Edgar Filing: TAIWAN SEMICONDUCTOR MANUFACTURING CO LTD

Form 6-K

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 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: ______.)

FOR IMMEDIATE RELEASE

CONTACT
Elizabeth Sun
Corporate Communication 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)*	3Q10			2Q10			3Q09			QoQ			YoY

EPS (NT$ per common share)		1.81			1.55			1.18			16.5	%		54.0	%
(US$ per ADR unit)		0.28			0.24			0.18

Consolidated Net Sales		112.25			104.96			89.94			6.9	%		24.8	%
Gross Profit		56.13			51.93			42.86			8.1	%		31.0	%
Gross Margin		50.0	%		49.5	%		47.7	%

Operating Expense		(13.06	)		(11.46	)		(10.87	)		14.0	%		20.1	%
Operating Income		43.07			40.47			31.99			6.4	%		34.6	%
Operating Margin		38.4	%		38.6	%		35.6	%
Non-Operating Items		6.61			1.94			0.97

Net Income		46.94			40.28			30.55			16.5	%		53.6	%
Net Profit Margin		41.8	%		38.4	%		34.0	%

Wafer Shipment (kpcs 8 inch-equiv.)		3,191			2,927			2,445			9.0	%		30.5	%

Note: Total outstanding shares were 25,907mn units on 9/30/10

Financial Highlights:

Third Quarter 2010

•		Consolidated net sales were NT$112.25 billion, representing a 6.9% increase from NT$104.96 billion in 2Q10 and a 24.8% increase from NT$89.94 billion in 3Q09.

•		Gross margin was 50.0%, 0.5 percentage point higher than 2Q10 and 2.3 percentage points higher than 3Q09 level.

•		Operating margin was 38.4%, down 0.2 percentage point from 2Q10, and up 2.8 percentage points from 3Q09.

•		Non-operating income and long-term investment combined were a gain of NT$6.61 billion, compared to a gain of NT$1.94 billion in 2Q10, and NT$0.97 billion in 3Q09.

•		Consolidated net income attributable to shareholders of the parent company was NT$46.94 billion, up 16.5% from 2Q10. Net profit margin was 41.8% and diluted EPS was NT$1.81.



TSMC
October 28, 2010		Page 2

I. Revenue Analysis

I. Wafer Sales Analysis


By Application	3Q10			2Q10			3Q09
Computer		25	%		29	%		28	%
Communication		44	%		41	%		42	%
Consumer		14	%		15	%		16	%
Industrial/Others		17	%		15	%		14	%


By Technology	3Q10			2Q10			3Q09
40/45nm		17	%		16	%		4	%
65nm		29	%		27	%		31	%
90nm		14	%		16	%		18	%
0.11/0.13um		12	%		13	%		14	%
0.15/0.18um		17	%		17	%		21	%
0.25/0.35um		8	%		8	%		9	%
0.50um+		3	%		3	%		3	%


By Customer Type	3Q10			2Q10			3Q09
Fabless/System		78	%		79	%		80	%
IDM		22	%		21	%		20	%


By Geography	3Q10			2Q10			3Q09
North America		67	%		66	%		70	%
Asia Pacific		15	%		15	%		13	%
China		3	%		3	%		3	%
Europe		11	%		11	%		11	%
Japan		4	%		5	%		3	%

Revenue Analysis:

Third quarter revenue was NT$112.25 billion, representing a 6.9% increase from the prior quarter. Communication continued its strong momentum with a 13% QoQ growth. Consumer and Industrial increased 4% and 19% from 2Q10, respectively, while Computer declined 7% due to weaker-than-seasonal demand.

In terms of technology, we continued to see strong demand from customers adopting TSMC’s leading edge technologies. 40/45nm and 65nm continued to grow and represented 17% and 29% of total wafer sales, respectively. Revenues from 0.13-micron and below accounted for 72% of total wafer sales.

Revenues from IDM customers grew 14% in 3Q10, much stronger than the overall growth. IDM customers accounted for 22% of total wafer sales during the quarter.

From a geographic perspective, revenues from customers based in North America accounted for 67% of total wafer sales, while sales from Asia Pacific, China, Europe and Japan accounted for 15%, 3%, 11%, and 4% of total wafer sales, respectively.

