TSMC Announces 1998 Audited Financial Results

Hsin-Chu, Taiwan, January 26, 1999 -- Taiwan Semiconductor Manufacturing Company Ltd. (TAIEX: 2330, NYSE: TSM), ("TSMC" or the "Company") today announced its audited 1998 financial results at an institutional investors' conference. Revenues for the fiscal year 1998, ended December 31, were a record of NT$50,233 million. Net income was NT$15,344 million and earnings per share were NT$2.54.

TSMC's net sales for 1998 went up 14.3% from 1997, as a combined result of a 2.8% increase in unit sales of 8-inch equivalent wafers and an increase of average selling price (ASP). However, due to a lower utilization rate and the NT$2,750 million investment losses from affiliate companies Vanguard International Semiconductor Co. (VIS) and WaferTech, TSMC's net income for 1998 declined 14.6% from 1997, to NT$15,344 million.

TSMC's 1998 revenue breakdown by customer type was fabless design house 71%, IDM (integrated device manufacturer) 27%, and system company 2%. The revenue breakdown by geographical market was North America 57%, Asia Pacific 27%, Europe 11% and Japan 5%; and by end market was computer 41%, consumer 29%, communication 21%, and industrial/others 8%.

On a sequential basis, TSMC's net sales in the fourth quarter of 1998 increased 3.3% over the third quarter of 1998, due to an increase in unit sales and a favorable product mix. Meanwhile, net income increased 19.4% to NT$2,524 million as a result of a higher utilization rate and a fewer investment lossese from VIS in the fourth quarter than those in the previous quarter. TSMC's booking volume in December 1998 reached a monthly record high. It is expected that the Company's 1999 first quarter results would outperform those of 1998 fourth quarter. On a year-over-year basis, it is also expected that TSMC will have a better performance in 1999 than in 1998.

In the past year TSMC has expanded its overall capacity to become well ahead of customer demand. Consequently, the capital expenditures in 1999 will be reduced to NT$17 billion, 30% less than those in 1998. Most of the capital expenditures in 1999 will go into the procurement of the most advanced facilities. The Company expects its total wafer output in 1999 will increase 7% over 1998, and most of these additions will be in the 0.25 and 0.18 micron-process technologies. These two leading-edge, high priced technologies will account for 24% of TSMC's output capacity in 1999 from 6% in 1998, assuring that increasing customer demand will be met.

TSMC's 1998 audited financial results will need to be approved by the TSMC Board of directors whose meeting is tentatively scheduled in March.