TSMC Reports 18% Sequential Increase in Third Quarter Revenue with EPS of NT$0.99

Hsinchu, Taiwan, R.O.C., October 27, 2005 -- TSMC today announced revenue and net income for the quarter ended September 30, 2005. Third quarter revenue reached NT$69.26 billion while net income and fully diluted earnings per share came to NT$24.49 billion and NT$0.99 per share (US$0.15 per ADS unit), respectively.

On a sequential basis, third quarter results represent an 18.4% increase in revenue, and a 33.3% increase in both net income and fully diluted EPS. Year-over-year comparison shows decreases in revenue, net income, and fully diluted EPS to be 0.7%, 12.3%, and 12.2%, respectively. All figures were prepared in accordance with R.O.C. GAAP on an unconsolidated basis.

The 18.4% increase in third quarter revenue mainly resulted from a 19.8% increase in wafer shipments. Gross margin for the third quarter jumped 4.4 percentage points to 44.1%, due to higher levels of capacity utilization and more favorable exchange rates. Advanced process technologies (0.13-micron and below) accounted for 43% of wafer revenues, same as in the previous quarter. Meanwhile, revenues from 90-nanometer process technology reached 10% of the total wafer sales. Overall utilization was 96%. Operating margin improved from 30.4% in second quarter to 36% in third quarter, and net margin improved to 35.4% from 31.4% in the last quarter.

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

• Revenues to be between NT$77 billion and NT$79 billion;
• Overall utilization rate to be about 100%;
• Gross profit margin to reach between 47% and 49%;
• Operating profit margin to be approximately 40%.

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

	3Q’05 Amount*	3Q’04 Amount	YoY Inc. (Dec.) %	2Q’05 Amount	QoQ Inc. (Dec.) %
Net sales	69,258	69,735	(0.7)	58,516	18.4
Gross profit	30,525	32,140	(5.0)	23,205	31.5
Income from operations	24,930	26,121	(4.6)	17,784	40.2
Income before tax	24,420	28,129	(13.2)	17,733	37.7
Net income	24,488	27,933	(12.3)	18,369	33.3
EPS(NT$)	0.99**	1.13***	(12.2)	0.74****	33.3

* 2005 third quarter figures have not been approved by Board of Directors
** Based on 24,690 million weighted average outstanding shares
*** Based on 24,739 million weighted average outstanding shares
****Based on 24687 million weighted average outstanding share