II . Profit & Expense Analysis

II — 1. Gross Profit Analysis

(In NT billions)

3Q10

2Q10

3Q09

COGS

56.12

53.03

47.08

Depreciation

20.40

19.26

18.37

Other MFG Cost

35.72

33.77

28.71

Gross Profit

56.13

51.93

42.86

Gross Margin

50.0

49.5

47.7

Gross Profit Analysis:

Gross margin was 50.0% in 3Q10, up 0.5 percentage point from the prior quarter, primarily due to continued cost improvement and a favorable foreign exchange rate.



TSMC
October 28, 2010		Page 3

II — 2. Operating Expenses

(In NT billions)

3Q10

2Q10

3Q09

Total Operating Exp.

13.06

11.46

10.87

SG&A

5.02

4.27

4.67

Research & Development

8.04

7.19

6.20

Total Operating Exp. as a % of Sales

11.6

10.9

12.1

Operating Expenses:

Total operating expenses were NT$13.06 billion, representing 11.6% of net sales.

SG&A expenses increased NT$0.75 billion from 2Q10, primarily due to higher opening expenses for Fab 12 Phase 5.

Research and development expenditures increased NT$0.85 billion sequentially, mainly reflecting a higher level of development activities for 28nm and 20nm technologies.

II — 3. Non-Operating Items

(In NT billions)

3Q10

2Q10

3Q09

Non-Operating Inc./(Exp.)

5.71

1.41

0.52

Net Interest Income/(Exp.)

0.30

0.33

0.42

Other Non-Operating

5.41

1.08

0.10

L-T Investments

0.90

0.53

0.45

SSMC

0.35

0.33

0.26

Others

0.55

0.20

0.19

Total Non-Operating Items

6.61

1.94

0.97

Non-Operating Items:

Total non-operating items were a gain of NT$6.61 billion for 3Q10.

Non-operating income was NT$5.71 billion, up NT$4.30 billion from 2Q10, primarily accounting for the receipt of SMIC shares valued at NT$4.43 billion from the SMIC litigation settlement.

Net investment gain was NT$0.90 billion, up NT$0.37 billion from the prior quarter, reflecting business improvement among certain invested companies.

III. Financial Condition Review

III — 1. Liquidity Analysis
(Balance Sheet Items)


(In NT billions)	3Q10		2Q10		3Q09

Cash & Marketable Securities		167.21		206.54		180.32
Accounts Receivable — Trade		47.38		48.06		35.88
Inventory		26.66		24.80		19.18
Other Current Assets		5.39		7.22		8.86
Total Current Assets		246.64		286.62		244.24
Short Term Loans		37.91		18.08		0.00
Accounts Payable		39.74		38.79		26.30
Dividends Payable		0.00		77.89		0.00
Accrued Employee Profit Sharing/Bonus		11.50		14.57		8.62
Accrued Liabilities and Others		20.09		16.94		20.09
Total Current Liabilities		109.24		166.27		55.01
Current Ratio (x)		2.3		1.7		4.4
Net Working Capital		137.40		120.35		189.23

Liquidity Analysis:

At the end of 3Q10, total cash and marketable securities decreased by NT$39.33 billion to NT$167.21 billion, primarily due to cash dividends payment of NT$77.71 billion during this quarter.

Accounts receivable decreased slightly, while inventory increased NT$1.86 billion.

Total current liabilities decreased NT$57.03 billion in this quarter, primarily due to payment of cash dividends, partially offset by an increase of short-term loans.

Net working capital was NT$137.4 billion and current ratio was 2.3x.


TSMC October 28, 2010		Page 4

III - 2. Receivable/Inventory Days


(In Number of Days)	3Q10		2Q10		3Q09

Days of Receivable		39		39		36

Days of Inventory		47		45		41

Receivable and Inventory Days:

Days of receivable remained flat at 39 days in this quarter, while days of inventory increased by 2 days to 47 days.

III - 3. Debt Service

(In NT billions)

3Q10

2Q10

3Q09

Cash & Marketable Securities

167.21

206.54

180.32

Interest-Bearing Debt

51.59

31.96

15.33

Net Cash Reserves

115.62

174.58

164.99

Debt Service:

Net cash reserves, defined as cash and short-term marketable securities minus interest-bearing debt, decreased NT$58.96 billion to NT$115.62 billion in 3Q10. The decrease was mainly due to a decrease of NT$39.33 billion in cash and marketable securities and an increase of NT$19.83 billion in short-term loans for the purpose of hedging an increased portion of the company’s US dollar position.

