Taiwan Semiconductor Manufacturing Company Ltd.
Table of Contents

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 October 2007
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 x            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 x
(If  “Yes” is marked, indicated below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82:                     .)
 
 

 


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FOR IMMEDIATE RELEASE
(TSMC LOGO)
      3Q07 Quarterly Management Report
                  October 25, 2007
CONTACT
Elizabeth Sun / Harrison Hsueh
Julie Wei

Investor Relations Division
TSMC
invest@tsmc.com
886-3-568-2085/ 2088/ 2086
Topics in This Report
  Revenue Analysis
  Capacity
  Profit & Expense Analysis
  Financial Condition Review
  Cash Flow & CapEx
  Recap of Recent Important Events & Announcements
Operating Results Review:
Summary:
                                         
(Amounts are on consolidated basis and are in                    
NT billions except noted otherwise)   3Q07   2Q07   3Q06   QoQ   YoY
EPS (NT$  per common share)
    1.15       0.96       1.23       19.2 %     (6.6 %)
(US$  per ADR unit)
    0.17       0.15       0.19                  
 
                                       
Consolidated Net Sales
    88.96       74.92       82.48       18.7 %     7.9 %
Gross Profit
    40.72       32.18       41.13       26.6 %     (1.0 %)
Gross Margin
    45.8 %     43.0 %     49.9 %                
Operating Expense
    (8.37 )     (7.45 )     (7.50 )     12.4 %     11.6 %
Operating Income
    32.35       24.73       33.63       30.8 %     (3.8 %)
Non-Operating Items
    1.87       3.29       1.03       (43.3 %)     80.8 %
Net Income
    30.37       25.48       32.49       19.2 %     (6.5 %)
Net Profit Margin
    34.1 %     34.0 %     39.4 %                
 
Wafer Shipment (kpcs 8 inch-equiv.)
    2,226       1,856       1,890       19.9 %     17.8 %
Remarks:
The third quarter diluted earnings per share were NT$1.15, representing a decline of 6.6% over the same period last year and a 19.2% increase sequentially. The consolidated operating results of 3Q07 are summarized below:
Third quarter net sales exceeded our guidance provided on July 26 to reach NT$89 billion, an increase of 7.9% over the year ago quarter and an increase of 18.7% sequentially.
Gross profit for the quarter was NT$41 billion with gross margin of 45.8%, or 2.8 percentage points higher than the 43% gross margin reported in the prior quarter.
Operating expenses were NT$8.4 billion or 9.4% of net sales. The combined result from non-operating income and long-term investments was a gain of NT$1.9 billion.
Consolidated net income attributable to shareholders of the parent company was NT$30.4 billion, down 6.5% from a year ago level and up 19.2% from the previous quarter. Net profit margin was 34.1% for 3Q07.

 


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TSMC    
October 25, 2007   Page 2
I. Revenue Analysis
   I. Wafer Sales Analysis
                         
By Application   3Q07   2Q07   3Q06
Computer
    32 %     29 %     28 %
Communication
    42 %     44 %     45 %
Consumer
    17 %     18 %     20 %
Industrial/Others
    5 %     6 %     5 %
Memory
    4 %     3 %     2 %
                         
By Technology   3Q07   2Q07   3Q06
65nm and below
    7 %     3 %      
90nm
    27 %     26 %     24 %
0.11/0.13um
    22 %     24 %     25 %
0.15/0.18um
    28 %     30 %     33 %
0.25/0.35um
    11 %     12 %     13 %
0.50um+
    5 %     5 %     5 %
                         
By Customer Type   3Q07   2Q07   3Q06
Fabless/System
    66 %     68 %     71 %
IDM
    34 %     32 %     29 %
                         
By Geography   3Q07   2Q07   3Q06
North America
    74 %     74 %     78 %
Asia Pacific
    13 %     13 %     10 %
Europe
    10 %     9 %     8 %
Japan
    3 %     4 %     4 %
Revenue Analysis:
Due to stronger than expected demand across our three major market segments (communication, computer, and consumer), third quarter revenue exceeded our guidance provided on July 26 to reach NT$89 billion.
Businesses from all three major market segments had double-digit quarter-over-quarter growth in the third quarter. On a sequential basis, revenues from computer, consumer and communication applications increased by 29%, 15% and 12%, respectively.
Revenue from 65nm more than doubled during the quarter to account for 7% of total wafer sales, while revenue from 90nm accounted for 27% of total wafer sales. Revenues from advanced technologies (0.13-micron and below) accounted for 56% of total wafer sales, up three percentage points from the second quarter of 2007.
Revenues from IDM customers accounted for 34% of total wafer sales during the quarter, compared to 32% in the previous quarter.
From a geographic perspective, revenues from North America accounted for 74% of total wafer sales, flat from the previous quarter. Meanwhile, sales from Asia Pacific, Europe and Japan accounted for 13%, 10% and 3% of wafer sales, respectively.

