Edgar Filing: TAIWAN SEMICONDUCTOR MANUFACTURING CO LTD

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1934 Act Registration No. 1-14700

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 6-K

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

For the month of July 2010

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: .)

SIGNATURES

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


	Taiwan Semiconductor Manufacturing Company Ltd.
Date: July 29, 2010	By	/s/ Lora Ho
		Lora Ho
		Vice President & Chief Financial Officer

FOR IMMEDIATE RELEASE


		2Q10		Quarterly Management Report July 29, 2010

CONTACT
Elizabeth Sun
Investor Relations Division
TSMC
invest@tsmc.com
886-3-568-2085

Topics in This Report

•

Revenue Analysis

•

Profit & Expense Analysis

•

Financial Condition Review

•

Cash Flow

•

CapEx & Capacity

•

Recap of Recent Important Events & Announcements

Operating Results Review:

Summary:


(Amounts are on consolidated basis and are in NT billions except otherwise noted)	2Q10			1Q10			2Q09			QoQ			YoY
EPS (NT$ per common share)		1.55			1.30			0.94			19.7	%		65.0	%
(US$ per ADR unit)		0.24			0.20			0.14

Consolidated Net Sales		104.96			92.19			74.21			13.9	%		41.4	%
Gross Profit		51.93			44.19			34.30			17.5	%		51.4	%
Gross Margin		49.5	%		47.9	%		46.2	%

Operating Expense		(11.46	)		(10.06	)		(9.17	)		13.9	%		25.0	%
Operating Income		40.47			34.13			25.13			18.6	%		61.1	%
Operating Margin		38.6	%		37.0	%		33.9	%
Non-Operating Items		1.94			1.18			1.26

Net Income		40.28			33.66			24.44			19.7	%		64.8	%
Net Profit Margin		38.4	%		36.5	%		32.9	%

Wafer Shipment (kpcs 8 inch-equiv.)		2,927			2,547			1,971			14.9	%		48.5	%

Note: Total outstanding shares were 25,905mn units on 6/30/10

Financial Highlights:

Second Quarter 2010

•		Consolidated net sales were NT$104.96 billion, representing a 13.9% increase from NT$92.19 billion in 1Q10 and a 41.4% increase from NT$74.21 billion in 2Q09.

•		Gross margin was 49.5%, up 1.6 percentage points from 1Q10, and up 3.3 percentage points from 2Q09.

•		Operating margin was 38.6%, 1.6 percentage points higher than 1Q10 and 4.7 percentage points higher than 2Q09.

•		Non-operating income and long-term investment combined were a gain of NT$1.94 billion, compared to a gain of NT$1.18 billion in 1Q10, and NT$1.26 billion in 2Q09.

•		Consolidated net income attributable to shareholders of the parent company was NT$40.28 billion, up 19.7% from 1Q10. Net profit margin was 38.4% and diluted EPS was NT$1.55.


TSMC
July 29, 2010		Page 2

I. Revenue Analysis

I. Wafer Sales Analysis


By Application	2Q10			1Q10			2Q09
Computer		29	%		32	%		26	%
Communication		41	%		39	%		42	%
Consumer		15	%		14	%		18	%
Industrial/Others		15	%		15	%		14	%


By Technology	2Q10			1Q10			2Q09
40/45nm		16	%		14	%		1	%
65nm		27	%		27	%		28	%
90nm		16	%		17	%		23	%
0.11/0.13um		13	%		13	%		13	%
0.15/0.18um		17	%		18	%		23	%
0.25/0.35um		8	%		8	%		9	%
0.50um+		3	%		3	%		3	%


By Customer Type	2Q10			1Q10			2Q09
Fabless/System		79	%		77	%		82	%
IDM		21	%		23	%		18	%


By Geography	2Q10			1Q10			2Q09
North America		66	%		68	%		65	%
Asia Pacific		15	%		15	%		18	%
China		3	%		2	%		3	%
Europe		11	%		11	%		11	%
Japan		5	%		4	%		3	%

Revenue Analysis:

2Q10 revenue was NT$104.96 billion, representing a 14% increase from 1Q10. Consumer was the strongest with a 26% sequential growth. Communication and Industrial grew 22% and 14% from the prior quarter, respectively, while Computer related applications grew 1%.

