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 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: ______.)

TABLE OF CONTENTS


SIGNATURES

Taiwan Semiconductor Manufacturing Company Limited

Financial Statements for the
Nine Months Ended September 30, 2010 and 2009 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, 2010 and 2009, 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, requirements of the Business Accounting Law and Guidelines Governing Business Accounting with respect to financial accounting standards, and accounting principles generally accepted in the Republic of China.

As discussed in Note 3 to the financial statements, effective January 1, 2009, Taiwan Semiconductor Manufacturing Company Limited adopted the newly revised Statement of Financial Accounting Standards No. 10, “Accounting for Inventories.”

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We have also reviewed, in accordance with Statement on Auditing Standards No. 36, the consolidated financial statements of Taiwan Semiconductor Manufacturing Company Limited and subsidiaries as of and for the nine months ended September 30, 2010 on which we have issued an unqualified review report and as of and for the nine months ended September 30, 2009 on which we have issued an unqualified review report with an explanatory paragraph relating to the adoption of the newly revised Statement of Financial Accounting Standards No. 10, “Accounting for Inventories.”

October 21, 2010

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.

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Taiwan Semiconductor Manufacturing Company Limited

BALANCE SHEETS
SEPTEMBER 30, 2010 AND 2009
(In Thousands of New Taiwan Dollars, Except Par Value)
(Reviewed, Not Audited)


	2010						2009
	Amount			%			Amount			%
ASSETS

CURRENT ASSETS
Cash and cash equivalents (Notes 2 and 4)	$	90,399,569			14		$	102,286,286			20
Financial assets at fair value through profit or loss (Notes 2, 5 and 23)		14,383			—			367,461			—
Available-for-sale financial assets (Notes 2, 6 and 23)		4,048,549			1			—			—
Held-to-maturity financial assets (Notes 2, 7 and 23)		5,598,471			1			8,374,389			2
Receivables from related parties (Note 24)		25,218,595			4			22,464,807			4
Notes and accounts receivable		27,263,732			4			20,825,053			4
Allowance for doubtful receivables (Notes 2 and 8)		(540,000	)		—			(436,000	)		—
Allowance for sales returns and others (Notes 2 and 8)		(6,590,121	)		(1	)		(8,874,199	)		(2	)
Other receivables from related parties (Note 24)		657,787			—			321,499			—
Other financial assets (Note 25)		282,002			—			903,842			—
Inventories (Notes 2, 3 and 9)		23,773,530			4			17,194,184			3
Deferred income tax assets (Notes 2 and 18)		1,965,666			—			4,287,040			1
Prepaid expenses and other current assets		1,243,888			—			613,580			—


Total current assets		173,336,051			27			168,327,942			32


LONG-TERM INVESTMENTS (Notes 2, 6, 7, 10, 11 and 23)
Investments accounted for using equity method		115,519,229			18			105,085,064			20
Available-for-sale financial assets		1,036,502			—			1,033,473			—
Held-to-maturity financial assets		1,658,671			—			13,278,683			3
Financial assets carried at cost		497,835			—			501,563			—

Total long-term investments		118,712,237			18			119,898,783			23


PROPERTY, PLANT AND EQUIPMENT (Notes 2, 12 and 24)
Cost
Buildings		127,695,671			19			123,783,029			24
Machinery and equipment		836,615,885			129			674,274,132			129
Office equipment		11,310,109			2			10,337,123			2

		975,621,665			150			808,394,284			155
Accumulated depreciation		(685,650,928	)		(105	)		(610,117,838	)		(117	)
Advance payments and construction in progress		40,621,708			6			18,320,302			4


Net property, plant and equipment		330,592,445			51			216,596,748			42


INTANGIBLE ASSETS
Goodwill (Note 2)		1,567,756			—			1,567,756			—
Deferred charges, net (Notes 2 and 13)		5,608,464			1			5,453,680			1


Total intangible assets		7,176,220			1			7,021,436			1


OTHER ASSETS
Deferred income tax assets (Notes 2 and 18)		10,200,761			2			6,973,800			1
Refundable deposits		9,059,889			1			2,754,296			1
Others (Notes 2 and 24)		437,617			—			487,358			—


Total other assets		19,698,267			3			10,215,454			2


TOTAL	$	649,515,220			100		$	522,060,363			100

LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES
Short-term loans (Note 14)	$	37,596,000			6		$	—			—
Financial liabilities at fair value through profit or loss (Notes 2, 5 and 23)		73,530			—			—			—
Accounts payable		9,645,148			1			8,297,913			1
Payables to related parties (Note 24)		3,451,537			1			2,294,155			—
Income tax payable (Notes 2 and 18)		5,252,509			1			5,726,656			1
Accrued profit sharing to employees and bonus to directors (Notes 2 and 20)		8,201,440			1			8,618,411			2
Payables to contractors and equipment suppliers		26,017,941			4			15,520,005			3
Accrued expenses and other current liabilities (Notes 16 and 23)		13,471,370			2			8,675,196			2


Total current liabilities		103,709,475			16			49,132,336			9


LONG-TERM LIABILITIES
Bonds payable (Notes 15 and 23)		4,500,000			1			4,500,000			1
Other long-term payables (Notes 16 and 23)		156,650			—			579,600			—


Total long-term liabilities		4,656,650			1			5,079,600			1


OTHER LIABILITIES
Accrued pension cost (Notes 2 and 17)		3,815,765			—			3,786,616			1
Guarantee deposits (Note 27)		809,698			—			1,104,704			—
Deferred credits (Notes 2 and 24)		—			—			71,809			—


Total other liabilities		4,625,463			—			4,963,129			1


Total liabilities		112,991,588			17			59,175,065			11


CAPITAL STOCK — NT$10 PAR VALUE (Note 20)
Authorized: 28,050,000 thousand shares Issued: 25,907,344 thousand shares in 2010 25,900,662 thousand shares in 2009		259,073,440			40			259,006,623			50


CAPITAL SURPLUS (Notes 2 and 20)		55,634,070			9			55,439,919			10


RETAINED EARNINGS (Note 20)
Appropriated as legal capital reserve		86,239,494			14			77,317,710			15
Appropriated as special capital reserve		1,313,047			—			—			—
Unappropriated earnings		137,506,581			21			71,898,923			14


		225,059,122			35			149,216,633			29

OTHERS (Notes 2 and 23)
Cumulative translation adjustments		(3,761,669	)		(1	)		(1,272,298	)		—
Unrealized gain on financial instruments		518,669			—			494,421			—

		(3,243,000	)		(1	)		(777,877	)		—


Total shareholders’ equity		536,523,632			83			462,885,298			89

TOTAL	$	649,515,220			100		$	522,060,363			100

The accompanying notes are an integral part of the financial statements.

(With Deloitte & Touche review report dated October 21, 2010)

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Taiwan Semiconductor Manufacturing Company Limited

STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)
(Reviewed, Not Audited)


	2010				2009
	Amount		%		Amount		%
GROSS SALES (Notes 2 and 24)	$	308,832,522			$	206,462,258

SALES RETURNS AND ALLOWANCES (Notes 2 and 8)		8,715,191				9,715,735


NET SALES		300,117,331		100		196,746,523		100

COST OF SALES (Notes 3, 9, 19 and 24)		154,784,733		52		113,516,518		58


GROSS PROFIT		145,332,598		48		83,230,005		42

UNREALIZED GROSS PROFIT FROM AFFILIATES (Note 2)		136,536		—		128,152		—


REALIZED GROSS PROFIT		145,196,062		48		83,101,853		42


OPERATING EXPENSES (Notes 19 and 24)
Research and development		20,084,456		6		13,686,108		7
General and administrative		8,168,276		3		7,246,047		3
Marketing		2,175,006		1		1,427,041		1


Total operating expenses		30,427,738		10		22,359,196		11


INCOME FROM OPERATIONS		114,768,324		38		60,742,657		31


NON-OPERATING INCOME AND GAINS
Settlement income (Note 27)		6,343,524		2		494,070		—
Equity in earnings of equity method investees, net (Notes 2 and 10)		4,677,062		2		—		—
Interest income (Note 2)		555,085		—		938,369		1
Technical service income (Notes 24 and 27)		354,756		—		279,644		—
Valuation gain on financial instruments, net (Notes 2, 5 and 23)		156,175		—		576,910		—
Others (Notes 2, 23 and 24)		266,309		—		409,157		—


Total non-operating income and gains		12,352,911		4		2,698,150		1

(Continued)

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Taiwan Semiconductor Manufacturing Company Limited

STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)
(Reviewed, Not Audited)


	2010				2009
	Amount		%		Amount		%
NON-OPERATING EXPENSES AND LOSSES
Casualty loss (Note 9)	$	190,992		—	$	—		—
Interest expense		142,824		—		108,276		—
Equity in losses of equity method investees, net (Notes 2 and 10)		—		—		2,772,157		1
Foreign exchange loss, net (Note 2)		—		—		611,098		—
Others (Note 2)		113,919		—		102,553		—


Total non-operating expenses and losses		447,735		—		3,594,084		1


INCOME BEFORE INCOME TAX		126,673,500		42		59,846,723		31

INCOME TAX EXPENSE (Notes 2 and 18)		5,788,940		2		3,294,936		2


NET INCOME	$	120,884,560		40	$	56,551,787		29


	2010				2009
	Before		After		Before		After
	Income		Income		Income		Income
	Tax		Tax		Tax		Tax
EARNINGS PER SHARE (NT$, Note 22)
Basic earnings per share	$	4.89	$	4.67	$	2.32	$	2.19

Diluted earnings per share	$	4.89	$	4.66	$	2.30	$	2.18

The accompanying notes are an integral part of the financial statements.

(With Deloitte & Touche review report dated October 21, 2010)

(Concluded)

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Taiwan Semiconductor Manufacturing Company Limited

STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009
(In Thousands of New Taiwan Dollars)
(Reviewed, Not Audited)


	2010			2009
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	120,884,560		$	56,551,787
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		61,013,582			55,547,956
Unrealized gross profit from affiliates		136,536			128,152
Amortization of premium/discount of financial assets		13,756			(6,248	)
Gain on disposal of available-for-sale financial assets, net		—			(37,370	)
Gain on held-to-maturity financial assets redeemed by the issuer		—			(16,091	)
Loss on disposal of financial assets carried at cost		1,263			97
Equity in losses (earnings) of equity method investees, net		(4,677,062	)		2,772,157
Cash dividends received from equity method investees		422,490			1,402,592
Gain on disposal of property, plant and equipment and other assets, net		(40,510	)		(77,173	)
Settlement income from receiving equity securities		(4,434,364	)		—
Deferred income tax		(273,785	)		(1,112,168	)
Changes in operating assets and liabilities:
Decrease (increase) in:
Financial assets and liabilities at fair value through profit or loss		240,890			(408,619	)
Receivables from related parties		(2,676,822	)		(10,736,603	)
Notes and accounts receivable		(7,379,212	)		(9,383,877	)
Allowance for doubtful receivables		109,000			(746	)
Allowance for sales returns and others		(1,993,511	)		3,005,617
Other receivables from related parties		23,875			160,152
Other financial assets		822,070			(192,087	)
Inventories		(4,943,314	)		(4,386,248	)
Prepaid expenses and other current assets		(339,265	)		578,895
Increase (decrease) in:
Accounts payable		456,994			4,306,139
Payables to related parties		1,412,195			1,091,805
Income tax payable		(3,508,611	)		(3,496,155	)
Bonuses payable to employees and directors		1,430,102			965,342
Accrued expenses and other current liabilities		(3,522,931	)		641,917
Accrued pension cost		8,589			76,607
Deferred credits		(47,873	)		(206,551	)


Net cash provided by operating activities		153,138,642			97,169,279

(Continued)

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Taiwan Semiconductor Manufacturing Company Limited

STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009
(In Thousands of New Taiwan Dollars)
(Reviewed, Not Audited)


	2010			2009
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions of:
Property, plant and equipment	$	(138,922,267	)	$	(44,452,382	)
Held-to-maturity financial assets		—			(9,405,409	)
Investments accounted for using equity method		(8,125,980	)		(262,922	)
Financial assets carried at cost		(480	)		(986	)
Proceeds from disposal or redemption of:
Available-for-sale financial assets		—			1,037,370
Held-to-maturity financial assets		14,893,000			5,418,000
Financial assets carried at cost		3,370			18,828
Property, plant and equipment and other assets		62,293			68,579
Proceeds from return of capital by investees		—			20,201
Increase in deferred charges		(1,177,741	)		(438,308	)
Increase in refundable deposits		(6,361,773	)		(34,559	)


Net cash used in investing activities		(139,629,578	)		(48,031,588	)


CASH FLOWS FROM FINANCING ACTIVITIES
Increase in short-term loans		37,596,000			—
Repayment of bonds payable		—			(8,000,000	)
Decrease in guarantee deposits		(191,678	)		(374,448	)
Proceeds from exercise of employee stock options		150,760			190,995
Cash dividends		(77,708,120	)		(76,876,312	)


Net cash used in financing activities		(40,153,038	)		(85,059,765	)


NET DECREASE IN CASH AND CASH EQUIVALENTS		(26,643,974	)		(35,922,074	)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		117,043,543			138,208,360


CASH AND CASH EQUIVALENTS, END OF PERIOD	$	90,399,569		$	102,286,286


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid	$	171,888		$	351,803

Income tax paid	$	9,477,093		$	7,770,195


INVESTING ACTIVITIES AFFECTING BOTH CASH AND NON-CASH ITEMS
Acquisition of property, plant and equipment	$	135,815,549		$	52,075,005
Decrease (increase) in payables to contractors and equipment suppliers		3,229,638			(7,622,623	)
Nonmonetary exchange trade-out price		(122,920	)		—

Cash paid	$	138,922,267		$	44,452,382

(Continued)

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Taiwan Semiconductor Manufacturing Company Limited

STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009
(In Thousands of New Taiwan Dollars)
(Reviewed, Not Audited)


	2010			2009
Disposal of property, plant and equipment and other assets	$	620,872		$	60,488
Decrease (increase) in other receivables from related parties		(435,659	)		8,091
Nonmonetary exchange trade-out price		(122,920	)		—

Cash received	$	62,293		$	68,579


NON-CASH FINANCING ACTIVITIES
Current portion of other long-term payables (under accrued expenses and other current liabilities)	$	614,061		$	775,567

Profit sharing to employees transferred to capital stock	$	—		$	7,494,988

The accompanying notes are an integral part of the financial statements.

(With Deloitte & Touche review report dated October 21, 2010)

(Concluded)

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Taiwan Semiconductor Manufacturing Company Limited

NOTES TO FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)
(Reviewed, Not Audited)

GENERAL


		Taiwan Semiconductor Manufacturing Company Limited (the “Company” or “TSMC”), a Republic of China (R.O.C.) corporation, was incorporated on February 21, 1987. The Company is a dedicated foundry in the semiconductor industry which engages mainly in the manufacturing, selling, packaging, testing and computer-aided design of integrated circuits and other semiconductor devices and the manufacturing of masks. Beginning in 2010, the Company also engages in the researching, developing, designing, manufacturing and selling of LED lighting devices and related applications products and systems, and renewable energy and efficiency related technologies and products. 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).

		As of September 30, 2010 and 2009, the Company had 29,377 and 20,566 employees, respectively.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


		The financial statements are presented in conformity with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers, Business Accounting Law, Guidelines Governing Business Accounting, 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, law 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 assets held for trading purposes and assets 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 acquired with maturities of less than three months from the date of purchase are classified as cash equivalents. The carrying amount approximates fair value due to their short term nature.

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		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 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

		Available-for-sale financial assets are initially recognized at fair value plus transaction costs that are directly attributable to the acquisition. 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.

		The fair value of overseas publicly traded stock is determined using the closing prices at the end of the period. The fair value of debt securities is determined using the average of bid and asked prices at the end of the period.

		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. 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.

		Allowance for Doubtful Receivables

		An allowance for doubtful receivables is provided based on a review of the collectability of receivables. The Company determines the amount of the allowance for doubtful receivables with a charge of 1% of the amount of outstanding receivables considering the account aging analysis and current trends in the credit quality of its customers.

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		Revenue Recognition and Allowance for Sales Returns and Others

		The Company recognizes revenue when evidence of an arrangement exists, the rewards of ownership and significant risk of the goods has been transferred to the buyer, price is fixed or determinable, and collectability is reasonably assured. Provisions for estimated sales returns and other allowances are 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 recorded at standard cost and adjusted to approximate weighted-average cost on the balance sheet date.

		Prior to January 1, 2009, inventories were stated at the lower of cost or market value. Any write-down was made on a total-inventory basis. Market value represented replacement cost for raw materials, supplies and spare parts and net realizable value for work in process and finished goods.

		As stated in Note 3, effective January 1, 2009, inventories are stated at the lower of cost or net realizable value. Inventory write-downs are made on an item-by-item basis, except where it may be appropriate to group similar or related items. Net realizable value is the estimated selling price of inventories less all estimated costs of completion and necessary selling costs.

		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 cost of an investment shall be analyzed and the cost of investment in excess of the fair value of identifiable net assets acquired, representing goodwill, shall not be amortized. If the fair value of identifiable net assets acquired exceeds the cost of investment, the excess shall be proportionately allocated as reductions to fair values of non-current assets (except for financial assets other than investments accounted for using the equity method and deferred income tax assets). When an indication of impairment is identified, the carrying amount of the investment is reduced, with the related impairment loss recognized in earnings.

		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 of 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.

- 11 -

		Gains or losses on sales from the Company to equity method investees are deferred in proportion to the Company’s ownership percentages 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 over each of which the Company has control are deferred in proportion to the Company’s weighted-average ownership percentage in the investee which records gains or losses. In transactions between equity method investees over either or both of which the Company has no control, gains or losses on sales are deferred in proportion to the multiplication of the Company’s weighted-average ownership percentages in the investees. Such gains or losses are recorded until they are realized through transactions with third parties.

		If an investee’s functional currency is a foreign currency, differences will result from the translation of the investee’s financial statements into the reporting currency of the Company. Such differences are charged or credited to cumulative translation adjustments, a separate component of shareholders’ equity.

		Financial Assets Carried at Cost

		Investments for which the Company does not exercise significant influence and that do not have a quoted market price in an active market and whose fair value cannot be reliably measured, such as non-publicly traded stocks and mutual funds, are carried at their original cost. The costs of non-publicly traded stocks and mutual funds 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.

		Cash dividends are recognized as investment income upon resolution of shareholders of an investee but are accounted for as a reduction to the original cost of investment if such dividends are declared on the earnings of the investee attributable to the period prior to the purchase of the investment. 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.

		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 and assets leased to others, the related cost and accumulated depreciation are deducted from the corresponding accounts, with any gain or loss recorded as non-operating gains or losses in the period of sale or disposal.

- 12 -

		Intangible Assets

		Goodwill represents the excess of the consideration paid for acquisition over the fair value of identifiable net assets acquired. Goodwill is no longer amortized and instead is tested for impairment annually. If an event occurs or circumstances change which indicate that the fair value of goodwill is more likely than not below its carrying amount, an impairment loss is recognized. A subsequent reversal of such impairment loss is not allowed.

		Deferred charges consist of technology license fees, software and system design costs and patent and others. The amounts are amortized over the following periods: Technology license fees — the estimated life of the technology or the term of the technology transfer contract; software and system design costs — 3 years; patent and others — the economic life or contract period. 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.

		Expenditures related to research activities and those related to development activities that do not meet the criteria for capitalization are charged to expense when incurred.

		Pension Costs

		For employees who participate in defined contribution pension plans, pension costs are recorded based on the actual contributions made to employees’ individual pension accounts during their service periods. For employees who participate in defined benefit pension plans, pension costs are recorded based on actuarial calculations.

		Income Tax

		The Company applies an inter-period allocation for its income tax whereby 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 expenditures, 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.

		Stock-based Compensation

		Employee stock options that were granted or modified in the period from January 1, 2004 to December 31, 2007 are accounted for by the interpretations issued by the Accounting Research and Development Foundation of the Republic of China. The Company adopted the intrinsic value method and any compensation cost determined using this method is recognized in earnings over the employee vesting period. Employee stock option plans that were granted or modified after December 31, 2007 are accounted for using fair value method in accordance with Statement of Financial Accounting Standards No. 39, “Accounting for Share-based Payment.” The Company did not grant or modify any employee stock options since January 1, 2008.

- 13 -

		Profit Sharing to Employees and Bonus to Directors

		Effective January 1, 2008, the Company adopted Interpretation 2007-052, “Accounting for Bonuses to Employees, Directors and Supervisors,” which requires companies to record profit sharing to employees and bonus to directors as an expense rather than as an appropriation of earnings.

		Foreign-currency Transactions

		Foreign-currency transactions other than derivative contracts 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 prevailing exchange rates with the resulting gains or losses recognized in earnings.

ACCOUNTING CHANGES

Effective January 1, 2009, the Company adopted the newly revised Statement of Financial Accounting Standards (SFAS) No. 10, “Accounting for Inventories.” The main revisions are (1) inventories are stated at the lower of cost or net realizable value, and inventories are written down to net realizable value on an item-by-item basis except when the grouping of similar or related items is appropriate; (2) unallocated overheads are recognized as expenses in the period in which they are incurred; and (3) abnormal cost, write-downs of inventories and any reversal of write-downs are recorded as cost of sales for the period. Such changes in accounting principle did not have significant effect on the Company’s financial statements for the nine months ended September 30, 2009.

CASH AND CASH EQUIVALENTS


	September 30
	2010		2009
Cash and deposits in banks	$	87,348,689	$	91,703,367
Repurchase agreements collateralized by government bonds		3,050,880		10,582,919


	$	90,399,569	$	102,286,286

FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS


	September 30
	2010		2009
Trading financial assets

Forward exchange contracts	$	3,241	$	—
Cross currency swap contracts		11,142		367,461


	$	14,383	$	367,461


Trading financial liabilities

Forward exchange contracts	$	73,530	$	—

- 14 -

The Company entered into derivative contracts during the nine months ended September 30, 2010 and 2009 to manage exposures due to fluctuations of foreign exchange rates. The derivative contracts entered into by the Company did not meet the criteria for hedge accounting. Therefore, the Company did not apply hedge accounting treatment for its derivative contracts.

Outstanding forward exchange contracts consisted of the following:


		Contract Amount
	Maturity Date	(In Thousands)
September 30, 2010

Sell EUR/Buy NT$	October 2010	EUR139,000/NT$5,851,568
Sell US$/Buy NT$	October 2010	US$30,000/NT$939,400

Outstanding cross currency swap contracts consisted of the following:

Contract Amount

Range of Interest

Maturity Date

(In Thousands)

Rates Paid

Rates Received

September 30, 2010

October 2010

US$

90,000/NT$2,830,540

0.46

0.00

September 30, 2009

October 2009 to December 2009

US$

950,000/NT$30,935,532

0.30%—1.00

0.00%—0.61

For the nine months ended September 30, 2010 and 2009, changes in fair value related to derivative financial instruments recognized in earnings was a net gain of NT$156,175 thousand and NT$576,910 thousand, respectively.

AVAILABLE-FOR-SALE FINANCIAL ASSETS


	September 30
	2010			2009
Overseas publicly traded stock	$	4,048,549		$	—
Corporate bonds		1,036,502			1,033,473

		5,085,051			1,033,473
Current portion		(4,048,549	)		—


	$	1,036,502		$	1,033,473

- 15 -

HELD-TO-MATURITY FINANCIAL ASSETS


	September 30
	2010			2009
Corporate bonds	$	7,257,142		$	12,748,902
Structured time deposits		—			6,000,000
Government bonds		—			2,904,170

		7,257,142			21,653,072
Current portion		(5,598,471	)		(8,374,389	)


	$	1,658,671		$	13,278,683

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, 2009

Callable domestic deposits

6,000,000

3,404

0.67%-0.95

March 2011 to August 2011

ALLOWANCES FOR DOUBTFUL RECEIVABLES, SALES RETURNS AND OTHERS

Movements of the allowance for doubtful receivables were as follows:


	Nine Months Ended September 30
	2010			2009
Balance, beginning of period	$	431,000		$	436,746
Provision		109,000			243,061
Write-off		—			(243,807	)


Balance, end of period	$	540,000		$	436,000


Movements of the allowance for sales returns and others were as follows:

	Nine Months Ended September 30
	2010			2009
Balance, beginning of period	$	8,583,632		$	5,868,582
Provision		8,715,191			9,715,735
Write-off		(10,708,702	)		(6,710,118	)


Balance, end of period	$	6,590,121		$	8,874,199

- 16 -

INVENTORIES


	September 30
	2010		2009
Finished goods	$	3,007,453	$	2,013,527
Work in process		18,087,605		13,654,961
Raw materials		1,490,972		907,655
Supplies and spare parts		1,187,500		618,041


	$	23,773,530	$	17,194,184

Write-down of inventories to net realizable value in the amount of NT$582,149 thousand and NT$313,175 thousand, respectively, were included in the cost of sales for the nine months ended September 30, 2010 and 2009. Inventory losses related to earthquake damage in the amount of NT$190,992 thousand were classified under non-operating expenses and losses for the nine months ended September 30, 2010.

10.

INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD


	September 30
	2010				2009
			% of				% of
	Carrying		Owner-		Carrying		Owner-
	Amount		ship		Amount		ship
TSMC Global Ltd. (TSMC Global)	$	44,892,711		100	$	45,492,790		100
TSMC Partners, Ltd. (TSMC Partners)		33,943,317		100		32,627,788		100
Vanguard International Semiconductor Corporation (VIS)		9,424,817		38		9,410,696		37
Systems on Silicon Manufacturing Company Pte Ltd. (SSMC)		6,890,171		39		5,899,305		39
Motech Industries Inc. (Motech)		6,533,432		20		—		—
TSMC China Company Limited (TSMC China)		3,654,158		100		3,606,012		100
VentureTech Alliance Fund III, L.P. (VTAF III)		2,852,802		99		1,341,398		98
TSMC North America		2,827,009		100		2,686,753		100
Xintec Inc. (Xintec)		1,618,701		41		1,372,699		41
VentureTech Alliance Fund II, L.P. (VTAF II)		1,093,417		98		1,059,820		98
Global UniChip Corporation (GUC)		1,061,303		35		960,442		36
Emerging Alliance Fund, L.P. (Emerging Alliance)		320,426		99		319,571		99
TSMC Europe B.V. (TSMC Europe)		182,022		100		152,965		100
TSMC Japan Limited (TSMC Japan)		150,896		100		136,710		100
TSMC Solar Europe B.V. (TSMC Solar Europe)		25,638		100		—		—
TSMC Solar North America, Inc. (TSMC Solar NA)		24,717		100		—		—
TSMC Korea Limited (TSMC Korea)		20,559		100		18,115		100
TSMC Lighting North America, Inc. (TSMC Lighting NA)		3,133		100		—		—


	$	115,519,229			$	105,085,064

- 17 -

		For the renewable energy and efficiency related businesses development, the Company established wholly-owned subsidiaries, TSMC Solar Europe, TSMC Solar NA and TSMC Lighting NA, in the third quarter of 2010.

		For the nine months ended September 30, 2010, the Company increased its investment in VTAF III for the amount of NT$1,786,701 thousand, and the Company’s percentage of ownership in VTAF III increased from 98% to 99%.

		In February 2010, the Company subscribed to 75,316 thousand shares of Motech through a private placement for NT$6,228,661 thousand; after the subscription, the Company’s percentage of ownership in Motech was 20%. Transfer of the aforementioned common shares within three years is prohibited according to the related regulations.

		For the nine months ended September 30, 2010 and 2009, equity in earnings/losses of equity method investees was a net gain of NT$4,677,062 thousand and a net loss of NT$2,772,157 thousand, respectively. Related equity in earnings/losses of equity method investees were determined based on the reviewed financial statements, except those of VTAF II, Emerging Alliance, TSMC Europe, TSMC Japan and TSMC Korea for the nine months ended September 30, 2010 and those of Emerging Alliance, TSMC Europe, TSMC Japan and TSMC Korea for the nine months ended September 30, 2009. The Company believes that, had VTAF II, Emerging Alliance, TSMC Europe, TSMC Japan and TSMC Korea’s financial statements been reviewed, any adjustments arising would have no material effect on the Company’s financial statements.

		As of September 30, 2010 and 2009, the quoted market price of publicly traded stocks in unrestricted investments accounted for using the equity method (VIS and GUC) were NT$13,789,014 thousand and NT$15,891,684 thousand, respectively.

		Movements of the difference between the cost of investments and the Company’s share in investees’ net assets allocated to depreciable assets were as follows:


	Nine Months Ended September 30
	2010			2009
Balance, beginning of period	$	1,429,118		$	2,053,253
Additions		2,055,660			—
Amortizations		(726,392	)		(468,101	)


Balance, end of period	$	2,758,386		$	1,585,152

Movements of the difference allocated to goodwill were as follows:


	Nine Months Ended September 30
	2010		2009
Balance, beginning of period	$	1,061,885	$	1,061,885
Additions		353,680		—


Balance, end of period	$	1,415,565	$	1,061,885

- 18 -

11.

FINANCIAL ASSETS CARRIED AT COST


	September 30
	2010		2009
Non-publicly traded stocks	$	338,584	$	338,584
Mutual funds		159,251		162,979


	$	497,835	$	501,563

12.

PROPERTY, PLANT AND EQUIPMENT


	Nine Months Ended September 30, 2010
	Balance,
	Beginning of										Balance,
	Period		Additions		Disposals			Reclassification			End of Period
Cost
Buildings	$	124,522,047	$	3,309,121	$	(135,497	)	$	—		$	127,695,671
Machinery and equipment		713,426,126		124,067,387		(1,017,470	)		139,842			836,615,885
Office equipment		10,781,099		1,185,072		(655,620	)		(442	)		11,310,109

		848,729,272	$	128,561,580	$	(1,808,587	)	$	139,400			975,621,665

Accumulated depreciation
Buildings		73,525,160	$	6,012,896	$	(128,466	)	$	—			79,409,590
Machinery and equipment		545,693,910		52,869,076		(1,017,066	)		139,842			597,685,762
Office equipment		8,545,253		666,347		(655,582	)		(442	)		8,555,576

		627,764,323	$	59,548,319	$	(1,801,114	)	$	139,400			685,650,928

Advance payments and construction in progress		33,786,577	$	7,253,969	$	(418,838	)	$	—			40,621,708


	$	254,751,526									$	330,592,445


	Nine Months Ended September 30, 2009
	Balance,
	Beginning of										Balance,
	Period		Additions		Disposals			Reclassification			End of Period
Cost
Buildings	$	114,014,588	$	9,778,198	$	(9,823	)	$	66		$	123,783,029
Machinery and equipment		635,008,261		40,995,876		(1,732,570	)		2,565			674,274,132
Office equipment		9,748,869		738,667		(150,347	)		(66	)		10,337,123

		758,771,718	$	51,512,741	$	(1,892,740	)	$	2,565			808,394,284

Accumulated depreciation
Buildings		65,351,514	$	6,067,051	$	(9,823	)	$	66			71,408,808
Machinery and equipment		484,046,160		47,404,997		(1,129,563	)		2,565			530,324,159
Office equipment		7,849,580		685,519		(150,162	)		(66	)		8,384,871

		557,247,254	$	54,157,567	$	(1,289,548	)	$	2,565			610,117,838

Advance payments and construction in progress		17,758,038	$	562,264	$	—		$	—			18,320,302


	$	219,282,502									$	216,596,748

No interest was capitalized during the nine months ended September 30, 2010 and 2009.

- 19 -

13.

DEFERRED CHARGES, NET


	Nine Months Ended September 30, 2010
	Balance,
	Beginning of							Balance,
	Period		Additions		Amortization			End of Period
Technology license fees	$	2,979,801	$	—	$	(534,476	)	$	2,445,325
Software and system design costs		1,646,973		966,623		(652,432	)		1,961,164
Patent and others		1,264,911		211,118		(274,054	)		1,201,975


	$	5,891,685	$	1,177,741	$	(1,460,962	)	$	5,608,464


	Nine Months Ended September 30, 2009
	Balance,
	Beginning of							Balance,
	Period		Additions		Amortization			End of Period
Technology license fees	$	3,786,251	$	—	$	(614,959	)	$	3,171,292
Software and system design costs		1,559,857		438,308		(569,672	)		1,428,493
Patent and others		1,055,353		—		(201,458	)		853,895


	$	6,401,461	$	438,308	$	(1,386,089	)	$	5,453,680

14.

SHORT-TERM LOANS


	September 30,
	2010
Unsecured loans
US$1,200,000 thousand, due in October 2010, and annual interest at 0.39%-0.54%	$	37,596,000

15.

BONDS PAYABLE


	September 30
	2010		2009
Domestic unsecured bonds:
Issued in January 2002 and repayable in January 2012, 3.00% interest payable annually	$	4,500,000	$	4,500,000

- 20 -

16.

OTHER LONG-TERM PAYABLES

The Company’s long-term payables mainly resulted from license agreements for certain semiconductor-related patents. As of September 30, 2010, future payments for other long-term payables were as follows:


Year of Payment	Amount
2010 (4^th quarter)	$	363,421
2011		407,290

		770,711
Current portion (classified under accrued expenses and other current liabilities)		(614,061	)


	$	156,650

17.

PENSION PLANS

		The pension mechanism under the Labor Pension 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 and recognized pension costs of NT$672,785 thousand and NT$441,429 thousand for the nine months ended September 30, 2010 and 2009, 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 Labor Pension Fund Supervisory Committee (the Committee) and deposited in the Committee’s name in the Bank of Taiwan. The Company recognized pension costs of NT$177,084 thousand and NT$216,482 thousand for the nine months ended September 30, 2010 and 2009, respectively.

		Movements of the Fund and accrued pension cost under the defined benefit plan were summarized as follows:


	Nine Months Ended September 30
	2010			2009
The Fund
Balance, beginning of period	$	2,595,717		$	2,389,519
Contributions		159,705			143,540
Interest		41,105			52,445
Payments		(11,050	)		(37,801	)


Balance, end of period	$	2,785,477		$	2,547,703


Accrued pension cost
Balance, beginning of period	$	3,807,176		$	3,710,009
Accruals		8,589			76,607


Balance, end of period	$	3,815,765		$	3,786,616

- 21 -

18.

INCOME TAX

A reconciliation of income tax expense based on “income before income tax” at the statutory rates and income tax currently payable was as follows:


	Nine Months Ended September 30
	2010			2009
Income tax expense based on “income before income tax” at statutory rate (17% and 25% for 2010 and 2009, respectively)	$	21,534,495		$	14,961,671
Tax effect of the following:
Tax-exempt income		(12,295,454	)		(6,678,202	)
Temporary and permanent differences		(616,048	)		2,854,793
Others		—			69,174
Additional tax at 10% on unappropriated earnings		127,489			—
Income tax credits used		(3,678,333	)		(5,603,718	)


Income tax currently payable	$	5,072,149		$	5,603,718


b. Income tax expense consisted of the following:

	Nine Months Ended September 30
	2010			2009
Income tax currently payable	$	5,072,149		$	5,603,718
Income tax adjustments on prior years		980,428			(1,155,113	)
Other income tax adjustments		10,148			(41,501	)
Net change in deferred income tax assets
Investment tax credits		(6,965,003	)		(3,159,546	)
Temporary differences		65,697			143,079
Valuation allowance		6,625,521			1,904,299


Income tax expense	$	5,788,940		$	3,294,936


c. Net deferred income tax assets consisted of the following:

	September 30
	2010			2009
Current deferred income tax assets
Investment tax credits	$	1,096,995		$	3,442,000
Temporary differences
Allowance for sales returns and others		566,750			757,656
Unrealized gain/loss on financial instruments		65,589			—
Others		236,332			87,384


	$	1,965,666		$	4,287,040


Noncurrent deferred income tax assets
Investment tax credits	$	20,599,749		$	13,329,764
Temporary differences
Depreciation		1,990,080			1,740,215
Others		35,785			207,766
Valuation allowance		(12,424,853	)		(8,303,945	)


	$	10,200,761		$	6,973,800

- 22 -

			Effective in May 2009 and June 2010, the Article 5 of the Income Tax Law of the Republic of China was amended, in which the income tax rate of profit-seeking enterprises would be reduced from 25% to 20% and from 20% to 17%, respectively. The last amended income tax rate of 17% is retroactively applied on January 1, 2010. The Company recalculated its deferred tax assets in accordance with the new amended Article and adjusted the resulting difference as an income tax expense in 2010 and 2009, respectively.

			Under Article 10 of the Statute for Industrial Innovation (SII) legislated and effective in May 2010, a profit-seeking enterprise may deduct up to 15% of its research and development expenditures from its income tax payable for the period in which these expenditures are incurred, but this deduction should not exceed 30% of the income tax payable for that period. This incentive is retroactive to January 1, 2010 and effective until December 31, 2019.

	d.		Integrated income tax information:

			The balance of the imputation credit account as of September 30, 2010 and 2009 was NT$1,669,533 thousand and NT$214,826 thousand, respectively.

			The estimated and actual creditable ratios for distribution of earnings of 2009 and 2008 were 9.85% and 9.10%, respectively.

