Edgar Filing: TAIWAN SEMICONDUCTOR MANUFACTURING CO LTD

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD.

1934 Act Registration No. 1-14700

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934

For the month of July 2004

Taiwan Semiconductor Manufacturing Company Ltd.

(Translation of Registrant’s Name Into English)

No. 8, Li-Hsin Rd. 6,
Science-Based Industrial Park,
Hsin-Chu, Taiwan

(Address of Principal Executive Offices)

(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)


Form 20-F ü		Form 40-F

(Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)


Yes		No ü

(If “Yes” is marked, indicated below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82: .)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	Taiwan Semiconductor Manufacturing Company Ltd.
Date: July 29, 2004	By	/s/ Lora Ho
		Lora Ho
		Vice President & Chief Financial Officer


		Taiwan Semiconductor Reports 25% Increase in Sequential EPS

Hsin-Chu, Taiwan, R.O.C., July 29, 2004 — Taiwan Semiconductor Manufacturing Company, Ltd. today announced record-setting revenue and net income for the quarter ended June 30, 2004. Second quarter revenue reached NT$64.87 billion while net income and fully diluted earnings per share came to NT$23.41 billion and NT$1.00 per share (US$0.15 per ADS unit), respectively.

On a sequential basis, second quarter results represent a 12.8% increase in revenue, a 24.6% increase in net income and in fully diluted EPS. Year-over-year comparison shows the increases in revenue, net income, and fully diluted EPS to be 30%, 100%, and 101%, respectively. All figures were prepared in accordance with R.O.C. GAAP on an unconsolidated basis.

The increase in second quarter revenue resulted from a 9.4% increase in wafer shipments, a 3.2% increase in wafer average selling price (ASP), and a slightly weaker U.S. dollar exchange rate. Gross margin for the second quarter jumped to 43.4%, a significant increase from 39.5% in the previous quarter, due to higher utilization levels, improved ASP and better manufacturing cost, particularly related to depreciation and a more favorable licensing fee structure. Net margin for the quarter rose to 36.1% from 32.7% in the previous quarter.

“Building upon four consecutive quarters of strong financial performance, TSMC has delivered a record-breaking set of financial results where both top-line and bottom-line figures continue to validate TSMC’s strong fundamentals,” said Lora Ho, VP and Chief Financial Officer of TSMC.

Based on the current business outlook, Ho said that management’s expectations for third quarter 2004 performance are:

	•		Wafer shipments to increase by a mid single digit percentage point sequentially;

	•		Overall utilization rate to be slightly down from 106% in 2Q, but still be well above 100%;

	•		Gross profit margin to be approximately 45%;

	•		ASP to remain at about the same level sequentially;

Ms. Ho said management expects 2004 capital expenditure to be about US$2.4 billion.

Conference Call & Webcast Notice:

TSMC’s quarterly review conference call will be held at 8 a.m. Eastern Time (8 p.m. Taiwan Time) on Thursday, July 29, 2004. The conference call will also be webcast live on the Internet. Investors wishing to access the live webcast should visit TSMC’s web site at http://www.tsmc.com at least 15 minutes prior to the broadcast. Instructions will be provided on the web site to facilitate the download and installation of necessary audio applications. Investors without Internet access may listen to the conference call, in listen only mode, by dialing 1-303-262-2075 in the U.S. and 852-3009-3050 in other locations (Password: TSMC). An archived version of the webcast will be available on TSMC’s web site for six months following the Company’s quarterly review conference call and webcast.

July 29, 2004 Taiwan Semiconductor Manufacturing Company Page 1 of 2

Profile

TSMC (TAIEX: 2330, NYSE: TSM) is the world’s largest dedicated semiconductor foundry, providing the industry’s leading manufacturing capacity, process technology, library and IP options, and other leading-edge foundry services. TSMC currently operates two twelve-inch wafer fabs, five eight-inch wafer fabs and one six-inch fab. The Company also has substantial capacity commitments at two wholly owned subsidiaries, WaferTech in the U.S. and TSMC (Shanghai) Company, Ltd. in China, and at a joint-venture fab, SSMC, in Singapore. TSMC’s first 300mm wafer fab (Fab 12), the first of its kind in Taiwan, commenced commercial production in January 2002. TSMC’s corporate headquarters are in Hsin-Chu, Taiwan. More information about TSMC is available through the World Wide Web at http://www.tsmc.com.