In terms of technology, revenues from all geometries grew sequentially. 40/45nm continued ramping and reached 16% of total wafer sales in 2Q10, from 14% in 1Q10. The revenue mix of 65nm and 90nm remained stable at 27% and 16% of total wafer sales, respectively. Revenues from 0.13-micron and below represented 72% of total wafer sales.

Revenues from IDM customers grew 11% sequentially, representing 21% of total wafer sales in 2Q10, compared with 23% in 1Q10 and 18% in 2Q09.

Revenues from all geographic locations grew strongly from the last quarter. Customers based in North America accounted for 66% of total wafer sales, followed by Asia Pacific with 15%. Europe, Japan and China accounted for 11%, 5%, and 3% of total wafer sales, respectively.

II. Profit & Expense Analysis

II — 1. Gross Profit Analysis

(In NT billions)

2Q10

1Q10

2Q09

COGS

53.03

48.00

39.91

Depreciation

19.26

19.22

18.54

Other MFG Cost

33.77

28.78

21.37

Gross Profit

51.93

44.19

34.30

Gross Margin

49.5

47.9

46.2

Gross Profit Analysis:

2Q10 gross margin reached 49.5%, up 1.6 percentage points from 1Q10, primarily due to higher capacity utilization and cost improvement, partially offset by an adverse inventory valuation adjustment under ROC SFAS No.10 and an increase in raw material costs.



TSMC
July 29, 2010		Page 3

II — 2. Operating Expenses

(In NT billions)

2Q10

1Q10

2Q09

Total Operating Exp.

11.46

10.06

9.17

SG&A

4.27

3.65

4.07

Research & Development

7.19

6.41

5.10

Total Operating Exp. as a % of Sales

10.9

12.3

Operating Expenses:

Total operating expenses were NT$11.46 billion, representing 10.9% of 2Q10 net sales.

SG&A expenses increased NT$0.62 billion sequentially, in support of expanded business scale and activities.

Research and development expenditures were NT$0.78 billion higher compared with the prior quarter, reflecting a faster pace for the development of the most advanced technologies.

II — 3. Non-Operating Items


(In NT billions)	2Q10		1Q10			2Q09
Non-Operating Inc./(Exp.)		1.41		1.00			1.15
Net Interest Income/(Exp.)		0.33		0.32			0.56
Other Non-Operating		1.08		0.68			0.59

L-T Investments		0.53		0.18			0.11
SSMC		0.33		0.19			0.19
Others		0.20		(0.01	)		(0.08	)

Total Non-Operating Items		1.94		1.18			1.26

Non-Operating Items:

Total non-operating items were a gain of NT$1.94 billion for 2Q10.

Non-operating income was NT$1.41 billion, up NT$0.41 billion from 1Q10, primarily due to the absence of earthquake scrap loss in 1Q and higher disposal gain from financial assets.

Net investment gain was NT$0.53 billion, or NT$0.35 billion higher than the prior quarter, mostly due to business improvement among certain invested companies.

III. Financial Condition Review

III — 1. Liquidity Analysis

(Selected Balance Sheet Items)


(In NT billions)	2Q10		1Q10		2Q09
Cash & Marketable Securities		206.54		192.01		246.77
Accounts Receivable — Trade		48.06		39.77		33.38
Inventory		24.80		22.69		18.97
Total Current Assets		286.62		265.62		309.42
Short-term Loans		18.08		0.32		0.00
Accounts Payable		38.79		40.41		25.96
Dividends Payable		77.89		0.00		77.17
Accrued Employee Profit Sharing / Bonus		14.57		11.39		11.49
Accrued Liabilities and Others		16.94		26.06		15.01
Total Current Liabilities		166.27		78.18		129.63
Current Ratio (x)		1.7		3.4		2.4
Net Working Capital		120.35		187.44		179.79

Liquidity Analysis:

At the end of 2Q10, cash and marketable securities totaled NT$206.54 billion, up NT$14.53 billion from 1Q10.

Accounts receivable increased NT$8.29 billion, along with stronger business activities in 2Q10.

Inventory grew NT$2.11 billion sequentially, in preparation for the higher demand level in 3Q10.

