Philips Announces Possible Offering of TSMC Shares

Issued by: Royal Philips Electronics & Taiwan Semiconductor Manufacturing Company Ltd.

Amsterdam, The Netherlands / Hsinchu, Taiwan, October 8, 2003 – Today, at a board meeting of Taiwan Semiconductor Manufacturing Company Ltd. (TAIEX: 2330, NYSE: TSM) (“TSMC”), the board of directors approved TSMC sponsoring the conversion of up to 500 million common shares to American depositary shares (“ADSs”) on behalf of Royal Philips Electronics (“Philips”). Subject to all necessary regulatory approvals, Philips is considering an offering of up to 500 million common shares, which when converted equate to 100 million ADSs. If such an offering is made, Philips plans to use the proceeds to reduce the level of net debt on the company’s balance sheet and for general corporate purposes. Currently, Philips holds approximately 21.5 percent of TSMC shares, which would decline to approximately 19.1 percent if the full 500 million shares were to be placed.

Philips and TSMC highly value their business relationship, through which the two companies share and exchange technology in a joint development agreement in Crolles, France. The two companies also have a manufacturing joint venture in Singapore, known as SSMC. Through its relationship with TSMC, Philips also has access to a strategic supply of wafers, allowing the company to pursue an asset-light strategy in its Semiconductors business.

This consideration of an offering follows on a strategic review of Philips’ holding in TSMC that Philips conducted in close collaboration with TSMC. “While we’ll remain among the largest shareholders in TSMC for the foreseeable future, we believe that in the long-term our shareholders would benefit most from a gradual and orderly reduction in this holding. We don’t expect this offering will affect the strategic relation between the two companies,” explained Jan Hommen, Vice Chairman and CFO of Royal Philips Electronics. In commenting on this offering, Ms. Lora Ho, Vice President and CFO of TSMC said: “We have seen a steadfast partnership between Philips and TSMC along the way, and will see it go forward in the long run.”

This announcement should not be construed as an offer of any securities for sale. Any offering of ADSs in the United States can only be made in accordance with the requirements of the U.S. Securities Act of 1933.

About Royal Philips Electronics
Royal Philips Electronics of the Netherlands is one of the world's biggest electronics companies and Europe's largest, with sales of EUR 31.8 billion in 2002. It is a global leader in color television sets, lighting, electric shavers, medical diagnostic imaging and patient monitoring, and one-chip TV products. Its 164,000 employees in more than 60 countries are active in the areas of lighting, consumer electronics, domestic appliances, semiconductors, and medical systems. Philips is quoted on the NYSE (symbol: PHG), London, Frankfurt, Amsterdam and other stock exchanges. News from Philips is located at www.philips.com/newscenter

About TSMC
TSMC is the world's largest dedicated semiconductor foundry, providing the industry's leading process technology and the foundry industry's largest portfolio of process-proven library, IP, design tools and reference flows. The company operates one advanced 300mm wafer fab, five eight-inch fabs and one six-inch wafer fab. TSMC also has substantial capacity commitments at its wholly-owned subsidiary, WaferTech, and its joint venture fab, SSMC. In early 2001, TSMC became the first IC manufacturer to announce a 90-nm technology alignment program with its customers. TSMC's corporate headquarters are in Hsinchu, Taiwan. For more information about TSMC please see http://www.tsmc.com.

Safe Harbor Statement
This document contains certain forward-looking statements with respect to the financial condition, results of operations and business of Philips and TSMC and certain of the plans and objectives of Philips with respect to these items. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements. These factors include, but are not limited to, levels of consumer and business spending in major economies, changes in consumer tastes and preferences, the levels of marketing and promotional expenditures by Philips and TSMC and their respective competitors, raw materials and employee costs, changes in future exchange and interest rates (in particular, changes in the euro and the US dollar can materially effect results), tax rates and future business combinations, acquisitions or dispositions and the rate of technical changes. Market share estimates contained in this report are based on outside sources such as specialized research institutes, industry and dealer panels, etc. in combination with management estimates.

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