TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED
 

 
 
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 October 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: _____________.)
 
 


 

Taiwan Semiconductor Manufacturing Company Limited
Financial Statements for the
Nine Months Ended September 30, 2006 and 2005 and
Independent Accountants’ Review Report

 


 

INDEPENDENT ACCOUNTANTS’ REVIEW REPORT
The Board of Directors and Shareholders
Taiwan Semiconductor Manufacturing Company Limited
We have reviewed the accompanying balance sheets of Taiwan Semiconductor Manufacturing Company Limited as of September 30, 2006 and 2005, and the related statements of income and cash flows for the nine months then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to issue a report on these financial statements based on our reviews.
We conducted our reviews in accordance with Statement on Auditing Standards No. 36 “Review of Financial Statements” issued by the Auditing Standards Committee of the Accounting Research and Development Foundation of the Republic of China. A review consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the Republic of China, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that should be made to the financial statements referred to above for them to be in conformity with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers and accounting principles generally accepted in the Republic of China.
October 11, 2006
Notice to Readers
The accompanying financial statements are intended only to present the financial position, results of operations and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to review such financial statements are those generally accepted and applied in the Republic of China.
For the convenience of readers, the accountants’ review report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language accountants’ review report and financial statements shall prevail.

- 1 -


 

Taiwan Semiconductor Manufacturing Company Limited
BALANCE SHEETS
SEPTEMBER 30, 2006 AND 2005
(In Thousands of New Taiwan Dollars, Except Par Value)
(Reviewed, Not Audited)
                                 
    2006     2005  
    Amount     %     Amount     %  
ASSETS
                               
 
                               
CURRENT ASSETS
                               
Cash and cash equivalents (Notes 2 and 4)
  $ 77,785,750       14     $ 58,467,326       12  
Financial assets at fair value through profit or loss (Notes 2, 3 and 5)
    45,295             103,214        
Available-for-sale financial assets (Notes 2, 3 and 6)
    35,749,909       7       48,216,860       10  
Held-to-maturity financial assets (Notes 2, 3 and 7)
    6,220,737       1       605,110        
Notes and accounts receivable
    19,339,939       4       18,605,971       4  
Receivables from related parties (Note 23)
    22,030,420       4       23,036,804       5  
Allowance for doubtful receivables (Note 2)
    (975,705 )           (977,365 )      
Allowance for sales returns and others (Note 2)
    (5,012,934 )     (1 )     (3,417,328 )      
Other receivables from related parties (Note 23)
    1,042,223             1,650,678        
Other financial assets (Note 3)
    747,755             1,144,264        
Inventories, net (Notes 2 and 8)
    18,369,130       3       15,070,064       3  
Deferred income taxes assets (Notes 2 and 16)
    2,683,412       1       1,781,000        
Prepaid expenses and other current assets (Note 3)
    704,492             767,457        
 
                       
 
                               
Total current assets
    178,730,423       33       165,054,055       34  
 
                       
 
                               
LONG-TERM INVESTMENTS (Notes 2, 3, 6, 7, 9 and 10)
                               
Investments accounted for using equity method
    84,640,267       15       50,235,546       10  
Available-for-sale financial assets
    4,893,355       1              
Held-to-maturity financial assets
    30,747,122       6       27,948,533       6  
Financial assets carried at cost
    769,411             774,373        
 
                       
 
                               
Total long-term investments
    121,050,155       22       78,958,452       16  
 
                       
 
                               
PROPERTY, PLANT AND EQUIPMENT (Notes 2, 11 and 23)
                               
Cost
                               
Buildings
    95,576,337       17       89,619,890       19  
Machinery and equipment
    508,975,810       92       453,130,574       94  
Office equipment
    8,443,812       2       7,726,708       1  
 
                       
 
    612,995,959       111       550,477,172       114  
Accumulated depreciation
    (401,098,736 )     (73 )     (346,517,367 )     (72 )
Advance payments and construction in progress
    21,069,769       4       14,949,566       3  
 
                       
 
                               
Net property, plant and equipment
    232,966,992       42       218,909,371       45  
 
                       
 
                               
GOODWILL (Note 2)
    1,567,756             1,654,853        
 
                       
 
                               
OTHER ASSETS
                               
Deferred income tax assets (Notes 2 and 16)
    10,989,791       2       11,042,079       3  
Deferred charges, net (Notes 2 and 12)
    5,639,776       1       7,322,444       2  
Refundable deposits
    83,738             83,642        
Assets leased to others, net (Note 2)
    68,579             74,312        
Others
    6,789             6,789        
 
                       
 
                               
Total other assets
    16,788,673       3       18,529,266       5  
 
                       
 
                               
TOTAL
  $ 551,103,999       100     $ 483,105,997       100  
 
                       
 
                               
LIABILITIES AND SHAREHOLDERS’ EQUITY
                               
 
                               
CURRENT LIABILITIES
                               
Financial liabilities at fair value through profit or loss (Notes 2, 3 and 5)
  $ 458,808           $ 1,599,615        
Accounts payable
    6,641,641       1       6,691,135       1  
Payables to related parties (Note 23)
    3,894,488       1       3,350,905       1  
Income tax payable (Notes 2 and 16)
    6,535,446       1       1,364,915        
Accrued expenses and other current liabilities (Notes 3 and 14)
    7,477,769       2       8,582,544       2  
Payables to contractors and equipment suppliers
    15,299,614       3       10,814,978       3  
Current portion of bonds payable (Note 13)
    2,500,000             10,500,000       2  
 
                       
 
                               
Total current liabilities
    42,807,766       8       42,904,092       9  
 
                       
 
                               
LONG-TERM LIABILITIES
                               
Bonds payable (Note 13)
    17,000,000       3       19,500,000       4  
Other long-term payables (Note 14)
    1,291,484             1,526,648       1  
Other payables to related parties (Notes 23 and 25)
    409,588             1,111,798        
 
                       
 
                               
Total long-term liabilities
    18,701,072       3       22,138,446       5  
 
                       
 
                               
OTHER LIABILITIES
                               
Accrued pension cost (Notes 2 and 15)
    3,502,475       1       3,451,671       1  
Guarantee deposits (Note 25)
    3,680,687       1       2,363,889        
Deferred credits (Notes 2 and 23)
    1,275,872             1,136,767        
 
                       
 
                               
Total other liabilities
    8,459,034       2       6,952,327       1  
 
                       
 
                               
Total liabilities
    69,967,872       13       71,994,865       15  
 
                       
 
                               
CAPITAL STOCK — NT$10 PAR VALUE
                               
Authorized: 27,050,000 thousand shares
                               
Issued: 25,825,840 thousand shares in 2006
                               
24,727,348 thousand shares in 2005
    258,258,398       47       247,273,476       51  
 
                       
 
                               
CAPITAL SURPLUS (Notes 2 and 18)
    53,857,667       10       56,777,040       12  
 
                       
 
                               
RETAINED EARNINGS (Note 18)
                               
Appropriated as legal capital reserve
    43,705,711       8       34,348,208       7  
Appropriated as special capital reserve
    640,742             2,226,427        
Unappropriated earnings
    124,866,387       22       72,296,264       15  
 
                       
 
                               
 
    169,212,840       30       108,870,899       22  
 
                       
 
                               
OTHERS (Notes 2 and 3)
                               
Cumulative translation adjustments
    223,105             (260,171 )      
Unrealized gains on financial instruments
    502,192                    
 
                       
 
                               
 
    725,297             (260,171 )      
 
                       
 
                               
TREASURY STOCK (AT COST, Notes 2 and 20)
                               
33,926 thousand shares in 2006 and 46,808 thousand shares in 2005
    (918,075 )           (1,550,112 )      
 
                       
 
                               
Total shareholders’ equity
    481,136,127       87       411,111,132       85  
 
                       
 
                               
TOTAL
  $ 551,103,999       100     $ 483,105,997       100  
 
                       
The accompanying notes are an integral part of the financial statements.

- 2 -


 

Taiwan Semiconductor Manufacturing Company Limited
STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)
(Reviewed, Not Audited)
                                 
    2006     2005  
    Amount     %     Amount     %  
GROSS SALES (Notes 2 and 23)
  $ 245,148,192             $ 187,279,666          
 
                               
SALES RETURNS AND ALLOWANCES (Note 2)
    5,202,252               3,852,617          
 
                           
 
                               
NET SALES
    239,945,940       100       183,427,049       100  
 
                               
COST OF SALES (Notes 17 and 23)
    123,155,982       51       108,047,657       59  
 
                       
 
                               
GROSS PROFIT
    116,789,958       49       75,379,392       41  
 
                       
 
                               
OPERATING EXPENSES (Notes 17 and 23)
                               
Research and development
    11,206,265       5       9,972,853       5  
General and administrative
    5,348,876       2       5,625,306       3  
Marketing
    1,360,794       1       991,423       1  
 
                       
 
                               
Total operating expenses
    17,915,935       8       16,589,582       9  
 
                       
 
                               
INCOME FROM OPERATIONS
    98,874,023       41       58,789,810       32  
 
                       
 
                               
NON-OPERATING INCOME AND GAINS
                               
Equity in earnings of equity method investees, net (Notes 2 and 9)
    4,696,522       2              
Interest income (Notes 2 and 3)
    2,734,401       1       1,747,952       1  
Technical service income (Notes 23 and 25)
    514,995       1       322,976        
Settlement income (Note 25)
    483,734             711,324       1  
Gain on disposal of property, plant and equipment and other assets (Notes 2 and 23)
    480,944             149,014        
Foreign exchange gain, net (Note 2)
    28,165             491,442        
Others (Note 23)
    342,234             248,776        
 
                       
 
                               
Total non-operating income and gains
    9,280,995       4       3,671,484       2  
 
                       
 
                               
NON-OPERATING EXPENSES AND LOSSES
                               
Loss on disposal of financial instruments, net (Notes 2, 3 and 5)
    1,395,264       1       1,383,563       1  
Interest expense (Note 3 )
    495,900             909,337        
Valuation loss on financial instruments, net (Notes 2, 3, 5 and 22)
    413,514             264,068        
Loss on disposal of property, plant and equipment (Note 2)
    225,781             60,565        
(Continued)

- 3 -


 

Taiwan Semiconductor Manufacturing Company Limited
STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)
(Reviewed, Not Audited)
                                 
    2006     2005  
    Amount     %     Amount     %  
Equity in losses of equity method investees, net (Notes 2 and 9)
  $           $ 1,277,187       1  
Others
    129,031             148,384        
 
                       
 
                               
Total non-operating expenses and losses
    2,659,490       1       4,043,104       2  
 
                       
 
                               
INCOME BEFORE INCOME TAX
    105,495,528       44       58,418,190       32  
 
                               
INCOME TAX BENEFIT (EXPENSE) (Notes 2 and 16)
    (6,151,303 )     (3 )     1,256,710       1  
 
                       
 
                               
NET INCOME BEFORE CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES
    99,344,225       41       59,674,900       33  
 
                               
CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES, NET OF TAX BENEFIT OF NT$82,062 THOUSAND (Note 3)
    (246,186 )                  
 
                       
 
                               
NET INCOME
  $ 99,098,039       41     $ 59,674,900       33  
 
                       
                                 
    2006     2005  
    Before     After     Before     After  
    Income     Income     Income     Income  
    Tax     Tax     Tax     Tax  
EARNINGS PER SHARE (NT$, Note 21)
                               
Basic earnings per share
  $ 4.08     $ 3.84     $ 2.27     $ 2.32  
 
                       
Diluted earnings per share
  $ 4.07     $ 3.84     $ 2.27     $ 2.32  
 
                       
Certain pro forma information (after income tax) is shown as follows, based on the assumption that the Company’s stock held by subsidiaries is treated as an investment instead of treasury stock (Notes 2 and 20):
                 
    2006     2005  
NET INCOME BEFORE CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES
  $ 99,426,545     $ 59,766,385  
 
           
 
               
NET INCOME
  $ 99,180,359     $ 59,766,385  
 
           
 
               
EARNINGS PER SHARE (NT$)
               
Basic earnings per share
  $ 3.84     $ 2.32  
 
           
Diluted earnings per share
  $ 3.84     $ 2.31  
 
           
     
The accompanying notes are an integral part of the financial statements.   (Concluded)

- 4 -


 

Taiwan Semiconductor Manufacturing Company Limited
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
(In Thousands of New Taiwan Dollars)
(Reviewed, Not Audited)
                 
    2006     2005  
CASH FLOWS FROM OPERATING ACTIVITIES
               
Net income
  $ 99,098,039     $ 59,674,900  
Adjustments to reconcile net income to net cash provided by operating activities:
               
Depreciation and amortization
    48,809,141       51,437,043  
Amortization of premium/discount of financial assets
    16,004       91,155  
Loss on disposal of available-for-sale financial assets, net
    11,258       134,440  
Equity in losses (earnings) of equity method investees, net
    (4,696,522 )     1,277,187  
Dividends received from equity method investees
    626,367       668,464  
Gain on disposal of financial assets carried at cost, net
          (2,810 )
Gain on disposal of property, plant and equipment and other assets, net
    (255,163 )     (88,449 )
Deferred income taxes
    99,752       (2,329,076 )
Loss on idle assets
    37,283       106,964  
Donation of idle assets
          7,207  
Changes in operating assets and liabilities:
               
Decrease (increase) in:
               
Financial assets and liabilities at fair value through profit or loss
    1,560,139       2,653,766  
Notes and accounts receivable
    1,251,879       (3,279,090 )
Receivables from related parties
    (979,816 )     (6,900,765 )
Allowance for doubtful receivables
    (639 )     (3,096 )
Allowance for sales returns and others
    742,965       89,414  
Other receivables from related parties
    688,353       (1,376,333 )
Other financial assets
    105,781       26,054  
Inventories, net
    (2,111,175 )     (898,119 )
Prepaid expenses and other current assets
    467,281       319,975  
Increase (decrease) in:
               
Accounts payable
    (1,410,465 )     202,518  
Payables to related parties
    (38,596 )     (1,115,663 )
Income tax payable
    2,719,558       985,012  
Accrued expenses and other current liabilities
    (513,289 )     (392,616 )
Accrued pension cost
    41,083       350,475  
Deferred credits
    (71,808 )     119,681  
 
           
 
               
Net cash provided by operating activities
    146,197,410       101,758,238  
 
           
 
               
CASH FLOWS FROM INVESTING ACTIVITIES
               
Acquisitions of:
               
Available-for-sale financial assets
    (78,666,694 )     (71,367,811 )
Held-to-maturity financial assets
    (16,141,019 )     (7,466,251 )
Investments accounted for using equity method
    (1,495,552 )     (3,225,972 )
Financial assets carried at cost
    (11,921 )     (14,427 )
Property, plant and equipment
    (59,945,807 )     (60,336,499 )
(Continued)

- 5 -


 

Taiwan Semiconductor Manufacturing Company Limited
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
(In Thousands of New Taiwan Dollars)
(Reviewed, Not Audited)
                 
    2006     2005  
Proceeds from disposal of:
               
Available-for-sale financial assets
  $ 57,874,205     $ 71,792,572  
Financial assets carried at cost
    50,000       15,498  
Property, plant and equipment and other assets
    927,200       1,502,142  
Redemption of held-to-maturity financial assets upon maturity
    8,512,000       8,716,394  
Increase in deferred charges
    (755,982 )     (735,673 )
Proceeds from return of capital by investee
    162,354        
Decrease (increase) in refundable deposits
    (96 )     1,771  
 
           
 
               
Net cash used in investing activities
    (89,491,312 )     (61,118,256 )
 
           
 
               
CASH FLOWS FROM FINANCING ACTIVITIES
               
Cash dividends paid for common stock
    (61,825,061 )     (46,504,097 )
Cash bonus paid to employees
    (3,432,129 )     (3,086,215 )
Increase in guarantee deposits
    787,742       1,951,496  
Proceeds from exercise of employee stock options
    422,927       165,808  
Bonus to directors and supervisors
    (257,410 )     (231,466 )
 
           
 
               
Net cash used in financing activities
    (64,303,931 )     (47,704,474 )
 
           
 
               
NET DECREASE IN CASH AND CASH EQUIVALENTS
    (7,597,833 )     (7,064,492 )
 
               
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    85,383,583       65,531,818  
 
           
 
               
CASH AND CASH EQUIVALENTS, END OF PERIOD
  $ 77,785,750     $ 58,467,326  
 
           
 
               
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
               
Interest paid
  $ 420,000     $ 420,000  
 
           
Income tax paid
  $ 3,146,676     $ 87,315  
 
           
 
               
INVESTING ACTIVITIES AFFECTING BOTH CASH AND NON-CASH ITEMS
               
Acquisition of property, plant, and equipment
  $ 66,386,191     $ 39,997,168  
Decrease (increase) in payables to contractors and equipment suppliers
    (6,440,384 )     20,339,331  
 
           
Cash paid
  $ 59,945,807     $ 60,336,499  
 
           
 
               
NON-CASH INVESTING AND FINANCING ACTIVITIES
               
Current portion of bonds payable
  $ 2,500,000     $ 10,500,000  
 
           
Current portion of other payables to related parties (under payables to related parties)
  $ 699,195     $ 701,096  
 
           
Current portion of other long-term payable (under accrued expenses and other current liabilities)
  $ 971,596     $ 1,516,436  
 
           
Transfer of available-for-sale financial assets and other net assets to investments accounted for using equity method (Note 6)
  $ 26,821,648     $  
 
           
     
The accompanying notes are an integral part of the financial statements.   (Concluded)

- 6 -


 

Taiwan Semiconductor Manufacturing Company Limited
NOTES TO FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)
(Reviewed, Not Audited)

 
1.   GENERAL
 
    Taiwan Semiconductor Manufacturing Company Limited (the Company or TSMC), a Republic of China (R.O.C.) corporation, was incorporated as a venture among the Government of the R.O.C., acting through the Development Fund of the Executive Yuan; Philips Electronics N.V. and certain of its affiliates (Philips); and certain other private investors. On September 5, 1994, its shares were listed on the Taiwan Stock Exchange (TSE). On October 8, 1997, TSMC listed some of its shares of stock on the New York Stock Exchange (NYSE) in the form of American Depositary Shares (ADSs).
 
    The Company is engaged mainly in the manufacturing, selling, packaging, testing and computer-aided designing of integrated circuits and other semiconductor devices and the manufacturing of masks.
 
    As of September 30, 2006 and 2005, the Company had 20,266 and 19,475 employees, respectively.
 
2.   SIGNIFICANT ACCOUNTING POLICIES
 
    The financial statements are presented in conformity with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers and accounting principles generally accepted in the R.O.C.
 
    For the convenience of readers, the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the R.O.C. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language financial statements shall prevail.
 
    Significant accounting policies are summarized as follows:
 
    Use of Estimates
 
    The preparation of financial statements in conformity with the aforementioned guidelines and principles requires management to make reasonable assumptions and estimates of matters that are inherently uncertain. The actual results may differ from management’s estimates.
 
    Classification of Current and Noncurrent Assets and Liabilities
 
    Current assets are those held for trading purposes and those expected to be converted to cash, sold or consumed within one year from the balance sheet date. Current liabilities are obligations incurred for trading purposes and obligations expected to be settled within one year from the balance sheet date. Assets and liabilities that are not classified as current are noncurrent assets and liabilities, respectively.
 
    Cash Equivalents
 
    Repurchase agreements collateralized by government bonds, corporate notes, commercial papers and treasury bills acquired with maturities of less than three months from the date of purchase are classified as cash equivalents. The carrying amount approximates fair value.

- 7 -


 

    Financial Assets/Liabilities at Fair Value Through Profit or Loss
 
    Derivatives that do not meet the criteria for hedge accounting are initially recognized at fair value, with transaction costs expensed as incurred. The derivatives are remeasured at fair value subsequently with the changes in fair value recognized in earnings. A regular way purchase or sale of financial assets is accounted for using settlement date accounting.
 
    Fair value is estimated using valuation techniques incorporating estimates and assumptions that are consistent with prevailing market conditions. When the fair value is positive, the derivative is recognized as a financial asset; when the fair value is negative, the derivative is recognized as a financial liability.
 
    Available-for-Sale Financial Assets
 
    Investments designated as available-for-sale financial assets include debt securities and equity securities. Available-for-sale financial assets are initially recognized at fair value plus transaction costs that are directly attributable to the acquisition. The changes in fair value from subsequent remeasurement are reported as a separate component of shareholders’ equity. The corresponding accumulated gains or losses are recognized in earnings when the financial asset is derecognized from the balance sheet. A regular way purchase or sale of financial assets is accounted for using settlement date accounting.
 
    Fair values of open-end mutual funds and publicly traded stocks are determined using the net assets value and the closing-price at the end of the period, respectively. For debt securities, fair value is determined using the average of bid and asked prices at the end of the period.
 
    Cash dividends are recognized as investment income upon resolution of shareholders of an investee but are accounted for as reductions to the original cost of investment if such dividends are declared on the earnings of the investees attributable to periods prior to the purchase of the investments. Stock dividends are recorded as an increase in the number of shares held and do not affect investment income. The cost per share is recalculated based on the new total number of shares. Any difference between the initial carrying amount of a debt security and the amount due at maturity is amortized using the effective interest method, with the amortization recognized in earnings.
 
    If there is objective evidence which indicates that a financial asset is impaired, a loss is recognized. If, in a subsequent period, the amount of the impairment loss decreases, for equity securities, the previously recognized impairment loss is reversed to the extent of the decrease and recorded as an adjustment to shareholders’ equity; for debt securities, the amount of the decrease is recognized in earnings, provided that the decrease is clearly attributable to an event which occurred after the impairment loss was recognized.
 
    Held-to-Maturity Financial Assets
 
    Debt securities for which the Company has a positive intention and ability to hold to maturity are categorized as held-to-maturity financial assets and are carried at amortized cost under the effective interest method. Those financial assets are initially recognized at fair value plus transaction costs that are directly attributable to the acquisition. Gains or losses are recognized at the time of derecognition, impairment or amortization. A regular way purchase or sale of financial assets is accounted for using settlement date accounting.
 
    If there is objective evidence which indicates that a financial asset is impaired, a loss is recognized. If, in a subsequent period, the amount of the impairment loss decreases and the decrease is clearly attributable to an event which occurred after the impairment loss was recognized, the previously recognized impairment loss is reversed to the extent of the decrease. The reversal may not result in a carrying amount that exceeds the amortized cost that would have been determined as if no impairment loss had been recognized.

- 8 -


 

    Allowance for Doubtful Receivables
 
    An allowance for doubtful receivables is provided based on a review of the collectibility of accounts receivable. The Company determines the amount of allowance for doubtful receivables by examining the aging analysis of outstanding accounts receivable and current trends in the credit quality of its customers as well as its internal credit policies.
 
    Revenue Recognition and Allowance for Sales Returns and Others
 
    The Company recognizes revenue when evidence of an arrangement exists, shipment is made, price is fixed or determinable, and collectibility is reasonably assured. Revenues from the design and manufacturing of photo masks, which are used as manufacturing tools in the fabrication process, are recognized when the photo masks are qualified by customers. Provisions for estimated sales returns and other allowances are generally recorded in the period the related revenue is recognized based on historical experience, management’s judgment, and any known factors that would significantly affect the allowance.
 
    Sales prices are determined using fair value taking into account related sales discounts agreed to by the Company and its customers. Sales agreements typically provide that payment is due 30 days from invoice date for a majority of the customers and 30 to 45 days after the end of the month in which sales occur for some customers. Since the receivables from sales are collectible within one year and such transactions are frequent, fair value of the receivables is equivalent to the nominal amount of the cash to be received.
 
    Inventories
 
    Inventories are stated at the lower of cost or market value. Inventories are recorded at standard cost and adjusted to the approximate weighted-average cost at the balance sheet date. Market value represents replacement cost for raw materials, supplies and spare parts and net realizable value for work in process and finished goods. The Company assesses the impact of changing technology on its inventories on hand and writes off inventories that are considered obsolete. Period-end inventories are evaluated for estimated excess quantities and obsolescence based on a demand forecast within a specific time horizon, which is generally 180 days or less. Estimated losses on scrap and slow-moving items are recognized and included in the allowance for losses.
 
    Investments Accounted for Using Equity Method
 
    Investments in companies wherein the Company exercises significant influence over the operating and financial policy decisions are accounted for using the equity method. The Company’s share of the net income or net loss of an investee is recognized in the “equity in earnings/losses of equity method investees, net” account. The difference, if any, between the cost of investment and the Company’s proportionate share of the investee’s equity was previously amortized by the straight-line method over five years, with the amortization recorded in the “equity in earnings/losses of equity method investees, net” account. Effective January 1, 2006, pursuant to the revised Statement of Financial Accounting Standards No. 5, “Long-term Investments in Equity Securities” (SFAS No. 5), investment premiums, representing goodwill, are no longer being amortized; while investment discounts continue to be amortized over the remaining periods. When an indication of impairment is identified, the carrying amount of the investment is reduced, with the related impairment loss charged to current income.
 
