6-K 1 h02344e6vk.htm 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 2008
Taiwan Semiconductor Manufacturing Company Ltd.
(Translation of Registrant’s Name Into English)
No. 8, Li-Hsin Rd. 6,
Hsinchu Science Park,
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

|  | 2Q08 |  | Quarterly Management Report July 31, 2008

CONTACT
Elizabeth Sun / Harrison Hsueh
Investor Relations Division
TSMC
invest@tsmc.com
886-3-568-2085/ 2088
Topics in This Report

• |  | Revenue Analysis
• |  | Profit & Expense Analysis
• |  | Financial Condition Review
• |  | Cash Flow
• |  | CapEx & Capacity
• |  | Recap of Recent Important Events & Announcements

Operating Results Review:

Summary: |  |  |  |  |  |  |  |  |  |
(Amounts are on consolidated basis and are in |  |  |  |  |  |  |  |  |  |
NT billions except otherwise noted) |  | 2Q08 |  | 1Q08 |  | 2Q07 |  | QoQ |  | YoY
EPS (NT$ per common share) |  |  | 1.12 |  |  |  | 1.10 |  |  |  | 0.96 |  |  |  | 2.1 | % |  |  | 16.3 | %
(US$ per ADR unit) |  |  | 0.18 |  |  |  | 0.17 |  |  |  | 0.15 |  |  |  |  |  |  |  |  |
Consolidated Net Sales |  |  | 88.14 |  |  |  | 87.48 |  |  |  | 74.92 |  |  |  | 0.8 | % |  |  | 17.6 | %
Gross Profit |  |  | 40.22 |  |  |  | 38.24 |  |  |  | 32.18 |  |  |  | 5.2 | % |  |  | 25.0 | %
Gross Margin |  |  | 45.6 | % |  |  | 43.7 | % |  |  | 43.0 | % |  |  |  |  |  |  |  |
Operating Expense |  |  | (9.85 | ) |  |  | (9.12 | ) |  |  | (7.45 | ) |  |  | 8.0 | % |  |  | 32.3 | %
Operating Income |  |  | 30.37 |  |  |  | 29.12 |  |  |  | 24.73 |  |  |  | 4.3 | % |  |  | 22.8 | %
Operating Margin |  |  | 34.5 | % |  |  | 33.3 | % |  |  | 33.0 | % |  |  |  |  |  |  |  |
Non-Operating Items |  |  | 2.00 |  |  |  | 2.45 |  |  |  | 3.29 |  |  |  | (18.2 | %) |  |  | (39.1 | %)
Net Income |  |  | 28.77 |  |  |  | 28.14 |  |  |  | 25.48 |  |  |  | 2.2 | % |  |  | 12.9 | %
Net Profit Margin |  |  | 32.6 | % |  |  | 32.2 | % |  |  | 34.0 | % |  |  |  |  |  |  |  |
Wafer Shipment (kpcs 8 inch-equiv.) |  |  | 2,329 |  |  |  | 2,196 |  |  |  | 1,856 |  |  |  | 6.0 | % |  |  | 25.5 | %

Remarks:
The diluted earnings per share in 2Q08 were NT$1.12, representing an increase of 16.3% over the same period last year and an increase of 2.1% from the previous quarter. The consolidated operating results of 2Q08 are summarized below:
Net sales in the second quarter were NT$88.1 billion, up 17.6% from NT$74.9 billion in 2Q07 and up 0.8% from NT$87.5 billion in 1Q08.
Gross profit for the quarter was NT$40.2 billion with gross margin of 45.6%, 1.9 percentage points higher than the 43.7% gross margin in 1Q08, mainly due to significant cost improvement and higher levels of wafer movements but partially offset by an unfavorable change of the exchange rate.
Operating expenses, including expenses accrued for employee profit sharing, were NT$9.8 billion or 11.1% of net sales. The combined result from non-operating income and long-term investments was a gain of NT$2.0 billion.
Consolidated net income attributable to shareholders of the parent company, including an accrual of employee profit sharing, was NT$28.8 billion, up 12.9% from a year ago level and up 2.2% from the previous quarter. Net profit margin was 32.6% for 2Q08.

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TSMC |  |
July 31, 2008 |  | Page 2

I. Revenue Analysis
I. Wafer Sales Analysis

By Application |  | 2Q08 |  | 1Q08 |  | 2Q07
Computer |  |  | 31 | % |  |  | 34 | % |  |  | 29 | %
Communication |  |  | 41 | % |  |  | 42 | % |  |  | 44 | %
Consumer |  |  | 21 | % |  |  | 17 | % |  |  | 18 | %
Industrial/Others |  |  | 7 | % |  |  | 7 | % |  |  | 9 | %

By Technology |  | 2Q08 |  | 1Q08 |  | 2Q07
65nm and below |  |  | 18 | % |  |  | 15 | % |  |  | 3 | %
90nm |  |  | 28 | % |  |  | 28 | % |  |  | 26 | %
0.11/0.13um |  |  | 17 | % |  |  | 20 | % |  |  | 24 | %
0.15/0.18um |  |  | 23 | % |  |  | 23 | % |  |  | 30 | %
0.25/0.35um |  |  | 10 | % |  |  | 10 | % |  |  | 12 | %
0.50um+ |  |  | 4 | % |  |  | 4 | % |  |  | 5 | %

By Customer Type |  | 2Q08 |  | 1Q08 |  | 2Q07
Fabless/System |  |  | 71 | % |  |  | 71 | % |  |  | 68 | %
IDM |  |  | 29 | % |  |  | 29 | % |  |  | 32 | %

By Geography |  | 2Q08 |  | 1Q08 |  | 2Q07
North America |  |  | 73 | % |  |  | 76 | % |  |  | 74 | %
Asia Pacific |  |  | 13 | % |  |  | 12 | % |  |  | 13 | %
Europe |  |  | 11 | % |  |  | 9 | % |  |  | 9 | %
Japan |  |  | 3 | % |  |  | 3 | % |  |  | 4 | %

Revenue Analysis:
In-line with our guidance, the second quarter 2008 revenue reached NT$88.1 billion. 2Q08 business saw a solid improvement but revenue was negatively impacted by a 3.7% appreciation in the NT dollar against the US dollar. Demand from consumer related applications grew but communication and computer applications declined during the quarter. On a sequential basis, revenue from consumer applications increased 24%, while revenues for communication and computer applications declined 2% and 8%, respectively.
As a result of continued strong ramp for our 65nm technology, revenue from 65nm reached 18% of total wafer sales during the quarter, up from 15% in the previous quarter. Meanwhile, revenue from 90nm remained strong at 28% of total wafer sales. Overall, revenues from advanced technologies (0.13-micron and below) accounted for 63% of total wafer sales.
Revenues from IDM customers accounted for 29% of total wafer sales in 2Q08, flat from 1Q08.
From a geographic perspective, revenues from customers based in North America accounted for 73% of total wafer sales. Meanwhile, sales from customers in Asia Pacific, Europe and Japan accounted for 13%, 11% and 3% of wafer sales, respectively.
II. Profit & Expense Analysis
II — 1. Gross Profit Analysis

