TSMC 1999 2Q Earnings Release

Hsin-Chu, Taiwan, R. O. C., July 27, 1999 - Taiwan Semiconductor Manufacturing Company Ltd. (TAIEX: 2330, NYSE: TSM), ("TSMC" or "the Company") the world!|s largest dedicated semiconductor foundry company, announced today the results of its operations for the second quarter ended June 30, 1999. All figures were prepared in accordance with generally accepted accounting principles in Taiwan

2Q99 Results: Year-over-Year Comparison

Highlights: Quarterly unit sales1 set a new record high at 422K. Capacity was fully utilized due to a strong recovery in demand. Net sales increased 48.5% YoY to NT$17,232 million. Operating income increased 64.1% YoY to NT$6,193 million. Net income rose 60.3% YoY to NT$6,022 million. Diluted earnings per share (EPS) increased 60.3% to NT$0.80 from NT$0.50.2

1Including resale wafers produced by WaferTech. 2Earnings per share for 2Q98 have been restated to reflect a 24.8% increase in shares outstanding in June 1999. Total shares outstanding were 7,548,483,035 for both 1998 and 1999. Total shares outstanding increased to 7,548,483,035 shares from 6,047,175,967 shares due to a stock dividend of 1,390,850,473 shares (at the rate of 23% or 230 shares per 1000 shares) and employee profit sharing of 110,456,595 shares, both of which became effective as of June 15, 1999.

Net Sales:

Net sales in 2Q99 totaled NT$17,232 million, up 48.5% compared with NT$11,601 million for the same period of 1998. Net sales mentioned above includes revenue and revenue adjustment from WaferTech (See Accounting Change below). The unit shipment of 8-inch equivalent wafers grew 52% to 422K1 units in 2Q99 from 277K in 2Q98. Unit volume growth resulted from new customers and strong demand for the foundry service across all regions.

The average selling price (ASP) in the New Taiwan dollar declined by 5.5% YoY to NT$36.0K in 2Q99, as a net result of price erosion in 2H98 and improvement in product mix in 1H99. In US dollar terms, quarterly ASP declined 4.8% to US$1,098 per 8-inch equivalent wafer. The New Taiwan dollar appreciated from the weighted average rate of NT$33.07 to NT$32.81 per US dollar during this period.

The average selling price (ASP)5 in the New Taiwan dollar declined by 3.7% YoY to NT$38.0K in 3Q99, as a result of unfavorable foreign exchange. In US dollar terms, quarterly ASP rose 3.8% to US$1,183 per 8-inch equivalent wafer due to improvement in technology mix. The New Taiwan dollar appreciated from the weighted average rate of NT$34.58 to NT$32.08 per US dollar during this period.

Sales breakdown by application, technology, customer type, and geography for 2Q99 and 2Q98 are summarized in Table 1.