(Management Report and Tables Follow)

CONTACT IN TAIWAN
Elizabeth Sun / Julie Chan / Eric Chiang / Mark Go
Investor Relations Division
TSMC
invest@tsmc.com
886-3-568- 2085/ 2080/ 2087/ 2088

Safe Harbor Notice:
The statements included in this press release that are not historical in nature are “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. TSMC cautions readers that forward-looking statements are subject to significant risks and uncertainties and are based on TSMC’s current expectations. Actual results may differ materially from those contained in such forward-looking statements for a variety of reasons including, among others, risks associated with cyclicality and market conditions in the semiconductor industry; demand and supply for TSMC’s foundry manufacturing capacity in particular and for foundry manufacturing capacity in general; intense competition; the failure of one or more significant customers to continue to place the same level of orders with us; TSMC’s ability to remain a technological leader in the semiconductor industry; TSMC’s ability to manage its capacity; TSMC’s ability to obtain, preserve and defend its intellectual property rights; natural disasters and other unexpected events which may disrupt production; and exchange rate fluctuations. Additional information as to these and other risk factors that may cause TSMC’s actual results to differ materially from TSMC’s forward-looking statements may be found in TSMC’s Annual Report on Form 20-F, filed with the United States Securities and Exchange Commission (the “SEC”) on May 28, 2004 and such other documents as TSMC may file with, or submit to, the SEC from time to time. Except as required by law, we undertake no obligation to update any forward-looking statement, whether as a result of new information, future events, or otherwise.

July 29, 2004 Taiwan Semiconductor Manufacturing Company Page 2 of 2

FOR IMMEDIATE RELEASE

CONTACT IN TAIWAN
Elizabeth Sun /
Julie Chan /
Eric Chiang / Mark Go
Investor Relations Division
TSMC
invest@tsmc.com
886-3-568-2085/ 2080/ 2087

Topics in This Report

•		Revenue Analysis

•		Utilization & Capacity

•		Profit & Expense Analysis

•		Financial Condition Review

•		Cash Flow & CapEx

•		Recap of Recent Important Events & Announcements

Operating Results Review:

Summary:


*(Amount in NT$ billion except noted otherwise)*	2Q04			1Q04			2Q03			QoQ			YoY
EPS (NT$ per com. shr.)		1.00			0.81			0.50			24.6	%		101.0	%
(US$ per ADR unit)		0.15			0.12			0.07

Net Sales		64.87			57.51			49.92			12.8	%		29.9	%
Gross Profit		28.14			22.73			18.35			23.8	%		53.3	%
Operating Expense		(6.01	)		(5.19	)		(5.01	)		15.7	%		19.8	%
Non-Operating Items		0.99			0.90			(0.77	)		10.3	%		228.5	%
Net Income		23.41			18.79			11.73			24.6	%		99.6	%

Wafers Shipped (kpcs 8 inch-equiv.)		1,282			1,172			887			9.4	%		44.5	%
Capacity Utilization		106	%		105	%		88	%		0.4	%		19.8	%

Net Profit Margin		36.1	%		32.7	%		23.5	%

Remarks:

The second quarter EPS of NT$1.00 represents a 24.6% increase compared with 1Q04. The unconsolidated operating results of 2Q04 are summarized below:

Net sales increased 12.8% to NT$64.9 billion compared with NT$57.5 billion in the first quarter due to a 9.4% increase in wafer shipments, a 3.2% increase in wafer average selling price (ASP), and a slightly weaker U.S. dollar exchange rate.

Gross profit improved 23.8% from the previous quarter to NT$28.1 billion mainly driven by higher utilization levels, improved ASP and better manufacturing costs, particularly related to depreciation and a more favorable licensing fee structure. As a result, gross margin improved significantly to 43.4% from 39.5% in 1Q04.

Operating expenses increased to NT$6.0 billion, representing 9.3% of net sales. This quarter’s increase was due mainly to an increase in SG&A expenses and a slight increase in R&D expenses.

Second quarter net gains from non-operating items and long-term investments amounted to NT$987 million, a 10.3% increase from NT$895 million in the previous quarter. These overall net gains resulted largely from improved operating performance by TSMC subsidiary/affiliates.

Income before tax rose 25.4% sequentially to NT$23.1 billion. The Company’s provision for tax expenses of NT$2.6 billion was more than offset by an investment tax credit of NT$2.9 billion. TSMC’s 2Q04 net income increased 24.6% to NT$23.4 billion while net margin improved to 36.1% from the previous quarter’s 32.7%.


Taiwan Semiconductor Manufacturing Company, Ltd.
July 29, 2004		Page 2

I. Revenue Analysis

I — 1. Wafer Sales Analysis



By Application	2Q04			1Q04			2Q03
Computer		27	%		32	%		43	%
Communication		45	%		45	%		34	%
Consumer		22	%		17	%		16	%
Industrial/Others		5	%		4	%		5	%
Memory		1	%		2	%		2	%



By Technology	2Q04			1Q04			2Q03
0.13um-		25	%		20	%		17	%
0.15um		13	%		17	%		21	%
0.18um		29	%		27	%		24	%
0.25um		15	%		18	%		19	%
0.35um+		10	%		11	%		9	%
0.50um+		8	%		7	%		10	%



By Customer Type	2Q04			1Q04			2Q03
Fabless		68	%		69	%		72	%
IDM		31	%		30	%		27	%
System		1	%		1	%		1	%



By Geography	2Q04			1Q04			2Q03
North America		73	%		74	%		77	%
Asia Pacific		12	%		13	%		12	%
Europe		7	%		7	%		4	%
Japan		8	%		6	%		7	%

Revenue Analysis:

Net sales increased 12.8% to NT$64.9 billion compared with NT$57.5 billion in the first quarter. The growth in TSMC net sales was attributable to a 9.4% increase in wafer shipments, a 3.2% increase in wafer average selling price (ASP), and a slightly weaker U.S. dollar exchange rate.

