Edgar Filing: TAIWAN SEMICONDUCTOR MANUFACTURING CO LTD

Amounts in NTD have been translated into USD at the rate of NT$32.46 as of March 31, 2006.

Certain prior period balances have been reclassified to conform to the current period presentation.

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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 April 2006

Taiwan Semiconductor Manufacturing Company Ltd.

(Translation of Registrant’s Name Into English)

No. 8, Li-Hsin Rd. 6,
Hsinchu Science Park,
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 þ		Form 40-F o

(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 o		No þ

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

FOR IMMEDIATE RELEASE
(TSMC LOGO)

CONTACT
Elizabeth Sun / Eric Chiang
Harrison Hsueh / Julie Wei
Investor Relations Division
TSMC
invest@tsmc.com
886-3-568-2085/ 2087/ 2088/ 2086

Topics in This Report

•		Revenue Analysis

•		Capacity

•		Profit & Expense Analysis

•		SFAS No. 34

•		Financial Condition Review

•		Cash Flow & CapEx

•		Analysis of Consolidated Results

•		Recap of Recent Important Events & Announcements

1Q06 Quarterly Management Report
April 27, 2006

Operating Results Review:

Summary:


*(Amount in NT$ billion except noted otherwise)*	1Q06			4Q05			1Q05			QoQ			YoY
EPS (NT$ per com. shr.)		1.32			1.37			0.68			(3.9	%)		93.6	%
(US$ per ADR unit)		0.20			0.21			0.11

Net Sales		77.29			81.16			55.65			(4.8	%)		38.9	%
Gross Profit		36.64			39.86			21.65			(8.1	%)		69.3	%
Gross Margin		47.4	%		49.1	%		38.9	%
Operating Expense		(5.77	)		(5.64	)		(5.57	)		2.4	%		3.6	%
Non-Operating Items		3.79			1.18			0.19			221.8	%		1906.7	%
Net Income		32.61			33.90			16.82			(3.8	%)		93.9	%
Net Profit Margin		42.2	%		41.8	%		30.2	%

Wafer Shipment (kpcs 8 inch-equiv.)		1,738			1,707			1,113			1.8	%		56.2	%

Remarks:

The first quarter EPS of NT$1.32 represents a year-over-year increase of 93.6% compared to 1Q05 and a sequential decline of 3.9% compared to 4Q05. The unconsolidated operating results of 1Q06 are summarized below:

Net sales were NT$77.29 billion, a 38.9% increase compared to NT$55.65 billion reported in 1Q05 and a 4.8% decline compared to NT$81.16 billion reported in the previous quarter. Net sales for the quarter surpassed the top end of our guidance by NT$1.29 billion, primarily driven by stronger than expected demand from our customers in computer segment.

Gross profit was NT$36.64 billion, representing an 8.1% decrease from the previous quarter. Gross margin declined by 1.7 percentage points sequentially to 47.4%, with 3.3% depreciation in US dollars being an important factor.

Operating expenses were NT$5.77 billion or 7.5% of net sales. The combined result from non-operating income and long-term investments was a gain of NT$3.79 billion, which includes a one-time gain of $1.8 billion from adopting Statement of Financial Accounting Standards (“SFAS”) No. 34.

Net income was NT$32.61 billion, down 3.8% sequentially. Net margin was 42.2%.


TSMC
April 27, 2006		Page 2

I. Revenue Analysis

I — 1. Wafer Sales Analysis


By Application	1Q06			4Q05			1Q05
Computer		37	%		32	%		34	%
Communication		39	%		41	%		41	%
Consumer		18	%		21	%		17	%
Industrial/Others		5	%		5	%		6	%
Memory		1	%		1	%		2	%


By Technology	1Q06			4Q05			1Q05
N90-		20	%		17	%		4	%
0.11/0.13um		29	%		32	%		41	%
0.15/0.18um		32	%		32	%		31	%
0.25/0.35um		14	%		14	%		18	%
0.50um+		5	%		5	%		6	%


By Customer Type	1Q06			4Q05			1Q05
Fabless/System		74	%		72	%		69	%
IDM		26	%		28	%		31	%


By Geography	1Q06			4Q05			1Q05
North America		78	%		77	%		79	%
Asia Pacific		11	%		11	%		8	%
Europe		7	%		8	%		6	%
Japan		4	%		4	%		7	%

Revenue Analysis:

Net sales were NT$77.29 billion for 1Q06, topping the high end of our guidance by NT$1.29 billion, mainly driven by stronger than expected demand from our customers in computer segment.

On a quarter over quarter basis, revenues from computer applications increased by 8%, while revenues from communications and consumer applications decreased by 10% and 20%, respectively.

Revenue from advanced technologies — defined as 0.13-micron and below – accounted for 49% of total wafer sales, flat from the previous quarter. Revenue from 90nm continued to increase and accounted for 20% of total wafer sales during the quarter, compared to 17% in the fourth quarter of 2005.

IDM accounted for 26% of total wafer sales during the quarter, down slightly from 28% in the previous quarter.

Geographically, North America accounted for 78% of wafer sales, up from 77% in 4Q05. Meanwhile, sales from Europe declined by one percentage point sequentially to 7% of wafer sales.


