Edgar Filing: TAIWAN SEMICONDUCTOR MANUFACTURING CO LTD

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 July 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


		2Q06		Quarterly Management Report July 27, 2006

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

•		Capacity

•		Profit & Expense Analysis

•		Financial Condition Review

•		Cash Flow & CapEx

•		Reconciliation of Consolidated and Unconsolidated Financial Results

•		Recap of Recent Important Events & Announcements

Operating Results Review:

Summary:


*(Amounts are on consolidated basis and are in*
*NT$ billion except noted otherwise)*	2Q06			1Q06			2Q05			QoQ			YoY
EPS (NT$ per com. shr.)		1.32			1.26			0.71			4.3	%		84.8	%
(US$ per ADR unit)		0.20			0.20			0.11

Consolidated Net Sales		82.12			77.85			59.98			5.5	%		36.9	%
Gross Profit		42.50			37.73			24.25			12.6	%		75.2	%
Gross Margin		51.8	%		48.5	%		40.4	%
Operating Expense		(7.18	)		(6.82	)		(7.04	)		5.1	%		1.9	%
Non-Operating Items ⁽¹⁾		0.95			3.62			0.69			(73.8	%)		37.7	%
Consolidated Net Income		34.00			32.61			18.37			4.3	%		85.1	%
Net Profit Margin		41.4	%		41.9	%		30.6	%

Wafer Shipment (kpcs 8 inch-equiv.)		1,869			1,738			1,275			7.5	%		46.6	%


*(1)*		*Includes cumulative effects of change in accounting principle.*

Remarks:

The second quarter consolidated EPS of NT$1.32 represents an 84.8% increase over the same period last year and a 4.3% sequential increase. The consolidated operating results of 2Q06 are summarized below:

Second quarter net sales increased by 36.9% year-over-year to reach NT$82.12 billion compared to NT$59.98 billion reported in 2Q05. On a sequential basis, net sales increased by 5.5% compared to NT$77.85 billion reported in the previous quarter. Growth was driven by strong demand in the consumer and communication segments.

Gross profit for 2Q06 was NT$42.5 billion, representing a year-over-year increase of 75.2% and a sequential increase of 12.6%. Gross margin rose from 48.5% in the previous quarter to 51.8% in the second quarter, an improvement of 3.3 percentage points.

Operating expenses were NT$7.18 billion or 8.8% of the net sales. The combined result from non-operating income and long-term investments was a gain of NT$0.95 billion.

Consolidated net income attributable to shareholders of the parent company was NT$34 billion, up 85.1% over the same period last year and up 4.3% sequentially. Net profit margin was 41.4%.



TSMC
July 27, 2006		Page 2

I. Consolidated Revenue Analysis

I. Wafer Sales Analysis


By Application	2Q06			1Q06			2Q05
Computer		30	%		37	%		38	%
Communication		44	%		39	%		37	%
Consumer		20	%		18	%		18	%
Industrial/Others		5	%		5	%		6	%
Memory		1	%		1	%		1	%


By Technology	2Q06			1Q06			2Q05
N90-		24	%		20	%		2	%
0.11/0.13um		25	%		29	%		41	%
0.15/0.18um		32	%		32	%		34	%
0.25/0.35um		14	%		14	%		17	%
0.50um+		5	%		5	%		6	%


By Customer Type	2Q06			1Q06			2Q05
Fabless/System		72	%		74	%		74	%
IDM		28	%		26	%		26	%


By Geography	2Q06			1Q06			2Q05
North America		77	%		78	%		77	%
Asia Pacific		10	%		11	%		9	%
Europe		9	%		7	%		8	%
Japan		4	%		4	%		6	%

Consolidated Revenue Analysis:

Consolidated net sales were NT$82.12 billion for 2Q06, mainly driven by strong demand from our customers in communication and consumer segments.

On a sequential basis, revenues from consumer and communication applications increased by 21% and 19%, respectively, while revenues from computer applications declined by 16%.

Revenue from advanced technologies (0.13-micron and below) accounted for 49% of total wafer sales, flat from the previous quarter. Revenue from 90nm process technology continued to increase and accounted for 24% of total wafer sales during the second quarter, compared to 20% in the first quarter of 2006.

IDM accounted for 28% of total wafer sales during the quarter, up from 26% in the previous quarter.

Geographically, North America accounted for 77% of total wafer sales. Meanwhile, sales from Asia Pacific, Europe and Japan accounted for 10%, 9% and 4% of wafer sales, respectively.



TSMC
July 27, 2006		Page 3

II. Capacity


	1Q06		2Q06		3Q06		4Q06		2006
Fab / (Wafer size)	(A)		(A)		(Est.)		(Est.)		(Est.)
Fab-2 (6")¹		244		258		258		266		1,025
Fab-3 (8")		246		252		265		258		1,021
Fab-5 (8")		135		138		147		153		573
Fab-6 (8")		215		222		233		248		918
Fab-7 (8")		33		23		4		0		60
Fab-8 (8")		231		233		234		248		946
Fab-12 (12")²		142		150		157		166		616
Fab-14 (12")²		61		66		86		105		318
Wafer Tech (8")		99		100		101		104		404
TSMC (Shanghai) (8")		48		52		73		90		262
TSMC total capacity (8" equiv. Kpcs)		1,602		1,650		1,748		1,860		6,860
SSMC (8")		49		50		51		52		202
Total managed capacity (8" equiv. Kpcs)		1,651		1,700		1,799		1,912		7,062


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

III. Consolidated Profit & Expense Analysis

III - 1. Consolidated Gross Profit Analysis

(Amount: NT$ billion)

2Q06

1Q06

2Q05

COGS

39.6

40.1

35.7

Depreciation

16.5

16.2

17.5

Other MFG Cost

23.1

23.9

18.2

Gross Profit

42.5

37.7

24.3

Gross Margin

51.8

48.5

40.4

Capacity :

Total TSMC managed capacity in 2Q06 was 1,700K 8-inch equivalent wafers, 3% higher than the 1,651K 8-inch equivalent wafers in 1Q06.

TSMC managed capacity in 3Q06 will increase to 1,799K 8-inch equivalent wafers, representing a 5.8% sequential growth.

Overall installed capacity for year 2006 is expected to be approximately 7,062K 8-inch equivalent wafers, representing a slight increase from our previous forecast provided in April 2006.

Consolidated Gross Profit Analysis:

Consolidated gross profit for the second quarter of 2006 was NT$42.5 billion, representing a year-over-year increase of 75.2% and a sequential increase of 12.6%. Consolidated gross margin improved by 3.3 percentage points sequentially to 51.8%, largely due to higher levels of wafer output and productivity improvements.