			The imputation credit allocated to shareholders is based on its balance as of the date of dividend distribution. The estimated 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.

	f.		As of September 30, 2010, investment tax credits consisted of the following:


		Total		Remaining
		Creditable		Creditable		Expiry
Law/Statute	Item	Amount		Amount		Year
Statute for Upgrading Industries	Purchase of machinery and equipment	$	3,212,913	$	3,147,180		2012
			6,039,644		6,039,644		2013
			5,442,649		5,442,649		2014


		$	14,695,206	$	14,629,473


Statute for Upgrading Industries	Research and development expenditures	$	1,000,000	$	—		2010
			1,054,194		—		2011
			2,691,517		2,691,517		2012
			4,328,009		4,328,009		2013


		$	9,073,720	$	7,019,526


Statute for Upgrading Industries	Personnel training expenditures	$	19,293	$	—		2011
			30,624		30,624		2012
			17,121		17,121		2013


		$	67,038	$	47,745


Statute for Industrial Innovation	Research and development expenditures	$	1,539,113	$	—		2010

- 23 -

The profits generated from the following projects are exempt from income tax for a five-year period:


		Tax-exemption Period
Construction and expansion of 2001		2006 to 2010
Construction and expansion of 2003		2007 to 2011
Construction and expansion of 2004		2008 to 2012
Construction and expansion of 2005		2010 to 2014

The tax authorities have examined income tax returns of the Company through 2007. All investment tax credit adjustments assessed by the tax authorities have been recognized accordingly.

19.

LABOR COST, DEPRECIATION AND AMORTIZATION


	Nine Months Ended September 30, 2010
			Classified as
	Classified as		Operating
	Cost of Sales		Expenses		Total
Labor cost
Salary and bonus	$	17,941,777	$	13,265,190	$	31,206,967
Labor and health insurance		670,276		382,460		1,052,736
Pension		540,957		308,912		849,869
Meal		403,413		163,910		567,323
Welfare		161,132		95,271		256,403
Others		50,792		18,560		69,352


	$	19,768,347	$	14,234,303	$	34,002,650


Depreciation	$	55,796,317	$	3,739,803	$	59,536,120

Amortization	$	933,660	$	527,302	$	1,460,962


	Nine Months Ended September 30, 2009
			Classified as
	Classified as		Operating
	Cost of Sales		Expenses		Total
Labor cost
Salary and bonus	$	11,010,069	$	8,299,658	$	19,309,727
Labor and health insurance		458,611		278,310		736,921
Pension		409,387		248,524		657,911
Meal		305,276		132,322		437,598
Welfare		107,465		67,310		174,775
Others		79,471		14,697		94,168


	$	12,370,279	$	9,040,821	$	21,411,100


Depreciation	$	51,354,934	$	2,790,434	$	54,145,368

Amortization	$	897,733	$	488,356	$	1,386,089

- 24 -

20.

SHAREHOLDERS’ EQUITY

		As of September 30, 2010, 1,096,448 thousand ADSs of the Company were traded on the NYSE. The number of common shares represented by the ADSs was 5,482,242 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 are limited to a certain percentage of the Company’s paid-in capital. In addition, the capital surplus from long-term investments may not be used for any purpose.

		Capital surplus consisted of the following:


	September 30
	2010		2009
Additional paid-in capital	$	23,562,191	$	23,408,710
From merger		22,805,390		22,805,390
From convertible bonds		8,893,190		8,893,190
From long-term investments		373,244		332,574
Donations		55		55


	$	55,634,070	$	55,439,919

The Company’s Articles of Incorporation 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 equals 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 profit sharing 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. The Company may issue profit sharing to employee in stock 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 subject to shareholders’ approval in the following year.

- 25 -

The Company accrued profit sharing to employees as a charge to earnings of certain percentage of net income during the period amounted to NT$8,162,440 thousand and NT$8,556,862 thousand for the nine months ended September 2010 and 2009, respectively; bonuses to directors were accrued with an estimate based on historical experience. If the actual amounts subsequently resolved by the shareholders differ from the estimated amounts, the differences are recorded in the year of shareholders’ resolution as a change in accounting estimate. If profit sharing is resolved to be distributed to employees in stock, the number of shares is determined by dividing the amount of profit sharing by the closing price (after considering the effect of dividends) of the shares on the day preceding the shareholders’ meeting.

		The Company no longer has supervisors since January 1, 2007. The required duties of supervisors are being fulfilled by the Audit Committee.

		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 instruments, 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.

		The appropriations of earnings for 2009 and 2008 had been approved in the shareholders’ meeting held on June 15, 2010 and June 10, 2009, respectively. The appropriations and dividends per share were as follows:


	Appropriation of Earnings					Dividends Per Share (NT$)
	For Fiscal		For Fiscal			For Fiscal		For Fiscal
	Year 2009		Year 2008			Year 2009		Year 2008
Legal capital reserve	$	8,921,784	$	9,993,317
Special capital reserve		1,313,047		(391,857	)
Cash dividends to shareholders		77,708,120		76,876,312		$	3.00	$	3.00
Stock dividends to shareholders		—		512,509			—		0.02


	$	87,942,951	$	86,990,281

		TSMC’s profit sharing to employees to be paid in cash and bonus to directors in the amounts of NT$6,691,338 thousand and NT$67,692 thousand for 2009, respectively, and profit sharing to employees to be paid in cash and in stock as well as bonus to directors in the amounts of NT$7,494,988 thousand, NT$7,494,988 thousand and NT$158,080 thousand for 2008, respectively, had been approved in the shareholders’ meeting held on June 15, 2010 and June 10, 2009, respectively. The profit sharing to employees in stock of 141,870 thousand shares for 2008 was determined by the closing price of the Company’s common shares (after considering the effect of dividends) of the day immediately preceding the shareholders’ meeting, which was NT$52.83. The resolved amounts of the profit sharing to employees and bonus to directors were consistent with the resolutions of meeting of the Board of Directors held on February 9, 2010 and February 10, 2009 and same amount had been charged against earnings of 2009 and 2008, respectively.

		The shareholders’ meeting held on June 10, 2009 also resolved to distribute stock dividends out of capital surplus, and stock dividends to shareholders as well as profit sharing to employees to be paid in stock in the amount of NT$768,763 thousand, NT$512,509 thousand and NT$7,494,988 thousand, respectively.

- 26 -

		The information about appropriations of profit sharing to employees and bonus to directors is available at the 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.

21.

STOCK-BASED COMPENSATION PLANS

		The Company’s Employee Stock Option Plans, consisting of 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.

		Options of the plans that had never been granted or had been granted but subsequently canceled had expired as of September 30, 2010.

		Information about outstanding options for the nine months ended September 30, 2010 and 2009 was as follows:


				Weighted-
	Number of			average
	Options			Exercise Price
	(In Thousands)			(NT$)
Nine months ended September 30, 2010

Balance, beginning of period		28,810		$	32.4
Options exercised		(4,638	)		32.5


Balance, end of period		24,172			32.5


Nine months ended September 30, 2009

Balance, beginning of period		36,234			34.0
Options granted		175			34.0
Options exercised		(5,228	)		36.5
Options canceled		(321	)		46.5


Balance, end of period		30,860			33.5

The number of outstanding options and exercise prices have been adjusted to reflect the distribution of earnings in accordance with the plans.

- 27 -

As of September 30, 2010, information about outstanding options was as follows:


	Options Outstanding
			Weighted-average
			Remaining	Weighted-average
Range of Exercise Price	Number of Options		Contractual Life	Exercise Price
(NT$)	(In Thousands)		(Years)	(NT$)
$21.7—$30.5		18,013	2.44	$	28.0
38.0—50.1		6,159	4.16		45.6


		24,172	2.88		32.5

		As of September 30, 2010, all of the above outstanding options were exercisable.

		No compensation cost was recognized under the intrinsic value method for the nine months ended September 30, 2010 and 2009. Had the Company used the fair value based method to evaluate the options using the Black-Scholes model, the assumptions at the various grant dates and pro forma results of the Company for the nine months ended September 30, 2010 and 2009 would have been as follows:


Assumptions:
Expected dividend yield		1.00%—3.44%
Expected volatility		43.77%—46.15%
Risk free interest rate		3.07%—3.85%
Expected life		5 years


	Nine Months Ended September 30
	2010		2009
Net income:
Net income as reported	$	120,884,560	$	56,551,787
Pro forma net income		120,871,974		56,173,879

Earnings per share (EPS) — after income tax (NT$):
Basic EPS as reported	$	4.67	$	2.19
Pro forma basic EPS		4.67		2.18
Diluted EPS as reported		4.66		2.18
Pro forma diluted EPS		4.66		2.16

22.

EARNINGS PER SHARE

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, 2010

Basic EPS
Earnings available to common shareholders	$	126,673,500	$	120,884,560		25,904,889	$	4.89	$	4.67

Effect of dilutive potential common shares		—		—		13,286


Diluted EPS
Earnings available to common shareholders (including effect of dilutive potential common shares)	$	126,673,500	$	120,884,560		25,918,175	$	4.89	$	4.66

(Continued)

- 28 -


					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, 2009

Basic EPS
Earnings available to common shareholders	$	59,846,723	$	56,551,787		25,813,614	$	2.32	$	2.19

Effect of dilutive potential common shares		—		—		166,923


Diluted EPS
Earnings available to common shareholders (including effect of dilutive potential common shares)	$	59,846,723	$	56,551,787		25,980,537	$	2.30	$	2.18

							(Concluded)

Effective January 1, 2008, the Company adopted Interpretation 2007-052 that requires companies to record profit sharing to employees as an expense rather than as an appropriation of earnings. If the Company may settle the obligation by cash, by issuing shares, or in combination of both cash and shares, profit sharing to employees which will be settled in shares should be included in the weighted average number of shares outstanding in calculation of diluted EPS, if the shares have a dilutive effect. The number of shares is estimated by dividing the amount of profit sharing to employees in stock by the closing price (after considering the dilutive effect of dividends) of the common shares on the balance sheet date. Such dilutive effect of the potential shares needs to be included in the calculation of diluted EPS until the shares of profit sharing to employees are resolved in the shareholders’ meeting in the following year.

The average number of shares outstanding for EPS calculation has been considered for the effect of retroactive adjustments. This adjustment caused each of the basic and diluted after income tax EPS for the nine months ended September 30, 2009 to remain at NT$2.19 and NT$2.18 respectively.

23.

DISCLOSURES FOR FINANCIAL INSTRUMENTS

Fair values of financial instruments were as follows:


	September 30
	2010				2009
	Carrying				Carrying
	Amount		Fair Value		Amount		Fair Value
Assets

Financial assets at fair value through profit or loss	$	14,383	$	14,383	$	367,461	$	367,461
Available-for-sale financial assets		5,085,051		5,085,051		1,033,473		1,033,473
Held-to-maturity financial assets		7,257,142		7,348,294		21,653,072		21,747,720
Financial assets carried at cost		497,835		—		501,563		—

Liabilities

Financial liabilities at fair value through profit or loss		73,530		73,530		—		—
Bonds payable		4,500,000		4,547,696		4,500,000		4,583,826
Other long-term payable (including current portion)		770,711		770,711		1,355,167		1,355,167

- 29 -

Methods and assumptions used in the estimation of fair values of financial instruments

	1)		The aforementioned financial instruments do not include cash and cash equivalents, receivables, other financial assets, refundable deposits, short-term loans, payables and guarantee deposits. The carrying amounts of these financial instruments approximate their fair values due to their short maturities.

	2)		Except for derivatives and structured time deposits, available-for-sale and held-to-maturity financial assets were based on their quoted market prices.

	3)		The fair values of those derivatives and structured time deposits are determined using valuation techniques incorporating estimates and assumptions that were consistent with prevailing market conditions.

	4)		Financial assets carried at cost have no quoted prices in an active market and entail an unreasonably high cost to obtain verifiable fair values. Therefore, no fair value is presented.

	5)		Fair value of bonds payable was based on their quoted market price.

	6)		Fair value of other long-term payables was based on the present value of expected cash flows, which approximates their carrying amount.

The changes in fair value of derivatives contracts which were outstanding as of September 30, 2010 and 2009 estimated using valuation techniques were recognized as a net loss of NT$59,147 thousand and a net gain of NT$367,461 thousand, respectively.

As of September 30, 2010 and 2009, financial assets exposed to fair value interest rate risk were NT$8,308,027 thousand and NT$23,054,006 thousand, respectively, financial liabilities exposed to fair value interest rate risk were NT$42,169,530 thousand and NT$4,500,000 thousand, respectively.

Movements of the unrealized gains or losses on financial instruments for the nine months ended September 30, 2010 and 2009 were as follows:


	Nine Months Ended September 30, 2010
	From
	Available-			Equity-
	for-sale			method
	Financial Assets			Investments		Total
Balance, beginning of period	$	46,672		$	406,949	$	453,621
Recognized directly in shareholders’ equity		(330,396	)		395,444		65,048


Balance, end of period	$	(283,724	)	$	802,393	$	518,669


	Nine Months Ended September 30, 2009
	From
	Available-			Equity-
	for-sale			method
	Financial Assets			Investments			Total
Balance, beginning of period	$	32,658		$	(320,000	)	$	(287,342	)
Recognized directly in shareholders’ equity		38,185			780,948			819,133
Removed from shareholders’ equity and recognized in earnings		(37,370	)		—			(37,370	)


Balance, end of period	$	33,473		$	460,948		$	494,421

- 30 -

Information about financial risks

	1)		Market risk. The derivative financial instruments categorized as financial assets/liabilities at fair value through profit or loss are mainly used to hedge the market exchange rate fluctuations of foreign-currency assets and liabilities; therefore, the market exchange rate risk of derivatives will be offset by the foreign exchange risk of these hedged items. Available-for-sale financial assets and held-to-maturity financial assets held by the Company are mainly fixed-interest-rate debt securities and overseas publicly traded stock; therefore, the fluctuations in market interest rates and market price will 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 Company evaluated whether the financial instruments for any possible counter-party or third-parties are reputable financial institutions, business enterprises, and government agencies and accordingly, the Company believed that the Company’s exposure to credit risk was not significant.

	3)		Liquidity risk. The Company has sufficient operating capital to meet cash needs upon settlement of derivative financial instruments and bonds payable. Therefore, the liquidity risk is low.

	4)		Cash flow interest rate risk. The Company mainly invests in fixed-interest-rate debt securities. Therefore, cash flows are not expected to fluctuate significantly due to changes in market interest rates.

24.

RELATED PARTY TRANSACTIONS

The Company engages in business transactions with the following related parties:

	a.		Subsidiaries

			TSMC North America
			TSMC China
			TSMC Europe
			TSMC Japan
			TSMC Korea

	b.		Investees

			GUC (with a controlling financial interest)
			Xintec (with a controlling financial interest)
			VIS (accounted for using equity method)
			SSMC (accounted for using equity method)
			Motech (accounted for using equity method)

	c.		Indirect subsidiaries

			WaferTech, LLC (WaferTech)
			TSMC Technology, Inc. (TSMC Technology)
			TSMC Design Technology Canada Inc. (TSMC Canada)

	d.		Indirect investee

			VisEra Technology Company, Ltd. (VisEra), an indirect investee accounted for using equity method.

- 31 -

	e.		Others

			Related parties over which the Company has control or exercises significant influence but with which the Company had no material transactions.

Transactions with the aforementioned parties, other than those disclosed in other notes, are summarized as follows:


	2010				2009
	Amount		%		Amount		%
For the nine months ended September 30

Sales
TSMC North America	$	160,415,902		52	$	111,683,024		54
Others		2,094,763		1		1,662,378		1


	$	162,510,665		53	$	113,345,402		55


Purchases
TSMC China	$	6,206,526		17	$	2,611,248		12
WaferTech		5,958,529		17		3,872,117		18
VIS		3,643,305		10		2,433,937		11
SSMC		3,383,596		10		2,530,044		11


	$	19,191,956		54	$	11,447,346		52


Manufacturing expenses
Xintec (rent and outsourcing)	$	214,590		—	$	—		—
VisEra (outsourcing)		34,434		—		22,550		—


	$	249,024		—	$	22,550		—


Marketing expenses — commission
TSMC Europe	$	321,483		15	$	234,892		16
TSMC Japan		196,939		9		166,109		12
TSMC China		42,140		2		—		—
TSMC Korea		14,362		—		10,667		1


	$	574,924		26	$	411,668		29


Research and development expenses
TSMC Technology (primarily consulting fee)	$	425,892		2	$	299,636		2
TSMC Canada (primarily consulting fee)		141,212		1		115,534		1
VIS (primarily rent)		8,730		—		1,988		—
Others		38,950		—		39,790		—


	$	614,784		3	$	456,948		3

- 32 -


	2010				2009
	Amount		%		Amount		%
Sales of property, plant and equipment and other assets
TSMC China	$	383,473		62	$	—		—
VIS		37,011		6		—		—
WaferTech		31,679		5		263		—
Others		10,660		2		58,450		97


	$	462,823		75	$	58,713		97


Purchases of property, plant and equipment
TSMC China	$	66,097		—	$	—		—
VIS		15,865		—		—		—
WaferTech		9,624		—		—		—


	$	91,586		—	$	—		—


Non-operating income and gains
VIS (primarily technical service income, see Note 27e)	$	226,256		2	$	179,168		7
SSMC (primarily technical service income, see Note 27d)		145,625		1		98,806		4
TSMC China		42,425		—		146,585		5
Others		9,655		—		263		—


	$	423,961		3	$	424,822		16


As of September 30

Receivables
TSMC North America	$	24,574,148		97	$	22,009,288		98
Others		644,447		3		455,519		2


	$	25,218,595		100	$	22,464,807		100


Other receivables
TSMC China	$	383,334		58	$	119,544		37
VIS		150,589		23		141,358		44
SSMC		49,752		8		42,588		13
WaferTech		39,956		6		3,921		1
Others		34,156		5		14,088		5


	$	657,787		100	$	321,499		100


Payables
VIS	$	1,122,687		33	$	759,737		33
TSMC China		873,981		25		456,026		20
WaferTech		671,004		19		605,006		26
SSMC		434,236		13		273,184		12
TSMC Technology		84,463		2		126,074		6
Others		265,166		8		74,128		3


	$	3,451,537		100	$	2,294,155		100

- 33 -


	2010				2009
	Amount		%		Amount			%
Deferred debits (credits)
TSMC China	$	20,821		5	$	(43,730	)		(61	)

The sales prices and payment terms to related parties were not significantly different from those of sales to third parties. For other related party transactions, prices and terms were determined in accordance with mutual agreements.

The Company leased certain buildings, facilities, and machinery and equipment from Xintec. The lease terms and prices were determined in accordance with mutual agreements. The rental expense was paid monthly and the related expenses were classified under manufacturing expenses.

The Company leased certain office space from VIS. The lease terms and prices were determined in accordance with mutual agreements. The rental expense was prepaid by the Company and the related expenses were classified under research and development expenses.

The Company deferred the gains and losses (classified under deferred debits and deferred credits) derived from sales of property, plant and equipment to TSMC China, and then recognized such gains and losses (classified under non-operating gains and losses) over the depreciable lives of the disposed assets.

25.

PLEDGED OR MORTGAGED ASSETS

As of September 30, 2010 and 2009, the Company had pledged time deposits of NT$25,864 thousand and NT$605,602 thousand (classified as other financial assets) as collateral for land lease agreements and customs duty guarantee, respectively.

26.

SIGNIFICANT LONG-TERM LEASES

The Company leases several parcels of land from the Science Park Administration. These operating leases expire on various dates from December 2010 to July 2030 and can be renewed upon expiration.

As of September 30, 2010, future lease payments were as follows:


Year	Amount
2010 (4^th quarter)	$	101,812
2011		414,128
2012		412,977
2013		388,729
2014		375,171
2015 and thereafter		3,443,302


	$	5,136,119

- 34 -

27.

SIGNIFICANT COMMITMENTS AND CONTINGENCIES

Significant commitments and contingencies of the Company as of September 30, 2010, excluding those disclosed in other notes, were as follows:

	a.		Under a technical cooperation agreement with ITRI, the R.O.C. Government or its designee approved by the Company can use up to 35% of the Company’s capacity if the Company’s outstanding commitments to its customers are not 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.

	b.		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, 2010 the Company had a total of US$23,979 thousand of guarantee deposits.

	c.		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%. Nevertheless, Philips parted with its semiconductor company which was renamed as NXP B.V. in September 2006. The Company and NXP B.V. purchased all the SSMC shares owned by EDB Investments Pte Ltd. pro rata according to the Shareholders Agreement on November 15, 2006. After the purchase, the Company and NXP B.V. currently own approximately 39% and 61% of the SSMC shares respectively. The Company and Philips (now NXP B.V.) are required, in the aggregate, to purchase at least 70% of SSMC’s capacity, but the Company alone is not required to purchase more than 28% of the capacity. If any party defaults on the commitment and the capacity utilization of SSMC fall below a specific percentage of its capacity, the defaulting party is required to compensate SSMC for all related unavoidable costs.

	d.		The Company provides technical services to SSMC under a Technical Cooperation Agreement (the Agreement) effective March 30, 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 will be automatically renewed for successive periods of five years each unless pre-terminated by either party under certain conditions.

	e.		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.

	f.		In August 2006, TSMC filed a lawsuit against Semiconductor Manufacturing International Corporation, SMIC (Shanghai) and SMIC Americas (aggregately referred to as “SMIC”) in the Superior Court of California for Alameda County for breach of a 2005 agreement that settled an earlier trade secret misappropriation and patent infringement litigation between the parties, as well as for trade secret misappropriation, seeking injunctive relief and monetary damages. In September 2006, SMIC filed a cross-complaint against TSMC in the same court alleging breach of settlement agreement, implied covenant of good faith and fair dealing. SMIC also filed a civil action against TSMC in November 2006 with the Beijing People’s High Court alleging defamation and breach of good faith. On June 10, 2009, the Beijing People’s High Court ruled in favor of TSMC and dismissed SMIC’s lawsuit. On November 4, 2009, after a two-month trial, a jury in the California action found SMIC to have both breached the 2005 settlement agreement and misappropriated TSMC’s trade secrets. TSMC has subsequently settled both lawsuits with SMIC. Pursuant to the new settlement agreement, the parties have agreed to the entry of a stipulated judgment in favor of TSMC in the California action, and to the dismissal of SMIC’s appeal against the Beijing High Court’s finding in favor of TSMC. Under the new settlement agreement and the related stipulated judgment, SMIC has agreed to make cash payments by installments to TSMC totaling US$200 million, which are in addition to the US$135 million previously paid to TSMC under the 2005 settlement agreement, and, conditional upon relevant

- 35 -

			government regulatory approvals, to issue to TSMC a total of 1,789,493,218 common shares of Semiconductor Manufacturing International Corporation and a three-year warrant to purchase 695,914,030 common shares (subject to adjustment) of Semiconductor Manufacturing International Corporation at HK$1.30 per share (subject to adjustment). TSMC has received the approval from the Investment Commission of Ministry of Economic Affairs and acquired the above mentioned common shares on July 5, 2010, representing approximately 7.37% of Semiconductor Manufacturing International Corporation’s total shares outstanding, and recognized settlement income amounting to NT$4,434,364 thousand.

	g.		In June 2010, STC.UNM, the technology transfer arm of the University of New Mexico, filed a complaint in the US International Trade Commission (US ITC) accusing the Company and one other company of allegedly infringing a single US patent. The US ITC has initiated an investigation in July 2010. The outcome of this investigation cannot be determined at this time.

28.

ADDITIONAL DISCLOSURES


		Following are the additional disclosures required by the SFB for the Company and its investees:

	a.		Financing provided: None;

	b.		Endorsement/guarantee provided: None;

	c.		Marketable securities held: Please see Table 1 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 2 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 3 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 4 attached;

	h.		Receivable from related parties amounting to at least NT$100 million or 20% of the paid-in capital: Please see Table 5 attached;

	i.		Names, locations, and related information of investees over which the Company exercises significant influence: Please see Table 6 attached;

	j.		Information about derivatives of investees over which the Company has a controlling interest:

			Not meet the criteria for hedge accounting

			TSMC China entered into forward exchange contracts during the nine months ended September 30, 2010 to manage exposures due to foreign exchange rate fluctuations. There are no outstanding forward exchange contracts as of September 30, 2010.

			For the nine months ended September 30, 2010, net losses arising from forward exchange contracts of TSMC China amounted to NT$1,602 thousand.

- 36 -

Xintec entered into forward exchange contracts during the nine months ended September 30, 2010 to manage exposures due to foreign exchange rate fluctuations. Outstanding forward exchange contracts as of September 30, 2010 consisted of the following:


		Contract Amount
	Maturity Date	(In Thousands)
Sell US$/Buy NT$	October 2010 to November 2010	US$12,500/NT$397,255

For the nine months ended September 30, 2010, net gains arising from forward exchange contracts of Xintec amounted to NT$1,464 thousand.

Meet the criteria for hedge accounting

Xintec monitors and manages the financial risk through the analysis of business environment and evaluation of entity’s financial risks. Further, Xintec seeks to reduce the effects of future cash flow related interest rate exposures by primarily using derivative financial instruments.

Xintec is exposed to interest rate risk because its long-term bank loans bear floating interest rates. Accordingly, Xintec enters into interest rate swap contract to hedge such a cash flow interest rate risk. As of September 30, 2010, the outstanding interest rate swap contract of Xintec consisted of the following:


				Expected Timing for
		Fair Value	Expected	the
	Hedging Financial	September 30,	Cash Flow	Recognition of Gains
Hedged Item	Instrument	2010	Generated Period	or Losses from Hedge
Long-term bank loans	Interest rate swap contract	$(1,065)	2010 to 2012	2010 to 2012

The adjustment to shareholders’ equity of Xintec as a result of the above interest rate swap contract amounted to NT$1,065 thousand for the nine months period ended September 30, 2010.

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 7 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 24.

- 37 -

TABLE 1

Taiwan Semiconductor Manufacturing Company Limited and Investees

MARKETABLE SECURITIES HELD
SEPTEMBER 30, 2010
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)


				September 30, 2010
	Marketable	Relationship	Financial							Market Value or Net
Held	Securities	with the	Statement	Shares/Units		Carrying Value		Percentage of		Asset Value
Company Name	Type and Name	Company	Account	(In Thousands)		(US$ in Thousands)		Ownership (%)		(US$ in Thousands)		Note
TSMC	Corporate bond
	Taiwan Mobile Co., Ltd.	—	Available-for-sale financial assets		—	$	1,036,502		N/A	$	1,036,502
	Taiwan Power Company	—	Held-to-maturity financial assets		—		1,730,004		N/A		1,744,264
	Formosa Petrochemical Corporation	—	"		—		1,639,288		N/A		1,653,850
	China Steel Corporation	—	"		—		1,508,598		N/A		1,521,155
	Nan Ya Plastics Corporation	—	"		—		1,303,204		N/A		1,345,262
	Formosa Plastics Corporation	—	"		—		576,062		N/A		583,792

	CPC Corporation, Taiwan	—	"		—		499,986		N/A		499,971

	Stock
	Semiconductor Manufacturing International Corporation	—	Available-for-sale financial assets		1,789,493		4,048,549		7		4,048,549
	TSMC Global	Subsidiary	Investments accounted for using equity method		1		44,892,711		100		44,892,711

	TSMC Partners	Subsidiary	"		988,268		33,943,317		100		33,943,317

	VIS	Investee accounted for using equity method	"		628,223		9,424,817		38		8,606,662

	SSMC	Investee accounted for using equity method	"		314		6,890,171		39		6,462,772

	Motech	Investee accounted for using equity method	"		76,069		6,533,432		20		4,382,382

	TSMC North America	Subsidiary	"		11,000		2,827,009		100		2,827,009

	Xintec	Investee with a controlling financial interest	"		93,081		1,618,701		41		1,599,842

	GUC	Investee with a controlling financial interest	"		46,688		1,061,303		35		5,182,352

	TSMC Europe	Subsidiary	"		—		182,022		100		182,022

	TSMC Japan	Subsidiary	"		6		150,896		100		150,896

	TSMC Solar Europe	Subsidiary	"		—		25,638		100		25,638

	TSMC Solar NA	Subsidiary	"		1		24,717		100		24,717

	TSMC Korea	Subsidiary	"		80		20,559		100		20,559

	TSMC Lighting NA	Subsidiary	"		1		3,133		100		3,133

	United Industrial Gases Co., Ltd.	—	Financial assets carried at cost		16,783		193,584		10		308,603
	Shin-Etsu Handotai Taiwan Co., Ltd.	—	"		10,500		105,000		7		358,047
	W.K. Technology Fund IV	—	"		4,000		40,000		2		42,945

	Fund
	Horizon Ventures Fund	—	Financial assets carried at cost		—		103,992		12		103,992
	Crimson Asia Capital	—	"		—		55,259		1		55,259

	Capital
	TSMC China	Subsidiary	Investments accounted for using equity method		—		3,654,158		100		3,662,459

	VTAF III	Subsidiary	"		—		2,852,802		99		2,833,933

	VTAF II	Subsidiary	"		—		1,093,417		98		1,087,647

	Emerging Alliance	Subsidiary	"		—		320,426		99		320,426

TSMC Partners	Corporate bond
	General Elec Cap Corp. Mtn	—	Held-to-maturity financial assets		—	US$	20,350		N/A	US$	21,303
	General Elec Cap Corp. Mtn	—	"		—	US$	20,161		N/A	US$	21,546

(Continued)

- 38 -


				September 30, 2010
	Marketable	Relationship	Financial							Market Value or Net
Held	Securities	with the	Statement	Shares/Units		Carrying Value		Percentage of		Asset Value
Company Name	Type and Name	Company	Account	(In Thousands)		(US$ in Thousands)		Ownership (%)		(US$ in Thousands)		Note
	Common stock
	TSMC Development, Inc. (TSMC Development)	Subsidiary	Investments accounted for using equity method		1	US$	386,744		100	US$	386,744

	VisEra Holding Company	Investee accounted for using equity method	"		43,000	US$	77,292		49	US$	77,292

	InveStar Semiconductor Development Fund, Inc. (ISDF)	Subsidiary	"		7,680	US$	24,529		97	US$	24,529

	InveStar Semiconductor Development Fund, Inc. (II) LDC. (ISDF II)	Subsidiary	"		21,415	US$	17,413		97	US$	17,413

	TSMC Technology	Subsidiary	"		1	US$	9,677		100	US$	9,677

	TSMC Canada	Subsidiary	"		2,300	US$	3,543		100	US$	3,543

	Mcube Inc.	Investee accounted for using equity method	"		5,333		—		70		—

	Preferred stock
	Mcube Inc.	Investee accounted for using equity method	Investments accounted for using equity method		1,000	US$	214		10	US$	214

TSMC Development	Corporate bond
	GE Capital Corp.	—	Held-to-maturity financial assets		—	US$	20,245		N/A	US$	21,546
	JP Morgan Chase & Co.	—	"		—	US$	15,000		N/A	US$	15,068

	Stock
	WaferTech	Subsidiary	Investments accounted for using equity method		293,637	US$	200,265		100	US$	200,265

Emerging Alliance	Common stock
	RichWave Technology Corp.	—	Financial assets carried at cost		4,074	US$	1,545		10	US$	1,545
	Global Investment Holding Inc.	—	"		11,124	US$	3,065		6	US$	3,065

	Preferred stock
	Audience, Inc.	—	Financial assets carried at cost		1,654	US$	250		—	US$	250
	Axiom Microdevices, Inc.	—	"		1,000	US$	13		1	US$	13

	Next IO, Inc.	—	"		800	US$	500		1	US$	500

	Optichron, Inc.	—	"		1,276	US$	1,145		2	US$	1,145

	Pixim, Inc.	—	"		4,641	US$	1,137		2	US$	1,137

	QST Holdings, LLC	—	"		—	US$	142		4	US$	142

	Capital
	VentureTech Alliance Holdings, LLC (VTA Holdings)	Subsidiary	Investments accounted for using equity method		—		—		7		—

VTAF II	Common stock
	Leadtrend	—	Available-for-sale financial assets		854	US$	3,747		2	US$	3,747
	Aether Systems, Inc.	—	Financial assets carried at cost		1,600	US$	1,503		25	US$	1,503
	RichWave Technology Corp.	—	"		1,267	US$	1,036		3	US$	1,036
	Sentelic	—	"		1,806	US$	2,607		9	US$	2,607

	Preferred stock
	5V Technologies, Inc.	—	Financial assets carried at cost		2,890	US$	2,168		4	US$	2,168
	Aquantia	—	"		3,974	US$	3,816		3	US$	3,816

	Audience, Inc.	—	"		12,378	US$	2,378		3	US$	2,378

	Beceem Communications	—	"		797	US$	1,701		1	US$	1,701

	Impinj, Inc.	—	"		475	US$	1,000		—	US$	1,000

	Next IO, Inc.	—	"		3,795	US$	953		2	US$	953

	Optichron, Inc.	—	"		2,847	US$	2,825		4	US$	2,825

	Pixim, Inc.	—	"		33,347	US$	1,878		2	US$	1,878

	Power Analog Microelectronics	—	"		7,027	US$	3,383		19	US$	3,383

(Continued)

- 39 -


				September 30, 2010
	Marketable	Relationship	Financial							Market Value or Net
Held	Securities	with the	Statement	Shares/Units		Carrying Value		Percentage of		Asset Value
Company Name	Type and Name	Company	Account	(In Thousands)		(US$ in Thousands)		Ownership (%)		(US$ in Thousands)		Note
	QST Holdings, LLC	—	Financial assets carried at cost		—	US$	593		13	US$	593
	Xceive	—	"		4,210	US$	1,554		3	US$	1,554

	Capital
	VTA Holdings	Subsidiary	Investments accounted for using equity method		—		—		31		—

VTAF III	Common stock
	Mutual-Pak Technology Co., Ltd.	Subsidiary	Investments accounted for using equity method		9,180	US$	1,461		59	US$	1,461
	Aiconn Technology Corporation	Investee accounted for using equity method	"		5,623	US$	682		43	US$	682

	Preferred stock
	Auramicro, Inc.	—	Financial assets carried at cost		4,694	US$	1,408		20	US$	1,408
	BridgeLux, Inc.	—	"		6,113	US$	7,781		4	US$	7,781
	Exclara, Inc.	—	"		21,587	US$	4,568		18	US$	4,568
	GTBF, Inc.	—	"		1,154	US$	1,500		N/A	US$	1,500
	InvenSense, Inc.	—	"		816	US$	1,000		1	US$	1,000
	LiquidLeds Lighting Corp.	—	"		1,600	US$	800		11	US$	800
	Neoconix, Inc.	—	"		3,283	US$	4,608		6	US$	4,608
	Powervation, Ltd.	—	"		310	US$	4,678		16	US$	4,678
	Quellan, Inc.	—	"		3,106	US$	369		N/A	US$	369
	Silicon Technical Services, LLC	—	"		1,055	US$	1,208		—	US$	1,208
	Stion Corp.	—	"		7,347	US$	50,000		23	US$	50,000
	Tilera, Inc.	—	"		3,222	US$	2,781		2	US$	2,781
	Validity Sensors, Inc.	—	"		9,340	US$	3,456		4	US$	3,456

	Capital
	Growth Fund Limited (Growth Fund)	Subsidiary	Investments accounted for using equity method		—	US$	829		100	US$	829
	VTA Holdings	Subsidiary	"		—		—		62		—

Growth Fund	Common stock
	SiliconBlue Technologies, Inc.	—	Financial assets carried at cost		5,107	US$	762		1	US$	762
	Staccato	—	"		10	US$	25		—	US$	25

ISDF	Common stock
	Integrated Memory Logic, Inc.	—	Available-for-sale financial assets		4,838	US$	18,496		7	US$	18,496
	Memsic, Inc.	—	"		1,286	US$	3,060		5	US$	3,060

	Capella Microsystems (Taiwan), Inc.	—	"		372	US$	2,108		1	US$	2,108

	Preferred stock
	IP Unity, Inc.	—	Financial assets carried at cost		1,008	US$	290		1	US$	290
	Sonics, Inc.	—	"		230	US$	497		2	US$	497

ISDF II	Common stock
	Memsic, Inc.	—	Available-for-sale financial assets		1,072	US$	2,552		5	US$	2,552
	Capella Microsystems (Taiwan), Inc.	—	"		374	US$	2,118		1	US$	2,118
	Alchip Technologies Limited	—	Financial assets carried at cost		7,520	US$	3,664		15	US$	3,664
	Sonics, Inc.	—	"		278	US$	10		3	US$	10
	EON Technology, Corp.	—	"		409	US$	113		1	US$	113
	Goyatek Technology, Corp.	—	"		932	US$	545		6	US$	545
	Auden Technology MFG. Co., Ltd.	—	"		1,049	US$	223		3	US$	223

	Preferred stock
	FangTek, Inc.	—	Financial assets carried at cost		1,032	US$	686		6	US$	686
	Sonics, Inc.	—	"		264	US$	456		3	US$	456

(Continued)

- 40 -


				September 30, 2010
	Marketable	Relationship	Financial							Market Value or Net
Held	Securities	with the	Statement	Shares/Units		Carrying Value		Percentage of		Asset Value
Company Name	Type and Name	Company	Account	(In Thousands)		(US$ in Thousands)		Ownership (%)		(US$ in Thousands)		Note
GUC	Common stock
	GUC-NA	Subsidiary	Investments accounted for using equity method		800	$	59,576		100	$	59,576
	GUC-Japan	Subsidiary	"		1		14,969		100		14,969
	GUC-BVI	Subsidiary	"		550		9,370		100		9,370
	GUC-Europe	Subsidiary	"		—		4,432		100		4,432