Consumer applications represent this quarter’s principle revenue driver, while communication applications revenue supported by wireless continued to grow. Computer applications revenue growth was flat.

Demand from advanced technologies — defined as 0.13 micron and below — strengthened in 2Q04. Revenue contribution from advanced technology wafers improved to 25% of total wafer sales, compared to 20% in the previous quarter.

Fabless and IDM wafer sales weightings during the quarter remained similar to the previous quarter.

Geographically, the weightings for North American, Asian and European markets remained relatively the same as the previous quarter. Meanwhile, Japanese sales weightings were up 2%.

Second quarter revenue contributions from TSMC subsidiary/affiliates amounted to NT$8.6 billion and represented 13.3% of net sales, similar to the previous quarter’s contribution of 12.9% (NT$7.4 billion).

(LINE GRAPH)

ASP Trend:

During the second quarter, the average selling price in U.S. dollars increased 3.2% compared to last quarter’s 3.2% decline. This quarter’s ASP increase was attributable to a better product mix and an improving pricing environment.


Taiwan Semiconductor Manufacturing Company, Ltd. July 29, 2004		Page 3

II. Utilization & Capacity

(UTILIZATION RATE CHART)

Utilization Rate:

Overall capacity utilization levels in the second quarter improved to 106% due to operational efficiencies.

II — 2. Capacity



	1Q04		2Q04		3Q04
Fab / (Wafer size)	(Act.)		(Act.)		(Est.)
Fab-2 (6”)¹		217		228		237
Fab-3 (8”)		208		221		246
Fab-5 (8”)		106		116		123
Fab-6 (8”)		187		196		214
Fab-7 (8”)		51		35		39
Fab-8 (8”)		182		202		216
Fab-12 (12”)²		43		52		69
TSMC – owned capacity 8”-equivalent Kpcs		953		1,014		1,127
Wafer Tech (8”)		88		92		97
SSMC (8”)		29		33		34
Total TSMC – managed 8”-equivalent Kpcs		1,070		1,138		1,258

Note:	1.	Figues represent number of 6” wafers. Conversion to 8”-equivalent wafers is by dividing this number by 1.78
	2.	Figues represent number of 12” wafers. Conversion to 8”-equivalent wafers is by multiplying this number by 2.25

Capacity:

Total TSMC managed capacity in 2Q04 was 1,138 kpcs/quarter in terms of 8-inch equivalent wafers, representing 6.4% sequential capacity growth, where 12-inch wafer fab capacity increased by 20.9% sequentially.

Overall installed capacity for year 2004 is to remain at 4.8 million 8-inch equivalent wafers.


Taiwan Semiconductor Manufacturing Company, Ltd. July 29, 2004		Page 4

III. Profit & Expense Analysis

III — 1. Gross Profit Analysis


(Amount: NT$ billion)	2Q04			1Q04			2Q03
COGS		36.7			34.8			31.6
Depreciation		14.0			13.4			14.0
Other MFG Cost		22.8			21.4			17.6

Gross Profit		28.1			22.7			18.4
Gross Margin
- TSMC		43.4	%		39.5	%		36.8	%
- TSMC w/o affiliates		49.1	%		44.3	%		41.1	%

Gross Profit Analysis:

Gross profit increased 23.8% to NT$28.1 billion. Gross margin improved significantly to 43.4% from 39.5% in 1Q04. The increase in gross margin was primarily due to higher utilization levels, improved ASP and better manufacturing costs, particularly related to depreciation and a more favorable licensing fee structure.

The gross margin from TSMC’s own fab manufacturing activities grew significantly to 49.1% in this quarter as compared to 1Q’s 44.3%.

III — 2. Operating Expense Analysis

(Amount: NT$ billion)

2Q04

1Q04

2Q03

Total Operating Exp.

6.01

5.19

5.01

SG&A

3.04

2.33

1.93

Research & Development

2.96

2.86

3.08

Operating Expenses:

Operating expenses increased to NT$6.0 billion. Higher selling, general and administrative expenses were attributable to Fab 14 opening expenses and overall heightened business activities. Research and Development expenditures increased slightly, while the ratio between R&D expenses to total net sales continued to maintain near its 5% level. Overall, total-operating expenses represented 9.3% of net sales, similar to 9.0% in 1Q04.

III — 3. Non-Operating Items


(Amount: NT$ million)	2Q04			1Q04			2Q03
Non-Operating Income/(Exp.)		(264	)		92			(1,578	)
Net Interest Income/(Exp.)		30			(74	)		(264	)
Other Non-Operating		(294	)		166			(1,314	)

L-T Investments		1,251			803			810
WaferTech*		1,433			817			188
SSMC		288			145			(240	)
Vanguard		257			323			35
TSMC (Shanghai)		(102	)		(29	)
Miscellaneous		(626	)		(454	)		827

Operation results only; does not include amortization of impaired assets.

