Edgar Filing: TAIWAN SEMICONDUCTOR MANUFACTURING CO LTD

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD.

1934 Act Registration No. 1-14700

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934

For the month of April 2005

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: ___.)

TABLE OF CONTENTS


FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003 AND INDEPENDENT AUDITORS’ REPORT
CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003 AND INDEPENDENT AUDITORS’ REPORT
COMBINED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2004 AND INDEPENDENT ACCOUNTANTS’ REVIEW REPORT
SIGNATURES

Taiwan Semiconductor Manufacturing
Company Ltd.

Financial Statements for the
Years Ended December 31, 2004 and 2003 and
Independent Auditors’ Report

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders
Taiwan Semiconductor Manufacturing Company Ltd.

We have audited the accompanying balance sheets of Taiwan Semiconductor Manufacturing Company Ltd. as of December 31, 2004 and 2003, and the related statements of income, changes in shareholders’ equity and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the Rules Governing the Audit of Financial Statements by Certified Public Accountants, and auditing standards generally accepted in the Republic of China. Those rules and standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Taiwan Semiconductor Manufacturing Company Ltd. as of December 31, 2004 and 2003, and the results of its operations and its cash flows for the years then ended in conformity with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers and accounting principles generally accepted in the Republic of China.

We have also audited the consolidated financial statements of Taiwan Semiconductor Manufacturing Company Ltd. as of and for the years ended December 31, 2004 and 2003, and have expressed an unqualified opinion on such financial statements.

(January 13, 2005 (January 30, 2005 as to Note 20m)

Notice to Readers

The accompanying financial statements are intended only to present the financial position, results of operations and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdiction. The standards, procedures and practices to audit such financial statements are those generally accepted and applied in the Republic of China.

For the convenience of readers, the auditors’ report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language auditors’ report and financial statements shall prevail.

- 1 -

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD.

BALANCE SHEETS
DECEMBER 31, 2004 AND 2003
(In Thousands of New Taiwan Dollars, Except Par Value)


	2004						2003
	Amount			%			Amount			%
ASSETS
CURRENT ASSETS
Cash and cash equivalents (Notes 2, 3 and 4)	$	65,531,818			14		$	98,288,002			25
Short-term investments, net (Notes 2 and 4)		52,979,095			11			12,559,019			3
Receivables from related parties (Note 18)		16,186,083			4			14,867,662			4
Notes receivable		2,942			—			9,893			—
Accounts receivable		15,323,939			3			13,907,914			4
Allowance for doubtful receivables (Note 2)		(980,461	)		—			(1,016,022	)		—
Allowance for sales returns and others (Note 2)		(3,327,914	)		(1	)		(2,126,025	)		(1	)
Other receivables from related parties (Note 18)		1,617,339			—			132,963			—
Other financial assets (Notes 2 and 21)		2,406,736			—			689,440			—
Inventories, net (Notes 2 and 5)		14,171,945			3			10,907,158			3
Deferred income tax assets (Notes 2 and 12)		8,849,000			2			8,322,000			2
Prepaid expenses and other current assets		906,789			—			1,984,268			—

Total current assets		173,667,311			36			158,526,272			40

LONG-TERM INVESTMENTS (Notes 2, 6, 16 and 21)
Equity method		46,828,322			10			37,262,237			10
Cost method		772,634			—			703,116			—
Long-term bonds		15,170,167			3			—			—
Other investments		10,521,740			2			—			—

Total long-term investments		73,292,863			15			37,965,353			10

PROPERTY, PLANT AND EQUIPMENT (Notes 2, 7 and 18)
Cost
Buildings		84,299,167			17			71,277,031			18
Machinery and equipment		390,719,215			80			332,252,225			84
Office equipment		7,041,132			1			6,180,495			1

		482,059,514			98			409,709,751			103
Accumulated depreciation		(300,006,201	)		(61	)		(247,514,312	)		(62	)
Advance payments and construction in progress		45,923,087			10			26,091,313			6

Net property, plant and equipment		227,976,400			47			188,286,752			47

GOODWILL (Note 2)		1,916,146			—			2,264,536			1

OTHER ASSETS
Deferred charges, net (Notes 2, 8 and 20)		8,845,144			2			7,947,331			2
Deferred income tax assets (Notes 2 and 12)		1,645,003			—			1,070,596			—
Refundable deposits (Note 18)		85,413			—			177,379			—
Assets leased to others, net (Note 2)		78,613			—			84,347			—
Idle assets (Note 2)		46,317			—			94,296			—

Total other assets		10,700,490			2			9,373,949			2

TOTAL	$	487,553,210			100		$	396,416,862			100

LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$	6,488,617			1		$	6,083,876			2
Payables to related parties (Note 18)		3,198,490			1			4,500,140			1
Payables to contractors and equipment suppliers		31,154,309			6			7,117,884			2
Accrued expenses and other current liabilities (Notes 2, 10 and 20)		9,297,436			2			7,836,084			2
Current portion of long-term bonds payable (Note 9)		10,500,000			2			5,000,000			1

Total current liabilities		60,638,852			12			30,537,984			8

LONG-TERM LIABILITIES
Bonds payable (Note 9)		19,500,000			4			30,000,000			7
Other long-term payables (Notes 10 and 20)		1,934,968			—			3,300,829			1
Other payables to related parties (Notes 18 and 20)		2,317,972			1			—			—

Total long-term liabilities		23,752,940			5			33,300,829			8

OTHER LIABILITIES
Accrued pension cost (Notes 2 and 11)		3,101,196			1			2,600,251			1
Guarantee deposits (Note 20)		412,393			—			763,489			—
Deferred credits — gain on intercompany (Notes 2 and 18)		682,530			—			—			—

Total other liabilities		4,196,119			1			3,363,740			1

Total liabilities		88,587,911			18			67,202,553			17

SHAREHOLDERS’ EQUITY (Notes 2 and 14)
Capital stock — $10 par value
Authorized: 24,600,000 thousand shares
Issued: 23,251,964 thousand shares in 2004 and 20,266,619 thousand shares in 2003		232,519,637			48			202,666,189			51
Capital surplus		56,537,259			11			56,855,885			14
Retained earnings
Appropriated as legal reserve		25,528,007			5			20,802,137			5
Appropriated as special reserve		—			—			68,945			—
Unappropriated earnings		88,202,009			18			50,229,008			13
Others
Unrealized loss on long-term investments		—			—			(35	)		—
Cumulative translation adjustments		(2,226,427	)		—			225,408			—
Treasury stock (at cost) — 45,521 thousand shares in 2004 and 40,597 thousand shares in 2003 (Notes 2 and 16)		(1,595,186	)		—			(1,633,228	)		—

Total shareholders’ equity		398,965,299			82			329,214,309			83

TOTAL	$	487,553,210			100		$	396,416,862			100

The accompanying notes are an integral part of the financial statements.

- 2 -

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD.

STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)


	2004					2003
	Amount			%		Amount			%
GROSS SALES (Notes 2 and 18)	$	260,726,896				$	206,157,918

SALES RETURNS AND ALLOWANCES (Note 2)		(4,734,469	)				(4,253,577	)


NET SALES		255,992,427			100		201,904,341			100

COST OF SALES (Notes 13 and 18)		145,831,843			57		129,012,704			64


GROSS PROFIT		110,160,584			43		72,891,637			36


OPERATING EXPENSES (Notes 13 and 18)
Research and development		12,516,434			5		12,712,695			6
General and administrative		9,367,010			3		6,337,845			3
Marketing		1,454,362			1		1,193,520			1

Total operating expenses		23,337,806			9		20,244,060			10


INCOME FROM OPERATIONS		86,822,778			34		52,647,577			26


NON-OPERATING INCOME AND GAINS
Investment income recognized by equity method, net (Notes 2 and 6)		4,040,319			2		791,424			—
Interest (Notes 2 and 21)		1,762,347			1		819,377			1
Technical service income (Notes 18 and 20)		423,804			—		209,764			—
Gain on disposal of property, plant and equipment (Notes 2 and 18)		164,147			—		438,804			—
Gain on sales of investments (Note 2)		90,319			—		114,817			—
Other (Note 18)		378,778			—		291,613			—


Total non-operating income and gains		6,859,714			3		2,665,799			1


NON-OPERATING EXPENSES AND LOSSES
Interest (Notes 2, 7, 9 and 21)		1,352,738			1		1,576,343			1
Foreign exchange loss, net (Notes 2 and 21)		323,080			—		909,496			—
Loss on disposal of property, plant and equipment (Note 2)		107,722			—		373,472			—
Unrealized valuation loss on short-term investments (Notes 2 and 4)		75,212			—		—			—
Loss on property, plant and equipment and idle assets (Note 2)		—			—		1,401,585			1
Other		45,156			—		24,205			—


Total non-operating expenses and losses		1,903,908			1		4,285,101			2

(Continued)

- 3 -

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD.

STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)


	2004				2003
	Amount		%		Amount			%
INCOME BEFORE INCOME TAX	$	91,778,584		36	$	51,028,275			25

INCOME TAX BENEFIT (EXPENSE) (Notes 2 and 12)		537,531		—		(3,769,575	)		(2	)


NET INCOME	$	92,316,115		36	$	47,258,700			23


	2004				2003
	Before		After		Before		After
	Income		Income		Income		Income
	Tax		Tax		Tax		Tax
EARNINGS PER SHARE (NT$, Note 17)
Basic earnings per share	$	3.95	$	3.97	$	2.18	$	2.02

Diluted earnings per share	$	3.95	$	3.97	$	2.18	$	2.02

The pro forma net income and earnings per share (after income tax) are based on the assumption that the stock of parent company held by its subsidiaries is treated as an investment instead of the treasury stock, and are shown as follows (Notes 2 and 16):


	2004		2003
NET INCOME	$	92,340,760	$	47,337,094


EARNINGS PER SHARE (NT$)
Basic earnings per share	$	3.96	$	2.02

Diluted earnings per share	$	3.96	$	2.02

(Concluded)

The accompanying notes are an integral part of the financial statements.

- 4 -

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD.

STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
(In Thousands of New Taiwan Dollars)


	Capital Stock Issued																										Unrealized
	Preferred Stock						Common Stock									Retained Earnings											Loss on			Cumulative			Treasury			Total
	Shares						Shares						Capital			Legal		Special			Unappropriated						Long-term			Translation			Stock			Shareholders’
	(Thousand)			Amount			(Thousand)			Amount			Surplus			Reserve		Reserve			Earnings			Total			Investments			Adjustments			(Note 16)			Equity
BALANCE, JANUARY 1, 2003		1,300,000		$	13,000,000			18,622,887		$	186,228,867		$	57,004,789		$	18,641,108	$	—		$	22,151,089		$	40,792,197		$	(194,283	)	$	945,129		$	(1,923,492	)	$	295,853,207
Redemption and retirement of preferred stock		(1,300,000	)		(13,000,000	)		—			—			—			—		—			—			—			—			—			—			(13,000,000	)
Appropriations of prior year’s earnings
Legal reserve		—			—			—			—			—			2,161,029		—			(2,161,029	)		—			—			—			—			—
Special reserve		—			—			—			—			—			—		68,945			(68,945	)		—			—			—			—			—
Bonus to employees — stock		—			—			153,901			1,539,013			—			—		—			(1,539,013	)		(1,539,013	)		—			—			—			—
Cash dividends paid for preferred stock		—			—			—			—			—			—		—			(455,000	)		(455,000	)		—			—			—			(455,000	)
Stock dividends — 8%		—			—			1,489,831			14,898,309			—			—		—			(14,898,309	)		(14,898,309	)		—			—			—			—
Remuneration to directors and supervisors		—			—			—			—			—			—		—			(58,485	)		(58,485	)		—			—			—			(58,485	)
Net income in 2003		—			—			—			—			—			—		—			47,258,700			47,258,700			—			—			—			47,258,700
Adjustment arising from changes in ownership percentage in investees		—			—			—			—			(158,924	)		—		—			—			—			—			—			—			(158,924	)
Reversal of unrealized loss on long-term investment of investees		—			—			—			—			—			—		—			—			—			194,248			—			—			194,248
Translation adjustments		—			—			—			—			—			—		—			—			—			—			(719,721	)		—			(719,721	)
Treasury stock — sales of parent company stock held by subsidiaries		—			—			—			—			10,020			—		—			—			—			—			—			290,264			300,284

BALANCE, DECEMBER 31, 2003		—			—			20,266,619			202,666,189			56,855,885			20,802,137		68,945			50,229,008			71,100,090			(35	)		225,408			(1,633,228	)		329,214,309
Appropriations of prior year’s earnings
Legal reserve		—			—			—			—			—			4,725,870		—			(4,725,870	)		—			—			—			—			—
Reversal of special reserve		—			—			—			—			—			—		(68,945	)		68,945			—			—			—			—			—
Bonus to employees — cash		—			—			—			—			—			—					(681,628	)		(681,628	)		—			—			—			(681,628	)
Bonus to employees — stock		—			—			272,651			2,726,514			—			—		—			(2,726,514	)		(2,726,514	)		—			—			—			—
Cash dividends paid for preferred stocks		—			—			—			—			—			—		—			(184,493	)		(184,493	)		—			—			—			(184,493	)
Cash dividends — 6%		—			—			—			—			—			—		—			(12,159,971	)		(12,159,971	)		—			—			—			(12,159,971	)
Stock dividends — 14%		—			—			2,837,327			28,373,267			—			—		—			(28,373,267	)		(28,373,267	)		—			—			—			—
Remuneration to directors and supervisors		—			—			—			—			—			—		—			(127,805	)		(127,805	)		—			—			—			(127,805	)
Net income in 2004		—			—			—			—			—			—		—			92,316,115			92,316,115			—			—			—			92,316,115
Adjustment arising from changes in ownership percentage in investees		—			—			—			—			34,059			—		—			—			—			—			—			—			34,059
Reversal of unrealized loss on long-term investment of investees		—			—			—			—			—			—		—			—			—			35			—			—			35
Translation adjustments		—			—			—			—			—			—		—			—			—			—			(2,451,835	)		—			(2,451,835	)
Issuance of stock arising from exercising stock options		—			—			87			867			2,757			—		—			—			—			—			—			—			3,624
Cash dividends received by subsidiaries from parent company		—			—			—			—			22,781			—		—			—			—			—			—			—			22,781
Treasury stock — sales of the parent company stock held by subsidiaries		—			—			—			—			1,864			—		—			—			—			—			—			38,042			39,906
Treasury stock — repurchased by the Company		—			—			—			—			—			—		—			—			—			—			—			(7,059,798	)		(7,059,798	)
Retirement of treasury stock		—			—			(124,720	)		(1,247,200	)		(380,087	)		—		—			(5,432,511	)		(5,432,511	)		—			—			7,059,798			—

BALANCE, DECEMBER 31, 2004		—		$	—			23,251,964		$	232,519,637		$	56,537,259		$	25,528,007	$	—		$	88,202,009		$	113,730,016		$	—		$	(2,226,427	)	$	(1,595,186	)	$	398,965,299

The accompanying notes are an integral part of the financial statements.

- 5 -

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD.

STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
(In Thousands of New Taiwan Dollars)


	2004			2003
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	92,316,115		$	47,258,700
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization		63,072,140			61,786,114
Deferred income taxes		(1,101,407	)		3,639,971
Investment income recognized by equity method, net		(4,040,319	)		(791,424	)
Amortization of premium/discount of long-term bond investments		28,673			—
Loss on property, plant, and equipment, and idle assets		—			1,401,585
Gain on sales of long-term investments, net		(2,216	)		(79,149	)
Gain on disposal of property, plant and equipment, net		(56,425	)		(65,332	)
Accrued pension cost		500,945			389,709
Changes in operating assets and liabilities
Decrease (increase) in
Receivables from related parties		(1,318,421	)		(4,752,698	)
Notes receivable		6,951			50,347
Accounts receivable		(1,416,025	)		(4,412,467	)
Allowance for doubtful receivables		(35,561	)		86,158
Allowance for sales returns and others		1,201,889			(237,042	)
Other receivables from related parties		(11,496	)		(64,439	)
Other financial assets		(1,655,730	)		189,024
Inventories, net		(3,264,787	)		(566,822	)
Prepaid expenses and other current assets		1,077,479			121,298
Increase (decrease) in
Payables to related parties		(1,771,144	)		2,033,142
Accounts payable		404,741			1,234,642
Accrued expenses and other liabilities		(255,184	)		1,447,119


Net cash provided by operating activities		143,680,218			108,668,436


CASH FLOWS FROM INVESTING ACTIVITIES
Increase in short-term investments		(43,822,489	)		(12,529,448	)
Acquisitions of
Long-term investments		(30,290,982	)		(3,006,374	)
Property, plant and equipment		(76,171,356	)		(37,247,465	)
Proceeds from disposal of
Long-term investments		7,822			476,405
Property, plant and equipment		1,713,934			177,307
Increase in deferred charges		(2,404,130	)		(2,137,932	)
Decrease in refundable deposits		91,966			366,090
Decrease in other assets		—			9,250


Net cash used in investing activities		(150,875,235	)		(53,892,167	)

(Continued)

- 6 -

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD.

STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
(In Thousands of New Taiwan Dollars)


	2004			2003
CASH FLOWS FROM FINANCING ACTIVITIES
Cash dividends paid for common stock	$	12,159,971	)	$	—
Repurchase of treasury stock		(7,059,798	)		—
Repayment of long-term bonds payable		(5,000,000	)		(4,000,000	)
Cash bonus paid to employees		(681,628	)		—
Decrease in guarantee deposits		(351,096	)		(631,577	)
Cash dividends paid for preferred stock		(184,493	)		(455,000	)
Remuneration paid to directors and supervisors		(127,805	)		(58,485	)
Proceeds from issuance of new shares arising from exercises of stock options		3,624			—
Redemption of preferred stock		—			(13,000,000	)


Net cash used in financing activities		(25,561,167	)		(18,145,062	)


NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(32,756,184	)		36,631,207

CASH AND CASH EQUIVALENTS, BEGINNING OF THE YEAR		98,288,002			61,656,795


CASH AND CASH EQUIVALENTS, END OF THE YEAR	$	65,531,818		$	98,288,002


SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid (excluding the amount capitalized of NT$262,109 thousand and NT$138,668 thousand in 2004 and 2003, respectively, Note 7)	$	1,379,287		$	1,652,579

Income tax paid	$	309,522		$	2,500


NONCASH INVESTING AND FINANCING ACTIVITIES
Current portion of long-term bonds payable	$	10,500,000		$	5,000,000

Current portion of other payables to related parties (under payables to related parties)	$	492,022		$	—

Current portion of other long-term payables (under accrued expenses and other current liabilities)	$	1,505,345		$	1,591,972

Reclassification of short-term investments to long-term investments	$	3,402,413		$	—

Reclassification of long-term investments to short-term investments	$	—		$	29,571

(Concluded)

The accompanying notes are an integral part of the financial statements.

- 7 -

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD.

NOTES TO FINANCIAL STATEMENTS
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)

1.		ORGANIZATION AND OPERATIONS

		Taiwan Semiconductor Manufacturing Company Ltd. (the Company or TSMC), a Republic of China (R.O.C.) corporation, was incorporated as a venture among the Government of the R.O.C., acting through the Development Fund of the Executive Yuan; Philips Electronics N.V. and certain of its affiliates (Philips); and certain other private investors. On September 5, 1994, its shares were listed on the Taiwan Stock Exchange (TSE). On October 8, 1997, TSMC listed some of its shares of stock on the New York Stock Exchange (NYSE) in the form of American Depositary Shares (ADSs).

		The Company is engaged mainly in the manufacturing, selling, packaging, testing and computer-aided designing of integrated circuits and other semiconductor devices and the manufacturing of masks.

2.		SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

		The financial statements are presented in conformity with Guidelines Governing the Preparation of Financial Reports by Securities Issuers and accounting principles generally accepted in the R.O.C.

		For the convenience of readers, the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the R.O.C. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language financial statements shall prevail.

		Significant accounting policies are summarized as follows:

		Use of Estimates

		The preparation of financial statements in conformity with the aforementioned guidelines and principles requires management to make reasonable assumptions and estimates of matters that are inherently uncertain. The actual results may differ from management’s estimates.

		Classification of Current and Noncurrent Assets and Liabilities

		Current assets are those expected to be converted to cash, sold or consumed within one year from the balance sheet date. Current liabilities are obligations due on demand within one year from the balance sheet date. Assets and liabilities that are not classified as current are noncurrent assets and liabilities, respectively.

		Cash Equivalents

		Government bonds under repurchase agreements and notes acquired with maturities less than three months from the date of purchase are classified as cash equivalents.

		Short-term Investments

		Short-term investments primarily consist of corporate bonds, asset-backed securities, bond funds, agency bonds, government bonds and others.

- 8 -

		Short-term investments are recorded at historical cost and are carried at the lower of cost or market value as of the balance sheet date. An allowance for decline in value is provided and is charged to current earnings when the aggregate carrying value of the investments exceeds the aggregate market value. A reversal of the allowance is recorded for a subsequent recovery of the market value.

		The cost of funds and listed stocks sold are counted for using the weighted-average method; whereas the other securities are accounted for using the specific identification method.

		The market value of funds is determined using the net asset value of the funds at the end of the year, and the market value of listed stocks is determined using the average-closing price of the listed stocks for the last month of the year. The others are determined using the average of bid and ask prices as of the balance sheet date.

		Cash dividends are recorded as investment income in the current year.

		Allowance for Doubtful Receivables

		An allowance for doubtful receivables is provided based on a review of the collectibility of accounts receivables. The Company determines the amount of allowance for doubtful accounts by examining the historical collection experience and current trends in the credit quality of its customers as well as its internal credit policies.

		Revenue Recognition and Allowance for Sales Returns and Others

		The Company recognizes net sales when the earnings process is complete, as evidenced by an agreement with the customer, transfer of title and acceptance, if applicable, have occurred, as well as the price is fixed or determinable price and the collectibility is reasonably assured. Allowance for sales returns and pricing discounts is estimated based on historical experience and any known factors that would affect the allowance. Such provisions are deducted from sales in the year the products are sold and the estimated related costs are deducted from cost of sales.

		Sales are determined using the fair value taking into account related sales discounts agreed to by the Company and its customers. Sales agreements typically provide that payment is due 30 days from invoice date for a majority of the customers and 30 to 45 days after the end of the month in which the sales occur for some customers. Since the receivables from sales are collectible within one year and such transactions are frequent, the fair value of receivables is equivalent to the nominal amount of cash received.

		Inventories

		Inventories are stated at the lower of cost or market value. Inventories are recorded at standard cost and adjusted to the approximate weighted-average cost at the end of the year. Market value represents replacement cost for raw materials, supplies and spare parts. Market value represents net realizable value for finished goods and work in process. The Company assesses the impact of changing technology on its inventory on hand and writes off inventories that are considered obsolete. Ending inventories are evaluated for estimated excess quantities and obsolescence based on demand forecast within a specific time horizon, generally 180 days or less, and the estimated losses on scrap and slow-moving items are recognized in the allowance for losses.

- 9 -

Long-term Investments

		Investments in companies wherein the Company exercises significant influence on the operating and financial policy decisions are accounted for using the equity method of accounting. The Company’s proportionate share in the net income or net loss of investee companies is recognized in the “investment income/loss recognized by equity method, net” account. When equity investments are made, the difference, if any, between the cost of investment and the Company’s proportionate share of the investee’s net equity is amortized using the straight-line method over five years and is also recorded in the “investment income/loss recognized by equity method, net” account.

		When the Company subscribes to additional investee shares at a percentage different from its existing equity interest, the resulting carrying amount of the investment in the investee differs from the amount of Company’s proportionate share in the investee’s net equity. The Company records such difference as an adjustment to long-term investments with the corresponding amount charged or credited to capital surplus.

		Investments in companies wherein the Company does not exercise significant influence are recorded at historical cost. Cash dividends are recognized as dividend income in the year received but are accounted for as reductions in the carrying amount of the long-term investments if the dividends are received in the same year that the related investments are acquired. Stock dividends are recorded as an increase in the number of shares held and do not affect investment income or the carrying amount of the investment. An allowance is recognized for any decline in the market value of investments with readily ascertainable fair market value with the corresponding amount recorded as an unrealized loss, a component of shareholders’ equity. A reversal of the allowance will result from a subsequent recovery of the market value of such investments. The carrying amounts of investments whose fair market values are not readily ascertainable are reduced to reflect an other-than-temporary decline in their values, with the related impairment loss charged to income.

		Investments in foreign mutual funds are stated at the lower of aggregate cost or net asset value. An allowance is recognized when the net asset value of the funds is lower than their cost, with the corresponding amount recorded as a reduction to shareholders’ equity. A reversal of the allowance will result from a subsequent recovery of the net asset value.

		The costs of stocks and mutual funds sold are determined using the weighted-average method.

		Investments in long-term bonds are stated at amortized cost. The discount or premium is amortized over the duration period using the interest method, and recorded as an adjustment to interest income.

		When investments in publicly-traded stocks are reclassified from short-term investments to long-term investments or from long-term investments to short-term investments, the Company recognizes a loss to the extent, if any, that the market value of such investments is lower than the carrying amount, and the market value becomes the new basis.

		If an investee company recognizes an unrealized loss on its long-term investment using the lower-of-cost-or-market method, the Company also recognizes a corresponding unrealized loss in proportion to its ownership percentage in the investee company and records the amount as a component of its shareholders’ equity.

		Gains or losses on sales from the Company to investee companies accounted for using the equity method are deferred in proportion to the Company’s ownership percentage in the investee companies until realized through transactions with third parties. The entire amount of the gains or losses on sales to majority-owned subsidiaries is deferred until such gains or losses are realized through the subsequent sales of the related products to third parties.

		Gains or losses on sales from investee companies to the Company are deferred in proportion to the Company’s ownership percentages in the investee companies until realized through transactions with third parties.

- 10 -

		If an investee’s functional currency is a foreign currency, translation adjustments will result from the process of translating the investee’s financial statements into the reporting currency of the Company. Such adjustments are accumulated and reported as a separate component of shareholders’ equity.

		Property, Plant and Equipment, Assets Leased to Others and Idle Assets

		Property, plant and equipment and assets leased to others are stated at cost less accumulated depreciation. When an impairment is determined, the related assets are stated at the lower of fair value or book value. Idle assets are stated at the lower of net realizable value or book value. Significant additions, renewals and betterments incurred during the construction period are capitalized. Maintenance and repairs are expensed in the year incurred. Interest expense incurred during the purchase and construction period is also capitalized.

		Depreciation is computed using the straight-line method over the following estimated service lives: buildings — 10 to 20 years; machinery and equipment — 5 years; and office equipment — 3 to 5 years.

		Upon sale or disposal of property, plant and equipment, the related cost and accumulated depreciation are removed from the corresponding accounts, with any gain or loss credited or charged to non-operating income or expenses in the year of sale or disposal.

		Goodwill

		Goodwill represents the excess of the consideration paid for acquisition over the fair market value of identifiable net assets acquired and acquisition costs. Goodwill is amortized using the straight-line method over the estimated life of 10 years.

		Deferred Charges

		Deferred charges consist of technology license fees, software and system design costs and other charges. The amounts are amortized as follows: technology license fees — the shorter of the estimated life of the technology or the term of the technology transfer contract; software and system design costs and other charges — 3 or 5 years.

		Pension Costs

		The Company records net periodic pension costs on the basis of actuarial calculations. Unrecognized net transition obligation and unrecognized net gains or losses are amortized over 25 years.

		Income Tax

		The Company uses an inter-period tax allocation method for income tax. Deferred income tax assets and liabilities are recognized for the tax effects of temporary differences and unused tax credits. Valuation allowances are provided to the extent, if any, that it is more likely than not that deferred income tax assets will not be realized. A deferred tax asset or liability is classified as current or noncurrent in accordance with the classification of its related asset or liability. However, if a deferred tax asset or liability does not relate to an asset or liability in the financial statements, then it is classified as either current or noncurrent based on the expected length of time before it is realized or settled.

		Any tax credit arising from the purchases of machinery, equipment and technology, research and development expenditures, personnel training, and investments in important technology-based enterprises are recognized using the flow-through method.

		Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.

- 11 -

		Income taxes on unappropriated earnings of 10% are expensed in the year of shareholder approval which is the year subsequent to the year the earnings are generated.

		Stock-based Compensation

		Employee stock option plans that are amended or have options granted on or after January 1, 2004 must be accounted for by the interpretations issued by the Accounting Research and Development Foundation. The Company adopted the intrinsic value method and any compensation cost determined using this method is charged to expense over the employee vesting period.

		Treasury Stock

		When the Company repurchases its outstanding common stock, the cost of the reacquired stock is recorded as treasury stock as a reduction to shareholders’ equity. When the Company retires treasury stock, the treasury stock account is reduced and the common stock as well as the capital surplus — additional paid-in capital are reversed in proportionate to the equity percentage of the retirement. When the book value of the treasury stock exceeds the sum of the par value and additional paid-in capital, the difference is charged to capital surplus — treasury stock and to retained earnings for any remaining amount. The Company’s stock held by its subsidiaries is also treated as treasury stock and reclassified from long-term investments to treasury stock. The cash dividends received by the subsidiaries from the Company are recorded under capital surplus — treasury stock.

		Foreign Currency Transactions

		Foreign currency transactions are recorded in New Taiwan dollars at the rates of exchange in effect when the transactions occur. Exchange gains or losses derived from foreign currency transactions or monetary assets and liabilities denominated in foreign currencies are recognized in current income. At the end of each year, assets and liabilities denominated in foreign currencies are revalued at the prevailing exchange rates with the resulting gains or losses recognized in current income.

		Derivative Financial Instruments

		The Company enters into foreign currency forward contracts to manage currency exposures in cash flow and in foreign-currency-denominated assets and liabilities. The contracts are recorded in New Taiwan dollars at the current rate of exchange of the contract date. The differences in the New Taiwan dollar amounts translated using the spot rates and the amounts translated using the contracted forward rates on the contract date are amortized over the terms of the forward contracts using the straight-line method. At the end of each year, the receivables or payables arising from forward contracts are restated using the prevailing spot rates at the balance sheet date with the resulting differences charged to income. In addition, the receivables and payables related to the forward contracts of the same counter party are netted with the resulting amount presented as either an asset or a liability. Any resulting gain or loss upon settlement is credited or charged to income in the year of settlement.

		The Company enters into cross-currency swap contracts to manage currencies exposures on foreign currency denominated assets and liabilities. The principal amount is recorded using the spot rates at the contract date. The differences in the New Taiwan dollar amounts translated using the spot rates and the amounts translated using the contracted rates on the contract date are amortized over the terms of the contracts using the straight-line method. At the end of each year, the receivables or payables arising from cross-currency swap contracts are restated using the prevailing spot rate with the resulting differences charged to income. In addition, the receivables and payables related to the contracts are netted with the resulting amount presented as either an asset or a liability. The difference in interest computed pursuant to the contracts on each settlement date or the balance sheet date is recorded as an adjustment to the interest income or expense associated with the hedged items. Any resulting gain or loss upon settlement is credited or charged to income in the year of settlement.