(In NT billions) |  | 2Q08 |  | 1Q08 |  | 2Q07
COGS |  |  | 47.9 |  |  |  | 49.2 |  |  |  | 42.7 |
Depreciation |  |  | 18.2 |  |  |  | 18.1 |  |  |  | 17.9 |
Other MFG Cost |  |  | 29.7 |  |  |  | 31.1 |  |  |  | 24.8 |
Gross Profit |  |  | 40.2 |  |  |  | 38.2 |  |  |  | 32.2 |
Gross Margin |  |  | 45.6 | % |  |  | 43.7 | % |  |  | 43.0 | %

Gross Profit Analysis:
Gross margin in 2Q08 was 45.6%, up 1.9 percentage points from the previous quarter, reflecting the significant cost improvement and higher levels of wafer movements, partially offset by a continued unfavorable change of the exchange rate.

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July 31, 2008 |  | Page 3

II — 2. Operating Expenses

(In NT billions) |  | 2Q08 |  | 1Q08 |  | 2Q07
Total Operating Exp. |  |  | 9.85 |  |  |  | 9.12 |  |  |  | 7.45 |
SG&A |  |  | 4.45 |  |  |  | 3.85 |  |  |  | 3.15 |
Research & Development |  |  | 5.40 |  |  |  | 5.27 |  |  |  | 4.30 |
Total Operating Exp. as a % of Sales |  |  | 11.1 | % |  |  | 10.4 | % |  |  | 10.0 | %

Operating Expenses:
Total operating expenses for 2Q08 increased by 8.0% sequentially to reach NT$9.8 billion, or 11.1% of net sales, compared with 10.4% of net sales in the previous quarter.
Research and development expenditures increased by NT$134 million quarter-over-quarter, mainly due to 32nm technology development and 45nm technology transfer.
SG&A expenses increased by NT$598 million from the previous quarter, primarily due to the start-up cost for the accelerating ramp-up of Fab 14 Phase 3, the promotion expenses for world-wide technology marketing activities, and an accrual for higher legal litigation fees.
II — 3. Non-Operating Items

(In NT billions) |  | 2Q08 |  | 1Q08 |  | 2Q07
Non-Operating Inc./(Exp.) |  |  | 1.7 |  |  |  | 1.8 |  |  |  | 2.8 |
Net Interest Income/(Exp.) |  |  | 1.2 |  |  |  | 1.2 |  |  |  | 1.3 |
Other Non-Operating |  |  | 0.5 |  |  |  | 0.6 |  |  |  | 1.5 |
L-T Investments |  |  | 0.3 |  |  |  | 0.6 |  |  |  | 0.5 |
SSMC |  |  | 0.3 |  |  |  | 0.4 |  |  |  | 0.2 |
Others |  |  | (0.0 | ) |  |  | 0.2 |  |  |  | 0.3 |
Total Non-Operating Items |  |  | 2.0 |  |  |  | 2.4 |  |  |  | 3.3 |

Non-Operating Items:
Combined result from non-operating income and long-term investments income was a gain of NT$2.0 billion for the second quarter 2008.
Non-operating income was NT$1.7 billion, slightly down from NT$1.8 billion in the previous quarter.
Net investment income decreased by NT$298 million in the quarter to NT$279 million.
II — 4. PSE Impact

|  | 2Q08 |  | 1Q08 |  | 2Q07
Gross Margin w/ PSE |  |  | 45.6 | % |  |  | 43.7 | % |  |  | 38.5 | %
Gross Margin w/o PSE |  |  | 48.2 | % |  |  | 46.2 | % |  |  | 43.0 | %
PSE Impact |  |  | -2.6 | % |  |  | -2.5 | % |  |  | -4.5 | %
Operating Margin w/ PSE |  |  | 34.5 | % |  |  | 33.3 | % |  |  | 24.3 | %
Operating Margin w/o PSE |  |  | 39.4 | % |  |  | 38.1 | % |  |  | 33.0 | %
PSE Impact |  |  | -4.9 | % |  |  | -4.8 | % |  |  | -8.7 | %

* |  | PSE: Profit Sharing Expenses
** |  | 2007 PSE impact is estimated using the 6/12/2008 closing share price adjusted for dividends

The Impact of Employee Profit Sharing:
Total impact from employee profit sharing expensing (PSE) on gross margin in 2Q08 was 2.6 percentage points, slightly up from the level in previous quarter.
Similarly, total PSE impact on operating margin was 4.9 percentage points in 2Q08.

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TSMC |  |
July 31, 2008 |  | Page 4

III. Financial Condition Review
III — 1. Liquidity Analysis
(Selected Balance Sheet Items)

(In NT billions) |  | 2Q08 |  | 1Q08 |  | 2Q07
Cash & Marketable Securities |  |  | 224.0 |  |  |  | 210.3 |  |  |  | 233.1 |
Accounts Receivable — Trade |  |  | 41.9 |  |  |  | 38.0 |  |  |  | 37.1 |
Inventory |  |  | 23.4 |  |  |  | 21.9 |  |  |  | 24.0 |
Total Current Assets |  |  | 299.8 |  |  |  | 281.5 |  |  |  | 304.6 |
Accounts Payable |  |  | 21.1 |  |  |  | 22.6 |  |  |  | 28.2 |
Current Portion of Bonds Payable |  |  | 8.0 |  |  |  | 8.0 |  |  |  | 4.5 |
Dividends Payable |  |  | 77.0 |  |  |  | 0.0 |  |  |  | 77.5 |
Accrued Bonus to Employees, Directors and Supervisors |  |  | 13.0 |  |  |  | 4.4 |  |  |  | 4.6 |
Accrued Liabilities and Others |  |  | 27.9 |  |  |  | 27.0 |  |  |  | 17.6 |
Total Current Liabilities |  |  | 147.0 |  |  |  | 62.0 |  |  |  | 132.4 |
Current Ratio (x) |  |  | 2.0 |  |  |  | 4.5 |  |  |  | 2.3 |
Net Working Capital |  |  | 152.8 |  |  |  | 219.4 |  |  |  | 172.2 |

Liquidity Analysis:
At the end of 2Q08, total current assets increased by NT$ 18.3 billion to reach NT$299.8 billion, mainly due to the increase of NT$13.7 billion in cash and marketable securities.
Total current liabilities increased by NT$84.9 billion in 2Q08, primarily due to higher accruals of NT$ 77.0 billion and NT$8.6 billion payables for cash dividends and bonuses of employees, directors, and supervisors, respectively.
Net working capital was NT$152.8 billion at the end of the quarter, current ratio declined to 2.0.
III — 2. Receivable/Inventory Days

