for the quarter improved to 31.4% from 30.2% in the last quarter.

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

• Wafer shipments to increase by a mid-teen percentage point sequentially;
• Overall utilization rate to exceed 90%;
• Gross profit margin to be in the range of 41% to 43%;
• ASP to decline by a low to mid single digit percentage point sequentially.

            
TSMC’s 2005 second quarter results: (Unit: NT$ million, except for EPS)    

	2Q’05 Amount*	2Q’04 Amount	YoY Inc. (Dec.) %	1Q’05 Amount	QoQ Inc. (Dec.) %
Net sales	58,516	64,869	(9.8)	55,653	5.1
Gross profit	23,205	28,139	(17.5)	21,649	7.2
Income from operations	17,784	22,134	(19.7)	16,076	10.6
Income before tax	17,733	23,121	(23.3)	16,265	9.0
Net income	18,369	23,410	(21.5)	16,818	9.2
EPS(NT$)	0.74**	0.95***	(21.3)	0.68****	9.2

* 2005 second quarter figures have not been approved by Board of Directors
** Based on 24,687 million weighted average outstanding shares
*** Based on 24,770 million weighted average outstanding shares
****Based on 24,684 million weighted average outstanding share