Non-Operating Items:

Combined non-operating items and long term investments represented a net gain of NT$987 million in 2Q04 compared with a net gain of NT$895 million in 1Q04.

Non-Operating items registered a net expense of NT$264 million, compared to last quarter’s income of NT$92 million. This quarter’s loss was due mainly to a forex evaluation loss on certain short-term investments.

A NT$448 million sequential increase in long-term investment income of NT$1,251 million resulted from the general improvement of business operations at TSMC subsidiaries / affiliates. Excluding miscellaneous, the sequential long-term investment return increased by NT$620 million. Miscellaneous items were lower by NT$172 million due to an absence of capital gains from the disposal of equities from venture capital investments as we did in 1Q04.


Taiwan Semiconductor Manufacturing Company, Ltd. July 29, 2004		Page 5

IV. Financial Condition Review

IV — 1. Liquidity Analysis


(Amount: NT$ billion)	2Q04		1Q04		2Q03

Cash & S-T Investments		123.3		126.3		69.6
Accounts Receivable		30.8		27.2		25.0
Inventory		11.7		11.0		11.4
Total Current Assets		173.8		175.7		111.0

Accounts Payable and Others		25.6		30.3		15.3
Accrued Liabilities		23.4		7.8		6.7
Total Current Liabilities		49.0		38.1		22.0

Current Ratio (x)		3.5		4.6		5.1

Net Working Capital		124.8		137.6		89.0

Liquidity Analysis:

Total current assets were NT$1.9 billion lower on a sequential basis primarily because of lower cash levels resulting from higher quarterly capital spending, increased short term investments and purchases in long term government bonds.

Meanwhile, total current liabilities increased significantly due to higher accrued liabilities, driven mainly by the Company’s accrued stockholder cash dividend and employee profit sharing totaling NT$12.8 billion.

As a result, the Company’s current ratio was lowered to 3.5x and net working capital amounted to NT$124.8 billion.

(RECEIVABLE INVENTORY DAYS TREND GRAPH)

Receivable/Inventory Days Trend:

Turnover of receivables remained flat at 42 days revenue, same as the first quarter.

Inventories amounted to an equivalent of 36 days of cost-of-goods-sold, similar to the previous quarter.

IV — 3. Debt Service


(Amount: NT$ billion)	2Q04		1Q04		2Q03

Cash & S-T Investments		123.3		126.3		69.6

Interest-Bearing Debt		35.0		35.0		35.0

Net Cash Reserves		88.3		91.3		34.6

Debt Service:

Net cash reserves, defined as the excess of cash and equivalents over interest-bearing debt, decreased by NT$3.0 billion to NT$88.3 billion in 2Q04, reflecting lower cash levels.

Interest-bearing debt remained unchanged at NT$35 billion.


Taiwan Semiconductor Manufacturing Company, Ltd. July 29, 2004		Page 6

V. Cash Flow & CapEx

V — 1. Cash Flow Analysis


(Amount: NT$ billion)	2Q04			1Q04			2Q03

Net Income		23.4			18.8			11.7
Depreciation & Amortization		16.0			15.1			15.5
Other Op Sources/(Uses)		(3.3	)		(1.2	)		(4.1	)
Total Op Sources/(Uses)		36.1			32.7			23.1


Capital Expenditure		(22.8	)		(16.4	)		(7.2	)
Short Term Investment		(24.8	)		(7.3	)		(3.1	)
Long Term Investment		(5.8	)		(0.2	)		(0.0	)
Other Investing Sources/(Uses)		(0.1	)		(0.1	)		(0.1	)
Net Investing Sources/(Uses)		(53.5	)		(23.9	)		(10.4	)


Treasury Stock		(6.6	)		(0.5	)		—
Corporate Bond		—			—			0.0
Redemption of preferred stocks		—			—			(13.0	)
Paid to directors and supervisors		(0.1	)		—			(0.1	)
Cash dividends paid to preferred stocks		(0.2	)		—			(0.5	)
Other Financing Sources/(Uses)		(0.1	)		(0.1	)		(0.2	)
Net Financing Sources/(Uses)		(7.0	)		(0.6	)		(13.7	)


Net Cash Position Changes		(24.4	)		8.2			(0.9	)

Summary of Cash Flow:

During 2Q04, TSMC generated NT$36.1 billion operating cash inflow mainly from net income of NT$23.4 billion and depreciation & amortization of NT$16.0 billion.

Net cash used in investing activities totaled NT$53.5 billion, including (i) capex of NT$22.8 billion (ii) a significant accumulation in short-term investments, primarily in various money market instruments and (iii) purchases of NT$5.5 billion in government bonds.

A net financing charge of NT$7.0 billion was largely attributable to the Company’s NT$6.6 billion treasury stock buyback.

As a result, TSMC ended the quarter with a cash balance of NT$82.1 billion.