 


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TSMC    
October 25, 2007   Page 3
II. Capacity
II. Capacity
                                         
    1Q07   2Q07   3Q07   4Q07   2007
Fab / (Wafer size)   (A)   (A)   (A)   (F)   (F)
Fab-2 (6")1
    257       257       273       273       1,060  
Fab-3 (8")
    259       262       267       269       1,057  
Fab-5 (8")
    144       155       163       166       627  
Fab-6 (8")
    245       255       274       279       1,053  
Fab-8 (8")
    239       239       260       265       1,004  
Fab-12 (12")2
    169       180       198       212       759  
Fab-14 (12")2
    103       113       154       176       546  
WaferTech (8")
    104       105       106       106       419  
TSMC (Shanghai) (8")
    90       94       99       92       375  
TSMC total capacity (8" equiv. Kpcs)
    1,836       1,913       2,113       2,202       8,064  
SSMC (8")
    53       55       56       61       226  
Total managed capacity (8" equiv. Kpcs)
    1,890       1,967       2,169       2,263       8,290  
 
Note:  1.   Figues represent number of 6" wafers. Conversion to 8"-equivalent wafers is by dividing this number by 1.78
 
  2.   Figues represent number of 12" wafers. Conversion to 8"-equivalent wafers is by multiplying this number by 2.25
Capacity:
Total TSMC managed capacity was 2,169K 8-inch equivalent wafers in 3Q07, 10% higher than 2Q07. TSMC managed capacity in 4Q07 is expected to increase by 4% sequentially to reach 2,263K 8-inch equivalent wafers.
Total managed capacity for 2007 is expected to reach 8,290K 8-inch equivalent wafers, down slightly from the forecast provided in the previous quarter. On a full year basis, 2007 capacity is expected to increase by 17% from 7,062K 8-inch equivalent wafers in 2006.
III. Profit & Expense Analysis
III — 1. Gross Profit Analysis
                         
(In NT billions)   3Q07   2Q07   3Q06
COGS
  48.2   42.7   41.3
Depreciation
    18.2       17.9       16.8  
Other MFG Cost
    30.0       24.8       24.5  
 
                       
Gross Profit
    40.7       32.2       41.1  
 
                       
Gross Margin
    45.8 %     43.0 %     49.9 %
Gross Profit Analysis:
Gross margin for the third quarter 2007 was 45.8%, up from 43% in the previous quarter. Third quarter gross margin improved by 2.8 percentage points primarily due to increased wafer shipment and a higher level of capacity utilization, offset in part by a decline in pure price.

 


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TSMC    
October 25, 2007   Page 4
     III — 2. Operating Expenses *
                         
(In NT billions)   3Q07   2Q07   3Q06
Total Operating Exp.
    8.37       7.45       7.50  
SG&A
    3.68       3.15       3.19  
Research & Development
    4.69       4.30       4.31  
 
*   Certain prior period amounts have been reclassified to conform with current period presentation.
Operating Expenses:
Total operating expenses for 3Q07 were NT$8.4 billion, compared to NT$7.4 billion in the prior quarter. Total operating expenses represented 9.4% of net sales, down slightly from 10% in the second quarter of 2007.
Research and development expenditures increased by NT$390 million quarter-over-quarter, largely due to increased R&D spending on 65nm and 55nm related projects.
SG&A expenses were NT$3.7 billion for the quarter, an increase of NT$535 million quarter-over-quarter, mainly due to higher legal fees.
     III — 3. Non-Operating Items
                         
(In NT millions)   3Q07   2Q07   3Q06
Non-Operating Income/(Exp.)
    1,083       2,802       322  
Net Interest Income/(Exp.)
    1,097       1,338       923  
Other Non-Operating
    (14 )     1,464       (601 )
 
                       
L-T Investments
    782       488       709  
SSMC
    405       233       403  
Others
    377       255       306  
 
                       
Total Non-Operating Items
    1,865       3,290       1,031  
Non-Operating Items:
Combined result from non-operating income and long-term investments was a gain of NT$1.9 billion for third quarter of 2007.
Non operating income was NT$1.1 billion, down from NT$2.8 billion in the previous quarter, primarily due to an accrual of litigation loss related to the TSMC-UniRAM case, lawsuit settlement received from SMIC in the previous quarter, and a reduction in mark-to-market adjustment on certain marketable securities.
Net investment income increased by NT$294 million in the quarter, reflecting improved operating performance at SSMC and increased ownership percentage in Vanguard.