IV. Cash Flow

IV - 1.1. Cash Flow Analysis


(In NT billions)	3Q10			2Q10			3Q09

Net Income		46.94			40.28			30.55
Depreciation & Amortization		22.37			21.13			20.00
Employee Profit Sharing Payment		n.a			n.a			(7.49	)
Other Operating Sources/(Uses)		(5.36	)		(12.48	)		3.60
Total Operating Sources/(Uses)		63.95			48.93			46.66

Capital Expenditure		(42.15	)		(52.72	)		(32.04	)
Marketable Financial Instruments		4.37			0.17			(18.94	)
Long Term Investment		0.00			(1.62	)		n.a
Other Investing Sources/(Uses)		(7.25	)		(0.04	)		(0.53	)
Net Investing Sources/(Uses)		(45.03	)		(54.21	)		(51.51	)

Proceeds from Short Term Loans		19.83			17.76			0.00
Cash Dividends		(77.71	)		0.00			(76.88	)
Other Financing Sources/(Uses)		(0.23	)		(0.15	)		(0.11	)
Net Financing Sources/(Uses)		(58.11	)		17.61			(76.99	)


Net Cash Position Changes		(39.19	)		12.33			(81.84	)

Exchange Rate Changes & Others		(1.03	)		0.36			(0.74	)

Ending Cash Balance		132.27			172.49			156.94

Summary of Cash Flow:

Cash generated from operating activities totaled NT$63.95 billion during the quarter, up NT$15.02 billion from 2Q10, mainly due to the increase in net income and decreased uses in non-cash net working capital.

Net cash used in investing activities totaled NT$45.03 billion, mostly for capital expenditures of NT$42.15 billion and other investing uses of NT$7.25 billion, which mainly reflect the deposits paid to equipment vendors.

Net cash used in financing activities totaled NT$58.11 billion during the quarter, mainly due to the payment of cash dividends, partially offset by proceeds from short-term loans.

As a result, TSMC ended 3Q10 with a cash balance of NT$132.27 billion.


TSMC October 28, 2010		Page 5

Operating and Free Cash Flows:

Free cash flow, defined as the excess of operating cash flows over capital expenditures, was NT$21.80 billion in 3Q10, compared to negative NT$3.79 billion in 2Q10 and NT$14.62 billion in 3Q09.

V. CapEx & Capacity

V-1. Capital Expenditures


(In US millions)	1Q10		2Q10		3Q10		YTD

TSMC		1,433		1,645		1,275		4,353
XinTec and GUC		2		4		10		16
TSMC China & WaferTech		8		7		34		49
Other TSMC Subsidiaries		1		1		0		2

Total TSMC		1,444		1,657		1,319		4,420

Capital Expenditures:

Capital expenditures for TSMC on a consolidated basis were US$1.32 billion in 3Q10.

Total capital expenditures in the first three quarters of 2010 reached US$4.42 billion.

V-2. Capacity


	2009		1Q10		2Q10		3Q10		4Q10		2010
Fab / (Wafer size)	(A)		(A)		(A)		(A)		(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		360		406		1,326
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		2,879		2,997		11,053
SSMC (8")		259		69		69		69		69		276
Total managed capacity (8" equiv. Kpcs)		9,955		2,566		2,749		2,948		3,066		11,329


(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:

During the third quarter, Fab 14 successfully accelerated productivity improvement on certain advanced technology ahead of our original schedule, which led to an upward revision of our annual capacity plan.

Total managed capacity in 2010 is now expected to increase 14% sequentially to 11,329K 8-inch equivalent wafers, compared with 11,299K 8-inch equivalent wafers planned in the prior quarter. 12-inch wafer capacity is expected to increase 37% in 2010.

Total managed capacity was 2,948K 8-inch equivalent wafers in 3Q10, increased by 7% from 2,749K in 2Q10.


TSMC October 28, 2010		Page 6

VI. Recap of Recent Important Events & Announcements

•		TSMC Begins Building Solar R&D Center and Fab in Central Taiwan ( 2010/09/16 )

•		TSMC Was Named the Semiconductor Sector Leader in 2010 Dow Jones Sustainability Index (DJSI) Survey and Included as Index Component for the 10th Consecutive Year ( 2010/09/09 )

•		ARM and TSMC Sign Long-Term Strategic Agreement That Enables Broad Processor and Physical IP Optimization on TSMC’s Most Advanced Technology Nodes ( 2010/07/20 )

•		TSMC Begins Construction on Gigafab^TM In Central Taiwan ( 2010/07/16 )


