First Quarter Results for the Period Ended
March 31, 1999

Hsin-Chu, Taiwan, R. O. C., April 20th, 1999 !X Taiwan Semiconductor Manufacturing Company Ltd. (TAIEX: 2330, NYSE: TSM), ("TSMC" or "the Company") the world!|s largest dedicated semiconductor foundry company, announced today the results of its operations for the first quarter ended March 31, 1999. All figures were prepared in accordance with generally accepted accounting principles in Taiwan.

• Highlights
  • Net sales declined 20.6% to NT$12,501 million.
  • Operating income declined 27.4%% to NT$4,873 million.
  • Net income declined 41.1% to NT$4,090 million.
  • Diluted earnings per share (EPS) declined 41.1% to NT$0.68 from NT$1.15.
• Net Sales:
  Net sales in 1Q99 totaled NT$12,501 million, down 20.6% compared with NT$15,736 for the same period of 1998, as a combined result of lower unit sales of eight-inch equivalent wafers and a lower average selling price (ASP). The unit sales of eight-inch equivalent wafers fell 8.8% to 319.6K units in 1Q99 from 350.5K in the same period of 1998. Pure price erosion was 18.2%, which was partially offset by favorable product mix and favorable foreign exchange rate. In US dollar terms, quarterly ASP declined 12.6% to US$1,101 per eight-inch equivalent wafer. The ASP in the New Taiwan dollar declined by 13.6% YoY to NT$35.9K in 1Q99. New Taiwan dollar appreciated from the weighted average rate of NT$33.00 to NT$32.58 per US dollar during this period.
• Gross Margins:
  The gross margin declined to 49.6% in 1Q99 compared with 52.3% in 1Q98 due to a net impact of price erosion and lower capacity utilization. Capacity utilization decreased to 88% in 1Q99 from 102% in 1Q98.
• Operating Expenses:
  Operating expenses in the 1Q99 declined 12.9% from the same period a year ago to NT$1,326 million due to cost control efforts. Operating expenses as percent of net sales slightly increased to 10.6% in 1Q99 from 9.7% in the same period of 1998.
• Non-Operating Income / Expenses:
  Net non-operating expense increased to NT$536 million in 1Q99 from NT$196 million in 1Q98. Non-operating income increased to NT$221 million in 1Q99 from NT$143 million in 1Q98 mailing due to NT$70 million increase in interest income. Non-operating expenses increased to NT$757 million in 1Q99 from NT$340 million in 1Q98 due mainly to NT$388 millioncharge for WafterTech!|s 85% capacity obligation. Investment loss increased to NT$226 million in 1Q99 compared to investment gain of NT$20 million in 1Q98. Loss came from WaferTech (NT$174 million), Vanguard International Semiconductor Company (NT$34 million). Consequently, the profit margin before tax declined to 32.9% in 1Q99 from 41.5% a year ago.
• Net Income:
  Net income tax expenses for 1Q99 was NT$22 million, down from NT$414 million of tax credit in 1Q98. Net income declined 41.1% to NT$4,090 million in 1Q99. Diluted earnings per share were NT$0.68 for 1Q99, down from NT$1.15 in the same period of 1998.
• Operations Highlights
  Sales to the fabless segment as percent of total sales reached 73% in 1Q99 versus 71% in 1Q98. Sales to North America regions as percent of total sales dropped to 48% versus 52% in 1Q98. Product mix in logic represented 90% vs 74% in 1Q98 of TSMC revenue, while memory represented 10% vs 26% in 1Q98. Under the new classification, revenue breakdown by end market for 1Q99 was computer 40%, communication 26%, consumer 18%, memory 12%, and industrial/others 4%. Historical annual breakdown under the new classification for 1998 was computer 38%, communication 25%, consumer 15%, memory 18%, and industrial/other 4%. Breakdown for 1997 was computer 38%, communication 21%, consumer 15%, memory 23%, and industrial/others 3%.