TSMC
April 27, 2006		Page 3

II. Capacity


	1Q06		2Q06		3Q06		4Q06
Fab / (Wafer size)	(Act.)		(Est.)		(Est.)		(Est.)
Fab-2 (6”)¹		244		258		260		260
Fab-3 (8”)		246		252		259		252
Fab-5 (8”)		135		138		143		149
Fab-6 (8”)		215		222		227		241
Fab-7 (8”)		33		23		4		0
Fab-8 (8”)		231		233		228		242
Fab-12 (12”)²		142		150		157		162
Fab-14 (12”)²		61		66		86		115
TSMC — owned capacity 8"-equivalent Kpcs		1,455		1,499		1,554		1,653
Wafer Tech (8”)		99		100		101		101
SSMC (8”)		49		50		50		52
TSMC (Shanghai) (8”)		48		52		69		82
Total TSMC — managed 8"-equivalent Kpcs		1,651		1,700		1,774		1,889


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

III. Profit & Expense Analysis

III — 1. Gross Profit Analysis

(Amount: NT$ billion)

1Q06

4Q05

1Q05

COGS

40.7

41.3

34.0

Depreciation

14.5

14.9

15.2

Other MFG Cost

26.1

26.4

18.8

Gross Profit

36.6

39.9

21.6

Gross Margin

47.4

49.1

38.9

Capacity :

Total TSMC managed capacity in 1Q06 was 1,651K 8-inch equivalent wafers, 1.3% higher than the 1,629K wafers in 4Q05.

TSMC managed capacity in 2Q06 will increase to 1,700K 8-inch equivalent wafers, representing a 3% sequential growth. Majority of the capacity increase was dedicated to advanced technologies.

Overall installed capacity for year 2006 is expected to be slightly above 7 million 8-inch equivalent wafers.

Gross Profit Analysis:

Gross profit for the first quarter of 2006 was NT$36.6 billion. Gross margin declined by 1.7 percentage points sequentially to 47.4%, with 3.3% depreciation in US dollars being an important factor.


TSMC
April 27, 2006		Page 4

III — 2. Operating Expense Analysis

(Amount: NT$ billion)

1Q06

4Q05

1Q05

Total Operating Exp.

5.77

5.64

5.57

SG&A

2.23

2.22

Research & Development

3.55

3.42

3.35

III — 4. Non-Operating Items


(Amount: NT$ million)	1Q06			4Q05			1Q05
Non-Operating Income/(Exp.)		816			952			387
Net Interest Income/(Exp.)		737			488			317
Other Non-Operating		79			464			70

L-T Investments		2,972			225			(198	)
WaferTech*		856			793			195
SSMC		462			348			104
InveStar Funds		1,797			56			(1	)
TSMC (Shanghai)		(38	)		(414	)		(280	)
Others		(106	)		(558	)		(217	)

Total Non-Operating Items		3,788			1,177			189


*		Operation results only; does not include amortization of goodwill and depreciation of impaired assets.

**		Certain prior period amounts have been reclassified to conform with current period presentation

III — 4. SFAS No. 34


(Amount: NT$ million)	Unconsolidated			Consolidated
Change in Accounting Principle		(246.2	)		1,606.7
Non-Operating Items		1,860.0			60.8
Minority Interest					(53.7	)

Total SFAS No. 34 Impact		1,613.8			1,613.8

Operating Expenses:

Operating expenses for 1Q06 were NT$5.77 billion, slightly higher than the previous quarter, largely due to higher R&D expenses associated with 65nm technology. Total operating expenses represented 7.5% of net sales, up from 6.9% in the fourth quarter of 2005.

Non-Operating Items:

Combined result from non-operating income and long-term investments was a gain of NT$3.8 billion.

During the first quarter of 2006, non-operating income was NT$816 million, compared to an income of NT$952 million in the previous quarter. The decrease in non-operating income was mainly due to the scheduled lawsuit settlement payment received in 4Q05 from SMIC and a decrease in gains on sale of fixed assets, offset in part by an increase in interest income.

Net investment income was NT$2,972 million in this quarter, compared to an income of NT$225 million in 4Q05. The increase was primarily due to gains recognized under SFAS No. 34 from TSMC venture capital funds and improved operating performance at TSMC’s manufacturing affiliates. A major portion of the gains recognized under SFAS No. 34 is non-recurring.

SFAS No. 34

On January 1, 2006, TSMC adopted the newly released Statements of Financial Accounting Standards No. 34 “Accounting for Financial Instruments” (SFAS No. 34).

Under SFAS No. 34, marketable securities with readily determinable market value are measured at fair value, with unrealized gains and losses on trading securities recognized in earnings for the current period. Total unrealized gains and losses on trading securities as of January 1, 2006 are included in the cumulative effect of changes in accounting principles.

As a result of adopting SFAS No. 34, TSMC recognized a total of NT$1.6 billion gains in 1Q06 on both consolidated and unconsolidated basis, majority of which is non-recurring.

The adoption of SFAS No. 34 resulted in an increase of NT$0.065 in earnings per share in 1Q06.


TSMC
April 27, 2006		Page 5

IV. Financial Condition Review

IV — 1. Liquidity Analysis


(Amount: NT$ Billion)	1Q06		4Q05		1Q05
Cash & Marketable Securities		178.0		133.8		112.2
Accounts Receivable — Trade		35.8		36.4		22.4
Inventory		16.9		16.3		13.4
Total Current Assets		240.8		197.6		159.7
Accounts Payable		22.5		20.2		19.1
Accrued Liabilities and Others		15.9		12.0		18.8
Total Current Liabilities		38.3		32.2		37.9
Current Ratio (x)		6.3		6.1		4.2
Net Working Capital		202.4		165.4		121.9


*		Certain prior period amounts have been reclassified to conform with current period presentation

IV — 2. Receivable/Inventory Days


	1Q06		4Q05		1Q05
Days of Receivable		44		42		42
Days of Inventory		44		42		42

IV — 3. Debt Service


(Amount: NT$ Billion)	1Q06		4Q05		1Q05
Cash & Marketable Securities		178.0		133.8		112.2
Interest-Bearing Debt		19.5		19.5		30.0
Net Cash Reserves		158.5		114.3		82.2


*		Certain prior period amounts have been reclassified to conform with current period presentation

Liquidity Analysis:

Cash & marketable securities increased by NT$44.2 billion in this quarter, mainly due to strong cash flows from operating activities. As a result, TSMC ended the quarter with total current assets of NT$240.8 billion, NT$43.2 billion higher on a sequential basis.