- 12 -

		The Company enters into interest rate swap contracts to manage exposures to changes in interest rates on existing assets or liabilities. These transactions are accounted for on an accrual basis, in which the cash settlement receivable or payable is recorded as an adjustment to interest income or expense associated with the hedged items.

		The premiums paid for the foreign currency option contracts entered into for hedging purposes are amortized and charged to income on a straight-line basis over the term of the related contract. Any resulting gain upon exercise settlement is credited or charged to income in the year of exercise.

		Reclassifications

		Certain accounts in the financial statements as of and for the year ended December 31, 2003 have been reclassified to conform to the financial statements as of and for the year ended December 31, 2004.

3.		CASH AND CASH EQUIVALENTS


	2004		2003
Cash and bank deposits	$	45,838,453	$	92,340,643
Government bonds acquired under repurchase agreements		19,215,153		5,947,359
Corporate issued notes		478,212		—

	$	65,531,818	$	98,288,002

SHORT-TERM INVESTMENTS


	2004			2003
Corporate bonds	$	13,554,598		$	—
Corporate issued asset-backed securities		11,766,877			—
Bond funds		10,662,758			1,000,000
Agency bonds		8,633,889			—
Government bonds		7,346,858			7,692,595
Money market funds		673,888			2,038,680
Government bonds acquired under repurchase agreements		249,449			1,800,000
Commercial papers		95,666			—
Corporate issued notes		63,796			—
Listed stocks		6,528			27,744

		53,054,307			12,559,019
Allowance for valuation losses		(75,212	)		—

	$	52,979,095		$	12,559,019

Market value	$	52,979,095		$	12,703,444

The Company entered into investment management agreements with three well-known financial institutions (fund managers) to manage investment portfolios for the Company. In accordance with the investment guidelines and terms in these agreements, the securities invested by the fund managers cannot be below a pre-defined credit rating. As of December 31, 2004, the Company had investment portfolios with these fund managers that aggregated to an original amount of US$1,200,000 thousand. The investment portfolios included securities such as corporate bonds, asset-backed securities, agency bonds, government bonds and others. Securities acquired with maturities less than three months from the date of purchase were reclassified as cash equivalents.

- 13 -

INVENTORIES, NET


	2004			2003
Finished goods	$	3,229,417		$	2,716,195
Work in process		10,713,178			8,292,327
Raw materials		808,722			445,357
Supplies and spare parts		779,368			674,548

		15,530,685			12,128,427
Allowance for losses		(1,358,740	)		(1,221,269	)

	$	14,171,945		$	10,907,158

LONG-TERM INVESTMENTS


	2004				2003
			% of				% of
	Carrying		Owner-		Carrying		Owner-
	Amount		ship		Amount		ship
Equity method
TSMC International Investment Ltd. (TSMC International)	$	23,778,997		100	$	22,654,743		100
TSMC (Shanghai) Company Limited (TSMC — Shanghai)		8,113,511		100		1,901,428		100
Vanguard International Semiconductor Corporation (VIS)		5,401,982		28		4,077,198		28
TSMC Partners, Ltd. (TSMC Partners)		3,908,356		100		4,116,934		100
Systems on Silicon Manufacturing Company Pte Ltd. (SSMC)		3,290,888		32		2,759,376		32
Emerging Alliance Fund, L.P. (Emerging Alliance)		823,232		99		704,744		99
TSMC North America (TSMC — North America)		502,242		100		417,858		100
Global UniChip Corporation (GUC)		391,626		47		368,434		47
VentureTech Alliance Fund II, L.P. (VTAF II)		329,968		98		—		—
TSMC Japan K. K. (TSMC — Japan)		102,572		100		101,722		100
VisEra Technologies Company, Limited (VisEra)		59,116		25		50,231		25
Chi Cherng Investment Co., Ltd. (Chi Cherng)		50,570		36		42,941		36
Hsin Ruey Investment Co., Ltd. (Hsin Ruey)		49,823		36		42,006		36
Taiwan Semiconductor Manufacturing Company Europe B.V. (TSMC — Europe)		25,439		100		24,622		100

		46,828,322				37,262,237

Cost method
Non-publicly traded stocks		482,500		—		432,500		—
Funds		290,134		—		270,616		—

		772,634				703,116

Long-term bonds
Government bonds		10,260,481		—		—		—
Corporate bonds
China Steel Corporation		2,978,804		—		—		—
Taiwan Power Company		915,276		—		—		—
Nan Ya Plastics Corporation		407,526		—		—		—

(Continued)

- 14 -


	2004				2003
			% of				% of
	Carrying		Owner-		Carrying		Owner-
	Amount		ship		Amount		ship
Formosa Plastics Corporation	$	405,485		—	$	—		—
Formosa Petrochemical Corporation		202,595		—		—		—

		15,170,167				—

Other investments		10,521,740		—		—		—

	$	73,292,863			$	37,965,353

		On January 8, 2003, the Company’s investee, VIS, issued 600,000 thousand shares of common stock at a price of NT$7 per share of which the Company purchased a total of 230,882 thousand shares. VIS reduced its capital on August 11, 2004 in order to decrease its accumulated deficit. The number of shares of VIS held by the Company after the capital reduction declined from 787,016 thousand shares to 409,532 thousand shares. The Company’s ownership percentage remained the same.

		For the years ended December 31, 2004 and 2003, net investment income recognized from the equity method investees was NT$4,040,319 thousand and NT$791,424 thousand, respectively. The carrying amounts of investments accounted for under the equity method and the related investment income or losses were determined based on the audited financial statements of the investees as of and for the same periods as the Company.

		As of December 31, 2004, other investments consist of the following:


	Nominal		Carrying		Range of
	Amount		Amount		Interest Rates			Maturity Date
Step-up callable deposits
Domestic bank	$	2,000,000	$	2,007,681		2.05%-2.20	%	July 2007 to August 2007
Foreign bank		2,138,340		2,152,394		1.44%-4.75	%	June 2007 to August 2007

Callable range accrual deposits
Foreign bank		6,383,400		6,414,151	(See below)			September 2009 to
								December 2009

	$	10,521,740	$	10,574,226

		During the year ended December 31, 2004, the Company deposited funds into structured-time deposits with the following terms:

		The interest rate of the step-up callable deposits is determined by the Company and the related banks.

		The amount of interest earned by the Company for the callable range accrual deposits is based on a pre-defined range as determined by the 3-month or 6-month LIBOR rate plus an agreed upon rate ranging between 2.1% and 3.45%. Based on the terms of the deposits, if the 3-month or 6-month LIBOR rate moves outside of the pre-defined range, the interest paid to the Company is at minimum of 1.5%. Under the term of contracts, the bank has the right to cancel the contracts before the maturity date.

		Deposits that reside in Hong Kong and Singapore amounted to NT$2,553,360 thousand and NT$638,340 thousand, respectively.

- 15 -

7.		PROPERTY, PLANT AND EQUIPMENT

		Accumulated depreciation consisted of the following:


	2004		2003
Buildings	$	35,546,918	$	29,384,609
Machinery and equipment		259,782,721		214,296,129
Office equipment		4,676,562		3,833,574

	$	300,006,201	$	247,514,312

Information on the status of the expansion or construction plans of the Company’s manufacturing facilities as of December 31, 2004 is as follows:

Estimated

Accumulated

Construction/Expansion Plan

Total Cost

Expenditures

Expected Date of Commencement

Fab 12 expansion

58,744,200

41,870,300

January 2005

		Interest expense for the years ended December 31, 2004 and 2003 was NT$ 1,614,847 thousand and NT$1,715,011 thousand, respectively (before deducting capitalized amounts of NT$262,109 thousand in 2004 and NT$138,668 thousand in 2003, respectively). The interest rates used for purposes of calculating the capitalized amounts was 2.80% and 2.80% to 5.283% in 2004 and 2003, respectively.

8.		DEFERRED CHARGES, NET


	2004		2003
Technology license fees	$	6,534,899	$	5,084,684
Software and system design costs		2,160,636		2,718,270
Other		149,609		144,377

	$	8,845,144	$	7,947,331

BONDS PAYABLE


	2004		2003
Domestic unsecured bonds:
Issued in October 1999 and repayable in October 2004, 5.95% interest payable annually	$	—	$	5,000,000
Issued in December 2000 and repayable in December 2005 and 2007 in two equal payments, 5.25% and 5.36% interest payable annually, respectively		15,000,000		15,000,000
Issued in January 2002 and repayable in January 2007, 2009 and 2012 in three equal payments, 2.60%, 2.75% and 3.00% interest payable annually, respectively		15,000,000		15,000,000

	$	30,000,000	$	35,000,000

- 16 -

As of December 31, 2004, future principal repayments for the Company’s bonds are as follows:


Year of Repayment	Amount
2005	$	10,500,000
2007		7,000,000
2009		8,000,000
2010 and thereafter		4,500,000

	$	30,000,000

10.		OTHER LONG-TERM PAYABLES

		The Company entered into several license arrangements for certain semiconductor-related patents. Future payments under the agreements as of December 31, 2004 are as follows:


Year	Amount
2005	$	1,505,345
2006		466,786
2007		446,838
2008		255,336
2009 and thereafter		766,008

	$	3,440,313

		The current portion of other long-term payables is recorded in the “accrued expenses and other current liabilities” account.

11.		PENSION PLAN

		The Company has a defined benefit pension plan for all regular employees that provides benefits based on the employee’s length of service and average monthly salary and wages for the six-month period prior to retirement. The Company contributes an amount equal to 2% of salaries and wages paid each month to a Pension Fund (the Fund). The Fund is administered by a pension fund monitoring committee (the Committee) and deposited in the Committee’s name in the Central Trust of China.

		Information on the pension plan is summarized as follows:

Components of net periodic pension cost


	2004			2003
Service cost	$	632,594		$	502,116
Interest cost		128,315			109,671
Projected return on plan assets		(41,925	)		(41,154	)
Amortization		8,300			2,409

Net periodic pension cost	$	727,284		$	573,042

- 17 -

Reconciliation of the funded status of the plan and accrued pension cost


	2004			2003
Benefit obligation
Vested benefit obligation	$	67,104		$	21,895
Nonvested benefit obligation		2,704,251			2,184,593

Accumulated benefit obligation		2,771,355			2,206,488
Additional benefits based on future salaries		2,132,721			1,752,208

Projected benefit obligation		4,904,076			3,958,696
Fair value of plan assets		(1,447,540	)		(1,207,264	)

Funded status		3,456,536			2,751,432
Unrecognized net transitional obligation		(132,791	)		(141,091	)
Unrecognized net loss		(222,549	)		(10,090	)

Accrued pension cost	$	3,101,196		$	2,600,251

Vested benefit	$	76,003		$	22,261

Actuarial assumptions


	2004			2003
Discount rated used in determining present values		3.25	%		3.25	%
Future salary increase rate		3.00	%		3.00	%
Expected rate of return on plan assets		3.25	%		3.25	%
d. Contributions to the Fund	$	226,339		$	181,106

e. Payments from the Fund	$	1,446		$	3,490

12.

INCOME TAX

A reconciliation of income tax on income before income tax at the statutory rate and income tax expense is as follows:


	2004			2003
Income tax based on “income before income tax” at statutory rate (25%)	$	(22,944,646	)	$	(12,757,069	)
Tax-exempt income		15,372,913			5,255,750
Temporary and permanent differences		(2,077,362	)		728,904

Current income tax on income before income tax credits	$	(9,649,095	)	$	(6,772,415	)

b. Income tax benefit (expense) consists of:
Current income tax on income before income tax credits	$	(9,649,095	)	$	(6,772,415	)
Additional 10% income tax on unappropriated earnings		(821,767	)		(1,271,759	)
Income tax credits		10,470,862			7,917,070
Other income tax		(563,876	)		(2,500	)

(Continued)

- 18 -


	2004			2003
Net change in deferred income tax assets and liabilities
Investment tax credits	$	234,690		$	(917,759	)
Temporary differences		1,034,916			80,390
Net change in valuation allowance of deferred income tax assets		(168,199	)		(2,802,602	)

Income tax benefit (expense)	$	537,531		$	(3,769,575	)

c. Deferred income tax assets (liabilities) consisted of the following:
Current:
Investment tax credits	$	8,849,000		$	8,322,000

Noncurrent:
Investment tax credits	$	17,035,584		$	17,327,894
Temporary differences		(2,450,535	)		(3,485,451	)
Valuation allowance		(12,940,046	)		(12,771,847	)

	$	1,645,003		$	1,070,596

	d.		Integrated income tax information:

			The balances of the imputation credit account (ICA) as of December 31, 2004 and 2003 were zero and NT$2,832 thousand, respectively.

			The expected and actual creditable ratio for distribution of earnings of 2004 and 2003 was zero and 0.03%, respectively.

			The imputation credits allocated to the shareholders are based on the balance as of the date of dividend distribution. The expected creditable ratio for distribution of earnings of 2004 may be adjusted when the allocation of the imputation credits is made.

	e.		All earnings generated prior to December 31, 1997 have been appropriated.

	f.		As of December 31, 2004, investment tax credits consisted of the following:


		Total		Remaining
		Creditable		Creditable		Expiry
Regulation	Items	Amounts		Amounts		Year
Statute for Upgrading Industries	Purchase of machinery and equipment	$	4,448,442	$	—		2004
			3,819,937		116,189		2005
			4,886,439		4,886,439		2006
			4,140,462		4,140,462		2007
			6,309,182		6,309,182		2008

		$	23,604,462	$	15,452,272

(Continued)

- 19 -


		Total		Remaining
		Creditable		Creditable		Expiry
Regulation	Items	Amounts		Amounts		Year
Statute for Upgrading Industries	Research and development expenditures	$	2,270,013	$	—		2004
			3,147,071		3,147,071		2005
			3,342,952		3,342,952		2006
			1,976,913		1,976,913		2007
			1,843,800		1,843,800		2008


		$	12,580,749	$	10,310,736

Statute for Upgrading Industries	Personnel training	$	48,659	$	—		2004
			29,448		29,448		2005
			27,312		27,312		2006
			26,780		26,780		2007


		$	132,199	$	83,540

Statute for Upgrading Industries	Investments in important technology-based enterprises	$	38,036	$	38,036		2005

The sales generated from the following expansion and construction of the Company’s manufacturing plants are exempt from income tax:


	Tax-Exemption Period
Construction of Fab 6		2001 to 2004
Construction of Fab 8 — module B		2002 to 2005
Expansion of Fab 2 — modules A and B, Fab 3, Fab 4, Fab 5 and Fab 6		2003 to 2006
Construction of Fab 12		2004 to 2007

The tax authorities have examined income tax returns of the Company through 2000. However, the Company is contesting the assessment of the tax authority for 1992 and 1998. The Company believes that any additional assessment will not have a material adverse effect on the Company.

13.

LABOR COST, DEPRECIATION AND AMORTIZATION EXPENSES


	Year Ended December 31, 2004						Year Ended December 31, 2003
			Classified as						Classified as
	Classified as		Operating				Classified as		Operating
	Cost of Sales		Expenses		Total		Cost of Sales		Expenses		Total
Labor cost
Salary	$	8,832,324	$	4,160,867	$	12,993,191	$	7,392,295	$	3,093,658	$	10,485,953
Labor and health insurance		571,853		309,585		881,438		476,687		239,067		715,754
Pension		471,646		255,482		727,128		379,845		190,507		570,352
Other		398,428		356,877		755,305		273,780		159,569		433,349

	$	10,274,251	$	5,082,811	$	15,357,062	$	8,522,607	$	3,682,801	$	12,205,408

Depreciation	$	56,001,719	$	2,429,967	$	58,431,686	$	55,699,522	$	2,298,375	$	57,997,897

Amortization	$	2,496,827	$	2,137,893	$	4,634,720	$	1,385,594	$	2,399,724	$	3,785,318

- 20 -

14.		SHAREHOLDERS’ EQUITY

		Common Stock, Capital Surplus and Earnings

		The Company has issued a total of 668,351 thousand ADSs which are traded on the NYSE as of December 31, 2004. The number of common shares represented by the ADSs is 3,341,754 thousand shares (one ADS represents five common shares).