TSMC
July 27, 2006		Page 4

III - 2. Consolidated Operating Expenses *

(Amount: NT$ billion)

2Q06

1Q06

2Q05

Total Operating Exp.

7.18

6.82

7.04

SG&A

3.13

3.04

3.48

Research & Development

4.05

3.78

3.56


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

III - 3. Consolidated Non-Operating Items *


(Amount: NT$ million)	2Q06			1Q06		2Q05
Non-Operating Income/(Exp.)		299			1,417		464
Net Interest Income/(Exp.)		924			775		268
Other Non-Operating		(625	)		642		196

L-T Investments		650			600		226
SSMC		471			462		140
Others		179			138		86

Change in Accounting Principle **		0			1,607		0

Total Non-Operating Items		949			3,624		690


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

**		For financial statement purposes, cumulative effect of changes in accounting principles is presented as a separate line item after income tax expenses.

Consolidated Operating Expenses:

Consolidated operating expenses for 2Q06 were NT$7.18 billion, slightly higher than the previous quarter. Higher operating expenses were largely the result of increased R&D expenditures on various 65nm projects. Total operating expenses represented 8.8% of net sales, flat from the previous quarter.

Consolidated Non-Operating Items:

Combined result from non-operating income and long-term investments was a gain of NT$949 million for 2Q06.

Consolidated non-operating income totaled NT$299 million during the second quarter of 2006, compared to an income of NT$1,417 million in the previous quarter. The decrease in non-operating income was mainly due to the mark-to-market adjustment recorded as a result of the decline in the market value of certain marketable securities held through TSMC venture capital funds.

Consolidated net investment income was NT$650 million in this quarter, compared to an income of NT$600 million in 1Q06. The increase was primarily due to improved operating performance at TSMC’s affiliates.

During the first quarter of 2006, TSMC adopted SFAS No. 34, which requires marketable securities with readily determinable market value measured at fair value with unrealized gains and losses on trading securities recognized in earnings for the current period. As a result of adopting SFAS No. 34, TSMC recognized a one-time gain of NT$1.6 billion in 1Q06 as the cumulative effect of changes in accounting principles.



TSMC
July 27, 2006		Page 5

IV. Financial Condition Review

IV - 1. Liquidity Analysis *


(Amount: NT$ Billion)	2Q06		1Q06		2Q05
Cash & Marketable Securities		211.6		192.3		138.1
Accounts Receivable — Trade		38.0		38.0		32.1
Inventory		20.1		18.4		15.2
Total Current Assets		279.7		259.3		194.0
Accounts Payable		27.5		22.4		19.0
Accrued Liabilities and Others		82.8		18.5		71.1
Total Current Liabilities		110.3		40.9		90.1
Current Ratio (x)		2.5		6.3		2.2
Net Working Capital		169.4		218.4		103.9


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

IV - 2. Consolidated Receivable/Inventory Days


	2Q06		1Q06		2Q05
Days of Receivable		44		46		48
Days of Inventory		47		44		41

IV - 3. Consolidated Debt Service *


(Amount: NT$ Billion)	2Q06		1Q06		2Q05
Cash & Marketable Securities		211.6		192.3		138.1
Interest-Bearing Debt		27.2		27.2		37.6
Net Cash Reserves		184.4		165.1		100.5


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

Liquidity Analysis:

Consolidated cash & marketable securities increased by NT$19.3 billion in this quarter, mainly due to strong cash flows from operating activities. As a result, TSMC ended the quarter with total current assets of NT$279.7 billion, NT$20.4 billion higher than the previous quarter.

Consolidated current liabilities were NT$110.3 billion at the end of the quarter, NT$69.4 billion higher than the previous quarter, mainly due to an NT$65 billion payable accrued for cash dividends and employee bonuses.

As a result, net consolidated working capital decreased to NT$169.4 billion and current ratio decreased to 2.5x.

Consolidated Receivable/Inventory Days Trend:

Consolidated days of receivable decreased to 44 days in 2Q06, compared to 46 days in the previous quarter.

Consolidated days of inventory increased to 47 days from 44 days in the first quarter of 2006.

Consolidated Debt Service:

As a result of strong operating performance during the quarter, consolidated net cash reserves - defined as the excess of cash and short-term marketable securities over interest-bearing debt - increased by NT$19.3 billion to NT$184.4 billion in 2Q06.

Consolidated interest-bearing debt remained flat at NT$27.2 billion as of June 30, 2006.



TSMC
July 27, 2006		Page 6

V. Cash Flow & CapEx

V - 1. Consolidated Cash Flow Analysis


(Amount: NT$ billion)	2Q06			1Q06			2Q05
Net Income		34.0			32.6			18.4
Depreciation & Amortization		17.9			17.7			19.5
Other Op Sources/(Uses)		(1.5	)		(1.4	)		(9.3	)
Total Op Sources/(Uses)		50.4			48.9			28.6


Capital Expenditure		(21.4	)		(11.5	)		(14.2	)
Marketable Financial Instruments		(7.8	)		(12.8	)		2.8
Other Investing Sources/(Uses)		(1.1	)		0.2			(0.4	)
Net Investing Sources/(Uses)		(30.3	)		(24.1	)		(11.8	)


Repayment of Corporate Bonds		(0.0	)		(0.0	)		(0.9	)
Other Financing Sources/(Uses)		0.1			0.1			0.9

Net Financing Sources/(Uses)		0.1			0.1			(0.0	)


Net Cash Position Changes		20.2			24.9			16.8

Exchange Rate Changes & Others		(0.0	)		(0.2	)		0.1

Ending Cash Balance		141.5			121.3			88.4


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

V - 3. Capital Spending

(Amount: US$ Million)

1Q06

2Q06

YTD

TSMC

344

653

997

TSMC (Shanghai) & WaferTech

Total TSMC

356

664

1,020

Summary of Consolidated Cash Flow:

During this quarter, TSMC generated NT$50.4 billion from operating activities, mainly from net income of NT$34 billion and depreciation & amortization of NT$17.9 billion.

Net cash used in investment activities totaled NT$30.3 billion, mainly as a result of an NT$21.4 billion in capital spending and an NT$7.8 billion net increase in marketable financial instruments.

Net cash provided by financing activities was NT$0.1 billion during this quarter.

As a result, TSMC ended the quarter with a cash balance of NT$141.5 billion, NT$20.2 billion higher than in 1Q06.