GUC-BVI	Capital
	Global Unichip (Shanghai) Company, Limited (GUC-Shanghai)	Subsidiary	Investments accounted for using equity method		—		7,969		100		7,969

Xintec	Capital
	Compositech Ltd.	—	Financial assets carried at cost		587		—		3		—

TSMC Global	Corporate bond
	African Development Bank	—	Available-for-sale financial assets		2,600	US$	2,618		N/A	US$	2,618
	Allstate Life Gbl Fdg Secd	—	"		4,430	US$	4,896		N/A	US$	4,896
	Alltel Corp.	—	"		100	US$	110		N/A	US$	110
	American Honda Fin Corp. Mtn	—	"		4,000	US$	3,995		N/A	US$	3,995
	Anz National Intl Ltd.	—	"		3,500	US$	3,549		N/A	US$	3,549
	Asian Development Bank	—	"		2,500	US$	2,499		N/A	US$	2,499
	Astrazeneca Plc	—	"		3,150	US$	3,432		N/A	US$	3,432
	AT+T Wireless	—	"		3,500	US$	3,888		N/A	US$	3,888
	Australia + New Zealand Bkg	—	"		2,000	US$	2,061		N/A	US$	2,061
	Banco Bilbao Vizcaya P R	—	"		3,250	US$	3,249		N/A	US$	3,249
	Bank New York Inc.	—	"		1,615	US$	1,609		N/A	US$	1,609
	Bank New York Inc. Medium	—	"		2,100	US$	2,278		N/A	US$	2,278
	Bank of America	—	"		1,900	US$	2,026		N/A	US$	2,026
	Bank of America Corp.	—	"		2,100	US$	2,167		N/A	US$	2,167
	Bank of New York Mellon	—	"		2,200	US$	2,206		N/A	US$	2,206
	Bank of Nova Scotia	—	"		5,000	US$	4,991		N/A	US$	4,991
	Bank of Scotland Plc	—	"		4,000	US$	3,998		N/A	US$	3,998
	Barclays Bank Plc	—	"		12,000	US$	11,996		N/A	US$	11,996
	Barclays Bank Plc NY	—	"		400	US$	400		N/A	US$	400
	Barclays Bank Plc NY	—	"		5,000	US$	4,999		N/A	US$	4,999
	Bbva US Senior SA Uniper	—	"		2,645	US$	2,631		N/A	US$	2,631
	Bear Stearns Cos Inc.	—	"		2,200	US$	2,195		N/A	US$	2,195
	Bear Stearns Cos Inc.	—	"		3,500	US$	3,524		N/A	US$	3,524
	Bear Stearns Cos Inc. Med Term	—	"		2,400	US$	2,653		N/A	US$	2,653
	Berkshire Hathaway Inc. Del	—	"		3,500	US$	3,517		N/A	US$	3,517
	Bhp Billiton Fin USA Ltd.	—	"		2,000	US$	2,118		N/A	US$	2,118
	Bk Tokyo Mitsubishi Ufj	—	"		2,000	US$	2,062		N/A	US$	2,062
	Bmw US Capital LLC	—	"		1,600	US$	1,602		N/A	US$	1,602
	Bnp Paribas SA	—	"		3,810	US$	3,848		N/A	US$	3,848
	Boeing Cap Corp.	—	"		2,925	US$	3,238		N/A	US$	3,238
	Boeing Co.	—	"		450	US$	459		N/A	US$	459
	Bp Captial Markets Plc	—	"		3,900	US$	3,976		N/A	US$	3,976
	Cello Part/Veri Wirelss	—	"		3,000	US$	3,050		N/A	US$	3,050
	Cie Financement Foncier	—	"		200	US$	200		N/A	US$	200
	Cie Financement Foncier	—	"		4,000	US$	4,016		N/A	US$	4,016
	Citigroup Funding Inc.	—	"		16,000	US$	16,404		N/A	US$	16,404
	Citigroup Inc.	—	"		1,400	US$	1,376		N/A	US$	1,376
	Citigroup Inc.	—	"		800	US$	806		N/A	US$	806
	Citigroup Inc.	—	"		400	US$	429		N/A	US$	429
	Citigroup Inc.	—	"		5,000	US$	5,524		N/A	US$	5,524
	Commonwealth Bank Aust	—	"		2,800	US$	2,794		N/A	US$	2,794

(Continued)

- 41 -


				September 30, 2010
	Marketable	Relationship	Financial							Market Value or Net
Held	Securities	with the	Statement	Shares/Units		Carrying Value		Percentage of		Asset Value
Company Name	Type and Name	Company	Account	(In Thousands)		(US$ in Thousands)		Ownership (%)		(US$ in Thousands)	Note
	Countrywide Finl Corp.	—	Available-for-sale financial assets		4,000	US$	4,249	N/A	US$	4,249
	Credit Suisse First Boston USA	—	"		2,150	US$	2,275	N/A	US$	2,275
	Credit Suisse New York	—	"		3,945	US$	4,103	N/A	US$	4,103
	Deutsche Bank AG NY	—	"		2,500	US$	2,492	N/A	US$	2,492
	Dexia Credit Local	—	"		6,000	US$	5,970	N/A	US$	5,970
	Dexia Credit Local	—	"		4,000	US$	3,983	N/A	US$	3,983
	Dexia Credit Local S.A	—	"		4,000	US$	3,991	N/A	US$	3,991
	Dexia Credit Local SA NY	—	"		5,000	US$	4,982	N/A	US$	4,982
	Du Pont E I De Nemours + Co.	—	"		2,475	US$	2,707	N/A	US$	2,707
	Finance for Danish Ind	—	"		3,800	US$	3,799	N/A	US$	3,799
	General Elec Cap Corp.	—	"		1,000	US$	995	N/A	US$	995
	General Elec Cap Corp.	—	"		7,000	US$	7,004	N/A	US$	7,004
	General Elec Cap Corp.	—	"		1,000	US$	1,003	N/A	US$	1,003
	General Elec Cap Corp.	—	"		4,000	US$	4,127	N/A	US$	4,127
	General Electric Capital Corp.	—	"		2,000	US$	1,971	N/A	US$	1,971
	Georgia Pwr Co.	—	"		6,000	US$	6,018	N/A	US$	6,018
	Goldman Sachs Group Inc.	—	"		2,000	US$	1,946	N/A	US$	1,946
	Groupe Bpce	—	"		1,000	US$	999	N/A	US$	999
	Hewlett Packard Co.	—	"		3,000	US$	3,001	N/A	US$	3,001
	Hewlett Packard Co.	—	"		2,030	US$	2,027	N/A	US$	2,027
	Hewlett Packard Co.	—	"		1,365	US$	1,383	N/A	US$	1,383
	Household Fin Corp.	—	"		4,330	US$	4,736	N/A	US$	4,736
	HSBC Bank Plc	—	"		3,400	US$	3,413	N/A	US$	3,413
	HSBC Fin Corp.	—	"		2,315	US$	2,296	N/A	US$	2,296
	HSBC Fin Corp.	—	"		2,900	US$	3,082	N/A	US$	3,082
	Hutchison Whampoa Intl	—	"		1,750	US$	1,761	N/A	US$	1,761
	IBM Corp.	—	"		2,300	US$	2,303	N/A	US$	2,303
	IBM Corp.	—	"		6,800	US$	6,823	N/A	US$	6,823
	Intl Bk Recon + Develop	—	"		5,000	US$	5,006	N/A	US$	5,006
	Intl Bk Recon + Develop	—	"		2,000	US$	2,059	N/A	US$	2,059
	John Deer Capital Corp. Fdic GT	—	"		3,500	US$	3,638	N/A	US$	3,638
	JP Morgan Chase + Co.	—	"		2,500	US$	2,516	N/A	US$	2,516
	JP Morgan Chase + Co.	—	"		5,000	US$	5,019	N/A	US$	5,019
	Kfw Medium Term Nts Book Entry	—	"		1,950	US$	1,951	N/A	US$	1,951
	Kreditanstalt Fur Wiederaufbau	—	"		650	US$	669	N/A	US$	669
	Lloyds Tsb Bank Plc Ser 144A	—	"		4,850	US$	4,864	N/A	US$	4,864
	Lloyds Tsb Bank Plc Ser 144A	—	"		5,950	US$	6,016	N/A	US$	6,016
	Macquarie Bk Ltd. Sr	—	"		3,900	US$	3,999	N/A	US$	3,999
	Massmutual Global Fdg II Mediu	—	"		4,000	US$	3,951	N/A	US$	3,951
	Mellon Fdg Corp.	—	"		3,500	US$	3,447	N/A	US$	3,447
	Merck + Co. Inc.	—	"		4,000	US$	4,046	N/A	US$	4,046
	Merck + Co. Inc.	—	"		2,000	US$	2,098	N/A	US$	2,098
	Merrill Lynch + Co. Inc.	—	"		4,691	US$	4,620	N/A	US$	4,620
	Met Life Glob Funding I	—	"		500	US$	509	N/A	US$	509
	Metlife Inc.	—	"		2,000	US$	2,015	N/A	US$	2,015
	Metlife Inc.	—	"		6,500	US$	6,548	N/A	US$	6,548
	Metropolitan Life Global Fdg	—	"		750	US$	751	N/A	US$	751
	Metropolitan Life Global Fdg I	—	"		3,340	US$	3,343	N/A	US$	3,343
	Microsoft Corp.	—	"		2,500	US$	2,504	N/A	US$	2,504
	Monumental Global Fdg III	—	"		750	US$	727	N/A	US$	727
	Morgan Stanley	—	"		1,000	US$	1,019	N/A	US$	1,019
	Morgan Stanley Dean Witter	—	"		8,000	US$	8,603	N/A	US$	8,603
	Morgan Stanley for Equity	—	"		2,000	US$	1,968	N/A	US$	1,968
	National Australia Bank	—	"		1,000	US$	1,021	N/A	US$	1,021

(Continued)

- 42 -


				September 30, 2010
	Marketable	Relationship	Financial							Market Value or Net
Held	Securities	with the	Statement	Shares/Units		Carrying Value		Percentage of		Asset Value
Company Name	Type and Name	Company	Account	(In Thousands)		(US$ in Thousands)		Ownership (%)		(US$ in Thousands)	Note
	New York Life Global Fdg	—	Available-for-sale financial assets		2,000	US$	2,051	N/A	US$	2,051
	Nordea Bank Fld Plc	—	"		2,250	US$	2,246	N/A	US$	2,246
	Occidental Pete Corp.	—	"		3,200	US$	3,764	N/A	US$	3,764
	Oesterreichische Kontrollbank	—	"		2,000	US$	2,000	N/A	US$	2,000
	Ontario (Province of)	—	"		2,000	US$	2,049	N/A	US$	2,049
	Pepsico Inc.	—	"		3,000	US$	3,002	N/A	US$	3,002
	Pnc Funding Corp.	—	"		2,000	US$	1,993	N/A	US$	1,993
	Pricoa Global Fdg I Med Term	—	"		1,750	US$	1,719	N/A	US$	1,719
	Pricoa Global Funding 1	—	"		1,200	US$	1,192	N/A	US$	1,192
	Princoa Global Fdg I Medium	—	"		5,050	US$	5,005	N/A	US$	5,005
	Rabobank Nederland	—	"		5,000	US$	5,000	N/A	US$	5,000
	Regions Bank Fdic Gtd Tlgp	—	"		1,700	US$	1,755	N/A	US$	1,755
	Royal Bk of Scotland Plc	—	"		4,000	US$	3,997	N/A	US$	3,997
	Royal Bk of Scotland Plc	—	"		5,000	US$	5,054	N/A	US$	5,054
	Royal Bk Scotland Plc	—	"		2,550	US$	2,602	N/A	US$	2,602
	Royal Bk Scotlnd Grp Plc 144A	—	"		9,450	US$	9,504	N/A	US$	9,504
	Shell International Fin	—	"		4,515	US$	4,535	N/A	US$	4,535
	Shell International Fin	—	"		1,200	US$	1,211	N/A	US$	1,211
	Shell International Fin	—	"		2,000	US$	2,047	N/A	US$	2,047
	Sovereign Bancorp Fdic Gtd Tlg	—	"		2,200	US$	2,273	N/A	US$	2,273
	State Str Corp.	—	"		6,420	US$	6,417	N/A	US$	6,417
	Sun Life Finl Global	—	"		4,400	US$	4,277	N/A	US$	4,277
	Sun Life Finl Global Fdg II Lp	—	"		1,500	US$	1,489	N/A	US$	1,489
	Suncorp Metway Ltd.	—	"		2,000	US$	2,001	N/A	US$	2,001
	Suncorp Metway Ltd.	—	"		8,800	US$	9,011	N/A	US$	9,011
	Svenska Handelsbanken AB	—	"		2,200	US$	2,263	N/A	US$	2,263
	Swedbank AB	—	"		2,000	US$	1,995	N/A	US$	1,995
	Swedbank Foreningssparbanken A	—	"		1,500	US$	1,542	N/A	US$	1,542
	Teva Pharma Fin III LLC	—	"		4,000	US$	4,015	N/A	US$	4,015
	Tiaa Global Mkts Inc. Mtn	—	"		1,500	US$	1,651	N/A	US$	1,651
	Ubs Ag Stamford CT	—	"		800	US$	806	N/A	US$	806
	US Central Federal Cred	—	"		10,200	US$	10,287	N/A	US$	10,287
	US Central Federal Cred	—	"		4,000	US$	4,103	N/A	US$	4,103
	Verizon Communications Inc.	—	"		1,500	US$	1,655	N/A	US$	1,655
	Wachovia Corp. New	—	"		1,400	US$	1,394	N/A	US$	1,394
	Wal Mart Stores Inc.	—	"		3,770	US$	4,393	N/A	US$	4,393
	Wells Fargo + Company	—	"		2,000	US$	2,010	N/A	US$	2,010
	Westfield Cap Corp. Ltd.	—	"		500	US$	502	N/A	US$	502
	Westpac Banking Corp.	—	"		2,100	US$	2,110	N/A	US$	2,110
	Westpac Banking Corp.	—	"		4,000	US$	4,006	N/A	US$	4,006
	Westpac Banking Corp.	—	"		2,170	US$	2,173	N/A	US$	2,173
	Wyeth	—	"		3,345	US$	3,703	N/A	US$	3,703
	Aust + Nz Banking Group	—	Held-to-maturity financial assets		20,000	US$	20,000	N/A	US$	20,042
	Commonwealth Bank of Australia	—	"		25,000	US$	25,000	N/A	US$	24,710
	Commonwealth Bank of Australia	—	"		25,000	US$	25,000	N/A	US$	24,929
	JP Morgan Chase + Co.	—	"		35,000	US$	35,084	N/A	US$	35,128
	Nationwide Building Society-UK Government Guarantee	—	"		8,000	US$	8,000	N/A	US$	7,993
	Westpac Banking Corp.	—	"		25,000	US$	25,000	N/A	US$	24,526
	Westpac Banking Corp. 12/12 Frn	—	"		5,000	US$	5,000	N/A	US$	5,006
	Agency bond
	Fannie Mae	—	Available-for-sale financial assets		8,765	US$	8,761	N/A	US$	8,761
	Fannie Mae	—	"		16,104	US$	16,099	N/A	US$	16,099

(Continued)

- 43 -


				September 30, 2010
	Marketable	Relationship	Financial								Market Value or Net
Held	Securities	with the	Statement	Shares/Units		Carrying Value		Percentage of			Asset Value
Company Name	Type and Name	Company	Account	(In Thousands)		(US$ in Thousands)		Ownership (%)			(US$ in Thousands)	Note
	Fannie Mae	—	Available-for-sale financial assets		4,600	US$	4,602	N/A	US$	4,602
	Fannie Mae	—	"		4,000	US$	4,004	N/A	US$	4,004
	Fannie Mae	—	"		4,000	US$	4,015	N/A	US$	4,015
	Fannie Mae	—	"		5,900	US$	5,942	N/A	US$	5,942
	Fed Hm Ln Pc Pool 1b2830	—	"		1,944	US$	2,047	N/A	US$	2,047
	Fed Hm Ln Pc Pool 1g0115	—	"		2,236	US$	2,318	N/A	US$	2,318
	Fed Hm Ln Pc Pool 1k1210	—	"		1,584	US$	1,647	N/A	US$	1,647
	Fed Hm Ln Pc Pool 780741	—	"		1,898	US$	1,984	N/A	US$	1,984
	Federal Farm Credit Bank	—	"		4,000	US$	3,993	N/A	US$	3,993
	Federal Farm Credit Bank	—	"		5,000	US$	5,022	N/A	US$	5,022
	Federal Farm Credit Bank	—	"		5,000	US$	5,028	N/A	US$	5,028
	Federal Home Ln Bks	—	"		5,000	US$	5,073	N/A	US$	5,073
	Federal Home Ln Mtg Assn	—	"		4,634	US$	4,710	N/A	US$	4,710
	Federal Home Ln Mtg Corp.	—	"		4,085	US$	4,078	N/A	US$	4,078
	Federal Home Ln Mtg Corp.	—	"		1,659	US$	1,730	N/A	US$	1,730
	Federal Home Ln Mtg Corp.	—	"		3,024	US$	3,175	N/A	US$	3,175
	Federal Home Ln Mtg Corp.	—	"		2,381	US$	2,448	N/A	US$	2,448
	Federal Home Ln Mtg Corp.	—	"		2,004	US$	2,082	N/A	US$	2,082
	Federal Home Ln Mtg Corp.	—	"		922	US$	930	N/A	US$	930
	Federal Home Ln Mtg Corp.	—	"		848	US$	854	N/A	US$	854
	Federal Home Ln Mtg Corp.	—	"		1,607	US$	1,665	N/A	US$	1,665
	Federal Home Ln Mtg Corp.	—	"		3,444	US$	3,604	N/A	US$	3,604
	Federal Home Ln Mtg Corp.	—	"		3,279	US$	3,362	N/A	US$	3,362
	Federal Home Ln Mtg Corp. Multi	—	"		1,154	US$	1,157	N/A	US$	1,157
	Federal Home Loan Bank	—	"		10,000	US$	9,998	N/A	US$	9,998
	Federal Home Loan Bank	—	"		5,000	US$	5,011	N/A	US$	5,011
	Federal Home Loan Bank	—	"		8,000	US$	7,996	N/A	US$	7,996
	Federal Home Loan Bank	—	"		8,400	US$	8,393	N/A	US$	8,393
	Federal Home Loan Bank	—	"		1,400	US$	1,398	N/A	US$	1,398
	Federal Home Loan Bank	—	"		6,800	US$	6,823	N/A	US$	6,823
	Federal Home Loan Bank	—	"		8,000	US$	8,050	N/A	US$	8,050
	Federal Home Loan Bank	—	"		3,000	US$	3,002	N/A	US$	3,002
	Federal Home Loan Bank	—	"		5,000	US$	4,998	N/A	US$	4,998
	Federal Home Loan Mtg Corp.	—	"		5,638	US$	5,616	N/A	US$	5,616
	Federal Home Loan Mtg Corp.	—	"		259	US$	260	N/A	US$	260
	Federal Home Loan Mtg Corp.	—	"		1,226	US$	1,241	N/A	US$	1,241
	Federal National Mort Assoc	—	"		922	US$	933	N/A	US$	933
	Federal National Mort Assoc	—	"		97	US$	97	N/A	US$	97
	Federal Natl Mtg Assn	—	"		1,694	US$	1,705	N/A	US$	1,705
	Federal Natl Mtg Assn Gtd	—	"		2,578	US$	2,661	N/A	US$	2,661
	Federal Natl Mtg Assn Gtd Remi	—	"		2,202	US$	2,283	N/A	US$	2,283
	Federal Natl Mtg Assn Gtd Remi	—	"		1,027	US$	1,036	N/A	US$	1,036
	Federal Natl Mtg Assn Mtn	—	"		1,799	US$	1,840	N/A	US$	1,840
	Federal Natl Mtg Assn Remic	—	"		1,486	US$	1,513	N/A	US$	1,513
	Federal Natl Mtge Assn	—	"		1,610	US$	1,705	N/A	US$	1,705
	Fhr 2647 Pb	—	"		3,787	US$	3,872	N/A	US$	3,872
	Fhr 3087 Jb	—	"		1,787	US$	1,866	N/A	US$	1,866
	Fhr 3184 Fa	—	"		4,314	US$	4,305	N/A	US$	4,305
	Fnma Pool 745131	—	"		1,752	US$	1,819	N/A	US$	1,819
	Fnma Pool 745688	—	"		1,514	US$	1,589	N/A	US$	1,589
	Fnma Pool 790772	—	"		1,215	US$	1,256	N/A	US$	1,256
	Fnma Pool 819649	—	"		1,878	US$	1,966	N/A	US$	1,966
	Fnma Pool 829989	—	"		1,637	US$	1,718	N/A	US$	1,718
	Fnma Pool 846233	—	"		1,730	US$	1,803	N/A	US$	1,803

(Continued)

- 44 -

September 30, 2010

Marketable

Relationship

Financial

Market Value or Net

Held

Securities

with the

Statement

Shares/Units

Carrying Value

Percentage of

Asset Value

Company Name

Type and Name

Company

Account

(In Thousands)

(US$ in Thousands)

Ownership (%)

(US$ in Thousands)

Note

Fnma Pool 870884

—

Available-for-sale financial assets

1,716

US$

1,796

N/A

US$

1,796

Fnma Pool 879908

—

1,486

US$

1,561

N/A

US$

1,561

Fnma Tba Oct 30 Single Fam

—

14,200

US$

14,786

N/A

US$

14,786

Fnr 2005 47 HA

—

2,065

US$

2,168

N/A

US$

2,168

Fnr 2006 60 CO

—

3,705

US$

3,689

N/A

US$

3,689

Fnr 2006 60 CO

—

1,510

US$

1,536

N/A

US$

1,536

Fnr 2009 70 NT

—

2,074

US$

2,185

N/A

US$

2,185

Freddie Mac

—

10,420

US$

10,409

N/A

US$

10,409

Freddie Mac

—

4,500

US$

4,495

N/A

US$

4,495

Freddie Mac

—

4,500

US$

4,511

N/A

US$

4,511

Freddie Mac

—

5,750

US$

5,785

N/A

US$

5,785

Freddie Mac

—

7,855

US$

7,873

N/A

US$

7,873

Freddie Mac

—

4,300

US$

4,324

N/A

US$

4,324

Freddie Mac

—

4,010

US$

4,027

N/A

US$

4,027

Gnma II Pool 082431

—

1,934

US$

1,991

N/A

US$

1,991

Gnr 2008 9 SA

—

2,442

US$

2,451

N/A

US$

2,451

Gnr 2009 45 AB

—

5,309

US$

5,476

N/A

US$

5,476

Government bond

US Treasury N/B

—

Available-for-sale financial assets

44,700

US$

45,336

N/A

US$

45,336

US Treasury N/B

—

1,660

US$

1,691

N/A

US$

1,691

Wi Treasury Sec

—

5,000

US$

5,016

N/A

US$

5,016

Societe De Financement De Lec

—

Held-to-maturity financial assets

15,000

US$

15,000

N/A

US$

15,026

Money market fund

Ssga Cash Mgmt Global Offshore

—

Available-for-sale financial assets

1,838

US$

1,838

N/A

US$

1,838

(Concluded)

- 45 -

TABLE 2

Taiwan Semiconductor Manufacturing Company Limited and Investees

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, 2010
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)


					Beginning Balance				Acquisition				Disposal (Note 2)									Ending Balance (Note 3)
	Marketable						Amount		Shares/Units		Amount				Amount				Gain (Loss) or					Amount
	Securities Type and	Financial Statement		Nature of	Shares/Units		(US$ in		(In Thousands)		(US$ in		Shares/Units		(US$ in		Carrying Value		Disposal (US$ in			Shares/Units		(US$ in
Company Name	Name	Account	Counter-party	Relationship	(In Thousands)		Thousands)		(Note 1)		Thousands)		(In Thousands)		Thousands)		(US$ in Thousands)		Thousands)			(In Thousands)		Thousands)
TSMC	Stock
	Motech	Investments accounted for using equity method	—	Investee accounted for using equity method		—	$	—		75,316	$	6,228,661		—	$	—	$	—	$	—			76,069	$	6,533,432
	Capital
	VTAF III	Investments accounted for using equity method	—	Investee accounted for using equity method		—		1,309,615		—		1,786,701		—		—		—		—			—		2,852,802
VTAF III	Preferred stock
	Stion Corp.	Financial assets carried at cost	—	—		—		—		7,347	US$	50,000		—		—		—		—			7,347	US$	50,000
GUC	Open-end mutual fund
	Jih Sun Bond Fund	Available-for-sale financial assets	Jih Sun Investment Trust Co., Ltd.	—		5,668		80,008		7,072		100,000		12,740		180,192		180,000		192			—		—
	PCA Well Pool Fund	"	PCA Securities Investment Trust Co., Ltd.	—		—		—		7,692		100,000		7,692		100,075		100,000		75			—		—
TSMC Global	Corporate bond
	Allstate Life Gbl Fdg Secd	Available-for-sale financial assets	—	—		—		—		4,430	US$	4,834		—		—		—		—			4,430	US$	4,896
	American Honda Fin Corp. Mtn	"	—	—		—		—		4,000	US$	3,985		—		—		—		—			4,000	US$	3,995
	Anz National Intl Ltd.	"	—	—		—		—		3,500	US$	3,515		—		—		—		—			3,500	US$	3,549
	AT+T Wireless	"	—	—		—		—		3,500	US$	3,979		—		—		—		—			3,500	US$	3,888
	Bank of America	"	—	—		—		—		2,900	US$	3,121		1,000	US$	1,077	US$	1,076	US$	1			1,900	US$	2,026
	Bank of America Corp. Fdic Gtd	"	—	—		—		—		3,400	US$	3,548		3,400	US$	3,539	US$	3,548	US$	(9	)		—		—
	Bank of Nova Scotia	"	—	—		—		—		5,000	US$	5,000		—		—		—		—			5,000	US$	4,991
	Bank of Scotland Plc	"	—	—		—		—		4,000	US$	3,984		—		—		—		—			4,000	US$	3,998
	Barclays Bank Plc	"	—	—		—		—		12,000	US$	12,035		—		—		—		—			12,000	US$	11,996
	Barclays Bank Plc NY	"	—	—		—		—		5,000	US$	5,000		—		—		—		—			5,000	US$	4,999
	Bbva US Senior SA Uniper	"	—	—		—		—		4,745	US$	4,744		2,100	US$	2,084	US$	2,100	US$	(16	)		2,645	US$	2,631
	Berkshire Hathaway Inc. Del	"	—	—		—		—		3,500	US$	3,500		—		—		—		—			3,500	US$	3,517
	Boeing Cap Corp.	"	—	—		—		—		2,925	US$	3,235		—		—		—		—			2,925	US$	3,238
	Bp Capital Markets Plc	"	—	—		—		—		3,900	US$	3,969		—		—		—		—			3,900	US$	3,976
	Cie Financement Foncier	"	—	—		—		—		4,000	US$	4,029		—		—		—		—			4,000	US$	4,016
	Citibank NA	"	—	—		—		—		4,020	US$	4,021		4,020	US$	4,016	US$	4,021	US$	(5	)		—		—
	Citibank NA	"	—	—		5,000	US$	4,996		—		—		5,000	US$	5,023	US$	4,995	US$	28			—		—
	Citibank NA	"	—	—		—		—		10,000	US$	10,094		10,000	US$	10,104	US$	10,094	US$	10			—		—
	Citigroup Funding Inc.	"	—	—		—		—		16,000	US$	16,262		—		—		—		—			16,000	US$	16,404
	Citigroup Inc.	"	—	—		—		—		4,165	US$	4,167		4,165	US$	4,167	US$	4,167		—			—		—
	Citigroup Inc.	"	—	—		—		—		4,800	US$	4,768		4,800	US$	4,761	US$	4,768	US$	(7	)		—		—
	Citigroup Inc.	"	—	—		—		—		5,000	US$	5,360		—		—		—		—			5,000	US$	5,524
	Countrywide Finl Corp.	"	—	—		—		—		4,000	US$	4,291		—		—		—		—			4,000	US$	4,249
	Dexia Credit Local	"	—	—		—		—		6,000	US$	6,000		—		—		—		—			6,000	US$	5,970

(Continued)

-46-


					Beginning Balance				Acquisition				Disposal (Note 2)									Ending Balance (Note 3)
	Marketable						Amount		Shares/Units		Amount				Amount				Gain (Loss) or					Amount
	Securities Type and	Financial Statement		Nature of	Shares/Units		(US$ in		(In Thousands)		(US$ in		Shares/Units		(US$ in		Carrying Value (US$		Disposal (US$ in			Shares/Units		(US$ in
Company Name	Name	Account	Counter-party	Relationship	(In Thousands)		Thousands)		(Note 1)		Thousands)		(In Thousands)		Thousands)		in Thousands)		Thousands)			(In Thousands)		Thousands)
	Dexia Credit Local	Available-for-sale financial assets	—	—		—	US$	—		4,000	US$	4,000		—	US$	—	US$	—	US$	—			4,000	US$	3,983
	Dexia Credit Local S.A	"	—	—		—		—		4,000	US$	4,000		—		—		—		—			4,000	US$	3,991
	Dexia Credit Local SA NY	"	—	—		—		—		5,000	US$	5,000		—		—		—		—			5,000	US$	4,982
	General Elec Cap Corp.	"	—	—		—		—		4,000	US$	4,117		—		—		—		—			4,000	US$	4,127
	Georgia Pwr Co.	"	—	—		—		—		6,000	US$	6,000		—		—		—		—			6,000	US$	6,018
	Goldman Sachs Group Incser 2	"	—	—		3,000	US$	3,012		—		—		3,000	US$	3,012	US$	3,016	US$	(4	)		—		—
	Household Fin Corp.	"	—	—		—		—		4,330	US$	4,781		—		—		—		—			4,330	US$	4,736
	HSBC Bank Plc	"	—	—		—		—		3,400	US$	3,407		—		—		—		—			3,400	US$	3,413
	HSBC Fin Corp.	"	—	—		—		—		2,900	US$	3,142		—		—		—		—			2,900	US$	3,082
	IBM Corp.	"	—	—		1,800	US$	1,796		4,300	US$	4,302		3,800	US$	3,804	US$	3,801	US$	3			2,300	US$	2,303
	IBM Corp.	"	—	—		3,000	US$	3,027		—		—		3,000	US$	3,020	US$	3,029	US$	(9	)		—		—
	IBM Corp.	"	—	—		—		—		6,800	US$	6,772		—		—		—		—			6,800	US$	6,823
	Intl Bk Recon + Develop	"	—	—		—		—		5,000	US$	5,014		—		—		—		—			5,000	US$	5,006
	John Deer Capital Corp. Fdic GT	"	—	—		—		—		3,500	US$	3,634		—		—		—		—			3,500	US$	3,638
	JP Morgan Chase + Co.	"	—	—		—		—		5,000	US$	5,000		—		—		—		—			5,000	US$	5,019
	JP Morgan Chase + Co. Fdic Gtd Tlg	"	—	—		3,000	US$	3,030		—		—		3,000	US$	3,028	US$	3,030	US$	(2	)		—		—
	Landwirtsch Rentenbank	"	—	—		—		—		3,800	US$	3,800		3,800	US$	3,801	US$	3,800	US$	1			—		—
	Lloyds Tsb Bank Plc Ser 144A	"	—	—		—		—		4,850	US$	4,895		—		—		—		—			4,850	US$	4,864
	Macquarie Bk Ltd. Sr	"	—	—		—		—		3,900	US$	3,984		—		—		—		—			3,900	US$	3,999
	Massmutual Global Fdg II Mediu	"	—	—		—		—		4,000	US$	3,926		—		—		—		—			4,000	US$	3,951
	Merck + Co. Inc.	"	—	—		—		—		4,000	US$	4,066		—		—		—		—			4,000	US$	4,046
	Merrill Lynch + Co. Inc.	"	—	—		—		—		4,691	US$	4,603		—		—		—		—			4,691	US$	4,620
	Met Life Glob Funding I	"	—	—		—		—		5,000	US$	5,004		5,000	US$	5,003	US$	5,004	US$	(1	)		—		—
	Met Life Glob Funding I	"	—	—		2,100	US$	2,142		2,575	US$	2,623		4,675	US$	4,757	US$	4,755	US$	2			—		—
	Metlife Inc.	"	—	—		—		—		6,500	US$	6,527		—		—		—		—			6,500	US$	6,548
	Morgan Stanley Dean Witter	"	—	—		—		—		8,000	US$	8,796		—		—		—		—			8,000	US$	8,603
	Occidental Pete Corp.	"	—	—		—		—		3,200	US$	3,752		—		—		—		—			3,200	US$	3,764
	Pepsico Inc.	"	—	—		—		—		3,000	US$	3,000		—		—		—		—			3,000	US$	3,002
	Rabobank Nederland	"	—	—		—		—		5,000	US$	4,997		—		—		—		—			5,000	US$	5,000
	Regions Bank Fdic Gtd Tlgp	"	—	—		—		—		10,000	US$	10,372		8,300	US$	8,599	US$	8,608	US$	(9	)		1,700	US$	1,755
	Royal Bk of Scotland Plc	"	—	—		—		—		4,000	US$	4,015		—		—		—		—			4,000	US$	3,997
	Shell International Fin	"	—	—		—		—		4,515	US$	4,528		—		—		—		—			4,515	US$	4,535
	State Str Corp.	"	—	—		1,940	US$	1,920		5,080	US$	5,065		600	US$	597	US$	596	US$	1			6,420	US$	6,417
	State Street Corp.	"	—	—		—		—		5,500	US$	5,585		5,500	US$	5,559	US$	5,585	US$	(26	)		—		—
	Sun Life Finl Global	"	—	—		—		—		4,400	US$	4,304		—		—		—		—			4,400	US$	4,277
	Suncorp Metway Ltd.	"	—	—		5,000	US$	5,170		3,800	US$	3,933		—		—		—		—			8,800	US$	9,011
	Teva Pharma Fin III LLC	"	—	—		—		—		4,000	US$	4,000		—		—		—		—			4,000	US$	4,015
	US Central Federal Cred	"	—	—		4,800	US$	4,799		8,000	US$	8,074		2,600	US$	2,622	US$	2,600	US$	22			10,200	US$	10,287
	US Central Federal Cred	"	—	—		—		—		4,000	US$	4,093		—		—		—		—			4,000	US$	4,103
	Wachovia Corp. New	"	—	—		4,000	US$	4,246		—		—		4,000	US$	4,205	US$	4,239	US$	(34	)		—		—
	Wal Mart Stores Inc.	"	—	—		—		—		3,770	US$	4,383		—		—		—		—			3,770	US$	4,393
	Westpac Banking Corp.	"	—	—		—		—		4,000	US$	4,044		—		—		—		—			4,000	US$	4,006
	Wyeth	"	—	—		—		—		3,345	US$	3,699		—		—		—		—			3,345	US$	3,703
	Aust + Nz Banking Group	Held-to-maturity financial assets	—	—		—		—		20,000	US$	20,000		—		—		—		—			20,000	US$	20,000
	Commonwealth Bank of Australia	"	—	—		—		—		25,000	US$	25,000		—		—		—		—			25,000	US$	25,000
	Commonwealth Bank of Australia	"	—	—		—		—		25,000	US$	25,000		—		—		—		—			25,000	US$	25,000
	Jpmorgan Chase + Co.	"	—	—		—		—		35,000	US$	35,103		—		—		—		—			35,000	US$	35,084
	Westpac Banking Corp.	"	—	—		—		—		25,000	US$	25,000		—		—		—		—			25,000	US$	25,000
	Agency bond
	Fannie Mae	Available-for-sale financial assets	—	—		—		—		8,000	US$	7,995		8,000	US$	7,999	US$	7,995	US$	4			—		—

(Continued)