		Capital surplus can only be used to offset a deficit under the Company Law of the R.O.C. However, the capital surplus generated from donations and the excess of the issue price over the par value of capital stock (including the stock issued for new capital, mergers, convertible bonds and the surplus arising from treasury stock transactions) may be appropriated as stock dividends restricted to a certain percentage based on shareholders’ ownership.

		As of December 31, 2004 and 2003, the capital surplus consisted of the following:


	2004		2003
From merger	$	24,003,546	$	24,132,297
Additional paid-in capital		23,051,675		23,172,550
From long-term investments		121,354		87,295
From convertible bonds		9,360,424		9,410,632
Donations		55		55
Treasury stock		205		53,056

	$	56,537,259	$	56,855,885

The Company’s Articles of Incorporation as revised on December 21, 2004, provide that the following shall be appropriated from annual earnings to the extent that the annual earnings exceed any cumulative deficit:

	a.		10% legal reserve; until the amount of total legal reserve equals the Company’s paid-in capital;

	b.		Special reserve in accordance with relevant laws or regulations;

	c.		Remuneration to directors and supervisors and bonuses to employees at 0.3% and at least 1% of the remainder, respectively. Individuals eligible for the employee bonuses may include employees of affiliated companies as approved by the board of directors or a representative of the board of directors;

	d.		The appropriation of any remaining balance shall be approved by the shareholders.

		Dividends may be distributed by way of cash dividend or stock dividend at the discretion of the Company. As the operation of the Company is at a steady growth stage, distribution of profits shall be made preferably by way of cash dividend. Distribution of profits may also be made by way of stock dividend; provided however, the ratio for stock dividend shall not exceed 50% of total distribution.

		Any appropriations of net income are recorded in the financial statements in the year of shareholder approval.

		An appropriation for legal reserve is required until the reserve equals the aggregate par value of the Company’s issued capital stock. The reserve can only be used to offset a deficit or be distributed as a stock dividend up to 50% of the reserve balance when the reserve balance has reached 50% of the aggregate par value of the issued capital stock of the Company.

- 21 -

		A special reserve equivalent to the net debit balance of the other components of shareholder’s equity (for example, unrealized loss on long-term investments and cumulative translation adjustments, but excluding treasury stock), shall be made from unappropriated earnings pursuant to existing regulations promulgated by the R.O.C. Securities and Futures Bureau (SFB). Any special reserve appropriated may be reversed to the extent that the net debit balance of the related account reverses.

		The appropriations of the earnings of 2003 and 2002 were approved in the shareholders’ meeting on May 11, 2004 and June 3, 2003, respectively. The appropriations and dividend per share are as follows:


						Dividend Per Share
	Appropriation of Earnings					(NT$)
	For Fiscal			For Fiscal		For Fiscal		For Fiscal
	Year 2003			Year 2002		Year 2003		Year 2002
Legal reserve	$	4,725,870		$	2,161,029
Special reserve		(68,945	)		68,945
Bonus paid to employees — in cash		681,628			—
Bonus paid to employees — in stock		2,726,514			1,539,013
Preferred stock dividend — in cash		184,493			455,000	$	0.35	$	0.35
Common stock dividend — in cash		12,159,971			—		0.60		—
Common stock dividend — in stock		28,373,267			14,898,309		1.41		0.80
Remuneration to directors and supervisors — in cash		127,805			58,485

	$	48,910,603		$	19,180,781

		The amount of the above appropriation of earnings for 2003 and 2002 is consistent with the resolution of the meetings of board of directors on February 17, 2004 and March 4, 2003, respectively. However, the Company Law of the R.O.C. states TSMC, as a holder of treasury stock shall not participate in the appropriations of earnings. Therefore, the actual cash dividend per share and stock dividend per share are slightly more than those in the aforementioned resolution. If the above employee bonus paid in stock had been paid in cash and all of the bonus to employees and remuneration to directors and supervisors had been charged against income for 2003 and 2002, the after income tax basic earnings per share for the years ended December 31, 2003 and 2002 would have decreased from NT$2.33 to NT$2.15 and NT$ 1.14 to NT$1.05, respectively. The shares distributed as a bonus to employees represented 1.35% and 0.83% of the Company’s total outstanding common shares as of December 31, 2003 and 2002, respectively.

		As of January 13, 2005, the board of directors have not resolved the appropriation for earnings of 2004.

		The above information about the appropriations of bonus to employees and remuneration to directors and supervisors is available at Market Observation System website.

		Under the Integrated Income Tax System that became effective on January 1, 1998, the R.O.C. resident shareholders are allowed a tax credit for their proportionate share of the income tax paid by the Company on earnings generated since January 1, 1998.

		Preferred Stock

		The Company issued 1,300,000 thousand shares of unlisted Series A — preferred stock to certain investors on November 29, 2000. All of the preferred stock was redeemed at par value and retired on May 29, 2003. Under the Company’s Articles of Incorporation, the Company is no longer authorized to issue preferred stock.

- 22 -

		The preferred shareholders had the following rights and the related terms and conditions prior to redemption:

		Preferred shareholders

	a.		Are entitled to receive cumulative cash dividends at an annual rate of 3.5%.

	b.		Are not entitled to receive any common stock dividends (whether declared out of unappropriated earnings or capital surplus).

	c.		Have priority over the holders of common shares to the assets of TSMC available for distribution to shareholders upon liquidation or dissolution; however, the pre-emptive rights to the assets shall not exceed the issue price of the shares.

	d.		Have voting rights similar to that of the holders of common shares.

	e.		Have no right to convert their shares into common shares. The preferred shares are to be redeemed within thirty months from their issuance. The preferred shareholders have the aforementioned rights and the Company’s related obligations remain the same until the preferred shares are redeemed by the Company.

15.		STOCK-BASED COMPENSATION PLANS

		The Company’s Employee Stock Option Plans, the 2003 Plan and the 2002 Plan, were approved on October 29, 2003 and June 25, 2002, respectively. The maximum number of units authorized to be granted under 2003 Plan and the 2002 Plan is 120,000 thousand and 100,000 thousand, respectively, with each unit representing one common share of stock. The option rights may be granted to qualified employees of the Company or any of its domestic or foreign subsidiaries, in which the Company’s shareholding with voting rights, directly or indirectly, is more than fifty percent (50%). The option rights of both plans are valid for ten years and exercisable at certain percentages subsequent to the second anniversary of the grant date. Under the terms of the plans, stock option rights are granted at an exercise price equal to the closing price of the Company’s common shares listed on the TSE on the date of grant. Under the 2003 Plan and the 2002 Plan, units that were never granted, or had been granted and subsequently cancelled were expired as of December 31, 2004.

		On November 2, 2004, the board of directors approved the 2004 Plan, in which the maximum number of units authorized to be granted is 11,000 thousand, with each unit representing one common share of stock. The option rights may be granted to qualified employees of the Company or any of its domestic or foreign subsidiaries, in which the Company’s shareholding with voting rights, directly or indirectly, is more than fifty percent (50%). The option rights of the plans are valid for ten years and exercisable at certain percentages subsequent to the second anniversary of the grant date. Under the terms of the plan, stock option rights are granted at an exercise price equal to the closing price of the Company’s common shares listed on the TSE on the date of grant. The 2004 plan was approved by Bureau of Monetary Affairs, Financial Supervisory Commission of the R.O.C. on January 6, 2005.

- 23 -

Information on outstanding stock options for the years ended December 31, 2004 and 2003 is as follows:


	2003 Plan					2002 Plan
	Number of			Weighted-		Number of			Weighted-
	Outstanding			Average		Outstanding			Average
	Stock Option			Exercise		Stock Option			Exercise
	Rights			Price		Rights			Prices
	(in Thousands)			(NT$)		(in Thousands)			(NT$)
Year ended December 31, 2004
Beginning outstanding balance		842			57.8		48,515			42.7
Options granted		13,199			49.9		7,201			42.6
Options exercised		—			—		(87	)		41.8
Options cancelled		(1,404	)		50.9		(3,899	)		44.2

Ending outstanding balance		12,637					51,730

Year ended December 31, 2003
Beginning outstanding balance		—			—		19,369			48.6
Options granted		843			66.5		32,031			50.3
Options cancelled		(1	)		66.5		(2,885	)		48.7

Ending outstanding balance		842					48,515

		The number of outstanding option rights and exercise prices have been adjusted to reflect the appropriations of dividends in accordance with the plans.

		As of December 31, 2004, information on outstanding and exercisable option rights is as follows:

Options Outstanding

Options Exercisable

Weighted-

Number of

Average

Weighted-

Number of

Weighted-

Range of

Outstanding

Remaining

Average

Exercisable

Average

Exercise

Options (in

Contractual

Exercise

Options (in

Exercise

Price (NT$)

Thousands)

Life (Years)

Price (NT$)

Thousands)

Price (NT$)

2003 plan

43.8-57.8

12,637

9.34

50.3

—

2002 plan

32.8-46.2

51,730

8.09

42.6

10,307

41.7

Total

64,367

8.33

44.1

10,307

41.7

The compensation cost recognized for the year ended December 31, 2004 was zero. Had the Company used the fair value based method to evaluate the options granted, the method, assumptions and pro forma results of the Company for the year ended December 31, 2004 would have been as follows:


Method:		Black-Scholes Model

Assumptions:
Expected dividend yield		1.00	%
Expected volatility		43.77%-46.15	%
Risk free interest rate		3.07%-3.85	%
Expected life	5 years

- 24 -


	NT$
Net income:
Net income as reported	$	92,316,115
Pro forma net income		92,257,355
Earnings per share (EPS) — after income tax:
Basic EPS as reported		3.97
Pro forma basic EPS		3.97
Diluted EPS as reported		3.97
Pro forma diluted EPS		3.97

		The estimated weighted average fair value for the options granted during the year ended December 31, 2004 was NT$19.73 per option.

16.		TREASURY STOCK (COMMON STOCK)

(Shares in Thousand)


	Beginning		Increase/				Ending
	Shares		Dividend		Decrease		Shares
Year ended December 31, 2004
Reclassification of parent company stock held by subsidiaries from long-term investment		40,597		5,676		752		45,521
Repurchase under share buyback plan		—		124,720		124,720		—

		40,597		130,396		125,472		45,521

Year ended December 31, 2003
Reclassification of parent company stock held by subsidiaries from long-term investment		42,001		3,357		4,761		40,597

		Proceeds from the sale of treasury stock for the years ended December 31, 2004 and 2003 were NT$39,906 thousand and NT$331,945 thousand, respectively. The Company’s capital stock held by a subsidiary as an investment is recorded as treasury stock, with the holder having the same rights as other common shareholders. As of December 31, 2004 and 2003, the book value of the treasury stock was NT$1,595,186 thousand and NT$1,633,228 thousand, respectively; the market value was NT$2,241,009 thousand and NT$2,548,788 thousand, respectively.

		The Company held a special meeting of the board of directors and approved a share buyback plan to repurchase the Company’s common shares listed on the TSE during the period from March 24, 2004 to May 23, 2004. The Company repurchased 124,720 thousand common shares for a total of NT$7,059,798 thousand. All the treasury stock repurchased under the buyback plan was retired on August 16, 2004.

- 25 -

17.		EARNINGS PER SHARE

		EPS is computed as follows:


							Number of		EPS (NT$)
	Amounts (Numerator)						Shares		Before		After
	Before			After			(Denominator)		Income		Income
	Income Tax			Income Tax			(Thousand)		Tax		Tax
Year ended December 31, 2004

Basic EPS
Income available to common shareholders	$	91,778,584		$	92,316,115			23,248,682	$	3.95	$	3.97

Effect of diluted securities — stock options		—			—			6,404

Diluted EPS
Income available to common shareholders (including effect of diluted potential common stock)	$	91,778,584		$	92,316,115			23,255,086	$	3.95	$	3.97

Year ended December 31, 2003

Net Income	$	51,028,275		$	47,258,700
Less — preferred stock dividends		(184,493	)		(184,493	)

Basic EPS
Income available to common shareholders		50,843,782			47,074,207			23,327,354	$	2.18	$	2.02

Effect of diluted potential common stock — stock options		—			—			9,599

Diluted EPS
Income available to common shareholders (including effect of diluted potential common stock)	$	50,843,782		$	47,074,207			23,336,953	$	2.18	$	2.02

18.		RELATED PARTY TRANSACTIONS

		The Company engages in business transactions with the following related parties:

	a.		Industrial Technology Research Institute (ITRI); the Chairman of the Company is one of its directors

	b.		Philips; a major shareholder of the Company

	c.		Subsidiaries

			TSMC — North America TSMC — Europe TSMC — Japan TSMC — Shanghai

	d.		Investees

			VIS SSMC GUC VisEra

	e.		Indirect subsidiaries

			WaferTech, LLC (WaferTech) TSMC Technology, Inc. (TSMC Technology)

- 26 -

The significant transactions with the aforementioned parties in addition to those disclosed in other notes are summarized as follows:


	2004				2003
	Amount		%		Amount		%
For the years

Sales
TSMC — North America	$	142,271,732		55	$	117,758,911		57
Philips and its affiliates		5,463,565		2		3,577,054		2
Others		466,345		—		610,534		—

	$	148,201,642		57	$	121,946,499		59

Purchase
WaferTech	$	15,203,047		34	$	11,433,083		36
VIS		9,169,602		21		4,910,810		15
SSMC		5,869,123		13		5,519,805		17
TSMC — Shanghai		12,752		—		—		—

	$	30,254,524		68	$	21,863,698		68

Manufacturing expenses — technical assistance fee (See Note 20a)
Philips	$	907,047		1	$	3,023,741		3

Marketing expenses — commission
TSMC — Japan	$	253,341		17	$	215,202		18
TSMC — Europe		202,678		14		154,262		13

	$	456,019		31	$	369,464		31

General and administrative expense — rental expenses
GUC	$	13,186		2	$	—		—

Research and development expenses
GUC	$	11,688		—	$	—		—

Sales of property, plant and equipment
TSMC — Shanghai	$	2,969,347		96	$	—		—
VIS		33,974		1		15,125		9

	$	3,003,321		97	$	15,125		9

Non-operating income and gains
SSMC (primarily technical service income, see Note 20e)	$	364,505		5	$	201,869		8
VIS (primarily technical service income, see Note 20j)		117,760		2		251		—
VisEra		28,917		—		—		—
WaferTech		3,267		—		2,794		—

	$	514,449		7	$	204,914		8

(Continued)

- 27 -


	2004				2003
	Amount		%		Amount		%
At end of year

Receivables
TSMC — North America	$	15,526,964		96	$	13,946,638		94
Philips and its affiliates		581,487		4		895,063		6
Others		77,632		—		25,961		—

	$	16,186,083		100	$	14,867,662		100

Other receivables
TSMC — Shanghai	$	1,472,880		91	$	—		—
SSMC		63,701		4		—		—
VIS		47,599		3		118,503		89
Others		33,159		2		14,460		11

	$	1,617,339		100	$	132,963		100

Payables
VIS	$	1,533,938		48		1,034,074		23
WaferTech		913,107		29		1,184,642		27
Philips and its affiliates		469,494		15		1,579,568		35
SSMC		207,794		6		634,647		14
Others		74,157		2		67,209		1

	$	3,198,490		100	$	4,500,140		100

Other long-term payables
Philips and its affiliates	$	2,317,972		100	$	—		—

Deferred credits — gain on intercompany
TSMC — Shanghai (disposal of property, plant and equipment)	$	682,530		100	$	—		—

Refundable deposits
VIS	$	—		—	$	150,840		85

		The terms of sales to related parties are not significantly different from those to third parties. For other related parties transactions, since there are no other similar transactions to follow, the prices are determined in accordance with the related contractual agreements.

