Edgar Filing: TAIWAN SEMICONDUCTOR MANUFACTURING CO LTD

Taiwan Semiconductor Manufacturing Company Ltd.

Date: January 26, 2006

/s/ Lora Ho

Lora Ho

Vice President & Chief Financial Officer

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD

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 January 2006

Taiwan Semiconductor Manufacturing Company Ltd.

(Translation of Registrant’s Name Into English)

No. 8, Li-Hsin Rd. 6,
Science-Based Industrial Park,
Hsin-Chu, 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: .)

FOR IMMEDIATE RELEASE

CONTACT
Elizabeth Sun / Eric Chiang
Harrison Hsueh / Julie Wei
Investor Relations Division
TSMC
invest@tsmc.com
886-3-568-2085/ 2087/ 2088/ 2086

Topics in This Report

•		Revenue Analysis

•		Utilization & Capacity

•		Profit & Expense Analysis

•		Financial Condition Review

•		Cash Flow & CapEx

•		Recap of Recent Important Events & Announcements

Operating Results Review:

Summary:


*(Amount in NT$ billion except noted otherwise)*	4Q05			3Q05			4Q04			QoQ			YoY
EPS (NT$ per common share)		1.37			0.99			0.90			38.4	%		52.7	%
(US$ per ADR unit)		0.21			0.15			0.14

Net Sales		81.16			69.26			63.87			17.2	%		27.1	%
Gross Profit		39.86			30.53			27.15			30.6	%		46.8	%
Operating Expenses		(5.64	)		(5.60	)		(6.12	)		0.8	%		(7.9	%)
Non-Operating Items		1.18			(0.51	)		1.07						10.5	%
Net Income		33.90			24.49			22.18			38.4	%		52.8	%

Capacity Utilization		104	%		96	%		88	%

Net Profit Margin		41.8	%		35.4	%		34.7	%

Remarks:

The fourth quarter EPS of NT$1.37 represents a 38.4% increase compared to 3Q05. The unconsolidated operating results of 4Q05 are summarized below:

Net sales were NT$81.16 billion, up 17.2% compared to net sales of NT$69.26 billion in the previous quarter. Net sales for the quarter surpassed the top end of our guidance by approximately NT$2 billion, driven by stronger than expected demand across all major product segments.

Gross profit was NT$39.86 billion, representing a 30.6% increase from the previous quarter. Gross margin improved by five percentage points sequentially to 49.1%, mainly due to higher levels of capacity utilization and more favorable exchange rates.

Operating expenses were NT$5.64 billion or 6.9% of net sales. The combined result from non-operating income and long-term investments was a gain of NT$1.18 billion, compared to a loss of NT$510 million in the third quarter of 2005.

Net income was NT$33.9 billion, up 38.4% sequentially. Net margin was 41.8%.


TSMC
January 26, 2006		Page 2

I. Revenue Analysis

I — 1. Wafer Sales Analysis


By Application	4Q05			3Q05			4Q04
Computer		32	%		30	%		35	%
Communication		41	%		41	%		41	%
Consumer		21	%		23	%		16	%
Industrial/Others		5	%		5	%		6	%
Memory		1	%		1	%		2	%


By Technology	4Q05			3Q05			4Q04
90nm		17	%		10	%		1	%
0.11/0.13um		32	%		33	%		35	%
0.15/0.18um		32	%		35	%		34	%
0.25/0.35um		14	%		16	%		23	%
0.50um+		5	%		6	%		7	%


By Customer Type	4Q05			3Q05			4Q04
Fabless/System		72	%		71	%		67	%
IDM		28	%		29	%		33	%


By Geography *	4Q05			3Q05			4Q04
North America		77	%		75	%		75	%
Asia Pacific		11	%		11	%		10	%
Europe		8	%		9	%		7	%
Japan		4	%		5	%		8	%


*		This does not reflect the actual shipment destination of sales.

Revenue Analysis:

Net sales increased 17.2% sequentially to NT$81.16 billion, topping the high end of our guidance by approximately NT$2 billion, driven by stronger than expected demand across all major product segments.

On a quarter over quarter basis, revenues from computer applications increased by 30%, followed by an 18% increase from communications. Revenues from consumer applications also grew by 6% sequentially.

Revenue from advanced technologies — defined as 0.13-micron and below – accounted for 49% of total wafer sales, up from 43% in the previous quarter. Revenue from 90nm was up strongly and accounted for 17% of total wafer sales during the quarter, compared to 10% in the third quarter of 2005.

IDM accounted for 28% of total wafer sales during the quarter, down slightly from 29% in the previous quarter.

Geographically, North America accounted for 77% of wafer sales, up from 75% in 3Q05. Meanwhile, sales from Europe and Japan declined by one percentage point sequentially to 8% and 4% of wafer sales, respectively.

II. Utilization & Capacity

Utilization Rate:

Overall capacity utilization improved by eight percentage points to 104% in this quarter, reflecting strong demand from customers across the board and operational efficiencies.


TSMC
January 26, 2006		Page 3

II — 2. Capacity


	3Q05		4Q05		2005		1Q06
Fab / (Wafer size)	(Act.)		(Act.)		(Act.)		(Fcst.)
Fab-2 (6")¹		251		251		989		244
Fab-3 (8")		247		247		973		246
Fab-5 (8")		126		126		496		135
Fab-6 (8")		217		217		850		215
Fab-7 (8")		40		40		155		33
Fab-8 (8")		227		227		893		231
Fab-12 (12")²		122		139		448		142
Fab-14 (12")²		46		56		156		61
TSMC — owned capacity 8" — equivalent Kpcs		1,374		1,437		5,282		1,455
Wafer Tech (8")		100		100		389		99
SSMC (8")		47		49		179		49
TSMC (Shanghai) (8")		30		44		105		48
Total TSMC — managed 8"— equivalent Kpcs		1,550		1,629		5,955		1,651


Note:	1.	Figues represent number of 6" wafers. Conversion to 8"-equivalent wafers is by dividing this number by 1.78

	2.	Figues represent number of 12" wafers. Conversion to 8"-equivalent wafers is by multiplying this number by 2.25

Capacity :

Total TSMC managed capacity in 4Q05 was 1,629K 8-inch equivalent wafers, 5.1% higher than the 1,550K wafers in 3Q05.

