Science-Based Industrial Park, Hsin-Chu, Taiwan, June 26, 1998 - Taiwan Semiconductor Manufacturing Company's (TSMC or the "Company") (NYSE: TSM) announced that it has revised down its 1998 capital expenditure plans from US$1.3 billion to US$920 million. The downward revision of US$380 million is based on an across-the-board adjustment among Fabs 3, 4, 5 and 6, but does not include spending for its US operation at Wafertech.
Despite the capital expenditure revision, TSMC's total production capacity by wafer unit will increase by 38% in 1998 from 1997 and the Company believes that sufficient capacity is in place to accommodate customer demand for the remainder of year. TSMC believes that a capacity utilization rate of below 100% is necessary to allow sufficient flexibility in production and bases its long-term capacity expansion plans accordingly. Despite the current softness in demand, the capacity utilization rate during the second quarter of 1998 is expected to range between 70% to 75% partially as a result of the 16% increase in capacity over that of the first quarter. The first quarter capacity utilization rate was 100%.
TSMC's capital expenditure for 1999 is projected to be in the range of $800 to $900 million to achieve a capacity increase of 25%. This figure is subject to an ongoing review of the market environment. The Company maintains its aggressive capacity expansion strategy in order to position itself for long-term industry growth. The actual timing of the capital spending, however, will be carefully adjusted to the market environment.
Forward looking statement: TSMC's statement of its current expectations is a forward looking statement subject to significant risks and uncertainties and actual results may vary materially from those contained in the forward looking statement. Information as to those factors that could cause actual results to vary can be found in TSMC's Annual Report on Form 20-F filed with the United States Securities and Exchange Commission on April 30, 1998.