19.		SIGNIFICANT LONG-TERM OPERATING LEASES

		The Company leases land from the Science-Based Industrial Park Administration. These agreements expire on various dates from March 2008 to December 2020. The agreements can be renewed upon their expiration.

- 28 -

Future remaining lease payments are as follows:


Year	Amount
2005	$	238,411
2006		238,411
2007		238,411
2008		220,246
2009		214,192
2010 and thereafter		1,422,637

	$	2,572,308

20.		SIGNIFICANT COMMITMENTS AND CONTINGENCIES

		The significant commitments and contingencies as of December 31, 2004 are as follows:

	a.		On June 20, 2004, the Company and Philips revised the Technical Cooperation Agreement, which was originally signed on May 12, 1997, with an effective date from January 1, 2004 for five years. Upon expiration, this amended Technical Cooperation Agreement will be terminated at the expiration date and will not be automatically renewed. Under this amended Technical Cooperation Agreement, the Company will pay Philips royalties based on a fixed amounts mutually agreed-on, rather than under certain percentage of the Company’s annual net sales. The Company and Philips agree to cross license the patents owned by each party. The Company also obtained through Philips a number of patent cross licenses.

	b.		Under a technical cooperation agreement with ITRI, the Company shall reserve and allocate up to 35% of certain of its production capacity for use by the Ministry of Economic Affairs (MOEA) or any other party designated by the MOEA.

	c.		Under several foundry agreements, the Company shall reserve a portion of its production capacity for certain major customers that have guarantee deposits with the Company. As of December 31, 2004, the Company had a total of US$12,802 thousand of guarantee deposits.

	d.		Under a Shareholders Agreement entered into with Philips and EDB Investments Pte Ltd. on March 30, 1999, the parties formed a joint venture company, SSMC, for the purpose of constructing an integrated circuit foundry in Singapore. As of December 31, 2004, the Company’s equity interest in SSMC was 32%. The Company and Philips committed to buy specific percentages of the production capacity of SSMC. If any party defaults on the commitment and the capacity utilization of SSMC falls below a specific percentage of its total capacity, the defaulting party is required to compensate SSMC for all related unavoidable costs.

	e.		The Company provides technical services to SSMC under a Technical Cooperation Agreement (the Agreement) entered into on May 12, 1999. The Company receives compensation for such services computed at a specific percentage of net selling price of certain products sold by SSMC. The Agreement shall remain in force for ten years and may be automatically renewed for successive periods of five years each unless pre-terminated by either party under certain conditions.

	f.		Under a Technology Transfer Agreement (TTA) with National Semiconductor Corporation (National) entered into on June 27, 2000, the Company shall receive payments for the licensing of certain technology to National. The agreement was to remain in force for ten years and could be automatically renewed for successive periods of two years thereafter unless either party gives notice for early termination under certain conditions. In January 2003, the Company and National entered into a Termination Agreement whereby the TTA was terminated for convenience. Under the Termination Agreement, the Company will be relieved of any further obligation to transfer any additional

- 29 -

technology. In addition, the Company granted National an option to request the transfer of certain technologies under the same terms and conditions as the terminated TTA. The option will expire in January 2008.

	g.		Beginning in 2001, the Company entered into several licensing arrangements for certain semiconductor patents. The terms of the contracts range from five to ten years with payments to be made in the form of royalties over the term of the related contracts. The Company has recorded the related amounts as a liability with the corresponding amounts recorded as deferred charges which are amortized and charged to cost of sales on a straight-line basis over the estimated life of the technology or the term of the contract, whichever is shorter.

	h.		In November 2002, the Company entered into an Amended and Restated Joint Technology Cooperation Agreement with Philips, Motorola, Inc. and STMicroelectronics to jointly develop 90-nm to 65-nm advanced CMOS Logic and e-DRAM technologies. The Company also agreed to align 0.12 micron CMOS Logic technology to enhance its foundry business opportunities. The Company will contribute process technologies and share a portion of the costs associated with this joint development project.

	i.		In December 2003, the Company entered into a Technology Development and License Agreement with Motorola, Inc. to jointly develop 65-nm SOI (silicon on insulator) technology. The Company will also license related 90-nm SOI technology from Motorola, Inc. Any intellectual properties arising out of the co-development project shall be jointly owned by the parties. In accordance with the agreement, the Company will pay royalties to Motorola, Inc. and will share a portion of the costs associated with the joint development project.

	j.		The Company provides a technology transfer to VIS under a Manufacturing License and Technology Transfer Agreement entered into in August 2004. The Company receives compensation for such technology transfer in the form of royalty payments from VIS computed at specific percentages of net selling price of certain products sold by VIS. VIS agreed to reserve its certain capacity to manufacture for the Company certain products at prior as agreed by the parties.

	k.		Amounts available under unused letters of credit as of December 31, 2004 were NT$6,480 thousand, US$204 thousand and SG$85 thousand.

	l.		The Company provided guarantees on loans amounting to US$60,000 thousand and US$40,000 thousand for TSMC Development, Inc. (TSMC Development) and TSMC — North America, respectively.

	m.		TSMC, TSMC — North America and WaferTech filed a series of lawsuits in late 2003 and 2004 in both state and federal courts in California and with the U.S. International Trade Commission against Semiconductor Manufacturing International Corporation (SMIC), SMIC (Shanghai) and SMIC Americas. The lawsuits alleged that SMIC companies infringed multiple TSMC patents and misappropriated TSMC’s trade secrets. These suits have been settled out of court on January 30, 2005. As part of the agreement, SMIC will pay TSMC US$175 million over six years to resolve TSMC’s patent infringement and trade secret claims.

21.		ADDITIONAL DISCLOSURES

		Following are the additional disclosures required by the SFB for the Company and its investees:

	a.		Financing provided: Please see Table 1 attached;

	b.		Endorsement/guarantee provided: Please see Table 2 attached;

- 30 -

	c.		Marketable securities held: Please see Table 3 attached;

	d.		Marketable securities acquired and disposed of at costs or prices of at least NT$100 million or 20% of the paid-in capital: Please see Table 4 attached;

	e.		Acquisition of individual real estate at costs of at least NT$100 million or 20% of the paid-in capital: Please see Table 5 attached;

	f.		Disposal of individual real estate at prices of at least NT$100 million or 20% of the paid-in capital: None;

	g.		Total purchase from or sale to related parties amounting to at least NT$100 million or 20% of the paid-in capital: Please see Table 6 attached;

	h.		Receivable from related parties amounting to at least NT$100 million or 20% of the paid-in capital: Please see Table 7 attached;

	i.		Names, locations, and related information of investees of which the Company exercises significant influence: Please see Table 8 attached;

	j.		Financial instrument transactions:

	1)		Derivative financial instruments

			The Company entered into derivative financial instrument transactions for the years ended December 31, 2004 and 2003 to manage exposures related to foreign exchange rate and interest rate fluctuations. Certain information on these contracts is as follows:

Outstanding forward exchange contracts as of December 31, 2004 and 2003 are as follows:

Contract Amount

Financial Instruments

Currency

Maturity Date

(in Thousands)

2004

Sell

US$/NT$

January 2005 to March 2005

US$

733,000

Sell

US$/EUR

January 2005

US$

159,081

2003

Sell

US$/NT$

January 2004 to July 2004

US$

1,805,000

Buy

EUR/US$

January 2004

EUR

7,500

Buy

JPY/US$

January 2004

JPY

748,405

As of December 31, 2004 and 2003, receivables from forward exchange contracts (included in the “other financial assets” account) aggregate approximately NT$392,534 thousand, and NT$76,385 thousand; payables from forward exchange contracts (included in the “other current liabilities” account) aggregate approximately NT$559 thousand and NT$174,018 thousand.

- 31 -

	b)		Cross currency swaps

			Outstanding cross currency swap contracts as of December 31, 2004 are as follows:

Contract

Range of

Amount

Interest Rate

Maturity Date

(in Thousands)

Paid

Received

January 2005 to June 2005

US$

1,420,000

1.28%-2.72

0.49%-1.17

			As of December 31, 2004, receivables from the cross currency swap contracts (included in the “other financial assets” account) was approximately NT$761,030 thousand.

			Net exchange gain or loss arising from forward exchange contracts and cross currency swap contracts was recognized in the “foreign exchange loss, net” account and the difference in interest was recorded in interest income or expense.

	c)		Interest rate swaps

			Outstanding contracts as of December 31, 2004 and 2003 were as follows:


			Contract
			Amount
Contract Date		Period	(in Thousands)
	2004

September 2003		September 2003 to December 2005	NT$	500,000
October 2003		October 2003 to December 2005	NT$	500,000
October 2003		October 2003 to December 2005	NT$	500,000
October 2003		October 2003 to December 2005	NT$	500,000
October 2003		October 2003 to December 2005	NT$	500,000
November 2003		November 2003 to December 2005	NT$	500,000

	2003

September 2003		September 2003 to December 2005	NT$	500,000
October 2003		October 2003 to December 2005	NT$	500,000
October 2003		October 2003 to December 2005	NT$	500,000
October 2003		October 2003 to December 2005	NT$	500,000
October 2003		October 2003 to December 2005	NT$	500,000
November 2003		November 2003 to December 2005	NT$	500,000
July 1999		July 1999 to June 2004	US$	2,857

	d)		Option contracts

			During 2004, the Company did not enter into any foreign currency option contracts. There were no outstanding option contracts as of December 31, 2003. The Company entered into foreign currency option contracts for hedging purposes; therefore, the related premiums and the foreign exchange gain or loss are recognized in the “foreign exchange loss, net” account.

- 32 -

Transaction risk

	i)		Credit risk. Credit risk represents the positive net settlement amount of those contracts with positive fair values at the balance sheet date. The positive net settlement amount represents the loss incurred by the Company if the counter-parties breached the contracts. The banks, which are the counter-parties to the foregoing derivative financial instruments, are reputable financial institutions. Management believes its exposure related to the potential default by those counter-parties is low.

	ii)		Market price risk. All derivative financial instruments are intended as hedges for fluctuations in foreign exchange rates and interest rates. Gains or losses from these hedging instruments are likely to be offset by gains or losses from the hedged items. Interest rate risks are also controlled as the expected cost of capital is fixed. Thus, market price risks are believed to be low.

	iii)		Cash flow risk and the amount and period of future cash needs.

			As of December 31, 2004, the Company’s future cash needs for outstanding forward exchange contracts and cross currency swap contracts are as follows:


	Inflow	Outflow
Term	(In Thousands)	(In Thousands)
Within one year	NT$ 69,761,484	US$	2,312,081
	EUR 118,500

The Company has sufficient operating capital to meet the above cash needs. In addition, there will be corresponding cash inflow for the cash outflow. Therefore, the cash flow risk is low.

Fair values of financial instruments were as follows:


	2004					2003
	Carrying					Carrying
	Amount		Fair Value			Amount			Fair Value
	(In Thousands)					(In Thousands)
Non-derivative financial instruments

Assets
Short-term investments, net	$	52,979,095	$	52,979,095		$	12,559,019		$	12,703,444
Long-term investments (securities with market price)		20,572,150		23,657,754			4,077,198			10,465,676
Liabilities
Bonds payable (including current portion)		30,000,000		30,607,341			35,000,000			35,850,377

Derivative financial instruments
Forward exchange contracts (buy)		—		—			2,351			3,037
Forward exchange contracts (sell)		391,975		317,090			(99,984	)		40,638
Cross currency swap contracts		761,030		760,012			—			—
Interest rate swap contracts		4,361		(22,714	)		—			2,093

- 33 -

			The above financial instruments do not include cash and cash equivalents, receivables, other financial assets, payables, and payable to contractors and equipment suppliers. The carrying amounts of the aforementioned instruments reported in the balance sheet approximate their fair values.

			The above financial instruments also exclude refundable deposits, guarantee deposits, long-term investments that do not have quoted market prices as well as other long-term payables. The future cash inflow and outflow of the deposits approximate their fair values. Some of long-term investments do not have quoted market prices; therefore, fair values for those long-term investments are not shown above. The fair value of other long-term payables is determined using the discounted value of expected cash flows, which approximates the carrying value.

			Fair values of financial instruments were determined as follows:

	a)		Fair value of short-term and publicly traded long-term investments is based on quoted market prices.

	b)		The fair value of bonds payable is the quoted market value.

	c)		Fair value of derivative financial instruments is the amount receivable from or payable to the counter-party if the contracts were terminated on the balance sheet date.

Information on investment in Mainland China

	1)		The name of the investee company in mainland China, the main businesses and products, its issued capital, method of investment, information on inflow or outflow of capital, ratio of ownership, equity in the net gain or net loss, ending balance, amount received as earnings distributions from the investment, and the limitation on investment: Please see Table 9 attached.

	2)		Significant direct or indirect transactions with the investee company, its prices and terms of payment, unrealized gain or loss, and other related information which is helpful to understand the impact of investment in mainland China on financial reports: Please see Note 18.

22.

SEGMENT FINANCIAL INFORMATION

Gross export sales


Area	2004		2003
Americas	$	113,948,320	$	103,600,081
Asia and others		91,057,215		63,349,186
Europe		19,084,530		11,706,059

	$	224,090,065	$	178,655,326

The export sales information is based on amounts billed to customers within the area.

- 34 -

	b.		Major customers representing at least 10% of net total sales:

			In 2004, there is no customer accounted for at least 10% of the Company’s total sales. The Company only has one customer that accounts for at least 10% of its total sales in 2003. The sales to such customer amounted to $ 21,893,320 thousand and $31,220,104 thousand in 2004 and 2003, representing 8% and 15% of its total sales, respectively.

- 35 -

TABLE 1

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND INVESTEES

FINANCING PROVIDED
FOR THE YEAR ENDED DECEMBER 31, 2004
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Maximum

Financing

Balance

Financing

Company’s

for the

Ending

Limit

Financing

Financial

Period

Balance

Type of

Reasons for

Allowance

for Each

Amount Limits

Financing

Statement

(US$ in

Interest

Financing

Transaction

Short-term

for

Collateral

Borrowing

(US$ in

No.

Name

Counter-party

Account

Thousand)

Rate

(Note 1)

Amounts

Financing

Bad Debt

Item

Value

Company

Thousand)

TSMC International

TSMC Development

Other receivables

1,915,020

1.50

—

Operating capital

—

N/A

31,532,982

(US$60,000)

(US$987,968)

(Note 2)

TSMC Technology

Other receivables

319,170

—

(US$10,000)

TSMC Partners

TSMC Development

Other receivables

2,553,360

1.50

—

Operating capital

—

N/A

(Note 3)

(US$80,000)

Note 1:		The No. 2 represents necessary for short-term financing.

Note 2:		Not exceeding the issued capital of the Company.

Note 3:		Generally not exceeding the issued capital of the Company, unless approved by all members of the board.