Total current liabilities increased NT$88.09 billion, primarily attributed to the increase in cash dividends payable and an increase in short-term loans, partially offset by the reduction in accrued liabilities (tax payable).

Net working capital was NT$120.35 billion and current ratio was 1.7x.



TSMC
July 29, 2010		Page 4

III — 2. Receivable/Inventory Days


(In Number of Days)	2Q10		1Q10		2Q09
Days of Receivable		39		38		30
Days of Inventory		45		45		42

Receivable and Inventory Days:

Days of receivable increased by one day to 39 days in 2Q10, while days of inventory stayed flat at 45 days.

III — 3. Debt Service

(In NT billions)

2Q10

1Q10

2Q09

Cash & Marketable Securities

206.54

192.01

246.77

Interest-bearing Debt

31.96

14.18

15.57

Net Cash Reserves

174.58

177.83

231.20

Debt Service:

Net cash reserves, defined as cash and short-term marketable securities minus interest-bearing debt, decreased NT$3.25 billion to NT$174.58 billion in 2Q10. The decrease is mainly due to an increase of NT$17.76 billion in short-term loans, which more than offset the increase of NT$14.53 billion in cash and marketable securities. The purpose of the short-term loans was to hedge a portion of the company’s US dollar position.

IV. Cash Flow

IV — 1.1. Cash Flow Analysis


(In NT billions)	2Q10			1Q10			2Q09
Net Income		40.28			33.66			24.44
Depreciation & Amortization		21.13			21.00			20.05
Other Operating Sources/(Uses)		(12.48	)		(8.63	)		(19.97	)
Total Operating Sources/(Uses)		48.93			46.03			24.52


Capital Expenditure		(52.72	)		(46.14	)		(7.42	)
Marketable Financial Instruments		0.17			(3.64	)		1.68
Long Term Investment		(1.62	)		(6.23	)		n.a
Other Investing Sources/(Uses)		(0.04	)		(0.28	)		(0.25	)
Net Investing Sources/(Uses)		(54.21	)		(56.29	)		(5.99	)


Proceeds from Short Term Loans		17.76			0.32			0.00
Other Financing Sources/(Uses)		(0.15	)		(1.16	)		(0.34	)
Net Financing Sources/(Uses)		17.61			(0.84	)		(0.34	)


Net Cash Position Changes		12.33			(11.10	)		18.19

Exchange Rate Changes & Others		0.36			(0.38	)		(1.93	)

Ending Cash Balance		172.49			159.80			239.52

Summary of Cash Flow:

Cash generated from operating activities totaled NT$48.93 billion during the quarter, up NT$2.90 billion from 1Q10, mainly due to an increase in net income, partially offset by an increase in net working capital.

Net cash used in investing activities totaled NT$54.21 billion, which mainly represents capital expenditures of NT$52.72 and a long-term investment of NT$1.62 billion in Stion.

Net cash generated in financing activities totaled NT$17.61 billion during the quarter, mainly due to the proceeds from the aforementioned short-term loans.

As a result, TSMC ended 2Q10 with a cash balance of NT$172.49 billion.



TSMC
July 29, 2010		Page 5

Operating and Free Cash Flows:

Free cash flow, defined as the excess of operating cash flows over capital expenditures, was negative NT$3.79 billion in 2Q10.

V. CapEx & Capacity

V — 1. Capital Expenditures


(In US millions)	1Q10		2Q10		YTD
TSMC		1,433		1,645		3,078
XinTec and GUC		2		4		6
TSMC China & WaferTech		8		7		15
Other TSMC Subsidiaries		1		1		2

Total TSMC		1,444		1,657		3,101

Capital Expenditures:

Capital expenditures for TSMC on a consolidated basis totaled US$1.66 billion in 2Q10.

Total capital expenditures in the first half of 2010 were US$3.10 billion.