Consolidated Operating and Free Cash Flows:

TSMC continues to generate strong free cash flows. Consolidated free cash flows totaled NT$29 billion in 2Q06, NT$8.4 billion lower than the NT$37.4 billion generated in the previous quarter, mainly due to higher level of capital expenditures in 2Q06.

Capital Spending:

Capital spending for TSMC consolidated group totaled US$664 million during the quarter. Most of the spending was for the purchase of 12-inch production equipment.

For year 2006, total capital expenditure for TSMC consolidated group is expected to be in the range of US$2.6 billion to US$2.8 billion, unchanged from our previous guidance provided in January 2006.



TSMC
July 27, 2006		Page 7


VI.		Reconciliation of Consolidated and Unconsolidated Financial Results

VI - 2. Consolidated v. Unconsolidated Income Statement


(Amount: NT$ billion)	Consolidated			Unconsolidated			Difference
Net Sales		82.1			81.2			0.9
COGS		(39.6	)		(40.3	)		0.7

Gross Profit		42.5			40.9			1.6
Gross Margin %		51.8	%		50.3	%		1.4	%
Operating Expenses
Research & Development		(4.1	)		(3.7	)		(0.3	)
SG&A		(3.1	)		(2.2	)		(0.9	)

Total Operating Expenses		(7.2	)		(5.9	)		(1.3	)

Operating Income		35.3			35.0			0.3
Operating Margin %		43.0	%		43.1	%		0.0	%

Non-Operating Items		0.9			1.3			(0.3	)

Income Tax Benefit (Expense)		(2.3	)		(2.2	)		(0.0	)

Minority Interest		0.0			0.0			0.0
Net Income		34.0			34.0			0.0

Net Margin %		41.4	%		41.9	%		-0.5	%

Consolidated Structure

TSMC consolidated results include the results from its overseas sales offices (TSMC North America, TSMC Europe, TSMC Japan and TSMC Korea), manufacturing subsidiaries (TSMC (Shanghai) and WaferTech), strategic alliance (Global Unichip Corp.), venture capital funds, and others. These entities are collectively referred to as “TSMC consolidating entities” hereafter.

Income Statement

Consolidated net sales for 2Q06 were NT$82.1 billion, NT$0.9 billion higher than the unconsolidated net sales. Higher consolidated net sales reflect sales contributions from TSMC consolidating entities. Consolidated gross margin was 51.8%, compared to 50.3% on the unconsolidated basis. The higher consolidated gross margin reflects the true gross margin from TSMC consolidating subsidiaries.

Consolidated operating expenses were NT$7.2 billion for 2Q06, NT$1.3 billion higher than the unconsolidated operating expenses. The higher consolidated operating expenses were mainly attributable to additional sales & marketing expenses from TSMC overseas sales offices and additional G&A and R&D expenses from other TSMC consolidating entities. Total consolidated operating expenses accounted for 8.8% of consolidated net sales, compared to 7.2% on the unconsolidated basis.

On a consolidated basis, the combined result from non-operating income and long-term investments was a gain of NT$0.9 billion, NT$0.3 billion lower than that on the unconsolidated basis. Higher unconsolidated gain from non-operating items reflects TSMC’s share of income from the consolidating subsidiaries.

Consolidated net income attributable to shareholders of the parent company was NT$34 billion, same as that on the unconsolidated basis. Consolidated net margin was 41.4%, 0.5% lower than the unconsolidated net margin, reflecting higher consolidated net sales.



TSMC
July 27, 2006		Page 8

VI - 3. Consolidated v. Unconsolidated Balance Sheet

(Selected Balance Sheet Items)


(Amount: NT$ billion)	Consolidated		Unconsolidated		Difference
Cash & Marketable Securities		211.6		195.9		15.7
Accounts Receivable — Trade		38.0		36.1		1.9
Inventory		20.1		18.4		1.7
Total Current Assets		279.7		259.9		19.8

Long-Term Investments		42.8		83.2		(40.4	)
Fixed Assets, Net		251.1		223.2		27.9

Total Assets		593.7		581.6		12.1

Total Current Liabilities		110.3		107.2		3.1
L/T Interest-Bearing Debt		24.7		17.0		7.7

Total Liabilities		146.2		134.8		11.5

Total Equity		447.5		446.8		0.7

VI - 4. Consolidated v. Unconsolidated Cash Flows

(Amount: NT$ billion)

Consolidated

Unconsolidated

Difference

Cash Flows Provided by Operating Activities

50.4

47.0

3.4

Depreciation & Amortization

17.9

16.2

1.7

Cash Flows Used in Investing Activities

(30.3

)

(29.4

)

(0.9

)

Capital Expenditures

(21.4

)

(21.1

)

(0.3

)

Cash Flows Provided by Financing Activities

0.1

(0.0

)

Net Cash Increase (Decrease)

20.2

17.7

2.5

Balance Sheet

On a consolidated basis, as a result of higher cash and marketable securities, total current assets were NT$279.7 billion, NT$19.8 billion higher than the unconsolidated total current assets.

Consolidated long-term investments were NT$42.8 billion for 2Q06, compared to NT$83.2 billion on the unconsolidated basis. Higher unconsolidated long-term investments reflect TSMC’s investments in its consolidating subsidiaries.

Consolidated net fixed assets totaled NT$251.1 billion, NT$27.9 billion higher than the unconsolidated net fixed assets, mainly due to manufacturing facilities located at TSMC’s consolidating entities.

Total consolidated liabilities were NT$146.2 billion, compared to NT$134.8 billion on the unconsolidated basis, as total unconsolidated liabilities does not reflect the borrowings by TSMC’s consolidating entities.

Cash Flows

Consolidated cash flows provided by operating activities were NT$50.4 billion in 2Q06, NT$3.4 billion higher than that on the unconsolidated basis, as consolidated operating cash flows included additional depreciation & amortization expenses from TSMC consolidating entities.

Consolidated cash flows used in investing activities totaled NT$30.3 billion in 2Q06, slightly higher than that on the unconsolidated basis.

Consolidated cash flows provided by financing activities were NT$0.1 billion in 2Q06, same as that on the unconsolidated basis.