Overall installed capacity for year 2005 was 5.96 million 8-inch equivalent wafers, up 24.4% on a year-over-year basis. Majority of the capacity increase was dedicated to advanced technologies.

TSMC managed capacity in 1Q06 will increase slightly to 1,651K 8-inch equivalent wafers, representing a 1.3% sequential growth.

III. Profit & Expense Analysis

III — 1. Gross Profit Analysis


(Amount: NT$ billion)	4Q05			3Q05			4Q04
COGS		41.3			38.7			36.7
Depreciation		14.9			15.5			14.9
Other MFG Cost		26.4			23.2			21.8

Gross Profit		39.9			30.5			27.2

Gross Margin
- TSMC		49.1	%		44.1	%		42.5	%
- TSMC w/o affiliates		53.6	%		47.6	%		47.8	%

Gross Profit Analysis:

Gross profit for the fourth quarter of 2005 was NT$39.9 billion. Gross margin climbed by five percentage points sequentially to 49.1%. The improvement in gross margin was mainly due to higher levels of capacity utilization and a 3.8% appreciation of US dollar against the local currency.

During the quarter, the gross margin for TSMC’s own fabs increased to 53.6% from 47.6% in 3Q05.


TSMC
January 26, 2006		Page 4

III — 2. Operating Expense Analysis

(Amount: NT$ billion)

4Q05

3Q05

4Q04

Total Operating Exp.

5.6

6.1

SG&A

2.2

2.3

2.5

Research & Development

3.4

3.3

3.6

Operating Expenses:

Operating expenses were essentially flat from the previous quarter at NT$5.6 billion. Total operating expenses represented 6.9% of net sales, down from 8.1% in the third quarter of 2005.

III — 3. Non-Operating Items


(Amount: NT$ million)	4Q05			3Q05			4Q04
Non-Operating Income/(Exp.)		952			(19	)		457
Net Interest Income/(Exp.)		142			(41	)		227
Other Non-Operating		810			22			230

Equity-Method Investments		225			(491	)		609
WaferTech		793			487			891
SSMC		348			210			31
Vanguard		177			61			423
TSMC (Shanghai)		(414	)		(760	)		(359	)
Others		(679	)		(489	)		(377	)

Non-Operating Items:

Combined result from non-operating income and long-term investments was a gain of NT$1.2 billion.

During the fourth quarter of 2005, the non-operating income was NT$952 million, compared to a loss of NT$19 million in the previous quarter. The increase in non-operating income was mainly due to an increase in gains on sale of fixed assets, scheduled settlement payment from the lawsuit against SMIC, and a smaller valuation loss under lower of cost or market method for short-term investments.

Net investment income recognized by equity method was NT$225 million in this quarter, compared to a loss of NT$491 million in 3Q05. This was primarily attributable to improved operating performance at TSMC’s manufacturing affiliates.

IV. Financial Condition Review

IV — 1. Liquidity Analysis


(Amount: NT$ Billion)	4Q05		3Q05		4Q04
Cash & S-T Investments		132.4		107.3		118.5

Accounts Receivable — Trade		36.4		37.2		27.2

Inventory		16.3		15.1		14.2

Total Current Assets		197.6		165.1		173.7

Accounts Payable		20.2		20.9		40.8

Accrued Liabilities and others		12.0		22.0		19.8

Total Current Liabilities		32.2		42.9		60.6

Current Ratio (x)		6.1		3.8		2.9

Net Working Capital		165.4		122.2		113.0

Liquidity Analysis:

Cash & short-term investments increased by NT$25.1 billion in this quarter, mainly due to strong cash flow from operating activities. Accounts receivable decreased slightly while inventory increased from the levels at 3Q05. As a result, TSMC ended the quarter with total current assets of NT$197.6 billion, NT$32.5 billion higher on a sequential basis.

Total current liabilities were NT$32.2 billion at the end of the quarter, NT$10.7 billion lower sequentially, mainly due to an NT$10.5 billion pay down of corporate bond.

As a result, net working capital increased to NT$165.4 billion and current ratio jumped to 6.1x.


TSMC
January 26, 2006		Page 5

Receivable/Inventory Days Trend:

Days of Receivable decreased to 42 days in 4Q05 compared to 46 days in the previous quarter.

Days of Inventory increased slightly to 42 days from 40 days in the third quarter of 2005.

IV — 3. Debt Service


(Amount: NT$ Billion)	4Q05		3Q05		4Q04
Cash & S-T Investments		132.4		107.3		118.5

Interest-Bearing Debt		19.5		30.0		30.0

Net Cash Reserves		112.9		77.3		88.5

Debt Service:

As a result of strong operating performance during the quarter, net cash reserves — defined as the excess of cash and short-term investments over interest-bearing debt — increased by NT$35.6 billion to NT$112.9 billion in 4Q05.

Interest-bearing debt declined by NT$10.5 billion from the previous quarter due to the pay down of corporate bond.