 


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TSMC    
October 25, 2007   Page 5
IV. Financial Condition Review
IV — 1. Liquidity Analysis
(Selected Balance Sheet Items)
                         
(In NT billions)   3Q07   2Q07   3Q06
Cash & Marketable Securities
    176.4       233.1       164.1  
Accounts Receivable — Trade
    42.4       37.1       37.7  
Inventory
    24.5       24.0       20.3  
Total Current Assets
    250.1       304.6       228.3  
Accounts Payable
    24.2       28.2       26.2  
Current Portion of Bonds Payable
    4.5       4.5       2.5  
Accrued Cash Dividend & Profit Sharing
    0.0       82.1       0.0  
Accrued Liabilities and Others
    22.2       17.6       16.9  
Total Current Liabilities
    50.9       132.4       45.6  
Current Ratio (x)
    4.9       2.3       5.0  
Net Working Capital
    199.2       172.2       182.7  
Liquidity Analysis:
Total cash and marketable securities decreased by NT$57 billion in the third quarter of 2007, as we paid NT$77 billion in cash dividends during the quarter. As a result, TSMC ended the quarter with NT$250 billion in total current assets, compared to NT$305 billion at the end of the previous quarter.
Mainly due to the payment of cash dividends accrued in the previous quarter, total current liabilities decreased by NT$82 billion in third quarter 2007.
Net working capital stood at NT$199 billion at the end of the quarter, with a current ratio of 4.9.
     IV — 2. Receivable/Inventory Days
                         
    3Q07   2Q07   3Q06
Days of Receivable
    42       44       43  
Days of Inventory
    48       52       48  
Receivable/Inventory Days Trend:
Days of receivable were 42 days in 3Q07, down from 44 days in the previous quarter.
Days of inventory declined by 4 days to reach 48 days.
     IV — 3. Debt Service
                         
(In NT billions)   3Q07   2Q07   3Q06
Cash & Marketable Securities
    176.4       233.1       164.1  
Interest-Bearing Debt
    26.7       26.3       27.6  
Net Cash Reserves
    149.7       206.8       136.5  
Debt Service:
As a result of the cash dividends paid and free cash flows generated during the quarter, net cash reserves — defined as the excess of cash and short-term marketable securities over interest-bearing debt — decreased by NT$57 billion to reach NT$150 billion in 3Q07.

 


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TSMC    
October 25, 2007   Page 6
V. Cash Flow & CapEx
V — 1. Cash Flow Analysis
                         
(In NT billions)   3Q07   2Q07   3Q06
Net Income
    30.4       25.5       32.5  
Depreciation & Amortization
    19.9       19.6       18.4  
Other Op Sources/(Uses)
    0.8       (10.4 )     1.8  
Total Op Sources/(Uses)
    51.1       34.7       52.7  
 
                       
Capital Expenditure
    (24.9 )     (25.3 )     (28.3 )
Marketable Financial Instruments
    (2.8 )     15.8       (8.6 )
Other Investing Sources/(Uses)
    (6.8 )     (0.7 )     (0.1 )
Net Investing Sources/(Uses)
    (34.5 )     (10.2 )     (37.0 )
 
                       
Cash Dividends
    (77.4 )     0.0       (61.7 )
Employee Profit Sharing
    (4.6 )     0.0       (3.2 )
Other Financing Sources/(Uses)
    (0.0 )     (0.5 )     0.2  
Net Financing Sources/(Uses)
    (82.0 )     (0.5 )     (64.7 )
 
                       
Net Cash Position Changes
    (65.4 )     24.0       (49.0 )
 