-47-


					Beginning Balance				Acquisition				Disposal (Note 2)									Ending Balance (Note 3)
	Marketable						Amount		Shares/Units		Amount				Amount				Gain (Loss) or					Amount
	Securities Type and	Financial Statement		Nature of	Shares/Units		(US$ in		(In Thousands)		(US$ in		Shares/Units		(US$ in		Carrying Value (US$		Disposal (US$ in			Shares/Units		(US$ in
Company Name	Name	Account	Counter-party	Relationship	(In Thousands)		Thousands)		(Note 1)		Thousands)		(In Thousands)		Thousands)		in Thousands)		Thousands)			(In Thousands)		Thousands)
	Fannie Mae	Available-for-sale financial assets	—	—		—	US$	—		8,765	US$	8,760		—	US$	—	US$	—	US$	—			8,765	US$	8,761
	Fannie Mae	"	—	—		—		—		16,104	US$	16,097		—		—		—		—			16,104	US$	16,099
	Fannie Mae	"	—	—		—		—		4,600	US$	4,598		—		—		—		—			4,600	US$	4,602
	Fannie Mae	"	—	—		—		—		3,770	US$	3,770		—		—		—		—			—		—
	Fannie Mae	"	—	—		—		—		4,000	US$	4,014		—		—		—		—			—		—
	Fannie Mae	"	—	—		—		—		4,000	US$	4,007		—		—		—		—			4,000	US$	4,004
	Fannie Mae	"	—	—		—		—		4,000	US$	4,011		—		—		—		—			4,000	US$	4,015
	Fannie Mae	"	—	—		—		—		5,900	US$	5,975		—		—		—		—			5,900	US$	5,942
	Federal Farm Credit Bank	"	—	—		—		—		4,020	US$	4,017		4,020	US$	4,023	US$	4,017	US$	6			—		—
	Federal Farm Credit Bank	"	—	—		—		—		4,000	US$	3,995		—		—		—		—			4,000	US$	3,993
	Federal Farm Credit Bank	"	—	—		—		—		5,000	US$	4,997		—		—		—		—			5,000	US$	5,022
	Federal Farm Credit Bank	"	—	—		—		—		3,100	US$	3,100		3,100	US$	3,100	US$	3,100		—			—		—
	Federal Farm Credit Bank	"	—	—		—		—		5,000	US$	5,049		—		—		—		—			5,000	US$	5,028
	Federal Home Ln Bank	"	—	—		11,000	US$	11,028		—		—		11,000	US$	11,049	US$	11,038	US$	11			—		—
	Federal Home Ln Bks	"	—	—		—		—		5,000	US$	5,098		—		—		—		—			5,000	US$	5,073
	Fed Home Ln Mtg Assn	"	—	—		—		—		4,634	US$	4,726		—		—		—		—			4,634	US$	4,710
	Fed Home Ln Mtg Corp.	"	—	—		1,350	US$	1,352		2,300	US$	2,304		3,650	US$	3,653	US$	3,656	US$	(3	)		—		—
	Fed Home Ln Mtg Corp.	"	—	—		—		—		4,289	US$	4,282		4,289	US$	4,292	US$	4,282	US$	10			—		—
	Fed Home Ln Mtg Corp.	"	—	—		—		—		4,717	US$	4,719		—		—		—		—			4,085	US$	4,078
	Fed Home Ln Mtg Corp.	"	—	—		—		—		3,840	US$	4,027		—		—		—		—			3,024	US$	3,175
	Fed Home Ln Mtg Corp.	"	—	—		—		—		3,720	US$	3,953		—		—		—		—			3,444	US$	3,604
	Fed Home Ln Mtg Corp.	"	—	—		—		—		4,121	US$	4,261		—		—		—		—			3,279	US$	3,362
	Fed Home Ln Mtg Corp. Multi	"	—	—		—		—		4,197	US$	4,261		—		—		—		—			1,154	US$	1,157
	Federal Home Loan Bank	"	—	—		—		—		10,000	US$	9,985		—		—		—		—			10,000	US$	9,998
	Federal Home Loan Bank	"	—	—		—		—		8,000	US$	7,996		—		—		—		—			8,000	US$	7,996
	Federal Home Loan Bank	"	—	—		—		—		5,000	US$	4,996		5,000	US$	5,001	US$	4,996	US$	5			—		—
	Federal Home Loan Bank	"	—	—		—		—		4,000	US$	3,999		4,000	US$	3,999	US$	3,999		—			—		—
	Federal Home Loan Bank	"	—	—		10,000	US$	9,987		—		—		10,000	US$	10,007	US$	9,996	US$	11			—		—
	Federal Home Loan Bank	"	—	—		—		—		10,000	US$	9,998		10,000	US$	10,010	US$	9,998	US$	12			—		—
	Federal Home Loan Bank	"	—	—		8,000	US$	7,992		—		—		8,000	US$	8,009	US$	8,002	US$	7			—		—
	Federal Home Loan Bank	"	—	—		—		—		6,050	US$	6,050		6,050	US$	6,060	US$	6,050	US$	10			—		—
	Federal Home Loan Bank	"	—	—		—		—		5,000	US$	5,009		—		—		—		—			5,000	US$	5,011
	Federal Home Loan Bank	"	—	—		—		—		6,800	US$	6,811		—		—		—		—			6,800	US$	6,823
	Federal Home Loan Bank	"	—	—		—		—		8,000	US$	7,990		—		—		—		—			8,000	US$	8,050
	Federal Home Loan Bank	"	—	—		10,000	US$	10,012		—		—		10,000	US$	10,047	US$	10,035	US$	12			—		—
	Federal Home Loan Bank	"	—	—		4,700	US$	4,715		—		—		4,700	US$	4,716	US$	4,723	US$	(7	)		—		—
	Federal Home Loan Bank	"	—	—		11,200	US$	11,186		1,500	US$	1,498		4,300	US$	4,294	US$	4,299	US$	(5	)		8,400	US$	8,393
	Federal Home Loan Bank	"	—	—		—		—		4,000	US$	4,012		4,000	US$	4,002	US$	4,012	US$	(10	)		—		—
	Federal Home Loan Bank	"	—	—		—		—		8,000	US$	8,082		8,000	US$	8,057	US$	8,082	US$	(25	)		—		—
	Federal Home Loan Mortg	"	—	—		—		—		8,000	US$	8,193		8,000	US$	8,123	US$	8,192	US$	(69	)		—		—
	Federal Home Loan Mtg Corp.	"	—	—		—		—		6,397	US$	6,394		—		—		—		—			5,638	US$	5,616
	Federal Natl Mtg Assn	"	—	—		4,000	US$	4,228		—		—		4,000	US$	4,205	US$	4,261	US$	(56	)		—		—
	Federal Natl Mtg Assn	"	—	—		—		—		3,426	US$	3,494		—		—		—		—			1,694	US$	1,705
	Federal Natl Mtg Assn Gtd	"	—	—		—		—		3,343	US$	3,466		—		—		—		—			2,578	US$	2,661
	Fhr 2647 Pb	"	—	—		—		—		4,000	US$	4,149		—		—		—		—			3,787	US$	3,872
	Fhr 3184 Fa	"	—	—		—		—		4,686	US$	4,681		—		—		—		—			4,314	US$	4,305
	Fnma Pool 745131	"	—	—		—		—		3,123	US$	3,261		—		—		—		—			1,752	US$	1,819
	Fnma Pool 995672	"	—	—		—		—		3,000	US$	3,141		3,000	US$	3,134	US$	3,141	US$	(7	)		—		—
	Fnma Pool AD9843	"	—	—		—		—		3,252	US$	3,405		3,252	US$	3,397	US$	3,405	US$	(8	)		—		—
	Fnma Tba Oct 30 Single Fam	"	—	—		—		—		14,200	US$	14,790		—		—		—		—			14,200	US$	14,786
	Fnr 2006 60 CO	"	—	—		—		—		4,092	US$	4,090		—		—		—		—			3,705	US$	3,689
	Freddie Mac	"	—	—		—		—		10,420	US$	10,412		—		—		—		—			10,420	US$	10,409

(Continued)

-48-


					Beginning Balance				Acquisition				Disposal (Note 2)									Ending Balance (Note 3)
	Marketable						Amount		Shares/Units		Amount				Amount				Gain (Loss) or					Amount
	Securities Type and	Financial Statement		Nature of	Shares/Units		(US$ in		(In Thousands)		(US$ in		Shares/Units		(US$ in		Carrying Value (US$		Disposal (US$ in			Shares/Units		(US$ in
Company Name	Name	Account	Counter-party	Relationship	(In Thousands)		Thousands)		(Note 1)		Thousands)		(In Thousands)		Thousands)		in Thousands)		Thousands)			(In Thousands)		Thousands)
	Freddie Mac	Available-for-sale financial assets	—	—		—	US$	—		8,000	US$	8,002		8,000	US$	7,997	US$	8,001	US$	(4	)		—	US$	—
	Freddie Mac	"	—	—		—		—		7,000	US$	6,994		7,000	US$	6,995	US$	6,994	US$	1			—		—
	Freddie Mac	"	—	—		—		—		4,500	US$	4,507		—		—		—		—			4,500	US$	4,511
	Freddie Mac	"	—	—		—		—		5,750	US$	5,771		—		—		—		—			5,750	US$	5,785
	Freddie Mac	"	—	—		—		—		7,855	US$	7,869		—		—		—		—			7,855	US$	7,873
	Freddie Mac	"	—	—		—		—		4,300	US$	4,308		—		—		—		—			4,300	US$	4,324
	Freddie Mac	"	—	—		—		—		4,010	US$	4,024		—		—		—		—			4,010	US$	4,027
	Gnr 2009 45 AB	"	—	—		—		—		7,004	US$	7,305		—		—		—		—			5,309	US$	5,476
	Government bond
	United States Treas Nts	Available-for-sale financial assets	—	—		—		—		24,000	US$	24,116		24,000	US$	24,105	US$	24,116	US$	(11	)		—		—
	United States Treas Nts	"	—	—		—		—		45,070	US$	45,309		45,070	US$	45,258	US$	45,309	US$	(51	)		—		—
	US Treasury N/B	"	—	—		—		—		43,900	US$	43,832		43,900	US$	44,134	US$	43,831	US$	303			—		—
	US Treasury N/B	"	—	—		—		—		53,000	US$	53,069		53,000	US$	53,316	US$	53,069	US$	247			—		—
	US Treasury N/B	"	—	—		—		—		16,800	US$	16,889		16,800	US$	16,897	US$	16,889	US$	8			—		—
	US Treasury N/B	"	—	—		—		—		49,700	US$	49,742		5,000	US$	5,046	US$	5,003	US$	43			44,700	US$	45,336
	US Treasury N/B	"	—	—		21,400	US$	21,394		—		—		21,400	US$	21,487	US$	21,416	US$	71			—		—
	US Treasury Nts	"	—	—		37,700	US$	39,012		—		—		37,700	US$	38,784	US$	39,346	US$	(562	)		—		—
	US Treasury Sec	"	—	—		—		—		8,000	US$	8,040		8,000	US$	8,028	US$	8,040	US$	(12	)		—		—
	US Treasury Sec	"	—	—		—		—		10,000	US$	10,040		10,000	US$	10,045	US$	10,040	US$	5			—		—
	Wi Treasury Sec	"	—	—		—		—		4,400	US$	4,380		4,400	US$	4,464	US$	4,380	US$	84			—		—
	Wi Treasury Sec	"	—	—		—		—		5,000	US$	5,009		—		—		—		—			5,000	US$	5,016
	Money market fund
	Ssga Cash Mgmt Global Offshore	Available-for-sale financial assets	—	—		8,858	US$	8,858		290,371	US$	290,371		297,391	US$	297,391	US$	297,391		—			1,838	US$	1,838
	Corporate issued note
	Barclays U.S. Fdg LLC	Available-for-sale financial assets	—	—		4,500	US$	4,489		—		—		4,500	US$	4,489	US$	4,489		—			—		—


Note 1:		The shares/units and amount of marketable securities acquired do not include stock dividends from investees.

Note 2:		The data for marketable securities disposed exclude bonds maturities and redemption by the issuer.

Note 3:		The ending balance includes the amortization of premium/discount on bonds investments, unrealized valuation gains/ losses on financial assets, translation adjustments, equity in earnings/losses of equity method investees and other adjustments to long-term investment using equity method.

(Concluded)

- 49 -

TABLE 3

Taiwan Semiconductor Manufacturing Company Limited

ACQUISITION OF INDIVIDUAL REAL ESTATE PROPERTIES AT COSTS OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010
(Amounts in Thousands of New Taiwan Dollars)

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

Relationships

Owner

Relationships

Transfer Date

Amount

Reference

Acquisition

Terms

TSMC

Fab

January 28, 2010 to September 2, 2010

802,489

By the construction progress

China Steel Structure Co., Ltd.

—

N/A

Public bidding

Manufacturing purpose

None

Fab

January 28, 2010 to September 26, 2010

1,217,815

By the construction progress

Fu Tsu Construction Co., Ltd.

—

N/A

Public bidding

Manufacturing purpose

None

Fab

February 19, 2010 to September 26, 2010

1,540,064

By the construction progress

Da Cin Constructure Co., Ltd.

—

N/A

Public bidding

Manufacturing purpose

None

Fab

February 25, 2010 to September 28, 2010

223,771

By the construction progress

Tasa Construction Corporation

—

N/A

Public bidding

Manufacturing purpose

None

- 50 -

TABLE 4

Taiwan Semiconductor Manufacturing Company Limited and Investees

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010
(Amounts in Thousands of New Taiwan Dollars)


			Transaction Details					Abnormal Transaction
			Purchases/					Unit Price	Payment Terms	Notes/Accounts Payable or Receivable
Company Name	Related Party	Nature of Relationships	Sales	Amount		% to Total	Payment Terms	(Note)	(Note)	Ending Balance			% to Total	Note
TSMC	TSMC North America	Subsidiary	Sales	$	160,415,902	52	Net 30 days after invoice date	—	—	$	24,574,148		47
	GUC	Investee with a controlling financial interest	Sales		1,893,205	1	Net 30 days after monthly closing	—	—		644,287		1
	VIS	Investee accounted for using equity method	Sales		189,984	—	Net 30 days after monthly closing	—	—		—		—
	TSMC China	Subsidiary	Purchases		6,206,526	17	Net 30 days after monthly closing	—	—		(873,981	)	7
	WaferTech	Indirect subsidiary	Purchases		5,958,529	17	Net 30 days after monthly closing	—	—		(671,004	)	5
	VIS	Investee accounted for using equity method	Purchases		3,643,305	10	Net 30 days after monthly closing	—	—		(1,122,687	)	9
	SSMC	Investee accounted for using equity method	Purchases		3,383,596	10	Net 30 days after monthly closing	—	—		(434,236	)	3

GUC	TSMC North America	Same parent company	Purchases		589,175	18	Net 30 days after invoice date/net 30 days after monthly closing	—	—		(75,901	)	8

Xintec	OmniVision	Parent company of director (represented for Xintec)	Sales		1,962,883	63	Net 30 days after monthly closing	—	—		256,872		53


Note:		The sales prices and payment terms to related parties were not significantly different from those of sales to third parties. For other related party transactions, prices and terms were determined in accordance with mutual agreements.

- 51 -

TABLE 5

Taiwan Semiconductor Manufacturing Company Limited and Investees

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
SEPTEMBER 30, 2010
(Amounts in Thousands of New Taiwan Dollars)


									Amounts Received
					Turnover Days	Overdue			in Subsequent		Allowance for
Company Name	Related Party	Nature of Relationships	Ending Balance		(Note 1)	Amounts		Action Taken	Period		Bad Debts
TSMC	TSMC North America	Subsidiary	$	24,600,032	40	$	5,674,665	—	$	8,233,250	$	—
	GUC	Investee with a controlling financial interest		644,287	71		1,120	—		295,170		—
	TSMC China	Subsidiary		383,334	(Note 2)		—	—		—		—
	VIS	Investee accounted for using equity method		150,589	(Note 2)		366	—		19,644		—

Xintec	OmniVision	Parent company of director (represented for Xintec)		256,872	46		—	—		—		—


Note 1:		The calculation of turnover days excludes other receivables from related parties.

Note 2:		The ending balance primarily consisted of other receivables, which is not applicable for the calculation of turnover days.

- 52 -

TABLE 6

Taiwan Semiconductor Manufacturing Company Limited and Investees

NAMES, LOCATIONS, AND RELATED INFORMATION OF INVESTEES OVER WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCE
SEPTEMBER 30, 2010
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)


																Equity in the
				Original Investment Amount									Net Income			Earnings
				September 30, 2010		December 31, 2009		Balance as of September 30, 2010					(Losses) of the			(Losses)
				(Foreign		(Foreign					Carrying Value		Investee			(Note 1)
				Currencies in		Currencies in		Shares		Percentage	(Foreign Currencies		(Foreign Currencies			(Foreign Currencies
Investor Company	Investee Company	Location	Main Businesses and Products	Thousands)		Thousands)		(In Thousands)		of Ownership	in Thousands)		in Thousands)			in Thousands)	Note
TSMC	TSMC Global	Tortola, British Virgin Islands	Investment activities	$	42,327,245	$	42,327,245		1	100	$	44,892,711	$	405,510		$405,510	Subsidiary
	TSMC Partners	Tortola, British Virgin Islands	Investing in companies involved in the design, manufacture, and other related business in the semiconductor industry.		31,456,130		31,456,130		988,268	100		33,943,317		1,600,796		1,600,796	Subsidiary
	VIS	Hsin-Chu, Taiwan	Research, design, development, manufacture, packaging, testing and sale of memory integrated circuits, LSI, VLSI and related parts		13,232,288		13,232,288		628,223	38		9,424,817		1,639,886		321,621	Investee accounted for using equity method
	SSMC	Singapore	Fabrication and supply of integrated circuits		5,120,028		5,120,028		314	39		6,890,171		2,632,321		873,329	Investee accounted for using equity method
	Motech	Taipei, Taiwan	Manufacturing and sales of solar cells, crystalline silicon solar cell, and test and measurement instruments and design and construction of solar power systems		6,228,661		—		76,069	20		6,533,432		3,001,229		327,526	Investee accounted for using equity method
	TSMC China	Shanghai, China	Manufacturing and selling of integrated circuits at the order of and pursuant to product design specifications provided by customers		12,180,367		12,180,367		—	100		3,654,158		705,707		695,070	Subsidiary
	VTAF III	Cayman Islands	Investing in new start-up technology companies		3,489,864		1,703,163		—	99		2,852,802		(168,764	)	(166,879)	Subsidiary
	TSMC North America	San Jose, California, U.S.A.	Selling and marketing of integrated circuits and semiconductor devices		333,718		333,718		11,000	100		2,827,009		165,780		165,780	Subsidiary
	Xintec	Taoyuan, Taiwan	Wafer level chip size packaging service		1,357,890		1,357,890		93,081	41		1,618,701		423,470		154,146	Investee with a controlling financial interest
	VTAF II	Cayman Islands	Investing in new start-up technology companies		1,166,470		1,093,943		—	98		1,093,417		101,532		99,501	Subsidiary (Note 3)
	GUC	Hsin-Chu, Taiwan	Researching, developing, manufacturing, testing and marketing of integrated circuits		386,568		386,568		46,688	35		1,061,303		452,520		158,146	Investee with a controlling financial interest
	Emerging Alliance	Cayman Islands	Investing in new start-up technology companies		971,785		959,044		—	99		320,426		8,981		8,936	Subsidiary (Note 3)
	TSMC Europe	Amsterdam, the Netherlands	Marketing and engineering supporting activities		15,749		15,749		—	100		182,022		34,237		34,237	Subsidiary (Note 3)
	TSMC Japan	Yokohama, Japan	Marketing activities		83,760		83,760		6	100		150,896		4,036		4,036	Subsidiary (Note 3)
	TSMC Solar Europe	Amsterdam, the Netherlands	Engaged in investing activities of solar related business		25,350		—		—	100		25,638		—		—	Subsidiary
	TSMC Solar NA	Delaware, U.S.A.	Engaged in selling and marketing of solar related products		31,330		—		1	100		24,717		(6,733	)	(6,733)	Subsidiary
	TSMC Korea	Seoul, Korea	Customer service and technical supporting activities		13,656		13,656		80	100		20,559		2,040		2,040	Subsidiary (Note 3)
	TSMC Lighting NA	Delaware, U.S.A.	Engaged in selling and marketing of LED related products		3,133		—		1	100		3,133		—		—	Subsidiary

TSMC Partners	TSMC Development	Delaware, U.S.A.	Investment activities	US$	0.001	US$	0.001		1	100	US$	386,744	US$	46,357		Note 2	Subsidiary
	VisEra Holding Company	Cayman Islands	Investing in companies involved in the design, manufacturing, and other related businesses in the semiconductor industry	US$	43,000	US$	43,000		43,000	49	US$	77,292	US$	9,320		Note 2	Investee accounted for using equity method
	ISDF	Cayman Islands	Investing in new start-up technology companies	US$	7,680	US$	7,680		7,680	97	US$	24,529	US$	2,806		Note 2	Subsidiary
	ISDF II	Cayman Islands	Investing in new start-up technology companies	US$	21,415	US$	21,415		21,415	97	US$	17,413	US$	2,903		Note 2	Subsidiary
	TSMC Technology	Delaware, U.S.A.	Engineering support activities	US$	0.001	US$	0.001		1	100	US$	9,677	US$	607		Note 2	Subsidiary (Note 3)
	TSMC Canada	Ontario, Canada	Engineering support activities	US$	2,300	US$	2,300		2,300	100	US$	3,543	US$	294		Note 2	Subsidiary (Note 3)

(Continued)

- 53 -

Equity in the

Original Investment Amount

Net Income

Earnings

September 30, 2010

December 31, 2009

Balance as of September 30, 2010

(Losses) of the

(Losses)

(Foreign

Carrying Value

Investee

(Note 1)

Currencies in

Shares

Percentage

(Foreign Currencies

Investor Company

Investee Company

Location

Main Businesses and Products

Thousands)

(In Thousands)

of Ownership

in Thousands)

Note

Mcube Inc. (Common Stock)

Delaware, U.S.A.

Research, development, and sale of micro-semiconductor device

US$

800

US$

800

5,333

US$

—

US$

(4,509

)

Note 2

Investee accounted for using equity method (Note 3)

Mcube Inc. (Preferred Stock)

Delaware, U.S.A.

Research, development, and sale of micro-semiconductor device

US$

1,000

US$

1,000

US$

214

US$

(4,509

)

Note 2

Investee accounted for using equity method (Note 3)

TSMC Development

WaferTech

Washington, U.S.A.

Manufacturing, selling, testing and computer-aided designing of integrated circuits and other semiconductor devices

US$

330,000

US$

330,000

293,637

100

US$

200,265

US$

45,832

Note 2

Subsidiary

VTAF III

Mutual-Pak Technology Co., Ltd.

Taipei, Taiwan

Manufacturing and selling of electronic parts and researching, developing, and testing of RFID

US$

3,088

US$

3,088

9,180

US$

1,461

US$

(1,147

)

Note 2

Subsidiary (Note 3)

Aiconn Technology Corp.

Taipei, Taiwan

Wholesaling telecommunication equipments, and manufacturing wired and wireless communication equipments

US$

2,206

US$

1,777

5,623

US$

682

US$

(667

)

Note 2

Investee accounted for using equity method (Note 3)

Growth Fund

Cayman Islands

Investing in new start-up technology companies

US$

1,650

US$

1,550

—

100

US$

829

US$

(94

)

Note 2

Subsidiary (Note 3)

VTA Holdings

Delaware, U.S.A.

Investing in new start-up technology companies

—

Note 2

Subsidiary (Note 3)

VTAF II

VTA Holdings

Delaware, U.S.A.

Investing in new start-up technology companies

—

Note 2

Subsidiary (Note 3)

GUC

GUC-NA

U.S.A.

Consulting services in main products

US$

1,234

US$

800

100

59,576

8,433

Note 2

Subsidiary

GUC-Japan

Japan

Consulting services in main products

JPY

30,000

JPY

30,000

100

14,969

980

Note 2

Subsidiary (Note 3)

GUC-BVI

British Virgin Islands

Investment activities

US$

550

US$

550

100

9,370

(8,020

)

Note 2

Subsidiary (Note 3)

GUC-Europe

The Netherlands

Consulting services in main products

EUR

100

EUR

100

—

100

4,432

(378

)

Note 2

Subsidiary (Note 3)

GUC-BVI

GUC-Shanghai

Shanghai, China

Consulting services in main products

US$

500

—

100

7,969

(7,983

)

Note 2

Subsidiary (Note 3)

Emerging Alliance

VTA Holdings

Delaware, U.S.A.

Investing in new start-up technology companies

—

Note 2

Subsidiary (Note 3)


Note 1:		Equity in earnings/losses of investees include the effect of unrealized gross profit from affiliates.

Note 2:		The equity in the earnings/losses of the investee company is not reflected herein as such amount is already included in the equity in the earnings/ losses of the investor company.

Note 3:		Equity in earnings/losses was determined based on the unreviewed financial statements.

(Concluded)

- 54 -

TABLE 7

Taiwan Semiconductor Manufacturing Company Limited and Investees

INFORMATION OF INVESTMENT IN MAINLAND CHINA
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)

Accumulated

Accumulated Outflow

Outflow of

of Investment

Investment from

Accumulated Inward

Total Amount of

from Taiwan as of

Investment Flows

Taiwan as of

Carrying Value

Remittance of

Investor

Investee

Paid-in Capital

Method of

January 1, 2010

Outflow

Inflow

September 30, 2010

Percentage of

Equity in the

as of

Earnings as of

Company

Main Businesses and Products

(Thousand)

Investment

(US$ in Thousand)

Ownership

Earnings (Losses)

September 30, 2010

TSMC

TSMC China

Manufacturing and selling of integrated circuits at the order of and pursuant to product design specifications provided by customers

$
(RMB

12,180,367
3,070,623

)

(Note 1)

$
(US$

12,180,367
371,000

)

—

$
(US$

12,180,367
371,000

)

100%

695,070
(Note 3)

3,654,158

—

GUC

GUC-Shanghai

Consulting services in main products

(US$

16,160
500

)

(Note 2)

—

(US$

16,160
500

)

—

(US$

16,160
500

)

100%

(7,983
(Note 4)

)

7,969

—

Accumulated Investment

in Mainland China as

Investment Amounts Authorized by

of September 30, 2010

Investment Commission, MOEA

Upper Limit on Investment

Investor Company

(US$ in Thousand)

$ 12,180,367

TSMC

(US$371,000

)

(US$371,000

)

(US$371,000

)

16,160

1,819,784

GUC

(US$ 500

)

(US$ 500

)

(Note 5)


Note 1:		TSMC directly invested US$371,000 thousand in TSMC China.

Note 2:		GUC, TSMC’s investee with a controlling financial interest, indirectly invested in GUC-Shanghai through GUC-BVI.

Note 3:		Amount was recognized based on the reviewed financial statements.

Note 4:		Equity in earnings/losses was determined based on the unreviewed financial statements.

Note 5:		Subject to 60% of net asset value of GUC according to the revised “Guidelines Governing the Approval of Investment or Technical Cooperation in Mainland China” issued by the Investment Commission.

- 55 -

Taiwan Semiconductor Manufacturing
Company Limited and Subsidiaries

Consolidated Financial Statements for the
Nine Months Ended September 30, 2010 and 2009 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 consolidated balance sheets of Taiwan Semiconductor Manufacturing Company Limited and subsidiaries as of September 30, 2010 and 2009, and the related consolidated statements of income and cash flows for the nine months then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to issue a report on these consolidated 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 consolidated 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 consolidated 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.

- 1 -

As discussed in Note 3 to the consolidated financial statements, effective January 1, 2009, Taiwan Semiconductor Manufacturing Company Limited and subsidiaries adopted the newly revised Statement of Financial Accounting Standards No. 10, “Accounting for Inventories.”

October 21, 2010

Notice to Readers

The accompanying consolidated financial statements are intended only to present the consolidated 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 jurisdiction. The standards, procedures and practices to review such consolidated 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 consolidated 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 consolidated financial statements shall prevail.

- 2 -

Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries

CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2010 AND 2009
(In Thousands of New Taiwan Dollars, Except Par Value)
(Reviewed, Not Audited)


	2010						2009
	Amount			%			Amount			%
ASSETS

CURRENT ASSETS
Cash and cash equivalents (Notes 2 and 4)	$	132,268,758			20		$	156,935,077			28
Financial assets at fair value through profit or loss (Notes 2, 5 and 25)		20,360			—			370,669			—
Available-for-sale financial assets (Notes 2, 6 and 25)		29,320,698			5			14,638,990			3
Held-to-maturity financial assets (Notes 2, 7 and 25)		5,598,471			1			8,374,389			2
Receivables from related parties		11,295			—			987			—
Notes and accounts receivable		54,754,753			8			45,421,657			8
Allowance for doubtful receivables (Notes 2 and 8)		(587,974	)		—			(535,383	)		—
Allowance for sales returns and others (Notes 2 and 8)		(6,796,624	)		(1	)		(9,006,496	)		(2	)
Other receivables from related parties (Note 26)		204,665			—			183,946			—
Other financial assets (Note 27)		1,017,211			—			3,165,465			1
Inventories (Notes 2, 3 and 9)		26,663,415			4			19,176,052			4
Deferred income tax assets (Notes 2 and 20)		2,201,161			—			4,531,774			1
Prepaid expenses and other current assets		1,960,989			—			983,812			—


Total current assets		246,637,178			37			244,240,939			45


LONG-TERM INVESTMENTS (Notes 2, 6, 7, 10, 12 and 25)
Investments accounted for using equity method		25,298,067			4			17,587,438			3
Available-for-sale financial assets		1,036,502			—			1,329,853			—
Held-to-maturity financial assets		8,984,875			1			16,473,164			3
Financial assets carried at cost		4,464,801			1			3,162,849			1


Total long-term investments		39,784,245			6			38,553,304			7


PROPERTY, PLANT AND EQUIPMENT (Notes 2, 13, 26 and 27)
Cost
Land and land improvements		916,213			—			938,509			—
Buildings		145,349,549			22			141,644,558			26
Machinery and equipment		898,675,883			135			736,712,546			136
Office equipment		14,414,922			2			13,165,301			2
Leased assets		713,821			—			714,012			—

		1,060,070,388			159			893,174,926			164
Accumulated depreciation		(753,541,185	)		(113	)		(675,028,153	)		(124	)
Advance payments and construction in progress		42,650,005			6			18,669,251			4


Net property, plant and equipment		349,179,208			52			236,816,024			44


INTANGIBLE ASSETS
Goodwill (Note 2)		5,835,954			1			5,954,477			1
Deferred charges, net (Notes 2 and 14)		6,218,321			1			6,060,452			1


Total intangible assets		12,054,275			2			12,014,929			2


OTHER ASSETS
Deferred income tax assets (Notes 2 and 20)		10,414,275			2			7,196,676			1
Refundable deposits		9,099,831			1			2,789,170			1
Others (Notes 2 and 27)		383,037			—			286,076			—


Total other assets		19,897,143			3			10,271,922			2


TOTAL	$	667,552,049			100		$	541,897,118			100


	2010						2009
	Amount			%			Amount			%
LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES
Short-term loans (Note 15)	$	37,910,282			6		$	—			—
Financial liabilities at fair value through profit or loss (Notes 2, 5 and 25)		74,741			—			97			—
Hedging derivative financial liabilities (Notes 2, 11 and 25)		1,065			—			—			—
Accounts payable		11,474,968			2			9,593,847			2
Payables to related parties (Note 26)		1,617,629			—			1,039,482			—
Income tax payable (Notes 2 and 20)		5,303,113			1			5,749,028			1
Accrued profit sharing to employees and bonus to directors and supervisors (Notes 2 and 22)		8,310,705			1			8,680,353			2
Payables to contractors and equipment suppliers		26,644,580			4			15,666,356			3
Accrued expenses and other current liabilities (Notes 18, 25 and 29)		17,028,193			2			13,971,034			2
Current portion of long-term bank loans (Notes 17, 25 and 27)		870,663			—			308,525			—


Total current liabilities		109,235,939			16			55,008,722			10


LONG-TERM LIABILITIES
Bonds payable (Notes 16 and 25)		4,500,000			1			4,500,000			1
Long-term bank loans (Notes 17, 25 and 27)		362,952			—			1,418,469			—
Other long-term payables (Notes 18, 25 and 29)		6,827,878			1			8,342,346			2
Obligations under capital leases (Notes 2, 13 and 25)		707,047			—			707,050			—


Total long-term liabilities		12,397,877			2			14,967,865			3


OTHER LIABILITIES
Accrued pension cost (Notes 2 and 19)		3,803,882			1			3,776,757			1
Guarantee deposits (Note 29)		836,908			—			1,157,131			—
Deferred credits		131,790			—			225,577			—
Others		241,576			—			134,395			—


Total other liabilities		5,014,156			1			5,293,860			1


Total liabilities		126,647,972			19			75,270,447			14


EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF THE PARENT
Capital stock — $10 par value (Note 22)
Authorized: 28,050,000 thousand shares
Issued: 25,907,344 thousand shares in 2010
25,900,662 thousand shares in 2009		259,073,440			39			259,006,623			48

Capital surplus (Notes 2 and 22)		55,634,070			8			55,439,919			10

Retained earnings (Note 22)
Appropriated as legal capital reserve		86,239,494			13			77,317,710			14
Appropriated as special capital reserve		1,313,047			—			—			—
Unappropriated earnings		137,506,581			21			71,898,923			13

		225,059,122			34			149,216,633			27

Others (Notes 2, 11 and 25)
Cumulative translation adjustments		(3,761,669	)		(1	)		(1,272,298	)		—
Unrealized gain on financial instruments		518,669			—			494,421			—

		(3,243,000	)		(1	)		(777,877	)		—


Equity attributable to shareholders of the parent		536,523,632			80			462,885,298			85

MINORITY INTEREST (Note 2)		4,380,445			1			3,741,373			1


Total shareholders’ equity		540,904,077			81			466,626,671			86


TOTAL	$	667,552,049			100		$	541,897,118			100

The accompanying notes are an integral part of the consolidated financial statements.

(With Deloitte & Touche review report dated October 21, 2010)

- 3 -

Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries

CONSOLIDATED STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)
(Reviewed, Not Audited)


	2010				2009
	Amount		%		Amount		%
GROSS SALES (Notes 2 and 26)	$	318,388,370			$	213,468,240

SALES RETURNS AND ALLOWANCES (Notes 2 and 8)		8,992,668				9,820,449


NET SALES		309,395,702		100		203,647,791		100

COST OF SALES (Notes 3, 9, 21 and 26)		157,159,327		51		119,013,880		58


GROSS PROFIT		152,236,375		49		84,633,911		42


OPERATING EXPENSES (Notes 21 and 26)
Research and development		21,634,730		7		15,026,333		7
General and administrative		8,978,513		3		8,016,976		4
Marketing		3,961,275		1		3,270,590		2


Total operating expenses		34,574,518		11		26,313,899		13


INCOME FROM OPERATIONS		117,661,857		38		58,320,012		29


NON-OPERATING INCOMES AND GAINS
Settlement income (Note 29)		6,343,524		2		494,070		—
Equity in earnings of equity method investees, net (Notes 2 and 10)		1,608,430		1		—		—
Interest income (Note 2)		1,245,000		—		2,156,083		1
Technical service income (Notes 26 and 29)		359,320		—		273,225		—
Gain on settlement and disposal of financial assets, net (Notes 2 and 25)		309,160		—		—		—
Valuation gain on financial instruments, net (Notes 2, 5 and 25)		156,038		—		580,706		1
Others (Notes 2 and 26)		541,057		—		379,439		—


Total non-operating incomes and gains		10,562,529		3		3,883,523		2

(Continued)

- 4 -

Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries

CONSOLIDATED STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)
(Reviewed, Not Audited)


	2010				2009
	Amount		%		Amount		%
NON-OPERATING EXPENSES AND LOSSES
Interest expense	$	302,235		—	$	297,927		—
Casualty loss (Note 9)		190,992		—		—		—
Impairment of financial assets (Notes 2, 6, 12 and 25)		112,759		—		804,409		1
Equity in losses of equity method investees, net (Notes 2 and 10)		—		—		253,185		—
Foreign exchange loss, net (Note 2)		—		—		605,140		—
Others (Notes 2 and 25)		230,314		—		148,200		—


Total non-operating expenses and losses		836,300		—		2,108,861		1


INCOME BEFORE INCOME TAX		127,388,086		41		60,094,674		30

INCOME TAX EXPENSE (Notes 2 and 20)		5,973,080		2		3,488,863		2


NET INCOME	$	121,415,006		39	$	56,605,811		28


ATTRIBUTABLE TO:
Shareholders of the parent	$	120,884,560		39	$	56,551,787		28
Minority interest		530,446		—		54,024		—


	$	121,415,006		39	$	56,605,811		28


	2010				2009
	Income Attributable to				Income Attributable to
	Shareholders of the Parent				Shareholders of the Parent
			After				After
	Before Income Tax		Income Tax		Before Income Tax		Income Tax
EARNINGS PER SHARE (NT$, Note 24)
Basic earnings per share	$	4.89	$	4.67	$	2.33	$	2.19

Diluted earnings per share	$	4.89	$	4.66	$	2.31	$	2.18

The accompanying notes are an integral part of the consolidated financial statements.