V. Cash Flow & CapEx

V — 1. Cash Flow Analysis


(Amount: NT$ billion)	4Q05			3Q05			4Q04*
Net Income		33.9			24.5			22.2
Depreciation & Amortization		16.6			17.1			16.6
Other Op Sources/(Uses)		(1.6	)		(3.7	)		(2.1	)
Total Op Sources/(Uses)		48.9			37.9			36.7


Capital Expenditure		(13.3	)		(9.1	)		(20.5	)
Short Term Investment		1.8			0.6			(6.9	)
Long Term Investment		(1.0	)		(0.7	)		(9.1	)
Other Investing Sources/(Uses)		0.4			(0.2	)		0.0
Net Investing Sources/(Uses)		(12.1	)		(9.4	)		(36.5	)


Cash dividends-common stocks		0.0			(46.5	)		0.0
Employees Bonus		0.0			(3.1	)		0.0
Repayment of Corporate Bonds		(10.5	)		0.0			(5.0	)
Other Financing Sources/(Uses)		0.6			0.9			(0.1	)

Net Financing Sources/(Uses)		(9.9	)		(48.7	)		(5.1	)


Net Cash Position Changes		26.9			(20.1	)		(4.8	)

Ending Cash Balance		85.4			58.5			65.5


*		Certain amounts have been reclassified to conform with the current period presentation.

Summary of Cash Flow:

During this quarter, TSMC generated NT$48.9 billion from operating activities, mainly from net income of NT$33.9 billion and depreciation & amortization of NT$16.6 billion.

Net cash used in investment activities totaled NT$12.1 billion, mainly resulting from NT$13.3 billion of capital spending.

Net cash used in financing activities was NT$9.9 billion during this quarter, largely attributable to an NT$10.5 billion pay down of corporate bond.

As a result, TSMC ended the quarter with a cash balance of NT$85.4 billion, NT$26.9 billion higher than in 3Q05.


TSMC
January 26, 2006		Page 6

Operating Cash Flow Trend:

Operating cash flow of NT$48.9 billion was higher than the NT$37.9 billion generated in the previous quarter, mainly due to increased net income.

V — 3. Capital Expenditure


(In US$ million)	4Q05		2005
TSMC	$	389		2,291

TSMC (Shanghai)		4		187

WaferTech & Others		3		7


TSMC & Affiliates	$	396		2,485

Capital Spending:

Capital expenditures for TSMC alone during the quarter totaled US$389 million. Most of the spending was for the purchase of 12-inch production equipment. Capital spending for TSMC (Shanghai) in this quarter was US$4 million.

For year 2005, total capital expenditure for TSMC and affiliates was approximately US$2.5 billion, including US$2.3 billion for TSMC and US$0.2 billion for TSMC (Shanghai).


TSMC
January 26, 2006		Page 7

VI. Recap of Recent Important Events & Announcements

•		TSMC has entered full production of its 80 nanometer process technology for high-performance designs (2006/01/18)

•		TSMC has pledged NT$120 million for the phase II project of the Chemistry Research Center at National Taiwan University (2005/12/16)

•		TSMC successfully manufactured industry’s first network search engine using its 90 nanometer process technology for Integrated Device Technology, Inc., achieving new levels of performance, cost and power consumption (2005/12/07)

•		TSMC was voted The Best Large Cap Company in Taiwan region by AsiaMoney (2005/12/01)

•		TSMC board of directors approved capital appropriation of US$706.5 million to expand its 65 nanometer, 0.18 micron and 0.15 micron capacities (2005/11/08)

•		TSMC board of directors approved the investment of up to US$75 million in establishing a new venture capital fund (2005/11/08)

•		TSMC won 6 out of 11 award categories at the IR Magazine Hong Kong and Taiwan Awards, including Grand Prix for Best Overall Investor Relations — Large Cap and Best Corporate Governance (2005/11/04)

•		TSMC was ranked No. 8 of the Top 50 Management Teams in Asia by CFO Asia magazine (2005/10)


*		Please visit TSMC’s Web site (http://www.tsmc.com) for details about these and other announcements.

*		Starting from 1Q05, TSMC will post quarterly consolidated financial statements, in addition to the unconsolidated financial statements, on our web site.


		TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED Condensed Balance Sheets (Unconsolidated) (Figures in Million of New Taiwan Dollars (“NTD”) and U.S. Dollars (“USD”)) ⁽¹⁾


	December 31, 2005									September 30, 2005						December 31, 2004 ⁽²⁾						QoQ						YoY
	USD			NTD			%			NTD			%			NTD			%			Amount			%			Amount			%
ASSETS
Current Assets
Cash and Cash Equivalents	$	2,599		$	85,384			16.8		$	58,467			12.1		$	65,532			13.4		$	26,917			46.0		$	19,852			30.3
Short Term Investments, Net		1,432			47,055			9.3			48,822			10.1			52,979			10.9			(1,767	)		(3.6	)		(5,924	)		(11.2	)
Accounts Receivable — Trade, Net		1,108			36,396			7.2			37,248			7.7			27,155			5.6			(852	)		(2.3	)		9,241			34.0
Inventories, Net		495			16,258			3.2			15,070			3.1			14,172			2.9			1,188			7.9			2,086			14.7
Other Current Assets		380			12,469			2.4			5,447			1.2			13,829			2.8			7,022			128.9			(1,360	)		(9.8	)

Total Current Assets		6,014			197,562			38.9			165,054			34.2			173,667			35.6			32,508			19.7			23,895			13.8


Long Term Investments		2,455			80,660			15.9			78,958			16.3			73,293			15.0			1,702			2.2			7,367			10.1


Properties, Plant and Equipment		17,453			573,337			113.0			565,426			117.0			527,982			108.4			7,911			1.4			45,355			8.6
Less: Accumulated Depreciation		(10,934	)		(359,191	)		(70.8	)		(346,517	)		(71.7	)		(300,006	)		(61.6	)		(12,674	)		3.7			(59,185	)		19.7

Properties, Plant and Equipment, Net		6,519			214,146			42.2			218,909			45.3			227,976			46.8			(4,763	)		(2.2	)		(13,830	)		(6.1	)