                       
Exchange Rate Changes & Others
    0.3       (0.9 )     0.5  
 
                       
Ending Cash Balance
    98.3       163.4       92.9  
Summary of Cash Flow:
Cash generated from operating activities totaled NT$51 billion during the quarter, up from NT$35 billion in the second quarter 2007.
TSMC spent NT$25 billion in capital expenditures in 3Q07, bringing total capital expenditures to US$1.9 billion on a year-to-date basis. TSMC also invested an additional NT$5 billion in Vanguard International Semiconductor Corporation during the quarter.
Net cash used in financing activities was NT$82 billion during the quarter, as we paid NT$77 billion in cash dividends and NT$5 billion in cash bonuses to employees.
As a result, TSMC ended the quarter with a cash balance of NT$98 billion.
(BAR GRAPH)
Operating and Free Cash Flows:
Cash flows generated from operating activities were NT$51 billion. Free cash flow, defined as the excess of operating cash flows over capital expenditures, totaled NT$26 billion in 3Q07.
     V — 3. Capital Expenditures
                                 
(In US millions)   3Q07   2Q07   1Q07   YTD
TSMC
    732       747       419       1,898  
XinTec and GUC
    15       13       3       31  
TSMC Shanghai & WaferTech
    8       4       2       14  
Other TSMC Subsidiaries
    1       2       0       3  
Total TSMC
    756       766       424       1,946  
Capital Expenditures:
Capital expenditures for TSMC consolidated group totaled US$756 million during the quarter.
For year 2007, total capital expenditures for TSMC consolidated group will be at the low end of our previous guidance to be around US$2.6 billion, which includes the US$82 million acquisition of eight-inch equipment that we announced recently.

 


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TSMC    
October 25, 2007   Page 7
VI. Recap of Recent Important Events & Announcements
     
l
  TSMC Signs Contract with Atmel to Purchase Eight-inch Wafer Fabrication Equipment (2007/10/09)
 
   
l
  TSMC Joins SOI Industry Consortium (2007/10/08)
 
   
l
  U.S. District Court Issues Verdict on TSMC-UniRAM Case (2007/09/26)
 
   
l
  California Court Issues Order on TSMC Motion for Preliminary Injunction Against SMIC (2007/09/14)
 
   
l
  TSMC Increases Stake in Vanguard (2007/08/27)
 
   
l
  TSMC Starts Production of 0.13-micron Embedded Flash Process (2007/08/21)
 
   
l
  Microsoft Embraces TSMC 90nm Embedded DRAM Process for Xbox 360 (2007/08/15)
 
*   Please visit TSMC’s Web site (http://www.tsmc.com) for details about these and other announcements.

 


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(TSMC LOGO)
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)
                                                                                         
    September 30, 2007 (unaudited)     June 30, 2007 (audited)     September 30, 2006 (unaudited)     QoQ     YoY  
    USD     NTD     %     NTD     %     NTD     %     Amount     %     Amount     %  
ASSETS
                                                                                       
Current Assets
                                                                                       
Cash and Cash Equivalents
  $ 3,010     $ 98,328       16.8     $ 163,391       25.6     $ 92,903       16.5     $ (65,063 )     -39.8     $ 5,425       5.8  
Investments in Marketable Financial Instruments
    2,390       78,064       13.3       69,685       10.9       71,192       12.6       8,379       12.0       6,872       9.7  
Accounts Receivable — Trade
    1,297       42,357       7.2       37,054       5.8       37,726       6.7       5,303       14.3       4,631       12.3  
Inventories, Net
    751       24,532       4.2       24,045       3.8       20,338       3.6       487       2.0       4,194       20.6  
Other Current Assets
    207       6,775       1.2       10,464       1.7       6,149       1.1       (3,689 )     -35.3       626       10.1  
 
                                                                 
Total Current Assets
    7,655       250,056       42.7       304,639       47.8       228,308       40.5       (54,583 )     -17.9       21,748       9.5  
 
                                                                 
 
                                                                                       
Long-Term Investments
    1,408       45,991       7.8       45,153       7.1       51,060       9.1       838       1.9       (5,069 )     -9.9  
 
                                                                                       
Property, Plant and Equipment
    24,087       786,850       134.2       767,100       120.3       706,191       125.4       19,750       2.6       80,659       11.4  
Less: Accumulated Depreciation
    (15,968 )     (521,614 )     -89.0       (502,495 )     -78.8       (445,525 )     -79.1       (19,119 )     3.8       (76,089 )     17.1  
 
                                                                 
Property, Plant and Equipment, Net
    8,119       265,236       45.2       264,605       41.5       260,666       46.3       631       0.2       4,570       1.8  
 
                                                                 
 
                                                                                       
Other Assets
    769       25,124       4.3       23,037       3.6       23,314       4.1       2,087       9.1       1,810       7.8  
 
