TSMC 1999 3Q Earnings Release

Hsin-Chu, Taiwan, R. O. C., October 22nd, 1999 - Taiwan Semiconductor Manufacturing Company Ltd. (TAIEX: 2330, NYSE: TSM), ("TSMC" or "the Company") the world's largest dedicated semiconductor foundry company, today announced the results of its operations for the third quarter ended September 30, 1999. All figures were prepared in accordance with generally accepted accounting principles in Taiwan.

3Q99 Results: Year-over-Year Comparison

Highlights: Quarterly unit sales1 set a new record high at 465K. Capacity utilization was at 96% as a result of the earthquake. Net sales increased 75% YoY to NT$19,707 million. Operating income increased 154% YoY to NT$7,169 million. Net income rose 190% YoY to NT$6,137 million. Diluted earnings per share (EPS) increased 190% to NT$0.81 from NT$0.28.2 Currently, 100% of wafer process equipment has been released for production.

1Including resale of wafers outsourced to joint ventures; WaferTech, Vanguard and TSMC-Acer. 2Earnings per share for 3Q98 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. EPS calculation does not take into account 53,176,427 units of entitlement certificates generated from the conversion of ECB as of September 30th, 1999.

Net Sales:

Despite a devastating earthquake, which hit the central island of Taiwan on September 21st, TSMC recovered its production at a faster than expected pace and reported strong 3Q99 results. Only ten days after the earthquake, 95% of TSMC's wafer process equipment were released for production, while wafer moves3 have reached more than 90%. Currently, 100% of wafer process equipment has been released for production. TSMC would like to express its gratitude toward TSMC's suppliers, customers, shareholders, and employees for their assistance and support during the recovery. Net sales in 3Q99 totaled NT$19,707 million, up 75% year-over-year. The unit shipment of 8-inch equivalent wafers, including those outsourced to joint ventures, grew 77% to 465K4 units in 3Q99. Unit volume growth resulted from new customers and strong demand for the foundry service, particularly from IDMs and communication segments. 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 types, and geography for 3Q99 and 3Q98 are summarized in Table 1. For consistency, historical numbers are changed to reflect current definition and methodology during classification thus may vary from those released earlier.