V — 2. Capacity


	2009		1Q10		2Q10		3Q10		4Q10		2010
Fab / (Wafer size)	(A)		(A)		(A)		(F)		(F)		(F)
Fab-2 (6")⁽¹⁾		1,121		254		236		255		255		1,000
Fab-3 (8")		1,150		267		282		300		300		1,149
Fab-5 (8")		599		139		144		141		141		564
Fab-6 (8")		1,154		269		280		282		282		1,113
Fab-8 (8")		1,066		247		253		254		255		1,009
Fab-12 (12")⁽²⁾		879		269		300		309		315		1,194
Fab-14 (12")⁽²⁾		958		261		299		357		395		1,313
WaferTech (8")		431		106		107		108		108		429
TSMC China (8")		531		132		134		145		147		557
TSMC total capacity (8" equiv. Kpcs)		9,695		2,497		2,680		2,872		2,974		11,023
SSMC (8")		259		69		69		69		69		276
Total managed capacity (8" equiv. Kpcs)		9,955		2,566		2,749		2,941		3,043		11,299


(1)		Figures represent number of 6" wafers. Conversion to 8"-equivalent wafers is obtained by dividing this number by 1.78

(2)		Figures represent number of 12" wafers. Conversion to 8"-equivalent wafers is obtained by multiplying this number by 2.25

Capacity:

Due to continuing strong demand for TSMC’s advanced technologies, TSMC has accelerated its capacity expansion plan for 2010. Current capacity plan calls for an overall increase by 14% to 11,299 8-inch equivalent wafers, compared with 11,247 8-inch equivalent wafers planned in the last quarter. 12-inch wafer capacity will increase 36% in 2010 under the current plan.

Total managed capacity was 2,749K 8-inch equivalent wafers in 2Q10, increased by 7% from 2,566K in 1Q10.



TSMC
July 29, 2010		Page 6

VI. Recap of Recent Important Events & Announcements

•		TSMC Announces Automotive Qualified 0.25-Micron One-Time-Programmable IP (2010/06/30)

•		TSMC Sets July 6th as Common Share Ex-dividend Date (2010/06/21)

•		TSMC and Stion Sign Technology and Supply Agreement (2010/06/16)

•		TSMC Shareholders Approve NT$3.0 Cash Dividend and Sets July 12 as Record Date for Common Share Dividends (2010/06/15)

•		TSMC New Standard Cell Slim Library Reduces Logic Area 15% (2010/06/15)

•		TSMC Extends Open Innovation Platform™ and Unveils Three Immediate Design Enablement Initiatives (2010/06/07)

•		TSMC Announces 0.18-Micron Automotive Grade Embedded Flash IP (2010/05/27)

•		TSMC Board of Directors Approved Capital Appropriations to Expand Capacity and the Full Conversion of TSMC’s Common Shares into Paperless Form (2010/05/11)

•		TSMC Ships 600,000 0.25-Micron Automotive-Qualified Embedded Flash Wafers (2010/04/21)

•		TSMC Announces Move to 20nm Process (2010/04/14)

•		TSMC Delivers Interoperable EDA Formats for Advanced Process Technologies (2010/04/07)

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


	June 30, 2010 (audited)									March 31, 2010 (unaudited)						June 30, 2009 (audited)						QoQ						YoY
	USD			NTD			%			NTD			%			NTD			%			Amount			%			Amount			%
ASSETS
Current Assets
Cash and Cash Equivalents	$	5,344		$	172,486			25.3		$	159,800			25.5		$	239,517			40.8		$	12,686			7.9		$	(67,031	)		(28.0	)
Investments in Marketable Financial Instruments		1,055			34,056			5.0			32,210			5.1			7,252			1.2			1,846			5.7			26,804			369.6
Accounts Receivable — Trade		1,489			48,062			7.1			39,771			6.3			33,384			5.7			8,291			20.8			14,678			44.0
Inventories		768			24,800			3.6			22,694			3.6			18,974			3.2			2,106			9.3			5,826			30.7
Other Current Assets		224			7,211			1.1			11,141			1.9			10,292			1.8			(3,930	)		(35.3	)		(3,081	)		(29.9	)

Total Current Assets		8,880			286,615			42.1			265,616			42.4			309,419			52.7			20,999			7.9			(22,804	)		(7.4	)


Long-term Investments		1,269			40,962			6.0			39,763			6.3			32,498			5.5			1,199			3.0			8,464			26.0