Total current liabilities were NT$38.3 billion at the end of the quarter, NT$6.2 billion higher than the previous quarter, mainly due to an increase in payables to contractors and equipment suppliers and a reclassification of an NT$2.5 billion corporate bond from long-term debt to current liabilities.

As a result, net working capital increased to NT$202.4 billion and current ratio increased to 6.3x.

Receivable/Inventory Days Trend:

Days of receivable increased to 44 days in 1Q06, compared to 42 days in the previous quarter.

Days of inventory increased to 44 days from 42 days in the fourth quarter of 2005.

Debt Service:

As a result of strong operating performance during the quarter, net cash reserves — defined as the excess of cash and marketable securities over interest-bearing debt — increased by NT$44.2 billion to NT$158.5 billion in 1Q06.

Interest-bearing debt remained flat at NT$19.5 billion.


TSMC
April 27, 2006		Page 6

V. Cash Flow & CapEx

V — 1. Cash Flow Analysis


(Amount: NT$ billion)	1Q06			4Q05			1Q05
Net Income		32.6			33.9			16.8
Depreciation & Amortization		16.0			16.6			16.7
Other Op Sources/(Uses)		(0.8	)		(1.6	)		2.5
Total Op Sources/(Uses)		47.7			48.9			36.0


Capital Expenditure		(11.1	)		(13.3	)		(38.2	)
Marketable Financial Instruments		(12.8	)		0.9			(0.0	)
Other Investing Sources/(Uses)		0.3			0.3			(3.2	)
Net Investing Sources/(Uses)		(23.6	)		(12.1	)		(41.3	)


Repayment of Corporate Bonds		0.0			(10.5	)		0.0
Other Financing Sources/(Uses)		0.4			0.6			(0.0	)
Net Financing Sources/(Uses)		0.4			(9.9	)		(0.0	)


Net Cash Position Changes		24.6			26.9			(5.3	)

Ending Cash Balance		110.0			85.4			60.2


*		Certain prior period amounts have been reclassified to conform with the current period presentation.

V — 3. Capital Expenditure
(In US$ million)


	1Q06
TSMC	$	344
TSMC (Shanghai) & WaferTech		12

TSMC Consolidated	$	356

Summary of Cash Flow:

During this quarter, TSMC generated NT$47.7 billion from operating activities, mainly from net income of NT$32.6 billion and depreciation & amortization of NT$16.0 billion.

Net cash used in investment activities totaled NT$23.6 billion, mainly as a result of an NT$11.1 billion in capital spending and an NT$12.8 billion net increase in marketable financial instruments.

Net cash provided by financing activities was NT$0.4 billion during this quarter.

As a result, TSMC ended the quarter with a cash balance of NT$110 billion, NT$24.6 billion higher than in 4Q05.

Operating and Free Cash Flows:

TSMC continues to generate strong free cash flows. Free cash flows totaled NT$36.6 billion for 1Q06, NT$1 billion higher than the NT$35.6 billion generated in the previous quarter, mainly due to lower level of capital expenditures during the quarter.

Capital Spending:

Capital expenditures for TSMC alone totaled US$344 million during the quarter. Most of the spending was for the purchase of 12-inch production equipment. Capital spending for TSMC subsidiaries in this quarter was US$12 million.

For year 2006, total capital expenditure for TSMC consolidated group is expected to be in the range of US$2.6 billion to US$2.8 billion, unchanged from our previous guidance provided in January 2006.


TSMC
April 27, 2006		Page 7

VI. Analysis of Consolidated Financial Results

VI — 2. Consolidated v. Unconsolidated Income Statement


(Amount: NT$ billion)	Consolidated			Unconsolidated			Difference
Net Sales		77.9			77.3			0.6
COGS		40.1			40.7			(0.6	)

Gross Profit		37.7			36.6			1.1
Gross Margin %		48.5	%		47.4	%		1.1	%
Operating Expenses
Research & Development		3.7			3.5			0.2
SG&A		3.1			2.2			0.9

Total Operating Expenses		6.8			5.8			1.0

Operating Income		30.9			30.9			0.0
Operating Margin %		39.7	%		39.9	%		-0.2	%

Non-Operating Income (Exp.)		1.4			0.8			0.6
Investment Income (Loss)		0.6			3.0			(2.4	)

Income Tax Benefit (Expense)		(1.9	)		(1.8	)		(0.1	)

Change in Accounting Principle		1.6			(0.2	)		1.8

Minority Interest		(0.1	)		0.0			(0.1	)


Net Income		32.6			32.6			0.0
Net Margin %		41.9	%		42.2	%		-0.3	%

Consolidated Structure

TSMC consolidated results include the results from its overseas sales offices (TSMC North America, TSMC Europe and TSMC Japan), manufacturing subsidiaries (TSMC (Shanghai) and WaferTech), strategic alliance (Global Unichip Corp.), venture capital funds, and others. These entities are collectively referred to as “TSMC consolidating entities” hereafter.

Consolidated Income Statement

On a consolidated basis, net sales for 1Q06 were NT$77.9 billion, NT$0.6 billion higher than the unconsolidated net sales, reflecting sales contributions from TSMC consolidating entities. Consolidated gross margin was 48.5%, compared to 47.4% on the unconsolidated basis. The higher consolidated gross margin reflects the true gross margins from TSMC consolidating entities.

Consolidated operating expenses were NT$6.8 billion for 1Q06, NT$1 billion higher than the unconsolidated operating expenses. The higher consolidated operating expenses were mainly attributable to additional sales & marketing expenses from TSMC overseas sales offices and additional G&A expenses from other TSMC consolidating entities. Total consolidated operating expenses accounted for 8.8% of consolidated net sales, compared to 7.5% on the unconsolidated basis.

Consolidated non-operating income was NT$1.4 billion for 1Q06, NT$0.6 billion higher than the unconsolidated non-operating income, mainly due to gains recognized under SFAS No. 34 from TSMC venture capital funds and a one-time gain from a TSMC subsidiary. SFAS No. 34 related gains attributable to changes in fair value during 1Q06 are reported as non-operating income for consolidated purpose instead of as investment income for unconsolidated purpose.

