TSMC Solidifies Strategic Alliance Between VIS and Etron

Hsin-Chu, Taiwan, November 18, 1998-- Taiwan Semiconductor Manufacturing Company (TSMC or the "Company") (NYSE: TSM) today announced its plan to liquidate no more than 20 million shares of its holding in Vanguard International Semiconductor Corporation ("VIS"). With the proceeds received TSMC will purchase 5% of the total outstanding common shares of Etron Technology Inc. ("Etron").

TSMC, the world's largest IC foundry, is VIS' second largest shareholder, holding a 26.7% stake. "To solidify strategic alliance between VIS and Etron, TSMC plans to sell no more than 20 million shares of its holding in VIS (accounting for less than 1% of VIS' capital) to Etron, and to use the proceeds to buy stocks in Etron", said Y.C. Huang, Spokesman and Vice president of TSMC.

Y.C. Huang emphasized that TSMC has very bright prospects in the long-term development of VIS; selling TSMC's shareholding in VIS to Etron is a business strategy. TSMC will later buy back the same amount of VIS shares that have been sold in order to bring TSMC's equity ownership in VIS back to the current level. Furthermore, TSMC's shareholding in Etron is a short-term investment. Later at a proper timing TSMC will sell its holding in Etron to VIS.

VIS, founded in 1994, is a semiconductor manufacturer which designs, makes and sells DRAMs. Etron Technology, the world's leading DRAM designer, uses VIS as a source for their DRAM manufacturing. TSMC believes that through the cross shareholding among TSMC, VIS and Etron, the three companies will be able to build up competitive advantages in their respect areas and continue to significantly increase their global presence in the semiconductor market.