TSMC
July 27, 2006		Page 9

VII. Recap of Recent Important Events & Announcements

•		TSMC and ARM Collaboration Achieves Significant Power Reduction on First 65nm Low-Power Test Chip (2006/07/18)

•		TSMC Continues Industry Leadership with Reference Flow 7.0 (2006/07/17)

•		TSMC Bolsters Design Ecosystem with DFM-Compliant EDA Tools and Data Kit for 65nm Design (2006/07/17)

•		TSMC Sets June 20, 2006 as the ex-Dividend Date for Common Share Dividend (2006/06/06)

•		TSMC is Production-Ready for 65nm X Architecture Designs (2006/05/25)

•		TSMC 65-Nanometer Process Moves to Volume Production (2006/05/17)

•		TSMC Senior Vice President of R&D Dr. Shang-Yi Chiang to Retire (2006/05/17)

•		TSMC Board of Directors Unanimously Re-elects Dr. Morris Chang as Chairman (2006/05/16)

•		TSMC Shareholders Approve NT$2.5 Cash and 3% Stock Dividend (2006/05/16)

•		TSMC Unveils First 65-Nanometer Data-Driven DFM Design Ecosystem (2006/05/15)

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


	June 30, 2006 (Audited)									March 31, 2006 (Unaudited)						June 30, 2005 (Audited)⁽²⁾							QoQ						YoY
	USD			NTD			%			NTD			%			NTD			%				Amount			%			Amount			%
ASSETS
Current Assets
Cash and Cash Equivalents	$	3,942		$	127,713			22.0		$	109,990			20.2		$	78,597			15.8			$	17,723			16.1		$	49,116			62.5
Investments in Marketable Financial Instruments		2,104			68,164			11.7			67,994			12.5			49,530			9.9				170			0.2			18,634			37.6
Accounts Receivable — Trade		1,114			36,077			6.2			35,780			6.6			30,116			6.0				297			0.8			5,961			19.8
Inventories, Net		567			18,376			3.2			16,901			3.1			14,114			2.8				1,475			8.7			4,262			30.2
Other Current Assets		295			9,570			1.6			10,123			1.9			9,470			1.9				(553	)		(5.5	)		100			1.1

Total Current Assets		8,022			259,900			44.7			240,788			44.3			181,827			36.4				19,112			7.9			78,073			42.9


Long Term Investments		2,569			83,217			14.3			75,439			13.9			76,434			15.3				7,778			10.3			6,783			8.9


Properties, Plant and Equipment		18,872			611,448			105.1			586,213			107.8			555,917			111.3				25,235			4.3			55,531			10.0
Less: Accumulated Depreciation		(11,982	)		(388,229	)		(66.7	)		(373,691	)		(68.7	)		(330,854	)		(66.2	)			(14,538	)		3.9			(57,375	)		17.3

Properties, Plant and Equipment, Net		6,890			223,219			38.4			212,522			39.1			225,063			45.1				10,697			5.0			(1,844	)		(0.8	)


Other Assets		471			15,287			2.6			14,975			2.7			16,108			3.2				312			2.1			(821	)		(5.1	)

Total Assets	$	17,952		$	581,623			100.0		$	543,724			100.0		$	499,432			100.0			$	37,899			7.0		$	82,191			16.5


LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts Payables	$	310		$	10,053			1.7		$	10,874			2.0		$	7,827			1.6		(	$	821	)		69.4		$	2,226			(28.3	)
Payables to Contractors and Equipment Suppliers		523			16,952			2.9			11,621			2.1			10,004			2.0				5,331			45.9			6,948			69.4
Accrued Expenses and Other Current Liabilities		2,400			77,730			13.4			13,352			2.4			58,393			11.7				64,378			482.2			19,337			34.0
Current Portion of Bonds Payable		77			2,500			0.4			2,500			0.6			10,500			2.1				—			—			(8,000	)		(76.2	)

Total Current Liabilities		3,310			107,235			18.4			38,347			7.1			86,724			17.4				68,888			179.6			20,511			23.7

Bonds Payable		525			17,000			2.9			17,000			3.1			19,500			3.9				—			—			(2,500	)		(12.8	)
Other Long Term Liabilities		325			10,556			1.9			10,444			1.9			9,008			1.8				112			1.1			1,548			17.2

Total Liabilities		4,160			134,791			23.2			65,791			12.1			115,232			23.1				69,000			104.9			19,559			17.0


Shareholders’ Equity
Common Stock		7,970			258,234			44.4			247,331			45.5			247,261			49.5				10,903			4.4			10,973			4.4
Capital Surplus		1,661			53,822			9.3			57,208			10.5			56,721			11.3				(3,386	)		(5.9	)		(2,899	)		(5.1	)
Retained Earnings		4,220			136,723			23.5			175,378			32.3			84,383			16.9				(38,655	)		(22.0	)		52,340			62.0
Others		(31	)		(1,029	)		(0.2	)		(1,066	)		(0.2	)		(2,613	)		(0.5	)			37			(3.4	)		1,584			(60.6	)
Treasury Stock		(28	)		(918	)		(0.2	)		(918	)		(0.2	)		(1,552	)		(0.3	)			0			0.0			634			(40.9	)

Total Shareholders’ Equity		13,792			446,832			76.8			477,933			87.9			384,200			76.9				(31,101	)		(6.5	)		62,632			16.3

Total Liabilities & Shareholders’ Equity	$	17,952		$	581,623			100.0		$	543,724			100.0		$	499,432			100.0			$	37,899			7.0		$	82,191			16.5


Note :	(1)	Amounts in NTD have been translated into USD at the rate of NT$32.399 as of June 30, 2006.

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

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED
Unaudited Condensed Income Statements (Unconsolidated)
For the Three Months Ended June 30, 2006, March 31, 2006 and June 30, 2005
(Expressed in Million New Taiwan Dollars (“NTD”) and U.S. Dollars (“USD”) ⁽¹⁾
Except for Per Share Amounts and Shares Outstanding)


	Q2 2006									Q1 2006						Q2 2005						QoQ						YoY
	USD			NTD			%			NTD			%			NTD			%			Amount			%			Amount			%
Net Sales	$	2,525		$	81,227			100.0		$	77,293			100.0		$	58,516			100.0		$	3,934			5.1		$	22,711			38.8
Cost of Sales		(1,254	)		(40,340	)		(49.7	)		(40,651	)		(52.6	)		(35,311	)		(60.3	)		311			(0.8	)		(5,029	)		14.2

Gross Profit		1,271			40,887			50.3			36,642			47.4			23,205			39.7			4,245			11.6			17,682			76.2

Operating Expenses
Research and Development Expenses		(115	)		(3,707	)		(4.6	)		(3,549	)		(4.6	)		(3,283	)		(5.6	)		(158	)		4.5			(424	)		12.9
General and Administrative Expenses		(57	)		(1,825	)		(2.1	)		(1,555	)		(2.0	)		(1,799	)		(3.1	)		(270	)		17.4			(26	)		1.4
Sales and Marketing Expenses		(12	)		(382	)		(0.5	)		(671	)		(0.9	)		(339	)		(0.6	)		289			(43.1	)		(43	)		12.7