Investment income for 1Q06 was NT0.6 billion on the consolidated basis, reflecting TSMC’s share of income from TSMC’s non-consolidating affiliates.

Consolidated net income was NT$32.6 billion, same as that on the unconsolidated basis. Consolidated net margin was 41.9%, 0.3% lower than the unconsolidated net margin.


TSMC
April 27, 2006		Page 8

VI — 3. Consolidated v. Unconsolidated Balance Sheet (Selected Balance Sheet Items)


(Amount: NT$ billion)	Consolidated		Unconsolidated		Difference
Cash & Marketable Securities		192.3		178.0		14.3
Accounts Receivable — Trade		38.0		35.8		2.2
Inventory		18.4		16.9		1.5
Total Current Assets		259.3		240.8		18.5

Long-Term Investments		34.7		75.4		(40.7	)
Fixed Assets, Net		241.5		212.5		29.0

Total Assets		555.3		543.7		11.6

Total Current Liabilities		40.9		38.3		2.6
L/T Interest-Bearing Debt		24.7		17.0		7.7

Total Liabilities		76.7		65.8		10.9

Total Equity		478.6		477.9		0.7

VI — 4. Consolidated v. Unconsolidated Cash Flows

(Amount: NT$ billion)

Consolidated

Unconsolidated

Difference

Cash Flows Provided by Operating Activities

48.9

47.7

1.2

Depreciation & Amortization

17.7

16.0

1.8

Cash Flows Used in Investing Activities

(24.1

)

(23.6

)

(0.6

)

Capital Expenditures

(11.5

)

(11.1

)

(0.4

)

Cash Flows Provided by Financing Activities

0.1

0.4

(0.3

)

Net Cash Increase (Decrease)

24.9

24.6

0.3

Consolidated Balance Sheet

On a consolidated basis, as a result of higher cash and marketable securities, total current assets were NT$259.3 billion, NT$18.5 billion higher than the unconsolidated total current assets.

Consolidated long-term investments were NT$34.7 billion for 1Q06, compared to NT$75.4 billion on the unconsolidated basis, reflecting the consolidation of TSMC subsidiaries.

Consolidated net fixed assets totaled NT$241.5 billion, NT$29 billion higher than the unconsolidated net fixed assets, mainly due to manufacturing facilities located at TSMC’s consolidating entities.

Total consolidated liabilities were NT$76.7 billion, compared to NT$65.8 billion on the unconsolidated basis, largely attributable to borrowings by TSMC’s consolidating entities.

Consolidated Cash Flows

Consolidated cash flows provided by operating activities were NT$48.9 billion in 1Q06, NT$1.2 billion higher than that on the unconsolidated basis, mainly due to additional depreciation & amortization expenses from TSMC consolidating entities.

Consolidated cash flows used in investing activities totaled NT$24.1 billion in 1Q06, slightly higher than that on the unconsolidated basis, primarily due to capital expenditures at TSMC (Shanghai).

Consolidated cash flows provided by financing activities were NT$0.1 billion in 1Q06.


TSMC
April 27, 2006		Page 9

VII. Recap of Recent Important Events & Announcements


l		TSMC and ARM Sign Long-term Physical IP Agreement for 65- And 45-nanometer Technologies (2006/04/19)

l		TSMC invites Carly Fiorina to Join Board of Directors as Independent Member (2006/04/06)

l		TSMC 65nm Wireless Devices is Sampled by QUALCOMM (2006/04/06)

l		TSMC Appoints Dr. Fu-Chieh Hsu as Vice President of Design and Technology Platform (2006/03/29)

l		TSMC Wins Intel’s Preferred Quality Supplier Award (2006/03/22)

l		TSMC Board Proposes Distribution of NT$2.5 Cash And 3% Stock Per Share (2006/02/14)

l		TSMC Announces Immersion Lithography Nearly Production Ready (2006/02/22)

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

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED
Condensed Balance Sheets (Unconsolidated)
(Figures in Million of New Taiwan Dollars (“NTD”) and U.S. Dollars (“USD”)) ⁽¹⁾


	March 31, 2006 (Unaudited)									December 31, 2005 (Audited)⁽²⁾						March 31, 2005 (Unaudited)⁽²⁾						QoQ						YoY
	USD			NTD			%			NTD			%			NTD			%			Amount			%			Amount			%
ASSETS
Current Assets
Cash and Cash Equivalents	$	3,388		$	109,990			20.2		$	85,384			16.8		$	60,219			12.5		$	24,606			28.8		$	49,771			82.6
Investments in Marketable Financial Instruments		2,095			67,994			12.5			48,436			9.5			51,941			10.8			19,558			40.4			16,053			30.9
Accounts Receivable — Trade		1,102			35,780			6.6			36,396			7.2			22,429			4.7			(616	)		(1.7	)		13,351			59.5
Inventories, Net		521			16,901			3.1			16,258			3.2			13,429			2.8			643			4.0			3,472			25.9
Other Current Assets		312			10,123			1.9			11,088			2.2			11,726			2.4			(965	)		(8.7	)		(1,603	)		(13.7	)

Total Current Assets		7,418			240,788			44.3			197,562			38.9			159,744			33.2			43,226			21.9			81,044			50.7


Long Term Investments		2,324			75,439			13.9			80,660			15.9			76,877			16.0			(5,221	)		(6.5	)		(1,438	)		(1.9	)


Properties, Plant and Equipment		18,060			586,213			107.8			573,337			113.0			545,308			113.4			12,876			2.2			40,905			7.5
Less: Accumulated Depreciation		(11,513	)		(373,691	)		(68.7	)		(359,191	)		(70.8	)		(315,454	)		(65.6	)		(14,500	)		4.0			(58,237	)		18.5