(OPERATING CASH FLOW TREND GRAPH)

Operating Cash Flow Trend:

Operating cash flow of NT$36.1 billion was 10.4% higher than the previous quarter due to better net income.

V-3. Capital Expenditure

•		Actual 2Q04 capital expenditure: US$684 million.

•		Estimated 2004 capital expenditure to be about US$2.4 billion.

Capital Spending:

TSMC’s capital expenditures during the quarter totaled US$684 million, 40% higher than the previous quarter. Most of the spending was for 12-inch capacity ramp-up in Fab 12 and Fab 14.

Management expects 2004 capex to be about US$2.4 billion.


Taiwan Semiconductor Manufacturing Company, Ltd. July 29, 2004		Page 7

VI. Recap of Recent Important Events & Announcements

•		TSMC’s Fab 6 Production Exceeds 70,000 8-inch Wafers per Month (2004/06/11)

•		TSMC Sets June 14 and June 20 as the Ex-dividend Date and Record Date for its Common Shares, Respectively (2004/05/31)

•		TSMC Files Trade Secret Case against SMIC in the State Court of California (2004/05/19)

•		TSMC Board of Directors Approves Capital Appropriation for Expanding Capacities (2004/05/11)

•		TSMC Shareholders Approve Stock and Cash Dividends (2004/05/11)

•		TSMC Receives Government Sponsored 2004 eAward (2004/04/30)

•		TSMC Accelerates Customer Competitiveness with Technology Platforms (2004/04/14)

Please visit TSMC’s Web site (http://www.tsmc.com) for details about these and other announcements.

Attachment A


		TAIWAN SEMICONDUCTOR MANUFACTURING CO., LTD. UNCONSOLIDATED BALANCE SHEET As of June 30, 2004 and 2003 (Figures in Millions of New Taiwan Dollars (NTD) and U.S. Dollars (USD))⁽¹⁾


	June 30, 2004									June 30, 2003						YoY
ASSETS	USD			NTD			%			NTD			%			Move			Inc(Dec)%

Cash		2,432			82,142			18.7			66,546			18.3			15,596			23.4
Short Term Investment		1,220			41,199			9.4			3,054			0.8			38,145			1,249.0
Accounts Receivable		913			30,841			7.0			24,990			6.9			5,851			23.4
Inventories		347			11,725			2.7			11,356			3.1			369			3.3
Other Current Assets		234			7,908			1.8			5,074			1.4			2,834			55.9

Total Current Assets		5,146			173,815			39.5			111,019			30.6			62,796			56.6

Long Term Investment		1,457			49,217			11.2			35,122			9.7			14,095			40.1

Fixed Assets		14,074			475,348			108.1			414,710			114.3			60,638			14.6
Less Accumulated Depreciation		(8,145	)		(275,066	)		(62.5	)		(218,916	)		(60.3	)		(56,150	)		25.6

Net Fixed Assets		5,929			200,282			45.5			195,794			54.0			4,488			2.3

Other Assets		489			16,513			3.8			20,917			5.8			(4,404	)		(21.1	)

Total Assets		13,021			439,827			100.0			362,852			100.0			76,975			21.2

LIABILITIES
Accounts Payables		354			11,971			2.7			8,745			2.4			3,226			36.9
Payables to Contractors and Equipment Suppliers		256			8,658			2.0			6,560			1.8			2,098			32.0
Accured Expenses and Other Current Liabilities		694			23,418			5.3			6,669			1.8			16,749			251.1
Current Portion of Bonds Payable		148			5,000			1.1			0			0.0			5,000			—

Total Current Liabilities		1,452			49,047			11.2			21,974			6.1			27,073			123.2

Bonds Payable		888			30,000			6.8			35,000			9.6			(5,000	)		(14.3	)
Other Long Term Liabilities		287			9,706			2.2			7,617			2.1			2,089			27.4

Total Liabilities		2,627			88,753			20.2			64,591			17.8			24,162			37.4

SHAREHOLDERS’ EQUITY
Capital Stock		6,921			233,766			53.1			186,229			51.3			47,537			25.5
Entitlement Certificate		0			0			0.0			16,437			4.5			(16,437	)		—
Capital Surplus		1,684			56,886			12.9			56,841			15.7			45			0.1
Legal Reserve		756			25,528			5.8			20,802			5.7			4,726			22.7
Special Reserve		0			0			0.0			69			0.0			(69	)		—
Retained Earnings		1,288			43,517			9.9			19,058			5.3			24,459			128.3
Treasury Stock		(257	)		(8,676	)		(2.0	)		(1,922	)		(0.5	)		(6,754	)		351.4
Unrealized Loss on Long-term Investments		0			0			0.0			(8	)		(0.0	)		8			—
Cumulated Translation Adjustment		2			53			0.0			755			0.2			(702	)		(93.0	)

Total Equity		10,394			351,074			79.8			298,261			82.2			52,812			17.7

Total Liabilities & Shareholders’ Equity		13,021			439,827			100.0			362,852			100.0			76,975			21.2

Note : (1) New Taiwan dollar amounts have been translated into U.S. dollars at the rate of NT$33.78 per U.S. dollar as of June 30, 2004.