(In Number of Days) |  | 2Q08 |  | 1Q08 |  | 2Q07
Days of Receivable |  |  | 42 |  |  |  | 43 |  |  |  | 44 |
Days of Inventory |  |  | 47 |  |  |  | 46 |  |  |  | 52 |

Receivable and Inventory Days:
Sequentially, days of receivable decreased by one day to 42 days in 2Q08 while days of inventory increased by one day to 47 days.
III — 3. Debt Service

(In NT billions) |  | 2Q08 |  | 1Q08 |  | 2Q07
Cash & Marketable Securities |  |  | 224.0 |  |  |  | 210.3 |  |  |  | 233.1 |
Interest-Bearing Debt |  |  | 22.9 |  |  |  | 22.9 |  |  |  | 26.3 |
Net Cash Reserves |  |  | 201.1 |  |  |  | 187.4 |  |  |  | 206.8 |

Debt Service:
Net cash reserves — defined as the excess of cash and short-term marketable securities over interest-bearing debt — increased by NT$13.7 billion to NT$201.1 billion at the end of 2Q08.

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TSMC July 31, 2008 |  | Page 5

IV. Cash Flow
IV — 1. Cash Flow Analysis

(In NT billions) |  | 2Q08 |  | 1Q08 |  | 2Q07
Net Income |  |  | 28.8 |  |  |  | 28.1 |  |  |  | 25.5 |
Depreciation & Amortization |  |  | 20.0 |  |  |  | 19.8 |  |  |  | 19.6 |
Other Operating Sources/(Uses) |  |  | (3.8 | ) |  |  | 9.4 |  |  |  | (10.4 | )
Total Operating Sources/(Uses) |  |  | 45.0 |  |  |  | 57.3 |  |  |  | 34.7 |
Capital Expenditure |  |  | (22.3 | ) |  |  | (15.3 | ) |  |  | (25.3 | )
Marketable Financial Instruments |  |  | 27.2 |  |  |  | 12.9 |  |  |  | 15.8 |
Other Investing Sources/(Uses) |  |  | (1.3 | ) |  |  | (0.7 | ) |  |  | (0.7 | )
Net Investing Sources/(Uses) |  |  | 3.6 |  |  |  | (3.1 | ) |  |  | (10.2 | )
Purchase of Treasury Stock |  |  | (6.6 | ) |  |  | (3.1 | ) |  |  | 0.0 |
Other Financing Sources/(Uses) |  |  | (0.2 | ) |  |  | (0.2 | ) |  |  | (0.5 | )
Net Financing Sources/(Uses) |  |  | (6.8 | ) |  |  | (3.3 | ) |  |  | (0.5 | )
Net Cash Position Changes |  |  | 41.8 |  |  |  | 50.9 |  |  |  | 24.0 |
Exchange Rate Changes & Others |  |  | (0.8 | ) |  |  | (1.6 | ) |  |  | (0.9 | )
Ending Cash Balance |  |  | 185.3 |  |  |  | 144.3 |  |  |  | 163.4 |

Summary of Cash Flow:
Cash generated from operating activities totaled NT$45.0 billion during the quarter, down from NT$57.3 billion in 1Q08, mainly due to tax payment of NT$10.0 billion and inventory increase of NT$1.5 billion.
Net cash generated in investing activities was NT$3.6 billion in 2Q08, reflecting capital expenditure of NT$22.3 billion and a net increase of NT$27.2 billion in marketable financial instruments.
Net cash used in financing activities was NT$6.8 billion during the quarter, as we spent NT$6.6 billion in share buyback.
As a result, TSMC ended the quarter with a cash balance of NT$185.3 billion.
IV—2. Operating and Free Cash Flows
Operating and Free Cash Flows:
Cash flows generated from operating activities were NT$45.0 billion during the quarter. Free cash flow, defined as the excess of operating cash flows over capital expenditures, totaled NT$22.8 billion in 2Q08, compared to NT$42.0 billion in 1Q08.

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TSMC July 31, 2008 |  | Page 6

V. CapEx & Capacity
V — 1. Capital Expenditures

(In US millions) |  | 1Q08 |  | 2Q08 |  | YTD
TSMC |  |  | 452 |  |  |  | 712 |  |  |  | 1,164 |
XinTec and GUC |  |  | 13 |  |  |  | 5 |  |  |  | 18 |
TSMC Shanghai & WaferTech |  |  | 18 |  |  |  | 11 |  |  |  | 29 |
Other TSMC Subsidiaries |  |  | 1 |  |  |  | 0 |  |  |  | 1 |
Total TSMC |  |  | 484 |  |  |  | 728 |  |  |  | 1,212 |

Capital Expenditures:
Capital expenditures for TSMC on a consolidated basis totaled US$728 million during the quarter.
In the first half of 2008, total capital expenditure reached US$1.2 billion.
V—2. Capacity

Fab / (Wafer size) |  | 1Q08 (A) |  | 2Q08 (A) |  | 3Q08 (F) |  | 4Q08 (F) |  | 2008 (F)
Fab-2 (6")1 |  |  | 248 |  |  |  | 267 |  |  |  | 270 |  |  |  | 272 |  |  |  | 1,056 |
Fab-3 (8") |  |  | 277 |  |  |  | 281 |  |  |  | 268 |  |  |  | 274 |  |  |  | 1,100 |
Fab-5 (8") |  |  | 163 |  |  |  | 165 |  |  |  | 161 |  |  |  | 161 |  |  |  | 650 |
Fab-6 (8") |  |  | 265 |  |  |  | 267 |  |  |  | 268 |  |  |  | 282 |  |  |  | 1,082 |
Fab-8 (8") |  |  | 262 |  |  |  | 275 |  |  |  | 267 |  |  |  | 272 |  |  |  | 1,076 |
Fab-12 (12")2 |  |  | 197 |  |  |  | 207 |  |  |  | 214 |  |  |  | 221 |  |  |  | 840 |
Fab-14 (12")2 |  |  | 167 |  |  |  | 185 |  |  |  | 229 |  |  |  | 236 |  |  |  | 818 |
WaferTech (8") |  |  | 105 |  |  |  | 105 |  |  |  | 106 |  |  |  | 106 |  |  |  | 420 |
TSMC (Shanghai) (8") |  |  | 88 |  |  |  | 110 |  |  |  | 128 |  |  |  | 128 |  |  |  | 453 |
TSMC total capacity (8" equiv. Kpcs) |  |  | 2,117 |  |  |  | 2,236 |  |  |  | 2,346 |  |  |  | 2,405 |  |  |  | 9,104 |
SSMC (8") |  |  | 63 |  |  |  | 67 |  |  |  | 69 |  |  |  | 73 |  |  |  | 272 |
Total managed capacity (8" equiv. Kpcs) |  |  | 2,180 |  |  |  | 2,303 |  |  |  | 2,416 |  |  |  | 2,478 |  |  |  | 9,377 |