Properties, Plant and Equipment		32,930			1,062,915			156.1			1,012,982			161.6			881,897			150.1			49,933			4.9			181,018			20.5
Less: Accumulated Depreciation		(22,754	)		(734,445	)		(107.8	)		(713,353	)		(113.8	)		(656,826	)		(111.8	)		(21,092	)		3.0			(77,619	)		11.8

Properties, Plant and Equipment, Net		10,176			328,470			48.3			299,629			47.8			225,071			38.3			28,841			9.6			103,399			45.9


Intangible and Other Assets		766			24,729			3.6			21,821			3.5			20,555			3.5			2,908			13.3			4,174			20.3

Total Assets	$	21,091		$	680,776			100.0		$	626,829			100.0		$	587,543			100.0		$	53,947			8.6		$	93,233			15.9


LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Short-term Loans	$	560		$	18,083			2.7		$	318			—		$	—			—		$	17,765			5582.0		$	18,083
Accounts Payables		398			12,867			1.9			11,626			1.9			10,105			1.7			1,241			10.7			2,762			27.3
Payables to Contractors and Equipment Suppliers		803			25,922			3.8			28,785			4.6			15,853			2.7			(2,863	)		(9.9	)		10,069			63.5
Accrued Expenses and Other Current Liabilities		3,362			108,504			15.9			36,501			5.9			103,363			17.6			72,003			197.3			5,141			5.0
Current Portion of Bonds Payable and Long-term Debts		28			889			0.1			945			0.1			309			0.1			(56	)		(5.9	)		580			187.8

Total Current Liabilities		5,151			166,265			24.4			78,175			12.5			129,630			22.1			88,090			112.7			36,635			28.3

Bonds Payable		139			4,500			0.7			4,500			0.7			4,500			0.8			—			—			—			—
Other Long-term Liabilities		407			13,138			1.9			11,849			1.9			16,060			2.7			1,289			10.9			(2,922	)		(18.2	)

Total Liabilities		5,697			183,903			27.0			94,524			15.1			150,190			25.6			89,379			94.6			33,713			22.4


Shareholders’ Equity Attributable to Shareholders of the Parent
Capital Stock at Par Value		8,026			259,050			38.0			259,038			41.3			258,964			44.1			12			0.0			86			0.0
Capital Surplus		1,721			55,567			8.2			55,531			8.9			55,331			9.4			36			0.1			236			0.4
Legal Capital Reserve⁽²⁾		2,672			86,239			12.7			77,317			12.3			77,317			13.2			8,922			11.5			8,922			11.5
Special Capital Reserve⁽²⁾		41			1,313			0.2			—			—			—			—			1,313						1,313
Unappropriated Earnings⁽²⁾		2,806			90,567			13.3			138,228			22.1			41,348			7.0			(47,661	)		(34.5	)		49,219			119.0
Treasury Stock		—			—			—			—			—			—			—			—						—
Others		(2	)		(52	)		—			(1,976	)		(0.3	)		801			0.1			1,924			(97.4	)		(853	)		(106.5	)

Equity Attributable to Shareholders of the Parent		15,264			492,684			72.4			528,138			84.3			433,761			73.8			(35,454	)		(6.7	)		58,923			13.6
Minority Interests		130			4,189			0.6			4,167			0.6			3,592			0.6			22			0.5			597			16.6

Total Shareholders’ Equity		15,394			496,873			73.0			532,305			84.9			437,353			74.4			(35,432	)		(6.7	)		59,520			13.6

Total Liabilities & Shareholders’ Equity	$	21,091		$	680,776			100.0		$	626,829			100.0		$	587,543			100.0		$	53,947			8.6		$	93,233			15.9

Note:



(1)		Amounts in New Taiwan dollars have been translated into U.S. dollars at the rate of NT$32.278 as of June 30, 2010.