Other Assets		462			15,172			3.0			20,185			4.2			12,617			2.6			(5,013	)		(24.8	)		2,555			20.3

Total Assets	$	15,450		$	507,540			100.0		$	483,106			100.0		$	487,553			100.0		$	24,434			5.1		$	19,987			4.1


LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts Payables	$	344		$	11,294			2.2		$	10,042			2.1		$	9,687			2.0		$	1,252			12.5		$	1,607			16.6
Payables to Contractors and Equipment Suppliers		270			8,859			1.7			10,815			2.2			31,154			6.4			(1,956	)		(18.1	)		(22,295	)		(71.6	)
Accrued Expenses and Other Current Liabilities		366			12,031			2.4			11,547			2.4			9,298			1.9			484			4.2			2,733			29.4
Current Portion of Bonds Payable		0			0			0.0			10,500			2.2			10,500			2.2			(10,500	)		(100.0	)		(10,500	)		(100.0	)

Total Current Liabilities		980			32,184			6.3			42,904			8.9			60,639			12.5			(10,720	)		(25.0	)		(28,455	)		(46.9	)

Bonds Payable		594			19,500			3.8			19,500			4.0			19,500			4.0			0			0.0			0			0.0
Other Long Term Liabilities		311			10,225			2.1			9,591			2.0			8,449			1.7			634			6.6			1,776			21.0

Total Liabilities		1,885			61,909			12.2			71,995			14.9			88,588			18.2			(10,086	)		(14.0	)		(26,679	)		(30.1	)


Shareholders’ Equity
Capital Stock		7,528			247,300			48.7			247,273			51.2			232,520			47.7			27			0.0			14,780			6.4
Capital Surplus		1,739			57,118			11.3			56,777			11.7			56,537			11.6			341			0.6			581			1.0
Retained Earnings		4,346			142,771			28.1			108,871			22.6			113,730			23.3			33,900			31.1			29,041			25.5
Treasury Stock		(28	)		(918	)		(0.2	)		(1,550	)		(0.3	)		(1,595	)		(0.3	)		632			(40.8	)		677			(42.4	)
Others		(20	)		(640	)		(0.1	)		(260	)		(0.1	)		(2,227	)		(0.5	)		(380	)		146.3			1,587			(71.2	)

Total Shareholders’ Equity		13,565			445,631			87.8			411,111			85.1			398,965			81.8			34,520			8.4			46,666			11.7

Total Liabilities & Shareholders’ Equity	$	15,450		$	507,540			100.0		$	483,106			100.0		$	487,553			100.0		$	24,434			5.1		$	19,987			4.1


Note:	(1) Amounts in NTD have been translated into USD at the rate of NT$32.85 as of December 31, 2005.

	(2) Certain prior period balances have been reclassified to conform with the current period presentation.


		TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED Condensed Income Statements (Unconsolidated) For the Three Months Ended December 31, 2005, September 30, 2005 and December 31, 2004 (Expressed in Million New Taiwan Dollars (“NTD”) and U.S. Dollars (“USD”)⁽¹⁾ Except for Per Share Amounts and Shares Outstanding)


	Q4 2005									Q3 2005						Q4 2004						QoQ						YoY
	USD			NTD			%			NTD			%			NTD			%			Amount			%			Amount			%
Net Sales	$	2,426		$	81,161			100.0		$	69,258			100.0		$	63,875			100.0		$	11,903			17.2		$	17,286			27.1
Cost of Sales		(1,234	)		(41,296	)		(50.9	)		(38,733	)		(55.9	)		(36,722	)		(57.5	)		(2,563	)		6.6			(4,574	)		12.5

Gross Profit		1,192			39,865			49.1			30,525			44.1			27,153			42.5			9,340			30.6			12,712			46.8

Operating Expenses
Research and Development Expenses		(102	)		(3,423	)		(4.2	)		(3,341	)		(4.8	)		(3,568	)		(5.6	)		(82	)		2.5			145			(4.1	)
General and Administrative Expenses		(56	)		(1,860	)		(2.3	)		(1,881	)		(2.8	)		(2,153	)		(3.4	)		21			(1.1	)		293			(13.6	)
Sales and Marketing Expenses		(11	)		(358	)		(0.4	)		(373	)		(0.5	)		(404	)		(0.6	)		15			(4.2	)		46			(11.3	)

Total Operating Expenses		(169	)		(5,641	)		(6.9	)		(5,595	)		(8.1	)		(6,125	)		(9.6	)		(46	)		0.8			484			(7.9	)


Income from Operations		1,023			34,224			42.2			24,930			36.0			21,028			32.9			9,294			37.3			13,196			62.8


Non-Operating Incomes (Expenses), Net		28			952			1.1			(19	)		0.0			457			0.7			971			(5,319.4	)		495			108.3
Investment Gains (Losses)		7			225			0.3			(491	)		(0.7	)		609			1.0			716			(145.8	)		(384	)		(63.0	)

Income before Income Tax		1,058			35,401			43.6			24,420			35.3			22,094			34.6			10,981			45.0			13,307			60.2


Income Tax Benefits (Expenses)		(45	)		(1,501	)		(1.8	)		68			0.1			90			0.1			(1,569	)		(2,337.1	)		(1,591	)		(1,758.6	)


Net Income	$	1,013		$	33,900			41.8		$	24,488			35.4		$	22,184			34.7		$	9,412			38.4		$	11,716			52.8


Earnings per Common Shares — Diluted		0.04			1.37						0.99						0.90						0.38			38.4			0.09			52.7

Earnings per ADR ⁽²⁾		0.21			6.86						4.96						4.49


Weighted Average Outstanding Shares (‘M) ⁽³⁾					24,693						24,690						24,724


Note:	(1) Amounts in NTD have been translated into USD at the weighted average rate of NTD33.456 for the fourth quarter of 2005.