(With Deloitte & Touche review report dated October 21, 2010)

(Concluded)

- 5 -

Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009
(In Thousands of New Taiwan Dollars)
(Reviewed, Not Audited)


	2010			2009
CASH FLOWS FROM OPERATING ACTIVITIES
Net income attributable to shareholders of the parent	$	120,884,560		$	56,551,787
Net income attributable to minority interest		530,446			54,024
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		64,505,818			60,537,339
Amortization of premium/discount of financial assets		25,208			6,613
Impairment of financial assets		112,759			804,409
Loss (gain) on disposal of available-for-sale financial assets, net		(192,877	)		56,619
Gain on held-to-maturity financial assets redeemed by the issuer		—			(16,091	)
Gain on disposal of financial assets carried at cost, net		(116,283	)		(14,493	)
Equity in losses (earnings) of equity method investees, net		(1,608,430	)		253,185
Cash dividends received from equity method investees		320,002			1,239,490
Loss (gain) on disposal of property, plant and equipment and other assets, net		(143,916	)		6,351
Settlement income from receiving equity securities		(4,434,364	)		—
Loss on impairment of idle assets		319			—
Deferred income tax		(256,824	)		(1,122,247	)
Changes in operating assets and liabilities:
Decrease (increase) in:
Financial assets and liabilities at fair value through profit or loss		240,437			(400,029	)
Receivables from related parties		1,229			(580	)
Notes and accounts receivable		(10,117,111	)		(20,398,336	)
Allowance for doubtful receivables		44,649			79,632
Allowance for sales returns and others		(1,927,857	)		2,935,470
Other receivables from related parties		(83,373	)		(84,028	)
Other financial assets		794,787			(1,300,426	)
Inventories		(5,749,664	)		(4,299,407	)
Prepaid expenses and other current assets		(677,574	)		829,880
Increase (decrease) in:
Accounts payable		1,055,181			4,369,663
Payables to related parties		834,622			549,625
Income tax payable		(3,497,136	)		(3,582,797	)
Accrued profit sharing to employees and bonus to directors and supervisors		1,492,362			805,611
Accrued expenses and other current liabilities		(3,078,054	)		231,960
Accrued pension cost		6,850			75,173
Deferred credits		(53,899	)		(201,353	)


Net cash provided by operating activities		158,911,867			97,967,044

(Continued)

- 6 -

Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009
(In Thousands of New Taiwan Dollars)
(Reviewed, Not Audited)


	2010			2009
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions of:
Property, plant and equipment	$	(141,008,323	)	$	(45,070,370	)
Available-for-sale financial assets		(41,358,621	)		(20,375,729	)
Held-to-maturity financial assets		(4,150,549	)		(10,669,821	)
Investments accounted for using equity method		(6,242,350	)		(32,200	)
Financial assets carried at cost		(1,753,712	)		(270,609	)
Proceeds from disposal or redemption of:
Available-for-sale financial assets		31,520,283			20,509,336
Held-to-maturity financial assets		14,893,000			7,081,700
Financial assets carried at cost		222,416			93,684
Property, plant and equipment and other assets		133,091			6,892
Increase in deferred charges		(1,413,869	)		(534,716	)
Increase in refundable deposits		(6,366,688	)		(21,971	)
Increase in other assets		(3,724	)		(82,985	)


Net cash used in investing activities		(155,529,046	)		(49,366,789	)


CASH FLOWS FROM FINANCING ACTIVITIES
Increase in short-term loans		37,910,282			—
Proceeds from long-term bank loans		—			287,865
Repayments of:
Long-term bank loans		(283,850	)		(183,710	)
Bonds payable		—			(8,000,000	)
Decrease in other long-term payables		(1,126,383	)		—
Decrease in guarantee deposits		(185,115	)		(327,364	)
Proceeds from donation		49,021			—
Proceeds from exercise of employee stock options		150,760			190,995
Cash dividends		(77,708,120	)		(76,876,312	)
Decrease in minority interest		(141,933	)		(285,325	)


Net cash used in financing activities		(41,335,338	)		(85,193,851	)


NET DECREASE IN CASH AND CASH EQUIVALENTS		(37,952,517	)		(36,593,596	)

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS		(1,055,066	)		(1,085,079	)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		171,276,341			194,613,752


CASH AND CASH EQUIVALENTS, END OF PERIOD	$	132,268,758		$	156,935,077


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid	$	318,542		$	525,575

Income tax paid	$	9,598,719		$	7,996,390

(Continued)

- 7 -

Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009
(In Thousands of New Taiwan Dollars)
(Reviewed, Not Audited)


	2010			2009
INVESTING ACTIVITY AFFECTING BOTH CASH AND NON-CASH ITEMS
Acquisition of property, plant and equipment	$	138,365,461		$	52,408,986
Decrease (increase) in payables to contractors and equipment suppliers		2,765,782			(7,338,616	)
Nonmonetary exchange trade — out price		(122,920	)		—

Cash paid	$	141,008,323		$	45,070,370


Disposal of property, plant and equipment and other assets	$	256,011		$	6,892
Nonmonetary exchange trade — out price		(122,920	)		—

Cash received	$	133,091		$	6,892


Acquisition of available-for-sale financial assets	$	41,853,306		$	23,399,615
Increase in accrued expenses and other current liabilities		(494,685	)		(3,023,886	)

Cash paid	$	41,358,621		$	20,375,729


NON-CASH FINANCING ACTIVITIES
Current portion of long-term bank loans	$	870,663		$	308,525

Current portion of other long-term payables (under accrued expenses and other current liabilities)	$	1,317,492		$	1,476,550

Profit sharing to employees transferred to capital stock	$	—		$	7,494,988

The accompanying notes are an integral part of the consolidated financial statements.

(With Deloitte & Touche review report dated October 21, 2010)

(Concluded)

- 8 -

Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)
(Reviewed, Not Audited)

GENERAL

Taiwan Semiconductor Manufacturing Company, Limited (TSMC), a Republic of China (R.O.C.) corporation, was incorporated on February 21, 1987. TSMC is a dedicated foundry in the semiconductor industry which engages mainly in the manufacturing, selling, packaging, testing and computer-aided design of integrated circuits and other semiconductor devices and the manufacturing of masks. Beginning in 2010, TSMC also engages in the researching, developing, designing, manufacturing and selling of LED lighting devices and related applications products and systems, and renewable energy and efficiency related technologies and products. 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).

As of September 30, 2010 and 2009, TSMC and its subsidiaries had 34,130 and 24,479 employees, respectively.

2.		SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

		The consolidated 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 consolidated 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 consolidated financial statements shall prevail.

		Significant accounting policies are summarized as follows:

		Principles of Consolidation

		The accompanying consolidated financial statements include the accounts of all directly and indirectly majority owned subsidiaries of TSMC, and the accounts of investees in which TSMC’s ownership percentage is less than 50% but over which TSMC has a controlling interest. All significant intercompany balances and transactions are eliminated upon consolidation.

- 9 -

The consolidated entities were as follows:


		Percentage of
		Ownership September 30
Name of Investor	Name of Investee	2010		2009		Remark
TSMC	TSMC North America	100	%	100	%	—
	TSMC Japan Limited (TSMC Japan)	100	%	100	%	—
	TSMC Partners, Ltd. (TSMC Partners)	100	%	100	%	—
	TSMC Korea Limited (TSMC Korea)	100	%	100	%	—
	TSMC Europe B.V. (TSMC Europe)	100	%	100	%	—
	TSMC Global Ltd. (TSMC Global)	100	%	100	%	—
	TSMC China Company Limited (TSMC China)	100	%	100	%	—
	VentureTech Alliance Fund III, L.P. (VTAF III)	99	%	98	%	—
	VentureTech Alliance Fund II, L.P. (VTAF II)	98	%	98	%	—
	Emerging Alliance Fund, L.P. (Emerging Alliance)	99.5	%	99.5	%	—
	Global Unichip Corporation (GUC)	35	%	36	%	TSMC has a controlling interest over the financial, operating and personnel hiring decisions of GUC.
	Xintec Inc. (Xintec)	41	%	41	%	TSMC obtained three out of five director positions and has a controlling interest in Xintec.
	TSMC Solar North America, Inc. (TSMC Solar NA)	100	%	—		Established in September 2010
	TSMC Lighting North America, Inc. (TSMC Lighting NA)	100	%	—		Established in September 2010
	TSMC Solar Europe B.V. (TSMC Solar Europe)	100	%	—		Established in September 2010

TSMC Partners	TSMC Design Technology Canada Inc. (TSMC Canada)	100	%	100	%	—
	TSMC Technology, Inc. (TSMC Technology)	100	%	100	%	—
	TSMC Development, Inc. (TSMC Development)	100	%	100	%	—
	InveStar Semiconductor Development Fund, Inc. (ISDF)	97	%	97	%	—
	InveStar Semiconductor Development Fund, Inc. (II) LDC. (ISDF II)	97	%	97	%	—

TSMC Development	WaferTech, LLC (WaferTech)	100	%	99.9	%	—

VTAF III	Mutual-Pak Technology Co., Ltd. (Mutual-Pak)	59	%	51	%	—
	Growth Fund Limited (Growth Fund)	100	%	100	%	—

VTAF III, VTAF II and Emerging Alliance	VentureTech Alliance Holdings, LLC (VTA Holdings)	100	%	100	%	—

GUC	Global Unichip Corp.-NA (GUC-NA)	100	%	100	%	—
	Global Unichip Japan Co., Ltd. (GUC-Japan)	100	%	100	%	—
	Global Unichip Europe B.V. (GUC-Europe)	100	%	100	%	—
	Global Unichip (BVI) Corp. (GUC-BVI)	100	%	100	%	—

GUC-BVI	Global Unichip (Shanghai) Company, Limited (GUC-Shanghai)	100	%	—		Established in January 2010.

- 10 -

The following diagram presents information regarding the relationship and ownership percentages between TSMC and its consolidated investees as of September 30, 2010:

TSMC North America is engaged in selling and marketing of integrated circuits and semiconductor devices. TSMC Japan, TSMC Korea and TSMC Europe are engaged mainly in marketing or customer service, engineering and technical supporting activities. TSMC Partners is engaged in investment in companies involved in the design, manufacture, and other related business in the semiconductor industry. TSMC Global and TSMC Development are engaged in investing activities. TSMC China is engaged in the manufacturing and selling of integrated circuits pursuant to the orders from and product design specifications provided by customers. Emerging Alliance, VTAF II, VTAF III, VTA Holdings, ISDF, ISDF II, and Growth Fund are engaged in investing in new start-up technology companies. TSMC Canada and TSMC Technology are engaged mainly in engineering support activities. WaferTech is engaged in the manufacturing, selling, testing and computer-aided designing of integrated circuits and other semiconductor devices. GUC is engaged in researching, developing, manufacturing, testing and marketing of integrated circuits. GUC-NA, GUC-Japan, GUC-Europe, and GUC-Shanghai are engaged in providing products consulting in North America, Japan, Europe, and China, respectively. GUC-BVI is engaged in investing activities. Xintec is engaged in the provision of wafer packaging service. TSMC Solar NA is engaged in selling and marketing of solar related products. TSMC Lighting NA is engaged in selling and marketing of LED related products. TSMC Solar Europe is engaged in investing activities of Solar related business. Mutual-Pak is engaged in the manufacturing and selling of electronic parts, and researching, developing and testing of RFID.

TSMC together with its subsidiaries are hereinafter referred to collectively as the “Company.”

Minority interests in the aforementioned subsidiaries are presented as a separate component of shareholders’ equity.

Use of Estimates

The preparation of consolidated 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 assets held for trading purposes and assets 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.

- 11 -

Cash Equivalents

Repurchase agreements collateralized by government bonds, corporate bonds and agency bonds acquired with maturities of less than three months from the date of purchase are classified as cash equivalents. The carrying amount approximates fair value due to their short term nature.

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 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.

Hedging Derivative Financial Instruments

Hedge derivatives are mainly derivatives instruments that are for cash flow hedge purposes and determined to be an effective hedge. The portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is recognized in shareholders’ equity. The amount recognized in shareholders’ equity is recognized in profit or loss in the same period or period during which the hedged forecast transaction or an asset or liability arising from the hedged forecast transaction affects profit or loss. However, if all or a portion of a loss recognized in shareholders’ equity is not expected to be recovered in the future, the amount that is not expected to be recovered is reclassified into profit or loss.

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. 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 value is determined as follows: Open-end mutual funds and money market funds — net asset values at the end of the period; publicly traded stocks — closing prices at the end of the period; and other debt securities — 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 a reduction to the original cost of investment if such dividends are declared on the earnings of the investee attributable to the period prior to the purchase of the investment. 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.

- 12 -

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. 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.

Allowance for Doubtful Receivables

An allowance for doubtful receivables is provided based on a review of the collectability of receivables. The amount of the allowance for doubtful receivables is determined based on the account aging analysis and current trends in the credit quality of the customers. TSMC’s provision is set at 1% of the amount of outstanding receivables.

Revenue Recognition and Allowance for Sales Returns and Others

The Company recognizes revenue when evidence of an arrangement exists, the rewards of ownership and significant risk of the goods has been transferred to the buyer; price is fixed or determinable, and collectability is reasonably assured. Provisions for estimated sales returns and other allowances are 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 recorded at standard cost and adjusted to approximate weighted-average cost on the balance sheet date.

Prior to January 1, 2009, inventories were stated at the lower of cost or market value. Any write-down was made on a total-inventory basis. Market value represented replacement cost for raw materials, supplies and spare parts and net realizable value for work in process and finished goods.

As stated in Note 3, effective January 1, 2009, inventories are stated at the lower of cost or net realizable value. Inventory write-downs are made on an item-by-item basis, except where it may be appropriate to group similar or related items. Net realizable value is the estimated selling price of inventories less all estimated costs of completion and necessary selling costs.

- 13 -

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 cost of an investment shall be analyzed and the cost of investment in excess of the fair value of identifiable net assets acquired, representing goodwill, shall not be amortized. If the fair value of identifiable net assets acquired exceeds the cost of investment, the excess shall be proportionately allocated as reductions to fair values of non-current assets (except for financial assets other than investments accounted for using the equity method and deferred income tax assets). When an indication of impairment is identified, the carrying amount of the investment is reduced, with the related impairment loss recognized in earnings.

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 of 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.

Gains or losses on sales from the Company to equity method investees or from equity method investees to the Company are deferred in proportion to the Company’s 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, differences will result from the translation of the investee’s financial statements into the reporting currency of the Company. Such differences are charged or credited to cumulative translation adjustments, a separate component of shareholders’ equity.

Financial Assets Carried at Cost

Investments for which the Company does not exercise significant influence and that do not have a quoted market price in an active market and whose fair value cannot be reliably measured, such as non-publicly traded stocks and mutual funds, are carried at their original cost. The costs of non-publicly traded stocks and mutual funds 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, Assets Leased to Others and Idle Assets

Property, plant and equipment and assets leased to others are stated at cost less accumulated depreciation. Properties covered by agreements qualifying as capital leases are carried at the lower of the leased equipment’s market value or the present value of the minimum lease payments at the inception date of the lease, with the corresponding amount recorded as obligations under capital leases. 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: land improvements — 20 years; buildings — 10 to 20 years; machinery and equipment — 3 to 5 years; office equipment — 3 to 15 years; and leased assets — 20 years.

- 14 -

Upon sale or disposal of property, plant and equipment and assets leased to others, the related cost and accumulated depreciation are deducted from the corresponding accounts, with any gain or loss recorded as non-operating gains or losses in the period of sale or disposal.

When property, plant and equipment are determined to be idle or useless, they are transferred to idle assets at the lower of the net realizable value or carrying amount. Depreciation on the idle assets is provided continuously, and the idle assets are tested for impairment on a periodical basis.

Intangible Assets

Goodwill represents the excess of the consideration paid for acquisition over the fair value of identifiable net assets acquired. Goodwill is no longer amortized and instead is tested for impairment annually. If an event occurs or circumstances change which indicate that the fair value of goodwill is more likely than not below its carrying amount, an impairment loss is recognized. A subsequent reversal of such impairment loss is not allowed.

Deferred charges consist of technology license fees, software and system design costs and patent and others. The amounts are amortized over the following periods: Technology license fees — the estimated life of the technology or the term of the technology transfer contract; software and system design costs — 2 to 5 years; patent and others — the economic life or contract period. 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.

Expenditures related to research activities and those related to development activities that do not meet the criteria for capitalization are charged to expense when incurred.

Pension Costs

For employees who participate in defined contribution pension plans, pension costs are recorded based on the actual contributions made to employees’ individual pension accounts during their service periods. For employees who participate in defined benefit pension plans, pension costs are recorded based on actuarial calculations.

Income Tax

The Company applies an inter-period allocation for its income tax whereby deferred income tax assets and liabilities are recognized for the tax effects of temporary differences, net operating loss carryforwards 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 expenditures, 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 (excluding earnings from foreign consolidated subsidiaries) 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.

- 15 -

Stock-based Compensation

Employee stock options that were granted or modified in the period from January 1, 2004 to December 31, 2007 are accounted for by the interpretations issued by the Accounting Research and Development Foundation of the Republic of China. The Company adopted the intrinsic value method and any compensation cost determined using this method is recognized in earnings over the employee vesting period. Employee stock option plans that were granted or modified after December 31, 2007 are accounted for using fair value method in accordance with Statement of Financial Accounting Standards No. 39, “Accounting for Share-based Payment.” The Company did not grant or modify any employee stock options since January 1, 2008.

Profit Sharing to Employees and Bonus to Directors and Supervisors

Effective January 1, 2008, the Company adopted Interpretation 2007-052, “Accounting for Bonuses to Employees, Directors and Supervisors,” which requires companies to record profit sharing to employees and bonus to directors and supervisors as an expense rather than as an appropriation of earnings.

Foreign-currency Transactions

Foreign-currency transactions other than derivative contracts 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 prevailing exchange rates with the resulting gains or losses recognized in earnings.

Translation of Foreign-currency Financial Statements

The financial statements of foreign subsidiaries are translated into New Taiwan dollars at the following exchange rates: Assets and liabilities — spot rates at period-end; shareholders’ equity — historical rates; income and expenses — average rates during the period. The resulting translation adjustments are recorded as a separate component of shareholders’ equity.

ACCOUNTING CHANGES

Effective January 1, 2009, the Company adopted the newly revised Statement of Financial Accounting Standard (SFAS) No. 10, “Accounting for Inventories.” The main revisions are (1) inventories are stated at the lower of cost or net realizable value, and inventories are written down to net realizable value on an item-by-item basis except when the grouping of similar or related items is appropriate; (2) unallocated overheads are recognized as expenses in the period in which they are incurred; and (3) abnormal cost, write-downs of inventories and any reversal of write-downs are recorded as cost of sales for the period. Such changes in accounting principle did not have significant effect on the Company’s consolidated financial statements as of and for the nine months ended September 30, 2009.

- 16 -

CASH AND CASH EQUIVALENTS


	September 30
	2010		2009
Cash and deposits in bank	$	127,654,510	$	144,018,278
Repurchase agreements collateralized by government bonds		4,457,598		10,582,919
Corporation bonds		156,650		—
Agency bonds		—		2,333,880


	$	132,268,758	$	156,935,077

FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS


	September 30
	2010		2009
Trading financial assets

Forward exchange contracts	$	9,218	$	3,208
Cross currency swap contracts		11,142		367,461


	$	20,360	$	370,669


Trading financial liabilities

Forward exchange contracts	$	74,741	$	97

The Company entered into derivative contracts during the nine months ended September 30, 2010 and 2009 to manage exposures due to fluctuations of foreign exchange rates. The above derivative contracts entered into by the Company did not meet the criteria for hedge accounting. Therefore, the Company did not apply hedge accounting treatment for the above derivative contracts.

Outstanding forward exchange contracts consisted of the following:


		Contract Amount
	Maturity Date	(In Thousands)
September 30, 2010

Sell EUR/Buy NT$	October 2010	EUR139,000/NT$5,851,568
Sell US$/Buy NT$	October 2010 to November 2010	US$42,500/NT$1,336,655

September 30, 2009

Sell US$/Buy RMB	October 2009	US$3,950/RMB26,974
Sell US$/Buy NT$	October 2009 to November 2009	US$9,100/NT$295,973

- 17 -

Outstanding cross currency swap contracts consisted of the following:


		Range of			Range of
	Contract Amount	Interest			Interest
Maturity Date	(In Thousands)	Rates Paid			Rates Received
September 30, 2010

October 2010	US$90,000/NT$2,830,540		0.46	%		0.00	%

September 30, 2009

October 2009 to December 2009	US$950,000/NT$30,935,532		0.30%-1.00	%		0.00%-0.61	%

For the nine months ended September 30, 2010 and 2009, changes in fair value related to derivative financial instruments recognized in earnings was a net gain of NT$156,038 thousand and NT$580,706 thousand, respectively.

AVAILABLE-FOR-SALE FINANCIAL ASSETS


	September 30
	2010			2009
Corporate bonds	$	14,963,843		$	2,870,817
Agency bonds		8,651,644			129,850
Publicly traded stocks		5,053,616			641,286
Government bonds		1,630,518			4,595,397
Money market funds		57,579			7,276,497
Corporate issued notes		—			304,977
Open-end mutual funds		—			150,019

		30,357,200			15,968,843
Current portion		(29,320,698	)		(14,638,990	)


	$	1,036,502		$	1,329,853

For the nine months ended September 30, 2009, the Company recognized impairment on available-for-sale financial assets of NT$202,797 thousand.

HELD-TO-MATURITY FINANCIAL ASSETS


	September 30
	2010			2009
Corporate bonds	$	14,113,396		$	15,460,383
Government bonds		469,950			3,387,170
Structured time deposits		—			6,000,000

		14,583,346			24,847,553
Current portion		(5,598,471	)		(8,374,389	)


	$	8,984,875		$	16,473,164

- 18 -

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, 2009

Callable domestic deposits

6,000,000

3,404

0.67%-0.95%

March 2011 to August 2011

ALLOWANCES FOR DOUBTFUL RECEIVABLES, SALES RETURNS AND OTHERS

Movements of the allowance for doubtful receivables were as follows:


	Nine Months Ended September 30
	2010		2009
Balance, beginning of period	$	543,325	$	455,751
Provision		44,649		323,538
Write-off		—		(243,906	)


Balance, end of period	$	587,974	$	535,383

Movements of the allowance for sales returns and others were as follows:


	Nine Months Ended September 30
	2010			2009
Balance, beginning of period	$	8,724,481		$	6,071,026
Provision		8,992,668			9,820,449
Write-off		(10,920,525	)		(6,884,979	)


Balance, end of period	$	6,796,624		$	9,006,496

INVENTORIES


	September 30
	2010		2009
Finished goods	$	3,418,321	$	2,419,467
Work in process		19,449,683		14,576,638
Raw materials		1,864,695		1,036,651
Supplies and spare parts		1,930,716		1,143,296


	$	26,663,415	$	19,176,052

Write-down of inventories to net realizable value in the amount of NT$664,631 thousand were included in the cost of sales for the nine months ended September 30, 2010. The reversal of previously recognized inventory write-downs amounting to NT$225,966 thousand was recorded for the nine months ended September 30, 2009. Inventories losses related to earthquake damage in the amount of NT$190,992 thousand were classified under non-operating expenses and losses for the nine months ended September 30, 2010.

- 19 -

10.

INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD


	September 30
	2010				2009
			% of				% of
	Carrying		Owner-		Carrying		Owner-
	Amount		ship		Amount		ship
Common stock
Vanguard International Semiconductor Corporation (VIS)	$	9,424,817		38	$	9,410,696		37
Systems on Silicon Manufacturing Company Pte Ltd. (SSMC)		6,890,171		39		5,899,305		39
Motech Industries Inc. (Motech)		6,533,432		20		—		—
VisEra Holding Company (VisEra Holding)		2,421,569		49		2,195,970		49
Aiconn Technology Corporation (Aiconn)		21,370		43		23,507		41
Mcube Inc. (Mcube)		—		70		25,760		74
Preferred stock
Mcube		6,708		10		32,200		10


	$	25,298,067			$	17,587,438

In February 2010, the Company subscribed to 75,316 thousand shares of Motech through a private placement for NT$6,228,661 thousand; after the subscription, the Company’s percentage of ownership in Motech was 20%. Transfer of the aforementioned common shares within three years is prohibited according to the related regulations.

In September 2009, the Company acquired common stock and preferred stock of Mcube for NT$57,960 thousand. The Company took both ownership of stock and controlling power into consideration and concluded that the Company did not have controlling interest over Mcube. Accordingly, the Company applied equity method to account for this investment and the related equity in earnings/losses.

For the nine months ended September 30, 2010 and 2009, equity in earnings/losses of equity method investees was a net gain of NT$1,608,430 thousand and a net loss of NT$253,185 thousand, respectively. Related equity in earnings/losses of equity method investees were determined based on the reviewed financial statements, except for Aiconn and Mcube. The Company believes that, had Aiconn and Mcube’s financial statements been reviewed, any adjustments arising would have had no material effect on the Company’s consolidated financial statements.

As of September 30, 2010 and 2009, the quoted market price of publicly traded stock in unrestricted investments accounted for using the equity method (VIS) were NT$8,606,662 thousand and NT$8,795,129 thousand, respectively.

Movements of the difference between the cost of investment and the Company’s share in investees’ net assets allocated to depreciable assets were as follows:


	Nine Months Ended September 30
	2010			2009
Balance, beginning of period	$	1,391,500		$	1,990,621
Additions		2,055,660			—
Amortizations		(707,631	)		(449,341	)


Balance, end of period	$	2,739,529		$	1,541,280

- 20 -

Movements of the difference allocated to goodwill were as follows:


	Nine Months Ended September 30
	2010		2009
Balance, beginning of period	$	1,061,885	$	1,061,885
Additions		353,680		—


Balance, end of period	$	1,415,565	$	1,061,885

11.

HEDGING DERIVATIVE FINANCIAL INSTRUMENTS


	September 30, 2010
Hedging derivative financial liabilities

Interest rate swap contract	$	1,065

The Company’s long-term bank loans bear floating interest rates; therefore, changes in the market interest rate may cause future cash flows to be volatile. Accordingly, the Company entered into an interest rate swap contract in order to hedge cash flow risk caused by floating interest rates. As of September 30, 2010, the outstanding interest rate swap contract consisted of the following:


			Range of
Contract Amount		Range of	Interest Rates
(In Thousands)	Maturity Date	Interest Rates Paid	Received
NT$140,000	August 31, 2012	1.38%	0.56%

The Company recognized NT$1,065 thousand as an adjustment in shareholders’ equity for the above interest rate swap contract for the nine months ended September 30, 2010.

12.

FINANCIAL ASSETS CARRIED AT COST


	September 30
	2010		2009
Non-publicly traded stocks	$	4,305,550	$	2,999,870
Mutual funds		159,251		162,979


	$	4,464,801	$	3,162,849

In June 2010, the Company invested in Stion Corporation (Stion, an United States corporation) for US$50,000 thousand and obtained Stion’s preferred stock of 7,347 thousand shares with 23.4% of ownership. Stion is engaged in the manufacturing of high-efficiency thin-film solar photovoltaic modules. Due to certain restrictions contained in the investment agreements, the Company does not have the ability to exert significant influence over Stion’s operating and financial policy. Therefore, the investment was classified under financial assets carried at cost.

The common stocks of Capella Microsystems (Taiwan), Inc., Integrated Memory Logic Limited and Leadtrend Technology Corporation were listed on the Taiwan GreTai Securities Market or Taiwan Stock Exchange in June 2010, May 2010, and August 2009, respectively. Thus, the Company reclassified the aforementioned investments from financial assets carried at cost to available-for-sale financial assets.

- 21 -

For the nine months ended September 30, 2010 and 2009, the Company recognized impairment on financial assets carried at cost of NT$112,759 thousand and NT$601,612 thousand, respectively.

13. PROPERTY, PLANT AND EQUIPMENT


	Nine Months Ended September 30, 2010
	Balance, Beginning										Effect of Exchange			Balance,
	of Period		Additions		Disposals			Reclassification			Rate Changes			End of Period
Cost
Land and land improvements	$	934,090	$	—	$	—		$	324		$	(18,201	)	$	916,213
Buildings		142,294,558		3,353,817		(135,497	)		4,414			(167,743	)		145,349,549
Machinery and equipment		775,653,489		124,966,538		(1,226,898	)		215,989			(933,235	)		898,675,883
Office equipment		13,667,747		1,446,535		(673,085	)		1,776			(28,051	)		14,414,922
Leased asset		714,424		—		—			—			(603	)		713,821

		933,264,308	$	129,766,890	$	(2,035,480	)	$	222,503		$	(1,147,833	)		1,060,070,388

Accumulated depreciation
Land and land improvements		317,580	$	21,815	$	—		$	—		$	(7,332	)		332,063
Buildings		81,821,718		6,880,336		(128,466	)		—			(106,283	)		88,467,305
Machinery and equipment		600,795,474		55,052,858		(1,188,485	)		132,823			(1,048,986	)		653,743,684
Office equipment		10,589,349		860,766		(672,909	)		(440	)		(24,594	)		10,752,172
Leased asset		219,765		26,483		—			—			(287	)		245,961

		693,743,886	$	62,842,258	$	(1,989,860	)	$	132,383		$	(1,187,482	)		753,541,185

Advance payments and construction in progress		34,154,365	$	8,626,111	$	(26,890	)	$	(98,914	)	$	(4,667	)		42,650,005


	$	273,674,787												$	349,179,208


	Nine Months Ended September 30, 2009
	Balance, Beginning										Effect of Exchange			Balance,
	of Period		Additions		Disposals			Reclassification			Rate Changes			End of Period
Cost
Land and land improvements	$	953,857	$	—	$	—		$	1,830		$	(17,178	)	$	938,509
Buildings		132,249,996		9,768,373		(9,822	)		66			(364,055	)		141,644,558
Machinery and equipment		697,498,743		41,591,076		(1,176,786	)		25,358			(1,225,845	)		736,712,546
Office equipment		12,430,800		967,582		(189,608	)		(5,201	)		(38,272	)		13,165,301
Leased asset		722,339		—		—			7,194			(15,521	)		714,012

		843,855,735	$	52,327,031	$	(1,376,216	)	$	29,247		$	(1,660,871	)		893,174,926

Accumulated depreciation
Land and land improvements		295,898	$	22,705	$	—		$	—		$	(6,676	)		311,927
Buildings		72,681,699		6,962,102		(9,823	)		66			(176,627	)		79,457,417
Machinery and equipment		535,962,291		51,017,742		(1,165,488	)		2,565			(1,143,190	)		584,673,920
Office equipment		9,693,809		911,478		(187,662	)		(7,260	)		(37,561	)		10,372,804
Leased asset		182,570		27,285		—			7,194			(4,964	)		212,085

		618,816,267	$	58,941,312	$	(1,362,973	)	$	2,565		$	(1,369,018	)		675,028,153

Advance payments and construction in progress		18,605,882	$	81,955	$	—		$	(22,342	)	$	3,756			18,669,251


	$	243,645,350												$	236,816,024

The company entered into agreements to lease buildings that qualify as capital leases. The term of the leases is from December 2003 to December 2013. The future minimum lease payments as of September 30, 2010 are NT$786,589 thousand.

14.

DEFERRED CHARGES, NET


	Nine Months Ended September 30, 2010
	Balance, Beginning									Effect of Exchange			Balance,
	of Period		Additions		Amortization			Reclassification		Rate Changes			End of Period
Technology license fee	$	3,230,624	$	2,000	$	(597,513	)	$	—	$	(19	)	$	2,635,092
Software and system design costs		1,834,528		1,176,073		(769,009	)		5,192		45			2,246,829
Patent and others		1,393,402		235,796		(292,734	)		—		(64	)		1,336,400


	$	6,458,554	$	1,413,869	$	(1,659,256	)	$	5,192	$	(38	)	$	6,218,321

- 22 -


	Nine Months Ended September 30, 2009
	Balance, Beginning										Effect of Exchange			Balance,
	of Period		Additions		Amortization			Reclassification			Rate Changes			End of Period
Technology license fee	$	4,125,212	$	—	$	(687,538	)	$	—		$	4,244		$	3,441,918
Software and system design costs		1,801,831		523,365		(684,458	)		(4,340	)		(10	)		1,636,388
Patent and others		1,198,785		11,351		(219,728	)		(6,035	)		(2,227	)		982,146


	$	7,125,828	$	534,716	$	(1,591,724	)	$	(10,375	)	$	2,007		$	6,060,452

15. SHORT-TERM LOANS


	September 30, 2010
Unsecured loans
US$1,210,000 thousand, due in February 2011, annual interest at 0.39% — 1.84%	$	37,910,282

16. BONDS PAYABLE


	September 30
	2010		2009
Domestic unsecured bonds
Issued in January 2002 and repayable in January 2012, 3.00% interest payable annually	$	4,500,000	$	4,500,000

17.

LONG-TERM BANK LOANS


	September 30
	2010			2009
Secured loans
US$20,000 thousand, repayable in full in one lump sum payment in November 2010, annual interest at 0.68%-0.83% in 2010 and 0.70%-0.97% in 2009	$	628,563		$	644,248
Repayable from August 2009 in 17 quarterly installments, annual interest at 0.66%-1.18% in 2010 and 0.68%-2.70% in 2009		605,052			950,971
Repayable from December 2007 in 8 semi-annual installments, fully repaid in June 2010, annual interest at 1.11%-2.42%		—			131,775

		1,233,615			1,726,994
Current portion		(870,663	)		(308,525	)


	$	362,952		$	1,418,469

Pursuant to the loan agreements, financial ratios calculated based on annual audited financial statements of TSMC China as well as semi-annual and annual financial statements of Xintec must comply with predetermined financial covenants.

- 23 -

As of September 30, 2010, future principal repayments for the long-term bank loans were as follows:


Year of Repayment	Amount
2010 (4^th quarter)	$	689,089
2011		242,099
2012		242,099
2013		60,328


	$	1,233,615

18.

OTHER LONG-TERM PAYABLES


	September 30
	2010			2009
Payables for acquisition of property, plant and equipment (Note 29h)	$	7,235,592		$	8,398,125
Payables for royalties		909,778			1,420,771

		8,145,370			9,818,896

Current portion (classified under accrued expenses and other current liabilities)		(1,317,492	)		(1,476,550	)


	$	6,827,878		$	8,342,346

The payables for royalties were primarily attributable to several license arrangements that the Company entered into for certain semiconductor-related patents.

As of September 30, 2010, future payments for other long-term payables were as follows:


Year of Payment	Amount
2010 (4^th quarter)	$	363,421
2011		1,110,722
2012		690,679
2013		579,543
2014		5,401,005


	$	8,145,370

19.

PENSION PLANS

The pension mechanism under the Labor Pension Act is deemed a defined contribution plan. Pursuant to the Act, TSMC, GUC, Xintec and Mutual-Pak have made monthly contributions equal to 6% of each employee’s monthly salary to employees’ pension accounts. Furthermore, TSMC North America, TSMC China, TSMC Europe and TSMC Canada are required by local regulations to make monthly contributions at certain percentage of the basic salary of their employees. Pursuant to the aforementioned Act and local regulations, the Company recognized pension costs of NT$774,327 thousand and NT$549,457 thousand for the nine months ended September 30, 2010 and 2009, respectively.

- 24 -

TSMC, GUC and Xintec have defined benefit plans under the Labor Standards Law that provide benefits based on an employee’s length of service and average monthly salary for the six-month period prior to retirement. The aforementioned companies contribute an amount equal to 2% of salaries paid each month to their respective pension funds (the Funds), which are administered by the Labor Pension Fund Supervisory Committee (the Committee) and deposited in the name of the committees in the Bank of Taiwan. The Company recognized pension costs of NT$193,180 thousand and NT$217,193 thousand for the nine months ended September 30, 2010 and 2009, respectively.

Movements of the Funds and accrued pension cost under the defined benefit plans were summarized as follows:


	Nine Months Ended September 30
	2010			2009
The Funds
Balance, beginning of period	$	2,644,988		$	2,434,876
Contributions		162,591			145,685
Interest		41,379			53,066
Payments		(11,050	)		(37,801	)


Balance, end of period	$	2,837,908		$	2,595,826


Accrued pension cost
Balance, beginning of period	$	3,797,032		$	3,701,584
Accruals		6,850			75,173


Balance, end of period	$	3,803,882		$	3,776,757

20.

INCOME TAX

A reconciliation of income tax expense based on “income before income tax” at the statutory rates and income tax currently payable was as follows:


	Nine Months Ended September 30
	2010			2009
Income tax expense based on “income before income tax” at statutory rates	$	22,833,745		$	15,088,240
Tax effect of the following:
Tax-exempt income		(12,828,404	)		(6,609,978	)
Temporary and permanent differences		(806,847	)		2,958,278
Others		—			69,174
Additional tax at 10% on unappropriated earnings		138,243			30,707
Net operating loss carryforwards used		(390,410	)		(54,459	)
Income tax credits used		(3,727,985	)		(5,668,306	)


Income tax currently payable	$	5,218,342		$	5,813,656

- 25 -

Income tax expense consisted of the following:


	Nine Months Ended September 30
	2010			2009
Income tax currently payable	$	5,218,342		$	5,813,656
Income tax adjustments on prior years		978,295			(1,157,674	)
Other income tax adjustments		(27,442	)		(40,056	)
Net change in deferred income tax assets
Investment tax credits		(6,952,518	)		(3,332,014	)
Net operating loss carryforwards		402,214			(66,114	)
Temporary differences		33,005			26,336
Valuation allowance		6,321,184			2,244,729


Income tax expense	$	5,973,080		$	3,488,863

Net deferred income tax assets consisted of the following:


	September 30
	2010			2009
Current deferred income tax assets
Investment tax credits	$	1,197,701		$	3,542,275
Temporary differences
Allowance for sales returns and others		592,958			773,787
Unrealized gain/loss on financial instruments		65,589			—
Others		480,459			354,789
Valuation allowance		(135,546	)		(139,077	)


	$	2,201,161		$	4,531,774


Noncurrent deferred income tax assets
Investment tax credits	$	21,243,533		$	13,987,353
Net operating loss carryforwards		2,973,983			3,583,246
Temporary differences
Depreciation		2,148,209			1,789,193
Others		409,732			555,928
Valuation allowance		(16,361,182	)		(12,719,044	)


	$	10,414,275		$	7,196,676

Effective in May 2009 and June 2010, the Article 5 of the Income Tax Law of the Republic of China was amended, in which the income tax rate of profit-seeking enterprises would be reduced from 25% to 20% and from 20% to 17%, respectively. The last amended income tax rate of 17% is retroactively applied on January 1, 2010. TSMC and its domestic subsidiaries which are subject to the Income Tax Law of the Republic of China recalculated their deferred tax assets in accordance with the new amended Article and adjusted the resulting difference as an income tax expense in 2010 and 2009, respectively.