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

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED AND SUBSIDIARIES
Unaudited Consolidated Condensed Income Statements
For the Three Months Ended June 30, 2010, March 31, 2010, June 30, 2009
(Expressed in Millions of New Taiwan Dollars (“NTD”) and U.S. Dollars (“USD”) ⁽¹⁾
Except for Per Share Amounts and Shares Outstanding)


	2Q 2010									1Q 2010						2Q 2009						QoQ					YoY
	USD			NTD			%			NTD			%			NTD			%			Amount			%		Amount			%
Net Sales	$	3,299		$	104,962			100.0		$	92,187			100.0		$	74,212			100.0		$	12,775			13.9	$	30,750			41.4
Cost of Sales		(1,667	)		(53,036	)		(50.5	)		(48,002	)		(52.1	)		(39,916	)		(53.8	)		(5,034	)		10.5		(13,120	)		32.9

Gross Profit		1,632			51,926			49.5			44,185			47.9			34,296			46.2			7,741			17.5		17,630			51.4

Operating Expenses
Research and Development Expenses		(226	)		(7,190	)		(6.9	)		(6,410	)		(7.0	)		(5,096	)		(6.9	)		(780	)		12.2		(2,094	)		41.1
General and Administrative Expenses		(92	)		(2,931	)		(2.8	)		(2,472	)		(2.6	)		(2,881	)		(3.8	)		(459	)		18.6		(50	)		1.7
Sales and Marketing Expenses		(42	)		(1,337	)		(1.2	)		(1,175	)		(1.3	)		(1,192	)		(1.6	)		(162	)		13.6		(145	)		12.1

Total Operating Expenses		(360	)		(11,458	)		(10.9	)		(10,057	)		(10.9	)		(9,169	)		(12.3	)		(1,401	)		13.9		(2,289	)		25.0


Income from Operations		1,272			40,468			38.6			34,128			37.0			25,127			33.9			6,340			18.6		15,341			61.1


Non-Operating Income, Net		44			1,413			1.3			998			1.1			1,156			1.6			415			41.5		257			22.1
Equity in Earnings of Equity Method Investees, Net		17			529			0.5			177			0.2			106			0.1			352			198.8		423			400.3

Income before Income Tax		1,333			42,410			40.4			35,303			38.3			26,389			35.6			7,107			20.1		16,021			60.7

Income Tax Expenses		(61	)		(1,943	)		(1.8	)		(1,478	)		(1.6	)		(1,943	)		(2.7	)		(465	)		31.6		0			0.0


Net Income		1,272			40,467			38.6			33,825			36.7			24,446			32.9			6,642			19.6		16,021			65.5

Net Income Attributable to Minority Interests		(6	)		(185	)		(0.2	)		(162	)		(0.2	)		(4	)		—			(23	)		13.6		(181	)		4693.7


Net Income Attributable to Shareholders of the Parent		1,266			40,282			38.4			33,663			36.5			24,442			32.9			6,619			19.7		15,840			64.8


Earnings per Share — Diluted	$	0.05		$	1.55					$	1.30					$	0.94					$	0.25			19.7	$	0.61			65.0

Earnings per ADR — Diluted ⁽²⁾	$	0.24		$	7.77					$	6.49					$	4.71					$	1.28			19.7	$	3.06			65.0


Weighted Average Outstanding Shares - Diluted (‘M) ⁽³⁾					25,917						25,916						25,943

Note:



(1)		Amounts in New Taiwan dollars have been translated into U.S. dollars at the weighted average rate of NTD31.813 for the second quarter of 2010.

(2)		1 ADR equals 5 ordinary shares.

(3)		Total diluted weighted average outstanding shares were 25,916M and 25,943M shares for 1Q10 and 2Q09 after the retroactive adjustments for stock dividends and stock bonus.

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED AND SUBSIDIARIES
Audited Consolidated Condensed Income Statements
For the Six Months Ended June 30, 2010 and 2009
(Expressed in Millions of New Taiwan Dollars (“NTD”) and U.S. Dollars (“USD”)⁽¹⁾
Except for Per Share Amounts and Shares Outstanding)


	For The Six Months Ended June 30
	2010									2009						YoY
	USD			NTD			%			NTD			%			Amount			%
Net Sales	$	6,184		$	197,149			100.0		$	113,712			100.0		$	83,437			73.4
Cost of Sales		(3,169	)		(101,038	)		(51.2	)		(71,936	)		(63.3	)		(29,102	)		40.5