	(2) 1 ADR equals 5 ordinary shares.

	(3) Total diluted weighted average outstanding shares were 24,693M shares for 4Q05 and 24,724M shares for 4Q04 after the retroactive adjustments for stock dividends and stock bonus.


		TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED Condensed Income Statements (Unconsolidated) For the Twelve Months Ended December 31, 2005 and 2004 (Expressed in Million New Taiwan Dollars (“NTD”) and U.S. Dollars (“USD”)⁽¹⁾ Except for Per Share Amounts and Shares Outstanding)


	2005									2004						YoY
	USD			NTD			%			NTD			%			Amount			%

Net Sales	$	8,228		$	264,588			100.0		$	255,992			100.0		$	8,596			3.4
Cost of Sales		(4,644	)		(149,344	)		(56.4	)		(145,831	)		(57.0	)		(3,513	)		2.4

Gross Profit		3,584			115,244			43.6			110,161			43.0			5,083			4.6

Operating Expenses
Research and Development Expenses		(417	)		(13,396	)		(5.1	)		(12,516	)		(4.9	)		(880	)		7.0
General and Administrative Expenses		(233	)		(7,485	)		(2.8	)		(9,367	)		(3.7	)		1,882			(20.1	)
Sales and Marketing Expenses		(42	)		(1,349	)		(0.5	)		(1,455	)		(0.6	)		106			(7.2	)

Total Operating Expenses		(692	)		(22,230	)		(8.4	)		(23,338	)		(9.1	)		1,108			(4.7	)


Income from Operations		2,892			93,014			35.2			86,823			33.9			6,191			7.1


Non-Operating Incomes (Expenses), Net		59			1,857			0.7			916			0.4			941			102.9
Investment Gains (Losses)		(33	)		(1,052	)		(0.4	)		4,040			1.6			(5,092	)		(126.0	)

Income before Income Tax		2,918			93,819			35.5			91,779			35.9			2,040			2.2


Income Tax Benefits (Expenses)		(8	)		(244	)		(0.1	)		537			0.2			(781	)		(145.5	)


Net Income	$	2,910		$	93,575			35.4		$	92,316			36.1		$	1,259			1.4


Diluted Earnings Per Ordinary Share		0.12			3.79						3.73						0.06			1.5

Earnings Per ADR ⁽²⁾		0.59			18.95						18.67


Weighted Average Outstanding Shares (‘M) ⁽³⁾					24,693						24,724


Note:	(1)	Amounts in NTD have been translated into USD at the weighted average rate of NTD 32.157 for the twelve months of 2005.

	(2)	1 ADR equals 5 ordinary shares.

	(3)	Total weighted average outstanding shares were 24,693M shares for the twelve months ended December 31, 2005 and 24,724M shares for the twelve months ended December 31, 2004 after the retroactive adjustments for stock dividends and stock bonus.

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED
Condensed Statement of Cash Flows (Unconsolidated)

For the Twelve Months Ended December 31, 2005

(Figures in Million of New Taiwan Dollars (“NTD”) and U.S. Dollars (“USD”)) ⁽¹⁾


	12 Months 2005						4Q 2005			3Q 2005			4Q 2004 ⁽²⁾
	USD			NTD			NTD			NTD			NTD
Cash Flows from Operating Activities:
Net Income		2,910			93,575			33,900			24,488			22,184
Depreciation & Amortization		2,114			67,991			16,554			17,107			16,615
Deferred Income Tax		(102	)		(3,279	)		(950	)		(1,179	)		(226	)
Investment Loss(Income) Recognized by Equity Method		33			1,052			(225	)		491			(608	)
Changes in Working Capital & Others		(275	)		(8,859	)		(422	)		(2,959	)		(1,231	)

Net Cash Provided from Operating Activities		4,680			150,480			48,857			37,948			36,734

Cash Flows from Investing Activities:
Decrease(Increase) in Short Term Investments		184			5,924			1,767			587			(6,851	)
Increase in Long Term Investments		(530	)		(17,038	)		(6,936	)		(3,683	)		(9,091	)
Acquisition of Properties, Plant and Equipment		(2,291	)		(73,659	)		(13,323	)		(9,142	)		(20,521	)
Proceeds from Disposal of Long Term Investments		326			10,474			5,945			3,014			—
Proceeds from Disposal of Properties, Plant and Equipment		65			2,087			585			71			1,404
Decrease in Others		(26	)		(846	)		(112	)		(229	)		(1,407	)

Net Cash Used By Investing Activities		(2,272	)		(73,058	)		(12,074	)		(9,382	)		(36,466	)

Cash Flows from Financing Activities:
Cash Dividend — Common Shares		(1,446	)		(46,504	)		—			(46,504	)		—
Bonus Paid to Employees, Directors and Supervisors		(103	)		(3,318	)		—			(3,086	)		—
Repayment of Long Term Bonds Payable		(327	)		(10,500	)		(10,500	)		—			(5,000	)
Increase(Decrease) in Guarantee Deposits		77			2,481			529			845			(112	)
Proceeds from Exercise of Stock Options		8			271			105			49			4

Net Cash Used By Financing Activities		(1,791	)		(57,570	)		(9,866	)		(48,696	)		(5,108	)


Net Increase (Decrease) in Cash and Cash Equivalents		617			19,852			26,917			(20,130	)		(4,840	)


Cash and Cash Equivalents at Beginning of Period		2,038			65,532			58,467			78,597			70,372

Cash and Cash Equivalents at End of Period		2,655			85,384			85,384			58,467			65,532


Note:	(1)	Amounts in NTD have been translated into USD at the rate of NTD32.157 , the weighted average rate for the twelve months ended December 31, 2005.