                                                                 
Total Assets
  $ 17,951     $ 586,407       100.0     $ 637,434       100.0     $ 563,348       100.0     $ (51,027 )     -8.0     $ 23,059       4.1  
 
                                                                 
 
                                                                                       
LIABILITIES AND SHAREHOLDERS’ EQUITY
                                                                                       
Current Liabilities
                                                                                       
Short-Term Bank Loans
  $ 3     $ 98           $ 99           $             ($1 )     -0.7     $ 98        
Accounts Payables (2)
    382       12,492       2.1       11,064       1.8       10,587       1.9       1,428       12.9       1,905       18.0  
Payables to Contractors and Equipment Suppliers (2)
    360       11,745       2.0       17,103       2.7       15,589       2.8       (5,358 )     -31.3       (3,844 )     -24.7  
Accrued Expenses and Other Current Liabilities
    667       21,776       3.8       99,365       15.5       16,885       3.0       (77,589 )     -78.1       4,891       29.0  
Current Portion of Bonds Payable and Long-Term liabilities
    146       4,782       0.8       4,782       0.8       2,505       0.4             0.0       2,277       90.9  
 
                                                                 
Total Current Liabilities
    1,558       50,893       8.7       132,413       20.8       45,566       8.1       (81,520 )     -61.6       5,327       11.7  
 
                                                                 
Bonds Payable
    383       12,500       2.1       12,500       2.0       17,000       3.0             0.0       (4,500 )     -26.5  
Other Long-Term Liabilities
    563       18,395       3.1       18,649       2.9       18,919       3.4       (254 )     -1.4       (524 )     -2.8  
 
                                                                 
Total Liabilities
    2,504       81,788       13.9       163,562       25.7       81,485       14.5       (81,774 )     -50.0       303       0.4  
 
                                                                 
 
                                                                                       
Shareholders’ Equity Attributable to Shareholders of the Parent
                                                                                       
Capital Stock
    8,090       264,262       45.1       264,235       41.5       258,258       45.8       27             6,004       2.3  
Capital Surplus
    1,644       53,713       9.2       53,726       8.4       53,858       9.6       (13 )           (145 )     -0.3  
Retained Earnings
    5,644       184,380       31.4       154,010       24.2       169,213       30.0       30,370       19.7       15,167       9.0  
Treasury Stock
    (28 )     (918 )     -0.2       (918 )     -0.1       (918 )     -0.2             0.0              
Others
    (5 )     (162 )     0.0       (167 )     -0.1       725       0.2       5       -2.5       (887 )     -122.3  
 
                                                                 
Total Equity Attributable to Shareholders of the Parent
    15,345       501,275       85.5       470,886       73.9       481,136       85.4       30,389       6.5       20,139       4.2  
Minority Interest
    102       3,344       0.6       2,986       0.4       727       0.1       358       12.0       2,617       359.7  
 
                                                                 
Total Shareholders’ Equity
    15,447       504,619       86.1       473,872       74.3       481,863       85.5       30,747       6.5       22,756       4.7  
 
                                                                 
Total Liabilities & Shareholders’ Equity
  $ 17,951     $ 586,407       100.0     $ 637,434       100.0     $ 563,348       100.0     $ (51,027 )     -8.0     $ 23,059       4.1  
 
                                                                 
 
Note:   (1) Amounts in New Taiwan dollars have been translated into U.S. dollars at the rate of NT$32.667 as of September 30, 2007.
 
  (2) Certain prior period balances have been reclassified to conform to the current period presentation.


Table of Contents

(TSMC LOGO)
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED AND SUBSIDIARIES
Unaudited Consolidated Condensed Income Statements
For the Three Months Ended September 30, 2007, June 30, 2007, and September 30, 2006
(Expressed in Millions of New Taiwan Dollars (“NTD”) and U.S. Dollars (“USD”)
(1)
Except for Per Share Amounts and Shares Outstanding)
                                                                                         
    Q3 2007     Q2 2007     Q3 2006     QoQ     YoY  
    USD     NTD     %     NTD     %     NTD     %     Amount     %     Amount     %  
Net Sales
  $ 2,700     $ 88,955       100.0     $ 74,918       100.0     $ 82,476       100.0     $ 14,037       18.7     $ 6,479       7.9  
Cost of Sales
    (1,464 )     (48,231 )     -54.2       (42,738 )     -57.0       (41,344 )     -50.1       (5,493 )     12.9       (6,887 )     16.7  
 