Gross Profit		3,015			96,111			48.8			41,776			36.7			54,335			130.1

Operating Expenses
Research and Development Expenses		(427	)		(13,600	)		(6.9	)		(8,825	)		(7.8	)		(4,775	)		54.1
General and Administrative Expenses		(169	)		(5,403	)		(2.7	)		(4,476	)		(3.9	)		(927	)		20.7
Sales and Marketing Expenses		(79	)		(2,512	)		(1.4	)		(2,139	)		(1.8	)		(373	)		17.4

Total Operating Expenses		(675	)		(21,515	)		(11.0	)		(15,440	)		(13.5	)		(6,075	)		39.3


Income from Operations		2,340			74,596			37.8			26,336			23.2			48,260			183.2


Non-Operating Income, Net		76			2,411			1.2			1,508			1.3			903			59.8
Equity in Earnings (Losses) of Equity Method Investees, Net		22			706			0.4			(707	)		(0.6	)		1,413			(199.9	)

Income before Income Tax		2,438			77,713			39.4			27,137			23.9			50,576			186.4

Income Tax Expenses		(107	)		(3,421	)		(1.7	)		(1,204	)		(1.1	)		(2,217	)		184.1


Net Income		2,331			74,292			37.7			25,933			22.8			48,359			186.5

Net Income Attributable to Minority Interests		(11	)		(347	)		(0.2	)		68			0.1			(415	)		(614.9	)


Net Income Attributable to Shareholders of the Parent		2,320			73,945			37.5			26,001			22.9			47,944			184.4


Earnings per Share — Diluted	$	0.09		$	2.85					$	1.00					$	1.85			184.7

Earnings per ADR — Diluted ⁽²⁾	$	0.45		$	14.27					$	5.01					$	9.26			184.7


Weighted Average Outstanding Shares - Diluted (‘M) ⁽³⁾					25,917						25,944

Note:



(1)		Amounts in New Taiwan dollars have been translated into U.S. dollars at the weighted average rate of NTD 31.879 for the six months ended June 30, 2010.

(2)		1 ADR equals 5 ordinary shares.

(3)		Total diluted weighted average outstanding shares were 25,944M shares for the six months ended June 30, 2009 after the retroactive adjustment for stock dividends.

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED AND SUBSIDIARIES
Consolidated Condensed Statements of Cash Flows
For the Six Months Ended June 30, 2010, and for the Three Months Ended June 30, 2010, March 31, 2010 and June 30, 2009
(Expressed in Millions of New Taiwan Dollars (“NTD”) and U.S. Dollars (“USD”)) ⁽¹⁾


	Six Months 2010						2Q 2010			1Q 2010			2Q 2009
	(Audited)						(unaudited)			(unaudited)			(unaudited)
	USD			NTD			NTD			NTD			NTD
Cash Flows from Operating Activities:
Net Income Attributable to Shareholders of the Parent	$	2,320		$	73,945		$	40,282		$	33,663		$	24,442
Net Income Attributable to Minority Interest		11			347			185			162			4
Depreciation & Amortization		1,322			42,134			21,131			21,003			20,053
Deferred Income Tax		(27	)		(856	)		(138	)		(718	)		697
Equity in Earnings of Equity Method Investees, Net		(22	)		(706	)		(529	)		(177	)		(106	)
Changes in Working Capital & Others		(625	)		(19,904	)		(12,005	)		(7,899	)		(20,566	)

Net Cash Provided by Operating Activities		2,979			94,960			48,926			46,034			24,524

Cash Flows from Investing Activities:
Acquisitions of:
Marketable Financial Instruments		(1,143	)		(36,435	)		(10,577	)		(25,858	)		(968	)
Investments Accounted for Using Equity Method		(196	)		(6,242	)		(13	)		(6,229	)		—
Property, Plant and Equipment		(3,101	)		(98,857	)		(52,721	)		(46,136	)		(7,415	)
Financial Assets Carried at Cost		(54	)		(1,723	)		(1,612	)		(111	)		(48	)
Proceeds from Disposal or Redemption of:
Marketable Financial Instruments		1,034			32,970			10,750			22,220			2,651
Property, Plant and Equipment		4			112			76			36			3
Financial Assets Carried at Cost		6			180			154			26			75
Others		(16	)		(503	)		(266	)		(237	)		(291	)

Net Cash Used In Investing Activities		(3,466	)		(110,498	)		(54,209	)		(56,289	)		(5,993	)