    When the Company subscribes for additional investee’s shares at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment in the investee differs from the amount of the Company’s share in the investee’s equity. The Company records such a difference as an adjustment to long-term investments with the corresponding amount charged or credited to capital surplus.

- 9 -


 

    Gains or losses on sales from the Company to equity method investees are deferred in proportion to the Company’s ownership percentage in the investees until such gains or losses are realized through transactions with third parties. The entire amount of the gains or losses on sales to investees over which the Company has a controlling interest is deferred until such gains or losses are realized through subsequent sales of the related products to third parties. Gains or losses on sales from equity method investees to the Company are deferred in proportion to the Company’s ownership percentages in the investees until they are realized through transactions with third parties.
 
    Gains or losses on sales between equity method investees are deferred in proportion to the Company’s weighted-average ownership percentages in the investees until such gains or losses are realized through transactions with third parties.
 
    If an investee’s functional currency is a foreign currency, translation adjustments will result from the translation of the investee’s financial statements into the reporting currency of the Company. Such adjustments are accumulated and reported as a separate component of shareholders’ equity.
 
    Financial Assets Carried at Cost
 
    Investments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured are carried at their original cost, such as non-publicly traded stocks and mutual funds. The costs of mutual funds and non-publicly traded stocks are determined using the weighted-average method. If there is objective evidence which indicates that a financial asset is impaired, a loss is recognized. A subsequent reversal of such impairment loss is not allowed.
 
    The accounting treatment for cash dividends and stock dividends arising from financial assets carried at cost is the same as that for cash and stock dividends arising from available-for-sale financial assets.
 
    Property, Plant, and Equipment and Assets Leased to Others
 
    Property, plant, and equipment and assets leased to others are stated at cost less accumulated depreciation. When an indication of impairment is identified, any excess of the carrying amount of an asset over its recoverable amount is recognized as a loss. If the recoverable amount increases in a subsequent period, the amount previously recognized as impairment would be reversed and recognized as a gain. However, the adjusted amount may not exceed the carrying amount that would have been determined, net of depreciation, as if no impairment loss had been recognized. Significant additions, renewals and betterments incurred during the construction period are capitalized. Maintenance and repairs are expensed as incurred.
 
    Depreciation is computed using the straight-line method over the following estimated service lives: Buildings — 10 to 20 years; machinery and equipment — 5 years; and office equipment — 3 to 5 years.
 
    Upon sale or disposal of property, plant, and equipment, the related cost and accumulated depreciation are deducted from the corresponding accounts, with any gain or loss credited or charged to non-operating gains or losses in the period of sale or disposal.
 
    Goodwill
 
    Goodwill represents the excess of the consideration paid for acquisition over the fair value of identifiable net assets acquired. Goodwill was previously amortized using the straight-line method over the estimated life of 10 years. Effective January 1, 2006, pursuant to the newly revised SFAS No. 25, “Business Combinations — Accounting Treatment under Purchase Method” (SFAS No. 25), goodwill is no longer amortized and is assessed for impairment at least on an annual basis. If an event occurs or circumstances change which indicated that the fair value of goodwill is more likely than not below its carrying amount, an impairment loss is recognized. A subsequent recovery in fair value of goodwill is not allowed.

- 10 -


 

    Deferred Charges
 
    Deferred charges consist of technology license fees, software and system design costs and other charges. The amounts are amortized over the following periods: Technology license fees — the shorter of the estimated life of the technology or the term of the technology transfer contract; software and system design costs and other charges — 3 years. When an indication of impairment is identified, any excess of the carrying amount of an asset over its recoverable amount is recognized as a loss. If the recoverable amount increases in a subsequent period, the previously recognized impairment loss would be reversed and recognized as a gain. However, the adjusted amount may not exceed the carrying amount that would have been determined, net of amortization, as if no impairment loss had been recognized.
 
    Pension Costs
 
    For employees under defined contribution pension plans, pension costs are recorded based on the actual contributions made to employees’ individual pension accounts during service periods. For employees under defined benefit pension plans, pension costs are recorded based on actuarial calculations.
 
    Income Tax
 
    The Company applies intra-period and inter-period allocations for its income tax whereby (1) a portion of current income tax expense is allocated to the cumulative effect of changes in accounting principles; and (2) deferred income tax assets and liabilities are recognized for the tax effects of temporary differences and unused tax credits. Valuation allowances are provided to the extent, if any, that it is more likely than not that deferred income tax assets will not be realized. A deferred tax asset or liability is classified as current or noncurrent in accordance with the classification of its related asset or liability. However, if a deferred tax asset or liability does not relate to an asset or liability in the financial statements, then it is classified as either current or noncurrent based on the expected length of time before it is realized or settled.
 
    Any tax credits arising from purchases of machinery, equipment and technology, research and development expenditures, personnel training, and investments in important technology-based enterprises are recognized using the flow-through method.
 
    Adjustments of prior years’ tax liabilities are added to or deducted from the current period’s tax provision.
 
    Income tax on unappropriated earnings at a rate of 10% is expensed in the year of shareholder approval which is the year subsequent to the year the earnings are generated.
 
    The R.O.C. government enacted the Alternative Minimum Tax Act (“AMT Act”), which became effective on January 1, 2006. The alternative minimum tax (“AMT”) imposed under the AMT Act is a supplemental tax levied at a rate of 10% which is payable if the income tax payable determined pursuant to the Income Tax Law is below the minimum amount prescribed under the AMT Act. The taxable income for calculating the AMT includes most of the income that is exempted from income tax under various laws and statutes. The Company has considered the impact of the AMT Act in the determination of its tax liabilities.
 
    Stock-based Compensation
 
    Employee stock option plans that are amended or have options granted on or after January 1, 2004 are accounted for by the interpretations issued by the Accounting Research and Development Foundation. The Company adopted the intrinsic value method and any compensation cost determined using this method is charged to expense over the employee vesting period.

- 11 -


 

    Treasury Stock
 
    The Company’s stock held by subsidiaries is treated as treasury stock and reclassified from investments accounted for using equity method to treasury stock. The gains resulted from disposal of the treasury stock held by the subsidiaries and cash dividends received by the subsidiaries from the Company are recorded under capital surplus — treasury stock transactions.
 
    Foreign-currency Transactions
 
    Foreign-currency transactions are recorded in New Taiwan dollars at the rates of exchange in effect when the transactions occur. Exchange gains or losses derived from foreign-currency transactions or monetary assets and liabilities denominated in foreign currencies are recognized in earnings. At the balance sheet date, monetary assets and liabilities denominated in foreign currencies are revalued at the prevailing exchange rates with the resulting gains or losses recognized in earnings.
 
3.   ACCOUNTING CHANGES
 
    On January 1, 2006, the Company adopted the newly released Statements of Financial Accounting Standards No. 34, “Financial Instruments: Recognition and Measurement” (SFAS No. 34) and No. 36, “Financial Instruments: Disclosure and Presentation” and related revisions of previously released SFASs.
  a.   Effect of adopting the newly released SFASs and related revisions of previously released SFASs
 
      The Company had properly categorized its financial assets and liabilities upon initial adoption of the newly released SFASs. The adjustments made to the carrying amounts of the financial instruments categorized as financial assets or financial liabilities at fair value through profit or loss were included in the cumulative effect of changes in accounting principles; on the other hand, the adjustments made to the carrying amounts of those categorized as available-for-sale financial assets were recognized as adjustments to shareholders’ equity.
 
      The effect of adopting the newly released SFASs is summarized as follows:
                 
    Recognized as        
    Cumulative        
    Effect of     Recognized as  
    Changes in     a Separate  
    Accounting     Component of  
    Principles     Shareholders’  
    (Net of Tax)     Equity  
Financial assets or liabilities at fair value through profit or loss
  $ (246,186 )   $  
Available-for-sale financial assets
           
 
           
 
  $ (246,186 )   $  
 
           
    The adoption of the newly released SFASs resulted in a decrease in net income before cumulative effect of changes in accounting principles of NT$167,328 thousand, a decrease in net income of NT$413,514 thousand, and a decrease in basic earnings per share (after income tax) of NT$0.02, for the nine months ended September 30, 2006.
 
    Effective January 1, 2006, the Company adopted the newly revised SFAS No. 5 and SFAS No. 25, which prescribe that investment premiums, representing goodwill, be assessed for impairment at least on an annual basis instead of being amortized. Such a change in accounting principle did not have a material effect on the Company’s financial statements as of and for the nine months ended September 30, 2006.

- 12 -


 

  b.   Reclassifications
 
      Upon the adoption of SFAS No. 34, certain accounts in the financial statements as of and for the nine months ended September 30, 2005 were reclassified to conform with the financial statements as of and for the nine months ended September 30, 2006. The previous issued financial statements as of and for the nine months ended September 30, 2005 need not be restated.
 
      Certain accounting policies prior to the adoption of the newly released SFASs are summarized as follows:
  1)   Short-term investments
 
      Short-term investments that were publicly-traded, easily converted to cash, and not acquired for the purpose of controlling the investees or establishing close business relationship with the investees were carried at the lower of cost or market value at the balance sheet date, with any temporary decline in value charged to current income. The market value of publicly-traded stocks was determined using the average-closing prices for the last month of the period.
 
  2)   Derivative financial instruments
 
      The Company entered into forward exchange contracts to manage foreign exchange exposures on foreign-currency-denominated assets and liabilities. The contracts were recorded in New Taiwan dollars at the current rate of exchange at the contract date. The differences in the New Taiwan dollar amounts translated using the current rates and the amounts translated using the contracted forward rates were amortized over the terms of the forward contracts using the straight-line method. At the end of each period, the receivables or payables arising from forward contracts were restated using the prevailing exchange rates with the resulting differences credited or charged to income. In addition, the receivables and payables related to the same forward contracts were netted with the resulting amount presented as either an asset or a liability. Any resulting gain or loss upon settlement was credited or charged to income in the period of settlement.
 
      The Company entered into cross currency swap contracts to manage currency exposures on foreign-currency-denominated assets and liabilities. The principal amount was recorded using the current rates at the contract date. The differences in the New Taiwan dollar amounts translated using the current rates and the amounts translated using the contracted rates were amortized over the terms of the contracts using the straight-line method. At the end of each period, the receivables or payables arising from cross-currency swap contracts were restated using the prevailing exchange rate with the resulting differences credited or charged to income. In addition, the receivables and payables related to the contracts of the same counter party were netted with the resulting amount presented as either an asset or a liability. The difference in interest computed pursuant to the contracts on each settlement date or the balance sheet date was recorded as an adjustment to the interest income or expense associated with the hedged items. Any resulting gain or loss upon settlement was credited or charged to income in the period of settlement.
 
      The Company entered into interest rate swap contracts to manage exposures to changes in interest rates on existing assets or liabilities. These transactions were accounted for on an accrual basis, in which the cash settlement receivable or payable was recorded as an adjustment to interest income or expense associated with the hedged items.

- 13 -


 

      Certain accounts in the financial statements as of and for the nine months ended September 30, 2005 have been reclassified to conform to the classifications prescribed by the newly released SFASs. The reclassifications of the whole or a part of the account balances of certain accounts are summarized as follows:
                 
    Before
Reclassification
    After
Reclassification
 
Balance sheet
               
 
               
Short-term investments
  $ 48,821,970     $  
Other financial assets
    46,699        
Prepaid expenses and other current assets
    56,515        
Long-term investments accounted for using cost method
    774,373        
Long-term bonds investment
    19,647,173        
Other long-term investments
    8,301,360        
Accrued expenses and other current liabilities
    (1,599,615 )      
Financial assets at fair value through profit or loss
          103,214  
Financial liabilities at fair value through profit or loss
          (1,599,615 )
Available-for-sale financial assets
          48,216,860  
Held-to-maturity financial assets
          28,553,643  
Financial assets carried at cost
          774,373  
 
           
 
               
 
  $ 76,048,475     $ 76,048,475  
 
           
 
               
Statement of income
               
 
               
Interest income
  $ 698,433     $  
Foreign exchange loss, net
    (608,743 )      
Interest expense
    (1,338,813 )      
Unrealized valuation loss on short-term investments
    (264,068 )      
Loss on disposal of investment, net
    (134,440 )      
Loss on disposal of financial instruments, net
          (1,383,563 )
Valuation loss on financial instruments, net
          (264,068 )
 
           
 
               
 
  $ (1,647,631 )   $ (1,647,631 )
 
           
4.   CASH AND CASH EQUIVALENTS
                 
    September 30  
    2006     2005  
 
               
Cash and deposits in banks
  $ 56,452,326     $ 27,906,434  
Repurchase agreements collaterized by government bonds
    21,200,915       29,924,288  
Corporate notes
    132,509       314,090  
Commercial papers
          321,757  
Treasury bills
          757  
 
           
 
               
 
  $ 77,785,750     $ 58,467,326  
 
           

- 14 -


 

5.   FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS
                 
    September 30  
    2006     2005  
Derivatives — financial assets
               
 
               
Forward exchange contracts
  $ 45,295     $ 17,002  
Cross currency swap contracts
          86,212  
 
           
 
               
 
  $ 45,295     $ 103,214  
 
           
 
               
Derivatives — financial liabilities
               
 
               
Forward exchange contracts
  $     $ 302,260  
Cross currency swap contracts
    458,808       1,297,355  
 
           
 
               
 
  $ 458,808     $ 1,599,615  
 
           
    The Company entered into derivative contracts for the nine months ended September 30, 2006 and 2005 to manage exposures due to the fluctuations of foreign exchange rates. The derivative contracts entered into by the Company did not meet the criteria for hedge accounting prescribed by SFAS No. 34. Therefore, effective from January 1, 2006, the Company discontinued applying hedge accounting treatment for its derivative financial instruments.
 
    Outstanding forward contracts as of September 30, 2006 and 2005:
                         
                    Contract
                    Amount
    Currency   Maturity Date   (in Thousands)
 
                       
September 30, 2006
                       
 
                       
Buy
  US$/NT$   October 2006 to November 2006   US$145,000
 
                       
September 30, 2005
                       
 
                       
Sell
  US$/NT$   October 2005 to December 2005   US$680,000
    Outstanding cross currency swap contracts as of September 30, 2006 and 2005:
                         
                         
    Contract
Amount
  Range of
Interest Rates
  Range of
Interest Rates
Maturity Date   (in Thousands)   Paid   Received
 
                       
September 30, 2006
                       
 
                       
October 2006 to November 2006
  US$1,550,000     3.34%—5.50 %     0.60%—2.72 %
 
                       
September 30, 2005
                       
 
                       
October 2005 to December 2005
  US$1,574,000     3.65%—4.01 %     1.17%—1.38 %

- 15 -


 

    The Company did not enter into any interest rate swap contracts during the nine months ended September 30, 2006. The Company rescinded all interest rate swap contracts in the second quarter of 2005 before their original maturities. The rescission loss of NT$28,295 thousand has been reclassified and included in the “loss on disposal of financial instrument” account.
 
    Net loss arising from derivative financial instruments for the nine months ended September 30, 2006 were NT$1,797,738 thousand (including realized settlement loss of NT$1,384,224 thousand and valuation loss of NT$413,514 thousand).
 
6.   AVAILABLE-FOR-SALE FINANCIAL ASSETS
                 
    September 30  
    2006     2005  
 
               
Open-end mutual funds
  $ 21,781,496     $ 8,186,687  
Corporate bonds
    9,137,742       12,327,416  
Agency bonds
    4,786,766       12,455,906  
Corporate issued asset-backed securities
    3,237,614       12,047,128  
Government bonds
    1,200,097       2,850,102  
Structured time deposit
    499,549        
Corporate notes
          265,958  
Money market funds
          58,184  
Publicly-traded stocks
          25,479  
 
           
 
    40,643,264       48,216,860  
Current portion
    (35,749,909 )     (48,216,860 )
 
           
 
               
 
  $ 4,893,355     $  
 
           
    Before July 31, 2006 the Company entered into investment management agreements with three well-known financial institutions (fund managers) to manage its investment portfolios. In accordance with the investment guidelines and terms specified in these agreements, the securities invested by the fund managers cannot be below a pre-defined credit rating. The Company transferred investment portfolios managed by two of the aforementioned fund managers to TSMC Global, Ltd. (TSMC-Global), a subsidiary of TSMC, in the third quarter of 2006. The transferred investment portfolios held by TSMC Global are still managed by the same fund managers in accordance with the aforementioned investment guidelines and terms. As of September 30, 2006, the Company’s investment portfolios managed by the remaining fund manager aggregated to an original amount of US$400,000 thousand. The investment portfolios included securities such as corporate bonds, agency bonds, asset-backed securities, government bonds and others. Securities acquired with maturities of less than three months from the date of purchase were classified as cash equivalents.
 
    As of September 30, 2006, structured time deposits categorized as available-for-sale financial assets consisted of the following:
                                 
    Principal     Carrying     Range of        
    Amount     Amount     Interest Rates     Maturity Date  
Step-up callable deposits
                               
 
                               
Domestic deposits
  $ 500,000     $ 499,549       1.76%   March 2008
 
                           
    The interest rate of the step-up callable deposits is pre-determined by the Company and the banks.

- 16 -


 

7.   HELD-TO-MATURITY FINANCIAL ASSETS
                 
    September 30  
    2006     2005  
 
               
Corporate bonds
  $ 14,670,013     $ 6,788,456  
Structured time deposits
    11,281,560       8,301,360  
Government bonds
    11,016,286       13,463,827  
 
           
 
    36,967,859       28,553,643  
Current portion
    (6,220,737 )     (605,110 )
 
           
 
               
 
  $ 30,747,122     $ 27,948,533  
 
           
    Structured time deposits categorized as held-to-maturity financial assets consisted of the following:
                         
    Principal     Interest     Range of    
    Amount     Receivable     Interest Rates   Maturity Date
September 30, 2006
                       
 
                       
Step-up callable deposits
                       
Domestic deposits
  $ 4,000,000     $ 35,459     1.40%—2.01%   June 2007 to March 2009
Callable range accrual deposits
                       
Domestic deposits
    3,971,760       15,004     (See below)   September 2009 to December 2009
Foreign deposits
    3,309,800       7,585     (See below)   October 2009 to January 2010
 
                   
 
                       
 
  $ 11,281,560     $ 58,048          
 
                   
 
                       
September 30, 2005
                       
 
                       
Step-up callable deposits
                       
Domestic deposits
  $ 1,000,000     $ 422     1.40%—1.50%   June 2007
Callable range accrual deposits
                       
Domestic deposits
    3,982,560       16,218     (See below)   September 2009 to December 2009
Foreign deposits
    3,318,800       11,653     (See below)   October 2009 to January 2010
 
                   
 
                       
 
  $ 8,301,360     $ 28,293          
 
                   
    The amount of interest earned by the Company for the callable range accrual deposits is based on a pre-defined range as determined by the 3-month or 6-month LIBOR plus an agreed upon rate ranging between 2.10% and 3.45%. Based on the terms of the contracts, if the 3-month or 6-month LIBOR moves outside of the pre-defined range, the interest paid to the Company is at a fixed rate between zero and 1.5%. Under the terms of the contracts, the bank has the right to cancel the contracts prior to the maturity date.
 
    As of September 30, 2006 and 2005, the principal of the deposits that resided in banks located in Hong Kong amounted to US$80,000 thousand; those resided in banks located in Singapore amounted to US$20,000 thousand.

- 17 -


 

8.   INVENTORIES, NET
                 
    September 30  
    2006     2005  
 
               
Finished goods
  $ 4,499,585     $ 2,018,670  
Work in process
    12,806,387       12,481,841  
Raw materials
    1,403,443       1,200,996  
Supplies and spare parts
    483,892       712,116  
 
           
 
    19,193,307       16,413,623  
Allowance for losses
    (824,177 )     (1,343,559 )
 
           
 
               
 
  $ 18,369,130     $ 15,070,064  
 
           
9.   INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD
                                 
    September 30  
    2006     2005  
          % of           % of  
    Carrying     Owner-     Carrying     Owner-  
    Amount     ship     Amount     ship  
 
                               
TSMC Global (Note 6)
  $ 28,423,113       100     $        
TSMC International Investment Ltd. (TSMC International)
    27,017,212       100       24,186,711       100  
TSMC (Shanghai) Company Limited (TSMC—Shanghai)
    9,250,288       100       9,888,482       100  
Systems on Silicon Manufacturing Company Pte Ltd. (SSMC)
    5,611,199       32       3,906,083       32  
Vanguard International Semiconductor Corporation (VIS)
    5,359,803       27       5,209,161       27  
TSMC Partners, Ltd. (TSMC Partners)
    4,397,781       100       4,084,085       100  
TSMC North America (TSMC—North America)
    1,876,355       100       846,477       100  
Emerging Alliance Fund, L.P. (Emerging Alliance)
    908,370       99       853,754       99  
VentureTech Alliance Fund II, L.P. (VTAF II)
    717,136       98       488,940       98  
Global UniChip Corporation (GUC)
    468,150       44       429,936       46  
VentureTech Alliance Fund III, L.P. (VTAF III)
    224,580       98              
Chi Cherng Investment Co., Ltd. (Chi Cherng)
    115,347       36       78,068       36  
Hsin Ruey Investment Co., Ltd. (Hsin Ruey)
    114,548       36       77,348       36  
TSMC Japan K. K. (TSMC—Japan)
    97,810       100       99,061       100  
Taiwan Semiconductor Manufacturing Company Europe B.V. (TSMC—Europe)
    44,143       100       23,582       100  
Taiwan Semiconductor Manufacturing Company Korea (TSMC—Korea)
    14,432       100              
VisEra Technologies Company, Ltd. (VisEra)
                63,858       25  
 
                           
 
                               
 
  $ 84,640,267             $ 50,235,546          
 
                           
    For the nine months ended September 30, 2006 and 2005, net equity in earnings of NT$4,696,522 thousand and net equity in losses of NT$1,277,187 thousand were recognized, respectively. The carrying amounts of the investments accounted for using the equity method and the related equity in earnings or losses of equity method investees were determined based on the reviewed financial statements of the investees as of and for the same periods ended as the Company.

- 18 -


 

    In November 2005, the Company transferred all of its shares in VisEra to VisEra Holding Company, an investee of TSMC Partners accounted for using the equity method, due to changes in investment structure.
10.   FINANCIAL ASSETS CARRIED AT COST
                 
    September 30  
    2006     2005  
 
               
Non-publicly traded stocks
  $ 422,500     $ 472,500  
Mutual funds
    346,911       301,873  
 
           
 
               
 
  $ 769,411     $ 774,373  
 
           
11.   PROPERTY, PLANT AND EQUIPMENT
 
    Accumulated depreciation consisted of the following:
                 
    September 30  
    2006     2005  
 
               
Buildings
  $ 47,680,865     $ 41,091,353  
Machinery and equipment
    347,184,167       300,003,419  
Office equipment
    6,233,704       5,422,595  
 
           
 
               
 
  $ 401,098,736     $ 346,517,367  
 
           
    No interest was capitalized during the nine months ended September 30, 2006 and 2005.
 
12.   DEFERRED CHARGES, NET
                 
    September 30  
    2006     2005  
 
               
Technology license fees
  $ 4,373,517     $ 5,410,933  
Software and system design costs
    1,221,171       1,828,117  
Others
    45,088       83,394  
 
           
 
               
 
  $ 5,639,776     $ 7,322,444  
 
           

- 19 -


 

13.   BONDS PAYABLE
                 
    September 30  
    2006     2005  
Domestic unsecured bonds:
               
Issued in December 2000 and repayable in December 2005 and 2007 in two installments, 5.25% and 5.36% interest payable annually, respectively
  $ 4,500,000     $ 15,000,000  
Issued in January 2002 and repayable in January 2007, 2009 and 2012 in three installments, 2.60%, 2.75% and 3.00% interest payable annually, respectively
    15,000,000       15,000,000  
 
           
 
    19,500,000       30,000,000  
Current portion
    (2,500,000 )     (10,500,000 )
 
           
 
               
 
  $ 17,000,000     $ 19,500,000  
 
           
    As of September 30, 2006, future principal repayments for the Company’s bonds were as follows:
         
Year of Repayment   Amount  
 
       
2007
  $ 7,000,000  
2009
    8,000,000  
2010 and thereafter
    4,500,000  
 
     
 
       
 
  $ 19,500,000  
 
     
14.   OTHER LONG-TERM PAYABLES
 
    Most of the payables resulted from license agreements for certain semiconductor-related patents. As of September 30, 2006, future payments for other long-term payables were as follows:
         
Year of Payment   Amount  
 
       
2006 4th quarter
  $ 227,906  
2007
    743,691  
2008
    342,233  
2009
    342,233  
2010
    342,233  
2011 and thereafter
    264,784  
 
     
 
    2,263,080  
Current portion (classified under accrued expenses and other current liabilities)
    (971,596 )
 
     
 
       
 
  $ 1,291,484  
 
     
15.   PENSION PLANS
 
    The Labor Pension Act (the Act) became effective on July 1, 2005. The employees who were subject to the Labor Standards Law prior to July 1, 2005 were allowed to choose to be subject to the pension mechanism under the Act with their seniority as of July 1, 2005 retained or continue to be subject to the pension mechanism under the Labor Standards Law. Employees who joined the Company after July 1, 2005 can only be subject to the pension mechanism under the Act.

