TSMC Reports Second Quarter EPS of NT$0.96

HSINCHU, Taiwan, July 26 /Xinhua-PRNewswire-FirstCall/ -- TSMC today announced consolidated revenue of NT$74.92 billion, net income of NT$25.48 billion, and diluted earnings per share of NT$0.96 (US$0.15 per ADS unit) for the second quarter ended June 30, 2007.

Year-over-year, second quarter revenue decreased 8.8% while net income and diluted EPS both decreased 25.1%. On a sequential basis, second quarter results represent a 15.4% increase in revenue, and an increase of 35.3% both in net income and in diluted EPS. All figures were prepared in accordance with R.O.C. GAAP on a consolidated basis.

Second quarter results were in-line with the guidance given on April 26. Advanced process technologies (0.13-micron and below) accounted for 53% of wafer revenues with 90-nanometer process technology accounting for 26% and 65- nanometer reaching 3% of total wafer sales. Gross margin was 43%, operating margin was 33%, and net margin increased 5 percentage points to 34% from the previous quarter.

"The recovery of our business, which started in March, has continued through the second quarter, and the momentum is expected to last through the third quarter," said Lora Ho, VP and Chief Financial Officer of TSMC. "Relative to the second quarter, the computer segment shows the strongest growth while the communication and consumer segments' growth will also continue, albeit at a lower pace," said Ho. "Based on our current business outlook, management's expectations for third quarter 2007 performance are as follows":

    -- Revenue is expected to be between NT$85 billion and NT$87 billion;
    -- Gross profit margin is expected to be between 43% and 45%;
    -- Operating profit margin is expected to be between 33% and 35%.

Conference Call & Webcast Notice:

TSMC's quarterly review conference call will be held at 8 a.m. Eastern Time (8 p.m. Taiwan Time) on Thursday, July 26, 2007. 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 1-617-213-8058 in the U.S., 852-3002-1672 in Hong Kong, 65-6823-2164 in Singapore, and 44-207-365-8426 in the U.K. (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 (NYSE: TSM) is the world's largest dedicated semiconductor foundry, providing the industry's leading manufacturing capacity, process technology, and the foundry industry's largest portfolio of process- proven libraries, IP, design tools and reference flows. TSMC currently operates two twelve-inch wafer fabs, four eight-inch fabs and one six-inch fab. The Company also operates two eight-inch fabs at its wholly owned subsidiaries, WaferTech in the U.S. and TSMC (Shanghai) Company, Ltd. in China, and has substantial capacity commitments from a joint-venture fab, SSMC, in Singapore. Total managed capacity in 2006 exceeded seven million eight-inch equivalent wafers. TSMC is the first foundry to provide 65-nanometer production capabilities. TSMC's corporate headquarters are in Hsin-Chu, Taiwan. More information about TSMC is available 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 April 20, 2007, TSMC's registration statement on Form F-3, filed with the SEC on May 8, 2007, 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.

                    (Management Report and Tables Follow)



                2Q07 Quarterly Management Report July 26, 2007

    Topics in This Report

    -- Revenue Analysis
    -- Capacity
    -- Profit & Expense Analysis
    -- Financial Condition Review
    -- Cash Flow & CapEx
    -- Recap of Recent Important Events & Announcements

    Operating Results Review:



    Summary:

    (Amounts are on consolidated   2Q07      1Q07      2Q06     QoQ     YoY
     basis and are in NT$ billion
     except noted otherwise)

    EPS (NT$ per common share)
        (US$ per ADR unit)          0.96      0.71      1.29   35.3%  (25.1%)
                                    0.15      0.11      0.20      --      --

    Consolidated Net Sales         74.92     64.90     82.12   15.4%   (8.8%)
    Gross Profit                   32.18     24.61     42.50   30.8%  (24.3%)
    Gross Margin                   43.0%     37.9%     51.8%      --      --
    Operating Expense              (7.45)    (6.73)    (7.18)  10.6%    3.8%
    Non-Operating Items             3.29      2.19      0.95   50.2%  246.7%
    Net Income                     25.48     18.84     34.00   35.3%  (25.1%)
    Net Profit Margin              34.0%     29.0%     41.4%      --      --

    Wafer Shipment
   (kpcs 8 inch-equiv.)            1,856     1,566     1,869   18.5%   (0.7%)


    Remarks:

The second quarter diluted earnings per share were NT$0.96, representing a 25.1% decrease over the same period last year and a 35.3% sequential increase from the previous quarter. The consolidated operating results of 2Q07 are summarized below:

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