Cash Flows from Financing Activities:
Increase in Short-term Loans		567			18,083			17,765			318			—
Decrease in Guarantee Deposits		(4	)		(128	)		(38	)		(90	)		(86	)
Proceeds from Exercise of Employee Stock Options		3			86			49			37			14
Others		(40	)		(1,268	)		(160	)		(1,108	)		(265	)

Net Cash Provided by (Used in) Financing Activities		526			16,773			17,616			(843	)		(337	)


Net Increase (Decrease) in Cash and Cash Equivalents		39			1,235			12,333			(11,098	)		18,194


Effect of Exchange Rate Changes on Cash and Cash Equivalents		(1	)		(25	)		353			(378	)		(1,939	)

Cash and Cash Equivalents at Beginning of Period		5,373			171,276			159,800			171,276			223,262


Cash and Cash Equivalents at End of Period	$	5,411		$	172,486		$	172,486		$	159,800		$	239,517

Note:

(1)

Amounts in New Taiwan dollars have been translated into U.S. dollars at the weighted average rate of NTD31.879 for the six months ended June 30, 2010.

TSMC 2010 Second Quarter Investor Conference July 29, 2010

Agenda Welcome Elizabeth Sun 2Q10 Financial Results and 3Q10 Outlook Lora Ho CEO Comments Morris Chang Q&A Morris Chang / Lora Ho

Safe Harbor Notice TSMC's statements of its current expectations are forward- looking statements subject to significant risks and uncertainties and actual results may differ materially from those contained in the forward-looking statements. Information as to those factors that could cause actual results to vary can be found in TSMC's Annual Report on Form 20-F filed with the United States Securities and Exchange Commission (the "SEC") on April 15, 2010 and such other documents as TSMC may file with, or submit to, the SEC from time to time. Except as required by law, we undertake no obligation to update any forward-looking statement, whether as a result of new information, future events, or otherwise.

2Q10 Financial Highlights

Income Statements

2Q10 Revenue by Applications

2Q10 Revenue by Technology

Balance Sheets & Key Indices Asset productivity = Annualized net sales / Average net fixed assets. (1)

Cash Flows Free cash flow = Operating cash flow - Capital expenditures. (1)

Figures represent number of 6" wafers. Conversion to 8"-equivalent wafers is obtained by dividing this number by 1.78. Figures represent number of 12" wafers. Conversion to 8"-equivalent wafers is obtained by multiplying this number by 2.25. Installed Capacity 2010 Overall Capacity +14%; Advanced Capacity +36%

Capital Expenditures

3Q10 Guidance Revenue to be between NT$109 billion and NT$111 billion, at a forecast exchange rate of 31.87 NT dollars to 1 US dollar Gross profit margin to be between 48% and 50% Operating profit margin to be between 36% and 38%

Recap of Recent Major Events TSMC Announces Automotive Qualified 0.25-Micron One-Time-Programmable IP ( 2010/06/30 ) TSMC Sets July 6th as Common Share Ex-dividend Date ( 2010/06/21 ) TSMC and Stion Sign Technology and Supply Agreement ( 2010/06/16 ) TSMC Shareholders Approve NT$3.0 Cash Dividend and Sets July 12 as Record Date for Common Share Dividends ( 2010/06/15 ) TSMC New Standard Cell Slim Library Reduces Logic Area 15% ( 2010/06/15 ) TSMC Extends Open Innovation Platform(tm) and Unveils Three Immediate Design Enablement Initiatives ( 2010/06/07 ) TSMC Announces 0.18-Micron Automotive Grade Embedded Flash IP ( 2010/05/27 ) TSMC Board of Directors Approved Capital Appropriations to Expand Capacity and the Full Conversion of TSMC's Common Shares into Paperless Form ( 2010/05/11 ) TSMC Ships 600,000 0.25-Micron Automotive-Qualified Embedded Flash Wafers ( 2010/04/21 ) TSMC Announces Move to 20nm Process ( 2010/04/14 ) TSMC Delivers Interoperable EDA Formats for Advanced Process Technologies ( 2010/04/07 ) * Please visit TSMC's Web site (http://www.tsmc.com) for details and other announcements

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