- 20 -


 

    The pension mechanism under the Act is deemed a defined contribution plan. Pursuant to the Act, the Company has made monthly contributions equal to 6% of each employee’s monthly salary to employees’ pension accounts starting from July 1, 2005, and recognized pension costs of NT$468,808 thousand and NT$127,170 thousand for the nine months ended September 30, 2006 and 2005, respectively.
 
    The Company has a defined benefit plan under the Labor Standards Law that provides benefits based on an employee’s length of service and average monthly salary for the six-month period prior to retirement. The Company contributes an amount equal to 2% of salaries paid each month to a pension fund (the Fund), which is administered by the pension fund monitoring committee (the Committee) and deposited in the Committee’s name in the Central Trust of China.
 
    Changes in the Fund and accrued pension cost under the defined benefit plan are summarized as follows:
                 
    Nine Months Ended  
    September 30  
    2006     2005  
 
               
The Fund
               
Balance, beginning of period
  $ 1,658,864     $ 1,428,001  
Contributions
    183,810       168,958  
Interest
    34,383       15,629  
Payments
    (7,407 )     (8,419 )
 
           
 
               
Balance, end of period
  $ 1,869,650     $ 1,604,169  
 
           
 
               
Accrued pension cost
               
Balance, beginning of period
  $ 3,461,392     $ 3,101,196  
Accruals
    41,083       350,475  
 
           
 
               
Balance, end of period
  $ 3,502,475     $ 3,451,671  
 
           
16.   INCOME TAX
  a.   A reconciliation of income tax expense based on “income before income tax” at statutory rate and income tax currently payable was as follows:
                 
    Nine Months Ended  
    September 30  
    2006     2005  
 
               
Income tax expense based on “income before income tax” at statutory rate (25%)
  $ (26,373,882 )   $ (14,604,548 )
Tax effect of the following:
               
Tax-exempt income
    8,871,751       8,120,128  
Temporary and permanent differences
    1,347,129       (909,174 )
Cumulative effect of changes in accounting principles
    82,062        
Additional tax at 10% on unappropriated earnings
    (1,156,130 )     (1,489,709 )
Income tax credits
    10,799,894       7,771,188  
 
           
 
               
Income tax currently payable
  $ (6,429,176 )   $ (1,112,115 )
 
           

- 21 -


 

  b.   Income tax benefit (expense) consisted of the following:
                 
    Nine Months Ended  
    September 30  
    2006     2005  
 
               
Income tax currently payable
  $ (6,429,176 )   $ (1,112,115 )
Other income tax adjustments
    377,625       39,749  
Net change in deferred income tax assets
               
Investment tax credits
    (4,483,230 )     2,297,281  
Temporary differences
    1,822,230       1,530,726  
Adjustment in valuation allowance
    2,561,248       (1,498,931 )
 
           
 
               
Income tax benefit (expense)
  $ (6,151,303 )   $ 1,256,710  
 
           
  c.   Net deferred income tax assets consisted of the following:
                 
    September 30  
    2006     2005  
 
               
Current deferred income tax assets
               
Investment tax credits
  $ 2,683,412     $ 1,781,000  
 
           
 
               
Noncurrent deferred income tax assets, net
               
Investment tax credits
  $ 16,699,129     $ 26,400,865  
Temporary differences
    1,139,960       (919,809 )
Valuation allowance
    (6,849,298 )     (14,438,977 )
 
           
 
               
 
  $ 10,989,791     $ 11,042,079  
 
           
  d.   Integrated income tax information:
 
      The balance of the imputation credit account as of September 30, 2006 and 2005 was NT$746,437 thousand and NT$20,087 thousand, respectively.
 
      The expected and actual creditable ratios for distribution of earnings of 2005 and 2004 were 2.88% and 0.11%, respectively.
 
      The imputation credit allocated to the shareholders is based on its balance as of the date of dividend distribution. The expected creditable ratio may change when the actual distribution of imputation credit is made.
 
  e.   All earnings generated prior to December 31, 1997 have been appropriated.

- 22 -


 

  f.   As of September 30, 2006, investment tax credits consisted of the following:
                         
        Total     Remaining      
        Creditable     Creditable     Expiry
Regulation   Item   Amount     Amount     Year
 
                       
Statute for Upgrading Industries
 
Purchase of machinery and equipment
  $ 2,685,805     $     2006
 
        4,113,439           2007
 
        6,808,912       5,877,392     2008
 
        6,030,827       6,030,827     2009
 
        2,978,287       2,978,287     2010
 
                   
 
                       
 
      $ 22,617,270     $ 14,886,506      
 
                   
 
                       
Statute for Upgrading Industries
 
Research and development expenditures
  $ 1,780,480     $     2006
 
        1,245,142           2007
 
        1,627,095       1,627,095     2008
 
        1,534,230       1,534,230     2009
 
        1,173,730       1,173,730     2010
 
                   
 
                       
 
      $ 7,360,677     $ 4,335,055      
 
                   
 
                       
Statute for Upgrading Industries
 
Personnel training
  $ 27,311     $     2006
 
        16,197           2007
 
        40,734       40,734     2008
 
        40,442       40,442     2009
 
                   
 
                       
 
      $ 124,684     $ 81,176      
 
                   
 
                       
Statute for Upgrading Industries
 
Investments in important technology-based enterprises
  $ 79,804     $ 79,804     2010
 
                   
  g.   The profits generated from the following expansion and construction projects are exempt from income tax:
     
    Tax-Exemption Period
 
   
Construction of Fab 8 — modules B
  2002 to 2005
Expansion of Fab 2 — modules A and B, Fab 3, Fab 4, Fab 5 and Fab 6
  2003 to 2006
Construction of Fab 12
  2004 to 2007
  h.   The tax authorities have examined income tax returns of the Company through 2003.

- 23 -


 

17.   LABOR COST, DEPRECIATION AND AMORTIZATION
                         
    Nine Months Ended September 30, 2006  
          Classified as        
    Classified as     Operating        
    Cost of Sales     Expenses     Total  
 
                       
Labor cost
                       
Salary
  $ 7,383,078     $ 3,140,749     $ 10,523,827  
Labor and health insurance
    514,883       262,833       777,716  
Pension
    462,022       235,806       697,828  
Meal
    335,397       117,518       452,915  
Welfare
    141,602       76,398       218,000  
Others
    167,104       17,644       184,748  
 
                 
 
                       
 
  $ 9,004,086     $ 3,850,948     $ 12,855,034  
 
                 
 
                       
Depreciation
  $ 44,547,208     $ 2,454,035     $ 47,001,243  
 
                 
Amortization
  $ 1,075,802     $ 711,017     $ 1,786,819  
 
                 
                         
    Nine Months Ended September 30, 2005  
            Classified as        
    Classified as     Operating        
    Cost of Sales     Expenses     Total  
 
                       
Labor cost
                       
Salary
  $ 6,530,511     $ 2,667,263     $ 9,197,774  
Labor and health insurance
    459,934       219,072       679,006  
Pension
    440,897       210,015       650,912  
Meal
    316,142       103,687       419,829  
Welfare
    114,926       67,142       182,068  
Others
    103,464       44,331       147,795  
 
                 
 
                       
 
  $ 7,965,874     $ 3,311,510     $ 11,277,384  
 
                 
 
                       
Depreciation
  $ 46,636,159     $ 2,254,165     $ 48,890,324  
 
                 
Amortization
  $ 1,284,868     $ 1,249,154     $ 2,534,022  
 
                 
18.   SHAREHOLDERS’ EQUITY
 
    As of September 30, 889,740 thousand ADSs of the Company were traded on the NYSE. The number of common shares represented by the ADSs is 4,448,702 thousand (one ADS represents five common shares).
 
    Capital surplus can only be used to offset a deficit under the Company Law. However, the capital surplus generated from donations and the excess of the issuance price over the par value of capital stock (including the stock issued for new capital, mergers, convertible bonds and the surplus from treasury stock transactions) may be appropriated as stock dividends, which is limited to a certain percentage of the Company’s paid-in capital.

- 24 -


 

    Capital surplus consisted of the following:
                 
    September 30  
    2006     2005  
 
               
From merger
  $ 24,003,546     $ 24,003,546  
Additional paid-in capital
    19,860,644       23,175,884  
From convertible bonds
    9,360,424       9,360,424  
From treasury stock transactions
    389,188       91,690  
From long-term investments
    243,810       145,441  
Donations
    55       55  
 
           
 
               
 
  $ 53,857,667     $ 56,777,040  
 
           
    The Company’s Articles of Incorporation as revised on May 10, 2005 provide that, when allocating the net profits for each fiscal year, the Company shall first offset its losses in previous years and then set aside the following items accordingly:
  a.   Legal capital reserve at 10% of the profits left over, until the accumulated legal capital reserve has equaled the Company’s paid-in capital;
 
  b.   Special capital reserve in accordance with relevant laws or regulations or as requested by the authorities in charge;
 
  c.   Bonus to directors and supervisors and bonus to employees of the Company of not more than 0.3% and not less than 1% of the remainder, respectively. Directors who also serve as executive officers of the Company are not entitled to receive the bonus to directors and supervisors. The Company may issue stock bonuses to employees of an affiliated company meeting the conditions set by the Board of Directors or, by the person duly authorized by the Board of Directors;
 
  d.   Any balance left over shall be allocated according to the resolution of the shareholders’ meeting.
    The Company’s Articles of Incorporation also provide that profits of the Company may be distributed by way of cash dividend and/or stock dividend. However, distribution of profits shall be made preferably by way of cash dividend. Distribution of profits may also be made by way of stock dividend; provided that the ratio for stock dividend shall not exceed 50% of the total distribution.
 
    Any appropriations of the profits are recorded in the year of shareholder approval and given effect to in the financial statements of that year.
 
    The appropriation for legal capital reserve shall be made until the reserve equals the Company’s paid-in capital. The reserve may be used to offset a deficit, or be distributed as dividends and bonuses for the portion in excess of 50% of the paid-in capital if the Company has no unappropriated earnings and the reserve balance has exceeded 50% of the Company’s paid-in capital. The Company Law also prescribes that, when the reserve has reached 50% of the Company’s paid-in capital, up to 50% of the reserve may be transferred to capital.
 
    A special capital reserve equivalent to the net debit balance of the other components of shareholders’ equity (for example, cumulative translation adjustments and unrealized loss on financial assets, but excluding treasury stock) shall be made from unappropriated earnings pursuant to existing regulations promulgated by the Securities and Futures Bureau (SFB). Any special reserve appropriated may be reversed to the extent that the net debit balance reverses.

- 25 -


 

    The appropriations of earnings for 2005 and 2004 had been approved in the shareholders’ meetings held on May 16, 2006 and May 10, 2005, respectively. The appropriations and dividends per share were as follows:
                                 
                    Dividends Per Share  
    Appropriation of Earnings     (NT$)  
    For Fiscal     For Fiscal     For Fiscal     For Fiscal  
    Year 2005     Year 2004     Year 2005     Year 2004  
 
                               
Legal capital reserve
  $ 9,357,503     $ 8,820,201                  
Special capital reserve
    (1,585,685 )     2,226,427                  
Employees’ profit sharing — in cash
    3,432,129       3,086,215                  
Employees’ profit sharing — in stock
    3,432,129       3,086,215                  
Cash dividends to shareholders
    61,825,061       46,504,097     $ 2.50     $ 2.00  
Stock dividends to shareholders
    3,709,504       11,626,024       0.15       0.50  
Bonus to directors and supervisors
    257,410       231,466                  
 
                           
 
                               
 
  $ 80,428,051     $ 75,580,645                  
 
                           
    The shareholders’ meeting held on May 16, 2006 also resolved to distribute stock dividends out of capital surplus in the amount of NT$3,709,504 thousand.
 
    The aforementioned stock dividends declared out of earnings for 2005 and stock dividends distributed out of capital surplus had been approved by the SFB and took effect on June 26, 2006.
 
    The amounts of the above appropriations of earnings for 2005 and 2004 are consistent with the resolutions of the meetings of the Board of Directors held on February 14, 2006 and February 22, 2005, respectively. If the above bonus to employees, directors and supervisors had been paid entirely in cash and charged to earnings of 2005 and 2004, the basic earnings per share (after income tax) for the years ended December 31, 2005 and 2004 shown in the respective financial statements would have decreased from NT$3.79 to NT$3.50 and NT$3.97 to NT$3.70, respectively.
 
    The shares distributed as a bonus to employees represented 1.39% and 1.33% of the Company’s total outstanding common shares as of December 31, 2005 and 2004, respectively.
 
    The above information about the appropriations of bonus to employees, directors and supervisors is available at Market Observation Post System website.
 
    Under the Integrated Income Tax System that became effective on January 1, 1998, the R.O.C. resident shareholders are allowed a tax credit for their proportionate share of the income tax paid by the Company on earnings generated since January 1, 1998.
 
19.   STOCK-BASED COMPENSATION PLANS
 
    The Company’s Employee Stock Option Plans under the 2004 Plan, 2003 Plan and 2002 Plan were approved by the SFB on January 6, 2005, October 29, 2003 and June 25, 2002, respectively. The maximum number of options authorized to be granted under the 2004 Plan, 2003 Plan and 2002 Plan was 11,000 thousand, 120,000 thousand and 100,000 thousand, respectively, with each option eligible to subscribe for one common share when exercisable. The options may be granted to qualified employees of the Company or any of its domestic or foreign subsidiaries, in which the Company’s shareholding with voting rights, directly or indirectly, is more than fifty percent (50%). The options of all the plans are valid for ten years and exercisable at certain percentages subsequent to the second anniversary of the grant date. Under the terms of the plans, the options are granted at an exercise price equal to the closing price of the Company’s common shares listed on the TSE on the grant date.

- 26 -


 

    Options of the aforementioned Plans that had never been granted or had been granted but subsequently canceled had expired as of September 30, 2006.
 
    Information about outstanding stock options for the nine months ended September 30, 2006 and 2005 was as follows:
                 
            Weighted-  
            Average  
    Number of     Exercise  
    Options     Price  
    (in Thousands)     (NT$)  
Nine months ended September 30, 2006
               
 
               
Balance, beginning of period
    67,758     $ 39.4  
Options granted
    2,758       40.1  
Options exercised
    (10,701 )     39.5  
Options canceled
    (3,020 )     44.0  
 
             
 
               
Balance, end of period
    56,795       39.6  
 
             
 
               
Nine months ended September 30, 2005
               
 
               
Balance, beginning of period
    64,367       40.5  
Options granted
    14,864       48.4  
Options exercised
    (4,160 )     39.9  
Options canceled
    (3,777 )     43.5  
 
             
 
               
Balance, end of period
    71,294       42.1  
 
             
    The number of outstanding options and exercise prices have been adjusted to reflect the appropriations of dividends in accordance with the plans.
 
    As of September 30, 2006, information about outstanding and exercisable options was as follows:
                                         
    Options Outstanding     Options Exercisable  
          Weighted-     Weighted-           Weighted-  
          average     average           average  
Range of   Number of     Remaining     Exercise     Number of     Exercise  
Exercise   Options (in     Contractual     Price     Options (in     Price  
Price (NT$)   Thousands)     Life (Years)     (NT$)     Thousands)     (NT$)  
 
                                       
$27.6—$39.7
    37,331       5.39     $ 35.6       30,718     $ 35.5  
45.1—52.3
    19,464       7.10       47.4       7,302       46.8  
 
                                   
 
                                       
 
    56,795                       38,020          
 
                                   

- 27 -


 

    No compensation cost was recognized under the intrinsic value method for the nine months ended September 30, 2006 and 2005. Had the Company used the fair value based method (based on the Black-Scholes model) to evaluate the options granted after January 1, 2004, the assumptions and pro forma results of the Company for the nine months ended September 30, 2006 and 2005 would have been as follows:
                 
    Nine Months Ended  
    September 30  
    2006     2005  
 
               
Assumptions:
               
Expected dividend yield
  1.00%—3.44%   1.00%—3.44%
Expected volatility
  43.77%—46.15%   43.77%—46.15%
Risk free interest rate
  3.07%—3.85%   3.07%—3.85%
Expected life
  5 years   5 years
 
               
Net income:
               
Net income as reported
  $ 99,098,039     $ 59,674,900  
Pro forma net income
    99,010,630       59,591,795  
 
               
Earnings per share (EPS) — after income tax (NT$):
               
Basic EPS as reported
    $3.84       $2.32  
Pro forma basic EPS
    3.84       2.31  
Diluted EPS as reported
    3.84       2.32  
Pro forma diluted EPS
    3.84       2.31  
20.   TREASURY STOCK
(Shares in Thousands)
                                 
    Beginning     Stock             Ending  
    Shares     Dividends     Disposal     Shares  
Nine months ended September 30, 2006
                               
 
                               
Parent company stock held by subsidiaries
    32,938       988             33,926  
 
                       
 
                               
Nine months ended September 30, 2005
                               
 
                               
Parent company stock held by subsidiaries
    45,521       2,242       955       46,808  
 
                       
    Proceeds from sales of treasury stock for the nine months ended September 30, 2005 were NT$52,273 thousand. As of September 30, 2006 and 2005, the book value of the treasury stock was NT$918,075 thousand and NT$1,550,112 thousand, respectively; the market value was NT$2,025,401 thousand and NT$2,456,486 thousand, respectively. The Company’s stock held by subsidiaries is treated as treasury stock and the holders are entitled to the rights of shareholders, except that starting from June 24, 2005, pursuant to the revised Company Law, the holders are no longer entitled to vote in shareholders’ meetings.

- 28 -


 

21.   EARNINGS PER SHARE
                                 
    Nine Months Ended September 30  
    2006     2005  
    Before     After     Before     After  
    Income Tax     Income Tax     Income Tax     Income Tax  
Basic EPS (NT$)
                               
Income before cumulative effect of changes in accounting principles
  $ 4.09     $ 3.85     $ 2.27     $ 2.32  
Cumulative effect of changes in accounting principles
    (0.01 )     (0.01 )            
 
                       
 
                               
Income for the period
  $ 4.08     $ 3.84     $ 2.27     $ 2.32  
 
                       
 
                               
Diluted EPS (NT$)
                               
Income before cumulative effect of change in accounting principles
  $ 4.08     $ 3.85     $ 2.27     $ 2.32  
Cumulative effect of changes in accounting principles
    (0.01 )     (0.01 )            
 
                       
 
                               
Income for the period
  $ 4.07     $ 3.84     $ 2.27     $ 2.32  
 
                       
    EPS is computed as follows:
                                         
          Number of     EPS (NT$)  
    Amounts (Numerator)     Shares     Before     After  
    Before     After     (Denominator)     Income     Income  
    Income Tax     Income Tax     (in Thousands)     Tax     Tax  
Nine months ended September 30, 2006
                                       
 
                                       
Basic EPS
                                       
Income available to common shareholders
  $ 105,167,280     $ 99,098,039       25,786,786     $ 4.08     $ 3.84  
 
                                   
Effect of dilutive potential common stock — stock options
                22,958                  
 
                                 
 
                                       
Diluted EPS
                                       
Income available to common shareholders (including effect of dilutive potential common stock)
  $ 105,167,280     $ 99,098,039       25,809,744     $ 4.07     $ 3.84  
 
                             
 
                                       
Nine months ended September 30, 2005
                                       
 
                                       
Basic EPS
                                       
Income available to common shareholders
  $ 58,418,190     $ 59,674,900       25,761,096     $ 2.27     $ 2.32  
 
                                   
Effect of dilutive potential common stock — stock options
                11,467                  
 
                                 
 
                                       
Diluted EPS
                                       
Income available to common shareholders (including effect of dilutive potential common stock)
  $ 58,418,190     $ 59,674,900       25,772,563     $ 2.27     $ 2.32  
 
                             

- 29 -


 

22.   DISCLOSURES FOR FINANCIAL INSTRUMENTS
  a.   Fair values of financial instruments were as follows:
                                 
    September 30  
    2006     2005  
    Carrying             Carrying        
    Amount     Fair Value     Amount     Fair Value  
Assets
                               
 
                               
Financial assets at fair value through profit or loss
  $ 45,295     $ 45,295     $ 103,214     $ 2,038  
Available-for-sale financial assets
    40,643,264       40,643,264       48,216,860       48,216,860  
Held-to-maturity financial assets
    36,967,859       36,799,837       28,553,643       28,277,622  
Investments accounted for using equity method (with market price)
    5,359,803       9,375,950       5,209,161       10,071,493  
 
                               
Liabilities
                               
 
                               
Financial liabilities at fair value through profit or loss
    458,808       458,808       1,599,615       1,110,612  
Bonds payable (including current portion)
    19,500,000       19,851,716       30,000,000       30,372,946  
Other long-term payables (including current portion)
    3,371,863       3,371,863       4,855,978       4,855,978  
  b.   Methods and assumptions used in the determination of fair values of financial instruments
  1)   The aforementioned financial instruments do not include cash and cash equivalents, receivables, other financial assets, payables, and payables to contractors and equipment suppliers. The carrying amounts of these financial instruments approximate their fair values.
 
  2)   Fair values of financial assets/liabilities at fair value through profit or loss were determined using valuation techniques incorporating estimates and assumptions that were consistent with prevailing market conditions.
 
  3)   Fair values of available-for-sale and held-to-maturity financial assets were based on their quoted market prices; while fair values of structured time deposits were estimated using valuation techniques.
 
  4)   Fair value of bonds payable was based on their quoted market price.
 
  5)   Fair value of other long-term payables was based on the present value of expected cash flows, which approximates their carrying amount.
  c.   Losses recognized for the changes in fair value of derivatives estimated using valuation techniques were NT$413,514 thousand for the nine months ended September 30, 2006.
 
  d.   As of September 30, 2006 and 2005, financial assets exposed to fair value interest rate risk were NT$77,656,418 thousand and NT$76,848,238 thousand, respectively, financial liabilities exposed to fair value interest rate risk were NT$458,808 thousand and NT$1,599,615 thousand, respectively, and financial assets exposed to cash flow interest rate risk were NT$7,281,560 thousand and NT$7,301,360 thousand, respectively.

- 30 -


 

  e.   The Company recognized an unrealized gain of NT$160,949 thousand in shareholder’s equity for the changes in fair value of available-for-sale financial assets for the nine months ended September 30, 2006. The Company also recognized an unrealized gain of NT$341,243 thousand in shareholders’ equity for the changes in available-for-sale financial assets held by equity method investees for the nine months ended September 30, 2006.
 
  f.   Information about financial risks
  1)   Market risk. The derivative financial instruments categorized as financial assets at fair value through profit or loss are mainly used to hedge the exchange rate fluctuations of foreign-currency-denominated assets and liabilities. Therefore, the market risk of derivatives will be offset by the foreign exchange risk of these assets and liabilities. Available-for-sale financial assets held by the Company are mainly fixed-interest-rate debt securities. Therefore, the fluctuations in market interest rates would result in changes in fair values of these debt securities.
 
  2)   Credit risk. Credit risk represents the potential loss that would be incurred by the Company if the counter-parties or third-parties breached contracts. Financial instruments with positive fair values at the balance sheet date are evaluated for credit risk. The counter-parties or third-parties to the foregoing financial instruments are reputable financial institutions, business organizations, and government agencies. Management believes that the Company’s exposure to default by those parties is low.
 
  3)   Liquidity risk. The Company has sufficient operating capital to meet cash needs upon settlement of derivative financial instruments and bonds payable. Therefore, the cash flow risk is low.
 
