TSMC Files Application for IC Fab Facility in Mainland China

HSIN-CHU, Taiwan—Sep. 9, 2002—Taiwan Semiconductor Manufacturing Company (TAIEX: 2330, NYSE: TSM) announced today that the company has filed its application regarding plans for an IC fabrication facility investment project in Mainland China. The application was filed with the Investment Committee of Taiwan’s Ministry of Economic Affairs. After obtaining government approval, the company plans to establish a 100-percent wholly-owned subsidiary in Mainland China, for the purpose of building an 8-inch fab in the Songjiang Science Park in Shanghai and to provide foundry services in Mainland China.

Dr. Morris Chang, TSMC Chairman, cited two primary reasons behind the Company’s decision to set up business operations in Mainland China. First is the business opportunity presented by the emerging and potentially immense IC market in the region. Second is the particular characteristic of Mainland China’s semiconductor market. TSMC anticipates that it would be very difficult to effectively claim market share in Mainland China unless it offers direct, local foundry services.

Consequently, TSMC has officially filed an application for its investment project in Mainland China, in accordance with Taiwan government regulations. TSMC has already fulfilled the Taiwan government’s requirement to provide volume production of 12-inch wafers within Taiwan prior to filing its investment plan for Mainland China.

The new company listed in the investment project is temporarily named “TSMC (Shanghai) Corporation.” The investment project is scheduled to be completed in four years, with a total investment of US$898 million, US$842 million of which will be used for the purchase, transportation and installation of machinery and equipment. After the investment project is completed, TSMC (Shanghai) Corporation will then have a payroll of 1,000 employees and an 8-inch fab with a monthly capacity of 35,000 wafers using 0.25-micron or older process technologies to provide foundry services to the Mainland market.

To smooth initial operations of the newly established company in Mainland, TSMC will dispatch approximately 100 staff members from Taiwan as regular staff in the new company. The majority of the new company’s operating staff will be gradually recruited locally in Mainland.

TSMC’s global strategy expands outward from its business operations center and R&D headquarters in Taiwan. The company’s global manufacturing hubs are in the Hsinchu and Tainan Science-based Industrial Parks in Taiwan. In addition, the company currently operates IC fabrication facilities in the US and Singapore. TSMC currently has 15,000 employees in Taiwan. To meet the labor needs of the several new 12-inch fabs in Hsinchu and Tainan in the future, the company expects its local payroll to grow to 20,000 over the next four years, representing 5,000 additional job opportunities in Taiwan.