		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⁾


	September 30, 2010 (unaudited)									June 30, 2010 (audited)						September 30, 2009 (unaudited)						QoQ						YoY
	USD			NTD			%			NTD			%			NTD			%			Amount			%			Amount			%
ASSETS
Current Assets
Cash and Cash Equivalents	$	4,222		$	132,269			19.8		$	172,486			25.3		$	156,935			29.0			($40,217	)		(23.3	)		($24,666	)		(15.7	)
Investments in Marketable Financial Instruments		1,115			34,940			5.2			34,056			5.0			23,384			4.3			884			2.6			11,556			49.4
Accounts Receivable — Trade		1,512			47,381			7.1			48,062			7.1			35,881			6.6			(681	)		(1.4	)		11,500			32.1
Inventories		851			26,663			4.0			24,800			3.6			19,176			3.5			1,863			7.5			7,487			39.0
Other Current Assets		172			5,384			0.8			7,211			1.1			8,865			1.7			(1,827	)		(25.3	)		(3,481	)		(39.3	)

Total Current Assets		7,872			246,637			36.9			286,615			42.1			244,241			45.1			(39,978	)		(13.9	)		2,396			1.0


Long-term Investments		1,270			39,784			6.0			40,962			6.0			38,553			7.1			(1,178	)		(2.9	)		1,231			3.2

Properties, Plant and Equipment		35,197			1,102,720			165.2			1,062,915			156.1			911,844			168.3			39,805			3.7			190,876			20.9
Less: Accumulated Depreciation		(24,052	)		(753,541	)		(112.9	)		(734,445	)		(107.8	)		(675,028	)		(124.6	)		(19,096	)		2.6			(78,513	)		11.6

Properties, Plant and Equipment, Net		11,145			349,179			52.3			328,470			48.3			236,816			43.7			20,709			6.3			112,363			47.4


Intangible and Other Assets		1,020			31,952			4.8			24,729			3.6			22,287			4.1			7,223			29.2			9,665			43.4

Total Assets	$	21,307		$	667,552			100.0		$	680,776			100.0		$	541,897			100.0			($13,224	)		(1.9	)	$	125,655			23.2


LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Short-term Loans	$	1,210		$	37,910			5.7		$	18,083			2.7		$	—			—		$	19,827			109.7		$	37,910			—
Accounts Payables		418			13,092			2.0			12,867			1.9			10,633			2.0			225			1.8			2,459			23.1
Payables to Contractors and Equipment Suppliers		850			26,645			4.0			25,922			3.8			15,666			2.9			723			2.8			10,979			70.1
Accrued Expenses and Other Current Liabilities		980			30,718			4.6			108,504			15.9			28,401			5.2			(77,786	)		(71.7	)		2,317			8.2
Current Portion of Bonds Payable and Long-term Debts		28			871			0.1			889			0.1			309			0.1			(18	)		(2.1	)		562			182.2

Total Current Liabilities		3,486			109,236			16.4			166,265			24.4			55,009			10.2			(57,029	)		(34.3	)		54,227			98.6

Bonds Payable		144			4,500			0.7			4,500			0.7			4,500			0.8			—			—			—			—
Other Long-term Liabilities		412			12,912			1.9			13,138			1.9			15,761			2.9			(226	)		(1.7	)		(2,849	)		(18.1	)

Total Liabilities		4,042			126,648			19.0			183,903			27.0			75,270			13.9			(57,255	)		(31.1	)		51,378			68.3


Shareholders’ Equity Attributable to Shareholders of the Parent
Capital Stock at Par Value		8,269			259,074			38.8			259,050			38.0			259,007			47.8			23			0.0			66			0.0
Capital Surplus		1,776			55,634			8.3			55,567			8.2			55,440			10.2			67			0.1			194			0.4
Legal Capital Reserve⁽²⁾		2,753			86,239			12.9			86,239			12.7			77,317			14.3			—			—			8,922			11.5
Special Capital Reserve⁽²⁾		42			1,313			0.2			1,313			0.2			—			—			—			—			1,313			—
Unappropriated Earnings⁽²⁾		4,389			137,506			20.6			90,567			13.3			71,899			13.3			46,940			51.8			65,608			91.2
Others		(104	)		(3,243	)		(0.5	)		(52	)		—			(778	)		(0.2	)		(3,190	)		6091.5			(2,464	)		316.9

Equity Attributable to Shareholders of the Parent		17,125			536,523			80.3			492,684			72.4			462,885			85.4			43,840			8.9			73,639			15.9
Minority Interests		140			4,381			0.7			4,189			0.6			3,742			0.7			191			4.6			638			17.1

Total Shareholders’ Equity		17,265			540,904			81.0			496,873			73.0			466,627			86.1			44,031			8.9			74,277			15.9