  4)   Cash flow interest rate risk. The Company mainly engages in investments in fixed-interest-rate debt securities. Therefore, cash flows are not expected to fluctuate significantly due to changes in market interest rates.
23.   RELATED PARTY TRANSACTIONS
 
    The Company engages in business transactions with the following related parties:
  a.   Industrial Technology Research Institute (ITRI), the chairman of the Company is one of its supervisors.
 
  b.   Philips, a major shareholder of the Company.
 
  c.   Subsidiaries
 
      TSMC—North America
TSMC—Shanghai
TSMC—Europe
TSMC—Japan
TSMC—Korea
Emerging Alliance
 
  d.   Investees
 
      GUC (with a controlling financial interest)
VIS (accounted for using equity method)
SSMC (accounted for using equity method)

- 31 -


 

  e.   Indirect subsidiaries
 
      WaferTech, LLC (WaferTech)
TSMC Technology, Inc. (TSMC Technology)
 
  f.   Indirect investee
 
      VisEra, originally an investee over which the Company had a controlling interest; beginning in November 2005, VisEra became an indirect investee accounted for using the equity method due to changes in investment structure.
    Transactions with the aforementioned parties, other than those disclosed in other notes, are summarized as follows:
                                 
    2006     2005  
    Amount     %     Amount     %  
Nine months ended September 30
                               
 
                               
Sales
                               
TSMC—North America
  $ 144,616,913       59     $ 106,026,297       57  
Philips
    3,225,151       1       2,145,073       1  
Others
    583,671             486,276        
 
                       
 
                               
 
  $ 148,425,735       60     $ 108,657,646       58  
 
                       
 
                               
Purchases
                               
WaferTech
  $ 9,695,565       27     $ 7,860,055       29  
SSMC
    5,555,044       16       3,611,658       14  
TSMC—Shanghai
    3,099,850       9       586,889       2  
VIS
    2,818,795       8       3,300,928       12  
 
                       
 
                               
 
  $ 21,169,254       60     $ 15,359,530       57  
 
                       
 
                               
Manufacturing expenses — technical assistance fees
                               
Philips (Note 25a)
  $ 566,928       1     $ 392,083        
 
                       
 
                               
Marketing expenses — commission
                               
TSMC—Japan
  $ 204,592       15     $ 185,295       19  
TSMC—Europe
    184,306       14       167,142       17  
TSMC—Korea
    5,903                    
 
                       
 
                               
 
  $ 394,801       29     $ 352,437       36  
 
                       
 
                               
General and administrative expenses — rental expense
                               
GUC
  $ 11,133           $ 12,348        
 
                       
 
                               
Research and development expenses
                               
GUC
  $ 37,142           $ 26,190        
 
                       
 
                               
Sales of property, plant, and equipment
                               
TSMC—Shanghai
  $ 401,332       48     $ 125,381       43  
 
                       
(Continued)

- 32 -


 

                                 
    2006     2005  
    Amount     %     Amount     %  
Non-operating income and gains
                               
SSMC (primarily technical service income, see Note 25e)
  $ 268,298       3     $ 226,738       6  
TSMC—Shanghai
    197,400       2       122,514       3  
VisEra
    187,189       2       16,387        
VIS (primarily technical service income, see Note 25h)
    176,084       2       140,086       4  
 
                       
 
                               
 
  $ 828,971       9     $ 505,725       13  
 
                       
 
                               
As of September 30
                               
 
                               
Receivables
                               
TSMC—North America
  $ 21,680,057       98     $ 22,728,468       99  
Philips
    224,516       1       308,335       1  
Others
    125,847       1       1        
 
                       
 
                               
 
  $ 22,030,420       100     $ 23,036,804       100  
 
                       
 
                               
Other receivables
                               
TSMC—Shanghai
  $ 482,542       46     $ 104,705       6  
TSMC—North America
    228,451       22       445,856       27  
SSMC
    142,521       14       314,569       19  
VIS
    88,717       9       63,293       4  
TSMC Technology
    2,756             717,685       43  
Others
    97,236       9       4,570       1  
 
                       
 
                               
 
  $ 1,042,223       100     $ 1,650,678       100  
 
                       
 
                               
Payables
                               
WaferTech
  $ 1,045,183       27     $ 970,004       29  
VIS
    806,789       21       739,543       22  
Philips
    699,195       18       701,096       21  
SSMC
    636,181       16       596,493       18  
TSMC—Shanghai
    545,706       14       211,880       6  
Others
    161,434       4       131,889       4  
 
                       
 
                               
 
  $ 3,894,488       100     $ 3,350,905       100  
 
                       
 
                               
Other long-term payables
                               
Philips (Note 25a)
  $ 409,588       100     $ 1,111,798       100  
 
                       
 
                               
Deferred credits
                               
TSMC—Shanghai
  $ 776,935       61     $ 681,978       60  
VisEra
    139,893       11              
 
                       
 
                               
 
  $ 916,828       72     $ 681,978       60  
 
                       
(Concluded)
    The terms of sales to related parties were not significantly different from those of sales to third parties. For other related party transactions, prices were determined in accordance with mutual agreements.

- 33 -


 

    The Company deferred the gains (classified under the deferred credits) derived from sales of property, plant, and equipment to TSMC-Shanghai and VisEra, and then recognized such gains (classified under the non-operating income and gains) over the depreciable lives of the disposed assets.
 
    The Company leased part of its office space from GUC with a quarterly rental of NT$4,186 thousand. The Company also leased certain buildings and facilities to VisEra with a monthly rental of NT$7,684 (classified under the non-operating income and gains).
24.   SIGNIFICANT LONG-TERM LEASES
 
    The Company leases several parcels of land from the Science Park Administration. These operating leases expire on various dates from March 2008 to December 2020 and can be renewed upon expiration.
 
    As of September 30, 2006, future lease payments were as follows:
         
            Year   Amount  
 
       
2006 4th quarter
  $ 65,708  
2007
    248,185  
2008
    222,450  
2009
    213,872  
2010
    166,803  
2011 and thereafter
    1,103,708  
 
     
 
       
 
  $ 2,020,726  
 
     
25.   SIGNIFICANT COMMITMENTS AND CONTINGENCIES
 
    The significant commitments and contingencies of the Company as of September 30, 2006, excluding those disclosed in other notes, were as follows:
  a.   On June 20, 2004, the Company and Philips amended the Technical Cooperation Agreement, which was originally signed on May 12, 1997. The amended Technical Cooperation Agreement is for five years beginning from January 1, 2004. Upon expiration, this amended Technical Cooperation Agreement will be terminated and will not be automatically renewed; however, the patent cross license arrangement between the Company and Philips will survive the expiration of the amended Technical Cooperation Agreement. Under this amended Technical Cooperation Agreement, the Company will pay Philips royalties based on a fixed amount mutually agreed-on, rather than under a certain percentage of the Company’s annual net sales. The Company and Philips agreed to cross license the patents owned by each party. The Company also obtained through Philips a number of cross patent licenses.
 
  b.   Under a technical cooperation agreement with ITRI, the Government of Republic of China or its designee approved by TSMC can use up to 35% of TSMC’s capacity if TSMC’s outstanding commitments to its customers are prejudiced. The term of this agreement is for five years beginning from January 1, 1987 and is automatically renewed for successive periods of five years unless otherwise terminated by either party with one year prior notice. The agreement was automatically renewed in 1992 and 1997 and on January 1, 2002.
 
  c.   Under several foundry agreements, the Company shall reserve a portion of its production capacity for certain major customers that have guarantee deposits with the Company. As of September 30, 2006, the Company had a total of US$110,657 thousand of guarantee deposits.

- 34 -


 

  d.   Under a Shareholders Agreement entered into with Philips and EDB Investments Pte Ltd. on March 30, 1999, the parties formed a joint venture company, SSMC, which is an integrated circuit foundry in Singapore. The Company’s equity interest in SSMC was 32%. The Company and Philips committed to buy specific percentages of the production capacity of SSMC. The Company and Philips are required, in the aggregate, to purchase up to 70% of SSMC’s full capacity, but the Company alone is not required to purchase more than 28% of the annual installed capacity. If any party defaults on the commitment and the capacity utilization of SSMC fall below a specific percentage of its total capacity, the defaulting party is required to compensate SSMC for all related unavoidable costs.
 
  e.   The Company provides technical services to SSMC under a Technical Cooperation Agreement (the Agreement) entered into on May 12, 1999. The Company receives compensation for such services computed at a specific percentage of net selling price of all products sold by SSMC. The Agreement shall remain in force for ten years and may be automatically renewed for successive periods of five years each unless pre-terminated by either party under certain conditions.
 
  f.   Under a Technology Transfer Agreement (TTA) with National Semiconductor Corporation (National) entered into on June 27, 2000, the Company shall receive payments for the licensing of certain technology to National. The agreement was to remain in force for ten years and could be automatically renewed for successive periods of two years thereafter unless either party gives written notice for early termination under certain conditions. In January 2003, the Company and National entered into a Termination Agreement whereby the TTA was terminated. Under the Termination Agreement, the Company will be relieved of any further obligation to transfer any additional technology. In addition, the Company granted National an option to request the transfer of certain technologies under the same terms and conditions as the terminated TTA. The option will expire in January 2008.
 
  g.   In December 2003, the Company entered into a Technology Development and License Agreement with Freescale Semiconductor, Inc. to jointly develop 65-nm SOI (silicon on insulator) technology. The Company will also license related 90-nm SOI technology from Freescale Semiconductor, Inc. Any intellectual properties arising out of the co-development project shall be jointly owned by the parties. In accordance with the agreement, the Company will pay royalties to Freescale Semiconductor, Inc. and will share a portion of the costs associated with the joint development project.
 
  h.   The Company provides a technology transfer to VIS under a Manufacturing License and Technology Transfer Agreement entered into on April 1, 2004. The Company receives compensation for such technology transfer in the form of royalty payments from VIS computed at specific percentages of net selling price of certain products sold by VIS. VIS agreed to reserve its certain capacity to manufacture for the Company certain products at prices as agreed by the parties.
 
  i.   TSMC, TSMC—North America and WaferTech filed a series of lawsuits in late 2003 and 2004 against Semiconductor Manufacturing International Corporation (“SMIC”), SMIC (Shanghai) and SMIC Americas. The lawsuits alleged that SMIC companies infringed multiple TSMC patents and misappropriated TSMC’s trade secrets. These suits were settled out of court on January 30, 2005. As part of the settlement, SMIC shall pay TSMC US$175,000 thousand over six years to resolve TSMC’s claims. As of September 30, 2006, SMIC had paid US$45,000 thousand in accordance with the terms of this settlement agreement. In August 2006, TSMC, TSMC—North America and Wafertech filed a lawsuit against SMIC in Alameda County Superior Court in California for breach of aforementioned settlement agreement, breach of promissory notes and trade secret misappropriation seeking injunctive relief and monetary damages. In September 2006, SMIC filed a cross-complaint against TSMC in the same court alleging TSMC of breach of settlement agreement and implied covenant of good faith and fair dealing in response to TSMC’s August complaint. The outcome of this litigation cannot be determined at this time.
 
  j.   Amounts available under unused letters of credit as of September 30, 2006 were NT$6,480 thousand.

- 35 -


 

26.   ADDITIONAL DISCLOSURES
 
    Following are the additional disclosures required by the SFB for the Company and its investees:
  a.   Financing provided: Please see Table 1 attached;
 
  b.   Endorsement/guarantee provided: Please see Table 2 attached;
 
  c.   Marketable securities held: Please see Table 3 attached;
 
  d.   Marketable securities acquired or disposed of at costs or prices of at least NT$100 million or 20% of the paid-in capital: Please see Table 4 attached;
 
  e.   Acquisition of individual real estate properties at costs of at least NT$100 million or 20% of the paid-in capital: Please see Table 5 attached;
 
  f.   Disposal of individual real estate properties at prices of at least NT$100 million or 20% of the paid-in capital: None;
 
  g.   Total purchases from or sales to related parties of at least NT$100 million or 20% of the paid-in capital: Please see Table 6 attached;
 
  h.   Receivable from related parties amounting to at least NT$100 million or 20% of the paid-in capital: Please see Table 7 attached;
 
  i.   Names, locations, and related information of investees on which the Company exercises significant influence: Please see Table 8 attached;
 
  j.   Information about derivatives of investees over which the Company has a controlling interest:
 
      TSMC—Shanghai entered into forward exchange contracts during the nine months ended September 30, 2006 to manage exposures related to foreign exchange rate fluctuations. As of September 30, 2006, TSMC—Shanghai did not have any outstanding forward exchange contracts. Net realized settlement gains arising from forward exchange transactions for the nine months ended September 30, 2006 were NT$2,492 thousand.
 
  k.   Information on investment in Mainland China
  1)   The name of the investee in mainland China, the main businesses and products, its issued capital, method of investment, information on inflow or outflow of capital, percentage of ownership, equity in the net gain or net loss, ending balance, amount received as dividends from the investee, and the limitation on investee: Please see Table 9 attached.
 
  2)   Significant direct or indirect transactions with the investee, its prices and terms of payment, unrealized gain or loss, and other related information which is helpful to understand the impact of investment in mainland China on financial reports: Please see Note 23.

- 36 -


 

     
TABLE 1
Taiwan Semiconductor Manufacturing Company Limited and Investees
FINANCING PROVIDED
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
                                                                                                                 
                                                                                                            Financing
                            Maximum                                                                           Company’s
                            Balance for the                                                                   Financing Limit   Financing
                            Period   Ending Balance           Type of           Reasons for                           for Each   Amount Limits
                    Financial Statement   (US$ in   (US$ in           Financing   Transaction   Short-term   Allowance for   Collateral   Borrowing   (US$ in
No.   Financing Name   Counter-party   Account   Thousands)   Thousands)   Interest Rate   (Note 1)   Amounts   Financing   Bad Debt   Item   Value   Company   Thousands)
  1    
TSMC International
  TSMC Development   Other receivables   $ 1,158,430     $       1.50 %     2     $     Operating capital   $           $       N/A     $ 32,699,765  
       
 
                  (US$ 35,000 )                                                                           (US$ 987,968 )
       
 
                                                                                                  (Note 2)
Note 1:   The type No. 2 represents necessary for short-term financing.
Note 2:   Not exceeding the issued capital of the Company.

- 37 -


 

     
TABLE 2
Taiwan Semiconductor Manufacturing Company Limited
ENDORSEMENT/GUARANTEE PROVIDED
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
                                             
                                    Ratio of Accumulated    
            Counter-party                   Amount of Collateral   Maximum
                Nature of   Limits on Each Counter-party’s   Maximum       Value of Collateral   to Net Equity of the   Collateral/Guarantee
        Endorsement/       Relationship   Endorsement/   Balance for the Period   Ending Balance   Property, Plant and   Latest Financial   Amounts Allowable
No.   Guarantee Provider   Name   (Note 2)   Guarantee Amounts   (US$ in Thousands)   (US$ in Thousands)   Equipment   Statement   (Note 1)
  0     TSMC   TSMC-North America


TSMC Development
 


 
Not exceed 10% of the net worth of the Company, and be also limited to the paid-in capital of the endorsement/guarantee company, unless otherwise approved by Board of Directors.
  $1,323,920
(US$40,000)

$1,985,880
(US$60,000)
  $—


  $—


 


  $ 120,284,032  
Note 1:   25% of the net worth of the Company as of September 30, 2006.
Note 2:   The No. 2 represents a subsidiary in which the Company holds directly over 50% of the equity interest.
The No. 3 represents an investee in which the Company holds directly and indirectly over 50% of the equity interest.

- 38 -


 

     
TABLE 3
Taiwan Semiconductor Manufacturing Company Limited and Investees
MARKETABLE SECURITIES HELD
SEPTEMBER 30, 2006
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
                                             
                September 30, 2006    
                                    Market Value or    
Held Company       Relationship with the   Financial Statement   Shares/Units   Carrying Value   Percentage of   Net Asset Value    
Name   Marketable Securities Type and Name   Company   Account   (in Thousands)   (US$ in Thousands)   Ownership   (US$ in Thousands)   Note
The Company  
Government bond
                                       
   
United States Treas Nts
   
Available-for-sale financial
assets
        US$ 5,944     N/A   US$ 5,944      
   
2004 Government Bond Series B
            $ 1,003,371     N/A   $ 1,003,371      
   
2006 Government Bond Series D
   
Held-to-maturity financial
assets
          3,658,687     N/A     3,661,122      
   
2005 Government Bond Series A
              3,049,206     N/A     3,047,575      
   
2003 Government Bond Series B
              1,647,828     N/A     1,647,954      
   
2003 Asian Development Bank Government Bond
              831,028     N/A     875,103      
   
2004 Kaohsiung Municipal Bond Series A
              620,000     N/A     618,760      
   
European Investment Bank Bonds
              370,374     N/A     400,000      
   
2002 Government Bond Series B
              351,806     N/A     351,534      
   
2004 Kaohsiung Municipal Bond Series B
              249,998     N/A     250,004      
   
2003 Government Bond Series F
              149,603     N/A     149,433      
   
2003 European Bank for Recomspruction and Development Government Bond Series A
              87,756     N/A     90,000      
   
Open-end mutual funds
                                       
   
NITC Bond Fund
   
Available-for-sale financial
assets
    22,219       3,643,097     N/A     3,643,097      
   
ABN AMRO Bond Fund
        175,156       2,630,053     N/A     2,630,053      
   
Fuh Hwa Bond
        125,122       1,661,927     N/A     1,661,927      
   
Prudential Financial Bond Fund
        103,751       1,510,993     N/A     1,510,993      
   
Cathay Bond
        122,762       1,410,843     N/A     1,410,843      
   
NITC Taiwan Bond
        93,312       1,310,068     N/A     1,310,068      
   
JF Taiwan Bond Fund
        75,286       1,144,625     N/A     1,144,625      
   
Dresdner Bond DAM Fund
        95,553       1,103,240     N/A     1,103,240      
   
JF Taiwan First Bond Fund
        77,530       1,085,714     N/A     1,085,714      
   
ABN AMRO Select Bond Fund
        94,250       1,064,534     N/A     1,064,534      
   
Shinkong Chi Shin Bond Fund
        72,680       1,037,545     N/A     1,037,545      
   
ABN AMRO Income
        63,947       1,008,483     N/A     1,008,483      
   
President James Bond
        65,496       1,006,962     N/A     1,006,962      
   
Taishin Lucky Fund
        78,624       803,580     N/A     803,580      
   
HSBC Taiwan Money Management
        34,093       504,512     N/A     504,512      
   
TIIM High Yield
        36,616       452,912     N/A     452,912      
   
Invesco R.O.C. Bond Fund
        35,359       402,408     N/A     402,408      
(Continued)

- 39 -


 

     
                                                         
                    September 30, 2006        
                                Market Value or    
Held Company       Relationship with the   Financial Statement   Shares/Units   Carrying Value   Percentage of   Net Asset Value    
Name   Marketable Securities Type and Name   Company   Account   (in Thousands)   (US$ in Thousands)   Ownership   (US$ in Thousands)   Note
   
Stocks
                                                   
   
TSMC Global
  Subsidiary  
Investment accounted for using equity method
    851     $ 28,423,113       100     $ 28,423,113          
   
TSMC International
  Subsidiary           987,968       27,017,212       100       27,017,212          
   
SSMC
  Equity method investee           382       5,611,199       32       5,611,199          
   
VIS
  Equity method investee           442,262       5,359,803       27       9,375,950          
   
TSMC Partners
  Subsidiary           300       4,397,781       100       4,397,781          
   
TSMC-North America
  Subsidiary           11,000       1,876,355       100       1,876,355          
   
GUC
  Investee over which the company had a controlling interest           42,315       468,150       44       483,620          
   
TSMC-Japan
  Subsidiary           6       97,810       100       97,810          
   
TSMC-Europe
  Subsidiary                 44,143       100       44,143          
   
TSMC-Korea
  Subsidiary           80       14,432       100       14,432          
   
United Industrial Gases Co., Ltd.
   
Financial assets carried at
cost
    16,783       193,584       10       289,359          
   
Shin-Etsu Handotai Taiwan Co., Ltd.
            10,500       105,000       7       210,602          
   
Hontung Venture Capital Co., Ltd.
            2,633       83,916       10       29,409          
   
W.K. Technology Fund IV
            4,000       40,000       2       48,880          
   
Capital
                                                   
   
TSMC-Shanghai
  Subsidiary  
Investment accounted for using equity method
          9,250,288       100       9,250,288          
   
Emerging Alliance
  Subsidiary                 908,370       100       908,370          
   
VentureTech Alliance Fund II
  Subsidiary                 717,136       98       716,139          
   
VentureTech Alliance Fund III
  Subsidiary                 224,580       98       222,250          
   
Chi Cheng
  Subsidiary                 115,347       36       573,911     Treasury stock of NT$458,564 thousand is deducted from the carrying value
   
Hsin Ruey
  Subsidiary                 114,548       36       574,059     Treasury stock of NT$459,511 thousand is deducted from the carrying value
   
Corporate bond
                                                   
   
Taiwan Power Company
   
Held-to-maturity financial assets
          4,384,931       N/A       4,389,191          
   
Formosa Petrochemical Corporation
                  3,089,119       N/A       3,078,749          
   
Nan Ya Plastics Corporation
                  2,975,056       N/A       2,982,460          
   
China Steel Corporation
                  1,600,753       N/A       1,600,583          
   
Chinese Petroleum Corporation
                  1,452,529       N/A       1,451,181          
   
Formosa Plastic Corporation
                  515,430       N/A       517,463          
   
Far Eastone Telecommunications Co. Ltd.
                  300,004       N/A       299,992          
   
Shanghai commercial & Saving Bank
                  284,950       N/A       284,894          
   
Formosa Chemicals &Fiber Corporation
                  67,241       N/A       68,313          
(Continued)

- 40 -


 

     
                                                                 
                            September 30, 2006        
                                        Market Value or    
Held Company       Relationship with the   Financial Statement   Shares/Units   Carrying Value   Percentage of   Net Asset Value    
Name   Marketable Securities Type and Name   Company   Account   (in Thousands)   (US$ in Thousands)   Ownership   (US$ in Thousands)   Note
       
Hua Nan Bank
        Available-for-sale financial assets         $ 1,539,139       N/A     $ 1,539,139          
       
Cathay United Bank
                      1,154,464       N/A       1,154,464          
       
Formosa Petrochemical Corporation
                      397,646       N/A       397,646          
       
Taiwan Power Company
                      299,185       N/A       299,185          
       
Abbott Labs
                    US$ 1,509       N/A     US$ 1,509          
       
Abbott Labs
                    US$ 2,556       N/A     US$ 2,556          
       
Allstate Life Global Fdg Secd
                    US$ 2,951       N/A     US$ 2,951          
       
American Gen Fin Corp. Mtn
                    US$ 3,442       N/A     US$ 3,442          
       
American Gen Fin Corp. Mtn
                    US$ 1,002       N/A     US$ 1,002          
       
American Honda Fin Corp. Mtn
                    US$ 3,092       N/A     US$ 3,092          
       
American Honda Fin Corp. Mtn
                    US$ 802       N/A     US$ 802          
       
Amgen Inc.
                    US$ 2,902       N/A     US$ 2,902          
       
Amsouth Bk Birmingham Ala
                    US$ 1,995       N/A     US$ 1,995          
       
Associates Corp. North Amer
                    US$ 2,550       N/A     US$ 2,550          
       
Beneficial Corp. Mtn Bk Entry
                    US$ 2,308       N/A     US$ 2,308          
       
Berkshire Hathaway Fin Corp.
                    US$ 1,480       N/A     US$ 1,480          
       
Cargill Inc.
                    US$ 3,385       N/A     US$ 3,385          
       
Chase Manhattan Corp. New
                    US$ 3,566       N/A     US$ 3,566          
       
Cit Group Hldgs Inc.
                    US$ 3,038       N/A     US$ 3,038          
       
Cogentrix Energy Inc.
                    US$ 3,786       N/A     US$ 3,786          
       
Colonial Pipeline Co.
                    US$ 1,502       N/A     US$ 1,502          
       
Consolidated Edison Inc.
                    US$ 2,904       N/A     US$ 2,904          
       
Dayton Hudson Corp.
                    US$ 2,030       N/A     US$ 2,030          
       
Dell Computer Corp.
                    US$ 2,834       N/A     US$ 2,834          
       
Diageo Plc
                    US$ 3,433       N/A     US$ 3,433          
       
Fifth Third Bk Cincinnati Oh
                    US$ 2,423       N/A     US$ 2,423          
       
First Data Corp.
                    US$ 2,891       N/A     US$ 2,891          
       
Fleet Boston Corp.
                    US$ 2,660       N/A     US$ 2,660          
       
Gannett Co. Inc.
                    US$ 2,937       N/A     US$ 2,937          
       
General Elec Cap Corp. Mtn
                    US$ 3,409       N/A     US$ 3,409          
       
General Elec Cap Corp. Mtn
                    US$ 3,888       N/A     US$ 3,888          
       
General Re Corp.
                    US$ 3,327       N/A     US$ 3,327          
       
Goldman Sachs Group Inc.
                    US$ 3,451       N/A     US$ 3,451          
       
Hancock John Global Fdg II Mtn
                    US$ 2,891       N/A     US$ 2,891          
       
Hancock John Global Fdg II Mtn
                    US$ 3,812       N/A     US$ 3,812          
       
Hbos Plc Medium Term Sr Nts
                    US$ 2,946       N/A     US$ 2,946          
       
Hershey Foods Corp.
                    US$ 1,510       N/A     US$ 1,510          
       
Honeywell Inc.
                    US$ 3,024       N/A     US$ 3,024          
       
Huntington Natl Bk Columbus Oh
                    US$ 2,996       N/A     US$ 2,996          
       
International Business Machs
                    US$ 2,212       N/A     US$ 2,212          
       
Intl Lease Fin Corp. Mtn
                    US$ 2,943       N/A     US$ 2,943          
       
J P Morgan Chase + Co.
                    US$ 3,313       N/A     US$ 3,313          
       
Keycorp Mtn Book Entry
                    US$ 3,013       N/A     US$ 3,013          
       
Metropolitan Life Global Mtn
                    US$ 3,355       N/A     US$ 3,355          
       
Monumental Global Fdg Ii
                    US$ 1,470       N/A     US$ 1,470          
       
Monumental Global Fdg Ii 2
                    US$ 3,391       N/A     US$ 3,391          
(Continued)

- 41 -


 

     
                                                                 
                            September 30, 2006        
                                        Market Value or    
Held Company       Relationship with the   Financial Statement   Shares/Units   Carrying Value   Percentage of   Net Asset Value    
Name   Marketable Securities Type and Name   Company   Account   (in Thousands)   (US$ in Thousands)   Ownership   (US$ in Thousands)   Note
       
