TSMC and WSMC Agree to Merge

Hsinchu, Taiwan, January 7, 2000 - Taiwan Semiconductor Manufacturing Company(TSMC)(NYSE:TSM) and Worldwide Semiconductor Manufacturing Corporation (WSMC) today announced that they have signed an agreement to merge WSMC with and into TSMC. The merger agreement was approved this afternoon by the boards of directors of both TSMC and WSMC. The consolidation date of the merger is targeted for June 30, 2000, at which time WSMC will be absorbed into TSMC. The merged entity will operate as TSMC.

WSMC, established in May 1996, is a dedicated IC foundry company with fundamentally the same business scope as TSMC. Currently the third-largest foundry in Taiwan, WSMC operates one 8-inch fab using 0.25um and 0.18um process technologies. The commerce production for the second 8-inch WSMC wafer fab is expected to start in March 2000. The total annual capacity for both fabs will reach 400,000 8-inch wafers this year, and is expected to achieve at 760,000 pieces in the year 2001.

WSMC's paid-in capital is NT$ 17 billion. Its major shareholders include Winbond (with 13.24 percent), China Development Industrial Bank (11.52 percent), China Steel (8.34 percent), and Syntek Semiconductor Co. (3.59 percent).

TSMC Chairman Dr. Morris Chang stated, "The worldwide demand for IC foundry capacity has steadily and strongly increased for some time. In response, TSMC is aggressively building our capacity through our own expansion programs and by carefully selecting opportunities to cooperate with companies that share our values. Through various types of collaborative models - including mergers and acquisitions, joint ventures and strategic alliances, we continue to provide the market with the premium foundry offerings - capacity, technology and technical services - that our customers have come to expect."

Mr. Benny T. Hu, WSMC's Vice Chairman, said, "WSMC is a relatively new player in the semiconductor industry. Since its establishment three years ago, WSMC has built a strong foundation for future growth as a result of the excellent performance of its management team and employees around the globe. However, given the growing attraction of foundries with best-of-class services and the competitive advantage of being the industry leader, the synergy of the combined organization should produce more substantial results than could be achieved by TSMC or WSMC separately."

"TSMC is not only the world's largest dedicated foundry but also the most reputable foundry in the world. WSMC's major shareholders have agreed to support this merger," continued Mr. Hu. "We believe that the merger further solidifies TSMC's leading position in the semiconductor industry and is in the best short- and long-term interests of WSMC's shareholders."

The major details of the merger agreements are as follows:

The contemplated merger shall be implemented by way of "Absorption",. The mergedentity will operate as TSMC. The consolidation date of this merger is targeted for June 30, 2000. The exchange ratio for WSMC to TSMC shares would be 2 to 1. respectively. Should the paid-in capital of TSMC be increased during the period starting from the execution date of the Merger Agreement until the Consolidation Date due to distribution of stock dividend,the exchange ratios shall not be proportionately adjusted. The Chairman of the Board, Directors and Supervisors of TSMC need not be reelected as a result of the merger.

TSMC stated that the exchange ratio in this merger agreement is based upon the net worth per share and future earning prospect of WSMC. According to government regulations, the merger is subject to the approval of regulatory authorities, and shall be carried out after the stockholders!| meetings of both companies.

This is TSMC's second merger deal in less than 10 days, following closely on t