Total Liabilities & Shareholders’ Equity	$	21,307		$	667,552			100.0		$	680,776			100.0		$	541,897			100.0			($13,224	)		(1.9	)	$	125,655			23.2


Note:

(1)		Amounts in New Taiwan dollars have been translated into U.S. dollars at the rate of NT$31.330 as of September 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 September 30, 2010, June 30, 2010, September 30, 2009
		(Expressed in Millions of New Taiwan Dollars ("NTD") and U.S. Dollars ("USD") ⁽¹⁾
		Except for Per Share Amounts and Shares Outstanding)


	3Q 2010									2Q 2010						3Q 2009						QoQ						YoY
	USD			NTD			%			NTD			%			NTD			%			Amount			%			Amount			%
Net Sales	$	3,515		$	112,247			100.0		$	104,962			100.0		$	89,936			100.0		$	7,285			6.9		$	22,311			24.8
Cost of Sales		(1,758	)		(56,122	)		(50.0	)		(53,036	)		(50.5	)		(47,078	)		(52.3	)		(3,086	)		5.8			(9,044	)		19.2

Gross Profit		1,757			56,125			50.0			51,926			49.5			42,858			47.7			4,199			8.1			13,267			31.0

Operating Expenses
Research and Development Expenses		(252	)		(8,035	)		(7.2	)		(7,190	)		(6.9	)		(6,202	)		(6.9	)		(845	)		11.7			(1,833	)		29.6
General and Administrative Expenses		(112	)		(3,575	)		(3.1	)		(2,931	)		(2.8	)		(3,541	)		(3.9	)		(644	)		22.0			(34	)		1.0
Sales and Marketing Expenses		(45	)		(1,449	)		(1.3	)		(1,337	)		(1.2	)		(1,131	)		(1.3	)		(112	)		8.4			(318	)		28.1

Total Operating Expenses		(409	)		(13,059	)		(11.6	)		(11,458	)		(10.9	)		(10,874	)		(12.1	)		(1,601	)		14.0			(2,185	)		20.1


Income from Operations		1,348			43,066			38.4			40,468			38.6			31,984			35.6			2,598			6.4			11,082			34.6


Non-Operating Income, Net		179			5,707			5.1			1,413			1.3			519			0.5			4,294			304.1			5,188			998.6
Equity in Earnings of Equity Method Investees, Net		28			902			0.8			529			0.5			454			0.5			373			70.5			448			98.9

Income before Income Tax		1,555			49,675			44.3			42,410			40.4			32,957			36.6			7,265			17.1			16,718			50.7

Income Tax Expenses		(79	)		(2,552	)		(2.3	)		(1,943	)		(1.8	)		(2,285	)		(2.5	)		(609	)		31.3			(267	)		11.7

Net Income		1,476			47,123			42.0			40,467			38.6			30,672			34.1			6,656			16.5			16,451			53.6

Net Income Attributable to Minority Interests		(6	)		(183	)		(0.2	)		(185	)		(0.2	)		(121	)		(0.1	)		2			(0.2	)		(62	)		51.6

Net Income Attributable to Shareholders of the Parent		1,470			46,940			41.8			40,282			38.4			30,551			34.0			6,658			16.5			16,389			53.6


Earnings per Share — Diluted	$	0.06		$	1.81					$	1.55					$	1.18					$	0.26			16.5		$	0.63			54.0

Earnings per ADR — Diluted ⁽²⁾	$	0.28		$	9.06					$	7.77					$	5.88					$	1.29			16.5		$	3.18			54.0


Weighted Average Outstanding Shares - Diluted ("M)⁽³⁾					25,919						25,917						25,983


Note:

(1)		Amounts in New Taiwan dollars have been translated into U.S. dollars at the weighted average rate of NTD31.936 for the third quarter of 2010.

(2)		1 ADR equals 5 ordinary shares.

(3)		Total diluted weighted average outstanding shares were 25,917M and 25,983M shares for 2Q10 and 3Q09 after the retroactive adjustments for exercise price of stock option.


		TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED AND SUBSIDIARIES
		Unaudited Consolidated Condensed Income Statements
		For the Nine Months Ended September 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 Nine Months Ended September 30
	2010									2009						YoY
	USD			NTD			%			NTD			%			Amount			%
Net Sales	$	9,699		$	309,396			100.0		$	203,648			100.0		$	105,748			51.9
Cost of Sales		(4,927	)		(157,160	)		(50.8	)		(119,014	)		(58.4	)		(38,146	)		32.1

Gross Profit		4,772			152,236			49.2			84,634			41.6			67,602			79.9

Operating Expenses
Research and Development Expenses		(678	)		(21,635	)		(7.0	)		(15,026	)		(7.4	)		(6,609	)		44.0
General and Administrative Expenses		(281	)		(8,978	)		(2.9	)		(8,017	)		(4.0	)		(961	)		12.0
Sales and Marketing Expenses		(125	)		(3,961	)		(1.3	)		(3,271	)		(1.6	)		(690	)		21.1

Total Operating Expenses		(1,084	)		(34,574	)		(11.2	)		(26,314	)		(13.0	)		(8,260	)		31.4


Income from Operations		3,688			117,662			38.0			58,320			28.6			59,342			101.8


Non-Operating Income, Net		254			8,118			2.7			2,028			1.0			6,090			300.3
Equity in Earnings (Losses) of Equity Method Investees, Net		51			1,608			0.5			(253	)		(0.1	)		1,861			(735.3	)

Income before Income Tax		3,993			127,388			41.2			60,095			29.5			67,293			112.0

Income Tax Expenses		(187	)		(5,973	)		(1.9	)		(3,489	)		(1.7	)		(2,484	)		71.2

Net Income		3,806			121,415			39.3			56,606			27.8			64,809			114.5

Net Income Attributable to Minority Interests		(17	)		(530	)		(0.2	)		(54	)		-			(476	)		881.9


Net Income Attributable to Shareholders of the Parent		3,789			120,885			39.1			56,552			27.8			64,333			113.8


Earnings per Share - Diluted	$	0.15		$	4.66					$	2.18					$	2.48			114.3

Earnings per ADR - Diluted ⁽²⁾	$	0.73		$	23.32					$	10.88					$	12.44			114.3


Weighted Average Outstanding Shares - Diluted ("M) ⁽³⁾					25,918						25,981


Note:

(1)		Amounts in New Taiwan dollars have been translated into U.S. dollars at the weighted average rate of NTD 31.900 for the nine months ended September 30, 2010.

(2)		1 ADR equals 5 ordinary shares.

(3)		Total diluted weighted average outstanding shares were 25,981M shares for the nine months ended September 30, 2009 after the retroactive adjustment for exercise price of stock option.


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


	Nine Months 2010						3Q 2010			2Q 2010			3Q 2009
	(unaudited)						(unaudited)			(unaudited)			(unaudited)
	USD			NTD			NTD			NTD			NTD
Cash Flows from Operating Activities:
Net Income Attributable to Shareholders of the Parent	$	3,789		$	120,885		$	46,940		$	40,282		$	30,551
Net Income Attributable to Minority Interest		17			530			183			185			121
Depreciation & Amortization		2,022			64,506			22,372			21,131			20,001
Deferred Income Tax		(8	)		(257	)		599			(138	)		(426	)
Equity in Earnings of Equity Method Investees, Net		(50	)		(1,608	)		(902	)		(529	)		(454	)
Changes in Working Capital & Others		(788	)		(25,144	)		(5,240	)		(12,005	)		(3,138	)

Net Cash Provided by Operating Activities		4,982			158,912			63,952			48,926			46,655

Cash Flows from Investing Activities:
Acquisitions of:
Marketable Financial Instruments		(1,427	)		(45,509	)		(9,074	)		(10,577	)		(20,827	)
Investments Accounted for Using Equity Method		(196	)		(6,242	)		—			(13	)		(32	)
Property, Plant and Equipment		(4,420	)		(141,008	)		(42,151	)		(52,721	)		(32,038	)
Financial Assets Carried at Cost		(55	)		(1,754	)		(31	)		(1,612	)		(139	)
Proceeds from Disposal or Redemption of:
Marketable Financial Instruments		1,455			46,413			13,443			10,750			1,886
Property, Plant and Equipment		4			133			21			76			2
Financial Assets Carried at Cost		7			222			42			154			19
Others		(244	)		(7,784	)		(7,281	)		(266	)		(381	)

Net Cash Used In Investing Activities		(4,876	)		(155,529	)		(45,031	)		(54,209	)		(51,510	)

Cash Flows from Financing Activities:
Increase in Short-term Loans		1,188			37,910			19,827			17,765			—
Decrease in Guarantee Deposits		(6	)		(185	)		(57	)		(38	)		(77	)
Proceeds from Exercise of Employee Stock Options		5			151			65			49			162
Cash Dividends Paid for Common Stock		(2,436	)		(77,708	)		(77,708	)		—			(76,876	)
Others		(47	)		(1,503	)		(235	)		(160	)		(191	)