National City Corp.
        Available-for-sale financial assets         US$ 3,398       N/A     US$ 3,398          
       
Nationwide Life Global Fdg I
                    US$ 3,517       N/A     US$ 3,517          
       
Nationwide Life Global Mtn
                    US$ 1,476       N/A     US$ 1,476          
       
Nucor Corp.
                    US$ 3,810       N/A     US$ 3,810          
       
Pepsico Inc. Mtn Book Entry
                    US$ 3,627       N/A     US$ 3,627          
       
Praxair Inc.
                    US$ 3,152       N/A     US$ 3,152          
       
Premark Intl Inc.
                    US$ 2,746       N/A     US$ 2,746          
       
Pricoa Global Fdg I Mtn
                    US$ 3,400       N/A     US$ 3,400          
       
Protective Life Secd Trs
                    US$ 2,908       N/A     US$ 2,908          
       
Prudential Ins Co. Amer
                    US$ 2,644       N/A     US$ 2,644          
       
Public Svc Elec Gas Co.
                    US$ 3,679       N/A     US$ 3,679          
       
Slm Corp. Medium Term Nts
                    US$ 2,934       N/A     US$ 2,934          
       
St Paul Cos Inc. Mtn Bk Ent
                    US$ 2,557       N/A     US$ 2,557          
       
Suntrust Bk Atlanta Ga Medium
                    US$ 3,444       N/A     US$ 3,444          
       
Tiaa Global Mkts Inc.
                    US$ 499       N/A     US$ 499          
       
Unitedhealth Group Inc.
                    US$ 2,999       N/A     US$ 2,999          
       
Us Bk Natl Assn Cincinnati Oh
                    US$ 2,716       N/A     US$ 2,716          
       
Virginia Elec + Pwr Co.
                    US$ 2,644       N/A     US$ 2,644          
       
Vodafone Group Plc New
                    US$ 2,506       N/A     US$ 2,506          
       
Washington Post Co.
                    US$ 3,006       N/A     US$ 3,006          
       
Wps Resources Corp.
                    US$ 1,054       N/A     US$ 1,054          
       
 
                                                       
       
Agency bond
                                                       
       
Fed Hm Ln Pc Pool E89857
        Available-for-sale financial assets         US$ 1,659       N/A     US$ 1,659          
       
Fed Hm Ln Pc Pool G11295
                    US$ 1,442       N/A     US$ 1,442          
       
Fed Hm Ln Pc Pool M80855
                    US$ 3,412       N/A     US$ 3,412          
       
Federal Home Ln Mtg Corp.
                    US$ 2,503       N/A     US$ 2,503          
       
Federal Home Ln Mtg Corp.
                    US$ 3,917       N/A     US$ 3,917          
       
Federal Home Ln Mtg Corp.
                    US$ 3,944       N/A     US$ 3,944          
       
Federal Home Ln Mtg Corp.
                    US$ 4,761       N/A     US$ 4,761          
       
Federal Home Ln Mtg Corp.
                    US$ 1,830       N/A     US$ 1,830          
       
Federal Home Ln Mtg Corp.
                    US$ 3,357       N/A     US$ 3,357          
       
Federal Home Ln Mtg Corp.
                    US$ 3,964       N/A     US$ 3,964          
       
Federal Home Ln Mtg Corp.
                    US$ 3,471       N/A     US$ 3,471          
       
Federal Home Ln Mtg Corp.
                    US$ 8,938       N/A     US$ 8,938          
       
Federal Home Ln Mtg Corp.
                    US$ 4,238       N/A     US$ 4,238          
       
Federal Home Ln Mtg Corp.
                    US$ 3,183       N/A     US$ 3,183          
       
Federal Home Ln Mtg Corp.
                    US$ 3,818       N/A     US$ 3,818          
       
Federal Home Ln Mtg Corp.
                    US$ 4,671       N/A     US$ 4,671          
       
Federal Home Ln Mtg Corp.
                    US$ 4,548       N/A     US$ 4,548          
       
Federal Home Ln Mtg Corp.
                    US$ 4,478       N/A     US$ 4,478          
       
Federal Home Loan Mtg
                    US$ 4,976       N/A     US$ 4,976          
       
Federal Natl Mtg Assn
                    US$ 3,015       N/A     US$ 3,015          
       
Federal Natl Mtg Assn
                    US$ 625       N/A     US$ 625          
       
Federal Natl Mtg Assn
                    US$ 2,001       N/A     US$ 2,001          
       
Federal Natl Mtg Assn Gtd
                    US$ 2,329       N/A     US$ 2,329          
(Continued)

- 42 -


 

     
                                                                         
                            September 30, 2006        
                                        Market Value or            
Held Company       Relationship with the   Financial Statement   Shares/Units   Carrying Value   Percentage of   Net Asset Value            
Name   Marketable Securities Type and Name   Company   Account   (in Thousands)   (US$ in Thousands)   Ownership   (US$ in Thousands)   Note        
       
Fnma Pool 254834
        Available-for-sale financial assets         US$ 1,483       N/A     US$ 1,483                  
       
Fnma Pool 685116
                    US$ 638       N/A     US$ 638                  
       
Fnma Pool 725095
                    US$ 1,260       N/A     US$ 1,260                  
       
Fnma Pool 730033
                    US$ 1,498       N/A     US$ 1,498                  
       
Fnma Pool 740934
                    US$ 1,532       N/A     US$ 1,532                  
       
Fnma Pool 790828
                    US$ 2,828       N/A     US$ 2,828                  
       
Fnma Pool 793932
                    US$ 668       N/A     US$ 668                  
       
Fnma Pool 794040
                    US$ 837       N/A     US$ 837                  
       
Federal Home Ln Bks
                    US$ 8,731       N/A     US$ 8,731                  
       
Federal Home Ln Bks
                    US$ 4,848       N/A     US$ 4,848                  
       
Federal Home Ln Bks
                    US$ 4,881       N/A     US$ 4,881                  
       
Federal Home Ln Bks
                    US$ 2,984       N/A     US$ 2,984                  
       
Federal Home Ln Bks
                    US$ 5,890       N/A     US$ 5,890                  
       
Federal Home Ln Bks
                    US$ 2,392       N/A     US$ 2,392                  
       
Federal Home Ln Mtg Corp.
                    US$ 3,473       N/A     US$ 3,473                  
       
Federal Natl Mtg Assn
                    US$ 4,356       N/A     US$ 4,356                  
       
Federal Natl Mtg Assn Medium
                    US$ 3,406       N/A     US$ 3,406                  
       
Federal Natl Mtg Assn Mtn
                    US$ 2,908       N/A     US$ 2,908                  
       
Federal Natl Mtg Assn Mtn
                    US$ 2,895       N/A     US$ 2,895                  
       
Tennessee Valley Auth
                    US$ 6,036       N/A     US$ 6,036                  
       
Corporate issued asset-backed securities
                                                               
       
Americredit Automobile Rec Tr
        Available-for-sale financial assets         US$ 560       N/A     US$ 560                  
       
Atlantic City Elc Trns Fdgllc
                    US$ 495       N/A     US$ 495                  
       
Banc Amer Mtg Secs Inc.
                    US$ 630       N/A     US$ 630                  
       
Bank Of Amer Lease Equip Tr
                    US$ 1,486       N/A     US$ 1,486                  
       
Capital One Multi Asset Execut
                    US$ 4,877       N/A     US$ 4,877                  
       
Caterpillar Finl Asset Tr
                    US$ 2,114       N/A     US$ 2,114                  
       
Caterpillar Finl Asset Tr
                    US$ 4,904       N/A     US$ 4,904                  
       
Cendant Rent Car Fdg Aesop LLC
                    US$ 3,926       N/A     US$ 3,926                  
       
Cit Equip Coll Tr
                    US$ 2,550       N/A     US$ 2,550                  
       
Cit Equip Coll Tr
                    US$ 3,996       N/A     US$ 3,996                  
       
Citicorp Mtg Secs
                    US$ 625       N/A     US$ 625                  
       
Credit Suisse First Boston Mtg
                    US$ 4,816       N/A     US$ 4,816                  
       
Cwmbs Inc.
                    US$ 979       N/A     US$ 979                  
       
Daimlerchrysler Auto Tr
                    US$ 2,225       N/A     US$ 2,225                  
       
Deere John Owner Tr
                    US$ 2,454       N/A     US$ 2,454                  
       
Federal Natl Mtg Assn
                    US$ 4,701       N/A     US$ 4,701                  
       
Fifth Third Auto Tr
                    US$ 709       N/A     US$ 709                  
       
Ford Cr Auto Owner Tr
                    US$ 1,886       N/A     US$ 1,886                  
       
Granite Mtgs Plc
                    US$ 1,455       N/A     US$ 1,455                  
       
Gs Auto Ln Tr
                    US$ 222       N/A     US$ 222                  
       
Harley Davidson Motorcycle Tr
                    US$ 432       N/A     US$ 432                  
       
Holmes Fing No 8 Plc
                    US$ 5,001       N/A     US$ 5,001                  
       
Hyundai Auto Receivables Tr
                    US$ 3,427       N/A     US$ 3,427                  
       
Hyundai Auto Receivables Tr
                    US$ 3,209       N/A     US$ 3,209                  
(Continued)

- 43 -


 

     
                                                 
                September 30, 2006    
                                        Market Value or    
Held Company       Relationship with the   Financial Statement   Shares/Units   Carrying Value   Percentage of   Net Asset Value    
Name   Marketable Securities Type and Name   Company   Account   (in Thousands)   (US$ in Thousands)   Ownership   (US$ in Thousands)   Note
 
  Long Beach Accep Auto Receivab     Available-for-sale financial assets         US$ 1,341       N/A     US$ 1,341      
 
  Mbna Master Cr Card Tr Ii             US$ 7,664       N/A     US$ 7,664      
 
  National City Auto Receivables             US$ 233       N/A     US$ 233      
 
  Residential Asset Sec Mtg Pass             US$ 2,641       N/A     US$ 2,641      
 
  Residential Asset Sec Mtg Pass             US$ 3,231       N/A     US$ 3,231      
 
  Residential Fdg Mtg Secs I Inc.             US$ 2,138       N/A     US$ 2,138      
 
  Residential Fdg Mtg Secs I Inc.             US$ 4,252       N/A     US$ 4,252      
 
  Wachovia Auto Owner Tr             US$ 1,786       N/A     US$ 1,786      
 
  Washington Mut Mtg Secs Corp.             US$ 3,323       N/A     US$ 3,323      
 
  Wells Fargo Finl Auto Owner Tr             US$ 4,934       N/A     US$ 4,934      
 
  Wfs Financial Owner Trust             US$ 2,184       N/A     US$ 2,184      
 
  Wfs Finl             US$ 759       N/A     US$ 759      
 
  Whole Auto Ln Tr             US$ 2,710       N/A     US$ 2,710      
 
  Whole Auto Ln Tr             US$ 2,944       N/A     US$ 2,944      
 
  Fund                                            
 
  Horizon Ventures Fund I, L.P.     Financial assets carried at cost     N/A     $ 280,179       N/A     $ 280,179      
 
  Crimson Asia Capital Ltd., L.P.         N/A       66,732       N/A       66,732      
Chi Cherng
  Stocks                                            
 
  TSMC   Parent company   Available-for-sale financial assets     16,947       1,011,752             1,011,752      
 
  VIS   Equity method investee   Investment accounted for using equity method     5,032       102,757             106,680      
Hsin Ruey
  Stocks                                            
 
  TSMC   Parent company   Available-for-sale
financial assets
    16,979       1,013,648             1,013,648      
 
  VIS   Equity method investee   Investment
accounted for using
equity method
    3,711       80,655             78,670      
TSMC International
  Stocks                                            
 
  TSMC Development   Subsidiary   Investment accounted for using equity method     1     US$ 649,102       100     US$ 649,102      
 
  TSMC Technology   Subsidiary       1     US$ 5,691       100     US$ 5,691      
 
  InveStar   Subsidiary       14,476     US$ 40,692       97     US$ 40,692      
 
  InveStar II   Subsidiary       51,300     US$ 44,956       97     US$ 44,956      
TSMC-Development
  WaferTech stock   Subsidiary   Investment
accounted for using
equity method
        US$ 355,450       99     US$ 355,450      
Partners
  Common stocks                                            
 
  VisEra Holding Company   Equity method investee   Investment
accounted for using
equity method
    18,931     US$ 25,649       48     US$ 25,649      
(Continued)

- 44 -


 

     
                                                 
                September 30, 2006    
                                        Market Value or    
Held Company       Relationship with the   Financial Statement   Shares/Units   Carrying Value   Percentage of   Net Asset Value    
Name   Marketable Securities Type and Name   Company   Account   (in Thousands)   (US$ in Thousands)   Ownership   (US$ in Thousands)   Note
Emerging Alliance
  Common stocks                                            
 
  NetLogic Microsystems, Inc.     Financial assets at fair value through profit or loss     84     US$ 2,138           US$ 2,138      
 
  Pixim, Inc.     Financial assets carried at cost     1,924     US$ 512       4     US$ 512      
 
  RichWave Technology Corp.         4,247     US$ 1,648       13     US$ 1,648      
 
  Global Investment Holding, Inc.         10,800     $ 100,000       6     $ 100,000      
 
 
  Preferred stock                                            
 
  Ikanos Communication, Inc.     Available-for-sale financial assets     515     US$ 6,058       2     US$ 6,058      
 
  Audience, Inc.     Financial assets carried at cost     1,654     US$ 250       1     US$ 250      
 
  Axiom Microdevices, Inc.         1,000     US$ 1,000       3     US$ 1,000      
 
  Britestream Networks, Inc.         2,444     US$ 1,172       2     US$ 1,172      
 
  Centrality Communications, Inc.         1,325     US$ 1,800       3     US$ 1,800      
 
  Miradia, Inc.         3,040     US$ 1,000       3     US$ 1,000      
 
  Mobilygen Corporation         1,415     US$ 750       1     US$ 750      
 
  Mosaic Systems, Inc.         2,481     US$ 12       6     US$ 12      
 
  Next IO, Inc.         800     US$ 500       2     US$ 500      
 
  NuCORE Technology Inc.         2,254     US$ 1,455       2     US$ 1,455      
 
  Optichron, Inc.         714     US$ 1,000       4     US$ 1,000      
 
  Optimal Corporation         583     US$ 600       4     US$ 600      
 
  Pixim, Inc.         2,193     US$ 583           US$ 583      
 
  Quicksilver Technology, Inc.         1,049     US$       4     US$      
 
  Reflectivity, Inc.         4,848     US$ 531       4     US$ 531      
 
  Teknovus, Inc.         6,977     US$ 1,327       3     US$ 1,327      
 
  Zenesis Technologies, Inc.         2,410     US$ 1,399       5     US$ 1,399      
 
 
  Warrants                                            
 
  Pixim, Inc.     Financial assets carried at cost     242             N/A            
 
VTAF II
  Common stock                                            
 
  Beceem Communication     Financial assets carried at cost     650     US$ 1,600       1     US$ 1,600      
 
  Yobon Technologies, Inc.         1,675     US$ 787       13     US$ 787      
 
  Sentelic, Corp.         1,200     US$ 2,040       15     US$ 2,040      
 
 
  Preferred stock                                            
 
  5V Technologies, Inc.     Financial assets carried at cost     2,357     US$ 1,768       11     US$ 1,768      
 
  Ageia Technologies, Inc.         2,030     US$ 2,074       2     US$ 2,074      
 
  Aquantia Corporation         1,264     US$ 1,150       5     US$ 1,150      
 
  Audience, Inc.         2,208     US$ 474       1     US$ 474      
 
  Axiom Microdevices, Inc.         761     US$ 776       2     US$ 776      
 
  GemFire Corporation         600     US$ 68       1     US$ 68      
(Continued)

- 45 -


 

     
                                                 
                September 30, 2006    
                                        Market Value or    
Held Company       Relationship with the   Financial Statement   Shares/Units   Carrying Value   Percentage of   Net Asset Value    
Name   Marketable Securities Type and Name   Company   Account   (in Thousands)   (US$ in Thousands)   Ownership   (US$ in Thousands)   Note
 
  Impinj, Inc.     Financial assets carried at cost     257     US$ 500           US$ 500      
 
  Leadtrend Technology, Inc.         1,150     US$ 660       6     US$ 660      
 
  Miradia, Inc.         2,740     US$ 2,424       3     US$ 2,424      
 
  Next IO, Inc.         216     US$ 182           US$ 182      
 
  Optichron, Inc.         353     US$ 869       2     US$ 869      
 
  Power Analog Microelectronics         2,000     US$ 1,500       13     US$ 1,500      
 
  Powerprecise Solutions, Inc.         1,445     US$ 1,400       11     US$ 1,400      
 
  RichWave Technology Corp.         500     US$ 231       2     US$ 231      
 
  Teknorus, Inc.         518     US$ 119           US$ 119      
 
  Tzero Technologies, Inc.         730     US$ 1,500       2     US$ 1,500      
 
  Xceive Corporation         714     US$ 1,000       2     US$ 1,000      
 
VTAF III
  Common stock                                            
 
  M2000, Inc.     Financial assets carried at cost     1,500     US$ 1,500       4     US$ 1,500      
 
  Mutua-Pac Ltd.         170     US$ 52       13     US$ 52      
 
  Quellan, Inc.         2,231     US$ 2,500       7     US$ 2,500      
 
  SynDiTec, Inc.         4,332     US$ 720       7     US$ 720      
 
  Validity Sensors, Inc.         5,333     US$ 2,000       7     US$ 2,000      
 
Investar
  Common stock                                            
 
  Monolithic Power Systems, Inc.     Financial assets at fair value through profit or loss     1,975     US$ 18,681       7     US$ 18,681      
 
  Broadtek Electronics Corp.         29     US$ 9           US$ 9      
 
  Global Testing Corp.         17,661     US$ 2,561       8     US$ 2,561      
 
  Broadtek Electronics Corp.     Available-for-sale
financial assets
    116     US$ 35           US$ 35      
 
  Capella Microsystems (Taiwan), Inc.     Financial assets carried at cost     530     US$ 154       3     US$ 154      
 
 
  Preferred stock                                            
 
  Integrated Memory Logic, Inc.     Financial assets carried at cost     1,831     US$ 1,221       9     US$ 1,221      
 
  IP Unity, Inc.         1,008     US$ 494       1     US$ 494      
 
  Memsic, Inc.         2,724     US$ 1,500       10     US$ 1,500      
 
  NanoAmp Solutions, Inc.         541     US$ 853       2     US$ 853      
 
  Sonics, Inc.         1,843     US$ 3,530       3     US$ 3,530      
 
Investar II
  Common stock                                            
 
  Monolithic Power Systems, Inc.     Financial assets at fair value through profit or loss     864     US$ 8,178       3     US$ 8,178      
 
  RichTek Technology Corp.         341     US$ 2,725           US$ 2,725      
 
  GeoVision, Inc.         46     US$ 171       1     US$ 171      
 
  RichTek Technology Corp.     Available-for-sale financial assets     227     US$ 1,816           US$ 1,816      
 
  GeoVision, Inc.         15     US$ 55           US$ 55      
(Continued)

- 46 -


 

     
                                                     
                September 30, 2006    
                                        Market Value or    
Held Company       Relationship with the   Financial Statement   Shares/Units   Carrying Value   Percentage of   Net Asset Value    
Name   Marketable Securities Type and Name   Company   Account   (in Thousands)   (US$ in Thousands)   Ownership   (US$ in Thousands)   Note
    Ralink Technology (Taiwan), Inc.    
Financial assets carried at cost
    1,833     US$ 791       3     US$ 791          
    Capella Microsystems (Taiwan), Inc.         419     US$ 122       2     US$ 122          
    Auden Technology MFG. Co., Ltd.         953     US$ 223       4     US$ 223          
    eChannelOpen Holding, Inc.         358     US$ 251       4     US$ 251          
    EoNEX Technologies, Inc.         55     US$ 3,048       5     US$ 3,048          
    Epic Communications, Inc.         191     US$ 37       1     US$ 37          
    EON Technology, Corp.         4,247     US$ 1,175       7     US$ 1,175          
    Goyatek Technology, Corp.         2,088     US$ 545       7     US$ 545          
    Conwise Technology Corporation, Ltd.         700     US$ 107       9     US$ 107          
    Trendchip Technologies Corp.         2,000     US$ 574       5     US$ 574          
           
 
                                       
    Preferred stock  
 
                                           
    eLCOS Microdisplay Technology, Ltd.    
Financial assets carried at cost
    2,937     US$ 3,527       9     US$ 3,527          
    Alchip Technologies Limited         3,531     US$ 2,950       15     US$ 2,950          
    FangTek, Inc.         6,931     US$ 3,250       20     US$ 3,250          
    Kilopass Technologies, Inc.         3,887     US$ 2,000       6     US$ 2,000          
    Memsic, Inc.         2,289     US$ 1,560       8     US$ 1,560          
    NanoAmp Solutions, Inc.         375     US$ 1,500       1     US$ 1,500          
    Sonics, Inc.         4,335     US$ 3,082       4     US$ 3,082          
           
 
                                       
GUC   Bond funds  
 
                                           
    Dresdner Bond DAM Fund    
Financial assets at fair value through profit or loss
    2,601     $     30,032       N/A     $     30,032          
    ABN AMRO Select Bond Fund         1,773       20,031       N/A       20,031          
    ABN AMRO Bond Fund         952       15,019       N/A       15,019          
    ABN AMRO Income         668       10,036       N/A       10,036          
           
 
                                       
    Stock  
 
                                           
    Global Unichip Corporation - North America   Subsidiary  
Investments accounted for using equity method
    100       5,964       100       5,964          
    Global Unichip Japan   Subsidiary             2,625       100       2,625          
           
 
                                       
TSMC
Global
  Government bonds  
 
                                           
    United States Treas Nts    
Available-for-sale financial assets
        US$ 118,175       N/A     US$ 118,175          
           
 
                                       
    Corporate bonds  
 
                                           
    Ace Ltd.    
Available-for-sale financial assets
        US$ 1,002       N/A     US$ 1,002          
    Aig Sunamerica Global Fing Ix             US$ 999       N/A     US$ 999          
    American Express Co.             US$ 3,446       N/A     US$ 3,446          
    American Gen Fin Corp.             US$ 1,630       N/A     US$ 1,630          
    American Gen Fin Corp. Mtn             US$ 1,967       N/A     US$ 1,967          
    Ameritech Capital Funding Co.             US$ 485       N/A     US$ 485          
    Anz Cap Tr I             US$ 969       N/A     US$ 969          
(Continued)

- 47 -


 

     
                                                     
                September 30, 2006    
                                        Market Value or    
Held Company       Relationship with the   Financial Statement   Shares/Units   Carrying Value   Percentage of   Net Asset Value    
Name   Marketable Securities Type and Name   Company   Account   (in Thousands)   (US$ in Thousands)   Ownership   (US$ in Thousands)   Note
    Axa Finl Inc.    
Available-for-sale financial assets
        US$ 2,169       N/A     US$ 2,169          
    Bank New York Inc.             US$ 1,484       N/A     US$ 1,484          
    Bank One Corp.             US$ 3,352       N/A     US$ 3,352          
    Bank One Corp.             US$ 2,061       N/A     US$ 2,061          
    Bank Utd Houston Tx Mtbn             US$ 532       N/A     US$ 532          
    Bear Stearns Cos Inc.             US$ 3,365       N/A     US$ 3,365          
    Chase Manhattan Corp. New             US$ 1,528       N/A     US$ 1,528          
    Chase Manhattan Corp. New             US$ 2,124       N/A     US$ 2,124          
    Chubb Corp.             US$ 2,115       N/A     US$ 2,115          
    Citicorp             US$ 1,379       N/A     US$ 1,379          
    Corestates Cap Corp.             US$ 1,002       N/A     US$ 1,002          
    Counrywide Finl Corp.             US$ 5,004       N/A     US$ 5,004          
    Countrywide Fdg Corp. Mtn             US$ 2,041       N/A     US$ 2,041          
    Credit Suisse Fincl Products             US$ 1,504       N/A     US$ 1,504          
    Credit Suisse First Boston             US$ 737       N/A     US$ 737          
    Credit Suisse First Boston USA             US$ 2,177       N/A     US$ 2,177          
    Daimlerchrysler North Amer             US$ 975       N/A     US$ 975          
    Daimlerchrysler North Amer Hld             US$ 751       N/A     US$ 751          
    Deere John Cap Corp.             US$ 4,921       N/A     US$ 4,921          
    Den Danske Bk Aktieselskab             US$ 2,029       N/A     US$ 2,029          
    Emerson Elec Co.             US$ 3,221       N/A     US$ 3,221          
    European Invt Bk             US$ 3,947       N/A     US$ 3,947          
    European Invt Bk             US$ 6,067       N/A     US$ 6,067          
    Federal Home Ln Bks             US$ 7,937       N/A     US$ 7,937          
    Fleet Finl Group Inc New             US$ 909       N/A     US$ 909          
    Fpl Group Cap Inc.             US$ 847       N/A     US$ 847          
    General Elec Cap Corp. Mtn             US$ 8,753       N/A     US$ 8,753          
    Goldman Sachs Group Inc.             US$ 4,982       N/A     US$ 4,982          
    Greenpoint Finl Corp.             US$ 966       N/A     US$ 966          
    Hancock John Global Fdg II Mtn             US$ 817       N/A     US$ 817          
    Hancock John Global Fdg Mtn             US$ 974       N/A     US$ 974          
    Hartford Finl Svcs Group Inc.             US$ 5,053       N/A     US$ 5,053          
    Hartford Finl Svcs Group Inc.             US$ 1,351       N/A     US$ 1,351          
    Hbos Plc Medium Term Sr Nts             US$ 3,194       N/A     US$ 3,194          
    Heller Finl Inc.             US$ 1,944       N/A     US$ 1,944          
    Household Fin Corp.             US$ 2,902       N/A     US$ 2,902          
    Household Fin Corp.             US$ 503       N/A     US$ 503          
    Household Intl Inc.             US$ 2,859       N/A     US$ 2,859          
    Hsbc Fin Corp. Mtn             US$ 5,091       N/A     US$ 5,091          
    Hsbc Usa Inc. New             US$ 1,072       N/A     US$ 1,072          
    Huntington National Bank             US$ 1,904       N/A     US$ 1,904          
    Ing Sec Life Instl Fdg             US$ 2,489       N/A     US$ 2,489          
    Intl Lease Fin Corp. Mtn             US$ 4,140       N/A     US$ 4,140          
    Intl Lease Fin Corp. Mtn             US$ 2,972       N/A     US$ 2,972          
    Jackson Natl Life Global Fdg             US$ 1,000       N/A     US$ 1,000          
    Key Bk Na Med Term Nts Bk Entr             US$ 4,400       N/A     US$ 4,400          
(Continued)

