TSMC Announces the Original 2001 Financial Forecast Should be Modified

Hsinchu, Taiwan, September 27, 2001– Taiwan Semiconductor Manufacturing Company Ltd. (“ TSMC” or “ the Company” ) (TAIEX: 2330, NYSE: TSM), today held a special meeting of the Board of Directors. The Board approved at the meeting that the original 2001 financial forecast, filed in accordance with local regulatory requirements, should be modified. TSMC expects that the new forecast approved by the Board today of net sales, operating income, income before tax, and net income are approximately NT$121.9 billion, NT$14.3 billion, NT$6 billion, and NT$11 billion, respectively. Earnings per share will be close to NT$0.63. A formal forecast statement will be announced after auditing.

Ms. K. C. Chen, TSMC spokesperson and senior vice president, stated that the Company’s monthly sales revenue had hit bottom during May and June 2001. However, given the anticipated substantial global market decline in the second half of 2001, the semiconductor industry did not resume its recovery as strongly as previously anticipated. Therefore, the essential assumptions for the original forecast, including unit shipment and average selling prices, have changed. As a result, the original forecast needs to be adjusted.

In accordance with the ROC government’s regulations, a company is required to file its annual financial forecast before the end of April of that year. However, given the opacity of the semiconductor industry, it is difficult to accurately reflect changes which impact a company’s actual operating performances. In order to provide TSMC shareholders with regular and current operation and business information, TSMC voluntarily makes quarterly announcements to all investors regarding both quarterly operating results and the guidance for the subsequent quarter. These efforts are to help the investors receive real-time information and understand the market trend. The latest quarterly announcement that TSMC made was on July 26, 2001. Also, in a press release issued on September 21, TSMC indicated that 2001 business conditions would be better than what was expected at the end of July 2001.

“As per the guidance given by TSMC earlier, TSMC’s Q3 2001 operating income is expected to be at least five times that of Q2 2001. It is also expected that TSMC will have better operating performance in Q4 2001 compared to Q3 2001,” Ms. K. C. Chen continues.

Forward-Looking Statements

Except for statements in respect of historical matters, the statements contained in this Release are “forward-looking statements” within the meaning of Section 27A of the U.S. Securities Act of 1933 and Section 21E of the U.S. Securities Exchange Act of 1934. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual performance, financial condition or results of operations of Taiwan Semiconductor Manufacturing Company Limited to be materially different from any future performance, financial condition or results of operations implied by such forward-looking statements. Such factors include, among others, the factors set forth in “Item 3: Risk Factors” of the Form 20-F filed with the United States Securities and Exchange Commission on June 21, 2001 and other factors disclosed in our other documents filed or submitted to the United States Securities and Exchange Commission including, without limitation, our Form 6-K dated July 26, 2001. This revised forecasted financial statements included herein were published on September 27, 2001 in accordance with the Republic of China Securities and Futures Commission’s “Guidelines for Publication of Financial Forecasts of Public Companies”. The attached financial forecasts reflect the current belief of TSMC as of this date and TSMC undertakes no obligation to update this forecast for events or circumstances that occur subsequent to this date.