Properties, Plant and Equipment, Net		6,547			212,522			39.1			214,146			42.2			229,854			47.8			(1,624	)		(0.8	)		(17,332	)		(7.5	)


Other Assets		462			14,975			2.7			15,172			3.0			14,199			3.0			(197	)		(1.3	)		776			5.5

Total Assets	$	16,751		$	543,724			100.0		$	507,540			100.0		$	480,674			100.0		$	36,184			7.1		$	63,050			13.1


LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts Payables	$	335		$	10,874			2.0		$	11,294			2.2		$	8,208			1.7			($420	)		(3.7	)	$	2,666			32.5
Payables to Contractors and Equipment Suppliers		358			11,621			2.1			8,859			1.7			10,920			2.3			2,762			31.2			701			6.4
Accrued Expenses and Other Current Liabilities		411			13,352			2.4			12,031			2.4			8,263			1.5			1,321			10.2			5,089			75.4
Current Portion of Bonds Payable		77			2,500			0.6			—			—			10,500			2.2			2,500			0.0			(8,000	)		(76.2	)

Total Current Liabilities		1,181			38,347			7.1			32,184			6.3			37,891			7.9			6,163			19.1			456			1.2

Bonds Payable		524			17,000			3.1			19,500			3.8			19,500			4.1			(2,500	)		(12.8	)		(2,500	)		(12.8	)
Other Long Term Liabilities		322			10,444			1.9			10,225			2.1			7,929			1.6			219			2.1			2,515			31.7

Total Liabilities		2,027			65,791			12.1			61,909			12.2			65,320			13.6			3,882			6.3			471			0.7


Shareholders’ Equity
Common Stock		7,620			247,331			45.5			247,300			48.7			232,529			48.4			31			—			14,802			6.4
Capital Surplus		1,762			57,208			10.5			57,118			11.3			56,574			11.8			90			0.2			634			1.1
Retained Earnings		5,403			175,378			32.3			142,771			28.1			130,549			27.1			32,607			22.8			44,829			34.3
Treasury Stock		(28	)		(918	)		(0.2	)		(918	)		(0.2	)		(1,572	)		(0.3	)		—			—			654			(41.6	)
Others		(33	)		(1,066	)		(0.2	)		(640	)		(0.1	)		(2,726	)		(0.6	)		(426	)		66.3			1,660			(60.9	)

Total Shareholders’ Equity		14,724			477,933			87.9			445,631			87.8			415,354			86.4			32,302			7.2			62,579			15.1

Total Liabilities & Shareholders’ Equity	$	16,751		$	543,724			100.0		$	507,540			100.0		$	480,674			100.0		$	36,184			7.1		$	63,050			13.1

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED
Unaudited Condensed Income Statements (Unconsolidated)
For the Three Months Ended March 31, 2006, December 31, 2005 and March 31, 2005
(Expressed in Million New Taiwan Dollars (“NTD”) and U.S. Dollars (“USD”) ⁽¹⁾
Except for Per Share Amounts and Shares Outstanding)


	Q1 2006									Q4 2005						Q1 2005						QoQ						YoY
	USD			NTD			%			NTD			%			NTD			%			Amount			%			Amount			%
Net Sales	$	2,390		$	77,293			100.0		$	81,161			100.0		$	55,653			100.0			($3,868	)		(4.8	)	$	21,640			38.9
Cost of Sales		(1,257	)		(40,651	)		(52.6	)		(41,296	)		(50.9	)		(34,004	)		(61.1	)		645			(1.6	)		(6,647	)		19.5

Gross Profit		1,133			36,642			47.4			39,865			49.1			21,649			38.9			(3,223	)		(8.1	)		14,993			69.3

Operating Expenses
Research and Development Expenses		(110	)		(3,549	)		(4.6	)		(3,423	)		(4.2	)		(3,349	)		(6.0	)		(126	)		3.7			(200	)		6.0
General and Administrative Expenses		(47	)		(1,555	)		(2.0	)		(1,860	)		(2.3	)		(1,945	)		(3.5	)		305			(16.4	)		390			(20.1	)
Sales and Marketing Expenses		(21	)		(671	)		(0.9	)		(358	)		(0.4	)		(279	)		(0.5	)		(313	)		87.5			(392	)		140.8

Total Operating Expenses		(178	)		(5,775	)		(7.5	)		(5,641	)		(6.9	)		(5,573	)		(10.0	)		(134	)		2.4			(202	)		3.6

Income from Operations		955			30,867			39.9			34,224			42.2			16,076			28.9			(3,357	)		(9.8	)		14,791			92.0


Non-Operating Incomes (Expenses), Net		25			816			1.1			952			1.1			387			0.7			(136	)		(14.3	)		429			110.9
Investment Gains (Losses)		92			2,972			3.8			225			0.3			(198	)		(0.4	)		2,747			1,220.1			3,170			(1,599.7	)

Income before Income Tax		1,072			34,655			44.8			35,401			43.6			16,265			29.2			(746	)		(2.1	)		18,390			113.1

Income Tax Benefits (Expenses)		(56	)		(1,802	)		(2.3	)		(1,501	)		(1.8	)		553			1.0			(301	)		20.1			(2,355	)		(425.9	)


Net Income Before Cumulative Effect of Changes in Accounting Principles		1,016			32,853			42.5			33,900			41.8			16,818			30.2			(1,047	)		(3.1	)		16,035			95.3

Cumulative Effect of Changes in Accounting Principles (Net of Tax)		(8	)		(246	)		(0.3	)		—			—			—			—			(246	)		—			(246	)		—


Net Income	$	1,008		$	32,607			42.2		$	33,900			41.8		$	16,818			30.2			($1,293	)		(3.8	)	$	15,789			93.9


Earnings per Share — Diluted		0.04			1.32						1.37						0.68						(0.05	)		(3.9	)		0.64			93.6