- 48 -


 

     
                                                     
                September 30, 2006    
                                      Market Value or    
Held Company       Relationship with the   Financial Statement   Shares/Units   Carrying Value   Percentage of   Net Asset Value    
Name   Marketable Securities Type and Name   Company   Account   (in Thousands)   (US$ in Thousands)   Ownership   (US$ in Thousands)   Note
    Kraft Foods Inc.    
Available-for-sale financial assets
        US$ 750       N/A     US$ 750          
    Kraft Foods Inc.             US$ 1,000       N/A     US$ 1,000          
    Lehman Brothers Hldgs Inc.             US$ 1,625       N/A     US$ 1,625          
    Lehman Brothers Hldgs Inc.             US$ 487       N/A     US$ 487          
    Lehman Brothers Hldgs Inc.             US$ 988       N/A     US$ 988          
    Lehman Brothers Hldgs Inc.             US$ 1,083       N/A     US$ 1,083          
    Lincoln Natl Corp. In             US$ 500       N/A     US$ 500          
    Merita Bk Ltd. Ny Brh             US$ 503       N/A     US$ 503          
    Merrill Lynch + Co. Inc.             US$ 3,441       N/A     US$ 3,441          
    Merrill Lynch + Co. Inc.             US$ 1,982       N/A     US$ 1,982          
    Merrill Lynch + Co. Inc.             US$ 4,872       N/A     US$ 4,872          
    Mgic Invt Corp.             US$ 1,204       N/A     US$ 1,204          
    Monumental Global Fdg II 2002a             US$ 1,000       N/A     US$ 1,000          
    Monunmetal Global Fdg II             US$ 1,965       N/A     US$ 1,965          
    Morgan Stanley             US$ 1,925       N/A     US$ 1,925          
    Morgan Stanley             US$ 2,128       N/A     US$ 2,128          
    National Westminster Bk Plc             US$ 1,329       N/A     US$ 1,329          
    Nationwide Bldg Soc             US$ 3,512       N/A     US$ 3,512          
    Oracle Corp./Ozark Hldg Inc.             US$ 1,976       N/A     US$ 1,976          
    Pnc Fdg Corp.             US$ 1,011       N/A     US$ 1,011          
    Popular North Amer Inc.             US$ 2,915       N/A     US$ 2,915          
    Principal Finl Group Australia             US$ 1,020       N/A     US$ 1,020          
    Regions Finl Corp. New             US$ 2,372       N/A     US$ 2,372          
    Safeco Corp.             US$ 717       N/A     US$ 717          
    Sbc Communications Inc.             US$ 1,039       N/A     US$ 1,039          
    Sbc Communications Inc.             US$ 696       N/A     US$ 696          
    Scotland Intl Fin B V 144a             US$ 1,405       N/A     US$ 1,405          
    Simon Ppty Group Lp             US$ 1,011       N/A     US$ 1,011          
    Slm Corp. Medium Term Nts             US$ 6,045       N/A     US$ 6,045          
    Sp Powerassests Ltd. Global             US$ 968       N/A     US$ 968          
    Swedbank Sparbanken Svenge Ab             US$ 1,001       N/A     US$ 1,001          
    Washington Mut Inc.             US$ 1,692       N/A     US$ 1,692          
    Washington Mut Inc.             US$ 4,505       N/A     US$ 4,505          
    Wells Fargo + Co. New             US$ 2,943       N/A     US$ 2,943          
    Wells Fargo + Co. New Med Trm             US$ 4,308       N/A     US$ 4,308          
    Westfield Cap Corp. Ltd.             US$ 2,007       N/A     US$ 2,007          
           
 
                                       
    Agency bond  
 
                                           
    Fed Hm Ln Pc Pool 1h2520    
Available-for-sale financial assets
        US$ 3,238       N/A     US$ 3,238          
    Fed Hm Ln Pc Pool 1h2524             US$ 2,449       N/A     US$ 2,449          
    Fed Hm Ln Pc Pool 781959             US$ 6,405       N/A     US$ 6,405          
    Federal Home Ln Mtg             US$ 3,242       N/A     US$ 3,242          
    Federal Home Ln Mtg Corp.             US$ 3,868       N/A     US$ 3,868          
    Federal Home Ln Mtg Corp.             US$ 1,405       N/A     US$ 1,405          
    Federal Home Ln Mtg Corp.             US$ 3,826       N/A     US$ 3,826          
    Federal Home Ln Mtg Corp.             US$ 3,192       N/A     US$ 3,192          
(Continued)

- 49 -


 

     
                                                     
                    September 30, 2006    
                                        Market Value or    
Held Company       Relationship with the   Financial Statement   Shares/Units   Carrying Value   Percentage of   Net Asset Value    
Name   Marketable Securities Type and Name   Company   Account   (in Thousands)   (US$ in Thousands)   Ownership   (US$ in Thousands)   Note
 
  Federal Natl Mtg Assn         Available-for-sale financial assets         US$ 3,431     N/A   US$ 3,431          
 
  Federal Natl Mtg Assn                 US$ 2,870     N/A   US$ 2,870          
 
  Federal Natl Mtg Assn                 US$ 848     N/A   US$ 848          
 
  Federal Natl Mtg Assn Gtd                 US$ 2,580     N/A   US$ 2,580          
 
  Fnma Pool 254507                 US$ 1,760     N/A   US$ 1,760          
 
  Fnma Pool 255883                 US$ 3,546     N/A   US$ 3,546          
 
  Fnma Pool 687863                 US$ 3,007     N/A   US$ 3,007          
 
  Fnma Pool 696485                 US$ 3,358     N/A   US$ 3,358          
 
  Fnma Pool 793025                 US$ 2,555     N/A   US$ 2,555          
 
  Fnma Pool 795548                 US$ 492     N/A   US$ 492          
 
  Fnma Pool 806642                 US$ 1,293     N/A   US$ 1,293          
 
  Fnma Pool 813641                 US$ 3,937     N/A   US$ 3,937          
 
  Fnma Pool 815626                 US$ 3,097     N/A   US$ 3,097          
 
  Fnma Pool 816594                 US$ 2,206     N/A   US$ 2,206          
 
  Fnma Pool 825395                 US$ 2,857     N/A   US$ 2,857          
 
  Fnma Pool 825398                 US$ 4,311     N/A   US$ 4,311          
 
  Fnma Pool 841069                 US$ 3,053     N/A   US$ 3,053          
 
  Fnma Pool 879906                 US$ 1,713     N/A   US$ 1,713          
 
  Gnma Ii Pool 081150                 US$ 656     N/A   US$ 656          
 
  Gnma Ii Pool 081153                 US$ 2,289     N/A   US$ 2,289          
 
  Federal Home Ln Bank                 US$ 3,961     N/A   US$ 3,961          
 
  Federal Home Ln Bks                 US$ 4,953     N/A   US$ 4,953          
 
  Federal Home Ln Bks                 US$ 8,741     N/A   US$ 8,741          
 
  Federal Home Ln Bks                 US$ 4,898     N/A   US$ 4,898          
 
  Federal Home Ln Bks                 US$ 5,847     N/A   US$ 5,847          
 
  Federal Home Ln Bks                 US$ 7,960     N/A   US$ 7,960          
 
  Federal Home Ln Bks                 US$ 6,072     N/A   US$ 6,072          
 
  Federal Home Ln Bks                 US$ 12,258     N/A   US$ 12,258          
 
  Federal Home Ln Bks                 US$ 6,899     N/A   US$ 6,899          
 
  Federal Home Ln Bks                 US$ 7,520     N/A   US$ 7,520          
 
  Federal Home Ln Mtg Corp.                 US$ 9,833     N/A   US$ 9,833          
 
  Federal Home Ln Mtg Corp.                 US$ 5,948     N/A   US$ 5,948          
 
  Federal Home Ln Mtg Corp.                 US$ 6,435     N/A   US$ 6,435          
 
  Federal Home Ln Mtg Corp.                 US$ 14,312     N/A   US$ 14,312          
 
  Federal Home Ln Mtg Corp.                 US$ 9,985     N/A   US$ 9,985          
 
  Federal Home Ln Mtg Corp. Mtn                 US$ 4,937     N/A   US$ 4,937          
 
  Federal Home Loan Mtg Assn                 US$ 4,929     N/A   US$ 4,929          
 
  Federal Home Loan Mtg Corp.                 US$ 4,950     N/A   US$ 4,950          
 
  Federal Natl Mtg Assn                 US$ 5,895     N/A   US$ 5,895          
 
  Federal Natl Mtg Assn                 US$ 7,857     N/A   US$ 7,857          
 
  Federal Natl Mtg Assn                 US$ 19,743     N/A   US$ 19,743          
 
  Federal Natl Mtg Assn                 US$ 14,975     N/A   US$ 14,975          
 
  Federal Natl Mtg Assn                 US$ 10,466     N/A   US$ 10,466          
 
  Federal Natl Mtg Assn                 US$ 6,519     N/A   US$ 6,519          
 
  Federal Natl Mtg Assn                 US$ 7,998     N/A   US$ 7,998          
 
  Federal Natl Mtg Assn Mtn                 US$ 5,304     N/A   US$ 5,304          
 
  Federal Natl Mtg Assn Mtn                 US$ 5,561     N/A   US$ 5,561          
 
  Freddie Mac                 US$ 4,440     N/A   US$ 4,440          
(Continued)

- 50 -


 

     
                                                     
                    September 30, 2006    
                                        Market Value or    
Held Company       Relationship with the   Financial Statement   Shares/Units   Carrying Value   Percentage of   Net Asset Value    
Name   Marketable Securities Type and Name   Company   Account   (in Thousands)   (US$ in Thousands)   Ownership   (US$ in Thousands)   Note
 
  Corporate issued asset-backed securities                                                
 
  American Home Mtg Invt Tr         Available-for-sale financial assets         US$ 199     N/A   US$ 199          
 
  Americredit Auto Rec Tr                 US$ 1,007     N/A   US$ 1,007          
 
  Americredit Automobile Rec Tr                 US$ 1,992     N/A   US$ 1,992          
 
  Americredit Automobile Rec Tr                 US$ 2,602     N/A   US$ 2,602          
 
  Americredit Automobile Rec Tr                 US$ 3,274     N/A   US$ 3,274          
 
  Americredit Automobile Receiva                 US$ 4,967     N/A   US$ 4,967          
 
  Americredit Automobile Receivb                 US$ 3,430     N/A   US$ 3,430          
 
  Banc Amer Coml Mtg Inc.                 US$ 3,120     N/A   US$ 3,120          
 
  Bear Stearns Alt A Tr                 US$ 702     N/A   US$ 702          
 
  Bear Stearns Arm Tr                 US$ 1,951     N/A   US$ 1,951          
 
  Bear Stearns Arm Tr                 US$ 3,569     N/A   US$ 3,569          
 
  Bear Stearns Coml Mtg Secs Inc.                 US$ 6,360     N/A   US$ 6,360          
 
  Capital Auto Receivables Asset                 US$ 3,252     N/A   US$ 3,252          
 
  Capital One Auto Fin Tr                 US$ 2,619     N/A   US$ 2,619          
 
  Capital One Auto Fin Tr                 US$ 2,985     N/A   US$ 2,985          
 
  Capital One Auto Fin Tr                 US$ 5,010     N/A   US$ 5,010          
 
  Capital One Multi Asset Execut                 US$ 3,939     N/A   US$ 3,939          
 
  Capital One Multi Asset Execut                 US$ 2,968     N/A   US$ 2,968          
 
  Capitial One Prime Auto Receiv                 US$ 2,780     N/A   US$ 2,780          
 
  Caterpillar Finl Asset Tr                 US$ 3,237     N/A   US$ 3,237          
 
  Cbass Tr                 US$ 4,270     N/A   US$ 4,270          
 
  Cendant Rent Car Fdg Aesop Llc                 US$ 5,349     N/A   US$ 5,349          
 
  Citibank Cr Card Issuance Tr                 US$ 9,820     N/A   US$ 9,820          
 
  Cnh Equip Tr                 US$ 2,810     N/A   US$ 2,810          
 
  Credit Suisse First Boston Mtg                 US$ 3,746     N/A   US$ 3,746          
 
  Credit Suisse First Boston Mtg                 US$ 3,582     N/A   US$ 3,582          
 
  Credit Suisse First Boston Mtg                 US$ 572     N/A   US$ 572          
 
  Cwabs Inc.                 US$ 292     N/A   US$ 292          
 
  Cwabs Inc.                 US$ 605     N/A   US$ 605          
 
  Drive Auto Receivables Tr                 US$ 3,192     N/A   US$ 3,192          
 
  First Horizon Abs Tr                 US$ 602     N/A   US$ 602          
 
  First Union Lehman Bros Mtg Tr                 US$ 1,953     N/A   US$ 1,953          
 
  Ford Credit Auto Owner Trust                 US$ 4,338     N/A   US$ 4,338          
 
  Ge Cap Cr Card Master Nt Tr                 US$ 2,855     N/A   US$ 2,855          
 
  Gs Mtg Secs Corp.                 US$ 4,149     N/A   US$ 4,149          
 
  Gsamp Tr                 US$ 4,263     N/A   US$ 4,263          
 
  Harley Davidson Motorcycle Tr                 US$ 5,832     N/A   US$ 5,832          
 
  Hertz Veh Fing Llc                 US$ 5,322     N/A   US$ 5,322          
 
  Home Equity Mtg Tr 2006 4                 US$ 4,233     N/A   US$ 4,233          
 
  Hsbc Automotive Tr                 US$ 2,982     N/A   US$ 2,982          
 
  Hyundai Auto Receivables Tr                 US$ 2,938     N/A   US$ 2,938          
 
  Hyundai Auto Receivables Tr                 US$ 3,933     N/A   US$ 3,933          
 
  Impac Cmb Tr                 US$ 436     N/A   US$ 436          
 
  Impac Cmb Tr                 US$ 299     N/A   US$ 299          
(Continued)

- 51 -


 

     
                                                     
                    September 30, 2006    
                                        Market Value or    
Held Company       Relationship with the   Financial Statement   Shares/Units   Carrying Value   Percentage of   Net Asset Value    
Name   Marketable Securities Type and Name   Company   Account   (in Thousands)   (US$ in Thousands)   Ownership   (US$ in Thousands)   Note
 
  Lb Ubs Coml Mtg Tr         Available-for-sale financial assets         US$ 3,585     N/A   US$ 3,585          
 
  Long Beach Mtg Ln Tr                 US$ 3,204     N/A   US$ 3,204          
 
  Massachusetts Rrb Spl Purp Tr                 US$ 3,405     N/A   US$ 3,405          
 
  Merrill Lynch Mtg Invs Inc.                 US$ 6,289     N/A   US$ 6,289          
 
  Navistar Finl 2003 A Owner Tr                 US$ 3,585     N/A   US$ 3,585          
 
  Nissan Auto Receivables                 US$ 707     N/A   US$ 707          
 
  Nomura Asset Accep Corp.                 US$ 4,160     N/A   US$ 4,160          
 
  Onyx Accep Owner Tr                 US$ 4,541     N/A   US$ 4,541          
 
  Pg+E Energy Recovery Fdg Llc                 US$ 4,406     N/A   US$ 4,406          
 
  Providian Gateway Owner Tr                 US$ 3,931     N/A   US$ 3,931          
 
  Reliant Energy Transition Bd                 US$ 2,483     N/A   US$ 2,483          
 
  Residential Asset Mtg Prods                 US$ 2,539     N/A   US$ 2,539          
 
  Sequoia Mtg Tr                 US$ 598     N/A   US$ 598          
 
  Sequoia Mtg Tr                 US$ 654     N/A   US$ 654          
 
  Sequoia Mtg Tr                 US$ 809     N/A   US$ 809          
 
  Structured Adj Rate Mtg Ln Tr                 US$ 1,521     N/A   US$ 1,521          
 
  Structured Adj Rate Mtg Ln Tr                 US$ 507     N/A   US$ 507          
 
  Terwin Mtg Tr                 US$ 4,065     N/A   US$ 4,065          
 
  Tw Hotel Fdg 2005 Llc                 US$ 4,115     N/A   US$ 4,115          
 
  Txu Elec Delivery Transition                 US$ 2,649     N/A   US$ 2,649          
 
  Wamu Tr                 US$ 999     N/A   US$ 999          
 
  Washington Mut Mtg Pass                 US$ 1,953     N/A   US$ 1,953          
 
  Wells Fargo Finl Auto Owner Tr                 US$ 5,256     N/A   US$ 5,256          
 
  Wells Fargo Mtg Backed Secs                 US$ 755     N/A   US$ 755          
 
  Wells Fargo Mtg Bkd Secs                 US$ 2,974     N/A   US$ 2,974          
 
  Wells Fargo Mtg Bkd Secs                 US$ 3,474     N/A   US$ 3,474          
 
  Wfs Finl 2004 4 Owner Tr                 US$ 1,277     N/A   US$ 1,277          
 
  Wfs Finl 2005 2 Oner Tr                 US$ 2,225     N/A   US$ 2,225          
 
  Whole Auto Ln Tr                 US$ 1,555     N/A   US$ 1,555          
 
  Money market funds                                                
 
  SSGA Cash Mgmt Global Offshore         Available-for-sale financial assets         US$ 6,396     N/A   US$ 6,396          
(Concluded)

- 52 -


 

     
TABLE 4
Taiwan Semiconductor Manufacturing Company Limited
MARKETABLE SECURITIES ACQUIRED AND DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)
                                                                                                 
                                                    Disposal (Note1)   Ending Balance
                    Beginning Balance   Acquisition                   Carrying Value   Gain (Loss) on           Amount (US$
Company   Marketable Securities Type   Financial Statement       Nature of   Shares/Units (in   Amount (US$   Shares/Units (in   Amount (US$   Shares/Units (in   Amount (US$   (US$   Disposal (US$   Shares/Units   in Thousands)
Name   and Name   Account   Counter-party   Relationship   Thousands)   in Thousands)   Thousands)   in Thousands)   Thousands)   in Thousands)   in Thousands)   in Thousands)   (In Thousands)   (Note2)
The Company
  Government bond                                                                                            
 
  United States Treas Nts   Available-for-sale
financial assets
            US$ 46,173           US$ 268,521           US$ 304,524     US$ 305,133     US$ (609 )         US$ 5,944  
 
  Kreditanatalt Fur Wiederaufbau               US$ 6,881                       US$ 6,866     US$ 6,881     US$ (15 )            
 
  2004 Government Bond Series B     KGI Securities Co., Ltd. and several financial institutions           $           $ 1,005,115           $     $     $           $ 1,003,371  
 
  2006 Government Bond Series D   Held-to-maturity
financial assets
  KGI Securities Co., Ltd. and several financial institutions                         3,658,659                                     3,658,687  
 
  2005 Government Bond Series A     KGI Securities Co., Ltd. and several financial institutions             2,548,977             499,084                                     3,049,206  
 
  2003 Government Bond Series B     KGI Securities Co., Ltd. and several financial institutions                         1,647,823                                     1,647,828  
 
  2003 Asian development Bank Govt. Bond Series A-11     KGI Securities Co., Ltd. and several financial institutions                         827,820                                     831,028  
 
  European Investment Bank Bonds     KGI Securities Co., Ltd. and several financial institutions                         367,600                                     370,374  
 
  2004 Kaohsiung Municipal Bond Series B     KGI Securities Co., Ltd. and several financial institutions                         249,998                                     249,998  
 
                                                                                               
 
  Open-end mutual funds                                                                                            
 
  NITC Bond Fund   Available-for-sale
financial assets
  National Investment Trust Co., Ltd.       3,764       610,864       18,455     $ 3,000,000                               22,219       3,643,097  
 
  ABN AMRO Bond Fund     ABN-AMRO Securities Investment Trust (Taiwan) Ltd.       134,906       2,004,862       40,250       600,000                               175,156       2,630,053  
 
  Fuh Hwa Bond     Fuh Hwa Investment Trust Co.                   125,122       1,655,781                               125,122       1,661,927  
 
  Prudential Financial Bond Fund     Reliance Securities Investment Trust Co., Ltd.                   103,751       1,500,000                               103,751       1,510,993  
 
  Cathay Bond     Cathay Securities Investment Trust Co., Ltd.                   122,762       1,400,000                               122,762       1,410,843  
 
  NITC Taiwan Bond     National Investment Trust Co., Ltd.                   93,312       1,300,000                               93,312       1,310,068  
 
  JF Taiwan Bond Fund     JF Asset Management (Taiwan) Ltd.       62,009       933,430       13,277       200,000                               75,286       1,144,625  
 
  Dresdner Bond DAM Fund     Allianz Dresdner Securities Investment Consulting Co., Ltd.       69,303       792,068       34,914       400,000       8,664       100,000       99,103       897       95,553       1,103,240  
 
  JF Taiwan First Bond Fund     JF Asset Management (Taiwan) Ltd.       63,131       875,416       14,399       200,000                               77,530       1,085,714  
 
  ABN AMRO Select Bond Fund     ABN-AMRO Securities Investment Trust (Taiwan) Ltd.       18,235       203,860       93,738       1,050,000       17,723       200,000       198,469       1,531       94,250       1,064,534  
 
  Shinkong Chi Shin Bond Fund     Shinkong Securities Investment Trust (Taiwan) Ltd.       55,063       778,482       17,617       250,000                               72,680       1,037,545  
 
  ABN AMRO Income     ABN-AMRO Securities Investment Trust (Taiwan) Ltd.                   63,947       1,000,000                               63,947       1,008,483  
(Continued)

- 53 -


 

     
                                                                                             
                                                Disposal (Note1)   Ending Balance
                    Beginning Balance   Acquisition                   Carrying Value   Gain (Loss) on           Amount (US$
Company   Marketable Securities Type   Financial Statement       Nature of   Shares/Units (in   Amount (US$   Shares/Units (in   Amount (US$   Shares/Units (in   Amount (US$   (US$ in   Disposal (US$   Shares/Units   in Thousands)
Name   and Name   Account   Counter-party   Relationship   Thousands)   in Thousands)   Thousands)   in Thousands)   Thousands)   in Thousands)   Thousands)   in Thousands)   (In Thousands)   (Note2)
 
  President James Bond   Available-for-sale
financial assets
  Uni-President Assets Management Corp.       $       72,002     $ 1,100,000       6,506     $ 100,000     $ 99,401     $ 599       65,496     $ 1,006,962  
 
  Taishin Lucky Fund     Taishin Securities Investment Trust (Taiwan) Ltd.               78,624       800,000                               78,624       803,580  
 
  HSBC Taiwan Money Management     HSBC Investment (Taiwan) Ltd.               47,667       700,000       13,573       200,007       199,327       680       34,093       504,512  
 
  TIIM High Yield     Taiwan International Securities Corp.               48,743       600,000       12,127       150,000       149,276       724       36,616       452,912  
 
  Invesco R.O.C.Bond Fund     Invesco Taiwan Ltd.               44,180       500,000       8,821       100,000       99,833       167       35,359       402,408  
 
  Fuhwa Albatross Fund     Fuh Hwa Investment Trust Co.               89,510       1,000,000       89,510       1,005,781       1,000,000       5,781          
 
                                                                                           
 
  Corporate bond                                                                                        
 
  Taiwan Power Company   Held-to-maturity
financial assets
  KGI Securities Co., Ltd.         3,263,349             1,690,567                                     4,384,931  
 