Net Cash Provided by (Used in) Financing Activities		(1,296	)		(41,335	)		(58,108	)		17,616			(76,982	)


Net Increase (Decrease) in Cash and Cash Equivalents		(1,190	)		(37,952	)		(39,187	)		12,333			(81,837	)


Effect of Exchange Rate Changes on Cash and Cash Equivalents		(33	)		(1,055	)		(1,030	)		353			(745	)

Cash and Cash Equivalents at Beginning of Period		5,369			171,276			172,486			159,800			239,517


Cash and Cash Equivalents at End of Period	$	4,146		$	132,269		$	132,269		$	172,486		$	156,935


Note:

(1)		Amounts in New Taiwan dollars have been translated into U.S. dollars at the weighted average rate of NTD31.900 for the nine months ended September 30, 2010.

TSMC Property TSMC Property 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.

3Q10 Financial Highlights TSMC Property

3Q104Q072Q104Q07 3Q09 3Q10 QoQ QoQ YoYYoY (In(InNTNTbillionsbillionsexceptexceptotherwiseotherwisenoted) noted) GuidanceResults ActualGuidanceActual Net NetSales Sales112.25109 93.86 — 111 104.96 92 — 94 89.94 5.5% 6.9% 25.2% 24.8% Gross Margin50.0%48% — 50% 49.5% 47.7% +0.5 ppt +2.3 ppts Gross Margin 47.8%46% — 48% +2 ppt +1.8 ppt Operating Margin38.4%36% — 38% 38.6% 35.6% -0.2 ppt +2.8 ppts Operating Margin 39.2%37% — 39% +2.8 ppt +2.6 ppt EPS — Diluted (NT$)1.81 1.55 1.18 16.5% 54.0% EPS — Diluted (NT$) 1.31 14.3% 24.3% Free Cash Flow21.80 -3.79 14.62 675.2% 49.1% Free Cash Flow 39.98 51.9% 12.9% ROE (%)36.5% 31.6%27.3% +4.9 ppts +9.2 ppts ShipmentROE (%)(Kpcs, (1) 8"-equiv. 27.9% +2.9 ppt +5.3 ppt Wafer)3,191 2,9272,445 9.0% 30.5% Average Exchange Rate— 2,357 5.9% 37.2% NTD/USD Shipment (Kpcs, 8"-equiv. Wafer)31.94 31.81 32.80 0.4% -2.6%

* Total outstanding shares were 25,907mn units at 9/30/10

** ROE figures are annualized based on average equity attributable to shareholders of the parent.

Income Statements

TSMC Property

(In NT billions except otherwise noted) 3Q10 2Q10 3Q09 QoQ YoY Net Sales112.25 104.96 89.94 6.9% 24.8% Gross Margin 50.0% 49.5% 47.7% +0.5 ppt +2.3 ppts Operating Expenses (13.06) (11.46) (10.87) 14.0% 20.1% Operating Margin 38.4% 38.6% 35.6% -0.2 ppt +2.8 ppts Non-Operating Items 5.71 1.41 0.52 304.1% 998.6% Long-Term Investment Gains 0.90 0.53 0.45 70.5% 98.9% Taxes(2.55) (1.94) (2.28) 31.3% 11.7% Net Income 46.94 40.28 30.55 16.5% 53.6% Net Margin 41.8% 38.4% 34.0% +3.4 ppt +7.8 ppts EPS (NT Dollar) 1.81 1.55 1.18 16.5% 54.0%

3Q10 Revenue by Applications

TSMC Property

Industrial/Others Consumer 17% Computer 14% 25%

Communications 44%

Communications Computer Consumer 50.0 QoQ +13% 50.0 50.0 B) B) $ $ B) (NT $ (NT (NT

QoQ -7%

Revenue Revenue Revenue QoQ +4% 0.0 0.0 0.0

2Q10 3Q10 2Q10 3Q10 2Q10 3Q10

3Q10 Revenue by Technology

TSMC Property

0.25/0.35um 0.5um+ 8% 3%

65nm/40nm Revenue

50 50% 45 40 40% 35 B) %

$30 30% of (NT

25 Sales Revenue 20 20% (%) 15

10 10% 5 0 0% 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 65nm 40nm Rev Rev (NT (NT$ $B) B) 40/65nm combined as % of Sales