Note: | 1. | Figues represent number of 6" wafers. Conversion to 8"-equivalent wafers is obtained by dividing this number by 1.78
| 2. | Figues represent number of 12" wafers. Conversion to 8"-equivalent wafers is obtained by multiplying this number by 2.25

Capacity:
Total TSMC managed capacity was 2,303K 8-inch equivalent wafers in the second quarter, 6% more than 1Q08. TSMC managed capacity in 3Q08 will increase by 5% to reach 2,416K 8-inch equivalent wafers.
Total managed capacity for 2008 is expected to reach 9,377K 8-inch equivalent wafers, representing an increase of 13% from 8,290K 8-inch equivalent wafers in 2007, while capacity for 12-inch wafer fabs will increase by 27%.

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TSMC July 31, 2008 |  | Page 7

VI. Recap of Recent Important Events & Announcements

l |  | TSMC Wins Corporate Governance Asia Annual Recognition Award 2008 (2008/06/26)
l |  | TSMC Shareholders Approve NT$3.0 Cash and 0.5% Stock Dividend (2008/06/13)
l |  | TSMC Unified DFM Architecture Promises Improved Yields and Accelerated Time-to-Market (2008/06/09)
l |  | New TSMC Reference Flow 9.0 Supports 40nm Process Technology (2008/06/03)
l |  | TSMC Board Approves Plan to Buy Back and Cancel Shares up to US$1 billion (2008/05/13)
l |  | TSMC Board Approves Capital Appropriation of US$995 Million to Expand Fab 12 and Increase Its Advanced Process Capacity (2008/05/13)
l |  | Intel, Samsung Electronics, TSMC Reach Agreement For 450mm Wafer Manufacturing Transition (2008/05/06)
l |  | TSMC Unveils New 40/65-Nanometer SPICE Tool Qualification Program (2008/04/22)
l |  | TSMC and NTHU Celebrate Opening of College of Technology Management TSMC Building (2008/04/18)
l |  | TSMC Announces Power Trim Service for Advanced Chip Leakage Power Reduction (2008/04/15)