                                                                 
Gross Profit
    1,236       40,724       45.8       32,180       43.0       41,132       49.9       8,544       26.6       (408 )     -1.0  
 
                                                                 
Operating Expenses
                                                                                       
Research and Development Expenses (4)
    (142 )     (4,691 )     -5.3       (4,301 )     -5.7       (4,309 )     -5.2       (390 )     9.1       (382 )     8.9  
General and Administrative Expenses (4)
    (87 )     (2,872 )     -3.2       (2,151 )     -2.9       (2,346 )     -2.8       (721 )     33.5       (526 )     22.4  
Sales and Marketing Expenses (4)
    (25 )     (808 )     -0.9       (994 )     -1.4       (845 )     -1.1       186       -18.6       37       -4.3  
 
                                                                 
Total Operating Expenses
    (254 )     (8,371 )     -9.4       (7,446 )     -10.0       (7,500 )     -9.1       (925 )     12.4       (871 )     11.6  
 
                                                                 
 
                                                                                       
Income from Operations
    982       32,353       36.4       24,734       33.0       33,632       40.8       7,619       30.8       (1,279 )     -3.8  
 
                                                                 
 
                                                                                       
Non-Operating Income, Net
    33       1,083       1.2       2,802       3.7       322       0.3       (1,719 )     -61.3       761       236.1  
Investment Gains
    24       782       0.9       488       0.7       709       0.9       294       60.1       73       10.3  
 
                                                                 
Income before Income Tax
    1,039       34,218       38.5       28,024       37.4       34,663       42.0       6,194       22.1       (445 )     -1.3  
 
                                                                                       
Income Tax (Expenses) Benefits
    (109 )     (3,600 )     -4.1       (2,394 )     -3.2       (2,144 )     -2.6       (1,206 )     50.4       (1,456 )     67.9  
 
                                                                                       
 
                                                                 
Net Income
    930       30,618       34.4       25,630       34.2       32,519       39.4       4,988       19.5       (1,901 )     -5.8  
 
                                                                                       
Minority Interest
    (8 )     (248 )     -0.3       (146 )     -0.2       (30 )     0.0       (102 )     69.5       (218 )     738.0  
 
 
                                                                 
Net Income Attributable to Shareholders of the Parent
    922       30,370       34.1       25,484       34.0       32,489       39.4       4,886       19.2       (2,119 )     -6.5  
 
                                                                 
 
                                                                                       
Earnings per Share — Diluted
  $ 0.03     $ 1.15             $ 0.96             $ 1.23             $ 0.19       19.2     -$ 0.08       -6.6  
 
                                                                       
Earnings per ADR — Diluted (2)
  $ 0.17     $ 5.75             $ 4.82             $ 6.15             $ 0.93       19.2     -$ 0.40       -6.6  
 
                                                                       
 
                                                                                       
Weighted Average Outstanding Shares — Diluted (‘M)(3)
            26,410               26,409               26,395                                          
 
Note:
 
(1)   Amounts in New Taiwan dollars have been translated into U.S. dollars at the weighted average rate of NTD32.948 for the third quarter of 2007.
 
(2)   1 ADR equals 5 ordinary shares.
 
(3)   Total diluted weighted average outstanding shares were 26,395M shares for 3Q06 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.


Table of Contents

     
(TSMC LOGO)
  TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED AND SUBSIDIARIES
 
  Unaudited Consolidated Condensed Income Statements
 
  For the Nine Months End September 30, 2007 and 2006
 
  (Expressed in Millions of New Taiwan Dollars (“NTD”) and U.S. Dollars (“USD”) (1)
 
  Except for Per Share Amounts and Shares Outstanding)
                                                         
    For The Nine Months Ended September 30  
    2007     2006     YoY  
    USD     NTD     %     NTD     %     Amount     %  
Net Sales
  $ 6,934     $ 228,771       100.0     $ 242,444       100.0     $ (13,673 )     -5.6  
Cost of Sales
    (3,978 )     (131,256 )     -57.4       (121,087 )     -49.9       (10,169 )     8.4  
 
                                         
Gross Profit
    2,956       97,515       42.6       121,357       50.1       (23,842 )     -19.6  
 
                                         
Operating Expenses
                                                       
Research and Development Expenses (4)
    (392 )     (12,934 )     -5.7       (12,245 )     -5.1       (689 )     5.6  
General and Administrative Expenses (4)
    (210 )     (6,926 )     -3.0       (6,297 )     -2.6       (629 )     10.0  
Sales and Marketing Expenses
    (81 )     (2,691 )     -1.1       (2,958 )     -1.2       267       -9.0  
 