Attachment A


		TAIWAN SEMICONDUCTOR MANUFACTURING CO., LTD. UNCONSOLIDATED BALANCE SHEET As of June 30 and March 31, 2004 (Figures in Millions of New Taiwan Dollars (NTD) and U.S. Dollars (USD))⁽¹⁾


	June 30, 2003									March 31, 2004						QoQ
ASSETS	USD			NTD			%			NTD			%			Move			Inc(Dec)%

Cash		2,432			82,142			18.7			106,508			25.3			(24,366	)		(22.9	)
Short Term Investment		1,220			41,199			9.4			19,829			4.7			21,370			107.8
Accounts Receivable		913			30,841			7.0			27,249			6.5			3,592			13.2
Inventories		347			11,725			2.7			11,015			2.6			710			6.5
Other Current Assets		234			7,908			1.8			11,116			2.6			(3,208	)		(28.9	)

Total Current Assets		5,146			173,815			39.5			175,717			41.7			(1,902	)		(1.1	)

Long Term Investment		1,457			49,217			11.2			37,979			9.0			11,238			29.6

Fixed Assets		14,074			475,348			108.1			457,611			108.7			17,737			3.9
Less Accumulated Depreciation		(8,145	)		(275,066	)		(62.5	)		(261,678	)		(62.2	)		(13,388	)		5.1

Net Fixed Assets		5,929			200,282			45.5			195,932			46.5			4,350			2.2

Other Assets		489			16,513			3.8			11,410			2.7			5,103			44.7

Total Assets		13,021			439,827			100.0			421,038			100.0			18,789			4.5

LIABILITIES
Accounts Payables		354			11,971			2.7			12,624			3.0			(653	)		(5.2	)
Payables to Contractors and Equipment Suppliers		256			8,658			2.0			12,648			3.0			(3,990	)		(31.5	)
Accured Expenses and Other Current Liabilities		694			23,418			5.3			7,810			1.9			15,608			199.8
Current Portion of Bonds Payable		148			5,000			1.1			5,000			1.2			0			0.0

Total Current Liabilities		1,452			49,047			11.2			38,082			9.0			10,965			28.8

Bonds Payable		888			30,000			6.8			30,000			7.1			0			0.0
Other Long Term Liabilities		287			9,706			2.2			6,370			1.5			3,336			52.4

Total Liabilities		2,627			88,753			20.2			74,452			17.7			14,301			19.2

SHAREHOLDERS’ EQUITY
Capital Stock		6,921			233,766			53.1			202,666			48.1			31,100			15.3
Capital Surplus		1,684			56,886			12.9			56,861			13.5			25			0.0
Legal Reserve		756			25,528			5.8			20,802			4.9			4,726			22.7
Special Reserve		0			0			0.0			69			0.0			(69	)		—
Retained Earnings		1,288			43,517			9.9			69,018			16.4			(25,501	)		(36.9	)
Treasury Stock		(257	)		(8,676	)		(2.0	)		(2,102	)		(0.5	)		(6,574	)		312.7
Unrealized Loss on Long-term Investments		0			0			0.0			(0	)		(0.0	)		0			—
Cumulated Translation Adjustment		2			53			0.0			(728	)		(0.2	)		781			—

Total Equity		10,394			351,074			79.8			346,586			82.3			4,488			1.3

Total Liabilities & Shareholders’ Equity		13,021			439,827			100.0			421,038			100.0			18,789			4.5

Note : (1) New Taiwan dollar amounts have been translated into U.S. dollars at the rate of NT$33.78 per U.S. dollar as of June 30, 2004.

Attachment B


		TAIWAN SEMICONDUCTOR MANUFACTURING CO., LTD. UNCONSOLIDATED INCOME STATEMENT For the Three Months Ended June 30, 2004 and 2003 (Expressed in Millions New Taiwan Dollars (NTD) and U.S. Dollars (USD))⁽¹⁾ Except for Per Share Amounts and Shares Outstanding)


	Year over Year Comparison															Sequential Comparison
	2Q 2004															2Q 2004
							% of			2Q 2003			YoY									% of			1Q 2004			QoQ
	USD			NTD			Sales			NTD			Inc(Dec) %			USD			NTD			Sales			NTD			Inc(Dec) %
Net Sales		1,944			64,869			100.0			49,922			29.9			1,944			64,869			100.0			57,513			12.8
Cost of Sales		(1,101	)		(36,730	)		(56.6	)		(31,571	)		16.3			(1,101	)		(36,730	)		(56.6	)		(34,784	)		5.6

Gross Profit		843			28,139			43.4			18,351			53.3			843			28,139			43.4			22,729			23.8