Under Article 10 of the Statute for Industrial Innovation (SII) legislated and effective in May 2010, a profit-seeking enterprise may deduct up to 15% of its research and development expenditures from its income tax payable for the period in which these expenditures are incurred, but this deduction should not exceed 30% of the income tax payable for that period. This incentive is retroactive to January 1, 2010 and effective until December 31, 2019.

- 26 -

As of September 30, 2010, the net operating loss carryforwards were generated by WaferTech, TSMC Development and Mutual-Pak and would expire on various dates through 2026.

Integrated income tax information:

The balance of the imputation credit account (ICA) of TSMC as of September 30, 2010 and 2009 was NT$1,669,533 thousand and NT$214,826 thousand, respectively.

The estimated and actual creditable ratio for distribution of TSMC’s earnings of 2009 and 2008 were 9.85% and 9.10%, respectively.

The imputation credit allocated to the shareholders is based on its balance as of the date of dividend distribution. The estimated creditable ratio may change when the actual distribution of imputation credit is made.

All of TSMC’s earnings generated prior to December 31, 1997 have been appropriated.

As of September 30, 2010, investment tax credits of TSMC, GUC, Xintec and Mutual-Pak consisted of the following:


		Total		Remaining
		Creditable		Creditable		Expiry
Law/Statute	Item	Amount		Amount		Year
Statute for Upgrading Industries	Purchase of machinery and equipment	$	114,677	$	100,145		2010
			66,368		66,368		2011
			3,220,393		3,154,660		2012
			6,051,074		6,051,074		2013
			5,443,947		5,443,947		2014


		$	14,896,459	$	14,816,194


Statute for Upgrading Industries	Research and development expenditures	$	1,021,544	$	—		2010
			1,192,759		125,748		2011
			2,924,808		2,924,808		2012
			4,523,367		4,523,367		2013


		$	9,662,478	$	7,573,923


Statute for Upgrading Industries	Personnel training expenditures		$759	$	—		2010
			20,081		788		2011
			32,534		32,534		2012
			17,795		17,795		2013


		$	71,169	$	51,117


Statute for Industrial Innovation	Research and development expenditures	$	1,539,113	$	—		2010

- 27 -

The profits generated from the following projects of TSMC, GUC and Xintec are exempt from income tax for a five-year period:


		Tax-Exemption Period
Construction and expansion of 2001 by TSMC		2006 to 2010
Construction and expansion of 2003 by TSMC		2007 to 2011
Construction and expansion of 2004 by TSMC		2008 to 2012
Construction and expansion of 2005 by TSMC		2010 to 2014
Construction and expansion of 2003 by GUC		2007 to 2011
Construction and expansion of 2005 and 2006 by GUC		To be determined
Construction and expansion of 2003 by Xintec		2007 to 2011
Construction and expansion of 2002, 2003 and 2006 by Xintec		2010 to 2014

The tax authorities have examined income tax returns of TSMC through 2007. All investment tax credit adjustments assessed by the tax authorities have been recognized accordingly.

21.

LABOR COST, DEPRECIATION AND AMORTIZATION


	Nine Months Ended September 30, 2010
			Classified as
	Classified as		Operating
	Cost of Sales		Expenses		Total
Labor cost
Salary and bonus	$	20,151,190	$	16,310,025	$	36,461,215
Labor and health insurance		728,802		555,298		1,284,100
Pension		580,208		387,299		967,507
Meal		436,489		177,435		613,924
Welfare		517,534		198,946		716,480
Other		92,861		210,063		302,924


	$	22,507,084	$	17,839,066	$	40,346,150


Depreciation	$	58,880,734	$	3,949,325	$	62,830,059

Amortization	$	982,878	$	676,378	$	1,659,256


	Nine Months Ended September 30, 2009
			Classified as
	Classified as		Operating
	Cost of Sales		Expenses		Total
Labor cost
Salary and bonus	$	12,631,169	$	10,938,484	$	23,569,653
Labor and health insurance		509,889		422,070		931,959
Pension		444,923		321,727		766,650
Meal		324,895		143,092		467,987
Welfare		365,194		144,646		509,840
Other		110,587		183,107		293,694


	$	14,386,657	$	12,153,126	$	26,539,783


Depreciation	$	55,879,597	$	3,049,516	$	58,929,113

Amortization	$	942,756	$	648,968	$	1,591,724

- 28 -

22.

SHAREHOLDERS’ EQUITY

As of September 30, 2010, 1,096,448 thousand ADSs of TSMC were traded on the NYSE. The number of common shares represented by the ADSs was 5,482,242 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 are limited to a certain percentage of TSMC’s paid-in capital. Also, the capital surplus from long-term investments may not be used for any purpose.

Capital surplus consisted of the following:


	September 30
	2010		2009
Additional paid-in capital	$	23,562,191	$	23,408,710
From merger		22,805,390		22,805,390
From convertible bonds		8,893,190		8,893,190
From long-term investments		373,244		332,574
Donations		55		55


	$	55,634,070	$	55,439,919

TSMC’s Articles of Incorporation provide that, when allocating the net profits for each fiscal year, TSMC shall first offset its losses in previous years and then set aside the following items accordingly:

Legal capital reserve at 10% of the profits left over, until the accumulated legal capital reserve equals TSMC’s paid-in capital;

Special capital reserve in accordance with relevant laws or regulations or as requested by the authorities in charge;

Bonus to directors and profit sharing to employees of TSMC of not more than 0.3% and not less than 1% of the remainder, respectively. Directors who also serve as executive officers of TSMC are not entitled to receive the bonus to directors. TSMC may issue profit sharing to employees in stock of an affiliated company meeting the conditions set by the Board of Directors or, by the person duly authorized by the Board of Directors;

Any balance left over shall be allocated according to the resolution of the shareholders’ meeting.

TSMC’s Articles of Incorporation also provide that profits of TSMC 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 subjected to shareholders’ approval in the following year.

- 29 -

TSMC accrued profit sharing to employees as a charge to earnings of certain percentage of net income during the period amounted to NT$8,162,440 thousand and NT$8,556,862 thousand for the nine months ended September 30, 2010 and 2009, respectively; bonuses to directors were accrued with an estimate based on historical experience. If the actual amounts subsequently resolved by the shareholders differ from the estimated amounts, the differences are recorded in the year of shareholders’ resolution as a change in accounting estimate. If profit sharing is resolved to be distributed to employees in stock, the number of shares is determined by dividing the amount of profit sharing by the closing price (after considering the effect of dividends) of the shares on the day preceding the shareholders’ meeting.

TSMC no longer has supervisors since January 1, 2007. The required duties of supervisors are being fulfilled by the Audit Committee.

The appropriation for legal capital reserve shall be made until the reserve equals TSMC’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 TSMC has no unappropriated earnings and the reserve balance has exceeded 50% of TSMC’s paid-in capital. The Company Law also prescribes that, when the reserve has reached 50% of TSMC’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 instruments, 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.

The appropriations of earnings for 2009 and 2008 had been approved in the TSMC’s shareholders meeting held on June 15, 2010 and June 10, 2009, 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 2009		Year 2008			Year 2009		Year 2008
Legal capital reserve	$	8,921,784	$	9,993,317
Special capital reserve		1,313,047		(391,857	)
Cash dividends to shareholders		77,708,120		76,876,312		$	3.00	$	3.00
Stock dividends to shareholders		—		512,509			—		0.02


	$	87,942,951	$	86,990,281

TSMC’s profit sharing to employees to be paid in cash and bonus to directors in the amounts of NT$6,691,338 thousand and NT$67,692 thousand for 2009, respectively, and profit sharing to employees to be paid in cash and in stock as well as bonus to directors in the amounts of NT$7,494,988 thousand, NT$7,494,988 thousand and NT$158,080 thousand for 2008, respectively, had been approved in the shareholders’ meeting held on June 15, 2010 and June 10, 2009, respectively. The profit sharing to employees in stock of 141,870 thousand shares for 2008 was determined by the closing price of the TSMC’s common shares (after considering the effect of dividends) of the day immediately preceding the shareholders’ meeting, which is NT$52.83. The resolved amounts of the profit sharing to employees and bonus to directors were consistent with the resolutions of meeting of the Board of Directors held on February 9, 2010 and February 10, 2009 and same amount had been charged against earnings of 2009 and 2008, respectively.

The shareholders’ meeting held on June 10, 2009 also resolved to distribute stock dividends out of capital surplus, and stock dividends to shareholders as well as profit sharing to employees to be paid in stock in the amount of NT$768,763 thousand, NT$512,509 thousand and NT$7,494,988 thousand, respectively.

- 30 -

The information about appropriations of TSMC’s profit sharing to employees and bonus to directors is available at the 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 TSMC on earnings generated since January 1, 1998.

23.

STOCK-BASED COMPENSATION PLANS

TSMC’s Employee Stock Option Plans, consisting of the TSMC 2004 Plan, TSMC 2003 Plan and TSMC 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 TSMC 2004 Plan, TSMC 2003 Plan and TSMC 2002 Plan was 11,000 thousand, 120,000 thousand and 100,000 thousand, respectively, with each option eligible to subscribe for one common share of TSMC when exercisable. The options may be granted to qualified employees of TSMC or any of its domestic or foreign subsidiaries, in which TSMC’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 TSMC’s common shares listed on the TSE on the grant date.

Options of the plans that had never been granted or had been granted but subsequently canceled had expired as of September 30, 2010.

Information about TSMC’s outstanding stock options for the nine months ended September 30, 2010 and 2009 was as follows:


				Weighted-
	Number of			average
	Options			Exercise Price
	(In Thousands)			(NT$)
Nine months ended September 30, 2010

Balance, beginning of period		28,810		$	32.4
Options exercised		(4,638	)		32.5


Balance, end of period		24,172			32.5


Nine months ended September 30, 2009

Balance, beginning of period		36,234			34.0
Options granted		175			34.0
Options exercised		(5,228	)		36.5
Options canceled		(321	)		46.5


Balance, end of period		30,860			33.5

The number of outstanding options and exercise prices had been adjusted to reflect the distribution of earnings by TSMC in accordance with the plans.

- 31 -

As of September 30, 2010, information about TSMC’s outstanding options was as follows:


	Options Outstanding
		Weighted-average
		Remaining		Weighted-average
Range of Exercise	Number of Options	Contractual Life		Exercise Price
Price (NT$)	(In Thousands)	(Years)		(NT$)
$21.7— $30.5	18,013	2.44	$	28.0
38.0— 50.1	6,159	4.16		45.6

	24,172	2.88		32.5

As of September 30, 2010, all of the above outstanding options were exercisable.

GUC’s Employee Stock Option Plans, consisting of the GUC 2003 Plan and GUC 2002 Plan, were approved by its Board of Directors on January 23, 2003 and July 1, 2002, respectively. The maximum number of options authorized to be granted under the GUC 2003 Plan and GUC 2002 Plan was 7,535 and 5,000, respectively, with each option eligible to subscribe for one thousand common shares of GUC when exercisable. The options may be granted to qualified employees of GUC. The options of all the plans are valid for six years and exercisable at certain percentages subsequent to the second anniversary of the grant date.

Moreover, the GUC 2007 Plan, GUC 2006 Plan and GUC 2004 Plan were approved by the SFB on November 28, 2007, July 3, 2006 and August 16, 2004 to grant a maximum of 1,999 options, 3,665 options and 2,500 options, respectively, with each option eligible to subscribe for one thousand common shares of GUC when exercisable. The options may be granted to qualified employees of GUC or any of its subsidiaries. Except for the options of the GUC 2006 Plan which are valid until August 15, 2011, the options of the other two GUC option plans were valid for six years. Options of all three plans are exercisable at certain percentages subsequent to the second anniversary of the grant date.

Information about GUC’s outstanding stock options for the nine months ended September 30, 2010 and 2009 was as follows:


				Weighted-
				average
	Number of			Exercise Price
	Options			(NT$)
Nine months ended September 30, 2010

Balance, beginning of period		3,810		$	83.4
Options exercised		(1,251	)		14.1
Options canceled		(354	)		136.9


Balance, end of period		2,205			114.0


Nine months ended September 30, 2009

Balance, beginning of period		5,557			66.6
Options granted		87			13.8
Options exercised		(1,004	)		10.8
Options canceled		(287	)		53.8


Balance, end of period		4,353			75.8

- 32 -

The number of outstanding options and exercise prices have been adjusted to reflect the distribution of earnings by GUC in accordance with the plans.

As of September 30, 2010, information about GUC’s outstanding and exercisable options was as follows:


	Options Outstanding						Options Exercisable
			Weighted-		Weighted-				Weighted-
			average		average				average
Range of			Remaining		Exercise				Exercise
Exercise	Number of		Contractual		Price		Number of		Price
Price (NT$)	Options		Life (Years)		(NT$)		Options		(NT$)
$8.3		156		0.25	$	8.3		156	$	8.3
15.3		679		0.92		15.3		679		15.3
175.0		1,370		3.25		175.0		684		175.0


		2,205		2.32		114.0		1,519		86.5

Xintec’s Employee Stock Option Plans, consisting of the Xintec 2007 Plan and Xintec 2006 Plan, were approved by the SFB on June 26, 2007 and July 3, 2006, respectively. The maximum number of options authorized to be granted under the Xintec 2007 Plan and Xintec 2006 Plan was 6,000 thousand each, with each option eligible to subscribe for one common share of Xintec when exercisable. The options may be granted to qualified employees of Xintec or any of its subsidiaries. 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.

Information about Xintec’s outstanding stock options for the nine months ended September 30, 2010 and 2009 was as follows:


				Weighted-
	Number of			average
	Options			Exercise Price
	(In Thousands)			(NT$)
Nine months ended September 30, 2010

Balance, beginning of period		3,960		$	14.7
Options exercised		(1,440	)		14.2
Options canceled		(266	)		17.2


Balance, end of period		2,254			14.8


Nine months ended September 30, 2009

Balance, beginning of period		7,442			14.8
Options exercised		(1,789	)		13.5
Options canceled		(754	)		16.5


Balance, end of period		4,899			14.8

The exercise prices have been adjusted to reflect the distribution of earnings by Xintec in accordance with the plans.

- 33 -

As of September 30, 2010, information about Xintec’s outstanding options 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$)
$12.2- $14.1		1,124		6.04	$	12.5		974	$	12.2
15.2- 19.1		1,130		6.91		17.1		357		16.2


		2,254		6.48		14.8		1,331		13.3

No compensation cost was recognized under the intrinsic value method for the nine months ended September 30, 2010 and 2009. Had the Company used the fair value based method to evaluate the options using the Black-Scholes model, the assumptions at the various grant dates and pro forma results of the Company for the nine months ended September 30, 2010 and 2009 would have been as follows:


Assumptions:
TSMC	Expected dividend yield		1.00%-3.44	%
	Expected volatility		43.77%-46.15	%
	Risk free interest rate		3.07%-3.85	%
	Expected life	5 years

GUC	Expected dividend yield		0.00%-0.60	%
	Expected volatility		22.65%-45.47	%
	Risk free interest rate		2.12%-2.56	%
	Expected life	3-6 years

Xintec	Expected dividend yield		0.80	%
	Expected volatility		31.79%-47.42	%
	Risk free interest rate		1.88%-2.45	%
	Expected life	3 years


	Nine Months Ended September 30
	2010		2009
Net income attributable to shareholders of the parent:
As reported	$	120,884,560	$	56,551,787
Pro forma		120,871,974		56,173,879

Earnings per share (EPS) — after income tax (NT$):
Basic EPS as reported	$	4.67	$	2.19
Pro forma basic EPS		4.67		2.18
Diluted EPS as reported		4.66		2.18
Pro forma diluted EPS		4.66		2.16

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24. EARNINGS PER SHARE

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, 2010

Basic EPS
Earnings attributable to common shareholders of the parent	$	126,801,996	$	120,884,560		25,904,889	$	4.89	$	4.67

Effect of dilutive potential common shares		—		—		13,286


Diluted EPS
Earnings attributable to common shareholders of the parent (including effect of dilutive potential common shares)	$	126,801,996	$	120,884,560		25,918,175	$	4.89	$	4.66


Nine months ended September 30, 2009

Basic EPS
Earnings attributable to common shareholders of the parent	$	60,021,689	$	56,551,787		25,813,614	$	2.33	$	2.19

Effect of dilutive potential common shares		—		—		166,923


Diluted EPS
Earnings attributable to common shareholders of the parent (including effect of dilutive potential common shares)	$	60,021,689	$	56,551,787		25,980,537	$	2.31	$	2.18

		Effective January 1, 2008, the Company adopted Interpretation 2007-052 that requires companies to record profit sharing to employees as an expense rather than as an appropriation of earnings. If the Company may settle the obligation by cash, by issuing share, or in combination of both cash and shares, profit sharing to employees which will be settled in shares should be included in the weighted average number of shares outstanding in calculation of diluted EPS, if the shares have a dilutive effect. The number of shares is estimated by dividing the amount of profit sharing to employees in stock by the closing price (after considering the dilutive effect of dividends) of the common shares on the balance sheet date. Such dilutive effect of the potential shares needs to be included in the calculation of diluted EPS until the shares of profit sharing to employees are resolved in the shareholders’ meeting in the following year.

		The average number of shares outstanding for EPS calculation has been considered for the effect of retroactive adjustments. This adjustment caused each of the basic and diluted after income tax EPS for the nine months ended September 30, 2009 to remain at NT$2.19 and NT$2.18 respectively.

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25. DISCLOSURES FOR FINANCIAL INSTRUMENTS

Fair values of financial instruments were as follows:


	September 30
	2010				2009
	Carrying				Carrying
	Amount		Fair Value		Amount		Fair Value
Assets

Financial assets at fair value through profit or loss	$	20,360	$	20,360	$	370,669	$	370,669
Available-for-sale financial assets		30,357,200		30,357,200		15,968,843		15,968,843
Held-to-maturity financial assets		14,583,346		14,767,973		24,847,553		25,029,053
Financial assets carried at cost		4,464,801		—		3,162,849		—

Liabilities

Financial liabilities at fair value through profit or loss		74,741		74,741		97		97
Hedging derivative financial liabilities		1,065		1,065		—		—
Bonds payable		4,500,000		4,547,696		4,500,000		4,583,826
Long-term bank loans (including current portion)		1,233,615		1,233,615		1,726,994		1,726,994
Other long-term payables (including current portion)		8,145,370		8,145,370		9,818,896		9,818,896
Obligations under capital leases		707,047		707,047		707,050		707,050

Methods and assumptions used in the estimation of fair values of financial instruments

	1)		The aforementioned financial instruments do not include cash and cash equivalents, receivables, other financial assets, refundable deposits, short-term loans, payables and guarantee deposits. The carrying amounts of these financial instruments approximate their fair values due to their short maturities.

	2)		Except for derivatives and structured time deposits, available-for-sale and held-to-maturity financial assets were based on their quoted market prices.

	3)		The fair value of those derivatives and structured time deposits are determined using valuation techniques incorporating estimates and assumptions that were consistent with prevailing market conditions.

	4)		Financial assets carried at cost have no quoted prices in an active market and entail an unreasonably high cost to obtain verifiable fair values. Therefore, no fair value is presented.

	5)		Fair value of bonds payable was based on their quoted market price.

	6)		Fair values of long-term bank loans, other long-term payables and obligations under capital leases were based on the present value of expected cash flows, which approximates their carrying amount.

	c.		The changes in fair value of derivatives contracts which were outstanding as of September 30, 2010 and 2009 estimated using valuation techniques were recognized a net loss of NT$54,381 thousand and a net gain of NT$370,572 thousand, respectively.

	d.		As of September 30, 2010 and 2009, financial assets exposed to fair value interest rate risk were NT$39,907,290 thousand and NT$40,545,779 thousand, respectively; financial liabilities exposed to fair value interest rate risk were NT$50,114,445 thousand and NT$13,605,272 thousand, respectively; and financial liabilities exposed to cash flow interest rate risk were NT$1,547,897 thousand and NT$1,726,994 thousand, respectively.

- 36 -

Movements of the unrealized gains or losses on financial instruments for the nine months ended September 30, 2010 and 2009 were as follows:


	Nine Months Ended September 30, 2010
	From Available-
	for-sale			Equity		Gain (Loss) on Cash
	Financial Assets			Method Investments		Flow Hedges			Total
Balance, beginning of period	$	424,128		$	29,493	$	—		$	453,621
Recognized directly in shareholders’ equity		242,902			8,895		(434	)		251,363
Removed from shareholders’ equity and recognized in earnings		(186,315	)		—		—			(186,315	)


Balance, end of period	$	480,715		$	38,388	$	(434	)	$	518,669


	Nine Months Ended September 30, 2009
	From Available-
	for-sale Financial			Equity			Gain (Loss) on Cash
	Assets			Method Investments			Flow Hedges		Total
Balance, beginning of period	$	(198,413	)	$	(88,929	)	$	—	$	(287,342	)
Recognized directly in shareholders’ equity		418,581			95,757			—		514,338
Removed from shareholders’ equity and recognized in earnings		267,425			—			—		267,425


Balance, end of period	$	487,593		$	6,828		$	—	$	494,421

Information about financial risks

	1)		Market risk. The derivative financial instruments categorized as financial assets/liabilities at fair value through profit or loss are mainly used to hedge the market exchange rate fluctuations of foreign-currency assets and liabilities; therefore, the market exchange rate risk of derivatives will be offset by the foreign exchange risk of these hedged items. Available-for-sale financial assets and held-to-maturity financial assets held by the Company are mainly fixed-interest-rate debt securities and publicly traded stock; therefore, the fluctuations in market interest rates and market price will 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 Company evaluated whether the financial instruments for any possible counter-parties or third-parties are reputable financial institutions, business enterprises, and government agencies and accordingly, the Company believed that the Company’s exposure to credit risk was not significant.

- 37 -

	3)		Liquidity risk. The Company has sufficient operating capital to meet cash needs upon settlement of derivative financial instruments, bonds payable and bank loans. Therefore, the liquidity risk is low.

	4)		Cash flow interest rate risk. The Company mainly invests in fixed-interest-rate debt securities. Therefore, cash flows are not expected to fluctuate significantly due to changes in market interest rates. A portion of the short-term loans and the long-term bank loans were floating-rate loans. Therefore, changes in the market interest rates will result in changes in the interest rate of the long-term bank loans, which will affect future cash flows.

	g.		The Company seeks to reduce the effects of future cash flow related interest rate changes by primarily using derivative financial instruments.

			The Company’s long-term bank loans bear floating interest rates; therefore, changes in the market interest rate may cause future cash flows to be volatile. Accordingly, the Company entered into an interest rate swap contract in order to hedge cash flow risk caused by floating interest rates. Information about outstanding interest rate swap contract consisted of the following:

Fair Value

Expected

Expected Timing for the

Hedging Financial

September 30,

Cash Flow

Recognition of Gains

Hedged Item

Instrument

2010

Generated Period

or Losses from Hedge

Long-term bank loans

Interest rate swap contract

(1,065

)

2010 to 2012

26. RELATED PARTY TRANSACTIONS

Except as disclosed in the consolidated financial statements and other notes, the following is a summary of significant related party transactions:

	a.		Investees of TSMC

			VIS (accounted for using equity method) SSMC (accounted for using equity method)

	b.		VisEra Technology Company, Ltd. (VisEra), an indirect investee accounted for using equity method by TSMC.

	c.		Others:

			Related parties over which the Company has significant influence but with which the Company had no material transactions.


	2010				2009
	Amount		%		Amount		%
For the nine months ended September 30

Sales
VIS	$	190,016		—	$	107,607		—
VisEra		73,030		—		2,725		—
Others		9,089		—		36		—


	$	272,135		—	$	110,368		—

- 38 -


	2010				2009
	Amount		%		Amount		%
Purchases
VIS	$	3,664,124		2	$	2,446,687		2
SSMC		3,383,596		2		2,530,044		2


	$	7,047,720		4	$	4,976,731		4


Manufacturing expenses
VisEra (primarily outsourcing and rent)	$	77,695		—	$	55,443		—


Research and development expenses
VIS (primarily rent)	$	8,730		—	$	1,988		—
VisEra		7,198		—		306		—
Others		110		—		—		—


	$	16,038		—	$	2,294		—


Sales of property, plant and equipment
VIS	$	37,011		30	$	—		—
VisEra		4,418		4		1,050		15
SSMC		2,401		2		—		—


	$	43,830		36	$	1,050		15


Purchase of property, plant and equipment
VIS	$	15,865		—	$	—		—


Non-operating incomes and gains
VIS (primarily technical service income, see Note 29e)	$	226,256		2	$	179,168		5
SSMC (primarily technical service income, see Note 29d)		145,625		1		98,806		2
Others		—		—		129		—


	$	371,881		3	$	278,103		7


As of September 30

Other receivables
VIS	$	150,589		74	$	141,358		77
SSMC		49,752		24		42,588		23
Others		4,324		2		—		—


	$	204,665		100	$	183,946		100


Payables
VIS	$	1,124,109		69	$	761,346		73
SSMC		434,236		27		273,184		26
Others		59,284		4		4,952		1


	$	1,617,629		100	$	1,039,482		100

- 39 -

		The sales prices and payment terms to related parties were not significantly different from those of sales to third parties. For other related party transactions, prices and terms were determined in accordance with mutual agreements.

		The Company leased certain office space from VIS. The lease terms and prices were determined in accordance with mutual agreements. The rental expense was prepaid by the Company and the related expenses were classified under research and development expenses.

		The Company leased certain factory building from VisEra. The lease terms and prices were determined in accordance with mutual agreements. The rental expense was paid monthly and classified under manufacturing expenses.

27. PLEDGED OR MORTGAGED ASSETS

The Company provided certain assets as collateral mainly for long-term bank loans, land lease agreement and customs duty guarantee, which were as follows:


	September 30
	2010		2009
Other financial assets	$	169,028	$	634,287
Property, plant and equipment, net		1,953,613		2,455,643
Other assets		20,000		20,000


	$	2,142,641	$	3,109,930

28. SIGNIFICANT LONG-TERM LEASES

		The Company leases several parcels of land, factory and office premises from the Science Park Administration and Jhongli Industrial Park Service Center. These operating leases expire on various dates from October 2010 to July 2030 and can be renewed upon expiration.

		The Company entered into lease agreements for its office premises and certain office equipment located in the United State, Europe, Japan, Shanghai and Taiwan. These operating leases expire between 2010 and 2018 and can be renewed upon expiration.

		As of September 30, 2010, future lease payments were as follows:


Year	Amount
2010 (4^th quarter)	$	146,262
2011		582,240
2012		560,617
2013		531,316
2014		510,605
2015 and thereafter		3,892,061


	$	6,223,101

- 40 -

29. SIGNIFICANT COMMITMENTS AND CONTINGENCIES

Significant commitments and contingencies of the Company as of September 30, 2010, excluding those disclosed in other notes, were as follows:

	a.		Under a technical cooperation agreement with ITRI, the R.O.C. Government or its designee approved by TSMC can use up to 35% of TSMC’s capacity if TSMC’s outstanding commitments to its customers are not 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.

	b.		Under several foundry agreements, TSMC shall reserve a portion of its production capacity for certain major customers that have guarantee deposits with TSMC. As of September 30, 2010 TSMC had a total of US$23,979 thousand of guarantee deposits.

	c.		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. TSMC’s equity interest in SSMC was 32%. Nevertheless, Philips parted with its semiconductor company which was renamed as NXP B.V. in September 2006. TSMC and NXP B.V. purchased all the SSMC shares owned by EDB Investments Pte Ltd. pro rata according to the Shareholders Agreement on November 15, 2006. After the purchase, TSMC and NXP B.V. currently own approximately 39% and 61% of the SSMC shares respectively. TSMC and Philips (now NXP B.V.) are required, in the aggregate, to purchase at least 70% of SSMC’s capacity, but TSMC alone is not required to purchase more than 28% of the capacity. If any party defaults on the commitment and the capacity utilization of SSMC fall below a specific percentage of its capacity, the defaulting party is required to compensate SSMC for all related unavoidable costs.

	d.		TSMC provides technical services to SSMC under a Technical Cooperation Agreement (the Agreement) effective March 30, 1999. TSMC 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 will be automatically renewed for successive periods of five years each unless pre-terminated by either party under certain conditions.

	e.		TSMC provides a technology transfer to VIS under a Manufacturing License and Technology Transfer Agreement entered into on April 1, 2004. TSMC 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 TSMC certain products at prices as agreed by the parties.

	f.		In August 2006, TSMC filed a lawsuit against Semiconductor Manufacturing International Corporation, SMIC (Shanghai) and SMIC Americas (aggregately referred to as “SMIC”) in the Superior Court of California for Alameda County for breach of a 2005 agreement that settled an earlier trade secret misappropriation and patent infringement litigation between the parties, as well as for trade secret misappropriation, seeking injunctive relief and monetary damages. In September 2006, SMIC filed a cross-complaint against TSMC in the same court alleging breach of settlement agreement, implied covenant of good faith and fair dealing. SMIC also filed a civil action against TSMC in November 2006 with the Beijing People’s High Court alleging defamation and breach of good faith. On June 10, 2009, the Beijing People’s High Court ruled in favor of TSMC and dismissed SMIC’s lawsuit. On November 4, 2009, after a two-month trial, a jury in the California action found SMIC to have both breached the 2005 settlement agreement and misappropriated TSMC’s trade secrets. TSMC has subsequently settled both lawsuits with SMIC. Pursuant to the new settlement agreement, the parties have agreed to the entry of a stipulated judgment in favor of TSMC in the California action, and to the dismissal of SMIC’s appeal against the Beijing High Court’s finding in favor of TSMC. Under the new settlement agreement and the related stipulated judgment, SMIC has agreed to make cash payments by installments to TSMC totaling US$200 million, which are in addition to the US$135 million previously paid to TSMC under the 2005 settlement agreement, and, conditional upon relevant

- 41 -

government regulatory approvals, to issue to TSMC a total of 1,789,493,218 common shares of Semiconductor Manufacturing International Corporation and a three-year warrant to purchase 695,914,030 common shares (subject to adjustment) of Semiconductor Manufacturing International Corporation at HK$1.30 per share (subject to adjustment). TSMC has received the approval from the Investment Commission of Ministry of Economic Affairs and acquired the above mentioned common shares on July 5, 2010, representing approximately 7.37% of Semiconductor Manufacturing International Corporation’s total shares outstanding, and recognized settlement income amounting to NT$4,434,364 thousand.

	g.		In June 2010, STC.UNM, the technology transfer arm of the University of New Mexico, filed a complaint in the US International Trade Commission (US ITC) accusing TSMC and one other company of allegedly infringing a single US patent. The US ITC has initiated an investigation in July 2010. The outcome of this investigation cannot be determined at this time.

	h.		The Company entered into an agreement with a counterparty in 2003 whereby TSMC China is obligated to purchase certain property, plant and equipment at the agreed-upon price within the contract period. If the purchase is not completed, TSMC China is obligated to compensate the counterparty for the loss incurred. The property, plant and equipment have been in use by TSMC China since 2004 and are being depreciated over their estimated service lives. The related obligation totaled NT$7,235,592 thousand and NT$8,398,125 thousand as of September 30, 2010 and 2009, respectively, which is included in other long-term payables.

	i.		Amounts available under unused letters of credit as of September 30, 2010 were NT$112,443 thousand.

30. ADDITIONAL DISCLOSURES

Following are the additional disclosures required by the SFB for TSMC and its investees in which all significant intercompany balances and transactions are eliminated upon consolidation:

	a.		Financing provided: None;

	b.		Endorsement/guarantee provided: None;

	c.		Marketable securities held: Please see Table 1 attached;

	d.		Marketable securities acquired and disposed of at costs or prices of at least NT$100 million or 20% of the paid-in capital: Please see Table 2 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 3 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 amounting to at least NT$100 million or 20% of the paid-in capital: Please see Table 4 attached;

	h.		Receivable from related parties amounting to at least NT$100 million or 20% of the paid-in capital: Please see Table 5 attached;

	i.		Names, locations, and related information of investees over which TSMC exercises significant influence: Please see Table 6 attached;

- 42 -

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 investment: Please see Table 7 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 Table 8 attached.

Intercompany relationships and significant intercompany transactions: Please see Table 8 attached.