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

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

|  | June 30, 2008 (audited) |  |  | March 31, 2008 (unaudited) |  |  | June 30, 2007 (audited) |  |  | QoQ |  |  | YoY |
|  | USD |  |  | NTD |  |  | % |  |  | NTD |  |  | % |  |  | NTD |  |  | % |  |  | Amount |  |  | % |  |  | Amount |  |  | % |
ASSETS |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and Cash Equivalents |  | $ | 6,106 |  |  | $ | 185,346 |  |  |  | 30.1 |  |  | $ | 144,277 |  |  |  | 24.2 |  |  | $ | 163,391 |  |  |  | 25.6 |  |  | $ | 41,069 |  |  |  | 28.5 |  |  | $ | 21,955 |  |  |  | 13.4 |
Investments in Marketable Financial Instruments |  |  | 1,273 |  |  |  | 38,642 |  |  |  | 6.3 |  |  |  | 66,034 |  |  |  | 11.1 |  |  |  | 69,685 |  |  |  | 10.9 |  |  |  | (27,392 | ) |  |  | (41.5 | ) |  |  | (31,043 | ) |  |  | (44.5 | )
Accounts Receivable — Trade |  |  | 1,379 |  |  |  | 41,858 |  |  |  | 6.8 |  |  |  | 37,950 |  |  |  | 6.3 |  |  |  | 37,054 |  |  |  | 5.8 |  |  |  | 3,908 |  |  |  | 10.3 |  |  |  | 4,804 |  |  |  | 13.0 |
Inventories, Net |  |  | 770 |  |  |  | 23,359 |  |  |  | 3.8 |  |  |  | 21,890 |  |  |  | 3.7 |  |  |  | 24,045 |  |  |  | 3.8 |  |  |  | 1,469 |  |  |  | 6.7 |  |  |  | (686 | ) |  |  | (2.9 | )
Other Current Assets |  |  | 348 |  |  |  | 10,558 |  |  |  | 1.7 |  |  |  | 11,304 |  |  |  | 1.9 |  |  |  | 10,464 |  |  |  | 1.7 |  |  |  | (746 | ) |  |  | (6.6 | ) |  |  | 94 |  |  |  | 0.9 |
Total Current Assets |  |  | 9,876 |  |  |  | 299,763 |  |  |  | 48.7 |  |  |  | 281,455 |  |  |  | 47.2 |  |  |  | 304,639 |  |  |  | 47.8 |  |  |  | 18,308 |  |  |  | 6.5 |  |  |  | (4,876 | ) |  |  | (1.6 | )
Long-Term Investments |  |  | 1,052 |  |  |  | 31,937 |  |  |  | 5.2 |  |  |  | 33,693 |  |  |  | 5.6 |  |  |  | 45,153 |  |  |  | 7.1 |  |  |  | (1,756 | ) |  |  | (5.2 | ) |  |  | (13,216 | ) |  |  | (29.3 | )
Property, Plant and Equipment |  |  | 27,573 |  |  |  | 836,936 |  |  |  | 136.0 |  |  |  | 817,464 |  |  |  | 136.9 |  |  |  | 767,100 |  |  |  | 120.3 |  |  |  | 19,472 |  |  |  | 2.4 |  |  |  | 69,836 |  |  |  | 9.1 |
Less: Accumulated Depreciation |  |  | (18,935 | ) |  |  | (574,738 | ) |  |  | (93.4 | ) |  |  | (555,854 | ) |  |  | (93.1 | ) |  |  | (502,495 | ) |  |  | (78.8 | ) |  |  | (18,884 | ) |  |  | 3.4 |  |  |  | (72,243 | ) |  |  | 14.4 |
Property, Plant and Equipment, Net |  |  | 8,638 |  |  |  | 262,198 |  |  |  | 42.6 |  |  |  | 261,610 |  |  |  | 43.8 |  |  |  | 264,605 |  |  |  | 41.5 |  |  |  | 588 |  |  |  | 0.2 |  |  |  | (2,407 | ) |  |  | (0.9 | )
Other Assets |  |  | 702 |  |  |  | 21,325 |  |  |  | 3.5 |  |  |  | 20,285 |  |  |  | 3.4 |  |  |  | 23,037 |  |  |  | 3.6 |  |  |  | 1,040 |  |  |  | 5.1 |  |  |  | (1,712 | ) |  |  | (7.4 | )
Total Assets |  | $ | 20,268 |  |  | $ | 615,223 |  |  |  | 100.0 |  |  | $ | 597,043 |  |  |  | 100.0 |  |  | $ | 637,434 |  |  |  | 100.0 |  |  | $ | 18,180 |  |  |  | 3.0 |  |  |  | ($22,211 | ) |  |  | (3.5 | )
LIABILITIES AND SHAREHOLDERS’ EQUITY |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Short-Term Bank Loans |  | $ | — |  |  | $ | — |  |  |  | — |  |  | $ | — |  |  |  | — |  |  | $ | 99 |  |  |  | — |  |  | $ | — |  |  |  | — |  |  |  | ($99 | ) |  |  | (100.0 | )
Accounts Payable (2) |  |  | 383 |  |  |  | 11,632 |  |  |  | 1.9 |  |  |  | 10,338 |  |  |  | 1.7 |  |  |  | 11,064 |  |  |  | 1.8 |  |  |  | 1,294 |  |  |  | 12.5 |  |  |  | 568 |  |  |  | 4.3 |
Payables to Contractors and Equipment Suppliers (2) |  |  | 313 |  |  |  | 9,511 |  |  |  | 1.5 |  |  |  | 12,256 |  |  |  | 2.1 |  |  |  | 17,103 |  |  |  | 2.7 |  |  |  | (2,745 | ) |  |  | (22.4 | ) |  |  | (7,592 | ) |  |  | (44.1 | )
Accrued Expenses and Other Current Liabilities |  |  | 3,874 |  |  |  | 117,576 |  |  |  | 19.2 |  |  |  | 31,162 |  |  |  | 5.2 |  |  |  | 99,365 |  |  |  | 15.5 |  |  |  | 86,414 |  |  |  | 277.3 |  |  |  | 18,211 |  |  |  | 18.3 |
Current Portion of Bonds Payable and Long-Term Liabilities |  |  | 272 |  |  |  | 8,262 |  |  |  | 1.3 |  |  |  | 8,280 |  |  |  | 1.4 |  |  |  | 4,782 |  |  |  | 0.8 |  |  |  | (18 | ) |  |  | (0.2 | ) |  |  | 3,480 |  |  |  | 72.8 |
Total Current Liabilities |  |  | 4,842 |  |  |  | 146,981 |  |  |  | 23.9 |  |  |  | 62,036 |  |  |  | 10.4 |  |  |  | 132,413 |  |  |  | 20.8 |  |  |  | 84,945 |  |  |  | 136.9 |  |  |  | 14,568 |  |  |  | 11.0 |
Bonds Payable |  |  | 148 |  |  |  | 4,500 |  |  |  | 0.7 |  |  |  | 4,500 |  |  |  | 0.8 |  |  |  | 12,500 |  |  |  | 2.0 |  |  |  | — |  |  |  | — |  |  |  | (8,000 | ) |  |  | (64.0 | )
Other Long-Term Liabilities |  |  | 562 |  |  |  | 17,055 |  |  |  | 2.8 |  |  |  | 17,537 |  |  |  | 2.9 |  |  |  | 18,649 |  |  |  | 2.9 |  |  |  | (482 | ) |  |  | (2.7 | ) |  |  | (1,594 | ) |  |  | (8.5 | )
Total Liabilities |  |  | 5,552 |  |  |  | 168,536 |  |  |  | 27.4 |  |  |  | 84,073 |  |  |  | 14.1 |  |  |  | 163,562 |  |  |  | 25.7 |  |  |  | 84,463 |  |  |  | 100.5 |  |  |  | 4,974 |  |  |  | 3.0 |
Shareholders’ Equity Attributable to Shareholders of the Parent |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Capital Stock |  |  | 8,616 |  |  |  | 261,535 |  |  |  | 42.5 |  |  |  | 256,292 |  |  |  | 42.9 |  |  |  | 264,235 |  |  |  | 41.5 |  |  |  | 5,243 |  |  |  | 2.0 |  |  |  | (2,700 | ) |  |  | (1.0 | )
Capital Surplus |  |  | 1,677 |  |  |  | 50,917 |  |  |  | 8.3 |  |  |  | 51,696 |  |  |  | 8.7 |  |  |  | 53,726 |  |  |  | 8.4 |  |  |  | (779 | ) |  |  | (1.5 | ) |  |  | (2,809 | ) |  |  | (5.2 | )
Retained Earnings |  |  | 5,006 |  |  |  | 151,953 |  |  |  | 24.7 |  |  |  | 208,633 |  |  |  | 34.9 |  |  |  | 154,010 |  |  |  | 24.2 |  |  |  | (56,680 | ) |  |  | (27.2 | ) |  |  | (2,057 | ) |  |  | (1.3 | )
Treasury Stock |  |  | (489 | ) |  |  | (14,845 | ) |  |  | (2.4 | ) |  |  | (918 | ) |  |  | (0.2 | ) |  |  | (918 | ) |  |  | (0.1 | ) |  |  | (13,927 | ) |  |  | 1517.0 |  |  |  | (13,927 | ) |  |  | 1517.0 |
Others |  |  | (208 | ) |  |  | (6,319 | ) |  |  | (1.1 | ) |  |  | (6,410 | ) |  |  | (1.0 | ) |  |  | (167 | ) |  |  | (0.1 | ) |  |  | 91 |  |  |  | (1.4 | ) |  |  | (6,152 | ) |  |  | 3701.9 |
Total Equity Attributable to Shareholders of the Parent |  |  | 14,602 |  |  |  | 443,241 |  |  |  | 72.0 |  |  |  | 509,293 |  |  |  | 85.3 |  |  |  | 470,886 |  |  |  | 73.9 |  |  |  | (66,052 | ) |  |  | (13.0 | ) |  |  | (27,645 | ) |  |  | (5.9 | )
Minority Interests |  |  | 114 |  |  |  | 3,446 |  |  |  | 0.6 |  |  |  | 3,677 |  |  |  | 0.6 |  |  |  | 2,986 |  |  |  | 0.4 |  |  |  | (231 | ) |  |  | (6.3 | ) |  |  | 460 |  |  |  | 15.4 |
Total Shareholders’ Equity |  |  | 14,716 |  |  |  | 446,687 |  |  |  | 72.6 |  |  |  | 512,970 |  |  |  | 85.9 |  |  |  | 473,872 |  |  |  | 74.3 |  |  |  | (66,283 | ) |  |  | (12.9 | ) |  |  | (27,185 | ) |  |  | (5.7 | )
Total Liabilities & Shareholders’ Equity |  | $ | 20,268 |  |  | $ | 615,223 |  |  |  | 100.0 |  |  | $ | 597,043 |  |  |  | 100.0 |  |  | $ | 637,434 |  |  |  | 100.0 |  |  | $ | 18,180 |  |  |  | 3.0 |  |  |  | ($22,211 | ) |  |  | (3.5 | )

Note: | (1) | Amounts in New Taiwan dollars have been translated into U.S. dollars at the rate of NT$30.354 as of June 30, 2008.
| (2) | Certain prior period balances have been reclassified to conform to the current period presentation.