Operating Expenses
General and Administrative Expenses		(78	)		(2,604	)		(4.0	)		(1,563	)		66.6			(78	)		(2,604	)		(4.0	)		(2,031	)		28.2
Selling and Marketing Expenses		(13	)		(437	)		(0.7	)		(371	)		17.7			(13	)		(437	)		(0.7	)		(297	)		47.1
Research and Development Expenses		(89	)		(2,964	)		(4.6	)		(3,077	)		(3.7	)		(89	)		(2,964	)		(4.6	)		(2,861	)		3.6

Total Operating Expenses		(180	)		(6,005	)		(9.3	)		(5,011	)		19.8			(180	)		(6,005	)		(9.3	)		(5,189	)		15.7

Income from Operations		663			22,134			34.1			13,340			65.9			663			22,134			34.1			17,540			26.2

Net Non-operating Income (Expenses)		(8	)		(264	)		(0.4	)		(1,578	)		(83.3	)		(8	)		(264	)		(0.4	)		92			—
Investment Gain		37			1,251			1.9			810			54.4			37			1,251			1.9			803			55.8

Income before Income Tax		692			23,121			35.6			12,572			83.9			692			23,121			35.6			18,435			25.4

Income Tax Credit (Expenses)		9			289			0.4			(842	)		—			9			289			0.4			354			(18.4	)

Net Income		701			23,410			36.1			11,730			99.6			701			23,410			36.1			18,789			24.6

Diluted Earnings Per Ordinary Share ⁽²⁾		0.03			1.00						0.50			101.0			0.03			1.00						0.81			24.6

Earnings Per ADR ⁽³⁾		0.15			5.02						2.50						0.15			5.02						4.04
Weighted Average Outstanding Shares (‘M) ⁽⁴⁾					23,301						23,325									23,301						23,342

Note:		(1) New Taiwan dollars have been translated into U.S. dollars at the weighted average rate of NTD33.37 per U.S. dollar for the second quarter of 2004.

		(2) EPS calculation for 2Q ‘03 is after deducting a cash dividend payment on NT$13,000 million of preferred stock paying an annual rate of 3.5% at the period from January 1 to May 29, 2003. The preferred stock was redeemed on May 29, 2003.

		(3) 1 ADR equals 5 ordinary shares.

		(4) Total weighted average outstanding shares for 2Q ‘03 and 1Q ‘04 are retroactively adjusted for stock dividends and stock bonus.

Attachment C


		TAIWAN SEMICONDUCTOR MANUFACTURING CO., LTD. UNCONSOLIDATED INCOME STATEMENT For the Six Months Ended June 30, 2004 and 2003 (Expressed in Millions New Taiwan Dollars (NTD) and U.S. Dollars (USD))⁽¹⁾ Except for Per Share Amounts and Shares Outstanding)

6 months ended June 30

2004

% of

2003

YoY

USD

NTD

Sales

NTD

Inc(Dec) %

Net Sales

3,662

122,382

100.0

89,247

37.1

Cost of Sales

(2,140

)

(71,514

)

(58.4

)

(60,510

)

18.2

Gross Profit

1,522

50,868

41.6

28,737

77.0

Operating Expenses

General and Administrative Expenses

(139

)

(4,636

)

(3.8

)

(2,958

)

56.7

Selling and Marketing Expenses

(22

)

(733

)

(0.6

)

(655

)

11.8

Research and Development Expenses

(174

)

(5,825

)

(4.8

)

(5,589

)

4.2

Total Operating Expenses

(335

)

(11,194

)

(9.1

)

(9,202

)

21.6

Income from Operations

1,187

39,674

32.4

19,535

103.1

Net Non-operating Expenses

)

(172

)

(0.1

)

(2,077

)

(91.7

)

Investment Gain (Loss)

2,054

1.7

(705

)

—

Income before Income Tax

1,244

41,556

34.0

16,753

148.1

Income Tax Credit (Expenses)

643

0.5

(665

)

—

Net Income

1,263

42,199

34.5

16,088

162.3

Diluted Earnings Per Ordinary Share ⁽²⁾

0.05

1.81

0.68

165.6

Earnings Per ADR ⁽³⁾

0.27

9.06

3.41

Weighted Average Outstanding Shares (’M) ⁽⁴⁾

23,301

23,325

Note:		(1) New Taiwan dollars have been translated into U.S. dollars at the weighted average rate of NTD 33.42 per U.S. dollar for the six months of 2004.

		(2) EPS calculation for 2Q ’03 is after deducting a cash dividend payment on NT$13,000 million of preferred stock paying an annual rate of 3.5% at the period from January 1 to May 29, 2003. The preferred stock was redeemed on May 29, 2003.

		(3) 1 ADR equals 5 ordinary shares.

		(4) Total weighted average outstanding shares for the six months ended June 30, 2003, are retroactively adjusted for stock dividends and stock bonus.