- 43 -

TABLE 1

Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries

MARKETABLE SECURITIES HELD
SEPTEMBER 30, 2010
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)


				September 30, 2010
										Market Value or Net
				Shares/Units		Carrying Value		Percentage of		Asset Value
Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	(In Thousands)		(US$ in Thousands)		Ownership (%)		(US$ in Thousands)		Note
TSMC	Corporate bond
	Taiwan Mobile Co., Ltd.	—	Available-for-sale financial assets		—	$	1,036,502		N/A	$	1,036,502
	Taiwan Power Company	—	Held-to-maturity financial assets		—		1,730,004		N/A		1,744,264
	Formosa Petrochemical Corporation	—	"		—		1,639,288		N/A		1,653,850
	China Steel Corporation	—	"		—		1,508,598		N/A		1,521,155
	Nan Ya Plastics Corporation	—	"		—		1,303,204		N/A		1,345,262
	Formosa Plastics Corporation	—	"		—		576,062		N/A		583,792
	CPC Corporation, Taiwan	—	"		—		499,986		N/A		499,971

	Stock
	Semiconductor Manufacturing International Corporation	—	Available-for-sale financial assets		1,789,493		4,048,549		7		4,048,549
	TSMC Global	Subsidiary	Investments accounted for using equity method		1		44,892,711		100		44,892,711
	TSMC Partners	Subsidiary	"		988,268		33,943,317		100		33,943,317
	VIS	Investee accounted for using equity method	"		628,223		9,424,817		38		8,606,662
	SSMC	Investee accounted for using equity method	"		314		6,890,171		39		6,462,772
	Motech	Investee accounted for using equity method	"		76,069		6,533,432		20		4,382,382
	TSMC North America	Subsidiary	"		11,000		2,827,009		100		2,827,009
	Xintec	Investee with a controlling financial interest	"		93,081		1,618,701		41		1,599,842
	GUC	Investee with a controlling financial interest	"		46,688		1,061,303		35		5,182,352
	TSMC Europe	Subsidiary	"		—		182,022		100		182,022
	TSMC Japan	Subsidiary	"		6		150,896		100		150,896
	TSMC Solar Europe	Subsidiary	"		—		25,638		100		25,638
	TSMC Solar NA	Subsidiary	"		1		24,717		100		24,717
	TSMC Korea	Subsidiary	"		80		20,559		100		20,559
	TSMC Lighting NA	Subsidiary	"		1		3,133		100		3,133
	United Industrial Gases Co., Ltd.	—	Financial assets carried at cost		16,783		193,584		10		308,603
	Shin-Etsu Handotai Taiwan Co., Ltd.	—	"		10,500		105,000		7		358,047
	W.K. Technology Fund IV	—	"		4,000		40,000		2		42,945

	Fund
	Horizon Ventures Fund	—	Financial assets carried at cost		—		103,992		12		103,992
	Crimson Asia Capital	—	"		—		55,259		1		55,259

	Capital
	TSMC China	Subsidiary	Investments accounted for using equity method		—		3,654,158		100		3,662,459
	VTAF III	Subsidiary	"		—		2,852,802		99		2,833,933
	VTAF II	Subsidiary	"		—		1,093,417		98		1,087,647
	Emerging Alliance	Subsidiary	"		—		320,426		99		320,426

TSMC Partners	Corporate bond
	General Elec Cap Corp. Mtn	—	Held-to-maturity financial assets		—	US$	20,350		N/A	US$	21,303
	General Elec Cap Corp. Mtn	—	"		—	US$	20,161		N/A	US$	21,546

(Continued)

- 44 -


				September 30, 2010
										Market Value or Net
				Shares/Units		Carrying Value		Percentage of		Asset Value
Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	(In Thousands)		(US$ in Thousands)		Ownership (%)		(US$ in Thousands)		Note
	Common stock
	TSMC Development, Inc. (TSMC Development)	Subsidiary	Investments accounted for using equity method		1	US$	386,744		100	US$	386,744
	VisEra Holding Company	Investee accounted for using equity method	"		43,000	US$	77,292		49	US$	77,292
	InveStar Semiconductor Development Fund, Inc. (ISDF)	Subsidiary	"		7,680	US$	24,529		97	US$	24,529
	InveStar Semiconductor Development Fund, Inc. (II) LDC. (ISDF II)	Subsidiary	"		21,415	US$	17,413		97	US$	17,413
	TSMC Technology	Subsidiary	"		1	US$	9,677		100	US$	9,677
	TSMC Canada	Subsidiary	"		2,300	US$	3,543		100	US$	3,543
	Mcube Inc.	Investee accounted for using equity method	"		5,333		—		70		—

	Preferred stock
	Mcube Inc.	Investee accounted for using equity method	Investments accounted for using equity method		1,000	US$	214		10	US$	214

TSMC Development	Corporate bond
	GE Capital Corp.	—	Held-to-maturity financial assets		—	US$	20,245		N/A	US$	21,546
	JP Morgan Chase & Co.	—	"		—	US$	15,000		N/A	US$	15,068

	Stock
	WaferTech	Subsidiary	Investments accounted for using equity method		293,637	US$	200,265		100	US$	200,265

Emerging Alliance	Common stock
	RichWave Technology Corp.	—	Financial assets carried at cost		4,074	US$	1,545		10	US$	1,545
	Global Investment Holding Inc.	—	"		11,124	US$	3,065		6	US$	3,065

	Preferred stock
	Audience, Inc.	—	Financial assets carried at cost		1,654	US$	250		—	US$	250
	Axiom Microdevices, Inc.	—	"		1,000	US$	13		1	US$	13
	Next IO, Inc.	—	"		800	US$	500		1	US$	500
	Optichron, Inc.	—	"		1,276	US$	1,145		2	US$	1,145
	Pixim, Inc.	—	"		4,641	US$	1,137		2	US$	1,137
	QST Holdings, LLC	—	"		—	US$	142		4	US$	142

	Capital
	VentureTech Alliance Holdings, LLC (VTA Holdings)	Subsidiary	Investments accounted for using equity method		—		—		7		—

VTAF II	Common stock
	Leadtrend	—	Available-for-sale financial assets		854	US$	3,747		2	US$	3,747
	Aether Systems, Inc.	—	Financial assets carried at cost		1,600	US$	1,503		25	US$	1,503
	RichWave Technology Corp.	—	"		1,267	US$	1,036		3	US$	1,036
	Sentelic	—	"		1,806	US$	2,607		9	US$	2,607

	Preferred stock
	5V Technologies, Inc.	—	Financial assets carried at cost		2,890	US$	2,168		4	US$	2,168
	Aquantia	—	"		3,974	US$	3,816		3	US$	3,816
	Audience, Inc.	—	"		12,378	US$	2,378		3	US$	2,378
	Beceem Communications	—	"		797	US$	1,701		1	US$	1,701
	Impinj, Inc.	—	"		475	US$	1,000		—	US$	1,000
	Next IO, Inc.	—	"		3,795	US$	953		2	US$	953
	Optichron, Inc.	—	"		2,847	US$	2,825		4	US$	2,825
	Pixim, Inc.	—	"		33,347	US$	1,878		2	US$	1,878
	Power Analog Microelectronics	—	"		7,027	US$	3,383		19	US$	3,383

(Continued)

- 45 -


				September 30, 2010
										Market Value or Net
				Shares/Units		Carrying Value		Percentage of		Asset Value
Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	(In Thousands)		(US$ in Thousands)		Ownership (%)		(US$ in Thousands)		Note
	QST Holdings, LLC	—	Financial assets carried at cost		—	US$	593		13	US$	593
	Xceive	—	"		4,210	US$	1,554		3	US$	1,554

	Capital
	VTA Holdings	Subsidiary	Investments accounted for using equity method		—		—		31		—

VTAF III	Common stock
	Mutual-Pak Technology Co., Ltd.	Subsidiary	Investments accounted for using equity method		9,180	US$	1,461		59	US$	1,461
	Aiconn Technology Corporation	Investee accounted for using equity method	"		5,623	US$	682		43	US$	682

	Preferred stock
	Auramicro, Inc.	—	Financial assets carried at cost		4,694	US$	1,408		20	US$	1,408
	BridgeLux, Inc.	—	"		6,113	US$	7,781		4	US$	7,781
	Exclara, Inc.	—	"		21,587	US$	4,568		18	US$	4,568
	GTBF, Inc.	—	"		1,154	US$	1,500		N/A	US$	1,500
	InvenSense, Inc.	—	"		816	US$	1,000		1	US$	1,000
	LiquidLeds Lighting Corp.	—	"		1,600	US$	800		11	US$	800
	Neoconix, Inc.	—	"		3,283	US$	4,608		6	US$	4,608
	Powervation, Ltd.	—	"		310	US$	4,678		16	US$	4,678
	Quellan, Inc.	—	"		3,106	US$	369		N/A	US$	369
	Silicon Technical Services, LLC	—	"		1,055	US$	1,208		—	US$	1,208
	Stion Corp.	—	"		7,347	US$	50,000		23	US$	50,000
	Tilera, Inc.	—	"		3,222	US$	2,781		2	US$	2,781
	Validity Sensors, Inc.	—	"		9,340	US$	3,456		4	US$	3,456

	Capital
	Growth Fund Limited (Growth Fund)	Subsidiary	Investments accounted for using equity method		—	US$	829		100	US$	829
	VTA Holdings	Subsidiary	"		—		—		62		—

Growth Fund	Common stock
	SiliconBlue Technologies, Inc.	—	Financial assets carried at cost		5,107	US$	762		1	US$	762
	Staccato	—	"		10	US$	25		—	US$	25

ISDF	Common stock
	Integrated Memory Logic, Inc.	—	Available-for-sale financial assets		4,838	US$	18,496		7	US$	18,496
	Memsic, Inc.	—	"		1,286	US$	3,060		5	US$	3,060
	Capella Microsystems (Taiwan), Inc.	—	"		372	US$	2,108		1	US$	2,108

	Preferred stock
	IP Unity, Inc.	—	Financial assets carried at cost		1,008	US$	290		1	US$	290
	Sonics, Inc.	—	"		230	US$	497		2	US$	497

ISDF II	Common stock
	Memsic, Inc.	—	Available-for-sale financial assets		1,072	US$	2,552		5	US$	2,552
	Capella Microsystems (Taiwan), Inc.	—	"		374	US$	2,118		1	US$	2,118
	Alchip Technologies Limited	—	Financial assets carried at cost		7,520	US$	3,664		15	US$	3,664
	Sonics, Inc.	—	"		278	US$	10		3	US$	10
	EON Technology, Corp.	—	"		409	US$	113		1	US$	113
	Goyatek Technology, Corp.	—	"		932	US$	545		6	US$	545
	Auden Technology MFG. Co., Ltd.	—	"		1,049	US$	223		3	US$	223

	Preferred stock
	FangTek, Inc.	—	Financial assets carried at cost		1,032	US$	686		6	US$	686
	Sonics, Inc.	—	"		264	US$	456		3	US$	456

(Continued)

- 46 -


				September 30, 2010
									Market Value or Net
				Shares/Units		Carrying Value		Percentage of	Asset Value
Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	(In Thousands)		(US$ in Thousands)		Ownership (%)	(US$ in Thousands)		Note
GUC	Common stock
	GUC-NA	Subsidiary	Investments accounted for using equity method		800	$	59,576	100	$	59,576
	GUC-Japan	Subsidiary	"		1		14,969	100		14,969
	GUC-BVI	Subsidiary	"		550		9,370	100		9,370
	GUC-Europe	Subsidiary	"		—		4,432	100		4,432

GUC-BVI	Capital
	Global Unichip (Shanghai) Company, Limited (GUC-Shanghai)	Subsidiary	Investments accounted for using equity method		—		7,969	100		7,969

Xintec	Capital
	Compositech Ltd.	—	Financial assets carried at cost		587		—	3		—

TSMC Global	Corporate bond
	African Development Bank	—	Available-for-sale financial assets		2,600	US$	2,618	N/A	US$	2,618
	Allstate Life Gbl Fdg Secd	—	"		4,430	US$	4,896	N/A	US$	4,896
	Alltel Corp.	—	"		100	US$	110	N/A	US$	110
	American Honda Fin Corp. Mtn	—	"		4,000	US$	3,995	N/A	US$	3,995
	Anz National Intl Ltd.	—	"		3,500	US$	3,549	N/A	US$	3,549
	Asian Development Bank	—	"		2,500	US$	2,499	N/A	US$	2,499
	Astrazeneca Plc	—	"		3,150	US$	3,432	N/A	US$	3,432
	AT+T Wireless	—	"		3,500	US$	3,888	N/A	US$	3,888
	Australia + New Zealand Bkg	—	"		2,000	US$	2,061	N/A	US$	2,061
	Banco Bilbao Vizcaya P R	—	"		3,250	US$	3,249	N/A	US$	3,249
	Bank New York Inc.	—	"		1,615	US$	1,609	N/A	US$	1,609
	Bank New York Inc. Medium	—	"		2,100	US$	2,278	N/A	US$	2,278
	Bank of America	—	"		1,900	US$	2,026	N/A	US$	2,026
	Bank of America Corp.	—	"		2,100	US$	2,167	N/A	US$	2,167
	Bank of New York Mellon	—	"		2,200	US$	2,206	N/A	US$	2,206
	Bank of Nova Scotia	—	"		5,000	US$	4,991	N/A	US$	4,991
	Bank of Scotland Plc	—	"		4,000	US$	3,998	N/A	US$	3,998
	Barclays Bank Plc	—	"		12,000	US$	11,996	N/A	US$	11,996
	Barclays Bank Plc NY	—	"		400	US$	400	N/A	US$	400
	Barclays Bank Plc NY	—	"		5,000	US$	4,999	N/A	US$	4,999
	Bbva US Senior SA Uniper	—	"		2,645	US$	2,631	N/A	US$	2,631
	Bear Stearns Cos Inc.	—	"		2,200	US$	2,195	N/A	US$	2,195
	Bear Stearns Cos Inc.	—	"		3,500	US$	3,524	N/A	US$	3,524
	Bear Stearns Cos Inc. Med Term	—	"		2,400	US$	2,653	N/A	US$	2,653
	Berkshire Hathaway Inc. Del	—	"		3,500	US$	3,517	N/A	US$	3,517
	Bhp Billiton Fin USA Ltd.	—	"		2,000	US$	2,118	N/A	US$	2,118
	Bk Tokyo Mitsubishi Ufj	—	"		2,000	US$	2,062	N/A	US$	2,062
	Bmw US Capital LLC	—	"		1,600	US$	1,602	N/A	US$	1,602
	Bnp Paribas SA	—	"		3,810	US$	3,848	N/A	US$	3,848
	Boeing Cap Corp.	—	"		2,925	US$	3,238	N/A	US$	3,238
	Boeing Co.	—	"		450	US$	459	N/A	US$	459
	Bp Captial Markets Plc	—	"		3,900	US$	3,976	N/A	US$	3,976
	Cello Part/Veri Wirelss	—	"		3,000	US$	3,050	N/A	US$	3,050
	Cie Financement Foncier	—	"		200	US$	200	N/A	US$	200
	Cie Financement Foncier	—	"		4,000	US$	4,016	N/A	US$	4,016
	Citigroup Funding Inc.	—	"		16,000	US$	16,404	N/A	US$	16,404
	Citigroup Inc.	—	"		1,400	US$	1,376	N/A	US$	1,376
	Citigroup Inc.	—	"		800	US$	806	N/A	US$	806
	Citigroup Inc.	—	"		400	US$	429	N/A	US$	429
	Citigroup Inc.	—	"		5,000	US$	5,524	N/A	US$	5,524
	Commonwealth Bank Aust	—	"		2,800	US$	2,794	N/A	US$	2,794

(Continued)

- 47 -


				September 30, 2010
									Market Value or Net
				Shares/Units		Carrying Value		Percentage of	Asset Value
Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	(In Thousands)		(US$ in Thousands)		Ownership (%)	(US$ in Thousands)		Note
	Countrywide Finl Corp.	—	Available-for-sale financial assets		4,000	US$	4,249	N/A	US$	4,249
	Credit Suisse First Boston USA	—	"		2,150	US$	2,275	N/A	US$	2,275
	Credit Suisse New York	—	"		3,945	US$	4,103	N/A	US$	4,103
	Deutsche Bank AG NY	—	"		2,500	US$	2,492	N/A	US$	2,492
	Dexia Credit Local	—	"		6,000	US$	5,970	N/A	US$	5,970
	Dexia Credit Local	—	"		4,000	US$	3,983	N/A	US$	3,983
	Dexia Credit Local S.A	—	"		4,000	US$	3,991	N/A	US$	3,991
	Dexia Credit Local SA NY	—	"		5,000	US$	4,982	N/A	US$	4,982
	Du Pont E I De Nemours + Co.	—	"		2,475	US$	2,707	N/A	US$	2,707
	Finance for Danish Ind	—	"		3,800	US$	3,799	N/A	US$	3,799
	General Elec Cap Corp.	—	"		1,000	US$	995	N/A	US$	995
	General Elec Cap Corp.	—	"		7,000	US$	7,004	N/A	US$	7,004
	General Elec Cap Corp.	—	"		1,000	US$	1,003	N/A	US$	1,003
	General Elec Cap Corp.	—	"		4,000	US$	4,127	N/A	US$	4,127
	General Electric Capital Corp.	—	"		2,000	US$	1,971	N/A	US$	1,971
	Georgia Pwr Co.	—	"		6,000	US$	6,018	N/A	US$	6,018
	Goldman Sachs Group Inc.	—	"		2,000	US$	1,946	N/A	US$	1,946
	Groupe Bpce	—	"		1,000	US$	999	N/A	US$	999
	Hewlett Packard Co.	—	"		3,000	US$	3,001	N/A	US$	3,001
	Hewlett Packard Co.	—	"		2,030	US$	2,027	N/A	US$	2,027
	Hewlett Packard Co.	—	"		1,365	US$	1,383	N/A	US$	1,383
	Household Fin Corp.	—	"		4,330	US$	4,736	N/A	US$	4,736
	HSBC Bank Plc	—	"		3,400	US$	3,413	N/A	US$	3,413
	HSBC Fin Corp.	—	"		2,315	US$	2,296	N/A	US$	2,296
	HSBC Fin Corp.	—	"		2,900	US$	3,082	N/A	US$	3,082
	Hutchison Whampoa Intl	—	"		1,750	US$	1,761	N/A	US$	1,761
	IBM Corp.	—	"		2,300	US$	2,303	N/A	US$	2,303
	IBM Corp.	—	"		6,800	US$	6,823	N/A	US$	6,823
	Intl Bk Recon + Develop	—	"		5,000	US$	5,006	N/A	US$	5,006
	Intl Bk Recon + Develop	—	"		2,000	US$	2,059	N/A	US$	2,059
	John Deer Capital Corp. Fdic GT	—	"		3,500	US$	3,638	N/A	US$	3,638
	JP Morgan Chase + Co.	—	"		2,500	US$	2,516	N/A	US$	2,516
	JP Morgan Chase + Co.	—	"		5,000	US$	5,019	N/A	US$	5,019
	Kfw Medium Term Nts Book Entry	—	"		1,950	US$	1,951	N/A	US$	1,951
	Kreditanstalt Fur Wiederaufbau	—	"		650	US$	669	N/A	US$	669
	Lloyds Tsb Bank Plc Ser 144A	—	"		4,850	US$	4,864	N/A	US$	4,864
	Lloyds Tsb Bank Plc Ser 144A	—	"		5,950	US$	6,016	N/A	US$	6,016
	Macquarie Bk Ltd. Sr	—	"		3,900	US$	3,999	N/A	US$	3,999
	Massmutual Global Fdg II Mediu	—	"		4,000	US$	3,951	N/A	US$	3,951
	Mellon Fdg Corp.	—	"		3,500	US$	3,447	N/A	US$	3,447
	Merck + Co. Inc.	—	"		4,000	US$	4,046	N/A	US$	4,046
	Merck + Co. Inc.	—	"		2,000	US$	2,098	N/A	US$	2,098
	Merrill Lynch + Co. Inc.	—	"		4,691	US$	4,620	N/A	US$	4,620
	Met Life Glob Funding I	—	"		500	US$	509	N/A	US$	509
	Metlife Inc.	—	"		2,000	US$	2,015	N/A	US$	2,015
	Metlife Inc.	—	"		6,500	US$	6,548	N/A	US$	6,548
	Metropolitan Life Global Fdg	—	"		750	US$	751	N/A	US$	751
	Metropolitan Life Global Fdg I	—	"		3,340	US$	3,343	N/A	US$	3,343
	Microsoft Corp.	—	"		2,500	US$	2,504	N/A	US$	2,504
	Monumental Global Fdg III	—	"		750	US$	727	N/A	US$	727
	Morgan Stanley	—	"		1,000	US$	1,019	N/A	US$	1,019
	Morgan Stanley Dean Witter	—	"		8,000	US$	8,603	N/A	US$	8,603
	Morgan Stanley for Equity	—	"		2,000	US$	1,968	N/A	US$	1,968
	National Australia Bank	—	"		1,000	US$	1,021	N/A	US$	1,021

(Continued)

- 48 -


				September 30, 2010
									Market Value or Net
				Shares/Units		Carrying Value		Percentage of	Asset Value
Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	(In Thousands)		(US$ in Thousands)		Ownership (%)	(US$ in Thousands)		Note
	New York Life Global Fdg	—	Available-for-sale financial assets		2,000	US$	2,051	N/A	US$	2,051
	Nordea Bank Fld Plc	—	"		2,250	US$	2,246	N/A	US$	2,246
	Occidental Pete Corp.	—	"		3,200	US$	3,764	N/A	US$	3,764
	Oesterreichische Kontrollbank	—	"		2,000	US$	2,000	N/A	US$	2,000
	Ontario (Province of)	—	"		2,000	US$	2,049	N/A	US$	2,049
	Pepsico Inc.	—	"		3,000	US$	3,002	N/A	US$	3,002
	Pnc Funding Corp.	—	"		2,000	US$	1,993	N/A	US$	1,993
	Pricoa Global Fdg I Med Term	—	"		1,750	US$	1,719	N/A	US$	1,719
	Pricoa Global Funding 1	—	"		1,200	US$	1,192	N/A	US$	1,192
	Princoa Global Fdg I Medium	—	"		5,050	US$	5,005	N/A	US$	5,005
	Rabobank Nederland	—	"		5,000	US$	5,000	N/A	US$	5,000
	Regions Bank Fdic Gtd Tlgp	—	"		1,700	US$	1,755	N/A	US$	1,755
	Royal Bk of Scotland Plc	—	"		4,000	US$	3,997	N/A	US$	3,997
	Royal Bk of Scotland Plc	—	"		5,000	US$	5,054	N/A	US$	5,054
	Royal Bk Scotland Plc	—	"		2,550	US$	2,602	N/A	US$	2,602
	Royal Bk Scotlnd Grp Plc 144A	—	"		9,450	US$	9,504	N/A	US$	9,504
	Shell International Fin	—	"		4,515	US$	4,535	N/A	US$	4,535
	Shell International Fin	—	"		1,200	US$	1,211	N/A	US$	1,211
	Shell International Fin	—	"		2,000	US$	2,047	N/A	US$	2,047
	Sovereign Bancorp Fdic Gtd Tlg	—	"		2,200	US$	2,273	N/A	US$	2,273
	State Str Corp.	—	"		6,420	US$	6,417	N/A	US$	6,417
	Sun Life Finl Global	—	"		4,400	US$	4,277	N/A	US$	4,277
	Sun Life Finl Global Fdg II Lp	—	"		1,500	US$	1,489	N/A	US$	1,489
	Suncorp Metway Ltd.	—	"		2,000	US$	2,001	N/A	US$	2,001
	Suncorp Metway Ltd.	—	"		8,800	US$	9,011	N/A	US$	9,011
	Svenska Handelsbanken AB	—	"		2,200	US$	2,263	N/A	US$	2,263
	Swedbank AB	—	"		2,000	US$	1,995	N/A	US$	1,995
	Swedbank Foreningssparbanken A	—	"		1,500	US$	1,542	N/A	US$	1,542
	Teva Pharma Fin III LLC	—	"		4,000	US$	4,015	N/A	US$	4,015
	Tiaa Global Mkts Inc. Mtn	—	"		1,500	US$	1,651	N/A	US$	1,651
	Ubs Ag Stamford CT	—	"		800	US$	806	N/A	US$	806
	US Central Federal Cred	—	"		10,200	US$	10,287	N/A	US$	10,287
	US Central Federal Cred	—	"		4,000	US$	4,103	N/A	US$	4,103
	Verizon Communications Inc.	—	"		1,500	US$	1,655	N/A	US$	1,655
	Wachovia Corp. New	—	"		1,400	US$	1,394	N/A	US$	1,394
	Wal Mart Stores Inc.	—	"		3,770	US$	4,393	N/A	US$	4,393
	Wells Fargo + Company	—	"		2,000	US$	2,010	N/A	US$	2,010
	Westfield Cap Corp. Ltd.	—	"		500	US$	502	N/A	US$	502
	Westpac Banking Corp.	—	"		2,100	US$	2,110	N/A	US$	2,110
	Westpac Banking Corp.	—	"		4,000	US$	4,006	N/A	US$	4,006
	Westpac Banking Corp.	—	"		2,170	US$	2,173	N/A	US$	2,173
	Wyeth	—	"		3,345	US$	3,703	N/A	US$	3,703
	Aust + Nz Banking Group	—	Held-to-maturity financial assets		20,000	US$	20,000	N/A	US$	20,042
	Commonwealth Bank of Australia	—	"		25,000	US$	25,000	N/A	US$	24,710
	Commonwealth Bank of Australia	—	"		25,000	US$	25,000	N/A	US$	24,929
	JP Morgan Chase + Co.	—	"		35,000	US$	35,084	N/A	US$	35,128
	Nationwide Building Society-UK Government Guarantee	—	"		8,000	US$	8,000	N/A	US$	7,993
	Westpac Banking Corp.	—	"		25,000	US$	25,000	N/A	US$	24,526
	Westpac Banking Corp. 12/12 Frn	—	"		5,000	US$	5,000	N/A	US$	5,006

	Agency bond
	Fannie Mae	—	Available-for-sale financial assets		8,765	US$	8,761	N/A	US$	8,761
	Fannie Mae	—	"		16,104	US$	16,099	N/A	US$	16,099

(Continued)

- 49 -


				September 30, 2010
									Market Value or Net
				Shares/Units		Carrying Value		Percentage of	Asset Value
Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	(In Thousands)		(US$ in Thousands)		Ownership (%)	(US$ in Thousands)		Note
	Fannie Mae	—	Available-for-sale financial assets		4,600	US$	4,602	N/A	US$	4,602
	Fannie Mae	—	"		4,000	US$	4,004	N/A	US$	4,004
	Fannie Mae	—	"		4,000	US$	4,015	N/A	US$	4,015
	Fannie Mae	—	"		5,900	US$	5,942	N/A	US$	5,942
	Fed Hm Ln Pc Pool 1b2830	—	"		1,944	US$	2,047	N/A	US$	2,047
	Fed Hm Ln Pc Pool 1g0115	—	"		2,236	US$	2,318	N/A	US$	2,318
	Fed Hm Ln Pc Pool 1k1210	—	"		1,584	US$	1,647	N/A	US$	1,647
	Fed Hm Ln Pc Pool 780741	—	"		1,898	US$	1,984	N/A	US$	1,984
	Federal Farm Credit Bank	—	"		4,000	US$	3,993	N/A	US$	3,993
	Federal Farm Credit Bank	—	"		5,000	US$	5,022	N/A	US$	5,022
	Federal Farm Credit Bank	—	"		5,000	US$	5,028	N/A	US$	5,028
	Federal Home Ln Bks	—	"		5,000	US$	5,073	N/A	US$	5,073
	Federal Home Ln Mtg Assn	—	"		4,634	US$	4,710	N/A	US$	4,710
	Federal Home Ln Mtg Corp.	—	"		4,085	US$	4,078	N/A	US$	4,078
	Federal Home Ln Mtg Corp.	—	"		1,659	US$	1,730	N/A	US$	1,730
	Federal Home Ln Mtg Corp.	—	"		3,024	US$	3,175	N/A	US$	3,175
	Federal Home Ln Mtg Corp.	—	"		2,381	US$	2,448	N/A	US$	2,448
	Federal Home Ln Mtg Corp.	—	"		2,004	US$	2,082	N/A	US$	2,082
	Federal Home Ln Mtg Corp.	—	"		922	US$	930	N/A	US$	930
	Federal Home Ln Mtg Corp.	—	"		848	US$	854	N/A	US$	854
	Federal Home Ln Mtg Corp.	—	"		1,607	US$	1,665	N/A	US$	1,665
	Federal Home Ln Mtg Corp.	—	"		3,444	US$	3,604	N/A	US$	3,604
	Federal Home Ln Mtg Corp.	—	"		3,279	US$	3,362	N/A	US$	3,362
	Federal Home Ln Mtg Corp. Multi	—	"		1,154	US$	1,157	N/A	US$	1,157
	Federal Home Loan Bank	—	"		10,000	US$	9,998	N/A	US$	9,998
	Federal Home Loan Bank	—	"		5,000	US$	5,011	N/A	US$	5,011
	Federal Home Loan Bank	—	"		8,000	US$	7,996	N/A	US$	7,996
	Federal Home Loan Bank	—	"		8,400	US$	8,393	N/A	US$	8,393
	Federal Home Loan Bank	—	"		1,400	US$	1,398	N/A	US$	1,398
	Federal Home Loan Bank	—	"		6,800	US$	6,823	N/A	US$	6,823
	Federal Home Loan Bank	—	"		8,000	US$	8,050	N/A	US$	8,050
	Federal Home Loan Bank	—	"		3,000	US$	3,002	N/A	US$	3,002
	Federal Home Loan Bank	—	"		5,000	US$	4,998	N/A	US$	4,998
	Federal Home Loan Mtg Corp.	—	"		5,638	US$	5,616	N/A	US$	5,616
	Federal Home Loan Mtg Corp.	—	"		259	US$	260	N/A	US$	260
	Federal Home Loan Mtg Corp.	—	"		1,226	US$	1,241	N/A	US$	1,241
	Federal National Mort Assoc	—	"		922	US$	933	N/A	US$	933
	Federal National Mort Assoc	—	"		97	US$	97	N/A	US$	97
	Federal Natl Mtg Assn	—	"		1,694	US$	1,705	N/A	US$	1,705
	Federal Natl Mtg Assn Gtd	—	"		2,578	US$	2,661	N/A	US$	2,661
	Federal Natl Mtg Assn Gtd Remi	—	"		2,202	US$	2,283	N/A	US$	2,283
	Federal Natl Mtg Assn Gtd Remi	—	"		1,027	US$	1,036	N/A	US$	1,036
	Federal Natl Mtg Assn Mtn	—	"		1,799	US$	1,840	N/A	US$	1,840
	Federal Natl Mtg Assn Remic	—	"		1,486	US$	1,513	N/A	US$	1,513
	Federal Natl Mtge Assn	—	"		1,610	US$	1,705	N/A	US$	1,705
	Fhr 2647 Pb	—	"		3,787	US$	3,872	N/A	US$	3,872
	Fhr 3087 Jb	—	"		1,787	US$	1,866	N/A	US$	1,866
	Fhr 3184 Fa	—	"		4,314	US$	4,305	N/A	US$	4,305
	Fnma Pool 745131	—	"		1,752	US$	1,819	N/A	US$	1,819
	Fnma Pool 745688	—	"		1,514	US$	1,589	N/A	US$	1,589
	Fnma Pool 790772	—	"		1,215	US$	1,256	N/A	US$	1,256
	Fnma Pool 819649	—	"		1,878	US$	1,966	N/A	US$	1,966
	Fnma Pool 829989	—	"		1,637	US$	1,718	N/A	US$	1,718
	Fnma Pool 846233	—	"		1,730	US$	1,803	N/A	US$	1,803

(Continued)

- 50 -


				September 30, 2010
									Market Value or Net
				Shares/Units		Carrying Value		Percentage of	Asset Value
Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	(In Thousands)		(US$ in Thousands)		Ownership (%)	(US$ in Thousands)		Note
	Fnma Pool 870884	—	Available-for-sale financial assets		1,716	US$	1,796	N/A	US$	1,796
	Fnma Pool 879908	—	"		1,486	US$	1,561	N/A	US$	1,561
	Fnma Tba Oct 30 Single Fam	—	"		14,200	US$	14,786	N/A	US$	14,786
	Fnr 2005 47 HA	—	"		2,065	US$	2,168	N/A	US$	2,168
	Fnr 2006 60 CO	—	"		3,705	US$	3,689	N/A	US$	3,689
	Fnr 2006 60 CO	—	"		1,510	US$	1,536	N/A	US$	1,536
	Fnr 2009 70 NT	—	"		2,074	US$	2,185	N/A	US$	2,185
	Freddie Mac	—	"		10,420	US$	10,409	N/A	US$	10,409
	Freddie Mac	—	"		4,500	US$	4,495	N/A	US$	4,495
	Freddie Mac	—	"		4,500	US$	4,511	N/A	US$	4,511
	Freddie Mac	—	"		5,750	US$	5,785	N/A	US$	5,785
	Freddie Mac	—	"		7,855	US$	7,873	N/A	US$	7,873
	Freddie Mac	—	"		4,300	US$	4,324	N/A	US$	4,324
	Freddie Mac	—	"		4,010	US$	4,027	N/A	US$	4,027
	Gnma II Pool 082431	—	"		1,934	US$	1,991	N/A	US$	1,991
	Gnr 2008 9 SA	—	"		2,442	US$	2,451	N/A	US$	2,451
	Gnr 2009 45 AB	—	"		5,309	US$	5,476	N/A	US$	5,476

	Government bond
	US Treasury N/B	—	Available-for-sale financial assets		44,700	US$	45,336	N/A	US$	45,336
	US Treasury N/B	—	"		1,660	US$	1,691	N/A	US$	1,691
	Wi Treasury Sec	—	"		5,000	US$	5,016	N/A	US$	5,016
	Societe De Financement De Lec	—	Held-to-maturity financial assets		15,000	US$	15,000	N/A	US$	15,026

	Money market fund
	Ssga Cash Mgmt Global Offshore	—	Available-for-sale financial assets		1,838	US$	1,838	N/A	US$	1,838

(Concluded)

- 51 -

TABLE 2

Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries

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, 2010

(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)


					Beginning Balance				Acquisition				Disposal (Note 2)
							Amount		Shares/Units		Amount				Amount		Carrying Value		Gain (Loss) or			Ending Balance (Note 3)
	Marketable Securities	Financial Statement	Counter-	Nature of	Shares/Units		(US$ in		(In Thousands)		(US$ in		Shares/Units		(US$ in		(US$ in		Disposal (US$			Shares/Units		Amount (US$
Company Name	Type and Name	Account	party	Relationship	(In Thousands)		Thousands)		(Note 1)		Thousands)		(In Thousands)		Thousands)		Thousands)		in Thousands)			(In Thousands)		in Thousands)
TSMC	Stock
	Motech	Investments accounted for using equity method	—	Investee accounted for using equity method		—	$	—		75,316	$	6,228,661		—	$	—	$	—	$	—			76,069	$	6,533,432

	Capital
	VTAF III	Investments accounted for using equity method	—	Investee accounted for using equity method		—		1,309,615		—		1,786,701		—		—		—		—			—		2,852,802

VTAF III	Preferred stock
	Stion Corp.	Financial assets carried at cost	—	—		—		—		7,347	US$	50,000		—		—		—		—			7,347	US$	50,000

GUC	Open-end mutual fund
	Jih Sun Bond Fund	Available-for-sale financial assets	Jih Sun Investment Trust Co., Ltd.	—		5,668		80,008		7,072		100,000		12,740		180,192		180,000		192			—		—
	PCA Well Pool Fund	"	PCA Securities Investment Trust Co., Ltd.	—		—		—		7,692		100,000		7,692		100,075		100,000		75			—		—

TSMC Global	Corporate bond
	Allstate Life Gbl Fdg Secd	Available-for-sale financial assets	—	—		—		—		4,430	US$	4,834		—		—		—		—			4,430	US$	4,896
	American Honda Fin Corp. Mtn	"	—	—		—		—		4,000	US$	3,985		—		—		—		—			4,000	US$	3,995
	Anz National Intl Ltd.	"	—	—		—		—		3,500	US$	3,515		—		—		—		—			3,500	US$	3,549
	AT+T Wireless	"	—	—		—		—		3,500	US$	3,979		—		—		—		—			3,500	US$	3,888
	Bank of America	"	—	—		—		—		2,900	US$	3,121		1,000	US$	1,077	US$	1,076	US$	1			1,900	US$	2,026
	Bank of America Corp. Fdic Gtd	"	—	—		—		—		3,400	US$	3,548		3,400	US$	3,539	US$	3,548	US$	(9	)		—		—
	Bank of Nova Scotia	"	—	—		—		—		5,000	US$	5,000		—		—		—		—			5,000	US$	4,991
	Bank of Scotland Plc	"	—	—		—		—		4,000	US$	3,984		—		—		—		—			4,000	US$	3,998
	Barclays Bank Plc	"	—	—		—		—		12,000	US$	12,035		—		—		—		—			12,000	US$	11,996
	Barclays Bank Plc NY	"	—	—		—		—		5,000	US$	5,000		—		—		—		—			5,000	US$	4,999
	Bbva US Senior SA Uniper	"	—	—		—		—		4,745	US$	4,744		2,100	US$	2,084	US$	2,100	US$	(16	)		2,645	US$	2,631
	Berkshire Hathaway Inc. Del	"	—	—		—		—		3,500	US$	3,500		—		—		—		—			3,500	US$	3,517
	Boeing Cap Corp.	"	—	—		—		—		2,925	US$	3,235		—		—		—		—			2,925	US$	3,238
	Bp Capital Markets Plc	"	—	—		—		—		3,900	US$	3,969		—		—		—		—			3,900	US$	3,976
	Cie Financement Foncier	"	—	—		—		—		4,000	US$	4,029		—		—		—		—			4,000	US$	4,016
	Citibank NA	"	—	—		—		—		4,020	US$	4,021		4,020	US$	4,016	US$	4,021	US$	(5	)		—		—
	Citibank NA	"	—	—		5,000	US$	4,996		—		—		5,000	US$	5,023	US$	4,995	US$	28			—		—
	Citibank NA	"	—	—		—		—		10,000	US$	10,094		10,000	US$	10,104	US$	10,094	US$	10			—		—
	Citigroup Funding Inc.	"	—	—		—		—		16,000	US$	16,262		—		—		—		—			16,000	US$	16,404
	Citigroup Inc.	"	—	—		—		—		4,165	US$	4,167		4,165	US$	4,167	US$	4,167		—			—		—
	Citigroup Inc.	"	—	—		—		—		4,800	US$	4,768		4,800	US$	4,761	US$	4,768	US$	(7	)		—		—
	Citigroup Inc.	"	—	—		—		—		5,000	US$	5,360		—		—		—		—			5,000	US$	5,524
	Countrywide Finl Corp.	"	—	—		—		—		4,000	US$	4,291		—		—		—		—			4,000	US$	4,249
	Dexia Credit Local	"	—	—		—		—		6,000	US$	6,000		—		—		—		—			6,000	US$	5,970

(Continued)