Total Operating Expenses		(184	)		(5,914	)		(7.2	)		(5,775	)		(7.5	)		(5,421	)		(9.3	)		(139	)		2.4			(493	)		9.1


Income from Operations		1,087			34,973			43.1			30,867			39.9			17,784			30.4			4,106			13.3			17,189			96.7


Non-Operating Income, Net		27			846			1.0			816			1.1			537			0.9			30			3.6			309			57.5
Investment Gains (Losses)		13			432			0.5			2,972			3.8			(588	)		(1.0	)		(2,540	)		(85.5	)		1,020			(173.5	)

Income before Income Tax		1,127			36,251			44.6			34,655			44.8			17,733			30.3			1,596			4.6			18,518			104.4

Income Tax Benefits (Expenses)		(70	)		(2,249	)		(2.7	)		(1,802	)		(2.3	)		636			1.1			(447	)		24.8			(2,885	)		(453.3	)


Net Income Before Cumulative Effect of Changes in Accounting Principles		1,057			34,002			41.9			32,853			42.5			18,369			31.4			1,149			3.5			15,633			85.1

Cumulative Effect of Changes in Accounting Principles (Net of Tax)		—			—			—			(246	)		0.3			—			—			246			(100.0	)		—			—


Net Income	$	1,057		$	34,002			41.9		$	32,607			42.2		$	18,369			31.4		$	1,395			4.3		$	15,633			85.1


Earnings per Share — Diluted		0.04			1.32						1.26						0.71						0.06			4.3			0.60			84.8

Earnings per ADR⁽²⁾		0.20			6.59						6.32						3.56						0.27			4.3			3.03			84.8


Weighted Average Outstanding Shares-Diluted (‘M)⁽³⁾					25,809						25,802						25,771


Note:	(1)	Amounts in NTD have been translated into USD at the weighted average rate of NTD32.174 for the second quarter of 2006.

	(2)	1 ADR equals 5 ordinary shares.

	(3)	Total diluted weighted average outstanding shares were 25,809M shares for 2Q06 and 25,771M shares for 2Q05 after the retroactive adjustments for stock dividends and stock bonus.

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED
Audited Condensed Income Statements (Unconsolidated)
For the Six Months Ended June 30, 2006 and 2005
(Expressed in Million New Taiwan Dollars (“NTD”) and U.S. Dollars (“USD”)⁽¹⁾
Except for Per Share Amounts and Shares Outstanding)


	2006									2005						YoY
	USD			NTD			%			NTD			%			Amount			%
Net Sales	$	4,914		$	158,521			100.0		$	114,169			100.0		$	44,352			38.8
Cost of Sales		(2,510	)		(80,992	)		(51.1	)		(69,315	)		(60.7	)		(11,677	)		16.8

Gross Profit		2,404			77,529			48.9			44,854			39.3			32,675			72.8

Operating Expenses
Research and Development Expenses		(225	)		(7,256	)		(4.6	)		(6,632	)		(5.8	)		(624	)		9.4
General and Administrative Expenses		(105	)		(3,380	)		(2.1	)		(3,744	)		(3.3	)		364			(9.7	)
Sales and Marketing Expenses		(33	)		(1,053	)		(0.7	)		(618	)		(0.5	)		(435	)		70.5

Total Operating Expenses		(363	)		(11,689	)		(7.4	)		(10,994	)		(9.6	)		(695	)		6.3


Income from Operations		2,041			65,840			41.5			33,860			29.7			31,980			94.4


Non-Operating Income , Net		51			1,662			1.1			924			0.8			738			79.9
Investment Gains (Losses)		106			3,404			2.1			(786	)		(0.7	)		4,190			(533.1	)

Income before Income Tax		2,198			70,906			44.7			33,998			29.8			36,908			108.6

Income Tax Benefits (Expenses)		(125	)		(4,051	)		(2.5	)		1,189			1.0			(5,240	)		(440.6	)


Net Income Before Cumulative Effect of Changes in Accounting Principles		2,073			66,855			42.2			35,187			30.8			31,668			90.0

Cumulative Effect of Changes in Accounting Principles (Net of Tax)		(8	)		(246	)		(0.2	)		—			—			(246	)		100.0


Net Income	$	2,065		$	66,609			42.0		$	35,187			30.8		$	31,422			89.3


Earnings per Share-Diluted		0.08			2.58						1.37						1.22			89.0

Earnings per ADR ⁽²⁾		0.40			12.90						6.83						6.08			89.0


Weighted Average Outstanding Shares-Diluted (‘M) ⁽³⁾					25,808						25,770


Note:	(1)	Amounts in NTD have been translated into USD at the weighted average rate of NTD 32.256 for the six months of 2006.

	(2)	1 ADR equals 5 ordinary shares.

	(3)	Total diluted weighted average outstanding shares were 25,808M shares for the six months ended June 30, 2006 and 25,770M shares for the six months ended June 30, 2005 after the retroactive adjustments for stock dividends and stock bonus.

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

For the Six Months Ended June 30, 2006 and the Three Months Ended June 30, 2006, March 31, 2006 and June 30, 2005

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


	6 Months 2006						2Q 2006			1Q 2006			2Q 2005⁽²⁾
	(Audited)						(Unaudited)			(Unaudited)			(Unaudited)
	USD			NTD			NTD			NTD			NTD
Cash Flows from Operating Activities:
Net Income	$	2,065		$	66,609		$	34,002		$	32,607		$	18,369
Depreciation & Amortization		997			32,155			16,180			15,975			17,661
Deferred Income Tax		9			294			862			(569	)		(597	)
Investment Loss (Income) Recognized by Equity Method		(106	)		(3,404	)		(432	)		(2,972	)		588
Changes in Working Capital & Others		(27	)		(875	)		(3,581	)		2,707			(8,254	)

Net Cash Provided by Operating Activities		2,938			94,779			47,031			47,748			27,767


Cash Flows from Investing Activities:
Acquisitions:
Marketable Financial Instruments⁽³⁾		(2,250	)		(72,581	)		(39,850	)		(32,731	)		(26,003	)
Long Term Investments by Equity Method		(9	)		(275	)		(255	)		(19	)		(234	)
Property, Plant and Equipment		(997	)		(32,171	)		(21,056	)		(11,115	)		(13,033	)
Proceeds from Disposal or Maturity of:
Marketable Financial Instruments⁽³⁾		1,610			51,939			32,014			19,924			27,798
Property, Plant and Equipment		22			711			250			461			1,310
Decrease in Others		(18	)		(603	)		(501	)		(102	)		(226	)

Net Cash Used in Investing Activities		(1,642	)		(52,980	)		(29,398	)		(23,582	)		(10,387	)


Cash Flows from Financing Activities:
Increase in Guarantee Deposits		14			461			139			322			1,147
Proceeds from Exercise of Stock Options		10			326			208			118			82
Bonus to Directors and Supervisors		(8	)		(257	)		(257	)		—			(231	)

Net Cash Provided by Financing Activities		16			530			90			440			998


Net Increase in Cash and Cash Equivalents		1,312			42,329			17,723			24,606			18,378

Cash and Cash Equivalents at Beginning of Period		2,647			85,384			109,990			85,384			60,219


Cash and Cash Equivalents at End of Period	$	3,959		$	127,713		$	127,713		$	109,990		$	78,597


Note :	(1)	Amounts in NTD have been translated into USD at the rate of NTD32.256 , the weighted average rate for the six months ended June 30, 2006.