Earnings per ADR ⁽²⁾		0.20			6.60						6.86						3.41						(0.27	)		(3.9	)		3.19			93.6


Weighted Average Outstanding Shares (‘M) ⁽³⁾					24,721						24,693						24,684

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED
Unaudited Condensed Statement of Cash Flows (Unconsolidated)
For the Three Months Ended March 31, 2006, December 31, 2005 and March 31, 2005
(Figures in Million of New Taiwan Dollars (“NTD”) and U.S. Dollars (“USD”)) ⁽¹⁾


	1Q 2006						4Q 2005			1Q 2005 ⁽²⁾
	USD			NTD			NTD			NTD
Cash Flows from Operating Activities:
Net Income	$	1,008		$	32,607		$	33,900		$	16,818
Depreciation & Amortization		494			15,975			16,554			16,669
Deferred Income Tax		(18	)		(569	)		(950	)		(553	)
Investment Loss(Income) Recognized by Equity Method		(92	)		(2,972	)		(225	)		198
Changes in Working Capital & Others		85			2,707			(383	)		2,889

Net Cash Provided by Operating Activities		1,477			47,748			48,896			36,021

Cash Flows from Investing Activities:
Acquisitions:
Marketable Financial Instruments⁽³⁾		(1,012	)		(32,731	)		(21,333	)		(20,395	)
Long-term investments by equity method		(1	)		(19	)		(167	)		(2,992	)
Property, Plant and Equipment		(344	)		(11,115	)		(13,323	)		(38,161	)
Proceeds from disposal or maturity of:
Marketable Financial Instruments⁽³⁾		616			19,924			22,204			20,394
Property, Plant and Equipment		14			461			585			121
Decrease in Others		(2	)		(102	)		(79	)		(294	)

Net Cash Used in Investing Activities		(729	)		(23,582	)		(12,113	)		(41,327	)

Cash Flows from Financing Activities:
Repayment of Long Term Bonds Payable		—			—			(10,500	)		—
Increase(Decrease) in Guarantee Deposits		10			322			529			(42	)
Proceeds from Exercise of Stock Options		3			118			105			35

Net Cash Provided by (Used in) Financing Activities		13			440			(9,866	)		(7	)


Net Increase (Decrease) in Cash and Cash Equivalents		761			24,606			26,917			(5,313	)


Cash and Cash Equivalents at Beginning of Period		2,640			85,384			58,467			65,532

Cash and Cash Equivalents at End of Period	$	3,401		$	109,990		$	85,384		$	60,219

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED AND SUBSIDIARIES
Condensed Balance Sheets (Consolidated)
(Figures in Million of New Taiwan Dollars (“NTD”) and U.S. Dollars (“USD”)) ⁽¹⁾


	March 31, 2006(Uuaudited)									December 31, 2005(Audited)⁽²⁾						March 31, 2005(Unaudited)⁽²⁾						QoQ						YoY
	USD			NTD			%			NTD			%			NTD			%			Amount			%			Amount			%
ASSETS
Current Assets
Cash and Cash Equivalents	$	3,735		$	121,251			21.8		$	96,484			18.6		$	71,541			14.5		$	24,767			25.7		$	49,710			69.5
Investments in Marketable Financial Instruments		2,187			71,006			12.8			48,780			9.4			53,240			10.8			22,226			45.6			17,766			33.4
Accounts Receivable — Trade, Net		1,171			38,012			6.8			38,478			7.4			23,846			4.8			(466	)		(1.2	)		14,166			59.4
Inventories, Net		567			18,409			3.3			17,728			3.4			14,688			3.0			681			3.8			3,721			25.3
Other Current Assets		327			10,572			2.0			10,785			2.1			9,740			2.0			(213	)		(2.0	)		832			8.5

Total Current Assets		7,987			259,250			46.7			212,255			40.9			173,055			35.1			46,995			22.1			86,195			49.8


Long-Term Investment		1,070			34,726			6.3			42,428			8.2			39,209			7.9			(7,702	)		(18.2	)		(4,483	)		(11.4	)

Properties, Plant and Equipment		20,191			655,396			118.0			642,948			123.7			609,807			123.5			12,448			1.9			45,589			7.5
Less: Accumulated Depreciation		(12,750	)		(413,852	)		(74.5	)		(398,125	)		(76.6	)		(347,886	)		(70.5	)		(15,727	)		4.0			(65,966	)		19.0

Properties, Plant and Equipment, Net		7,441			241,544			43.5			244,823			47.1			261,921			53.0			(3,279	)		(1.3	)		(20,377	)		(7.8	)


Other Assets		609			19,772			3.5			20,003			3.8			19,522			4.0			(231	)		(1.2	)		250			1.3

Total Assets	$	17,107		$	555,292			100.0		$	519,509			100.0		$	493,707			100.0		$	35,783			6.9		$	61,585			12.5


LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Short-term loan payable	$	—		$	—			0.0		$	328			0.1		$	377			0.1		($	328	)		(100.0	)	($	377	)		(100.0	)
Accounts Payables		329			10,687			1.9			11,165			2.1			8,321			1.7			(478	)		(4.3	)		2,366			28.4
Payables to Contractors and Equipment Suppliers		360			11,680			2.1			9,066			1.7			12,293			2.5			2,614			28.8			(613	)		(5.0	)
Accrued Expenses and Other Current Liabilities		493			15,996			2.9			14,558			2.8			9,791			2.0			1,438			9.9			6,205			63.4
Current Portion of Bonds Payable		77			2,505			0.5			5			0.1			10,505			2.1			2,500			45545.6			(8,000	)		(76.2	)

Total Current Liabilities		1,259			40,868			7.4			35,122			6.8			41,287			8.4			5,746			16.4			(419	)		(1.0	)

Bonds Payable		524			17,000			3.1			19,500			3.8			19,500			3.9			(2,500	)		(12.8	)		(2,500	)		(12.8	)
Other Long Term Liabilities		579			18,813			3.3			18,649			3.5			16,832			3.4			164			0.9			1,981			11.8