  Formosa Petrochemical
Corporation
    KGI Securities Co., Ltd.         1,093,283             2,294,348                                     3,089,119  
 
  Nan Ya Plastics Corporation     KGI Securities Co., Ltd.         2,150,842             1,097,948                                     2,975,056  
 
  China Steel Corporation     KGI Securities Co., Ltd.         1,010,532             1,000,000                                     1,600,753  
 
  Chinese Petroleum Corporation     KGI Securities Co., Ltd. and several financial institutions         705,436             1,000,441                                     1,452,529  
 
  Formosa Plastic Corporation     KGI Securities Co., Ltd. and several financial institutions         268,855             380,260                                     515,430  
 
  Shanghai Commercial & Saving Bank     KGI Securities Co., Ltd.                     284,448                                     284,950  
 
  Hua Nan Bank   Available-for-sale
financial assets
  HSBC                     1,526,049                                     1,539,139  
 
  Cathay United Bank     HSBC and other financial institutions                     1,144,877                                     1,154,464  
 
  Formosa Petrochemical
Corporation
    KGI Securities Co., Ltd.                     397,076                                     397,646  
 
  Taiwan Power Company     KGI Securities Co., Ltd.                     298,918                                     299,185  
 
  American Express Co.           US$ 3,550                       US$ 3,431     US$ 3,550     US$ (119 )        
 
  American Gen Fin Corp. Mtn                       US$ 3,415                                   US$ 3,442  
 
  American Honda Fin Corp. Mtn                       US$ 3,087                                   US$ 3,092  
 
  American Honda Fin Corp. Mtn           US$ 3,800                       US$ 3,004     US$ 3,000     US$ 4           US$ 802  
 
  Bank One Corp.                       US$ 3,326           US$ 3,325     US$ 3,326     US$ (1 )        
 
  Bear Stearns Cos Inc.           US$ 3,329                       US$ 3,340     US$ 3,329     US$ 11          
 
  Bear Stearns Cos Inc.           US$ 3,757                       US$ 3,575     US$ 3,757     US$ (182 )        
 
  Cargill Inc.                       US$ 3,337                                   US$ 3,385  
 
  Caterpillar Finl Svcs Mtn           US$ 5,721                       US$ 5,761     US$ 5,721     US$ 40          
 
  Chase Manhattan Corp. New           US$ 1,628           US$ 3,540           US$ 1,526     US$ 1,628     US$ (102 )         US$ 3,566  
 
  Countrywide Home Lns Inc.           US$ 5,210                       US$ 5,001     US$ 5,210     US$ (209 )        
 
  Credit Suisse Fb USA Inc.           US$ 4,141                       US$ 4,003     US$ 4,141     US$ (138 )        
 
  Deere John Cap Corp.                       US$ 4,911           US$ 4,899     US$ 4,911     US$ (12 )        
 
  Deere John Cap Corp.           US$ 5,079                       US$ 5,013     US$ 5,079     US$ (66 )        
 
  European Invt Bk           US$ 3,918                       US$ 3,930     US$ 3,918     US$ 12          
 
  European Invt Bk                       US$ 5,995           US$ 5,994     US$ 5,995     US$ (1 )        
 
  European Invt Bk           US$ 8,315                       US$ 8,002     US$ 8,315     US$ (313 )        
 
  Federal Home Ln Bks                       US$ 7,937           US$ 7,937     US$ 7,937                
 
  General Elec Cap Corp. Mtn                       US$ 3,351                                   US$ 3,409  
 
  General Elec Cap Corp. Mtn           US$ 8,862                       US$ 8,716     US$ 8,862     US$ (146 )        
 
  Genworth Finl Inc.           US$ 3,412                       US$ 3,415     US$ 3,412     US$ 3          
 
  Goldman Sachs Group Inc.           US$ 4,981                       US$ 4,941     US$ 4,981     US$ (40 )        
 
  Hancock John Global Fdg Ii Mtn           US$ 3,566                       US$ 3,486     US$ 3,566     US$ (80 )        
 
  Hancock John Global Fdg Ii Mtn                       US$ 3,808                                   US$ 3,812  
 
  Hartford Finl Svcs Group Inc.                       US$ 5,016           US$ 5,048     US$ 5,016     US$ 32          
 
  Hbos Plc Medium Term Sr Nts               US$ 3,201                       US$ 3,182     US$ 3,201     US$ (19 )        
(Continued)

- 54 -


 

     
                                                                                                         
                                                            Disposal (Note1)   Ending Balance
                            Beginning Balance   Acquisition                   Carrying Value   Gain (Loss) on           Amount (US$
Company   Marketable Securities Type   Financial Statement           Nature of   Shares/Units (in   Amount (US$   Shares/Units (in   Amount (US$   Shares/Units (in   Amount (US$   (US$   Disposal (US$   Shares/Units   in Thousands)
Name   and Name   Account   Counter-party   Relationship   Thousands)   in Thousands)   Thousands)   in Thousands)   Thousands)   in Thousands)   in Thousands)   in Thousands)   (In Thousands)   (Note2)
 
  Hewlett Packard Co.   Available-for-sale financial assets                     US$ 3,373           US$           US$ 3,177     US$ 3,373     US$ (196 )         US$  
 
  Hsbc Fin Corp. Mtn                       US$ 5,097                       US$ 5,066     US$ 5,097     US$ (31 )            
 
  Intl Lease Fin Corp. Mtn                       US$ 2,471           US$ 4,100           US$ 6,578     US$ 6,571     US$ 7              
 
  Jp Morgan Chase + Co.                       US$ 3,663                       US$ 3,519     US$ 3,663     US$ (144 )            
 
  Key Bk Na Med Term Nts Bk Entry                       US$ 4,450                       US$ 4,393     US$ 4,450     US$ (57 )            
 
  Keycorp Mtn Book Entry                       US$ 3,500                       US$ 3,508     US$ 3,500     US$ 8              
 
  Keycorp Mtn Book Entry                                   US$ 3,006                                   US$ 3,013  
 
  Merrill Lynch + Co. Inc.                       US$ 3,486                       US$ 3,426     US$ 3,486     US$ (60 )            
 
  Merrill Lynch + Co. Inc.                       US$ 4,900                       US$ 4,842     US$ 4,900     US$ (58 )            
 
  Monumental Global Fdg Ii 2                                   US$ 3,348                                   US$ 3,391  
 
  Morgan Stanley Group Inc.                       US$ 4,507                       US$ 4,386     US$ 4,507     US$ (121 )            
 
  Nationwide Bldg Soc                       US$ 3,457                       US$ 3,495     US$ 3,457     US$ 38              
 
  Nationwide Bldg Soc Mtn                       US$ 3,000                       US$ 3,004     US$ 3,000     US$ 4              
 
  Nationwide Life Global Fdg I                                   US$ 3,491                                   US$ 3,517  
 
  Nucor Corp.                                   US$ 3,828                                   US$ 3,810  
 
  Praxair Inc.                                   US$ 3,180                                   US$ 3,152  
 
  Pricoa Global Fdg 1 Mtn                       US$ 3,500                       US$ 3,504     US$ 3,500     US$ 4              
 
  Pricoa Global Fdg I Mtn                                   US$ 3,394                                   US$ 3,400  
 
  Santander Us Debt S A Uniperso                       US$ 4,998                       US$ 4,957     US$ 4,998     US$ (41 )            
 
  Slm Corp. Medium Term Nts                       US$ 2,950           US$ 6,012           US$ 6,012     US$ 6,012                 US$ 2,934  
 
  Suntrust Bk Atlanta Ga Medium                                   US$ 3,409                                   US$ 3,444  
 
  Washington Mut Inc.                       US$ 4,735                       US$ 4,505     US$ 4,735     US$ (230 )            
 
  Wells Fargo + Co. New                       US$ 3,697                       US$ 3,512     US$ 3,697     US$ (185 )            
 
  Wells Fargo + Co. New                                   US$ 6,076           US$ 6,073     US$ 6,076     US$ (3 )            
 
  Agency bonds                                                                                                    
 
  Federal Farm Cr Bks   Available-for-sale financial assets                     US$ 3,985                       US$ 3,940     US$ 3,985     US$ (45 )            
 
  Federal Home Ln Bank                       US$ 3,962                       US$ 3,955     US$ 3,962     US$ (7 )            
 
  Federal Home Ln Bks                       US$ 6,110                       US$ 6,061     US$ 6,110     US$ (49 )            
 
  Federal Home Ln Bks                       US$ 7,886                       US$ 7,960     US$ 7,886     US$ 74              
 
  Federal Home Ln Bks                       US$ 3,932                       US$ 3,980     US$ 3,932     US$ 48              
 
  Federal Home Ln Bks                       US$ 4,927                       US$ 4,930     US$ 4,927     US$ 3              
 
  Federal Home Ln Bks                       US$ 3,976                       US$ 3,964     US$ 3,976     US$ (12 )            
 
  Federal Home Ln Bks                                   US$ 8,628           US$ 8,716     US$ 8,628     US$ 88              
 
  Federal Home Ln Bks                       US$ 4,136                       US$ 4,140     US$ 4,136     US$ 4              
 
  Federal Home Ln Bks                       US$ 4,939                       US$ 4,872     US$ 4,939     US$ (67 )            
 
  Federal Home Ln Bks                       US$ 4,965                       US$ 4,944     US$ 4,965     US$ (21 )            
 
  Federal Home Ln Bks                                   US$ 5,740           US$ 5,825     US$ 5,740     US$ (85 )            
 
  Federal Home Ln Bks                       US$ 7,558                       US$ 7,515     US$ 7,558     US$ (43 )            
 
  Federal Home Ln Bks                                   US$ 4,823                                   US$ 4,881  
 
  Federal Home Ln Bks                       US$ 8,594                       US$ 8,519     US$ 8,594     US$ (75 )            
 
  Federal Home Ln Bks                                   US$ 12,227           US$ 12,233     US$ 12,227     US$ 6              
 
  Federal Home Ln Bks                       US$ 3,972                       US$ 3,951     US$ 3,972     US$ (21 )            
 
  Federal Home Ln Bks                       US$ 7,887                       US$ 7,758     US$ 7,887     US$ (129 )            
 
  Federal Home Ln Bks                       US$ 19,846                       US$ 19,800     US$ 19,846     US$ (46 )            
 
  Federal Home Ln Bks                       US$ 6,908                       US$ 6,881     US$ 6,908     US$ (27 )            
 
  Federal Home Ln Bks                       US$ 9,134                       US$ 8,968     US$ 9,134     US$ (166 )            
 
  Federal Home Ln Bks                       US$ 3,379                       US$ 3,296     US$ 3,379     US$ (83 )            
 
  Federal Home Ln Bks                                   US$ 7,490           US$ 7,490     US$ 7,490                    
 
  Federal Home Ln Mtg Corp.                       US$ 9,997                       US$ 9,788     US$ 9,997     US$ (209 )            
 
  Federal Home Ln Mtg Corp.                       US$ 6,980                       US$ 6,941     US$ 6,980     US$ (39 )            
 
  Federal Home Ln Mtg Corp.                       US$ 5,929                       US$ 5,930     US$ 5,929     US$ 1              
 
  Federal Home Ln Mtg Corp.                                   US$ 6,415           US$ 6,410     US$ 6,415     US$ (5 )            
 
  Federal Home Ln Mtg Corp.                                   US$ 14,175           US$ 14,269     US$ 14,175     US$ 94              
 
  Federal Home Ln Mtg Corp.                                   US$ 9,974           US$ 9,929     US$ 9,974     US$ (45 )            
 
  Federal Home Ln Mtg Corp. Mtn                       US$ 4,930                       US$ 4,912     US$ 4,930     US$ (18 )            
 
  Federal Home Loan Bank                       US$ 3,475                       US$ 3,459     US$ 3,475     US$ (16 )            
 
                                                                                                     
(Continued)

- 55 -


 

     
                                                                                                         
                                                            Disposal (Note1)   Ending Balance
                            Beginning Balance   Acquisition                   Carrying Value   Gain (Loss) on           Amount (US$
Company   Marketable Securities Type   Financial Statement           Nature of   Shares/Units (in   Amount (US$   Shares/Units (in   Amount (US$   Shares/Units (in   Amount (US$   (US$   Disposal (US$   Shares/Units   in Thousands)
Name   and Name   Account   Counter-party   Relationship   Thousands)   in Thousands)   Thousands)   in Thousands)   Thousands)   in Thousands)   in Thousands)   in Thousands)   (In Thousands)   (Note2)
 
  Federal Home Loan Mtg Assn   Available-for-sale financial assets                     US$ 4,847           US$           US$ 4,901     US$ 4,847     US$ 54           US$  
 
  Federal Home Loan Mtg Corp.                       US$ 4,903                       US$ 4,927     US$ 4,903     US$ 24              
 
  Federal Natl Mtg Assn                       US$ 8,971                       US$ 8,940     US$ 8,971     US$ (31 )            
 
  Federal Natl Mtg Assn                       US$ 4,921                       US$ 4,916     US$ 4,921     US$ (5 )            
 
  Federal Natl Mtg Assn                       US$ 7,892                       US$ 7,908     US$ 7,892     US$ 16              
 
  Federal Natl Mtg Assn                       US$ 4,943                       US$ 4,944     US$ 4,943     US$ 1              
 
  Federal Natl Mtg Assn                       US$ 17,888                       US$ 17,782     US$ 17,888     US$ (106 )            
 
  Federal Natl Mtg Assn                       US$ 5,928                       US$ 5,885     US$ 5,928     US$ (43 )            
 
  Federal Natl Mtg Assn                                   US$ 7,800           US$ 7,832     US$ 7,800     US$ 32              
 
  Federal Natl Mtg Assn                       US$ 7,926                       US$ 7,834     US$ 7,926     US$ (92 )            
 
  Federal Natl Mtg Assn                                   US$ 19,539           US$ 19,702     US$ 19,539     US$ 162              
 
  Federal Natl Mtg Assn                                   US$ 14,901           US$ 14,931     US$ 14,901     US$ 30              
 
  Federal Natl Mtg Assn                                   US$ 10,430           US$ 10,459     US$ 10,430     US$ 29              
 
  Federal Natl Mtg Assn                                   US$ 7,966           US$ 7,979     US$ 7,966     US$ 13              
 
  Federal Natl Mtg Assn Medium                                   US$ 3,353                                   US$ 3,406  
 
  Federal Natl Mtg Assn Mtn                       US$ 9,758                       US$ 9,781     US$ 9,758     US$ 23              
 
  Federal Natl Mtg Assn Mtn                       US$ 7,000                       US$ 6,925     US$ 7,000     US$ (75 )            
 
  Federal Natl Mtg Assn Mtn                       US$ 15,787                       US$ 15,851     US$ 15,787     US$ 64              
 
  Federal Natl Mtg Assn Mtn                                   US$ 5,255           US$ 5,292     US$ 5,255     US$ 37              
 
  Federal Natl Mtg Assn Mtn                       US$ 5,740                       US$ 5,562     US$ 5,740     US$ (178 )            
 
  Freddie Mac                                   US$ 9,391           US$ 9,314     US$ 9,391     US$ (77 )            
 
  Tennessee Valley Auth                                   US$ 6,039                                   US$ 6,036  
 
  Fed Hm Ln Pc Pool 1h2520                       US$ 3,753                       US$ 3,329     US$ 3,345     US$ (16 )            
 
  Fed Hm Ln Pc Pool 781959                       US$ 7,112                       US$ 6,577     US$ 6,553     US$ 24              
 
  Fed Hm Ln Pc Pool M80855                                   US$ 3,882                                   US$ 3,412  
 
  Federal Home Ln Mtg                       US$ 3,848                       US$ 3,308     US$ 3,336     US$ (28 )            
 
  Federal Home Ln Mtg Corp.                                   US$ 3,898                                   US$ 3,917  
 
  Federal Home Ln Mtg Corp.                       US$ 6,096                       US$ 4,316     US$ 4,424     US$ (108 )            
 
  Federal Home Ln Mtg Corp.                                   US$ 4,962                                   US$ 4,761  
 
  Federal Home Ln Mtg Corp                                   US$ 3,351                                   US$ 3,357  
 
  Federal Home Ln Mtg Corp                                   US$ 4,317                                   US$ 3,964  
 
  Federal Home Ln Mtg Corp                       US$ 4,902                       US$ 4,069     US$ 4,159     US$ (90 )            
 
  Federal Home Ln Mtg Corp                       US$ 3,755                       US$ 3,308     US$ 3,362     US$ (54 )            
 
  Federal Home Ln Mtg Corp                                   US$ 4,481                                   US$ 4,238  
 
  Federal Home Ln Mtg Corp                                   US$ 3,349                                   US$ 3,183  
 
  Federal Home Ln Mtg Corp                                   US$ 3,857                                   US$ 3,818  
 
  Federal Home Ln Mtg Corp                                   US$ 5,380                                   US$ 4,671  
 
  Federal Home Ln Mtg Corp                                   US$ 4,631                                   US$ 4,548  
 
  Federal Home Ln Mtg Corp                                   US$ 4,488                                   US$ 4,478  
 
  Federal Home Loan Mtg                                   US$ 5,009                                   US$ 4,976  
 
  Federal Natl Mtg Assn                       US$ 4,030                       US$ 3,515     US$ 3,568     US$ (53 )            
 
  Federal Natl Mtg Assn                       US$ 4,051                       US$ 3,131     US$ 3,196     US$ (65 )            
 
  Fnma Pool 255883                       US$ 3,771                       US$ 3,559     US$ 3,581     US$ (22 )            
 
  Fnma Pool 696485                       US$ 4,175                       US$ 3,393     US$ 3,403     US$ (10 )            
 
  Fnma Pool 813641                                   US$ 3,906           US$ 3,916     US$ 3,906     US$ 10              
 
  Fnma Pool 815626                       US$ 3,622                       US$ 3,189     US$ 3,203     US$ (14 )            
 
  Fnma Pool 825398                       US$ 4,949                       US$ 4,562     US$ 4,672     US$ (110 )            
 
  Fnma Pool 841069                       US$ 3,673                       US$ 3,134     US$ 3,156     US$ (22 )            
 
  Corporate issued asset-backed securities                                                                                                    
 
  Americredit Automobile Rec Tr   Available-for-sale financial assets                                 US$ 3,249           US$ 3,261     US$ 3,249     US$ 12              
 
  Americredit Automobile Receiva                       US$ 5,000                       US$ 4,959     US$ 5,000     US$ (41 )            
 
  Americredit Automobile Receivb                       US$ 4,949                       US$ 3,826     US$ 3,856     US$ (30 )            
 
  Banc Amer Coml Mtg Inc.                       US$ 4,462                       US$ 3,254     US$ 3,325     US$ (71 )            
 
  Bear Stearns Arm Tr                                   US$ 3,826           US$ 3,597     US$ 3,609     US$ (12 )            
 
  Bear Stearns Coml Mtg Secs Inc.                       US$ 6,350                       US$ 6,362     US$ 6,350     US$ 12              
 
  Capital Auto Receivables Asset                                   US$ 3,250           US$ 3,232     US$ 3,250     US$ (18 )            
 
  Capital One Auto Fin Tr                                   US$ 5,000           US$ 5,008     US$ 5,000     US$ 8              

- 56 -


 

(Continued)
                                                                                                         
                            Beginning Balance     Acquisition     Disposal (Note1)     Ending Balance  
                                                                            Carrying Value     Gain (Loss) on             Amount (US$  
Company   Marketable Securities Type               Nature of     Shares/Units (in     Amount (US$     Shares/Units (in     Amount (US$     Shares/Units (in     Amount (US$     (US$     Disposal (US$     Shares/Units     in Thousands)  
Name   and Name   Financial Statement Account   Counter-party     Relationship     Thousands)     in Thousands)     Thousands)     in Thousands)     Thousands)     in Thousands)     in Thousands)     in Thousands)     (In Thousands)     (Note2)  
 
  Capital One Multi Asset Execut   Available-for-sale financial assets                     US$ 3,974           US$           US$ 3,932     US$ 3,974     US$ (42 )         US$  
 
  Caterpillar Finl Asset Tr   "                     US$ 8,219                       US$ 3,218     US$ 3,299     US$ (81 )         US$ 4,904  
 
  Cendant Rent Car Fdg Aesop LLC   "                     US$ 11,626                       US$ 7,482     US$ 7,649     US$ (167 )         US$ 3,926  
 
  Cit Equip Coll Tr   "                                 US$ 3,975                                   US$ 3,996  
 
  Citibank Cr Card Issuance Tr   "                     US$ 9,782                       US$ 9,797     US$ 9,782     US$ 15              
 
  Cnh Equip Tr   "                     US$ 5,000                       US$ 3,457     US$ 3,500     US$ (43 )            
 
  Credit Suisse First Boston Mtg   "                                 US$ 3,750           US$ 3,728     US$ 3,750     US$ (22 )            
 
  Credit Suisse First Boston Mtg   "                                 US$ 4,773                                   US$ 4,816  
 
  Credit Suisse First Boston Mtg   "                                 US$ 3,572           US$ 3,566     US$ 3,572     US$ (6 )            
 
  Drive Auto Receivables Tr   "                     US$ 3,200                       US$ 3,182     US$ 3,200     US$ (18 )            
 
  Federal Natl Mtg Assn   "                                 US$ 4,828                                   US$ 4,701  
 
  Ford Cr Auto Owner Tr   "                     US$ 10,908           US$           US$ 4,181     US$ 4,225     US$ (44 )         US$ 1,886  
 
  Gs Mtg Secs Corp.   "                                 US$ 4,150           US$ 4,134     US$ 4,150     US$ (16 )            
 
  Gsamp Tr   "                                 US$ 4,250           US$ 4,241     US$ 4,250     US$ (9 )            
 
  Harley Davidson Motorcycle Tr   "                     US$ 5,999                       US$ 5,793     US$ 5,999     US$ (206 )            
 
  Hertz Veh Fing Llc   "                     US$ 5,350                       US$ 5,284     US$ 5,350     US$ (66 )            
 
  Home Equity Mtg Tr 2006 4   "                                 US$ 4,200           US$ 4,200     US$ 4,200                    
 
  Hyundai Auto Receivables Tr   "                     US$ 3,999                       US$ 3,904     US$ 3,999     US$ (95 )            
 
  Lb Ubs Coml Mtg Tr   "                     US$ 4,001                       US$ 3,733     US$ 3,779     US$ (46 )            
 
  Long Beach Mtg Ln Tr   "                                 US$ 3,200           US$ 3,195     US$ 3,200     US$ (5 )            
 
  Massachusetts Rrb Spl Purp Tr   "                     US$ 3,900                       US$ 3,830     US$ 3,900     US$ (70 )            
 
  Mastr Asset Backed Secs Tr   "                     US$ 3,499                       US$ 3,083     US$ 3,079     US$ 4              
 
  Merrill Lynch Mtg Invs Inc.   "                                 US$ 6,665           US$ 6,561     US$ 6,558     US$ 3              
 
  Navistar Finl 2003 A Owner Tr   "                     US$ 4,928                       US$ 3,994     US$ 4,035     US$ (41 )            
 
  Nissan Auto Receivables   "                     US$ 7,000                       US$ 6,132     US$ 6,194     US$ (62 )            
 
  Nomura Asset Accep Corp.   "                                 US$ 4,150           US$ 4,144     US$ 4,150     US$ (6 )            
 
  Onyx Accep Owner Tr   "                     US$ 4,913                       US$ 4,885     US$ 4,913     US$ (28 )            
 
  Pg+E Energy Recovery Fdg Llc   "                     US$ 4,749                       US$ 4,646     US$ 4,749     US$ (103 )            
 
  Providian Gateway Owner Tr   "                     US$ 3,992                       US$ 3,911     US$ 3,992     US$ (81 )            
 
  Reliant Energy Transition Bd   "                     US$ 4,973                       US$ 3,994     US$ 4,162     US$ (168 )            
 
  Terwin Mtg Tr   "                                 US$ 4,050           US$ 4,033     US$ 4,050     US$ (17 )            
 
  Toyota Auto Receivables 2003 B   "                     US$ 4,970                       US$ 4,962     US$ 4,970     US$ (8 )            
 
  Tw Hotel Fdg 2005 Llc   "                     US$ 8,197                         US$ 8,216     US$ 8,197     US$ 19              
 
  Usaa Auto Owner Tr   "                     US$ 3,718                       US$ 3,696     US$ 3,718     US$ (22 )            
 
  Wells Fargo Finl Auto Owner Tr   "                     US$ 5,299                       US$ 5,235     US$ 5,299     US$ (64 )            
 
  Wells Fargo Finl Auto Owner Tr   "                                 US$ 4,893                                   US$ 4,934  
 
  Wells Fargo Mtg Bkd Secs   "                                 US$ 3,772           US$ 3,488     US$ 3,500     US$ (12 )            
 
  Wells Fargo Mtg Bkd Secs   "                     US$ 3,661                       US$ 3,020     US$ 3,054     US$ (34 )            
 
  Wfs Finl 2004 2 Owner Tr   "                     US$ 4,994                       US$ 4,913     US$ 4,994     US$ (81 )            
 