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

	(3)	Marketable financial instruments include available-for-sale and held-to-maturity financial assets, which non-current portions are classified as long-term investments in Balance Sheet.

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⁾


	June 30, 2006 (Audited)									March 31, 2006 (Unaudited) ⁽²⁾						June 30, 2005 (Audited) ⁽²⁾						QoQ						YoY
	USD			NTD			%			NTD			%			NTD			%			Amount			%			Amount			%
ASSETS
Current Assets
Cash and Cash Equivalents	$	4,366		$	141,452			23.8		$	121,251			21.8		$	88,405			17.3		$	20,201			16.7		$	53,047			60.0
Investments in Marketable Financial Instruments		2,165			70,139			11.8			71,006			12.8			49,724			9.7			(867	)		(1.2	)		20,415			41.1
Accounts Receivable — Trade		1,172			37,969			6.4			38,012			6.8			32,095			6.3			(43	)		(0.1	)		5,874			18.3
Inventories, Net		619			20,051			3.4			18,409			3.3			15,159			3.0			1,642			8.9			4,892			32.3
Other Current Assets		311			10,079			1.7			10,572			2.0			8,618			1.6			(493	)		(4.7	)		1,461			17.0

Total Current Assets		8,633			279,690			47.1			259,250			46.7			194,001			37.9			20,440			7.9			85,689			44.2


Long-Term Investments		1,320			42,778			7.2			34,726			6.3			39,207			7.7			8,052			23.2			3,571			9.1


Properties, Plant and Equipment		21,023			681,123			114.7			655,396			118.0			622,025			121.6			25,727			3.9			59,098			9.5
Less: Accumulated Depreciation		(13,272	)		(429,993	)		(72.4	)		(413,852	)		(74.5	)		(365,019	)		(71.3	)		(16,141	)		3.9			(64,974	)		17.8

Properties, Plant and Equipment, Net		7,751			251,130			42.3			241,544			43.5			257,006			50.3			9,586			4.0			(5,876	)		(2.3	)


Other Assets		622			20,145			3.4			19,772			3.5			21,207			4.1			373			1.9			(1,062	)		(5.0	)

Total Assets	$	18,326		$	593,743			100.0		$	555,292			100.0		$	511,421			100.0		$	38,451			6.9		$	82,322			16.1


LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities Short-term loan payable	$	—		$	—			—		$	—			—		$	316			0.1		$	—			—			($316	)		(100.0	)
Accounts Payables		317			10,282			1.7			10,687			1.9			7,605			1.5			(405	)		(3.8	)		2,677			35.2
Payables to Contractors and Equipment Suppliers		531			17,214			2.9			11,680			2.1			11,384			2.2			5,534			47.4			5,830			51.2
Accrued Expenses and Other Current Liabilities		2,479			80,300			13.6			15,996			2.9			60,251			11.7			64,304			402.0			20,049			33.3
Current Portion of Bonds Payable		77			2,505			0.4			2,505			0.5			10,505			2.1			—			—			(8,000	)		(76.2	)

Total Current Liabilities		3,404			110,301			18.6			40,868			7.4			90,061			17.6			69,433			169.9			20,240			22.5

Bonds Payable		525			17,000			2.9			17,000			3.1			19,500			3.8			—			—			(2,500	)		(12.8	)
Other Long Term Liabilities		585			18,943			3.1			18,813			3.3			16,919			3.3			130			0.7			2,024			12.0

Total Liabilities		4,514			146,244			24.6			76,681			13.8			126,480			24.7			69,563			90.7			19,764			15.6


Shareholders’ Equity Attributable to Shareholders of the Parent
Common Stock		7,970			258,234			43.5			247,331			44.5			247,261			48.3			10,903			4.4			10,973			4.4
Capital Surplus		1,661			53,822			9.1			57,208			10.3			56,721			11.1			(3,386	)		(5.9	)		(2,899	)		(5.1	)
Retained Earnings		4,220			136,723			23.0			175,378			31.6			84,383			16.5			(38,655	)		(22.0	)		52,340			62.0
Treasury Stock		(28	)		(918	)		(0.2	)		(918	)		(0.2	)		(1,552	)		(0.3	)		—			—			634			(40.9	)
Others		(32	)		(1,029	)		(0.1	)		(1,066	)		(0.1	)		(2,613	)		(0.5	)		37			(3.5	)		1,584			(60.6	)

Total equity attributable to shareholders of the parent		13,791			446,832			75.3			477,933			86.1			384,200			75.1			(31,101	)		(6.5	)		62,632			16.3
Minority interest		21			667			0.1			678			0.1			741			0.2			(11	)		(1.6	)		(74	)		(10.0	)

Total shareholders’ equity		13,812			447,499			75.4			478,611			86.2			384,941			75.3			(31,112	)		(6.5	)		62,558			16.3

Total Liabilities & Shareholders’ Equity	$	18,326		$	593,743			100.0		$	555,292			100.0		$	511,421			100.0		$	38,451			6.9		$	82,322			16.1


Note :	(1)	Amounts in NTD have been translated into USD at the rate of NT$32.399 as of June 30, 2006.