#####

|  | TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED AND SUBSIDIARIES Unaudited Consolidated Condensed Income Statements For the Three Months Ended June 30, 2008, March 31, 2008, and June 30, 2007 (Expressed in Millions of New Taiwan Dollars (“NTD”) and U.S. Dollars (“USD”) (1) Except for Per Share Amounts and Shares Outstanding)

|  | Q2 2008 |  |  | Q1 2008 |  |  | Q2 2007 |  |  | QoQ |  |  | YoY |
|  | USD |  |  | NTD |  |  | % |  |  | NTD |  |  | % |  |  | NTD |  |  | % |  |  | Amount |  |  | % |  |  | Amount |  |  | % |
Net Sales |  | $ | 2,896 |  |  | $ | 88,137 |  |  |  | 100.0 |  |  | $ | 87,480 |  |  |  | 100.0 |  |  | $ | 74,918 |  |  |  | 100.0 |  |  | $ | 657 |  |  |  | 0.8 |  |  | $ | 13,219 |  |  |  | 17.6 |
Cost of Sales |  |  | (1,574 | ) |  |  | (47,916 | ) |  |  | (54.4 | ) |  |  | (49,241 | ) |  |  | (56.3 | ) |  |  | (42,738 | ) |  |  | (57.0 | ) |  |  | 1,325 |  |  |  | (2.7 | ) |  |  | (5,178 | ) |  |  | 12.1 |
Gross Profit |  |  | 1,322 |  |  |  | 40,221 |  |  |  | 45.6 |  |  |  | 38,239 |  |  |  | 43.7 |  |  |  | 32,180 |  |  |  | 43.0 |  |  |  | 1,982 |  |  |  | 5.2 |  |  |  | 8,041 |  |  |  | 25.0 |
Operating Expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Research and Development Expenses |  |  | (178 | ) |  |  | (5,404 | ) |  |  | (6.1 | ) |  |  | (5,270 | ) |  |  | (6.0 | ) |  |  | (4,301 | ) |  |  | (5.7 | ) |  |  | (134 | ) |  |  | 2.5 |  |  |  | (1,103 | ) |  |  | 25.6 |
General and Administrative Expenses |  |  | (104 | ) |  |  | (3,170 | ) |  |  | (3.6 | ) |  |  | (2,662 | ) |  |  | (3.0 | ) |  |  | (2,151 | ) |  |  | (2.9 | ) |  |  | (508 | ) |  |  | 19.1 |  |  |  | (1,019 | ) |  |  | 47.3 |
Sales and Marketing Expenses |  |  | (42 | ) |  |  | (1,274 | ) |  |  | (1.4 | ) |  |  | (1,184 | ) |  |  | (1.4 | ) |  |  | (994 | ) |  |  | (1.4 | ) |  |  | (90 | ) |  |  | 7.7 |  |  |  | (280 | ) |  |  | 28.2 |
Total Operating Expenses |  |  | (324 | ) |  |  | (9,848 | ) |  |  | (11.1 | ) |  |  | (9,116 | ) |  |  | (10.4 | ) |  |  | (7,446 | ) |  |  | (10.0 | ) |  |  | (732 | ) |  |  | 8.0 |  |  |  | (2,402 | ) |  |  | 32.3 |
Income from Operations |  |  | 998 |  |  |  | 30,373 |  |  |  | 34.5 |  |  |  | 29,123 |  |  |  | 33.3 |  |  |  | 24,734 |  |  |  | 33.0 |  |  |  | 1,250 |  |  |  | 4.3 |  |  |  | 5,639 |  |  |  | 22.8 |
Non-Operating Income, Net |  |  | 57 |  |  |  | 1,725 |  |  |  | 1.9 |  |  |  | 1,872 |  |  |  | 2.1 |  |  |  | 2,802 |  |  |  | 3.7 |  |  |  | (147 | ) |  |  | (7.8 | ) |  |  | (1,077 | ) |  |  | (38.5 | )
Investment Gains |  |  | 9 |  |  |  | 279 |  |  |  | 0.3 |  |  |  | 577 |  |  |  | 0.7 |  |  |  | 488 |  |  |  | 0.7 |  |  |  | (298 | ) |  |  | (51.6 | ) |  |  | (209 | ) |  |  | (42.8 | )
Income before Income Tax |  |  | 1,064 |  |  |  | 32,377 |  |  |  | 36.7 |  |  |  | 31,572 |  |  |  | 36.1 |  |  |  | 28,024 |  |  |  | 37.4 |  |  |  | 805 |  |  |  | 2.6 |  |  |  | 4,353 |  |  |  | 15.5 |
Income Tax (Expenses) Benefits |  |  | (115 | ) |  |  | (3,503 | ) |  |  | (4.0 | ) |  |  | (3,336 | ) |  |  | (3.8 | ) |  |  | (2,394 | ) |  |  | (3.2 | ) |  |  | (167 | ) |  |  | 5.0 |  |  |  | (1,109 | ) |  |  | 46.3 |
Net Income |  |  | 949 |  |  |  | 28,874 |  |  |  | 32.7 |  |  |  | 28,236 |  |  |  | 32.3 |  |  |  | 25,630 |  |  |  | 34.2 |  |  |  | 638 |  |  |  | 2.3 |  |  |  | 3,244 |  |  |  | 12.7 |
Minority Interests |  |  | (4 | ) |  |  | (103 | ) |  |  | (0.1 | ) |  |  | (93 | ) |  |  | (0.1 | ) |  |  | (146 | ) |  |  | (0.2 | ) |  |  | (10 | ) |  |  | 11.7 |  |  |  | 43 |  |  |  | (29.3 | )
Net Income Attributable to Shareholders of the Parent |  |  | 945 |  |  |  | 28,771 |  |  |  | 32.6 |  |  |  | 28,143 |  |  |  | 32.2 |  |  |  | 25,484 |  |  |  | 34.0 |  |  |  | 628 |  |  |  | 2.2 |  |  |  | 3,287 |  |  |  | 12.9 |
Earnings per Share — Diluted |  | $ | 0.04 |  |  | $ | 1.12 |  |  |  |  |  |  | $ | 1.10 |  |  |  |  |  |  | $ | 0.96 |  |  |  |  |  |  | $ | 0.02 |  |  |  | 2.1 |  |  | $ | 0.16 |  |  |  | 16.3 |
Earnings per ADR — Diluted (2) |  | $ | 0.18 |  |  | $ | 5.61 |  |  |  |  |  |  | $ | 5.49 |  |  |  |  |  |  | $ | 4.82 |  |  |  |  |  |  | $ | 0.12 |  |  |  | 2.1 |  |  | $ | 0.79 |  |  |  | 16.3 |
Weighted Average Outstanding Shares — Diluted (‘M) |  |  |  |  |  |  | 25,634 |  |  |  |  |  |  |  | 25,610 |  |  |  |  |  |  |  | 26,409 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

Note: |  |
(1) |  | Amounts in New Taiwan dollars have been translated into U.S. dollars at the weighted average rate of NT$30.437 for the second quarter of 2008.
(2) |  | 1 ADR equals 5 ordinary shares.