- 52 -


					Beginning Balance				Acquisition				Disposal (Note 2)									Ending Balance (Note 3)
									Shares/Units						Amount		Carrying Value		Gain (Loss) or
					Shares/Units		Amount		(In Thousands)		Amount		Shares/Units		(US$ in		(US$ in		Disposal (US$			Shares/Units		Amount (US$
Company Name	Marketable Securities Type and Name	Financial Statement Account	Counter-party	Nature of Relationship	(In Thousands)		(US$ in Thousands)		(Note 1)		(US$ in Thousands)		(In Thousands)		Thousands)		Thousands)		in Thousands)			(In Thousands)		in Thousands)
	Dexia Credit Local	Available-for-sale financial assets	—	—		—	US$	—		4,000	US$	4,000		—	US$	—	US$	—	US$	—			4,000	US$	3,983
	Dexia Credit Local S.A	"	—	—		—		—		4,000	US$	4,000		—		—		—		—			4,000	US$	3,991
	Dexia Credit Local SA NY	"	—	—		—		—		5,000	US$	5,000		—		—		—		—			5,000	US$	4,982
	General Elec Cap Corp.	"	—	—		—		—		4,000	US$	4,117		—		—		—		—			4,000	US$	4,127
	Georgia Pwr Co.	"	—	—		—		—		6,000	US$	6,000		—		—		—		—			6,000	US$	6,018
	Goldman Sachs Group Incser 2	"	—	—		3,000	US$	3,012		—		—		3,000	US$	3,012	US$	3,016	US$	(4	)		—		—
	Household Fin Corp.	"	—	—		—		—		4,330	US$	4,781		—		—		—		—			4,330	US$	4,736
	HSBC Bank Plc	"	—	—		—		—		3,400	US$	3,407		—		—		—		—			3,400	US$	3,413
	HSBC Fin Corp.	"	—	—		—		—		2,900	US$	3,142		—		—		—		—			2,900	US$	3,082
	IBM Corp.	"	—	—		1,800	US$	1,796		4,300	US$	4,302		3,800	US$	3,804	US$	3,801	US$	3			2,300	US$	2,303
	IBM Corp.	"	—	—		3,000	US$	3,027		—		—		3,000	US$	3,020	US$	3,029	US$	(9	)		—		—
	IBM Corp.	"	—	—		—		—		6,800	US$	6,772		—		—		—		—			6,800	US$	6,823
	Intl Bk Recon + Develop	"	—	—		—		—		5,000	US$	5,014		—		—		—		—			5,000	US$	5,006
	John Deer Capital Corp. Fdic GT	"	—	—		—		—		3,500	US$	3,634		—		—		—		—			3,500	US$	3,638
	JP Morgan Chase + Co.	"	—	—		—		—		5,000	US$	5,000		—		—		—		—			5,000	US$	5,019
	JP Morgan Chase + Co. Fdic Gtd Tlg	"	—	—		3,000	US$	3,030		—		—		3,000	US$	3,028	US$	3,030	US$	(2	)		—		—
	Landwirtsch Rentenbank	"	—	—		—		—		3,800	US$	3,800		3,800	US$	3,801	US$	3,800	US$	1			—		—
	Lloyds Tsb Bank Plc Ser 144A	"	—	—		—		—		4,850	US$	4,895		—		—		—		—			4,850	US$	4,864
	Macquarie Bk Ltd. Sr	"	—	—		—		—		3,900	US$	3,984		—		—		—		—			3,900	US$	3,999
	Massmutual Global Fdg II Mediu	"	—	—		—		—		4,000	US$	3,926		—		—		—		—			4,000	US$	3,951
	Merck + Co. Inc.	"	—	—		—		—		4,000	US$	4,066		—		—		—		—			4,000	US$	4,046
	Merrill Lynch + Co. Inc.	"	—	—		—		—		4,691	US$	4,603		—		—		—		—			4,691	US$	4,620
	Met Life Glob Funding I	"	—	—		—		—		5,000	US$	5,004		5,000	US$	5,003	US$	5,004	US$	(1	)		—		—
	Met Life Glob Funding I	"	—	—		2,100	US$	2,142		2,575	US$	2,623		4,675	US$	4,757	US$	4,755	US$	2			—		—
	Metlife Inc.	"	—	—		—		—		6,500	US$	6,527		—		—		—		—			6,500	US$	6,548
	Morgan Stanley Dean Witter	"	—	—		—		—		8,000	US$	8,796		—		—		—		—			8,000	US$	8,603
	Occidental Pete Corp.	"	—	—		—		—		3,200	US$	3,752		—		—		—		—			3,200	US$	3,764
	Pepsico Inc.	"	—	—		—		—		3,000	US$	3,000		—		—		—		—			3,000	US$	3,002
	Rabobank Nederland	"	—	—		—		—		5,000	US$	4,997		—		—		—		—			5,000	US$	5,000
	Regions Bank Fdic Gtd Tlgp	"	—	—		—		—		10,000	US$	10,372		8,300	US$	8,599	US$	8,608	US$	(9	)		1,700	US$	1,755
	Royal Bk of Scotland Plc	"	—	—		—		—		4,000	US$	4,015		—		—		—		—			4,000	US$	3,997
	Shell International Fin	"	—	—		—		—		4,515	US$	4,528		—		—		—		—			4,515	US$	4,535
	State Str Corp.	"	—	—		1,940	US$	1,920		5,080	US$	5,065		600	US$	597	US$	596	US$	1			6,420	US$	6,417
	State Street Corp.	"	—	—		—		—		5,500	US$	5,585		5,500	US$	5,559	US$	5,585	US$	(26	)		—		—
	Sun Life Finl Global	"	—	—		—		—		4,400	US$	4,304		—		—		—		—			4,400	US$	4,277
	Suncorp Metway Ltd.	"	—	—		5,000	US$	5,170		3,800	US$	3,933		—		—		—		—			8,800	US$	9,011
	Teva Pharma Fin III LLC	"	—	—		—		—		4,000	US$	4,000		—		—		—		—			4,000	US$	4,015
	US Central Federal Cred	"	—	—		4,800	US$	4,799		8,000	US$	8,074		2,600	US$	2,622	US$	2,600	US$	22			10,200	US$	10,287
	US Central Federal Cred	"	—	—		—		—		4,000	US$	4,093		—		—		—		—			4,000	US$	4,103
	Wachovia Corp. New	"	—	—		4,000	US$	4,246		—		—		4,000	US$	4,205	US$	4,239	US$	(34	)		—		—
	Wal Mart Stores Inc.	"	—	—		—		—		3,770	US$	4,383		—		—		—		—			3,770	US$	4,393
	Westpac Banking Corp.	"	—	—		—		—		4,000	US$	4,044		—		—		—		—			4,000	US$	4,006
	Wyeth	"	—	—		—		—		3,345	US$	3,699		—		—		—		—			3,345	US$	3,703
	Aust + Nz Banking Group	Held-to-maturity financial assets	—	—		—		—		20,000	US$	20,000		—		—		—		—			20,000	US$	20,000
	Commonwealth Bank of Australia	"	—	—		—		—		25,000	US$	25,000		—		—		—		—			25,000	US$	25,000
	Commonwealth Bank of Australia	"	—	—		—		—		25,000	US$	25,000		—		—		—		—			25,000	US$	25,000
	Jpmorgan Chase + Co.	"	—	—		—		—		35,000	US$	35,103		—		—		—		—			35,000	US$	35,084
	Westpac Banking Corp.	"	—	—		—		—		25,000	US$	25,000		—		—		—		—			25,000	US$	25,000
	Agency bond
	Fannie Mae	Available-for-sale financial assets	—	—		—		—		8,000	US$	7,995		8,000	US$	7,999	US$	7,995	US$	4			—		—

(Continued)

- 53 -


					Beginning Balance				Acquisition				Disposal (Note 2)									Ending Balance (Note 3)
									Shares/Units						Amount		Carrying Value		Gain (Loss) or
					Shares/Units		Amount		(In Thousands)		Amount		Shares/Units		(US$ in		(US$ in		Disposal (US$			Shares/Units		Amount (US$
Company Name	Marketable Securities Type and Name	Financial Statement Account	Counter-party	Nature of Relationship	(In Thousands)		(US$ in Thousands)		(Note 1)		(US$ in Thousands)		(In Thousands)		Thousands)		Thousands)		in Thousands)			(In Thousands)		in Thousands)
	Fannie Mae	Available-for-sale financial assets	—	—		—	US$	—		8,765	US$	8,760		—	US$	—	US$	—	US$	—			8,765	US$	8,761
	Fannie Mae	"	—	—		—		—		16,104	US$	16,097		—		—		—		—			16,104	US$	16,099
	Fannie Mae	"	—	—		—		—		4,600	US$	4,598		—		—		—		—			4,600	US$	4,602
	Fannie Mae	"	—	—		—		—		3,770	US$	3,770		—		—		—		—			—		—
	Fannie Mae	"	—	—		—		—		4,000	US$	4,014		—		—		—		—			—		—
	Fannie Mae	"	—	—		—		—		4,000	US$	4,007		—		—		—		—			4,000	US$	4,004
	Fannie Mae	"	—	—		—		—		4,000	US$	4,011		—		—		—		—			4,000	US$	4,015
	Fannie Mae	"	—	—		—		—		5,900	US$	5,975		—		—		—		—			5,900	US$	5,942
	Federal Farm Credit Bank	"	—	—		—		—		4,020	US$	4,017		4,020	US$	4,023	US$	4,017	US$	6			—		—
	Federal Farm Credit Bank	"	—	—		—		—		4,000	US$	3,995		—		—		—		—			4,000	US$	3,993
	Federal Farm Credit Bank	"	—	—		—		—		5,000	US$	4,997		—		—		—		—			5,000	US$	5,022
	Federal Farm Credit Bank	"	—	—		—		—		3,100	US$	3,100		3,100	US$	3,100	US$	3,100		—			—		—
	Federal Farm Credit Bank	"	—	—		—		—		5,000	US$	5,049		—		—		—		—			5,000	US$	5,028
	Federal Home Ln Bank	"	—	—		11,000	US$	11,028		—		—		11,000	US$	11,049	US$	11,038	US$	11			—		—
	Federal Home Ln Bks	"	—	—		—		—		5,000	US$	5,098		—		—		—		—			5,000	US$	5,073
	Fed Home Ln Mtg Assn	"	—	—		—		—		4,634	US$	4,726		—		—		—		—			4,634	US$	4,710
	Fed Home Ln Mtg Corp.	"	—	—		1,350	US$	1,352		2,300	US$	2,304		3,650	US$	3,653	US$	3,656	US$	(3	)		—		—
	Fed Home Ln Mtg Corp.	"	—	—		—		—		4,289	US$	4,282		4,289	US$	4,292	US$	4,282	US$	10			—		—
	Fed Home Ln Mtg Corp.	"	—	—		—		—		4,717	US$	4,719		—		—		—		—			4,085	US$	4,078
	Fed Home Ln Mtg Corp.	"	—	—		—		—		3,840	US$	4,027		—		—		—		—			3,024	US$	3,175
	Fed Home Ln Mtg Corp.	"	—	—		—		—		3,720	US$	3,953		—		—		—		—			3,444	US$	3,604
	Fed Home Ln Mtg Corp.	"	—	—		—		—		4,121	US$	4,261		—		—		—		—			3,279	US$	3,362
	Fed Home Ln Mtg Corp. Multi	"	—	—		—		—		4,197	US$	4,261		—		—		—		—			1,154	US$	1,157
	Federal Home Loan Bank	"	—	—		—		—		10,000	US$	9,985		—		—		—		—			10,000	US$	9,998
	Federal Home Loan Bank	"	—	—		—		—		8,000	US$	7,996		—		—		—		—			8,000	US$	7,996
	Federal Home Loan Bank	"	—	—		—		—		5,000	US$	4,996		5,000	US$	5,001	US$	4,996	US$	5			—		—
	Federal Home Loan Bank	"	—	—		—		—		4,000	US$	3,999		4,000	US$	3,999	US$	3,999		—			—		—
	Federal Home Loan Bank	"	—	—		10,000	US$	9,987		—		—		10,000	US$	10,007	US$	9,996	US$	11			—		—
	Federal Home Loan Bank	"	—	—		—		—		10,000	US$	9,998		10,000	US$	10,010	US$	9,998	US$	12			—		—
	Federal Home Loan Bank	"	—	—		8,000	US$	7,992		—		—		8,000	US$	8,009	US$	8,002	US$	7			—		—
	Federal Home Loan Bank	"	—	—		—		—		6,050	US$	6,050		6,050	US$	6,060	US$	6,050	US$	10			—		—
	Federal Home Loan Bank	"	—	—		—		—		5,000	US$	5,009		—		—		—		—			5,000	US$	5,011
	Federal Home Loan Bank	"	—	—		—		—		6,800	US$	6,811		—		—		—		—			6,800	US$	6,823
	Federal Home Loan Bank	"	—	—		—		—		8,000	US$	7,990		—		—		—		—			8,000	US$	8,050
	Federal Home Loan Bank	"	—	—		10,000	US$	10,012		—		—		10,000	US$	10,047	US$	10,035	US$	12			—		—
	Federal Home Loan Bank	"	—	—		4,700	US$	4,715		—		—		4,700	US$	4,716	US$	4,723	US$	(7	)		—		—
	Federal Home Loan Bank	"	—	—		11,200	US$	11,186		1,500	US$	1,498		4,300	US$	4,294	US$	4,299	US$	(5	)		8,400	US$	8,393
	Federal Home Loan Bank	"	—	—		—		—		4,000	US$	4,012		4,000	US$	4,002	US$	4,012	US$	(10	)		—		—
	Federal Home Loan Bank	"	—	—		—		—		8,000	US$	8,082		8,000	US$	8,057	US$	8,082	US$	(25	)		—		—
	Federal Home Loan Mortg	"	—	—		—		—		8,000	US$	8,193		8,000	US$	8,123	US$	8,192	US$	(69	)		—		—
	Federal Home Loan Mtg Corp.	"	—	—		—		—		6,397	US$	6,394		—		—		—		—			5,638	US$	5,616
	Federal Natl Mtg Assn	"	—	—		4,000	US$	4,228		—		—		4,000	US$	4,205	US$	4,261	US$	(56	)		—		—
	Federal Natl Mtg Assn	"	—	—		—		—		3,426	US$	3,494		—		—		—		—			1,694	US$	1,705
	Federal Natl Mtg Assn Gtd	"	—	—		—		—		3,343	US$	3,466		—		—		—		—			2,578	US$	2,661
	Fhr 2647 Pb	"	—	—		—		—		4,000	US$	4,149		—		—		—		—			3,787	US$	3,872
	Fhr 3184 Fa	"	—	—		—		—		4,686	US$	4,681		—		—		—		—			4,314	US$	4,305
	Fnma Pool 745131	"	—	—		—		—		3,123	US$	3,261		—		—		—		—			1,752	US$	1,819
	Fnma Pool 995672	"	—	—		—		—		3,000	US$	3,141		3,000	US$	3,134	US$	3,141	US$	(7	)		—		—
	Fnma Pool AD9843	"	—	—		—		—		3,252	US$	3,405		3,252	US$	3,397	US$	3,405	US$	(8	)		—		—
	Fnma Tba Oct 30 Single Fam	"	—	—		—		—		14,200	US$	14,790		—		—		—		—			14,200	US$	14,786
	Fnr 2006 60 CO	"	—	—		—		—		4,092	US$	4,090		—		—		—		—			3,705	US$	3,689
	Freddie Mac	"	—	—		—		—		10,420	US$	10,412		—		—		—		—			10,420	US$	10,409

(Continued)

- 54 -


					Beginning Balance				Acquisition				Disposal (Note 2)									Ending Balance (Note 3)
									Shares/Units						Amount		Carrying Value		Gain (Loss) or
					Shares/Units		Amount		(In Thousands)		Amount		Shares/Units		(US$ in		(US$ in		Disposal (US$			Shares/Units		Amount (US$
Company Name	Marketable Securities Type and Name	Financial Statement Account	Counter-party	Nature of Relationship	(In Thousands)		(US$ in Thousands)		(Note 1)		(US$ in Thousands)		(In Thousands)		Thousands)		Thousands)		in Thousands)			(In Thousands)		in Thousands)
	Freddie Mac	Available-for-sale financial assets	—	—		—	US$	—		8,000	US$	8,002		8,000	US$	7,997	US$	8,001	US$	(4	)		—	US$	—
	Freddie Mac	"	—	—		—		—		7,000	US$	6,994		7,000	US$	6,995	US$	6,994	US$	1			—		—
	Freddie Mac	"	—	—		—		—		4,500	US$	4,507		—		—		—		—			4,500	US$	4,511
	Freddie Mac	"	—	—		—		—		5,750	US$	5,771		—		—		—		—			5,750	US$	5,785
	Freddie Mac	"	—	—		—		—		7,855	US$	7,869		—		—		—		—			7,855	US$	7,873
	Freddie Mac	"	—	—		—		—		4,300	US$	4,308		—		—		—		—			4,300	US$	4,324
	Freddie Mac	"	—	—		—		—		4,010	US$	4,024		—		—		—		—			4,010	US$	4,027
	Gnr 2009 45 AB	"	—	—		—		—		7,004	US$	7,305		—		—		—		—			5,309	US$	5,476

	Government bond
	United States Treas Nts	Available-for-sale financial assets	—	—		—				- 24,000	US$	24,116		24,000	US$	24,105	US$	24,116	US$	(11	)		—		—
	United States Treas Nts	"	—	—		—		—		45,070	US$	45,309		45,070	US$	45,258	US$	45,309	US$	(51	)		—		—
	US Treasury N/B	"	—	—		—		—		43,900	US$	43,832		43,900	US$	44,134	US$	43,831	US$	303			—		—
	US Treasury N/B	"	—	—		—		—		53,000	US$	53,069		53,000	US$	53,316	US$	53,069	US$	247			—		—
	US Treasury N/B	"	—	—		—		—		16,800	US$	16,889		16,800	US$	16,897	US$	16,889	US$	8			—		—
	US Treasury N/B	"	—	—		—		—		49,700	US$	49,742		5,000	US$	5,046	US$	5,003	US$	43			44,700	US$	45,336
	US Treasury N/B	"	—	—		21,400	US$	21,394		—		—		21,400	US$	21,487	US$	21,416	US$	71			—		—
	US Treasury Nts	"	—	—		37,700	US$	39,012		—		—		37,700	US$	38,784	US$	39,346	US$	(562	)		—		—
	US Treasury Sec	"	—	—		—		—		8,000	US$	8,040		8,000	US$	8,028	US$	8,040	US$	(12	)		—		—
	US Treasury Sec	"	—	—		—		—		10,000	US$	10,040		10,000	US$	10,045	US$	10,040	US$	5			—		—
	Wi Treasury Sec	"	—	—		—		—		4,400	US$	4,380		4,400	US$	4,464	US$	4,380	US$	84			—		—
	Wi Treasury Sec	"	—	—		—		—		5,000	US$	5,009		—		—		—		—			5,000	US$	5,016

	Money market fund
	Ssga Cash Mgmt Global Offshore	Available-for-sale financial assets	—	—		8,858	US$	8,858		290,371	US$	290,371		297,391	US$	297,391	US$	297,391		—			1,838	US$	1,838
	Corporate issued note
	Barclays U.S. Fdg LLC	Available-for-sale financial assets	—	—		4,500	US$	4,489		—		—		4,500	US$	4,489	US$	4,489		—			—		—


Note 1:		The shares/units and amount of marketable securities acquired do not include stock dividends from investees.

Note 2:		The data for marketable securities disposed exclude bonds maturities and redemption by the issuer.

Note 3:		The ending balance includes the amortization of premium/discount on bonds investments, unrealized valuation gains/ losses on financial assets, translation adjustments, equity in earnings/losses of equity method investees and other adjustments to long-term investment using equity method.

(Concluded)

- 55 -

TABLE 3

Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries

ACQUISITION OF INDIVIDUAL REAL ESTATE PROPERTIES AT COSTS OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010

(Amounts in Thousands of New Taiwan Dollars)

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

Relationships

Owner

Relationships

Transfer Date

Amount

Reference

Acquisition

Terms

TSMC

Fab

January 28, 2010 to

Manufacturing

September 2, 2010

802,489

By the construction progress

China Steel Structure Co., Ltd.

—

N/A

Public bidding

purpose

None

Fab

January 28, 2010 to

Manufacturing

September 26, 2010

1,217,815

By the construction progress

Fu Tsu Construction Co., Ltd.

—

N/A

Public bidding

purpose

None

Fab

February 19, 2010 to

Manufacturing

September 26, 2010

1,540,064

By the construction progress

Da Cin Constructure Co., Ltd.

—

N/A

Public bidding

purpose

None

Fab

February 25, 2010 to

Manufacturing

September 28, 2010

223,771

By the construction progress

Tasa Construction Corporation

—

N/A

Public bidding

purpose

None

- 56 -

TABLE 4

Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010

(Amounts in Thousands of New Taiwan Dollars)


										Notes/Accounts Payable or
			Transaction Details					Abnormal Transaction		Receivable
			Purchases/			% to		Unit Price	Payment Terms				% to
Company Name	Related Party	Nature of Relationships	Sales	Amount		Total	Payment Terms	(Note)	(Note)	Ending Balance			Total	Note
TSMC	TSMC North America	Subsidiary	Sales	$	160,415,902	52	Net 30 days after invoice date	—	—	$	24,574,148		47
	GUC	Investee with a controlling financial interest	Sales		1,893,205	1	Net 30 days after monthly closing	—	—		644,287		1
	VIS	Investee accounted for using equity method	Sales		189,984	—	Net 30 days after monthly closing	—	—		—		—
	TSMC China	Subsidiary	Purchases		6,206,526	17	Net 30 days after monthly closing	—	—		(873,981	)	7
	WaferTech	Indirect subsidiary	Purchases		5,958,529	17	Net 30 days after monthly closing	—	—		(671,004	)	5
	VIS	Investee accounted for using equity method	Purchases		3,643,305	10	Net 30 days after monthly closing	—	—		(1,122,687	)	9
	SSMC	Investee accounted for using equity method	Purchases		3,383,596	10	Net 30 days after monthly closing	—	—		(434,236	)	3
GUC	TSMC North America	Same parent company	Purchases		589,175	18	Net 30 days after invoice date/net 30 days after monthly closing	—	—		(75,901	)	8
Xintec	OmniVision	Parent company of director (represented for Xintec)	Sales		1,962,883	63	Net 30 days after monthly closing	—	—		256,872		53


Note:		The sales prices and payment terms to related parties were not significantly different from those of sales to third parties. For other related party transactions, prices and terms were determined in accordance with mutual agreements.

- 57 -

TABLE 5

Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
SEPTEMBER 30, 2010
(Amounts in Thousands of New Taiwan Dollars)


						Turnover Days		Overdue				Amounts Received in		Allowance for
Company Name	Related Party	Nature of Relationships	Ending Balance			(Note1)		Amounts		Action Taken		Subsequent Period		Bad Debts
TSMC	TSMC North America	Subsidiary	$	24,600,032			40	$	5,674,665		—	$	8,233,250	$	—
	GUC	Investee with a controlling financial interest		644,287			71		1,120		—		295,170		—
	TSMC China	Subsidiary		383,334	(Note 2)				—		—		—		—
	VIS	Investee accounted for using equity method		150,589	(Note 2)				366		—		19,644		—

Xintec	OmniVision	Parent company of director (represented for Xintec)		256,872			46		—		—		—		—

Note 1: The calculation of turnover days excludes other receivables from related parties.

Note 2: The ending balance primarily consisted of other receivables, which is not applicable for the calculation of turnover days.

- 58 -

TABLE 6

Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries


																		Equity in the
				Original Investment Amount				Balance as of September 30, 2010						Net Income				Earnings
				September 30,		December 31,						Carrying		(Losses) of the				(Losses)
				2010		2009						Value		Investee				(Note 1)
				(Foreign		(Foreign						(Foreign		(Foreign				(Foreign
				Currencies in		Currencies in		Shares (In		Percentage of		Currencies in		Currencies in				Currencies in
Investor Company	Investee Company	Location	Main Businesses and Products	Thousands)		Thousands)		Thousands)		Ownership		Thousands)		Thousands)				Thousands)			Note
TSMC	TSMC Global	Tortola, British Virgin Islands	Investment activities	$	42,327,245	$	42,327,245		1		100	$	44,892,711	$	405,510			$	405,510		Subsidiary
	TSMC Partners	Tortola, British Virgin Islands	Investing in companies involved in the design, manufacture, and other related business in the semiconductor industry.		31,456,130		31,456,130		988,268		100		33,943,317		1,600,796				1,600,796		Subsidiary
	VIS	Hsin-Chu, Taiwan	Research, design, development, manufacture, packaging, testing and sale of memory integrated circuits, LSI, VLSI and related parts		13,232,288		13,232,288		628,223		38		9,424,817		1,639,886				321,621		Investee accounted for using equity method
	SSMC	Singapore	Fabrication and supply of integrated circuits		5,120,028		5,120,028		314		39		6,890,171		2,632,321				873,329		Investee accounted for using equity method
	Motech	Taipei, Taiwan	Manufacturing and sales of solar cells, crystalline silicon solar cell, and test and measurement instruments and design and construction of solar power systems		6,228,661		—		76,069		20		6,533,432		3,001,229				327,526		Investee accounted for using equity method
	TSMC China	Shanghai, China	Manufacturing and selling of integrated circuits at the order of and pursuant to product design specifications provided by customers		12,180,367		12,180,367		—		100		3,654,158		705,707				695,070		Subsidiary
	VTAF III	Cayman Islands	Investing in new start-up technology companies		3,489,864		1,703,163		—		99		2,852,802		(168,764	)			(166,879	)	Subsidiary
	TSMC North America	San Jose, California, U.S.A.	Selling and marketing of integrated circuits and semiconductor devices		333,718		333,718		11,000		100		2,827,009		165,780				165,780		Subsidiary
	Xintec	Taoyuan, Taiwan	Wafer level chip size packaging service		1,357,890		1,357,890		93,081		41		1,618,701		423,470				154,146		Investee with a controlling financial interest
	VTAF II	Cayman Islands	Investing in new start-up technology companies		1,166,470		1,093,943		—		98		1,093,417		101,532				99,501		Subsidiary (Note 3)
	GUC	Hsin-Chu, Taiwan	Researching, developing, manufacturing, testing and marketing of integrated circuits		386,568		386,568		46,688		35		1,061,303		452,520				158,146		Investee with a controlling financial interest
	Emerging Alliance	Cayman Islands	Investing in new start-up technology companies		971,785		959,044		—		99		320,426		8,981				8,936		Subsidiary (Note 3)
	TSMC Europe	Amsterdam, the Netherlands	Marketing and engineering supporting activities		15,749		15,749		—		100		182,022		34,237				34,237		Subsidiary (Note 3)
	TSMC Japan	Yokohama, Japan	Marketing activities		83,760		83,760		6		100		150,896		4,036				4,036		Subsidiary (Note 3)
	TSMC Solar Europe	Amsterdam, the Netherlands	Engaged in investing activities of solar related business		25,350		—		—		100		25,638		—				—		Subsidiary
	TSMC Solar NA	Delaware, U.S.A.	Engaged in selling and marketing of solar related products		31,330		—		1		100		24,717		(6,733	)			(6,733	)	Subsidiary
	TSMC Korea	Seoul, Korea	Customer service and technical supporting activities		13,656		13,656		80		100		20,559		2,040				2,040		Subsidiary (Note 3)
	TSMC Lighting NA	Delaware, U.S.A.	Engaged in selling and marketing of LED related products		3,133		—		1		100		3,133		—				—		Subsidiary

TSMC Partners	TSMC Development	Delaware, U.S.A.	Investment activities	US$	0.001	US$	0.001		1		100	US$	386,744	US$	46,357		Note 2				Subsidiary
	VisEra Holding Company	Cayman Islands	Investing in companies involved in the design, manufacturing, and other related businesses in the semiconductor industry	US$	43,000	US$	43,000		43,000		49	US$	77,292	US$	9,320		Note 2				Investee accounted for using equity method
	ISDF	Cayman Islands	Investing in new start-up technology companies	US$	7,680	US$	7,680		7,680		97	US$	24,529	US$	2,806		Note 2				Subsidiary
	ISDF II	Cayman Islands	Investing in new start-up technology companies	US$	21,415	US$	21,415		21,415		97	US$	17,413	US$	2,903		Note 2				Subsidiary
	TSMC Technology	Delaware, U.S.A.	Engineering support activities	US$	0.001	US$	0.001		1		100	US$	9,677	US$	607		Note 2				Subsidiary (Note 3)
	TSMC Canada	Ontario, Canada	Engineering support activities	US$	2,300	US$	2,300		2,300		100	US$	3,543	US$	294		Note 2				Subsidiary (Note 3)

(Continued)

- 59 -

Original Investment Amount

Balance as of September 30, 2010

Net Income

Equity in the

September 30,

December 31,

Carrying

(Losses) of the

Earnings

2010

2009

Value

Investee

(Losses) (Note 1)

(Foreign

Currencies in

Shares (In

Percentage of

Currencies in

Investor Company

Investee Company

Location

Main Businesses and Products

Thousands)

Ownership

Thousands)

Note

Mcube Inc. (Common Stock)

Delaware, U.S.A.

Research, development, and sale of micro-semiconductor device

US$

800

US$

800

5,333

US$

—

US$

(4,509

)

Note 2

Investee accounted for using
equity method (Note 3)

Mcube Inc. (Preferred Stock)

Delaware, U.S.A.

Research, development, and sale of micro-semiconductor device

US$

1,000

US$

1,000

US$

214

US$

(4,509

)

Note 2

Investee accounted for using
equity method (Note 3)

TSMC Development

WaferTech

Washington, U.S.A.

Manufacturing, selling, testing and computer-aided designing of integrated circuits and other semiconductor devices

US$

330,000

US$

330,000

293,637

100

US$

200,265

US$

45,832

Note 2

Subsidiary

VTAF III

Mutual-Pak Technology Co., Ltd.

Taipei, Taiwan

Manufacturing and selling of electronic parts and researching, developing, and testing of RFID

US$

3,088

US$

3,088

9,180

US$

1,461

US$

(1,147

)

Note 2

Subsidiary (Note 3)

Aiconn Technology Corp.

Taipei, Taiwan

Wholesaling telecommunication equipments, and manufacturing wired and wireless communication equipments

US$

2,206

US$

1,777

5,623

US$

682

US$

(667

)

Note 2

Investee accounted for using
equity method (Note 3)

Growth Fund

Cayman Islands

Investing in new start-up technology companies

US$

1,650

US$

1,550

—

100

US$

829

US$

(94

)

Note 2

Subsidiary (Note 3)

VTA Holdings

Delaware, U.S.A.

Investing in new start-up technology companies

—

Note 2

Subsidiary (Note 3)

VTAF II

VTA Holdings

Delaware, U.S.A.

Investing in new start-up technology companies

—

Note 2

Subsidiary (Note 3)

GUC

GUC-NA

U.S.A.

Consulting services in main products

US$

1,234

US$

800

100

59,576

8,433

Note 2

Subsidiary

GUC-Japan

Japan

Consulting services in main products

JPY

30,000

JPY

30,000

100

14,969

980

Note 2

Subsidiary (Note 3)

GUC-BVI

British Virgin Islands

Investment activities

US$

550

US$

550

100

9,370

(8,020

)

Note 2

Subsidiary (Note 3)

GUC-Europe

The Netherlands

Consulting services in main products

EUR

100

EUR

100

—

100

4,432

(378

)

Note 2

Subsidiary (Note 3)

GUC-BVI

GUC-Shanghai

Shanghai, China

Consulting services in main products

US$

500

—

100

7,969

(7,983

)

Note 2

Subsidiary (Note 3)

Emerging Alliance

VTA Holdings

Delaware, U.S.A.

Investing in new start-up technology companies

—

Note 2

Subsidiary (Note 3)


Note 1:		Equity in earnings/losses of investees include the effect of unrealized gross profit from affiliates.

Note 2:		The equity in the earnings/losses of the investee company is not reflected herein as such amount is already included in the equity in the earnings/ losses of the investor company.

Note 3:		Equity in earnings/losses was determined based on the unreviewed financial statements.

(Concluded)

- 60 -

TABLE 7

Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries

INFORMATION OF INVESTMENT IN MAINLAND CHINA
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)

Accumulated

Outflow of

Accumulated

Investment from

Inward

Taiwan as of

Investment Flows

Taiwan as of

Carrying Value

Remittance of

Total Amount of

January 1, 2010

Outflow

Inflow

September 30,

Equity in the

as of

Earnings as of

Investor

Investee

Main Businesses and

Paid-in Capital

Method of

(US$ in

2010 (US$ in

Percentage of

Earnings

September 30,

Company

Products

(Thousand)

Investment

Thousand)

Ownership

(Losses)

2010

TSMC

TSMC China

Manufacturing and selling of integrated circuits at the order of and pursuant to product design specifications provided by customers

12,180,367

(Note 1)

12,180,367

—

12,180,367

100

695,070

3,654,158

—

RMB

(3,070,623

)

US$

(371,000

)

US$

(371,000

)

(Note 3)

GUC

GUC-Shanghai

Consulting services in main products

16,160

(Note 2)

—

16,160

—

16,160

100

(7,983

)

7,969

—

US$

(500

)

US$

(500

)

US$

(500

)

(Note 4)


	Accumulated Investment in Mainland China			Investment Amounts Authorized by
	as of September 30, 2010			Investment Commission, MOEA			Upper Limit on Investment
Investor Company	(US$ in Thousand)			(US$ in Thousand)			(US$ in Thousand)
	$	12,180,367		$	12,180,367		$	12,180,367
TSMC	US$	(371,000	)	US$	(371,000	)	US$	(371,000	)

		16,160			16,160			1,819,784
GUC	US$	(500	)	US$	(500	)	(Note 5)


Note 1:		TSMC directly invested US$371,000 thousand in TSMC China.

Note 2:		GUC, TSMC’s investee with a controlling financial interest, indirectly invested in GUC-Shanghai through GUC-BVI.

Note 3:		Amount was recognized based on the reviewed financial statements.

Note 4:		Equity in earnings/losses was determined based on the unreviewed financial statements.

Note 5:		Subject to 60% of net asset value of GUC according to the revised “Guidelines Governing the Approval of Investment or Technical Cooperation in Mainland China” issued by the Investment Commission.

- 61 -

TABLE 8

Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONS
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

For the nine months ended September 30, 2010


				Intercompany Transactions
			Nature of					Percentage of
			Relationship				Terms	Consolidated Total Gross
No.	Company Name	Counter Party	(Note 1)	Financial Statement Items	Amount		(Note 2)	Sales or Total Assets
0	TSMC	TSMC North America	1	Sales	$	160,415,902	—	50%
				Receivables from related parties		24,574,148	—	4%
				Other receivables from related parties		25,884	—	—
				Payables to related parties		48,973	—	—

		TSMC China	1	Sales		2,049	—	—
				Purchases		6,206,526	—	2%
				Marketing expenses — commission		42,140	—	—
				Gain on disposal of property, plant and equipment		38,745	—	—
				Acquisition of property, plant and equipment		66,097	—	—
				Disposal of property, plant and equipment		383,473	—	—
				Technical service income		3,680	—	—
				Other receivables from related parties		383,334	—	—
				Payables to related parties		873,981	—	—
				Deferred debits		20,821	—	—

		TSMC Japan	1	Marketing expenses — commission		196,939	—	—
				Payables to related parties		23,143	—	—

		TSMC Europe	1	Marketing expenses — commission		321,483	—	—
				Research and development expenses		18,989	—	—
				Payables to related parties		44,475	—	—

		TSMC Korea	1	Marketing expenses — commission		14,362	—	—
				Payables to related parties		1,609	—	—

		GUC	1	Sales		1,893,205	—	1%
				Research and development expenses		7,928	—	—
				Receivables from related parties		644,287	—	—
				Payables to related parties		8,601	—	—

		TSMC Technology	1	Research and development expenses		425,892	—	—
				Payables to related parties		84,463	—	—

		WaferTech	1	Sales		7,743	—	—
				Purchases		5,958,529	—	2%
				Gain on disposal of other assets		9,655	—	—
				Acquisition of property, plant and equipment		9,624	—	—
				Disposal of property, plant and equipment		22,024	—	—
				Disposal of other assets		9,655	—	—
				Other receivables from related parties		39,956	—	—
				Payables to related parties		671,004	—	—

		Xintec	1	Manufacturing overhead		214,590	—	—
				Research and development expenses		5,369	—	—
				Disposal of property, plant and equipment		3,841	—	—
				Other receivables from related parties		3,948	—	—
				Payables to related parties		69,583	—	—

		TSMC Canada	1	Research and development expenses		141,212	—	—
				Payables to related parties		14,647	—	—

(Continued)

- 62 -


				Intercompany Transactions
			Nature of					Percentage of
			Relationship				Terms	Consolidated Total Gross
No.	Company Name	Counter Party	(Note 1)	Financial Statement Items	Amount		(Note 2)	Sales or Total Assets
1	GUC	TSMC North America	3	Purchases	$	589,175	—	—
				Manufacturing overhead		161,306	—	—
				Payables to related parties		75,901	—	—

		GUC-NA	3	Manufacturing overhead		35,009	—	—
				Operating expenses		124,926	—	—
				Accrued expenses		15,920	—	—

		GUC-Japan	3	Operating expenses		32,687	—	—
				Accrued expenses		3,450	—	—

		GUC-Europe	3	Operating expenses		1,467	—	—

		GUC-Shanghai	3	Operating expenses		16,014	—	—
				Accrued expenses		2,744	—	—


Note 1:		No. 1 represents the transactions from parent company to subsidiary.

		No. 3 represents the transactions between subsidiaries.

Note 2:		The sales prices and payment terms of intercompany sales are not significantly different from those to third parties. For other intercompany transactions, prices and terms are determined in accordance with mutual agreements.

(Continued)

- 63 -

B. For the nine months ended September 30, 2009


				Intercompany Transactions
			Nature of					Percentage of
			Relationship				Terms	Consolidated Total Gross
No.	Company Name	Counter Party	(Note 1)	Financial Statement Items	Amount		(Note 2)	Sales or Total Assets
0	TSMC	TSMC North America	1	Sales	$	111,683,024	—	52%
				Receivables from related parties		22,009,288	—	4%
				Other receivables from related parties		13,851	—	—
				Payables to related parties		1,370	—	—

		TSMC China	1	Sales		53,839	—	—
				Purchases		2,611,248	—	1%
				Gain on disposal of property, plant and equipment		140,166	—	—
				Technical service income		6,419	—	—
				Other receivables from related parties		119,544	—	—
				Payables to related parties		456,026	—	—
				Deferred credits		43,730	—	—

		TSMC Japan	1	Marketing expenses-commission		166,109	—	—
				Payables to related parties		21,021	—	—

		TSMC Europe	1	Marketing expenses-commission		234,892	—	—
				Research and development expenses		13,172	—	—
				Payables to related parties		35,717	—	—

		TSMC Korea	1	Marketing expenses-commission		10,667	—	—
				Payables to related parties		1,020	—	—

		GUC	1	Sales		1,497,213	—	1%
				Research and development expenses		26,488	—	—
				Receivables from related parties		455,417	—	—

		TSMC Technology	1	Research and development expenses		299,636	—	—
				Payables to related parties		126,074	—	—

		WaferTech	1	Sales		3,357	—	—
				Purchases		3,872,117	—	2%
				Other receivables from related parties		3,921	—	—
				Payables to related parties		605,006	—	—

		Xintec	1	Sales of property, plant and equipment and other assets		58,450	—	—

		TSMC Canada	1	Research and development expenses		115,534	—	—
				Payables to related parties		12,889	—	—

1	GUC	TSMC North America	3	Purchases		701,967	—	—
				Manufacturing overhead		216,059	—	—
				Payables to related parties		97,319	—	—

		GUC-NA	3	Operating expenses		115,524	—	—
				Accrued expenses		14,015	—	—

		GUC-Japan	3	Operating expenses		29,296	—	—
				Accrued expenses		3,478	—	—

		GUC-Europe	3	Operating expenses		6,632	—	—


Note 1:		No. 1 represents the transactions from parent company to subsidiary. No. 3 represents the transactions between subsidiaries.

		No. 3 represents the transactions between subsidiaries.

Note 2:		The sales prices and payment terms of intercompany sales are not significantly different from those to third parties. For other intercompany transactions, prices and terms are determined in accordance with mutual agreements.

(Concluded)

- 64 -

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 29, 2010	By	/s/ Lora Ho
		Lora Ho
		Senior Vice President & Chief Financial Officer