Attachment D


		TAIWAN SEMICONDUCTOR MANUFACTURING CO., LTD. UNCONSOLIDATED STATEMENT OF CASH FLOWS For the Six Months and Three Months Ended June 30, 2004 (Figures in Million of New Taiwan Dollars (NTD) and U.S. Dollars (USD))⁽¹⁾


	6 Months 2004						2Q 2004			1Q 2004
	USD			NTD			NTD			NTD
Cash Flows from Operating Activities:
Net Income		1,263			42,198			23,409			18,789
Depreciation & Amortization		930			31,086			15,997			15,089
Investment Loss (Gain) Recognized by Equity Method		(61	)		(2,054	)		(1,251	)		(803	)
Loss on Property, Plant, Equipment and Idle Assets		—			—			—			—
Gain on Sale of Long-Term Investments		—			(2	)		(2	)		—
Deferred Income Tax		(28	)		(921	)		(567	)		(354	)
Changes in Working Capital & Others		(45	)		(1,520	)		(1,500	)		(20	)

Net Cash Provided from Operating Activities		2,059			68,787			36,086			32,701

Cash Flows from Investing Activities:
Increase in Short-Term Investments		(959	)		(32,043	)		(24,773	)		(7,270	)
Acquisition of Fixed Assets		(1,172	)		(39,179	)		(22,828	)		(16,351	)
Proceeds from Disposal of Properties		7			250			182			68
Decrease in Deposit-Out		5			151						151
Increase in Long-Term Investments		(178	)		(5,943	)		(5,775	)		(168	)
Proceeds from Sales of Long-Term Investments		—			8			8			—
Increase in Deferred Assets		(19	)		(641	)		(314	)		(327	)
Decrease in Other Assets		—			—			—			—

Net Cash Used in Investing Activities		(2,316	)		(77,397	)		(53,500	)		(23,897	)

Cash Flows from Financing Activities:
Decrease in Bonds Payable		—			—			—			—
Decrease in Guarantee Deposits & Others		(5	)		(164	)		(57	)		(107	)
Increase in Treasury Stocks		(211	)		(7,060	)		(6,583	)		(477	)
Decrease in Preferred Shares		—			—						—
Cash Dividend — Preferred Shares		(6	)		(184	)		(184	)		—
Bonus Paid to Directors and Supervisors		(4	)		(128	)		(128	)		—

Net Cash Used in Financing Activities		(226	)		(7,536	)		(6,952	)		(584	)

Net Increase (Decrease) in Cash and Cash Equivalents		(483	)		(16,146	)		(24,366	)		8,220

Cash and Cash Equivalents at Beginning of Period		2,941			98,288			106,508			98,288

Cash and Cash Equivalents at End of Period		2,458			82,142			82,142			106,508

Note : (1) New Taiwan dollar amounts have been translated into U.S. dollars at the rate of NTD33.42 per U.S. dollar, the weighted average exchange rate for the six months of 2004.

TSMC 2004 Second Quarter Results Investor Conference July 29th, 2004

Agenda Welcome 2004 2Q Financial Results Lora Ho (unconsolidated) Remarks Morris Chang Q&A

Safe Harbor Notice TSMC's statements of its current expectations are forward- looking statements subject to significant risks and uncertainties and actual results may differ materially from those contained in the forward-looking statements. 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 (the "SEC") on May 28, 2004, and such other documents as TSMC may file with, or submit to, the SEC from time to time. Except as required by law, we undertake no obligation to update any forward-looking statement, whether as a result of new information, future events, or otherwise.

2Q'04 Result Highlights * Annualized ROE for the quarter.

Income Statement - QoQ Comparison

Income Statement - YoY Comparison

Balance Sheet & Key Indices

Cash Flows

Sales Breakdown by Technology

Sales Breakdown by Application

Sales Breakdown by Geography Note: This chart does not reflect the actual shipment destination of sales.

Sales Breakdown by Customer

Fab Utilization and ASP Trend

Note: 1 Figures represent number of 6" wafers. Conversion to 8"-equivalent wafers is by dividing this number by 1.78. 2 Figures represent number of 12" wafers. Conversion to 8"-equivalent wafers is by multiplying this number by 2.25. 1 2 Installed Capacity by Fab

Recap of Recent Major Events TSMC's Fab 6 Production Exceeds 70,000 8-inch Wafers per Month (2004/06/11) TSMC Sets June 14 and June 20 to be the Ex-dividend Date and Record Date for its Common Shares, Respectively (2004/05/31) TSMC Files Trade Secret Case against SMIC in the State Courts (2004/05/19) TSMC Board of Directors Approve Capital Appropriation for Expanding Capacities (2004/05/11) TSMC Shareholders Approve Stock and Cash Dividends (2004/05/11) TSMC Receives Government Sponsored 2004 eAward (2004/04/30) TSMC Accelerates Customer Competitiveness with Technology Platforms (2004/04/14) Please visit TSMC's Web site (http://www.tsmc.com) for details and other announcements.

3Q04 Guidance Wafer shipments to increase by a mid single digit percentage point sequentially; Overall utilization rate to be slightly down from 106% in 2Q but still be well above 100%; Gross profit margin is expected to be approximately 45%; ASP to remain at about the same level sequentially; 2004 capex is expected to be about US$2.4 billion.