#####

|  | TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED AND SUBSIDIARIES
| Audited Consolidated Condensed Income Statements
| For the Six Months Ended June 30, 2008 and 2007
| (Expressed in Millions of New Taiwan Dollars (“NTD”) and U.S. Dollars (“USD”) (1)
| Except for Per Share Amounts and Shares Outstanding)

|  | For the Six Months Ended June 30 |
|  | 2008 |  |  | 2007 |  |  | YoY |
|  | USD |  |  | NTD |  |  | % |  |  | NTD |  |  | % |  |  | Amount |  |  | % |
Net Sales |  | $ | 5,663 |  |  | $ | 175,617 |  |  |  | 100.0 |  |  | $ | 139,815 |  |  |  | 100.0 |  |  | $ | 35,802 |  |  |  | 25.6 |
Cost of Sales |  |  | (3,133 | ) |  |  | (97,156 | ) |  |  | (55.3 | ) |  |  | (83,025 | ) |  |  | (59.4 | ) |  |  | (14,131 | ) |  |  | 17.0 |
Gross Profit |  |  | 2,530 |  |  |  | 78,461 |  |  |  | 44.7 |  |  |  | 56,790 |  |  |  | 40.6 |  |  |  | 21,671 |  |  |  | 38.2 |
Operating Expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Research and Development Expenses |  |  | (344 | ) |  |  | (10,674 | ) |  |  | (6.1 | ) |  |  | (8,243 | ) |  |  | (5.9 | ) |  |  | (2,431 | ) |  |  | 29.5 |
General and Administrative Expenses |  |  | (188 | ) |  |  | (5,833 | ) |  |  | (3.3 | ) |  |  | (4,053 | ) |  |  | (2.9 | ) |  |  | (1,780 | ) |  |  | 43.9 |
Sales and Marketing Expenses |  |  | (80 | ) |  |  | (2,458 | ) |  |  | (1.4 | ) |  |  | (1,883 | ) |  |  | (1.3 | ) |  |  | (575 | ) |  |  | 30.5 |
Total Operating Expenses |  |  | (612 | ) |  |  | (18,965 | ) |  |  | (10.8 | ) |  |  | (14,179 | ) |  |  | (10.1 | ) |  |  | (4,786 | ) |  |  | 33.7 |
Income from Operations |  |  | 1,918 |  |  |  | 59,496 |  |  |  | 33.9 |  |  |  | 42,611 |  |  |  | 30.5 |  |  |  | 16,885 |  |  |  | 39.6 |
Non-Operating Income, Net |  |  | 116 |  |  |  | 3,596 |  |  |  | 2.0 |  |  |  | 4,632 |  |  |  | 3.3 |  |  |  | (1,036 | ) |  |  | (22.4 | )
Investment Gains |  |  | 28 |  |  |  | 857 |  |  |  | 0.5 |  |  |  | 849 |  |  |  | 0.6 |  |  |  | 8 |  |  |  | 0.9 |
Income before Income Tax |  |  | 2,062 |  |  |  | 63,949 |  |  |  | 36.4 |  |  |  | 48,092 |  |  |  | 34.4 |  |  |  | 15,857 |  |  |  | 33.0 |
Income Tax (Expenses) Benefits |  |  | (220 | ) |  |  | (6,839 | ) |  |  | (3.9 | ) |  |  | (3,501 | ) |  |  | (2.5 | ) |  |  | (3,338 | ) |  |  | 95.3 |
Net Income |  |  | 1,842 |  |  |  | 57,110 |  |  |  | 32.5 |  |  |  | 44,591 |  |  |  | 31.9 |  |  |  | 12,519 |  |  |  | 28.1 |
Minority Interest |  |  | (7 | ) |  |  | (196 | ) |  |  | (0.1 | ) |  |  | (268 | ) |  |  | (0.2 | ) |  |  | 72 |  |  |  | (26.9 | )
Net Income Attributable to Shareholders of the Parent |  |  | 1,835 |  |  |  | 56,914 |  |  |  | 32.4 |  |  |  | 44,323 |  |  |  | 31.7 |  |  |  | 12,591 |  |  |  | 28.4 |
Earnings per Share — Diluted |  | $ | 0.07 |  |  | $ | 2.22 |  |  |  |  |  |  | $ | 1.68 |  |  |  |  |  |  | $ | 0.54 |  |  |  | 32.1 |
Earnings per ADR — Diluted (2) |  | $ | 0.36 |  |  | $ | 11.08 |  |  |  |  |  |  | $ | 8.39 |  |  |  |  |  |  | $ | 2.69 |  |  |  | 32.1 |
Weighted Average Outstanding Shares — Diluted (‘M) |  |  |  |  |  |  | 25,676 |  |  |  |  |  |  |  | 26,409 |  |  |  |  |  |  |  |  |  |  |  |  |

Note:
(1) |  | Amounts in New Taiwan dollars have been translated into U.S. dollars at the weighted average rate of NTD 31.012 for the six months ended June 30, 2008.
(2) |  | 1 ADR equals 5 ordinary shares.

#####

|  | TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED AND SUBSIDIARIES
| Consolidated Condensed Statements of Cash Flows
| For the Six Months Ended June 30, 2008 and for the Three Months Ended June 30, 2008, March 31, 2008, and June 30, 2007
|  | (Expressed in Millions of New Taiwan Dollars (“NTD”) and U.S. Dollars (“USD”))(1)

