TSMC Reports First Quarter EPS of NT$1.32

Hsin-Chu, Taiwan, R.O.C., April 27, 2006 -- TSMC today announced, on an unconsolidated basis, revenue of NT$77.29 billion, net income of NT$32.61 billion, and fully diluted earnings per share of NT$1.32 (US$0.20 per ADS unit) for the first quarter ended March 31, 2006. On a consolidated basis, net sales were NT$77.85 billion while net income and EPS remained at NT$32.61 billion and NT$1.32, respectively.

Year-over-year, first quarter unconsolidated revenue increased 38.9% while net income and fully diluted EPS increased 93.9% and 93.6%, respectively. On a sequential basis, unconsolidated first quarter results represent a 4.8% decrease in revenue, a 3.8% decrease in net income and a 3.9% decrease in fully diluted EPS. All figures were prepared in accordance with R.O.C. GAAP.

As a result of stronger than expected demand in certain product segments, first quarter revenue surpassed guidance. Advanced process technologies (0.13-micron and below) accounted for 49% of wafer revenues while revenues from 90-nanometer process technology alone was 20% of the total wafer sales. Gross margin declined from 49.1% in the previous quarter to 47.4% in the first quarter, with 3.3% depreciation in US dollars being an important factor. Operating margin was 39.9% compared to 42.2% in the previous quarter, while net margin increased slightly to 42.2% from 41.8% quarter over quarter.

“Due primarily to seasonality and a weaker US dollar, our first quarter business had declined as we expected, although revenue surpassed our guidance,” said Lora Ho, VP and Chief Financial Officer of TSMC. “Going forward, we expect the demand to increase for most of the application segments and the currency exchange rate impact to be less pronounced,” said Ho. “Based on our current business outlook, management’s expectations for second quarter 2006 performance are as follows”:

• Revenue to be between NT$79 billion and NT$81billion, while consolidated revenue to be between NT$80 billion and NT$82 billion;
  
• Gross profit margin to be between 47% and 49%, while consolidated gross profit margin to be between 48% and 50%;
  
• Operating profit margin to be between 40% and 42% on both consolidated and unconsolidated basis.