TSMC Reports Second Quarter EPS of NT$1.12

Hsin-Chu, Taiwan, R.O.C. -- July 31, 2008 -- TSMC today announced consolidated revenue of NT$88.14 billion, net income of NT$28.77 billion, and diluted earnings per share of NT$1.12 (US$0.18 per ADS unit) for the second quarter ended June 30, 2008.

Year-over-year, second quarter revenue increased 17.6% while net income and diluted EPS increased 12.9% and 16.3%, respectively. On a sequential basis, second quarter results represent a 0.8% increase in revenue, an increase of 2.2% in net income, and an increase of 2.1% in diluted EPS. All figures were prepared in accordance with R.O.C. GAAP on a consolidated basis.

Second quarter business saw an improvement from the previous quarter, although revenue and margins continued to be negatively affected by the strength of the NT dollar. Despite the negative impact from the foreign exchange rate, our margins have exceeded guidance due to significant cost improvement and higher levels of wafer movements. Second quarter gross margin was 45.6%, operating margin was 34.5%, and net margin was 32.6%.

Advanced process technologies (0.13-micron and below) accounted for 63% of wafer revenues with 90-nanometer process technology accounting for 28% and 65-nanometer reaching 18% of total wafer sales.

“Even with a weakening macroeconomic environment, our second quarter results were either in line with or slightly higher than guidance announced at the end of April, thanks to our continual effort in driving cost reduction and increasing utilization rates,” said Lora Ho, VP and Chief Financial Officer of TSMC. “Based on our current business outlook, management expects third quarter revenue growth to be below seasonality. Management further expects overall performance for third quarter 2008 to be as follows”:

• Revenue is expected to be between NT$90 billion and NT$92 billion;
• Gross profit margin is expected to be between 45% and 47%;
• Operating profit margin is expected to be between 34% and 36%.