TSMC 2004 Second Quarter Report - 25% Increase in Sequential EPS

July 29, 2004 -  Taiwan Semiconductor Manufacturing Company, Ltd. today announced record-setting revenue and net income for the quarter ended June 30, 2004. Second quarter revenue reached NT$64.87 billion while net income and fully diluted earnings per share came to NT$23.41 billion and NT$1.00 per share (US$0.15 per ADS unit), respectively.

On a sequential basis, second quarter results represent a 12.8% increase in revenue, a 24.6% increase in net income and in fully diluted EPS. Year-over-year comparison shows the increases in revenue, net income, and fully diluted EPS to be 30%, 100%, and 101%, respectively. All figures were prepared in accordance with R.O.C. GAAP on an unconsolidated basis.

The increase in second quarter revenue resulted from a 9.4% increase in wafer shipments, a 3.2% increase in wafer average selling price (ASP), and a slightly weaker U.S. dollar exchange rate. Gross margin for the second quarter jumped to 43.4%, a significant increase from 39.5% in the previous quarter, due to higher utilization levels, improved ASP and better manufacturing cost, particularly related to depreciation and a more favorable licensing fee structure. Net margin for the quarter rose to 36.1% from 32.7% in the previous quarter.

“Building upon four consecutive quarters of strong financial performance, TSMC has delivered a record-breaking set of financial results where both top-line and bottom-line figures continue to validate TSMC’s strong fundamentals,” said Lora Ho, VP and Chief Financial Officer of TSMC.

Ms. Ho said management expects 2004 capital expenditure to be about US$2.4 billion. TSMC’s 2004 second quarter results: (Unit: NT$million, except for EPS)

	2Q’04 Amount*	2Q’03 Amount	YoY Change %	1Q’04 Amount	QoQ Change %
Net sales	64,869	49,922	29.9%	57,513	12.8%
Gross profit	28,139	18,351	53.3%	22,729	23.8%
Income from operations	22,134	13,340	65.9%	17,540	26.2%
Income before tax	23,121	12,572	83.9%	18,435	25.4%
Net income	23,410	11,730	99.6%	18,789	24.6%
EPS(NT$)	1.00**	0.50***	101.0%	0.81****	24.6%

* 2004 first quarter figures have not been approved by Board of Directors
** Based on 23,301 million weighted average outstanding shares
*** Based on 23,325 million weighted average outstanding shares
****Based on 23,342 million weighted average outstanding share