	(2)	Certain prior period amounts have been reclassified to conform with the current period presentation.

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED AND SUBSIDIARIES
Condensed Balance Sheets (Consolidated)
(Figures in Million of New Taiwan Dollars (“NTD”) and U.S. Dollars (“USD”)) ⁽¹⁾


	December 31, 2005									September 30, 2005						December 31, 2004						QoQ						YoY
	USD			NTD			%			NTD			%			NTD			%			Amount			%			Amount			%
ASSETS
Current Assets
Cash and Cash Equivalents	$	2,937		$	96,484			18.6		$	69,582			14.0		$	74,303			14.9		$	26,902			38.7		$	22,181			29.9
Short Term Investments, Net		1,443			47,399			9.1			49,260			9.9			54,108			10.8			(1,861	)		(3.8	)		(6,709	)		(12.4	)
Accounts Receivable — Trade, Net		1,171			38,478			7.4			39,140			7.9			27,544			5.5			(662	)		(1.7	)		10,934			39.7
Inventories, Net		540			17,728			3.4			16,239			3.3			15,556			3.1			1,489			9.2			2,172			14.0
Other Current Assets		370			12,166			2.4			4,880			1.0			12,938			2.6			7,286			149.3			(772	)		(6.0	)

Total Current Assets		6,461			212,255			40.9			179,101			36.1			184,449			36.9			33,154			18.5			27,806			15.1


Long Term Investment		1,292			42,428			8.2			40,331			8.1			38,102			7.6			2,097			5.2			4,326			11.4


Properties, Plant and Equipment		19,572			642,948			123.8			635,513			128.1			590,166			118.3			7,435			1.2			52,782			8.9
Less: Accumulated Depreciation		(12,119	)		(398,125	)		(76.7	)		(384,200	)		(77.4	)		(331,255	)		(66.4	)		(13,925	)		3.6			(66,870	)		20.2

Properties, Plant and Equipment, Net		7,453			244,823			47.1			251,313			50.7			258,911			51.9			(6,490	)		(2.6	)		(14,088	)		(5.4	)


Other Assets		609			20,003			3.8			25,371			5.1			17,992			3.6			(5,368	)		(21.2	)		2,011			11.2

Total Assets	$	15,815		$	519,509			100.0		$	496,116			100.0		$	499,454			100.0		$	23,393			4.7		$	20,055			4.0


LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Short-term loan payable	$	10		$	328			0.1		$	1,125			0.2		$	382			0.1			($797.00	)		(70.8	)		($54	)		(14.2	)
Accounts Payables		340			11,165			2.1			9,852			2.0			9,481			1.9			1,313			13.3			1,684			17.7
Payables to Contractors and Equipment Suppliers		276			9,066			1.7			11,247			2.3			33,428			6.7			(2,181	)		(19.4	)		(24,362	)		(72.9	)
Accrued Expenses and Other Current Liabilities		443			14,558			2.8			13,846			2.8			10,128			2.1			712			5.1			4,430			43.8
Current Portion of Bonds Payable		0			5			0.1			10,505			2.1			10,500			2.1			(10,500	)		(99.9	)		(10,495	)		(99.9	)

Total Current Liabilities		1,069			35,122			6.8			46,575			9.4			63,919			12.9			(11,453	)		(24.6	)		(28,797	)		(45.1	)

Bonds Payable		594			19,500			3.8			19,500			3.9			19,500			3.9			0			0.0			0			0.0
Other Long Term Liabilities		567			18,649			3.5			18,144			3.7			16,994			3.3			505			2.8			1,655			9.7

Total Liabilities		2,230			73,271			14.1			84,219			17.0			100,413			20.1			(10,948	)		(13.0	)		(27,142	)		(27.0	)


Shareholders’ Equity Attributable to Shareholders of the Parent
Common Stock		7,528			247,300			47.6			247,273			49.8			232,520			46.6			27			0.0			14,780			6.4
Capital Surplus		1,739			57,118			11.0			56,777			11.3			56,537			11.3			341			0.6			581			1.0
Retained Earnings		4,346			142,771			27.5			108,871			22.0			113,730			22.8			33,900			31.1			29,041			25.5
Treasury Stock		(28	)		(918	)		(0.2	)		(1,550	)		(0.3	)		(1,595	)		(0.3	)		632			(40.8	)		677			(42.4	)
Others		(19	)		(641	)		(0.1	)		(260	)		(0.1	)		(2,227	)		(0.5	)		(381	)		146.3			1,586			(71.2	)

Total equity attributable to shareholders of the parent		13,566			445,630			85.8			411,111			82.7			398,965			79.9			34,519			8.4			46,665			11.7
Minority interest		19			608			0.1			786			0.3			76			0.0			(178	)		(22.6	)		532			703.3

Total shareholders’ equity		13,585			446,238			85.9			411,897			83.0			399,041			79.9			34,341			8.3			47,197			11.8

Total Liabilities & Shareholders’ Equity	$	15,815		$	519,509			100.0		$	496,116			100.0		$	499,454			100.0		$	23,393			4.7		$	20,055			4.0


Note:	(1)	Amounts in NTD have been translated into USD at the rate of NT$32.85 as of December 31, 2005

	(2)	Certain prior period balances have been reclassified to conform to the current period presentation.

