TSMC Board of Directors Proposes Amendment of Dividend Policy

Hsinchu Science Park, Taiwan, November 2, 2004 - Taiwan Semiconductor Manufacturing Company Ltd. (“TSMC” or “the Company”) (TAIEX: 2330, NYSE: TSM) today held a meeting of the Board of Directors, at which the directors approved of holding a special shareholders' meeting at 9:00 a.m. on December 21, 2004 at TSMC Fab 12 (No. 8, Li-Hsin Rd. 6, Hsinchu Science Park, Hsinchu, Taiwan) to approve a proposed amendment to the Company's Articles of Incorporation.

TSMC Spokesperson and CFO Ms. Lora Ho noted that the directors proposed a partial revision to Article 35 of the Company's Articles of Incorporation. With regard to its dividend policy, the proposed revision calls for future dividend distribution to be made preferably by way of cash. Moreover, stock dividends would not exceed 50 percent of total distribution. The revision, upon approval by TSMC's shareholders, is expected to allow the Company more flexibility in planning cash dividend distributions and to better manage the build-up and flow of TSMC's paid-in capital.

The Board of Directors also approved the “TSMC 2004 Employee Stock Options Plan” and the issuance of no more than 11,000,000 stock options to the employees of WaferTech, an overseas subsidiary of TSMC. Each unit of stock option will be entitled to purchase one TSMC common share.