TSMC Board of Directors Unanimously Re-elects Dr. Morris Chang as Chairman

Hsinchu, Taiwan, R.O.C. -- May 16, 2006 – TSMC (NYSE: TSM) today held the first meeting of the 10th Board of Directors and Supervisors, at which the Board unanimously re-elected Dr. Morris Chang as Chairman and Dr. F.C. Tseng as Vice Chairman of TSMC.

TSMC Spokesperson and Vice President Ms. Lora Ho said other major conclusions of the Board meeting were as follows:

1. The Board approved capital appropriation of US$966.3 million to expand the Fab 14 facility and increase 65 nanometer and 90 nanometer capacity.

2. The Board approved capital appropriation of US$242.1 million to expand production capacity of eigh-inch and six-inch wafer fabs.

3. The Board approved a sum of US$1.3 billion to be held by a TSMC wholly-owned foreign subsidiary for the purpose of holding TSMC’s fixed income investment portfolio and reducing foreign exchange hedging costs. The subsidiary will hold the funds in order to improve TSMC’s cash investments and there are no plans to employ it for any other purpose. There will be no impact on TSMC’s capital operations as US$1.3 billion accounts for less than 20 percent of TSMC’s total cash, and the percentage will decrease over time as more cash is generated. In addition, TSMC will follow government regulations and disclose how the funds are invested, as well as other data, in quarterly financial reports.

4. The Board approved the promotion of Dr. Jack Sun and the appointment of Dr. Fu-Chieh Hsu as Vice Presidents of TSMC.

5. The Board appointed Sir Peter L. Bonfield, Professor Lester Thurow, Mr. Stan Shih and Ms. Carly Fiorina as members of the Audit Committee, and designated Sir Peter L. Bonfield as the Chairman of the committee.