                                         
Total Operating Expenses
    (683 )     (22,551 )     -9.8       (21,500 )     -8.9       (1,051 )     4.9  
 
                                         
 
                                                       
Income from Operations
    2,273       74,964       32.8       99,857       41.2       (24,893 )     -24.9  
 
                                         
 
                                                       
Non-Operating Income, Net
    173       5,715       2.5       2,038       0.8       3,677       180.4  
Investment Gains
    49       1,631       0.7       1,959       0.8       (328 )     -16.7  
 
                                         
Income before Income Tax
    2,495       82,310       36.0       103,854       42.8       (21,544 )     -20.7  
 
                                                       
Income Tax (Expenses) Benefits
    (215 )     (7,102 )     -3.1       (6,280 )     -2.6       (822 )     13.1  
 
                                         
Net Income before Cumulative Effect of Changes in Accounting Principles
    2,280       75,208       32.9       97,574       40.2       (22,366 )     -22.9  
 
                                                       
Cumulative Effect of Changes in Accounting Principles (Net of Tax)
    0       0       0.0       1,607       0.7       (1,607 )     -100.0  
 
                                         
Net Income
    2,280       75,208       32.9       99,181       40.9       (23,973 )     -24.2  
Minority Interest
    (16 )     (516 )     -0.2       (83 )     0.0       (433 )     523.2  
 
                                         
Net Income Attributable to Shareholders of the Parent
    2,264       74,692       32.7       99,098       40.9       (24,406 )     -24.6  
 
                                         
 
                                                       
Earnings per Share — Diluted
  $ 0.09     $ 2.83             $ 3.75             -$ 0.93       -24.7  
 
                                             
Earnings per ADR — Diluted (2)
  $ 0.43     $ 14.14             $ 18.77             -$ 4.63       -24.7  
 
                                             
 
                                                       
Weighted Average Outstanding Shares — Diluted (‘M) (3)
            26,410               26,395                          
 
Note:
(1)   Amounts in New Taiwan dollars have been translated into U.S. dollars at the weighted average rate of NTD 32.993 for nine months ended September 30, 2007.
 
(2)   1 ADR equals 5 ordinary shares.
 
(3)   Total diluted weighted average outstanding shares were 26,395M shares for the nine months ended September 30, 2006 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.

 


Table of Contents

     
(TSMC LOGO)
  TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED AND SUBSIDIARIES
 
  Consolidated Condensed Statements of Cash Flows
 
 
  For the Nine Months Ended September 30, 2007 and for the Three Months Ended September 30, 2007, June 30, 2007, and September 30, 2006
 
 
  (Expressed in Millions of New Taiwan Dollars (“NTD”) and U.S. Dollars (“USD”)) (1)
                                         
    Nine Months 2007     3Q 2007     2Q 2007     3Q 2006  
    (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)  
    USD     NTD     NTD     NTD     NTD  
Cash Flows from Operating Activities:
                                       
Net Income
  $ 2,264     $ 74,692     $ 30,369     $ 25,484     $ 32,489  
Net Income Attributable to Minority Interest
    16       516       248       146       30  
Depreciation & Amortization
    1,810       59,724       19,857       19,616       18,411  
Deferred Income Tax
    2       67       668       371       (136 )
Equity in Earnings of Equity Method Investees, Net
    (49 )     (1,631 )     (782 )     (488 )     (709 )
Changes in Working Capital & Others
    (284 )     (9,361 )     758       (10,384 )     2,593  
 
                             
Net Cash Provided by Operating Activities
    3,759       124,007       51,118       34,745       52,678  
 
                                       
Cash Flows from Investing Activities:
                                       
Acquisitions of:
                                       
Marketable Financial Instruments
    (1,669 )     (55,072 )     (25,042 )     (14,234 )     (27,054 )
Investments Accounted for Using Equity Method
    (176 )     (5,810 )     (5,810 )           (132 )
Property, Plant and Equipment
    (1,946 )     (64,220 )     (24,917 )     (25,345 )     (28,256 )
Financial Assets Carried at Cost
    (25 )     (808 )     (378 )     (218 )     (205 )
Proceeds from Disposal or maturity of:
                                       
Marketable Financial Instruments
    2,169       71,554       22,282       30,013       18,486  
Investments Accounted for Using Equity Method
                             