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED AND SUBSIDIARIES
Condensed Income Statements (Consolidated)
For the Three Months Ended December 31, 2005 and September 30, 2005
(Expressed in Million New Taiwan Dollars (“NTD”) and U.S. Dollars (“USD)⁽¹⁾
Except For Per Share Amount and Shares Outstanding)


	Q4 2005									Q3 2005						QoQ
	USD			NTD			%			NTD			%			Amount			%
Net Sales	$	2,508		$	80,661			100.0		$	70,502			100.0		$	10,159			14.4
Cost of Sales		(1,223	)		(39,347	)		(48.8	)		(39,545	)		(56.1	)		198			(0.5	)

Gross Profit		1,285			41,314			51.2			30,957			43.9			10,357			33.5

Operating Expenses
Research and Development Expenses		(111	)		(3,570	)		(4.4	)		(3,473	)		(4.9	)		(97	)		2.8
General and Administrative Expenses		(60	)		(1,911	)		(2.4	)		(2,410	)		(3.5	)		499			(20.8	)
Sales and Marketing Expenses		(44	)		(1,424	)		(1.8	)		(898	)		(1.3	)		(526	)		58.7

Total Operating Expenses		(215	)		(6,905	)		(8.6	)		(6,781	)		(9.7	)		(124	)		1.8


Income from Operations		1,070			34,409			42.6			24,176			34.2			10,233			42.3


Non-Operating Incomes (Expenses), Net		21			640			0.8			20			0.1			620			3,162.4
Investment Gains (Losses)		16			540			0.7			271			0.4			269			98.9

Income before Income Tax		1,107			35,589			44.1			24,467			34.7			11,122			45.5


Income Tax Benefits (Expenses)		(53	)		(1,692	)		(2.1	)		57			0.1			(1,749	)		(3,049.9	)


Net Income	$	1,054		$	33,897			42.0		$	24,524			34.8		$	9,373			38.2


Attributable to:
Shareholders of the parent	$	1,054		$	33,900			42.0		$	24,488			34.7		$	9,412			27.8
Minority Interest		—			(3	)		0.0			36			0.1			(39	)		1,300.0

	$	1,054		$	33,897			42.0		$	24,524			34.8		$	9,373			27.7


Earnings per Common Shares — Diluted	$	0.04		$	1.37					$	0.99

Earnings per ADR ⁽²⁾	$	0.21		$	6.86					$	4.97


Weighted Average Outstanding Shares (‘M) ⁽³⁾					24,693						24,690


Note:	(1)	Amounts in NTD have been translated into USD at the weighted average rate of NTD33.456 for the fourth quarter of 2005.

	(2)	1 ADR equals 5 ordinary shares.

	(3)	Total diluted weighted average outstanding shares were 24,693M shares for 4Q05 and 24,690M shares for 3Q05 after the retroactive adjustments for stock dividends and stock bonus.


		TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED AND SUBSIDIARIES Condensed Income Statements (Consolidated) For the Twelve Months Ended December 31, 2005 and 2004 (Expressed in Million New Taiwan Dollars (“NTD”) and U.S. Dollars (“USD”)⁽¹⁾ Except for Per Share Amount and Shares Outstanding)


	2005									2004						YoY
	USD			NTD			%			NTD			%			Amount			%
Net Sales	$	8,334		$	267,998			100.0		$	257,213			100.0		$	10,785			4.2
Cost of Sales		(4,658	)		(149,795	)		(55.9	)		(141,394	)		(55.0	)		(8,401	)		5.9

Gross Profit		3,676			118,203			44.1			115,819			45.0			2,384			2.1

Operating Expenses
Research and Development Expenses		(436	)		(14,016	)		(5.2	)		(12,515	)		(4.9	)		(1,501	)		12.0
General and Administrative Expenses		(283	)		(9,086	)		(3.4	)		(11,454	)		(4.5	)		2,368			(20.7	)
Sales and Marketing Expenses		(128	)		(4,132	)		(1.5	)		(3,368	)		(1.3	)		(764	)		22.7

Total Operating Expenses		(847	)		(27,234	)		(10.1	)		(27,337	)		(10.7	)		103			(0.4	)


Income from Operations		2,829			90,969			34.0			88,482			34.3			2,487			2.8


Non-Operating Incomes (Expenses), Net		57			1,861			0.8			1,391			0.5			470			33.9
Investment Gains (Losses)		45			1,433			0.5			2,093			0.8			(660	)		(31.6	)

Income before Income Tax		2,931			94,263			35.3			91,966			35.6			2,297			2.5


Income Tax Benefits (Expenses)		(19	)		(630	)		(0.2	)		363			0.1			(993	)		(273.5	)


Net Income	$	2,912		$	93,633			35.1		$	92,329			35.7		$	1,304			1.4


Attributable to:
Shareholders of the parent	$	2,910		$	93,575			35.0		$	92,316			35.7		$	1,259			1.3
Minority Interest		2			58			0.1			13			0.0			45			77.6

	$	2,912		$	93,633			35.1		$	92,329			35.7		$	1,304			1.4


Diluted Earnings Per Ordinary Share	$	0.12		$	3.82					$	3.95

Earnings Per ADR ⁽²⁾	$	0.59		$	19.10					$	19.75


Weighted Average Outstanding Shares (‘M) ⁽³⁾					24,693						24,724


Note:	(1)	Amounts in NTD have been translated into USD at the weighted average rate of NTD 32.157 for the twelve months of 2005.

	(2)	1 ADR equals 5 ordinary shares.

	(3)	Total diluted weighted average outstanding shares were 24,693M shares for the twelve months ended December 31, 2005 and 24,724M shares for the twelve months ended December 31, 2004 after the retroactive adjustments for stock dividends and stock bonus.


		TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED AND SUBSIDIARIES Condensed Statements of Cash Flows (Consolidated) For the Twelve Months Ended December 31, 2005 (Figures in Million of New Taiwan Dollars (“NTD”) and U.S. Dollars (“USD”)) ⁽¹⁾


	12 Months 2005						4Q 2005			3Q 2005
	USD			NTD			NTD			NTD
Cash Flows from Operating Activities:
Net Income	$	2,910		$	93,575		$	33,900		$	24,488
Net Income attributable to minority interest		2			58			(3	)		36
Depreciation & Amortization		2,352			75,649			18,664			19,006
Deferred Income Tax		(104	)		(3,354	)		(953	)		(1,220	)
Investment Loss(Income) From Equity Method Investees		(45	)		(1,433	)		(539	)		(271	)
Changes in Working Capital & Others		(232	)		(7,482	)		(983	)		(2,125	)

Net Cash Provided from Operating Activities		4,883			157,013			50,086			39,914

Cash Flows from Investing Activities:
Decrease(Increase) in Short Term Investments		216			6,954			1,779			424
Increase in Long Term Investments		(456	)		(14,675	)		(7,615	)		(3,697	)
Acquisition of Properties, Plant and Equipment		(2,484	)		(79,879	)		(13,618	)		(10,599	)
Proceeds from Disposal of Long Term Investments		328			10,534			5,965			3,035
Proceeds from Disposal of Properties, Plant and Equipment		15			481			206			147
Decrease in Others		(27	)		(855	)		(101	)		(231	)

Net Cash Used By Investing Activities		(2,408	)		(77,440	)		(13,384	)		(10,921	)

Cash Flows from Financing Activities:
Cash Dividend — Common Shares		(1,444	)		(46,420	)		—			(46,420	)
Bonus Paid to Employees, Directors and Supervisors		(103	)		(3,318	)		—			(3,086	)
Repayment of Long Term Bonds Payable		(327	)		(10,500	)		(9,504	)		(49	)
Increase(Decrease) in Guarantee Deposits		77			2,484			531			847
Proceeds from Exercise of Stock Options		8			271			105			166

Increase(Decrease) in Others		(15	)		(486	)		(1,150	)		549

Net Cash Used By Financing Activities		(1,804	)		(57,969	)		(10,018	)		(47,993	)
					0

Net Increase (Decrease) in Cash and Cash Equivalents		671			21,604			26,684			(19,000	)


Effect of exchange rate changes on cash and cash equivalents and others		11			349			363			33

Effect of first inclusion for consolidation of certain subsidiaries		7			229			(145	)		144

Cash and Cash Equivalents at Beginning of Period		2,311			74,302			69,582			88,405


Cash and Cash Equivalents at End of Period	$	3,000		$	96,484		$	96,484		$	69,582


Note :	(1)	Amounts in NTD have been translated into USD at the rate of NTD32.157 , the weighted average rate for the twelve months ended December 31, 2005.

	(2)	Certain prior period amounts have been reclassified to conform to the current period presentation.

TSMC 2005 Fourth Quarter Results Investor Conference January 26th, 2006

Agenda Welcome 2005 4Q Financial Results Lora Ho, CFO (unconsolidated) Remarks Rick Tsai, CEO Q&A

Safe Harbor Notice TSMC's statements of its current expectations are forward- looking statements subject to significant risks and uncertainties and actual results may differ materially from those contained in the forward-looking statements. Information as to those factors that could cause actual results to vary can be found in TSMC's Annual Report on Form 20-F filed with the United States Securities and Exchange Commission (the "SEC") on May 16, 2005, TSMC's registration statement on Form F-3, filed with the SEC on July 5, 2005, and such other documents as TSMC may file with, or submit to, the SEC from time to time. Except as required by law, we undertake no obligation to update any forward-looking statement, whether as a result of new information, future events, or otherwise.

* Annualized ROE for the quarter. 4Q'05 Result Highlights

Income Statement - QoQ Comparison

Income Statement - YoY Comparison

Balance Sheet & Key Indices

Cash Flows

Note: 1 Figures represent number of 6" wafers. Conversion to 8"-equivalent wafers is by dividing this number by 1.78. 2 Figures represent number of 12" wafers. Conversion to 8"-equivalent wafers is by multiplying this number by 2.25. Installed Capacity by Fab

Capital Expenditures

Sales Breakdown by Technology

Sales Breakdown by Application

Note: This chart does not reflect the actual shipment destination of sales. Sales Breakdown by Geography

Sales Breakdown by Customer

2005 Highlights

1Q'06 Guidance Revenues to be between NT$73 billion and NT$76 billion; Gross profit margin to be between 46% and 48%; Operating profit margin to be approximately 39%; 2006 Capital expenditure to be in the range of US$2.6 billion- US$2.8 billion.

Recap of Recent Major Events - 1/2 TSMC has entered full production of its 80 nanometer process technology for high- performance designs (2006/01/18) TSMC has pledged NT$120 million for the phase II project of the Chemistry Research Center at National Taiwan University (2005/12/16) TSMC successfully manufactured industry's first network search engine using its 90 nanometer process technology for Integrated Device Technology, Inc. , achieving new levels of performance, cost and power consumption (2005/12/07) TSMC was voted The Best Large Cap Company in Taiwan region by AsiaMoney (2005/12/01) TSMC board of directors approved capital appropriation of US$706.5 million to expand its 65 nanometer, 0.18 micron and 0.15 micron capacities (2005/11/08)

Recap of Recent Major Events - 2/2 TSMC board of directors approved the investment of up to US$75 million in establishing a new venture capital fund (2005/11/08) TSMC won 6 out of 11 award categories at the IR Magazine Hong Kong and Taiwan Awards, including Grand Prix for Best Overall Investor Relations - Large Cap and Best Corporate Governance (2005/11/04) TSMC was ranked No. 8 of the Top 50 Management Teams in Asia by CFO Asia magazine (2005/10) * Please visit TSMC's Web site (http://www.tsmc.com) for details and other announcements. * Starting from 1Q05, TSMC will post quarterly consolidated financial statements, in addition to the unconsolidated financial statements, on our web site.

http://www.tsmc.com invest@tsmc.com

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.