Total Liabilities		2,362			76,681			13.8			73,271			14.1			77,619			15.7			3,410			4.7			(938	)		(1.2	)


Shareholders’ Equity Attributable to Shareholders of the Parent
Common Stock		7,620			247,331			44.5			247,300			47.6			232,529			47.1			31			0.0			14,802			6.4
Capital Surplus		1,762			57,208			10.3			57,118			11.0			56,574			11.5			90			0.2			634			1.1
Retained Earnings		5,403			175,378			31.6			142,771			27.5			130,549			26.4			32,607			22.8			44,829			34.3
Treasury Stock		(28	)		(918	)		(0.2	)		(918	)		(0.2	)		(1,572	)		(0.3	)		0			0.0			654			(41.6	)
Others		(33	)		(1,066	)		(0.1	)		(641	)		(0.1	)		(2,726	)		(0.5	)		(425	)		66.3			1,660			(60.9	)

Total equity attributable to shareholders of the parent		14,724			477,933			86.1			445,630			85.8			415,354			84.2			32,303			7.2			62,579			15.1
Minority interest		21			678			0.1			608			0.1			734			0.1			70			11.4			(56	)		(7.7	)

Total shareholders’ equity		14,745			478,611			86.2			446,238			85.9			416,088			84.3			32,373			7.3			62,523			15.0

Total Liabilities & Shareholders’ Equity	$	17,107		$	555,292			100.0		$	519,509			100.0		$	493,707			100.0		$	35,783			6.9		$	61,585			12.5


Note :		(1) Amounts in NTD have been translated into USD at the rate of NT$32.46 as of March 31, 2006.

		(2) Certain prior period balances have been reclassified to conform to the current period presentation.

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED AND SUBSIDIARIES
Unaudited Condensed Income Statements (Consolidated)
For the Three Months Ended March 31, 2006, December 31, 2005 And March 31, 2005
(Expressed in Million New Taiwan Dollars (“NTD”) and U.S. Dollars (“USD”) ⁽¹⁾
Except for Per Share Amounts and Shares Outstanding)


	Q1 2006									Q4 2005						Q1 2005						QoQ						YoY
	USD			NTD			%			NTD			%			NTD			%			Amount			%			Amount			%
Net Sales	$	2,407		$	77,850			100.0		$	79,228			100.0		$	56,857			100.0		($	1,378	)		(1.7	)	$	20,993			36.9
Cost of Sales		(1,240	)		(40,123	)		(51.5	)		(37,914	)		(47.9	)		(35,179	)		(61.9	)		(2,209	)		5.8			(4,944	)		14.1

Gross Profit		1,167			37,727			48.5			41,314			52.1			21,678			38.1			(3,587	)		(8.7	)		16,049			74.0

Operating Expenses
Research and Development Expenses		(114	)		(3,689	)		(4.7	)		(3,570	)		(4.5	)		(3,412	)		(6.0	)		(119	)		3.3			(277	)		8.1
General and Administrative Expenses		(59	)		(1,919	)		(2.5	)		(1,910	)		(2.4	)		(2,513	)		(4.4	)		(9	)		0.5			594			(23.6	)
Sales and Marketing Expenses		(38	)		(1,217	)		(1.6	)		(1,424	)		(1.8	)		(583	)		(1.0	)		207			(14.5	)		(634	)		108.7

Total Operating Expenses		(211	)		(6,825	)		(8.8	)		(6,904	)		(8.7	)		(6,508	)		(11.4	)		79			(1.1	)		(317	)		4.9


Income from Operations		956			30,902			39.7			34,410			43.4			15,170			26.7			(3,508	)		(10.2	)		15,732			103.7


Non-Operating Incomes, Net		43			1,417			1.8			639			0.8			738			1.3			778			121.8			679			92.0
Investment Gains		19			600			0.8			539			0.7			397			0.7			61			11.3			203			51.1

Income before Income Tax		1,018			32,919			42.3			35,589			44.9			16,305			28.7			(2,670	)		(7.5	)		16,614			101.9

Income Tax (Expenses) Benefits		(58	)		(1,855	)		(2.4	)		(1,692	)		(2.1	)		513			0.9			(163	)		9.6			(2,368	)		(461.6	)


Net Income Before Cumulative Effect of Changes in Accounting Principles		960			31,064			39.9			33,897			42.8			16,818			29.6			(2,833	)		(8.4	)		14,246			84.7

Cumulative Effect of Changes in Accounting Principles (Net of Tax)		50			1,607			2.1			0			0.0			0			0.0			1,607			—			1,607			—


Net Income	$	1,010		$	32,671			42.0		$	33,897			42.8		$	16,818			29.6		($	1,226	)		(3.6	)	$	15,853			94.3


Attributable to:
Shareholders of the parent	$	1,008		$	32,607			41.9		$	33,900			42.8		$	16,818			29.6		($	1,293	)		(3.8	)	$	15,789			93.9
Minority Interest		2			64			0.1			(3	)		0.0			0			0.0			67			(2,233.3	)		64			—

	$	1,010		$	32,671			42.0		$	33,897			42.8		$	16,818			29.6		($	1,226	)		(3.6	)	$	15,853			94.3


Earnings per Share — Diluted	$	0.04		$	1.32					$	1.37					$	0.68					($	0.05	)		(3.9	)	$	0.64			93.6

Earnings per ADR ⁽²⁾	$	0.20		$	6.60					$	6.86					$	3.41					($	0.27	)		(3.9	)	$	3.19			93.6


Weighted Average Outstanding Shares (‘M) ⁽³⁾					24,721						24,693						24,684


Note:		(1) Amounts in NTD have been translated into USD at the weighted average rate of NTD32.337 for the first quarter of 2006.

		(2) 1 ADR equals 5 ordinary shares.