Property, Plant and Equipment
    1       26       15       10       217  
Financial Assets Carried at Cost
    8       269       255             105  
Others
    (121 )     (3,967 )     (866 )     (383 )     (147 )
 
                             
Net Cash Used In Investing Activities
    (1,759 )     (58,028 )     (34,461 )     (10,157 )     (36,986 )
 
                                       
Cash Flows from Financing Activities:
                                       
Increase (Decrease) in Guarantee Deposits
    (38 )     (1,253 )     (447 )     (418 )     327  
Proceeds from Exercise of Stock Options
    12       402       105       175       97  
Bonus Paid to Directors and Supervisors
    (9 )     (286 )           (286 )      
Repayment of Long-Term Bonds Payable
    (76 )     (2,500 )                  
Cash Dividends Paid for Common Stock
    (2,345 )     (77,387 )     (77,387 )           (61,743 )
Cash Bonus Paid to Employees
    (139 )     (4,573 )     (4,573 )           (3,432 )
Others
    9       296       322       2       13  
 
                             
Net Cash Provided by (Used in) Financing Activities
    (2,586 )     (85,301 )     (81,980 )     (527 )     (64,738 )
 
 
                             
Net Increase in Cash and Cash Equivalents
    (586 )     (19,322 )     (65,323 )     24,061       (49,046 )
 
                             
 
                                       
Effect of Exchange Rate Changes and Others
    (6 )     (187 )     260       (944 )     497  
 
                                       
Cash and Cash Equivalents at Beginning of Period
    3,572       117,837       163,391       140,274       141,452  
 
                             
 
                                       
Cash and Cash Equivalents at End of Period
  $ 2,980     $ 98,328     $ 98,328     $ 163,391     $ 92,903  
 
                             
 
Note: (1)   Amounts in New Taiwan dollars have been translated into U.S. dollars at the weighted average rate of NTD32.993 for the nine months ended September 30, 2007.

 


TABLE OF CONTENTS

TSMC
Agenda
Safe Harbor Notice
3Q07 Result Highlights
Income Statements
Balance Sheets & Key Indices
Cash Flows
Installed Capacity
Capital Expenditures
Sales Breakdown by Technology
Sales Breakdown by Application
Sales Breakdown by Geography
Sales Breakdown by Customer
4Q07 Guidance
Recap of Recent Major Events
http://www.tsmc.com
SIGNATURES


Table of Contents

TSMC 2007 Third Quarter Results Investor Conference October 25, 2007


Table of Contents

Agenda Welcome 2007 3Q Consolidated Financial Results Q&A


Table of Contents

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, 2007, TSMC's registration statement on Form F-3, filed with the SEC on May 8, 2007, 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.


Table of Contents

Net Income attributable to shareholders of the parent company Annualized ROE for the quarter based on average equity attributable to shareholders of the parent 3Q07 Result Highlights


Table of Contents

Income Statements Net Income attributable to shareholders of the parent company


Table of Contents

Balance Sheets & Key Indices


Table of Contents

Cash Flows


Table of Contents

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


Table of Contents

Capital Expenditures 2007 CapEx to be around US$2.6 billion


Table of Contents

Sales Breakdown by Technology


Table of Contents

Sales Breakdown by Application


Table of Contents

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


Table of Contents

Sales Breakdown by Customer


Table of Contents

4Q07 Guidance Revenue is expected to be between NT$92 billion and NT$94 billion Gross profit margin is expected to be between 46% and 48% Operating profit margin is expected to be between 37% and 39%


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Recap of Recent Major Events TSMC Signs Contract with Atmel to Purchase Eight-inch Wafer Fabrication Equipment (2007/10/09) TSMC Joins SOI Industry Consortium (2007/10/08) U.S. District Court Issues Verdict on TSMC-UniRAM Case (2007/09/26) California Court Issues Order on TSMC Motion for Preliminary Injunction Against SMIC (2007/09/14) TSMC Increases Stake in Vanguard (2007/08/27) TSMC Starts Production of 0.13-micron Embedded Flash Process (2007/08/21) Microsoft Embraces TSMC 90nm Embedded DRAM Process for Xbox 360 (2007/08/15) * Please visit TSMC's Web site (http://www.tsmc.com) for details about these 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: October 25, 2007
  By   /s/ Lora Ho    
 
           
 
      Lora Ho    
 
      Vice President & Chief Financial Officer