0.15/0.18um 40nm 17% 17% 0.11/0.13um 12% 65nm 90nm 29% 14%

Balance Sheets & Key Indices

TSMC Property

Selected Items from Balance Sheets 3Q10 2Q10 3Q09 (In NT billions excepted otherwise noted) Amount % Amount % Amount % Cash & Marketable Securities 167.21 25.0% 206.54 30.3% 180.32 33.3% Accounts Receivable — Trade 47.38 7.1% 48.06 7.1% 35.88 6.6% Inventory26.664.0% 24.80 3.6% 19.18 3.5% Long-Term Investment 39.78 6.0% 40.96 6.0% 38.55 7.1% Net PP&E349.1852.3% 328.47 48.3% 236.82 43.7% Total Assets667.55 100.0% 680.78 100.0% 541.90 100.0% Current Liabilities109.24 16.4% 166.27 24.4% 55.01 10.2% Long-Term Interest-bearing Debt 12.18 1.8% 12.35 1.8% 14.35 2.6% Total Liabilities126.65 19.0% 183.90 27.0% 75.27 13.9% Total Shareholders’ Equity 540.90 81.0% 496.87 73.0% 466.63 86.1% Key Indices A/R Turnover Days39 39 36 Inventory Turnover Days 47 45 41 Current Ratio (x)2.3 1.7 4.4 Asset Productivity (x)(1) 1.3 1.3 1.6

(1) Asset productivity = Annualized net sales / Average net fixed assets.

Cash Flows

TSMC Property

(In NT billions except otherwise noted) 3Q10 2Q10 3Q09 Beginning Balance 172.49 159.80 239.52 Cash from operating activities 63.95 48.93 46.66 Capital expenditures (42.15) (52.72) (32.04) Cash dividends (77.71) 0.00 (76.88) Proceeds from short-term loans 19.83 17.76 0.00 Investments and others (4.14) (1.28) (20.32) Ending Balance 132.27 172.49 156.94 Free Cash Flow (1) 21.80 (3.79) 14.62

(1) Free cash flow = Operating cash flow — Capital expenditures.

Installed Capacity

2010 Overall Capacity +14%; Advanced Capacity +37%

TSMC Property

| | | | | |

2009 1Q10 2Q10 3Q10 4Q10 2010

FAB / (Wafer size)(A) (A) (A) (A) (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)958 261 299 360 406 1,326

WaferTech( 8”)431 106 107 108 108 429 TSMC China( 8”) 531 132 134 145 147 557 TSMC & Subsidiaries 9,695 2,497 2,680 2,879 2,997 11,053 (8” Equivalent Kpcs) SSMC( 8”)259 69 69 69 69 276 Total TSMC-managed 9,955 2,566 2,749 2,948 3,066 11,329 (8” Equivalent Kpcs)

(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.

Capital Expenditures

TSMC Property

(In US millions) 1Q10 2Q10 3Q10 YTD TSMC1,433 1,645 1,275 4,353 XinTec and GUC 2 4 10 16 TSMC China & WaferTech 8 7 34 49 Other TSMC Subsidiaries 1 1 0 2 TSMC Consolidated 1,444 1,657 1,319 4,420

Note: 2010 CapEx was based on the weighted average exchange rate of NT$31.900 per US dollar.

4Q10 Guidance

Revenue to be between NT$107 billion and NT$109 billion, at a forecast exchange rate of 30.60 NT dollars to 1 US dollar

Gross profit margin to be between 48% and 50% Operating profit margin to be between 35.5% and 37.5%

TSMC Property

Recap of Recent Major Events

TSMC Begins Building Solar R&D Center and Fab in Central Taiwan ( 2010/09/16 ) TSMC Was Named the Semiconductor Sector Leader in 2010 Dow Jones

Sustainability Index (DJSI) Survey and Included as Index Component for the 10th Consecutive Year ( 2010/09/09 )

ARM and TSMC Sign Long-Term Strategic Agreement That Enables Broad Processor and Physical IP Optimization on TSMC’s Most Advanced Technology Nodes ( 2010/07/20 )

TSMC Begins Construction on GigafabTM In Central Taiwan ( 2010/07/16 )

TSMC Property

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

CEO Message

I. 3Q, 4Q and Year 2010 II. Supply Chain Inventory and 2011 Outlook III. Mission and Strategy IV. New Technologies V. New Businesses (LED and Solar)

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

TSMC Property

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 28, 2010	By	/s/ Lora Ho
		Lora Ho
		Senior Vice President & Chief Financial Officer