TSMC Reports Fourth Quarter EPS of NT$1.31

Hsin-Chu, Taiwan, R.O.C., January 31, 2008 -- TSMC today announced consolidated revenue of NT$93.9 billion, net income of NT$34.48 billion, and diluted earnings per share of NT$1.31 (US$0.20 per ADS unit) for the fourth quarter ended December 31, 2007.

Year-over-year, fourth quarter revenue increased 25.2% while net income and diluted EPS increased 23.5% and 24.3%, respectively. On a sequential basis, fourth quarter results represent a 5.5% increase in revenue, an increase of 13.5% in net income, and an increase of 14.3% in diluted EPS. All figures were prepared in accordance with R.O.C. GAAP on a consolidated basis.

Stronger than expected demand of TSMC’s wafers across all major product segments (communication, computer, and consumer) led to the fourth quarter results approaching or exceeding the high end of the guidance. Advanced process technologies (0.13-micron and below) accounted for 59% of wafer revenues with 90-nanometer process technology accounting for 29% and 65-nanometer reaching 10% of total wafer sales. Gross margin was 47.8%, operating margin was 39.2%, and net margin was 36.7%.

“Fourth quarter set another record for our business in terms of revenues and wafer shipment, while our margins improved sequentially ” said Lora Ho, VP and Chief Financial Officer of TSMC. “Although the global economy is facing a large degree of uncertainty, we expect our first quarter to follow a normal seasonal pattern and our results will track with normal seasonality,” said Ho. “Based on our current business outlook, and the implementation of a new ROC accounting rule which requires the expensing of employee profit sharing, management’s expectations for first quarter 2008 performance are as follows”:

· Revenue is expected to be between NT$87 billion and NT$89 billion;
· Gross profit margin is expected to be between 42% and 44%;
· Operating profit margin is expected to be between 32% and 34%.

Ho said management also expects that 2008 capital expenditure will be around US$1.8 billion.