- 36 -

TABLE 2

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND INVESTEES

ENDORSEMENT/GUARANTEE PROVIDED
FOR THE YEAR ENDED DECEMBER 31, 2004
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Ratio of

Accumulated

Maximum

Value of

Amount of

Counter-party

Balance

Ending

Collateral

Collateral to

Maximum

Nature of

for the Year

Balance

Property,

Net Equity of the

Collateral/Guarantee

Endorsement/

Relationship

Limits on Each Counter-party’s

(US$ in

Plant and

Latest Financial

Amounts Allowable

No.

Guarantee Provider

Name

(Note 2)

Endorsement/Guarantee Amounts

Thousand)

Equipment

Statement

(Note 1)

The Company

TSMC Development

Not exceed 10% of the net worth of

1,915,020

—

0.48%

99,741,325

the Company, and also limiting to

(US$60,000)

the total capital issued of the endorsement/guarantee company,

unless otherwise approved by Board of Directors.

TSMC — North America

1,276,680
(US$40,000)

—

0.32%

WaferTech

14,043,480

—

(US$440,000)

Note 1:		25% of the net worth of the Company as of December 31, 2004.

Note 2:		The No. 2 represents a subsidiary in which the Company holds directly over 50% of the equity interest.

		The No. 3 represents an investee in which the Company holds directly and indirectly over 50% of the equity interest.

- 37 -

TABLE 3

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND INVESTEES

MARKETABLE SECURITIES HELD
DECEMBER 31, 2004
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)


				December 31, 2004
										Market Value or
						Carrying Value				Net Asset Value
	Marketable Securities	Relationship with	Financial Statement	Shares/Units		(US$ in		Percentage of		(US$ in
Held Company Name	Type and Name	the Company	Account	(In Thousand)		Thousand)		Ownership		Thousand)		Note
The Company	Government bonds
	2003 Government Bond Series A	—	Short-term investment		—	$	1,207,409		N/A	$	1,202,028
	United States Treas NTS	—	Short-term investment		—	US$	192,357		N/A	US$	191,824
	2003 Government Bond Series I	—	Long-term investment		—		3,397,081		N/A		3,393,982
	2004 Government Bond Series A	—	Long-term investment		—		2,349,573		N/A		2,352,973
	2004 Government Bond Series E	—	Long-term investment		—		3,893,827		N/A		3,892,025
	2004 Kaohsiung Municipal Bond Series A	—	Long-term investment		—		620,000		N/A		620,000

	Bonds under repurchase agreement	—	Short-term investment		—		249,449		N/A		251,593

	Bond funds
	JF Taiwan Bond Fund	—	Short-term investment		78,698		1,153,209		N/A		1,169,406
	ABN AMRO Bond Fund	—	Short-term investment		134,906		1,956,175		N/A		1,978,785
	JF Taiwan First Bond Fund	—	Short-term investment		84,886		1,151,463		N/A		1,162,632
	INVESCO R.O.C. Bond A Fund	—	Short-term investment		76,705		1,101,911		N/A		1,111,932
	Dresdner Bond DAM Fund	—	Short-term investment		80,833		900,000		N/A		910,904
	Barits Bond Fund	—	Short-term investment		76,640		900,000		N/A		907,765
	Shinkong Chi Shin Bond Fund	—	Short-term investment		151,594		2,100,000		N/A		2,115,554
	ABN AMRO Select Bond Fund	—	Short-term investment		18,235		200,000		N/A		201,183
	NITC Bond Fund	—	Short-term investment		3,764		600,000		N/A		602,703
	HSBC NTD Money Management Fund	—	Short-term investment		41,568		600,000		N/A		601,958

	Stock
	Taiwan Mask Corp.	—	Short-term investment		1,787		6,528		—		27,552
	TSMC International	Subsidiary	Long-term investment		987,968		23,778,997		100		23,778,997
	VIS	Investee	Long-term investment		409,532		5,401,982		28		8,493,692
	TSMC Partners	Subsidiary	Long-term investment		300		3,908,356		100		3,908,356
	SSMC	Investee	Long-term investment		382		3,290,888		32		3,290,888
	TSMC — North America	Subsidiary	Long-term investment		11,000		502,242		100		1,179,352	Treasury stock of NT$677,110 thousand is deducted from the carrying value.
	GUC	Investee	Long-term investment		39,040		391,626		47		418,272
	TSMC — Japan	Subsidiary	Long-term investment		6		102,572		100		102,572
	VisEra	Investee	Long-term investment		5,100		59,116		25		59,116
	TSMC — Europe	Subsidiary	Long-term investment		—		25,439		100		25,439
	United Industrial Gases Co., Ltd.	—	Long-term investment		16,783		193,584		10		284,036
	Shin-Etsu Handotai Taiwan Co., Ltd.	—	Long-term investment		10,500		105,000		7		170,940

(Continued)

- 38 -


				December 31, 2004
										Market Value or
						Carrying Value				Net Asset Value
	Marketable Securities	Relationship with	Financial Statement	Shares/Units		(US$ in		Percentage of		(US$ in
Held Company Name	Type and Name	the Company	Account	(In Thousand)		Thousand)		Ownership		Thousand)		Note
	W.K. Technology Fund IV	—	Long-term investment		5,000	$	50,000		2	$	55,146
	Hontung Venture Capital Co., Ltd.	—	Long-term investment		8,392		83,916		10		53,571
	Globaltop Partner I Venture Capital Corp.	—	Long-term investment		5,000		50,000		1		49,909

	Corporate bonds
	Taiwan Power Company	—	Short-term investment		—		2,777,798		N/A		2,749,413
	Abbott Labs	—	Short-term investment		—	US$	2,732		N/A	US$	2,709
	Abbott Labs	—	Short-term investment		—	US$	1,581		N/A	US$	1,587
	Ace Ltd	—	Short-term investment		—	US$	1,046		N/A	US$	1,042
	AIG Sunamerica Global Fing IX	—	Short-term investment		—	US$	1,032		N/A	US$	1,028
	Allstate Finl Global Fdg LLC	—	Short-term investment		—	US$	3,171		N/A	US$	3,096
	American Express Co.	—	Short-term investment		—	US$	3,550		N/A	US$	3,503
	American Gen Fin Corp.	—	Short-term investment		—	US$	1,768		N/A	US$	1,765
	American Gen Fin Corp. Mtn	—	Short-term investment		—	US$	3,130		N/A	US$	3,087
	American Gen Fin Corp. Mtn	—	Short-term investment		—	US$	1,058		N/A	US$	1,042
	American Honda Fin Corp. Mtn	—	Short-term investment		—	US$	3,800		N/A	US$	3,803
	American Intl Group Inc. Mtnf	—	Short-term investment		—	US$	3,795		N/A	US$	3,795
	Amgen Inc.	—	Short-term investment		—	US$	3,005		N/A	US$	2,991
	Amsouth Bk Birmingham Ala	—	Short-term investment		—	US$	1,972		N/A	US$	1,978
	ANZ Cap Tr I	—	Short-term investment		—	US$	1,012		N/A	US$	1,001
	Bank New York Inc.	—	Short-term investment		—	US$	1,525		N/A	US$	1,509
	Bank New York Inc.	—	Short-term investment		—	US$	3,945		N/A	US$	3,943
	Bank Scotland Treas Svcs PLC	—	Short-term investment		—	US$	2,715		N/A	US$	2,717
	Bank Utd Houston TX Mtbn	—	Short-term investment		—	US$	580		N/A	US$	574
	Bear Stearns Cos Inc.	—	Short-term investment		—	US$	3,518		N/A	US$	3,493
	Bear Stearns Cos Inc. Medium Te	—	Short-term investment		—	US$	3,105		N/A	US$	3,105
	Berkshire Hathaway Fin Corp.	—	Short-term investment		—	US$	1,498		N/A	US$	1,494
	Bristol Myers Squibb Co.	—	Short-term investment		—	US$	3,819		N/A	US$	3,788
	British Telecommunications PLC	—	Short-term investment		—	US$	2,104		N/A	US$	2,091
	Cargill Inc.	—	Short-term investment		—	US$	2,120		N/A	US$	2,079
	Chase Manhattan Corp. New	—	Short-term investment		—	US$	1,628		N/A	US$	1,613
	Cit Group Hldgs Inc.	—	Short-term investment		—	US$	3,203		N/A	US$	3,195
	Citigroup Inc.	—	Short-term investment		—	US$	2,000		N/A	US$	2,002
	Citigroup Inc.	—	Short-term investment		—	US$	1,033		N/A	US$	1,033
	Citigroup Inc.	—	Short-term investment		—	US$	3,583		N/A	US$	3,523
	Colonial Pipeline Co.	—	Short-term investment		—	US$	1,625		N/A	US$	1,612
	Compaq Computer Corp.	—	Short-term investment		—	US$	3,719		N/A	US$	3,593
	Consolidated Edison Co. NY Inc.	—	Short-term investment		—	US$	3,687		N/A	US$	3,618
	Corestates Cap Corp.	—	Short-term investment		—	US$	1,062		N/A	US$	1,060
	Countrywide Fdg Corp. Mtn	—	Short-term investment		—	US$	2,158		N/A	US$	2,151
	Countrywide Home Lns Inc.	—	Short-term investment		—	US$	5,210		N/A	US$	5,157

(Continued)

- 39 -


				December 31, 2004
										Market Value or
						Carrying Value				Net Asset Value
	Marketable Securities	Relationship with	Financial Statement	Shares/Units		(US$ in		Percentage of		(US$ in
Held Company Name	Type and Name	the Company	Account	(In Thousand)		Thousand)		Ownership		Thousand)		Note
	Credit Suisse Fb USA Inc.	—	Short-term investment		—	US$	2,645		N/A	US$	2,599
	Credit Suisse First Boston	—	Short-term investment		—	US$	786		N/A	US$	779
	Credit Suisse First Boston USA	—	Short-term investment		—	US$	2,249		N/A	US$	2,240
	Daimlerchrysler North Amer	—	Short-term investment		—	US$	997		N/A	US$	999
	Daimlerchrysler North Amer Hld	—	Short-term investment		—	US$	749		N/A	US$	755
	Dell Computer Corp.	—	Short-term investment		—	US$	3,054		N/A	US$	3,025
	Den Danske BK Aktieselskab	—	Short-term investment		—	US$	2,192		N/A	US$	2,166
	Deutsche Telkom Intl Fin BV	—	Short-term investment		—	US$	1,852		N/A	US$	1,838
	Diageo PLC	—	Short-term investment		—	US$	3,459		N/A	US$	3,477
	Dow Chem Co.	—	Short-term investment		—	US$	921		N/A	US$	911
	European Invt Bk	—	Short-term investment		—	US$	8,315		N/A	US$	8,236
	Fifth Third Bk Cincinnati OH	—	Short-term investment		—	US$	2,419		N/A	US$	2,466
	First Data Corp.	—	Short-term investment		—	US$	3,013		N/A	US$	2,986
	First Un Corp.	—	Short-term investment		—	US$	970		N/A	US$	965
	Fleet Finl Group Inc. New	—	Short-term investment		—	US$	494		N/A	US$	493
	Fleet Finl Corp Inc. New	—	Short-term investment		—	US$	975		N/A	US$	962
	Ford Mtr Cr Co.	—	Short-term investment		—	US$	1,542		N/A	US$	1,535
	FPL Group Cap Inc.	—	Short-term investment		—	US$	1,001		N/A	US$	990
	FPL Group Cap Inc.	—	Short-term investment		—	US$	860		N/A	US$	846
	General Elec Cap Corp. Mtn	—	Short-term investment		—	US$	3,467		N/A	US$	3,455
	General Elec Cap Corp. Mtn	—	Short-term investment		—	US$	1,040		N/A	US$	1,040
	General Elec Cap Corp. Mtn	—	Short-term investment		—	US$	3,886		N/A	US$	3,878
	Genworth Finl Inc.	—	Short-term investment		—	US$	3,412		N/A	US$	3,408
	Goldman Sachs Group Inc. Mtn	—	Short-term investment		—	US$	3,505		N/A	US$	3,494
	Goldman Sachs Group LP	—	Short-term investment		—	US$	1,637		N/A	US$	1,599
	Goldman Sachs Group LP	—	Short-term investment		—	US$	1,100		N/A	US$	1,075
	Greenpoint Finl Corp.	—	Short-term investment		—	US$	974		N/A	US$	972
	GTE Corp.	—	Short-term investment		—	US$	2,134		N/A	US$	2,109
	Hancock John Global Fdg Mtn	—	Short-term investment		—	US$	1,003		N/A	US$	986
	Hartford Finl Svcs Group Inc.	—	Short-term investment		—	US$	765		N/A	US$	758
	Hartford Finl Svcs Group Inc.	—	Short-term investment		—	US$	296		N/A	US$	296
	Heller Finl Inc.	—	Short-term investment		—	US$	1,171		N/A	US$	1,163
	Hershey Foods Corp.	—	Short-term investment		—	US$	1,627		N/A	US$	1,606
	Hewlett Packard Co.	—	Short-term investment		—	US$	3,373		N/A	US$	3,305
	Honeywell Inc.	—	Short-term investment		—	US$	3,284		N/A	US$	3,218
	Household Fin Corp.	—	Short-term investment		—	US$	529		N/A	US$	522
	Household Fin Corp.	—	Short-term investment		—	US$	2,993		N/A	US$	2,985
	Household Fin Corp. Mtn Bk Ent	—	Short-term investment		—	US$	3,542		N/A	US$	3,510
	HSBC USA Inc. New	—	Short-term investment		—	US$	1,154		N/A	US$	1,134
	Huntington Natl Bk	—	Short-term investment		—	US$	3,003		N/A	US$	3,000
	Huntington Natl Bk Columbus OH	—	Short-term investment		—	US$	2,954		N/A	US$	2,961
	ING Bank	—	Short-term investment		—	US$	2,114		N/A	US$	2,113
	ING Sec Life Ins Ingslf	—	Short-term investment		—	US$	3,012		N/A	US$	3,007
	Intl Bk For Recon + Dev	—	Short-term investment		—	US$	5,232		N/A	US$	5,102
	JP Morgan Chase + Co.	—	Short-term investment		—	US$	1,043		N/A	US$	1,039
	Jackson Natl Life Global Fdg	—	Short-term investment		—	US$	1,036		N/A	US$	1,032
	Jackson Natl Life Global Fdg S	—	Short-term investment		—	US$	2,998		N/A	US$	2,988

(Continued)

