TSMC Reports 95% Increase in Record Year Profit

Quarterly Net Income Reached NT$22 Billion     
        
Hsinchu, Taiwan, R.O.C. – January 27, 2005 -- Taiwan Semiconductor Manufacturing Company, Ltd. today announced revenue and net income for the quarter ended December 31, 2004. Fourth quarter revenue reached NT$63.87 billion, while net income and fully diluted earnings per share came to NT$22.18 billion and NT$0.96 per share (US$0.15 per ADS unit), respectively. For the full year of 2004, TSMC’s revenue set a new record, NT$255.99 billion, 26.8% higher than in year 2003. Net income for the entire year grew 95.3% to NT$92.32 billion, also a new record. In US dollar terms, revenue for 2004 was US$7.65 billion, an increase of 30.3% while net income grew to US$2.76 billion, an increase of 100%. Fully diluted earnings per share jumped 96.8% to NT$3.97 (US$0.59 per ADS unit).

On a sequential basis, fourth quarter results represent an 8.4% decline in revenue, a 20.6% decrease in net income and a 20.5% decrease in fully diluted EPS. Year-over-year, fourth quarter revenue, net income, and fully diluted EPS increased 11%, 39%, and 40%, respectively. All figures were prepared in accordance with R.O.C. GAAP on an unconsolidated basis.

The 8.4% sequential decline in revenue in the fourth quarter mainly resulted from an 8.5% decrease in wafer shipments and a 2.9% depreciation of US dollar against local currency, ameliorated by a 1.7% increase in wafer average selling price (ASP). Revenues from advanced process technologies (0.13-micron and below) increased significantly in the fourth quarter and reached 36 percent of total wafer sales. Gross profit margin for the quarter declined by 3.6 percentage points to 42.5%, due to lower levels of wafer output, an unfavorable movement of the exchange rate, and the ramp-up of Fab14. Net margin for the quarter was 34.7%.

“Due primarily to customers’ continuing inventory digestion, our fourth quarter business had declined as we expected,” said Lora Ho, VP and Chief Financial Officer of TSMC. “First quarter business conditions are likely to exhibit a normal seasonal pattern in the end market,” noted Ho, “and based on the current outlook, management’s expectations for the first quarter 2005 performance are as follows”:

1. Wafer shipments to decrease by a single digit percentage point sequentially;

2. Overall utilization rate to be about 80%;

3. Gross profit margin to be in the range of 38% to 40%;

4. ASP to remain about the same sequentially.

Ho said management also expects that 2005 capital expenditure will be in the range of US$2.5 billion to US$2.7 billion.        
TSMC’s 2004 fourth quarter results: (Unit: NT$million, except for EPS)

	4Q’04 Amount*	4Q’03 Amount	YoY Inc. (Dec.) %	3Q’04 Amount	QoQ Inc. (Dec.) %
Net sales	63,875	57,780	10.5	69,735	(8.4)
Gross profit	27,153	22,707	19.6	32,140	(15.5)
Income from operations	21,028	16,625	26.5	26,121	(19.5)
Income before tax	22,094	17,568	25.8	28,129	(21.5)
Net income	22,184	16,002	38.6	27,933	(20.6)
EPS(NT$)	0.96**	0.68***	40.1	1.20****	(20.5)

* 2004 fourth quarter figures have not been approved by Board of Directors
** Based on 23,255 million weighted average outstanding shares
*** Based on 23,337 million weighted average outstanding shares
****Based on 23,270 million weighted average outstanding share
       
TSMC’s 2004 results: (Unit: NT$million, except for EPS)

	2004* Amount	2003 Amount	YoY Inc. (Dec.) %
Net sales	255,992	201,904	26.8
Gross profit	110,161	72,892	51.1
Income from operations	86,823	52,648	64.9
Income before tax	91,779	51,028	79.9
Net income	92,316	47,259	95.3
EPS(NT$)	3.97**	2.02***	96.8

* 2004 figures have not been approved by Board of Directors
** Based on 23,255 million weighted average outstanding shares
*** Based on 23,337 million weighted average outstanding shares