TSMC Board of Directors and Supervisors Approved the Policy for TSMC ADS Conversion Sale Program

Science-Based Industrial Park, Hsin-Chu, Taiwan, May 11, 1999 - Taiwan Semiconductor Manufacturing Company Ltd. ("TSMC" or the "Company")today announced that the Board of Directors and Supervisors approved the "Policy for TSMC ADS Conversion Sale Program", the increase of normal capital budget and the appointment of two vice-presidents.

TSMC Spokesman, Mr. YC Huang, explained that the purpose of the "TSMC ADS Conversion Sale Program" is to enable sales of common shares in American Depositary Share ("ADS") form by interested TSMC Common Shareholders in a gradual and coordinated fashion. Shareholders of TSMC, excluding TSMC's affiliates (as defined under the United States Securities Act) who are holding at least 0.02% of the TSMC's outstanding common shares as of the relevant announcement date and have held such shares for at least one year as of such date will be eligible to file an application to sell shares in the Program. Based on TSMC's 6,047,175,967 shares currently outstanding, 0.02% represents 1,209,436 shares. The maximum amount that will be approved for participation in the Program during any three month period will be 0.5% of TSMC's outstanding shares. TSMC does not recommend or promote the sale of TSMC shares by its shareholders. Each transaction under the Program is subject to the approval by the TSMC Board of Directors, the approvals by certain ROC and US regulatory authorities and stock exchanges and market conditions. Each investor should consult with its own independent legal and financial advisors to ascertain whether the probability of success in obtaining all necessary approvals for TSMC and the investor justifies the investor participating in the Program.

Eligible selling shareholders who have submitted a written application to participate in the Program, whether or not required regulatory approvals are granted or whether or not any sales are made, shall be liable on a pro rata basis for all fees and expenses incurred by the Company, the administrative agent, advisors and trade facilitator in connection with the Program.

The Policy also stated that the Company reserves the right to revise, suspend and terminate any sale program, and also reserves the right to revise the Policy.

Mr. Huang added that the Company has designated Barits Securities Co. as the local administrative agent for the Program. For more information please contact Mr. Chen and Ms. Lee at Barits by telephone (02-2366-8773 / 02-2366-8575) or fax (02-2366-8516).

Several other important decisions were made at the Board of Directors and Supervisors' meeting as follows:

The Board of Directors and Supervisors approved the increase of 1999 normal capital budget to NT$15,078 million. The Board of Directors and Supervisors approved the subscription of new shares to be issued by Vanguard International Semiconductor Corporation in 1999. The Board of Directors and Supervisors approved the appointment of Mr. Michael Pawlik as the vice president of TSMC.

The Board of Directors and Supervisors approved the promotion of Dr. Mark Liu as the vice president of TSMC.

Mr. Huang also pointed out that apart from the increase of normal capital budget approved by the Board of Directors, the Company plans to increase its project capital budget. The Company's total capital expenditure for 1999 will therefore be NT$27,383 million. It is expected that by the end of 1999, the Company's monthly capacity will exceed 150 thousand 8-inch equivalent wafers, of which 0.25um and 0.18um technologies will account for approximately 35%.