- 40 -


				December 31, 2004
										Market Value or
						Carrying Value				Net Asset Value
	Marketable Securities	Relationship with	Financial Statement	Shares/Units		(US$ in		Percentage of		(US$ in
Held Company Name	Type and Name	the Company	Account	(In Thousand)		Thousand)		Ownership		Thousand)		Note
	JP Morgan Chase + Co.	—	Short-term investment		—	US$	3,663		N/A	US$	3,629
	Keycorp Mtn Book Entry	—	Short-term investment		—	US$	3,500		N/A	US$	3,502
	KFW Intl Fin Inc.	—	Short-term investment		—	US$	5,104		N/A	US$	5,027
	Kraft Foods Inc.	—	Short-term investment		—	US$	773		N/A	US$	765
	Kraft Foods Inc.	—	Short-term investment		—	US$	1,037		N/A	US$	1,036
	Lehman Brothers Hldgs Inc.	—	Short-term investment		—	US$	1,163		N/A	US$	1,162
	Lehman Brothers Hldgs Inc.	—	Short-term investment		—	US$	3,705		N/A	US$	3,634
	Lehman Brothers Hldgs Inc.	—	Short-term investment		—	US$	2,171		N/A	US$	2,154
	Lilly Eli + Co.	—	Short-term investment		—	US$	3,750		N/A	US$	3,749
	Lincoln Natl Corp. In	—	Short-term investment		—	US$	519		N/A	US$	518
	Merita Bk Ltd NY Brh	—	Short-term investment		—	US$	538		N/A	US$	533
	Merrill Lynch + Co. Inc.	—	Short-term investment		—	US$	3,486		N/A	US$	3,481
	Metropolitan Life Global Mtn	—	Short-term investment		—	US$	1,907		N/A	US$	1,910
	Monumental Global Fdg II	—	Short-term investment		—	US$	2,500		N/A	US$	2,501
	Monumental Global Fdg II	—	Short-term investment		—	US$	1,534		N/A	US$	1,516
	Monumental Global Fdg II 2002A	—	Short-term investment		—	US$	1,045		N/A	US$	1,034
	Morgan Stanley	—	Short-term investment		—	US$	2,136		N/A	US$	2,128
	Morgan Stanley Group Inc.	—	Short-term investment		—	US$	3,638		N/A	US$	3,628
	Morgan Stanley Group Inc.	—	Short-term investment		—	US$	1,050		N/A	US$	1,048
	National Westminster Bk PLC	—	Short-term investment		—	US$	1,433		N/A	US$	1,422
	Nationsbank Corp.	—	Short-term investment		—	US$	3,644		N/A	US$	3,549
	Nationwide Bldg Soc	—	Short-term investment		—	US$	3,457		N/A	US$	3,477
	Nationwide Life Global Mtn	—	Short-term investment		—	US$	1,463		N/A	US$	1,469
	Pepsico Inc. Mtn Book Entry	—	Short-term investment		—	US$	3,818		N/A	US$	3,817
	PNC Fdg Corp.	—	Short-term investment		—	US$	1,080		N/A	US$	1,075
	Popular North Amer Inc. Mtn	—	Short-term investment		—	US$	3,042		N/A	US$	3,022
	Premark Intl Inc.	—	Short-term investment		—	US$	2,954		N/A	US$	2,914
	Pricoa Global Fdg I Mtn	—	Short-term investment		—	US$	3,507		N/A	US$	3,503
	Pricoa Global Fdg I Mtn	—	Short-term investment		—	US$	3,050		N/A	US$	3,047
	Principal Life Global Fdg I Gl	—	Short-term investment		—	US$	3,168		N/A	US$	3,102
	Protective Life Secd Trs	—	Short-term investment		—	US$	2,920		N/A	US$	2,969
	Prudential Ins Co. Amer	—	Short-term investment		—	US$	2,648		N/A	US$	2,610
	Reinsurance Group Amer Inc.	—	Short-term investment		—	US$	2,091		N/A	US$	2,089
	Royal Bk Scotland Group PLC	—	Short-term investment		—	US$	1,563		N/A	US$	1,547
	Royal Bk Scotland Group PLC	—	Short-term investment		—	US$	564		N/A	US$	558
	Royal Bk Scotland Group PLC	—	Short-term investment		—	US$	369		N/A	US$	364
	Safeco Corp.	—	Short-term investment		—	US$	765		N/A	US$	763
	Salomon Smith Barney Hldgs Inc.	—	Short-term investment		—	US$	3,160		N/A	US$	3,100
	Sara Lee Corp.	—	Short-term investment		—	US$	1,596		N/A	US$	1,601
	SBC Communications Inc.	—	Short-term investment		—	US$	3,681		N/A	US$	3,617
	SBC Communications Inc.	—	Short-term investment		—	US$	2,251		N/A	US$	2,245
	Scotland Intl Fin B V 144A	—	Short-term investment		—	US$	1,533		N/A	US$	1,532
	Shell Finance (UK) PLC	—	Short-term investment		—	US$	3,604		N/A	US$	3,553
	SLM Corp.	—	Short-term investment		—	US$	500		N/A	US$	501
	SLM Corp. Medium Term Nts	—	Short-term investment		—	US$	2,950		N/A	US$	2,985
	SP Powerassets Ltd Global	—	Short-term investment		—	US$	991		N/A	US$	992
	Suntrust Bks Inc.	—	Short-term investment		—	US$	1,062		N/A	US$	1,060

(Continued)

- 41 -


				December 31, 2004
										Market Value or
						Carrying Value				Net Asset Value
	Marketable Securities	Relationship with	Financial Statement	Shares/Units		(US$ in		Percentage of		(US$ in
Held Company Name	Type and Name	the Company	Account	(In Thousand)		Thousand)		Ownership		Thousand)		Note
	Swedbank Sparbanken Svenge AB	—	Short-term investment		—	US$	1,084		N/A	US$	1,067
	TIAA Global Mkts Inc.	—	Short-term investment		—	US$	519		N/A	US$	514
	Tribune Co. Med Trm Nts	—	Short-term investment		—	US$	2,943		N/A	US$	2,965
	Union Planters	—	Short-term investment		—	US$	2,755		N/A	US$	2,704
	Unitedhealth Group Inc.	—	Short-term investment		—	US$	3,119		N/A	US$	3,097
	US Bk Natl Assn Cincinnati OH	—	Short-term investment		—	US$	2,669		N/A	US$	2,687
	Virginia Elec + Pwr Co.	—	Short-term investment		—	US$	2,884		N/A	US$	2,838
	Vodafone Group PLC New	—	Short-term investment		—	US$	2,559		N/A	US$	2,561
	Wachovia Corp.	—	Short-term investment		—	US$	3,720		N/A	US$	3,600
	Wal Mart Cda Venture Corp.	—	Short-term investment		—	US$	3,670		N/A	US$	3,602
	Washington Mut Fin Corp.	—	Short-term investment		—	US$	4,768		N/A	US$	4,689
	Washington Mut Inc.	—	Short-term investment		—	US$	4,735		N/A	US$	4,682
	Washington Post Co.	—	Short-term investment		—	US$	3,182		N/A	US$	3,180
	Wells Fargo + Co. New	—	Short-term investment		—	US$	3,697		N/A	US$	3,631
	Westfield Cap Corp. Ltd	—	Short-term investment		—	US$	1,999		N/A	US$	1,999
	China Steel Corporation	—	Long-term investment		—		2,978,804		N/A		2,977,695
	Taiwan Power Company	—	Long-term investment		—		915,276		N/A		914,582
	Nan Ya Plastics Corporation	—	Long-term investment		—		407,526		N/A		407,484
	Formosa Plastics Corporation	—	Long-term investment		—		405,485		N/A		405,322
	Formosa Petrochemical Corporation	—	Long-term investment		—		202,595		N/A		200,000

	Agency bonds				—
	Fed Hm Ln Pc	—	Short-term investment		—	US$	3,466		N/A	US$	3,462
	Federal Home Ln Bks	—	Short-term investment		—	US$	2,532		N/A	US$	2,520
	Federal Home Ln Bks	—	Short-term investment		—	US$	1,042		N/A	US$	1,024
	Federal Home Ln Bks	—	Short-term investment		—	US$	4,927		N/A	US$	4,947
	Federal Home Ln Bks	—	Short-term investment		—	US$	7,962		N/A	US$	7,939
	Federal Home Ln Bks	—	Short-term investment		—	US$	7,014		N/A	US$	6,924
	Federal Home Ln Bks	—	Short-term investment		—	US$	4,936		N/A	US$	4,949
	Federal Home Ln Bks	—	Short-term investment		—	US$	4,948		N/A	US$	4,944
	Federal Home Ln Bks	—	Short-term investment		—	US$	2,454		N/A	US$	2,468
	Federal Home Ln Bks	—	Short-term investment		—	US$	7,018		N/A	US$	7,004
	Federal Home Ln Bks	—	Short-term investment		—	US$	4,996		N/A	US$	4,973
	Federal Home Ln Bks	—	Short-term investment		—	US$	7,042		N/A	US$	6,985
	Federal Home Ln Bks	—	Short-term investment		—	US$	6,098		N/A	US$	6,084
	Federal Home Ln Bks	—	Short-term investment		—	US$	2,909		N/A	US$	2,907
	Federal Home Ln Bks	—	Short-term investment		—	US$	13,953		N/A	US$	13,898
	Federal Home Ln Bks	—	Short-term investment		—	US$	13,983		N/A	US$	13,946
	Federal Home Ln Bks	—	Short-term investment		—	US$	13,981		N/A	US$	13,946
	Federal Home Ln Mtg Corp	—	Short-term investment		—	US$	6,978		N/A	US$	6,928
	Federal Home Ln Mtg Corp.	—	Short-term investment		—	US$	3,388		N/A	US$	3,419
	Federal Home Ln Mtg Corp	—	Short-term investment		—	US$	4,953		N/A	US$	4,941
	Federal Home Ln Mtg Corp.	—	Short-term investment		—	US$	9,997		N/A	US$	9,943
	Federal Home Ln Mtg Corp.	—	Short-term investment		—	US$	998		N/A	US$	993
	Federal Home Ln Mtg Corp.	—	Short-term investment		—	US$	4,933		N/A	US$	4,936
	Federal Home Ln Mtg Corp. Mtn	—	Short-term investment		—	US$	4,930		N/A	US$	4,938
	Federal Home Loan Mtg Assn	—	Short-term investment		—	US$	4,847		N/A	US$	4,891

(Continued)

- 42 -


				December 31, 2004
										Market Value or
						Carrying Value				Net Asset Value
	Marketable Securities	Relationship with	Financial Statement	Shares/Units		(US$ in		Percentage of		(US$ in
Held Company Name	Type and Name	the Company	Account	(In Thousand)		Thousand)		Ownership		Thousand)		Note
	Federal Home Loan Mtg Corp.	—	Short-term investment		—	US$	4,903		N/A	US$	4,943
	Federal Natl Mtg Assn	—	Short-term investment		—	US$	5,270		N/A	US$	5,237
	Federal Natl Mtg Assn	—	Short-term investment		—	US$	6,940		N/A	US$	6,937
	Federal Natl Mtg Assn	—	Short-term investment		—	US$	6,903		N/A	US$	6,917
	Federal Natl Mtg Assn	—	Short-term investment		—	US$	4,981		N/A	US$	4,953
	Federal Natl Mtg Assn	—	Short-term investment		—	US$	6,997		N/A	US$	6,983
	Federal Natl Mtg Assn Mtn	—	Short-term investment		—	US$	15,787		N/A	US$	15,798
	Federal Natl Mtg Assn Mtn	—	Short-term investment		—	US$	7,000		N/A	US$	6,976
	Freddie Mac	—	Short-term investment		—	US$	4,929		N/A	US$	4,934
	Fed Hm Ln Pc Pool E89857	—	Short-term investment		—	US$	2,535		N/A	US$	2,531
	Fed Hm Ln Pc Pool G11295	—	Short-term investment		—	US$	2,277		N/A	US$	2,273
	Federal Home Ln Mtg Corp.	—	Short-term investment		—	US$	6,096		N/A	US$	6,075
	Federal Home Ln Mtg Corp.	—	Short-term investment		—	US$	4,435		N/A	US$	4,440
	Federal Home Ln Mtg Corp.	—	Short-term investment		—	US$	3,558		N/A	US$	3,539
	Federal Home Ln Mtg Corp.	—	Short-term investment		—	US$	3,645		N/A	US$	3,615
	Federal Natl Mtg Assn	—	Short-term investment		—	US$	4,242		N/A	US$	4,188
	Federal Natl Mtg Assn	—	Short-term investment		—	US$	2,141		N/A	US$	2,126
	Federal Natl Mtg Assn	—	Short-term investment		—	US$	4,765		N/A	US$	4,719
	Federal Natl Mtg Assn Gtd	—	Short-term investment		—	US$	3,486		N/A	US$	3,446
	FNMA Pool 685116	—	Short-term investment		—	US$	1,003		N/A	US$	1,002
	FNMA Pool 725095	—	Short-term investment		—	US$	2,008		N/A	US$	2,003
	FNMA Pool 790828	—	Short-term investment		—	US$	4,807		N/A	US$	4,773
	FNMA Pool 793932	—	Short-term investment		—	US$	994		N/A	US$	994
	FNMA Pool 794040	—	Short-term investment		—	US$	1,021		N/A	US$	1,020
	FNMA Pool 795548	—	Short-term investment		—	US$	977		N/A	US$	975
	FNMA Pool 806642	—	Short-term investment		—	US$	2,006		N/A	US$	2,004
	GNMA II Pool 081150	—	Short-term investment		—	US$	999		N/A	US$	997
	GNMA II Pool 081153	—	Short-term investment		—	US$	3,789		N/A	US$	3,766
	Government Natl Mtg Assn	—	Short-term investment		—	US$	1,734		N/A	US$	1,700

	Corporate issued asset-backed securities
	Aegis Asset Backed Secs Tr	—	Short-term investment		—	US$	2,000		N/A	US$	2,004
	Aesop Fed II LLC	—	Short-term investment		—	US$	4,955		N/A	US$	4,963
	Aesop Fed II LLC	—	Short-term investment		—	US$	1,912		N/A	US$	1,888
	American Express Cr Account Ma	—	Short-term investment		—	US$	3,445		N/A	US$	3,427
	American Home Mtg Invt Tr	—	Short-term investment		—	US$	949		N/A	US$	949
	Americredit Automobile Receiv	—	Short-term investment		—	US$	2,002		N/A	US$	1,998
	Americredit Automobile Rec Tr	—	Short-term investment		—	US$	1,055		N/A	US$	1,048
	Americredit Automobile Rec Tr	—	Short-term investment		—	US$	2,000		N/A	US$	1,990
	Americredit Automobile Receivb	—	Short-term investment		—	US$	4,949		N/A	US$	4,912
	Atlantic City Elc Trns Fdg LLC	—	Short-term investment		—	US$	926		N/A	US$	923
	Banc Amer Coml Mtg Inc.	—	Short-term investment		—	US$	5,364		N/A	US$	5,315
	Banc Amer Mtg Secs Inc.	—	Short-term investment		—	US$	4,030		N/A	US$	4,006
	Bank of Amer Lease Equip Tr	—	Short-term investment		—	US$	4,023		N/A	US$	3,995
	Bear Stearns Alt A Tr	—	Short-term investment		—	US$	1,478		N/A	US$	1,489
	Bear Stearns Asset Backed Secs	—	Short-term investment		—	US$	2,000		N/A	US$	2,000
	BMW Veh Owner Tr	—	Short-term investment		—	US$	4,978		N/A	US$	4,941

(Continued)

