TSMC Reaches Settlement with SMIC

Hsinchu, Taiwan, January 30, 2005—Taiwan Semiconductor Manufacturing Company (“TSMC”) (TSE: 2330, NYSE: TSM) today announced it has resolved pending patent and trade secret litigations with Semiconductor Manufacturing International Corp. (“SMIC”).

Under the settlement’s terms, SMIC will pay TSMC US$175 million, payable in installments over six years. In addition, the two parties will cross license to each other’s patent portfolio through December 2010. The agreement also provides for the dismissal of all pending legal actions without prejudice between the two companies in U.S. District Court, California State Superior Court, the U.S. International Trade Commission, and Taiwan District Court as well.

TSMC stated that it would not sue SMIC for itemized acts of alleged trade secret misappropriation, although the settlement does not grant a license to use any of TSMC’s trade secrets. Besides, other terms of the settlement are confidential.

“With this settlement, we have amicably resolved all of our pending litigation with SMIC and believe that it is in the best interest of our shareholders,” said Dr. F.C. Tseng, Deputy Chief Executive Officer for TSMC.