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

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED AND SUBSIDIARIES
Unaudited Condensed Income Statements (Consolidated)
For the Three Months Ended June 30, 2006, March 31, 2006 And June 30, 2005
(Expressed in Million New Taiwan Dollars (“NTD”) and U.S. Dollars (“USD”) ⁽¹⁾
Except for Per Share Amounts and Shares Outstanding)


	Q2 2006									Q1 2006						Q2 2005						QoQ						YoY
	USD			NTD			%			NTD			%			NTD			%			Amount			%			Amount			%
Net Sales	$	2,552		$	82,118			100.0		$	77,850			100.0		$	59,978			100.0		$	4,268			5.5		$	22,140			36.9
Cost of Sales		(1,231	)		(39,620	)		(48.2	)		(40,123	)		(51.5	)		(35,724	)		(59.6	)		503			(1.3	)		(3,896	)		10.9

Gross Profit		1,321			42,498			51.8			37,727			48.5			24,254			40.4			4,771			12.6			18,244			75.2

Operating Expenses
Research and Development Expenses⁽⁴⁾		(126	)		(4,053	)		(4.9	)		(3,787	)		(4.9	)		(3,561	)		(5.9	)		(266	)		7.0			(492	)		13.8
General and Administrative Expenses⁽⁴⁾		(69	)		(2,226	)		(2.7	)		(1,821	)		(2.3	)		(2,253	)		(3.8	)		(405	)		22.2			27			(1.2	)
Sales and Marketing Expenses		(28	)		(896	)		(1.2	)		(1,217	)		(1.6	)		(1,227	)		(2.0	)		321			(26.4	)		331			(27.0	)

Total Operating Expenses		(223	)		(7,175	)		(8.8	)		(6,825	)		(8.8	)		(7,041	)		(11.7	)		(350	)		5.1			(134	)		1.9


Income from Operations		1,098			35,323			43.0			30,902			39.7			17,213			28.7			4,421			14.3			18,110			105.2


Non-Operating Income, Net		9			299			0.4			1,417			1.8			464			0.8			(1,118	)		(78.9	)		(165	)		(35.6	)
Investment Gains		20			650			0.8			600			0.8			226			0.4			50			8.3			424			187.6

Income before Income Tax		1,127			36,272			44.2			32,919			42.3			17,903			29.8			3,353			10.2			18,369			102.6

Income Tax (Expenses) Benefits		(71	)		(2,281	)		(2.8	)		(1,855	)		(2.4	)		491			0.8			(426	)		23.0			(2,772	)		(564.6	)


Net Income Before Cumulative Effect of Changes in Accounting Principles		1,056			33,991			41.4			31,064			39.9			18,394			30.7			2,927			9.4			15,597			84.8
Cumulative Effect of Changes in Accounting Principles (Net of Tax)		—			—			—			1,607			2.1			—			—			(1,607	)		(100.0	)		—			—


Net Income	$	1,056		$	33,991			41.4		$	32,671			42.0		$	18,394			30.7		$	1,320			4.0		$	15,597			84.8


Attributable to:
Shareholders of the parent	$	1,056		$	34,002			41.4		$	32,607			41.9		$	18,369			30.6		$	1,395			4.3		$	15,633			85.1
Minority Interest		—			(11	)		—			64			0.1			25			0.1			(75	)		(116.5	)		(36	)		(142.4	)

	$	1,056		$	33,991			41.4		$	32,671			42.0		$	18,394			30.7		$	1,320			4.0		$	15,597			84.8


Earnings per Share — Diluted	$	0.04		$	1.32					$	1.26					$	0.71					$	0.06			4.3		$	0.60			84.8

Earnings per ADR ⁽²⁾	$	0.20		$	6.59					$	6.32					$	3.56					$	0.27			4.3		$	3.03			84.8


Weighted Average Outstanding Shares — Diluted (‘M) ⁽³⁾					25,809						25,802						25,771


Note:	(1)	Amounts in NTD have been translated into USD at the weighted average rate of NTD32.174 for the second quarter of 2006.

	(2)	1 ADR equals 5 ordinary shares.

	(3)	Total diluted weighted average outstanding shares were 25,809M shares for 2Q06 and 25,771M shares for 2Q05 after the retroactive adjustments for stock dividends and stock bonus.

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

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED AND SUBSIDIARIES
Audited Condensed Income Statements (Consolidated)
For the Six Months Ended June 30, 2006 And 2005
(Expressed in Million New Taiwan Dollars (“NTD”) and U.S. Dollars (“USD”) ⁽¹⁾
Except for Per Share Amounts and Shares Outstanding)


	2006									2005						YoY
	USD			NTD			%			NTD			%			Amount			%
Net Sales	$	4,959		$	159,968			100.0		$	116,836			100.0		$	43,132			36.9
Cost of Sales		(2,472	)		(79,743	)		(49.8	)		(70,904	)		(60.7	)		(8,839	)		12.5

Gross Profit		2,487			80,225			50.2			45,932			39.3			34,293			74.7

Operating Expenses
Research and Development Expenses		(243	)		(7,840	)		(4.9	)		(6,973	)		(6.0	)		(867	)		12.4
General and Administrative Expenses		(125	)		(4,047	)		(2.5	)		(4,766	)		(4.1	)		719			(15.1	)
Sales and Marketing Expenses		(66	)		(2,113	)		(1.4	)		(1,811	)		(1.5	)		(302	)		16.7

Total Operating Expenses		(434	)		(14,000	)		(8.8	)		(13,550	)		(11.6	)		(450	)		3.3


Income from Operations		2,053			66,225			41.4			32,382			27.7			33,843			104.5


Non-Operating Income, Net		53			1,716			1.1			1,203			1.0			513			42.6
Investment income		39			1,250			0.8			623			0.5			627			100.6

Income before Income Tax		2,145			69,191			43.3			34,208			29.3			34,983			102.3

Income Tax (Expenses) Benefits		(128	)		(4,136	)		(2.6	)		1,004			0.9			(5,140	)		(512.0	)


Net Income Before Cumulative Effect of Changes in Accounting Principles		2,017			65,055			40.7			35,212			30.1			29,843			84.8

Cumulative Effect of Changes in Accounting Principles (Net of Tax)		50			1,607			1.0			—			—			1,607			—


Net Income	$	2,067		$	66,662			41.7		$	35,212			30.1		$	31,450			89.3


Attributable to:
Shareholders of the parent	$	1,056		$	66,609			41.6		$	35,187			30.1		$	31,422			89.3
Minority Interest		—			53			0.0			25			—			28			112.0

	$	1,056		$	66,662			41.7		$	35,212			30.1		$	31,450			89.3


Earnings per Share — Diluted	$	0.08		$	2.58					$	1.37					$	1.22			89.0

Earnings per ADR ⁽²⁾	$	0.40		$	12.90					$	6.83					$	6.08			89.0


Weighted Average Outstanding Shares — Diluted (‘M) ⁽³⁾					25,808						25,770


Note:	(1)	Amounts in NTD have been translated into USD at the weighted average rate of NTD 32.256 for the six months of 2006.