		(3) Total diluted weighted average outstanding shares were 24,721M shares for 1Q06 and 24,684M shares for 1Q05 after the retroactive adjustments for stock dividends and stock bonus.

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED AND SUBSIDIARIES
Unaudited Condensed Statements of Cash Flows (Consolidated)
For the Three Months Ended March 31, 2006, December 31, 2005 and March 31, 2005
(Figures in Million of New Taiwan Dollars (“NTD”) and U.S. Dollars (“USD”)) ⁽¹⁾


	1Q 2006						4Q 2005			1Q 2005⁽²⁾
	USD			NTD			NTD			NTD
Cash Flows from Operating Activities:
Net Income	$	1,008		$	32,607		$	33,900		$	16,818
Net Income attributable to minority interest		2			64			(3	)		—
Depreciation & Amortization		548			17,734			18,664			18,453
Deferred Income Tax		(19	)		(609	)		(953	)		(546	)
Investment Loss(Income) From Equity Method Investees		(19	)		(600	)		(539	)		(397	)
Changes in Working Capital & Others		(7	)		(282	)		(1,511	)		4,301

Net Cash Provided from Operating Activities		1,513			48,914			49,558			38,629

Cash Flows from Investing Activities:
Acquisitions:
Marketable Financial Instruments ⁽³⁾		(1,012	)		(32,731	)		(19,744	)		(20,395	)
Financial assets carried at cost		(4	)		(122	)		—			(83	)
Property, Plant and Equipment		(356	)		(11,510	)		(13,618	)		(41,530	)
Long-term investments by equity method		—			—			(7,615	)		—
Proceeds from disposal or maturity of:
Marketable Financial Instruments ⁽³⁾		616			19,931			21,501			20,394
Financial assets carried at cost		—			—			12			8
Property, Plant and Equipment		14			462			206			181
Long-term investments by equity method		—			—			6,504			—
Decrease in Others		(4	)		(142	)		(102	)		(287	)

Net Cash Used By Investing Activities		(746	)		(24,112	)		(12,856	)		(41,712	)

Cash Flows from Financing Activities:
Repurchase of treasury stock		—			—			—			26
Cash Dividend — Common Shares		—			—			—			—
Bonus Paid to Employees, Directors and Supervisors		—			—			—			—
Repayment of Long Term Bonds Payable		—			(1	)		(9,504	)		—
Increase(Decrease) in Guarantee Deposits		10			322			531			(41	)
Proceeds from Exercise of Stock Options		4			117			105			35
Increase(Decrease) in Others		(10	)		(322	)		(1,149	)		—

Net Cash Provided From (Used By) Financing Activities		4			116			(10,017	)		20


Net Increase (Decrease) in Cash and Cash Equivalents		771			24,918			26,684			(3,063	)


Effect of exchange rate changes on cash and cash equivalents and others		(5	)		(151	)		363			(14	)

Effect of first inclusion for consolidation of certain subsidiaries		—			—			(145	)		315

Cash and Cash Equivalents at Beginning of Period		2,984			96,484			69,582			74,302


Cash and Cash Equivalents at End of Period	$	3,750		$	121,251		$	96,484		$	71,540


Note :		(1) Amounts in NTD have been translated into USD at the rate of NTD32.337 , the weighted average rate for the three months ended March 31, 2006.

		(2) Certain prior period balances have been reclassified to conform to the current period presentation.

		(3) Marketable financial instruments include available-for-sale and held-to-maturity financial assets, which non-current portions are classified as long-term investments in Balance Sheet.

TSMC 2006 First Quarter Results Investor Conference April 27th, 2006

Agenda Welcome 2006 1Q Financial Results 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 April 20, 2006 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.

* Annualized ROE for the quarter. 1Q'06 Result Highlights

Income Statement

SFAS No. 34 Impact

Balance Sheet & Key Indices * * * Certain prior period balances have been reclassified to conform to the current period presentation

Cash Flows * * * Certain prior period balances have been reclassified to conform to the current period presentation

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. Installed Capacity by Fab

Capital Expenditures 2006 CapEx to be in the range of US$2.6-2.8 billion

Sales Breakdown by Technology

Sales Breakdown by Application

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

Sales Breakdown by Customer

TSMC Consolidation Entities Regional Sales Office Manufacturing Subsidiaries Strategic Alliance Venture Capital Funds Others TSMC TSMC-NA, Europe, Japan TSMC (Shanghai), WaferTech GUC EAF, VTAF II, ISDF, ISDF II

Consolidated Income Statement

Consolidated Balance Sheet

Consolidated Cash Flow

2Q'06 Guidance Revenues to be between NT$79 billion and NT$81 billion; consolidated revenue to be between NT$80 billion and NT$82 billion Gross profit margin to be between 47% and 49%; consolidated gross profit margin to be between 48% and 50% Operating profit margin to be between 40% and 42% on both consolidated and unconsolidated basis

Recap of Recent Major Events TSMC And ARM Sign Long-term Physical IP Agreement for 65- And 45-nanometer Technologies ( 2006/04/19 ) TSMC invites Carly Fiorina to Join Board of Directors as Independent Member ( 2006/04/06 ) TSMC 65nm Wireless Devices Is Sampled by QUALCOMM ( 2006/04/06 ) TSMC Appoints Dr. Fu-Chieh Hsu as Vice President of Design and Technology Platform ( 2006/03/29 ) TSMC Wins Intel's Preferred Quality Supplier Award ( 2006/03/22 ) TSMC Board Proposes Distribution of NT$2.5 Cash And 3% Stock Per Share( 2006/02/14 ) TSMC Announces Immersion Lithography Nearly Production Ready ( 2006/02/22 ) * Please visit TSMC's Web site (http://www.tsmc.com) for details and other announcements.

http://www.tsmc.com invest@tsmc.com

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: April 27, 2006	By	/s/ Lora Ho
		Lora Ho
		Vice President & Chief Financial Officer