• Highlights
  • Sequential recovery in order volume continued.
  • Net sales increased 7.5% to NT$12,501 million.
  • Operating income increased 68.5% to NT$4,873 million.
  • Net income increased 62.0% to NT$4,090 million.
  • Diluted earnings per share were NT$0.68, an increase of 62.0% from NT$0.42 in 4Q98.
• Net Sales:
  Net sales in 1Q99 totaled NT$12,501 million, up 7.5 % compared with 4Q98, as a result of higher unit sales of eight-inch equivalent wafers, offsetting an impact of lower ASP. Unit sales of eight-inch equivalent wafers grew 11.7% to 319.6K units in 1Q99 from 286.2K in 4Q98. In US dollar terms, the quarterly ASP decreased 5.4% to US$1,101 per eight-inch equivalent wafer from US$1,164 in 4Q98, mainly due to pure price erosion of 4.9%. Unfavorable foreign exchange rate resulted in 7.3% decline in ASP in the New Taiwan dollar to NT$35.9K. The New Taiwan dollar appreciated from the weighted average rate of NT$33.33 to NT$32.58 per US dollar during the period.
• Gross Margins:
  The gross margin recovered to 49.6% in the 1Q99 compared with 33.8% in 4Q98 mainly due to capacity utilization improvement from 67% in 4Q98 to 88% in 1Q99.
• Operating Expenses:
  Operating expenses in 1Q99 increased by 27.5% to NT$1,326 million from NT$1,040 million in 4Q98. Operating expenses as percent of net sales increased to 10.6% in 1Q99 from 8.9% in 4Q98.
• Non-Operating Income / Expenses:
  Net non-operating expense was NT$536 million in 1Q99 compared to non-operating income of NT$115 million in 4Q98. Non-Operating income decreased in 1Q99 to NT$221 million from NT$487 million in 4Q98 mainly due to lower foreign exchange gain. Non-operating expenses were NT$757 million in 1Q99, up from NT$371 million in 4Q98 primarily due to NT$388 million charge for WaferTech 85% capacity obligation. Investment loss decreased to NT$226 million in 1Q99 compared to investment loss of NT$483 million in 4Q98. Reduced investment loss was result of better conditions in VISC and WaferTech.
• Net Income:
  Net income tax expenses for 1Q99 was NT$22 million compared to NT$1 million net tax expense for 4Q98. Net income increased 62.0% to NT$4,090 million in 1Q99 from NT$2,524 million in 4Q98 and diluted earnings per share (EPS) grew to NT$0.68 from NT$0.42 in 4Q98.
• Operations Highlights
  During the 1Q99, TSMC experienced a continuous sequential recovery in order volume. Average capacity utilization rate rose to 88% compare with 67% in the 4Q98. Installed capacity was down 13% to 373K in 1Q99 compared to 431K in 4Q98 in terms of eight-inch equivalent wafers due to periodic maintenance, upgrades, and fewer working days. In order to accommodate increasing demand, the Company announced an upward revision in its capital expenditure for 1999. The current capital expenditure plan stands at minimum US$780 million excluding WaferTech. This plan represent an increase of 50% compares to the previous plan of US$519 million that was announced earlier during the 4Q98 conference call. Capital expenditure plan for WaferTech in 1999 is currently planned at US$106 million. As a result, total wafer capacity for 1999 is now scheduled to increase by 11% YoY to approximately 1.8 million eight-inch equivalent wafers compared to the previous plan of 7%.
  
  Sales to the fabless segment as percent of total sales lowered to 73% in 1Q99 versus 76% in 4Q98. Sales to integrated device manufactures (IDM) rose to 25% versus 22% in 4Q98; while sales to system OEM remained the same at 2%. Sales to North America regions as percent of total sales dropped to 48% versus 64% in 4Q98. Product mix between logic and memory was almost unchanged. Logic represented 90% (versus 91% in 4Q98), while memory represented 10% (versus 9% in 4Q98).

Founded in 1987, TSMC is the first and largest semiconductor foundry company in the world. The company is based in Taiwan's "Silicon Valley", the Hsin-Chu Science-Based Industrial Park, and is dedicated to providing manufacturing services for advanced integrated circuits to fabless design houses and integrated device manufacturers (IDM). The company operates two six-inch wafer fabs and three eight-inch wafer fabs offering a comprehensive set of IC fabrication processes, including processes to manufacture CMOS logic, mixed mode, volatile and non-volatile memory and BiCMOS chips. In mid-1996, TSMC began construction on the first-ever, pure-play foundry in the US, WaferTech, in Camas, Washington, - a $1.2 billion joint venture. Fab 6 and 7 will be located in the new Tainan Science-Based Industrial Park in Taiwan.

Taiwan Semiconductor Manufacturing Company Ltd.
No. 121, Park Avenue III, Hsin-Chu Science-Based Industrial Park
Hsin-Chu, Taiwan, R. O. C.
Tel: 886-3-5780221
https://www.tsmc.com