TSMC Board of Directors Proposes NT$0.80 Stock Dividend

Taiwan Semiconductor Manufacturing Company Ltd. (TSMC or the “Company”) (NYSE: TSM) today held a meeting of the Board of Directors, at which the Board adopted a proposal recommending distribution of a stock dividend of NT$0.80 per common share. The proposal will be discussed and brought to a vote at the Company’s annual shareholders' meeting scheduled for June 3, 2003.

TSMC Spokesperson Mr. Harvey Chang noted that, at its meeting, the Board of Directors also:

1. Approved the 2002 Business Report and Financial Statements. Net sales for 2002 were NT$160,961 million and net income after tax was NT$21,610 million, with earnings per share of NT$1.14.

2. Approved a proposal for distribution of 2002 profits. Cash dividends of NT$455 million will be proposed to the Preferred A shareholders. A stock dividend of NT$0.80 per share will be proposed to the common shareholders. In addition, employees’ profit sharing of total 153.9 million shares will be distributed in 100% stock at par value. The employee profit sharing dilution is estimated at 0.76%.

3. Approved scheduling of the 2003 Regular Shareholders’ Meeting for 9:30a.m. on June 3, 2003 at the Auditorium in the Activity Center of the Hsinchu Science-Based Industrial Park.

4. Approved the redemption and cancellation of the Company’s 1.3 billion Preferred A shares at par value of NT$10 per share according to TSMC’s Articles of Incorporation. After the redemption and cancellation, the Company’s paid-in capital will be reduced by NT$13 billion. Furthermore, the Board of Directors approved the record date for capital reduction (also the redemption date of the Company’s Preferred A shares) as May 29, 2003.

5. Approved the revisions to the Company’s 2002 Employee Stock Options Plan, which was originally approved at the Board of Directors’ Meeting on May 7, 2002, in order to synchronize the vesting schedules for domestic and overseas employees and reflect recent change of relevant regulations. The vesting schedule for employees of TSMC and TSMC’s domestic subsidiaries is changed from five years to four years.