US$477 Million Letter of Credit Facility To Support the Zero Coupon Convertible Bond due 2002

September 4, 1997, Hsin-chu, Taiwan - Syndication for TSMC's US$477 million Letter of Credit (LOC) Facility, which provides credit enhancement for TSMC's 5-year Zero Coupon Convertible Bond, has been successfully closed. This LOC facility is the first credit enhancement facility ever closed in Taiwan and is also believed to be one of the largest single currency syndications ever done in Taiwan.

TSMC is the world's first and largest IC foundry company. It currently operates two 6-inch and two 8-inch wafer fabs, with two more 8-inch wafer fabs under construction. In order to meet the ever-increasing demand for ICs and to maintain its leading market position, TSMC has recently announced a 10-year expansion plan to invest a total of NT$400 billion to build six more wafer fabs. This syndication is the first syndication that TSMC has brought to the Taiwan's financial market after the announcement and has received a very good response.

Dr. Yang owns several patents. He has also coauthored two books and published over 100 articles in international scientific and technical journals. In 1992, he received the award for best paper published in the IEEE Transactions on CAD. Due to his excellent performance in the semiconductor field, he has been invited to chair many international symposiums and conferences and has edited technical articles for several renowned industrial journals. He was made an IEEE Fellow in 1991.

"TSMC has always been dedicated to recruiting talented people to join our SMC has always been dedicated in providing world-class IC foundry services to best serve our customers' needs.", stated Dr. Morris Chang, TSMC's Chairman and President, "The successful issuance of European Convertible Bond and syndication prove that TSMC is a world-class foundry with strong creditworthiness and promising outlook. We will continue to work on sustaining our leadership in the IC foundry industry." This credit enhancement facility was arranged and administered by BA Asia Limited, the merchant banking arm of Bank of America, NT & SA, in Asia. Just as Bank of America syndicated the first credit enhancement facility for all of Asia in India, the success of this syndication sets a milestone for the Taiwanese financial market, for it is the first credit enhancement facility ever closed in Taiwan.

The special feature of this facility is that Bank of America via guaranteeing the payment of the principle and the redemption premium of TSMC's five-year convertible bond. This feature is one of the major contributing factors for TSMC's successful issuance of the 5-year convertible bond at low cost and favorable pricing. For example, this 5-year convertible bond received 7 times over-subscription, a 20% conversion premium, and a low yield to maturity rate at 5-year US Treasury bond minus 5 basis points.

The fact that TSMC maintains a solidly dominant position in the fast-growing foundry market and its strong management team that will lead the company well into the future has prompted many renown foreign and local financial institutions to express their strong interests in participating in this syndication, even well before it was officially launched to the financial market. As a result, Bank of America has to syndicate out more shares of their own than they originally expected to allow more interested financial institutions to participate in this facility. This syndication was completed over a very short period of time on a clean basis with considerable low margin comparing with syndication of similar type ever done in Taiwan.