  Wfs Finl 2004 4 Owner Tr   "                     US$ 5,399                       US$ 4,883     US$ 4,955     US$ (72 )            
 
  World Omni Auto Receivables Tr   "                     US$ 5,963                       US$ 5,869     US$ 5,963     US$ (94 )            
 
                                                                                                       
TSMC Global
  Government bond                                                                                                    
 
  United States Treas Nts   Available-for-sale financial assets                                 US$ 148,942           US$ 31,830     US$ 31,773     US$ 57           US$ 117,684  
 
                                                                                                       
 
  Corporate bond                                                                                                    
 
  American Express Co.   "                                 US$ 3,431                                   US$ 3,446  
 
  Bank One Corp.   "                                 US$ 3,325                                   US$ 3,352  
 
  Bear Stearns Cos Inc.   "                                 US$ 3,340                                   US$ 3,365  
 
  Counrywide Finl Corp.   "                                 US$ 5,005                                   US$ 5,004  
 
  Deere John Cap Corp.   "                                 US$ 4,899                                   US$ 4,921  
 
  Emerson Elec Co.   "                                 US$ 3,222                                   US$ 3,221  
 
  European Invt Bk   "                                 US$ 3,930                                   US$ 3,947  
 
  European Invt Bk   "                                 US$ 5,994                                   US$ 6,067  
 
  Federal Home Ln Bks   "                                 US$ 7,937                                   US$ 7,937  
 
  General Elec Cap Corp. Mtn   "                                 US$ 8,716                                   US$ 8,753  
 
  Goldman Sachs Group Inc.   "                                 US$ 4,941                                   US$ 4,982  

- 57 -


 

(Continued)
                                                                                                         
                            Beginning Balance     Acquisition     Disposal (Note1)     Ending Balance  
                                                                            Carrying Value     Gain (Loss) on             Amount (US$  
Company   Marketable Securities Type               Nature of     Shares/Units (in     Amount (US$     Shares/Units (in     Amount (US$     Shares/Units (in     Amount (US$     (US$     Disposal (US$     Shares/Units     in Thousands)  
Name   and Name   Financial Statement Account   Counter-party     Relationship     Thousands)     in Thousands)     Thousands)     in Thousands)     Thousands)     in Thousands)     in Thousands)     in Thousands)     (In Thousands)     (Note2)  
 
  Hartford Finl Svcs Group Inc.   Available-for-sale financial assets                     US$           US$ 5,048           US$     US$     US$           US$ 5,053  
 
  Hbos Plc Medium Term Sr Nts   "                                 US$ 3,182                                   US$ 3,194  
 
  Hsbc Fin Corp. Mtn   "                                 US$ 5,066                                   US$ 5,091  
 
  Intl Lease Fin Corp. Mtn   "                                 US$ 4,118                                   US$ 4,140  
 
  Key Bk Na Med Term Nts Bk Entr   "                                 US$ 4,393                                   US$ 4,400  
 
  Merrill Lynch + Co. Inc.   "                                 US$ 3,426                                   US$ 3,441  
 
  Merrill Lynch + Co. Inc.   "                                 US$ 4,842                                   US$ 4,872  
 
  Morgan Stanley Group Inc.   "                                 US$ 4,386           US$ 4,384     US$ 4,386     US$ (2 )            
 
  Nationwide Bldg Soc   "                                 US$ 3,495                                   US$ 3,512  
 
  Slm Corp Medium Term Nts   "                                 US$ 6,012                                   US$ 6,045  
 
  Washington Mut Inc.   "                                 US$ 4,505                                   US$ 4,505  
 
  Wells Fargo + Co. New   "                                 US$ 6,073           US$ 3,167     US$ 3,148     US$ 19           US$ 2,943  
 
  Wells Fargo + Co. New Med Trm   "                                 US$ 4,282                                   US$ 4,308  
 
                                                                                                       
 
  Agency bonds                                                                                                    
 
  Fed Hm Ln Pc Pool 1h2520   Available-for-sale financial assets                                 US$ 3,330                                   US$ 3,238  
 
  Fed Hm Ln Pc Pool 781959   "                                 US$ 6,578                                   US$ 6,405  
 
  Federal Home Ln Mtg   "                                 US$ 3,308                                   US$ 3,242  
 
  Federal Home Ln Mtg Corp.   "                                 US$ 4,316                                   US$ 3,868  
 
  Federal Home Ln Mtg Corp.   "                                 US$ 4,069                                   US$ 3,826  
 
  Federal Home Ln Mtg Corp.   "                                 US$ 3,308                                   US$ 3,192  
 
  Federal Natl Mtg Assn   "                                 US$ 3,515                                   US$ 3,431  
 
  Federal Natl Mtg Assn   "                                 US$ 3,131                                   US$ 2,870  
 
  Fnma Pool 255883   "                                 US$ 3,559                                   US$ 3,546  
 
  Fnma Pool 696485   "                                 US$ 3,393                                   US$ 3,358  
 
  Fnma Pool 813641   "                                 US$ 3,916                                   US$ 3,937  
 
  Fnma Pool 815626   "                                 US$ 3,189                                   US$ 3,097  
 
  Fnma Pool 825398   "                                 US$ 4,562                                   US$ 4,311  
 
  Fnma Pool 841069   "                                 US$ 3,134                                   US$ 3,053  
 
  Federal Farm Cr Bks   "                                 US$ 3,940           US$ 3,946     US$ 3,940     US$ 6              
 
  Federal Home Ln Bank   "                                 US$ 3,955                                   US$ 3,961  
 
  Federal Home Ln Bks   "                                 US$ 7,960                                   US$ 7,960  
 
  Federal Home Ln Bks   "                                 US$ 4,930                                   US$ 4,953  
 
  Federal Home Ln Bks   "                                 US$ 8,716                                   US$ 8,741  
 
  Federal Home Ln Bks   "                                 US$ 4,140           US$ 4,141     US$ 4,140     US$ 1              
 
  Federal Home Ln Bks   "                                 US$ 4,872                                   US$ 4,898  
 
  Federal Home Ln Bks   "                                 US$ 5,825                                   US$ 5,847  
 
  Federal Home Ln Bks   "                                 US$ 7,515           US$ 7,520     US$ 7,515     US$ 5              
 
  Federal Home Ln Bks   "                                 US$ 6,061                                   US$ 6,072  
 
  Federal Home Ln Bks   "                                 US$ 12,233                                   US$ 12,258  
 
  Federal Home Ln Bks   "                                 US$ 6,881                                   US$ 6,899  
 
  Federal Home Ln Bks   "                                 US$ 3,296           US$ 3,297     US$ 3,296     US$ 1              
 
  Federal Home Ln Bks   "                                 US$ 7,490                                   US$ 7,520  
 
  Federal Home Ln Mtg Corp.   "                                 US$ 9,788                                   US$ 9,833  
 
  Federal Home Ln Mtg Corp.   "                                 US$ 5,930                                   US$ 5,948  
 
  Federal Home Ln Mtg Corp.   "                                 US$ 6,410                                   US$ 6,435  
 
  Federal Home Ln Mtg Corp.   "                                 US$ 14,269                                   US$ 14,312  
 
  Federal Home Ln Mtg Corp.   "                                 US$ 9,929                                   US$ 9,985  
 
  Federal Home Ln Mtg Corp. Mtn   "                                 US$ 4,912                                   US$ 4,937  
 
  Federal Home Loan Bank   "                                 US$ 3,459           US$ 3,463     US$ 3,459     US$ 4              
 
  Federal Home Loan Mtg Assn   "                                 US$ 4,901                                   US$ 4,929  
 
  Federal Home Loan Mtg Corp.   "                                 US$ 4,927                                   US$ 4,950  
 
  Federal Natl Mtg Assn   "                                 US$ 5,885                                   US$ 5,895  
 
  Federal Natl Mtg Assn   "                                 US$ 7,834                                   US$ 7,857  
 
  Federal Natl Mtg Assn   "                                 US$ 19,702                                   US$ 19,743  
 
  Federal Natl Mtg Assn   "                                 US$ 14,931                                   US$ 14,975  
(Continued)

- 58 -


 

                                                                                                         
                            Beginning Balance     Acquisition     Disposal (Note1)     Ending Balance  
                                                                                    Gain (Loss) on             Amount (US$  
Company   Marketable Securities Type   Financial Statement           Nature of     Shares/Units (in     Amount (US$     Shares/Units (in     Amount (US$     Shares/Units (in     Amount (US$     Carrying Value (US$     Disposal (US$     Shares/Units     in Thousands)  
Name   and Name   Account   Counter-party     Relationship     Thousands)     in Thousands)     Thousands)     in Thousands)     Thousands)     in Thousands)     in Thousands)     in Thousands)     (In Thousands)     (Note2)  
 
  Federal Natl Mtg Assn   Available-for-sale financial assets                     US$           US$ 10,459           US$     US$     US$           US$ 10,466  
 
  Federal Natl Mtg Assn                                   US$ 6,516                                   US$ 6,519  
 
  Federal Natl Mtg Assn                                   US$ 7,979                                   US$ 7,998  
 
  Federal Natl Mtg Assn Mtn                                   US$ 5,292                                   US$ 5,304  
 
  Federal Natl Mtg Assn Mtn                                   US$ 5,562                                   US$ 5,561  
 
  Freddie Mac                                   US$ 9,314           US$ 4,926     US$ 4,902     US$ 24           US$ 4,440  
 
 
  Corporate issued                                                                                                    
 
 
asset-backed securities
                                                                                                   
 
  Americredit Automobile Rec Tr   Available-for-sale financial assets                                 US$ 3,261                                   US$ 3,274  
 
  Americredit Automobile Receiva                                   US$ 4,959                                   US$ 4,967  
 
  Americredit Automobile Receivb                                   US$ 3,826                                   US$ 3,430  
 
  Banc Amer Coml Mtg Inc.                                   US$ 3,254                                   US$ 3,120  
 
  Bear Stearns Arm Tr                                   US$ 3,597                                   US$ 3,569  
 
  Bear Stearns Coml Mtg Secs Inc.                                   US$ 6,362                                   US$ 6,360  
 
  Capital Auto Receivables Asset                                   US$ 3,232                                   US$ 3,252  
 
  Capital One Auto Fin Tr                                   US$ 5,008                                   US$ 5,010  
 
  Capital One Multi Asset Execut                                   US$ 3,932                                   US$ 3,939  
 
  Caterpillar Finl Asset Tr                                   US$ 3,218                                   US$ 3,237  
 
  Cbass Tr                                   US$ 4,260                                   US$ 4,270  
 
  Cendant Rent Car Fdg Aesop Llc                                   US$ 5,319                                   US$ 5,349  
 
  Citibank Cr Card Issuance Tr                                   US$ 9,797                                   US$ 9,820  
 
  Cnh Equip Tr                                   US$ 3,457                                   US$ 2,810  
 
  Credit Suisse First Boston Mtg                                   US$ 3,728                                   US$ 3,746  
 
  Credit Suisse First Boston Mtg                                   US$ 3,566                                   US$ 3,582  
 
  Drive Auto Receivables Tr                                   US$ 3,182                                   US$ 3,192  
 
  Ford Credit Auto Owner Trust                                   US$ 4,310                                   US$ 4,338  
 
  Gs Mtg Secs Corp.                                   US$ 4,134                                   US$ 4,149  
 
  Gsamp Tr                                   US$ 4,241                                   US$ 4,263  
 
  Harley Davidson Motorcycle Tr                                   US$ 5,793                                   US$ 5,832  
 
  Hertz Veh Fing Llc                                   US$ 5,284                                   US$ 5,322  
 
  Home Equity Mtg Tr 2006 4                                   US$ 4,200                                   US$ 4,233  
 
  Hyundai Auto Receivables Tr                                   US$ 3,904                                   US$ 3,933  
 
  Lb Ubs Coml Mtg Tr                                   US$ 3,733                                   US$ 3,585  
 
  Long Beach Mtg Ln Tr                                   US$ 3,195                                   US$ 3,204  
 
  Massachusetts Rrb Spl Purp Tr                                   US$ 3,830                                   US$ 3,405  
 
  Mastr Asset Backed Secs Tr                                   US$ 3,083           US$ 3,082     US$ 3,083     US$ (1 )            
 
  Merrill Lynch Mtg Invs Inc.                                   US$ 6,561                                   US$ 6,289  
 
  Navistar Finl 2003 A Owner Tr                                   US$ 3,994                                   US$ 3,585  
 
  Nomura Asset Accep Corp.                                   US$ 4,144                                   US$ 4,160  
 
  Onyx Accep Owner Tr                                   US$ 4,885                                   US$ 4,541  
 
  Pg+E Energy Recovery Fdg Llc                                   US$ 4,646                                   US$ 4,406  
 
  Providian Gateway Owner Tr                                   US$ 3,911                                   US$ 3,931  
 
  Reliant Energy Transition Bd                                   US$ 3,994                                   US$ 2,483  
 
  Terwin Mtg Tr                                   US$ 4,033                                   US$ 4,065  
 
  Tw Hotel Fdg 2005 Llc                                   US$ 4,116                                   US$ 4,115  
 
  Wells Fargo Finl Auto Owner Tr                                   US$ 5,235                                   US$ 5,256  
 
  Wells Fargo Mtg Bkd Secs                                   US$ 3,020                                   US$ 2,974  
 
  Wells Fargo Mtg Bkd Secs                                   US$ 3,488                                   US$ 3,474  
Note 1:   The proceeds of bond investments matured are excluded.
 
Note 2:   The ending balance included the amortization of premium or discount on bond investments and valuation gain or loss.
(Concluded)

- 59 -


 

TABLE 5
Taiwan Semiconductor Manufacturing Company Limited
ACQUISITION OF INDIVIDUAL REAL ESTATES AT COSTS OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
                                                         
Company   Types of       Transaction           Nature of   Prior Transaction of Related Counter-party   Price   Purpose of   Other
Name   Property   Transaction Date   Amount   Payment Term   Counter-party   Relationship   Owner   Relationship   Transfer Date   Amount   Reference   Acquisition   Terms
The Company
  Fab. 14   January 6, 2006   $ 854,000    
By the construction
progress
  M+W Zander Facility Engineering Co., Ltd.     N/A   N/A   N/A   N/A   Public bidding   Manufacturing purpose   None
 
  Fab. 12   March 30, 2006   US$ 3,340    
By the construction
progress
  M+W Zander Facility Engineering Co., Ltd.     N/A   N/A   N/A   N/A   Public bidding   Manufacturing purpose   None
 
  Fab. 12   June 1, 2006   $ 487,000    
By the construction
progress
  United Integrated Services Co., Ltd.     N/A   N/A   N/A   N/A   Public bidding   Manufacturing purpose   None
 
  Fab. 12   June 1 2006   US$ 3,770    
By the construction
progress
  Celerity, Inc.     N/A   N/A   N/A   N/A   Public bidding   Manufacturing purpose   None
 
  Fab. 14   June 2, 2006   $ 197,500    
By the construction
progress
  China Steel Structure Co., Ltd.     N/A   N/A   N/A   N/A   Public bidding   Manufacturing purpose   None
 
  Fab. 12   June 6, 2006     192,000    
By the construction
progress
  Marketech International Corp.     N/A   N/A   N/A   N/A   Public bidding   Manufacturing purpose   None
 
  Fab. 12   June 9, 2006     142,000    
By the construction
progress
  Uangyih-tech Industrial Co., Ltd.     N/A   N/A   N/A   N/A   Public bidding   Manufacturing purpose   None
 
  Fab. 14   June 26, 2006   EUR 2,733    
By the construction
progress
  Siemens Limited     N/A   N/A   N/A   N/A   Public bidding   Manufacturing purpose   None
 
  Fab. 14   June 30, 2006   $ 517,500    
By the construction
progress
 
United Steel Engineering & Construction Corp.
    N/A   N/A   N/A   N/A   Public bidding   Manufacturing purpose   None
 
  Fab. 14   August 7, 2006     453,000    
By the construction
progress
  China Steel Structure Co., Ltd.     N/A   N/A   N/A   N/A   Public bidding   Manufacturing purpose   None
 
  Fab. 14   August 25, 2006     1,365,000    
By the construction
progress
  Fu Tsu Construction Co., Ltd.     N/A   N/A   N/A   N/A   Public bidding   Manufacturing purpose   None
 
  Fab. 14   September 28, 2006   JPY 1,080,000    
By the construction
progress
  Organo Corporation     N/A   N/A   N/A   N/A   Public bidding   Manufacturing purpose   None
 
  Fab. 14   September 28, 2006   $ 407,000    
By the construction
progress
  Organo Technology Co., Ltd.     N/A   N/A   N/A   N/A   Public bidding   Manufacturing purpose   None
 
  Fab. 14   September 29, 2006   US$ 4,250    
By the construction
progress
  York Internation Corp.     N/A   N/A   N/A   N/A   Public bidding   Manufacturing purpose   None

- 60 -


 

TABLE 6
Taiwan Semiconductor Manufacturing Company Limited and Investees
TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006
(Amounts in Thousands of New Taiwan Dollars)
                                                             
                                            Notes/Accounts Payable or    
            Transaction Details   Abnormal Transaction   Receivable    
            Purchase/           % to       Unit Price   Payment Terms           % to    
Company Name   Related Party   Nature of Relationship   Sale   Amount   Total   Payment Terms   (Note)   (Note)   Ending Balance   Total   Note
The Company
  TSMC-North America   Subsidiary   Sales   $ 144,616,913       59     Net 30 days after invoice date       $ 21,680,057       52      
 
  Philips   Major shareholder   Sales     3,225,151       1     Net 30 days after monthly closing         224,516       1      
 
  GUC  
Investee over which the Company had a controlling interest
  Sales     488,818           Net 30 days after monthly closing         124,820        
 
  WaferTech   Indirect subsidiary   Purchases     9,695,565       27     Net 30 days after monthly closing         (1,045,183 )     10      
 
  SSMC  
Investee accounted for using
equity method
  Purchases     5,555,044       16     Net 30 days after monthly closing         (636,181 )     6      
 
  TSMC-Shanghai   Subsidiary   Purchases     3,099,850       9     Net 30 days after monthly closing         (545,706 )     5      
 
  VIS   Investee accounted for using equity method   Purchases     2,818,795       8     Net 30 days after monthly closing         (806,789 )     8      
GUC
  TSMC-North America   The same Parent   Purchases     694,918       43     Net 30 days after invoice date         (91,620 )     30      
Note:   The terms of sales to related parties are not significantly different from those to third parties. For purchase transactions, prices are determined in accordance with the related contractual agreements and no other similar transaction could be compared with.

- 61 -


 

TABLE 7
Taiwan Semiconductor Manufacturing Company Limited
RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
SEPTEMBER 30, 2006
(Amounts in Thousands of New Taiwan Dollars)
                                             
                                    Amounts Received    
                        Overdue   in Subsequent   Allowance for Bad
Company Name   Related Party   Nature of Relationship   Ending Balance   Turnover Rate   Amounts   Action Taken   Period   Debts
The Company
  TSMC-North America   Subsidiary   $ 21,908,508     40 days   $ 5,165,276     -   $ 7,044,667     $—
 
  Philips   Major shareholder     224,516     34 days     4,693     Accelerate demand on account receivables     1,226    
 
  GUC  
Investee over which the Company had a
controlling interest
    139,273     53 days     1,514     -     72,757    
 
  TSMC-Shanghai   Subsidiary     482,542     Note     254,572     Accelerate demand on account receivables        
 
  SSMC   Investee accounted for using equity method     142,521     Note         Accelerate demand on account receivables        
Note:   The ending balance primarily consisted of other receivables, it is not applicable for the calculation of the turnover rate.

- 62 -


 

TABLE 8
Taiwan Semiconductor Manufacturing Company Limited
NAMES, LOCATIONS, AND RELATED INFORMATION OF INVESTEES ON WHICH THE COMPANY EXERCISES
SIGNIFICANT INFLUENCE
SEPTEMBER 30, 2006
(Amounts in Thousands of New Taiwan Dollars)
                                                                         
                Original Investment Amount   Balance as of September 30, 2006   Net Income   Equity in the    
                September 30,   December 31,   Shares (in   Percentage of   Carrying   (Losses) of the   Earnings    
Investor Company   Investee Company   Location   Main Businesses and Products   2006   2005   Thousands)   Ownership   Value (Note)   Investee   (Losses)   Note
The Company
  TSMC Global   Tortola, British Virgin Islands   Investment activities   $ 27,925,685     $       851       100     $ 28,423,113     $ 161,639     $ 161,639     Subsidiary
 
  TSMC International   Tortola, British Virgin Islands  
Providing investment in companies involved in the design, manufacture, and other related business in the semiconductor industry
    31,445,780       31,445,780       987,968       100       27,017,212       2,808,423       2,808,423     Subsidiary
 
  TSMC-Shanghai   Shanghai, China  
Manufacturing and sales of integrated circuits at the order of and pursuant to product design specifications provided by customers
    12,180,367       12,180,367             100       9,250,288       (442,392 )     (442,392 )   Subsidiary
 
  SSMC   Singapore  
Fabrication and supply of integrated circuits
    6,408,190       6,408,190       382       32       5,611,199       4,175,855       1,336,274     Investee accounted for
   using equity method
 
  VIS   Hsin-Chu, Taiwan  
Research, design, development, manufacture, packaging, testing and sale of memory integrated circuits, LSI, VLSI and related parts
    8,119,816       8,119,816       442,262       27       5,359,803       1,942,693       466,490     Investee accounted for
   using equity method
 
  TSMC Partners   Tortola, British Virgin Islands   Investment activities     10,350       10,350       300       100       4,397,781       234,854       234,854     Subsidiary
 
  TSMC-North America   San Jose, California, U.S.A.  
Sales and marketing of integrated circuits and semiconductor devices
    333,718       333,718       11,000       100       1,876,355       71,167       71,167     Subsidiary
 
  Emerging Alliance   Cayman Islands   Investing in new start-up technology companies     1,412,235       1,526,074             99       908,370       53,419       53,151     Subsidiary
 
  VTAF II   Cayman Islands   Investing in new start-up technology companies     745,604       654,509             98       717,136       (31,728 )     (31,093 )   Subsidiary
 
  GUC   Hsin-Chu, Taiwan  
Researching, developing, manufacturing, testing and marketing of integrated circuits
    409,920       409,920       42,315       44       468,150       92,083       40,554    
Investee over which the Company has a controlling interest
 
  VTAF III   Cayman Islands   Investing in new start-up technology companies     228,314                   98       224,580       (14,526 )     (14,236 )   Subsidiary
 
  Chi Cherng   Taipei, Taiwan   Investment activities     300,000       300,000             36       115,347       101,601       (4,835 )   Subsidiary
 
  Hsin Ruey   Taipei, Taiwan   Investment activities     300,000       300,000             36       114,548       101,558       (4,928 )   Subsidiary
 
  TSMC-Japan   Yokohama, Japan   Marketing activities     83,760       83,760       6       100       97,810       2,542       2,542     Subsidiary
 
  TSMC-Europe   Amsterdam, the Netherlands   Marketing activities     15,749       15,749             100       44,143       18,492       18,492     Subsidiary
 
  TSMC-Korea   Seoul, Korea   Marketing activities     13,656             80       100       14,432       420       420     Subsidiary
Note:   The treasury stock is deducted from the carrying value.

- 63 -


 

TABLE 9
Taiwan Semiconductor Manufacturing Company Limited
INFORMATION OF INVESTMENT IN MAINLAND CHINA
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
                                                                     
                    Accumulated           Accumulated                            
                    Outflow of           Outflow of                            
                    Investment           Investment                           Accumulated
        Total Amount       from Taiwan as           from Taiwan as                           Inward
        of Paid-in       of   Investment Flows   of           Equity in the   Carrying Value   Remittance of
        Capital       January 1, 2006   Outflow       September 30,           Earnings   as of   Earnings as of
    Main Businesses and   (RMB in   Method of   (US$ in   (US$ in       2006 (US$ in   Percentage of   (Losses)   September 30,   September 30,
Investee Company   Products   Thousand)   Investment   Thousand)   Thousand)   Inflow   Thousand)   Ownership   (Note 2)   2006   2006
TSMC (Shanghai) Company Limited
 
Manufacturing and sales of integrated circuits at the order of and pursuant to product design specifications provided by
  $ 12,180,367           $12,180,367               $12,180,367                              
 
 
customers
  (RMB3,070,623)   (Note 1)     (US$371,000 )   $—   $—     (US$371,000 )     100 %   $ (442,392 )   $ 9,250,288     $—
         
Accumulated Investment in Mainland   Investment Amounts Authorized by    
China as of September 30, 2006   Investment Commission, MOEA   Upper Limit on Investment
(US$ in Thousand)   (US$ in Thousand)   (US$ in Thousand)
$12,180,367
(US$371,000)
  $12,180,367
(US$371,000)
  $12,180,367
(US$371,000)
Note 1: Direct investments US$371,000 thousand in TSMC-Shanghai.
Note 2: Amount was recognized based on the reviewed financial statements.
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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: October 27, 2006  By   /s/ Lora Ho    
    Lora Ho   
    Vice President & Chief Financial Officer