|  | Six Months 2008 |  |  | 2Q 2008 |  |  | 1Q 2008 |  |  | 2Q 2007 |
|  | (Audited) |  |  | (Unaudited) |  |  | (Unaudited) |  |  | (Unaudited) |
|  | USD |  |  | NTD |  |  | NTD |  |  | NTD |  |  | NTD |
Cash Flows from Operating Activities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net Income |  | $ | 1,835 |  |  | $ | 56,914 |  |  | $ | 28,771 |  |  | $ | 28,143 |  |  | $ | 25,484 |
Net Income Attributable to Minority Interest |  |  | 6 |  |  |  | 196 |  |  |  | 103 |  |  |  | 93 |  |  |  | 146 |
Depreciation & Amortization |  |  | 1,285 |  |  |  | 39,865 |  |  |  | 20,034 |  |  |  | 19,831 |  |  |  | 19,616 |
Deferred Income Tax |  |  | 55 |  |  |  | 1,715 |  |  |  | 1,280 |  |  |  | 435 |  |  |  | 371 |
Equity in Earnings of Equity Method Investees, Net |  |  | (28 | ) |  |  | (857 | ) |  |  | (280 | ) |  |  | (577 | ) |  |  | (488 | )
Changes in Working Capital & Others (2) |  |  | 147 |  |  |  | 4,513 |  |  |  | (4,857 | ) |  |  | 9,370 |  |  |  | (10,478 | )
Net Cash Provided by Operating Activities |  |  | 3,300 |  |  |  | 102,346 |  |  |  | 45,051 |  |  |  | 57,295 |  |  |  | 34,651 |
Cash Flows from Investing Activities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Acquisitions of: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Marketable Financial Instruments |  |  | (920 | ) |  |  | (28,537 | ) |  |  | (14,635 | ) |  |  | (13,902 | ) |  |  | (14,234 | )
Investments Accounted for Using Equity Method |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Property, Plant and Equipment |  |  | (1,212 | ) |  |  | (37,587 | ) |  |  | (22,274 | ) |  |  | (15,313 | ) |  |  | (25,345 | )
Financial Assets Carried at Cost |  |  | (10 | ) |  |  | (303 | ) |  |  | (90 | ) |  |  | (213 | ) |  |  | (218 | )
Proceeds from Disposal or maturity of: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Marketable Financial Instruments |  |  | 2,214 |  |  |  | 68,656 |  |  |  | 41,840 |  |  |  | 26,816 |  |  |  | 30,013 |
Investments Accounted for Using Equity Method |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Property, Plant and Equipment |  |  | 1 |  |  |  | 31 |  |  |  | 30 |  |  |  | 1 |  |  |  | 10 |
Financial Assets Carried at Cost |  |  | 4 |  |  |  | 128 |  |  |  | 35 |  |  |  | 93 |  |  |  | — |
Others |  |  | (62 | ) |  |  | (1,917 | ) |  |  | (1,310 | ) |  |  | (607 | ) |  |  | (383 | )
Net Cash Provided by (Used In) Investing Activities |  |  | 15 |  |  |  | 471 |  |  |  | 3,596 |  |  |  | (3,125 | ) |  |  | (10,157 | )
Cash Flows from Financing Activities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Decrease in Guarantee Deposits |  |  | (17 | ) |  |  | (535 | ) |  |  | (164 | ) |  |  | (371 | ) |  |  | (418 | )
Proceeds from Exercise of Stock Options |  |  | 6 |  |  |  | 172 |  |  |  | 91 |  |  |  | 81 |  |  |  | 175 |
Bonus Paid to Directors and Supervisors |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (286 | )
Repayment of Long-Term Bonds Payable |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Cash Dividends Paid for Common Stock |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Repurchase of Treasury Stock |  |  | (312 | ) |  |  | (9,669 | ) |  |  | (6,615 | ) |  |  | (3,054 | ) |  |  | — |
Cash Bonus Paid to Employees |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Others |  |  | (3 | ) |  |  | (101 | ) |  |  | (159 | ) |  |  | 58 |  |  |  | 2 |
Net Cash Used in Financing Activities |  |  | (326 | ) |  |  | (10,133 | ) |  |  | (6,847 | ) |  |  | (3,286 | ) |  |  | (527 | )
Net Increase in Cash and Cash Equivalents |  |  | 2,989 |  |  |  | 92,684 |  |  |  | 41,800 |  |  |  | 50,884 |  |  |  | 23,967 |
Effect of Exchange Rate Changes and Others (2) |  |  | (75 | ) |  |  | (2,324 | ) |  |  | (731 | ) |  |  | (1,593 | ) |  |  | (850 | )
Cash and Cash Equivalents at Beginning of Period |  |  | 3,063 |  |  |  | 94,986 |  |  |  | 144,277 |  |  |  | 94,986 |  |  |  | 140,274 |
Cash and Cash Equivalents at End of Period |  | $ | 5,977 |  |  | $ | 185,346 |  |  | $ | 185,346 |  |  | $ | 144,277 |  |  | $ | 163,391 |

Note: |  | (1) Amounts in New Taiwan dollars have been translated into U.S. dollars at the weighted average rate of NTD 31.012 for the six months ended June 30, 2008.
|  | (2) Certain prior period balances have been reclassified to conform to the current period presentation.

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TSMC 2008 Second Quarter Investor Conference July 31, 2008

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Agenda Welcome Elizabeth Sun 2Q08 Financial Results and 3Q08 Outlook Lora Ho CEO Comments Rick Tsai Q&A Rick Tsai / Lora Ho

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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 15, 2008 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.

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2Q08 Financial Highlights Annualized ROE for the quarter based on average equity attributable to shareholders of the parent.

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Income Statements 2Q07 results do not include expenses of employee profit sharing.

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2Q08 Revenue by Applications

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2Q08 Revenue by Technology 65nm Revenue

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Balance Sheets & Key Indices Asset productivity = Annualized net sales / Average net fixed assets.

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Cash Flows Free cash flow = Operating cash flow - Capital expenditures.

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Note: 1 Figures represent number of 6" wafers. Conversion to 8"-equivalent wafers is obtained by dividing this number by 1.78. 2 Figures represent number of 12" wafers. Conversion to 8"-equivalent wafers is obtained by multiplying this number by 2.25. Installed Capacity Overall Capacity +13%; Advanced Capacity +27%

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Capital Expenditures

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3Q08 Guidance Revenue is expected to be between NT$90 billion and NT$92 billion, at a forecast exchange rate of 30.20 NT dollars to 1 US dollar averaged over 3Q08. Gross profit margin is expected to be between 45% and 47%. Operating profit margin is expected to be between 34% and 36%.

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Recap of Recent Major Events TSMC Wins Corporate Governance Asia Annual Recognition Award 2008 (2008/06/26) TSMC Unified DFM Architecture Promises Improved Yields and Accelerated Time-to-Market (2008/06/09) New TSMC Reference Flow 9.0 Supports 40nm Process Technology (2008/06/03) TSMC Board Approves Plan to Buy Back and Cancel Shares up to US$1 billion (2008/05/13) Intel, Samsung Electronics, TSMC Reach Agreement For 450mm Wafer Manufacturing Transition (2008/05/06) TSMC Unveils New 40/65-Nanometer SPICE Tool Qualification Program (2008/04/22) TSMC Announces Power Trim Service for Advanced Chip Leakage Power Reduction (2008/04/15) * Please visit TSMC's Web site (http://www.tsmc.com) for details and other announcements.

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

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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 31, 2008 | By | /s/ Lora Ho |
|  | Lora Ho |
|  | Vice President & Chief Financial Officer |