	(2)	1 ADR equals 5 ordinary shares.

	(3)	Total diluted weighted average outstanding shares were 25,808M shares for the six months ended June 30, 2006 and 25,770M shares for the six months ended June 30, 2005 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 Six Months Ended June 30, 2006 and for the Three months Ended June 30, 2006, March 31, 2006 and June 30, 2005
(Figures in Million of New Taiwan Dollars (“NTD”) and U.S. Dollars (“USD”)) ⁽¹⁾


	6 Months 2006						2Q 2006			1Q 2006			2Q 2005 ⁽²⁾
	(Audited)						(Unaudited)			(Unaudited)			(Unaudited)
	USD			NTD			NTD			NTD			NTD
Cash Flows from Operating Activities:
Net Income	$	2,065		$	66,609		$	34,002		$	32,607		$	18,369
Net Income attributable to minority interest		2			53			(11	)		64			24
Depreciation & Amortization		1,104			35,622			17,888			17,734			19,464
Deferred Income Tax		8			251			860			(609	)		(634	)
Investment Income From Equity Method Investees		(39	)		(1,250	)		(650	)		(600	)		(226	)
Changes in Working Capital & Others		(62	)		(1,980	)		(1,698	)		(282	)		(8,384	)

Net Cash Provided by Operating Activities		3,078			99,305			50,391			48,914			28,613

Cash Flows from Investing Activities:
Acquisitions:
Marketable Financial Instruments⁽³⁾		(2,250	)		(72,581	)		(39,850	)		(32,731	)		(26,003	)
Financial assets carried at cost		(9	)		(290	)		(168	)		(122	)		(103	)
Property, Plant and Equipment		(1,020	)		(32,901	)		(21,391	)		(11,510	)		(14,239	)
Long-term investments by equity method		(1	)		(48	)		(48	)		—			—
Proceeds from disposal or maturity of:
Marketable Financial Instruments⁽³⁾		1,612			52,006			32,075			19,931			28,765
Financial assets carried at cost		—			—			—			—			12
Property, Plant and Equipment		8			247			(215	)		462			(54	)
Long-term investments by equity method		—			—			—			—			—
Decrease in Others		(25	)		(795	)		(653	)		(142	)		(222	)

Net Cash Used In Investing Activities		(1,685	)		(54,362	)		(30,250	)		(24,112	)		(11,844	)

Cash Flows from Financing Activities:
Repurchase of treasury stock		—			—			—			—			(26	)
Cash Dividend — Common Shares		(8	)		—			—			—			—
Bonus Paid to Employees, Directors and Supervisors		—			(257	)		(257	)		—			(231	)
Repayment of Long Term Bonds Payable		—			(3	)		(2	)		(1	)		(944	)
Increase in Guarantee Deposits		14			461			139			322			1,147
Proceeds from Exercise of Stock Options		10			326			209			117			82
Decrease in Others		(10	)		(337	)		(15	)		(322	)		(3	)

Net Cash Provided by Financing Activities		6			190			74			116			25


Net Increase in Cash and Cash Equivalents		1,399			45,133			20,215			24,918			16,794


Effect of exchange rate changes on cash and cash equivalents and others		(5	)		(165	)		(14	)		(151	)		(95	)

Effect of first inclusion for consolidation of certain subsidiaries		—			—			—			—			166

Cash and Cash Equivalents at Beginning of Period		2,991			96,484			121,251			96,484			71,540


Cash and Cash Equivalents at End of Period	$	4,385		$	141,452		$	141,452		$	121,251		$	88,405


Note:	(1)	Amounts in NTD have been translated into USD at the rate of NTD32.256 , the weighted average rate for the six months ended June 30, 2006.

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

	(3)	Marketable financial instruments include available-for-sale and held-to-maturity financial assets, which non-current portions are classified as long-term investments in Balance Sheet.

TSMC 2006 Second Quarter Results Investor Conference July 27th, 2006

Agenda Welcome 2006 2Q Consolidated Financial Results Advanced Technology Update 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 April 20, 2006 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.

TSMC Consolidating Entities Regional Sales Office Manufacturing Subsidiaries Strategic Alliance Venture Capital Funds Others TSMC TSMC - NA - Europe - Japan - Korea TSMC (Shanghai) WaferTech GUC EAF VTAF II, VTAF III ISDF, ISDF II

Net Income attributable to shareholders of the parent company Annualized ROE for the quarter 2Q’06 Result Highlights

Consolidated Income Statements Certain prior period balances have been reclassified to conform to the current period presentation Net Income attributable to shareholders of the parent company

Consolidated Balance Sheets & Key Indices * Certain prior period balances have been reclassified to conform to the current period presentation *

Consolidated Cash Flows * * Certain prior period balances have been reclassified to conform to the current period presentation

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 2006 CapEx to remain in the range of US$2.6-2.8 billion *

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

2Q06 Income Statements - Consolidated vs. Unconsolidated * Net Income attributable to shareholders of the parent company

2Q06 Balance Sheets - Consolidated vs. Unconsolidated

2Q06 Cash Flows - Consolidated vs. Unconsolidated

3Q’06 Guidance Revenues to be between NT$79 billion and NT$82 billion Gross profit margin to be between 48% and 50% Operating profit margin to be between 39% and 41%

Recap of Recent Major Events TSMC and ARM Collaboration Achieves Significant Power Reduction on First 65nm Low- Power Test Chip (2006/07/18) TSMC Continues Industry Leadership with Reference Flow 7.0 (2006/07/17) TSMC Bolsters Design Ecosystem with DFM-Compliant EDA Tools and Data Kit for 65nm Design (2006/07/17) TSMC Sets June 20, 2006 as Ex-dividend Date (2006/06/06) TSMC is Production-Ready for 65nm X Architecture Designs (2006/05/25) TSMC 65-Nanometer Process Moves to Volume Production (2006/05/17) TSMC Senior Vice President of R&D Dr. Shang-Yi Chiang to Retire (2006/05/17) TSMC Board of Directors Unanimously Re-elects Dr. Morris Chang as Chairman (2006/05/16) TSMC Shareholders Approve NT$2.5 Cash and 3% Stock Dividend (2006/05/16) TSMC Unveils First 65-Nanometer Data-Driven DFM Design Ecosystem (2006/05/15) * Please visit TSMC's Web site (http://www.tsmc.com) for details and other announcements.

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.


	Taiwan Semiconductor Manufacturing Company Ltd.
Date: July 27, 2006	By	/s/ Lora Ho
		Lora Ho
		Vice President & Chief Financial Officer