- 43 -


				December 31, 2004
										Market Value or
						Carrying Value				Net Asset Value
	Marketable Securities	Relationship with	Financial Statement	Shares/Units		(US$ in		Percentage of		(US$ in
Held Company Name	Type and Name	the Company	Account	(In Thousand)		Thousand)		Ownership		Thousand)		Note
	California Infr + Economic Dev	—	Short-term investment		—	US$	4,298		N/A	US$	4,230
	California Infras + Economic	—	Short-term investment		—	US$	6,126		N/A	US$	6,064
	California Infrastructure Dev	—	Short-term investment		—	US$	5,089		N/A	US$	5,035
	Capital Auto Receivables Asset	—	Short-term investment		—	US$	4,018		N/A	US$	3,992
	Capital One Auto Fin Tr	—	Short-term investment		—	US$	319		N/A	US$	318
	Capital One Auto Fin Tr	—	Short-term investment		—	US$	1,147		N/A	US$	1,145
	Capital One Auto Fin Tr	—	Short-term investment		—	US$	3,000		N/A	US$	2,989
	Capital One Multi Asset Execut	—	Short-term investment		—	US$	4,957		N/A	US$	4,977
	Caterpillar Finl Asset Tr	—	Short-term investment		—	US$	10,008		N/A	US$	9,923
	Centex Home Equity Ln Tr	—	Short-term investment		—	US$	3,500		N/A	US$	3,493
	Cit Equip Coll Tr	—	Short-term investment		—	US$	4,999		N/A	US$	4,991
	Citibank Cr Card Issuance Tr	—	Short-term investment		—	US$	4,959		N/A	US$	4,965
	Citicorp Mtg Secs	—	Short-term investment		—	US$	2,364		N/A	US$	2,363
	CNH Equip Tr	—	Short-term investment		—	US$	5,000		N/A	US$	4,952
	Comm 2004 Htl 1	—	Short-term investment		—	US$	4,600		N/A	US$	4,607
	Credit Suisse First Boston Mtg	—	Short-term investment		—	US$	4,209		N/A	US$	4,178
	CWABS Inc.	—	Short-term investment		—	US$	1,647		N/A	US$	1,662
	CWABS Inc.	—	Short-term investment		—	US$	1,903		N/A	US$	1,907
	CWABS Inc.	—	Short-term investment		—	US$	1,907		N/A	US$	1,912
	CWABS Inc.	—	Short-term investment		—	US$	2,000		N/A	US$	1,997
	CWABS Inc.	—	Short-term investment		—	US$	5,000		N/A	US$	5,055
	CWABS Inc.	—	Short-term investment		—	US$	3,500		N/A	US$	3,541
	CWALT Inc.	—	Short-term investment		—	US$	4,292		N/A	US$	4,277
	CWABS Inc.	—	Short-term investment		—	US$	2,317		N/A	US$	2,298
	CWABS Inc.	—	Short-term investment		—	US$	4,040		N/A	US$	4,040
	Daimlerchrysler Auto Tr	—	Short-term investment		—	US$	4,991		N/A	US$	4,970
	Daimlerchrysler Auto Tr	—	Short-term investment		—	US$	4,982		N/A	US$	4,970
	Daimlerchrysler Auto Tr	—	Short-term investment		—	US$	4,897		N/A	US$	4,893
	Detroit Edison Securitization	—	Short-term investment		—	US$	674		N/A	US$	671
	Fifth Third Auto Tr	—	Short-term investment		—	US$	3,000		N/A	US$	2,999
	Finance Amer Mtg Ln Tr	—	Short-term investment		—	US$	985		N/A	US$	986
	First Franklin Mtg Ln Tr	—	Short-term investment		—	US$	2,002		N/A	US$	2,006
	First Horizon Abs Tr	—	Short-term investment		—	US$	2,000		N/A	US$	2,000
	First Union Lehman Bros Mtg Tr	—	Short-term investment		—	US$	3,567		N/A	US$	3,534
	First USA Credit Cr Master Tr	—	Short-term investment		—	US$	5,011		N/A	US$	5,008
	Ford Cr Auto Owner Tr	—	Short-term investment		—	US$	10,999		N/A	US$	10,936
	Granite Mtgs PLC	—	Short-term investment		—	US$	5,000		N/A	US$	5,000
	GS Auto Ln Tr	—	Short-term investment		—	US$	2,948		N/A	US$	2,970
	GS Mtg Secs Corp.	—	Short-term investment		—	US$	2,944		N/A	US$	2,944
	Harley Davidson Motorcycle Tr	—	Short-term investment		—	US$	3,417		N/A	US$	3,400
	Harley Davidson Motorcycle Tr	—	Short-term investment		—	US$	5,999		N/A	US$	5,938
	Holmes Fing No 8 PLC	—	Short-term investment		—	US$	5,001		N/A	US$	5,052
	Honda Auto Receivables	—	Short-term investment		—	US$	5,000		N/A	US$	4,991
	Household Automotive Tr	—	Short-term investment		—	US$	513		N/A	US$	511
	Hyundai Auto Receivables Tr	—	Short-term investment		—	US$	3,500		N/A	US$	3,468
	IMPAC Cmb Tr	—	Short-term investment		—	US$	1,414		N/A	US$	1,413
	IMPAC Cmb Tr	—	Short-term investment		—	US$	988		N/A	US$	988

(Continued)

- 44 -


				December 31, 2004
										Market Value or
						Carrying Value				Net Asset Value
	Marketable Securities	Relationship with	Financial Statement	Shares/Units		(US$ in		Percentage of		(US$ in
Held Company Name	Type and Name	the Company	Account	(In Thousand)		Thousand)		Ownership		Thousand)		Note
	IMPAC Secd Assets Corp.	—	Short-term investment		—	US$	3,570		N/A	US$	3,566
	Long Beach Accep Auto Receivab	—	Short-term investment		—	US$	2,526		N/A	US$	2,502
	Merrill Lynch Mtg Invs Inc.	—	Short-term investment		—	US$	1,460		N/A	US$	1,460
	Merrill Lynch Mtg Invs Inc.	—	Short-term investment		—	US$	1,500		N/A	US$	1,502
	Monumentl Global Fdg II	—	Short-term investment		—	US$	1,000		N/A	US$	1,001
	National City Auto Receivables	—	Short-term investment		—	US$	1,206		N/A	US$	1,207
	Navistar finl 2003 A Owner Tr	—	Short-term investment		—	US$	4,928		N/A	US$	4,889
	Nissan Auto Receivables	—	Short-term investment		—	US$	7,000		N/A	US$	6,958
	Nissan Auto Receivables Own Tr	—	Short-term investment		—	US$	4,999		N/A	US$	4,993
	Nissan Auto Receivables Owner	—	Short-term investment		—	US$	4,853		N/A	US$	4,872
	ONYX Accep Owner Tr	—	Short-term investment		—	US$	963		N/A	US$	961
	ONYX Accep Owner Tr	—	Short-term investment		—	US$	4,913		N/A	US$	4,933
	Providian Gateway Owner Tr	—	Short-term investment		—	US$	4,204		N/A	US$	4,201
	Providian Gateway Owner Tr	—	Short-term investment		—	US$	3,992		N/A	US$	3,982
	Reliant Energy Transition Bd	—	Short-term investment		—	US$	5,185		N/A	US$	5,117
	Residential Asset Mtg Prods	—	Short-term investment		—	US$	3,731		N/A	US$	3,672
	Residential Asset Mtg Prods	—	Short-term investment		—	US$	3,000		N/A	US$	2,980
	Residential Fdg Mtg Secs I Inc.	—	Short-term investment		—	US$	3,659		N/A	US$	3,631
	Sequoia Mtg Tr	—	Short-term investment		—	US$	2,504		N/A	US$	2,513
	Sequoia Mtg Tr	—	Short-term investment		—	US$	1,960		N/A	US$	1,955
	Sequoia Mtg Tr	—	Short-term investment		—	US$	1,488		N/A	US$	1,486
	Sequoia Mtg Tr	—	Short-term investment		—	US$	2,000		N/A	US$	2,000
	Sequoia Mtg Tr	—	Short-term investment		—	US$	3,500		N/A	US$	3,500
	Structured Adj Rate Mtg Ln Tr	—	Short-term investment		—	US$	3,037		N/A	US$	3,031
	Structured Asset Secs Corp.	—	Short-term investment		—	US$	1,403		N/A	US$	1,394
	Thoornburg Mtg Secs Tr	—	Short-term investment		—	US$	1,921		N/A	US$	1,923
	Toyota Auto Receivables 2003B	—	Short-term investment		—	US$	4,970		N/A	US$	4,930
	Triad Auto Receivables Tr	—	Short-term investment		—	US$	5,042		N/A	US$	4,997
	TXU Elec Delivery Transition	—	Short-term investment		—	US$	7,736		N/A	US$	7,715
	USAA Auto Owner Tr	—	Short-term investment		—	US$	4,000		N/A	US$	3,991
	Wachovia Auto Owner Tr	—	Short-term investment		—	US$	6,000		N/A	US$	5,991
	Wachovia Auto Owner Tr	—	Short-term investment		—	US$	4,999		N/A	US$	4,995
	WFS Financial Owner Trust	—	Short-term investment		—	US$	5,008		N/A	US$	4,989
	WFS Finl 2004 2 Owner Tr	—	Short-term investment		—	US$	4,994		N/A	US$	4,992
	WFS Finl 2004 4 Owner Tr	—	Short-term investment		—	US$	5,399		N/A	US$	5,342
	Whole Auto Ln Tr	—	Short-term investment		—	US$	5,967		N/A	US$	5,966
	Whole Auto Ln Tr	—	Short-term investment		—	US$	4,000		N/A	US$	3,969
	Whole Auto Ln Tr	—	Short-term investment		—	US$	3,000		N/A	US$	2,964
	World Omni Auto Receivables Tr	—	Short-term investment		—	US$	5,963		N/A	US$	5,906

	Commercial papers		Short-term investment		—	US$	2,997		N/A	US$	2,997

	Corporate issued notes		Short-term investment		—	US$	1,999		N/A	US$	1,999

(Continued)

- 45 -


				December 31, 2004
										Market Value or
						Carrying Value				Net Asset Value
	Marketable Securities	Relationship with	Financial Statement	Shares/Units		(US$ in		Percentage of		(US$ in
Held Company Name	Type and Name	the Company	Account	(In Thousand)		Thousand)		Ownership		Thousand)		Note
	Money market funds		Short-term investment		—	US$	21,114		N/A	US$	21,114

	Equity
	Horizon Venture Fund I, L.P.	—	Long-term investment		—		246,485		N/A		246,485
	Crimson Asia Capital Ltd., L.P.	—	Long-term investment		—		43,649		N/A		43,649

TSMC - North America	TSMC stock	Parent company	Short-term investment		14,151		677,110		—		696,661

Chi Cherng	TSMC stock	Parent company	Short-term investment		15,670		458,564		—		771,451

Hsin Ruey	TSMC stock	Parent company	Short-term investment		15,700		459,512		—		772,897

TSMC International	Money market fund
	BOA Fund	—	Short-term investment		30,300	US$	30,300		N/A	US$	30,300

	Stock
	InveStar	Subsidiary	Long-term investment		24,320	US$	34,514		97	US$	34,514
	InveStar II	Subsidiary	Long-term investment		51,300	US$	34,534		97	US$	34,534
	TSMC Development	Subsidiary	Long-term investment		1	US$	603,993		100	US$	603,993
	TSMC Technology	Subsidiary	Long-term investment		1	US$	5,544		100	US$	5,544
	3DFX Interactive Inc.	—	Long-term investment		68		—		—		—

TSMC Development	WaferTech stock	Subsidiary	Long-term investment		—	US$	484,060		99	US$	484,060

InveStar	Common stock
	RichTek Technology Corp.	—	Short-term investment		682	US$	67		—	US$	1,370
	Advanced Power Electronics Corp.	—	Short-term investment		1,108	US$	502		—	US$	697
	Broadtek Electronics Corp.	—	Short-term investment		869	US$	275		—	US$	225
	Monolithic Power Systems, Inc.	—	Short-term investment		1,975	US$	1,567		—	US$	19,910
	SiRF Technology Holdings, Inc.	—	Short-term investment		90	US$	393		—	US$	1,157
	Broadtek Electronics Corp.	—	Long-term investment		145	US$	46		—	US$	38
	Programmable Microelectronics	—	Long-term investment		575	US$	208		1	US$	208
	(Taiwan), Corp. Global Testing Corp.	—	Long-term investment		13,268	US$	5,670		9	US$	5,670
	RichTek Technology Corp.	—	Long-term investment		842	US$	83		1	US$	1,692
	Signia Technologies, Inc.	—	Long-term investment		701	US$	202		3	US$	202
	Incentia Design Systems, Inc.	—	Long-term investment		365	US$	92		1	US$	92
	Advanced Power Electronics Corp.	—	Long-term investment		1,123	US$	508		2	US$	706
	Capella Microsystems (Taiwan), Inc.	—	Long-term investment		530	US$	154		4	US$	154

	Preferred stock
	Integrated Memory Logic, Inc.	—	Long-term investment		1,831	US$	1,221		12	US$	1,221
	Sensory, Inc.	—	Long-term investment		1,404	US$	125		6	US$	125
	Sonics, Inc.	—	Long-term investment		2,686	US$	3,530		4	US$	3,530
	NanoAmp Solutions, Inc.	—	Long-term investment		541	US$	853		2	US$	853
	Memsic, Inc.	—	Long-term investment		2,727	US$	1,500		10	US$	1,500

(Continued)

- 46 -


				December 31, 2004
										Market Value or
						Carrying Value				Net Asset Value
	Marketable Securities	Relationship with	Financial Statement	Shares/Units		(US$ in		Percentage of		(US$ in
Held Company Name	Type and Name	the Company	Account	(In Thousand)		Thousand)		Ownership		Thousand)		Note
	Reflectivity, Inc.	—	Long-term investment		1,064	US$	741		2	US$	741
	IP Unity	—	Long-term investment		1,008	US$	494		2	US$	494
	Tropian, Inc.	—	Long-term investment		1,758	US$	471		3	US$	471

InveStar II	Common stock
	RichTek Technology Corp.	—	Short-term investment		321	US$	184		—	US$	645
	Monolithic Power Systems, Inc.	—	Short-term investment		864	US$	2,081		—	US$	8,716
	eChannel Option Holding, Inc.	—	Long-term investment		358	US$	251		4	US$	251
	eLCOS Microdisplay Technology, Ltd.	—	Long-term investment		270	US$	27		1	US$	27
	Signia Technologies, Inc.	—	Long-term investment		351	US$	101		1	US$	101
	Procoat Technology, Inc.	—	Long-term investment		5,123	US$	1,940		10	US$	1,940
	RichTek Technology Corp.	—	Long-term investment		395	US$	226		1	US$	794
	Programmable Microelectronics	—	Long-term investment		177	US$	50		—	US$	50
	(Taiwan), Inc. Auden Technology MFG. Co., Ltd.	—	Long-term investment		953	US$	738		4	US$	738
	GeoVision, Inc.	—	Long-term investment		471	US$	127		1	US$	127
	EoNex Technologies, Inc.	—	Long-term investment		55	US$	3,048		5	US$	3,048
	Conwise Technology Corporation, Ltd.	—	Long-term investment		2,800	US$	490		14	US$	490
	EON Technology, Corp.	—	Long-term investment		3,276	US$	1,175		8	US$	1,175
	Goyatek Technology, Corp.	—	Long-term investment		2,088	US$	545		7	US$	545
	Trendchip Technologies Corp.	—	Long-term investment		2,000	US$	861		5	US$	861
	Ralink Technology (Taiwan), Inc.	—	Long-term investment		1,833	US$	791		3	US$	791
	Silicon Data International Co., Inc.	—	Long-term investment		2,000	US$	204		3	US$	204
	Capella Microsystems (Taiwan), Inc.	—	Long-term investment		419	US$	122		3	US$	122

	Preferred stock
	Memsic, Inc.	—	Long-term investment		2,289	US$	1,560		8	US$	1,560
	eLCOS Microdisplay Technology, Ltd.	—	Long-term investment		2,667	US$	3,500		15	US$	3,500
	NanoAmp Solutions, Inc.	—	Long-term investment		375	US$	1,500		1	US$	1,500
	Advanced Analogic Technology, Inc.	—	Long-term investment		948	US$	1,261		2	US$	1,261
	Sonics, Inc.	—	Long-term investment		1,582	US$	3,082		5	US$	3,082
	Reflectivity, Inc.	—	Long-term investment		4,255	US$	2,205		5	US$	2,205
	Tropian, Inc.	—	Long-term investment		1,464	US$	393		2	US$	393
	Kilopass Technologies, Inc.	—	Long-term investment		3,887	US$	2,000		19	US$	2,000
	FangTek, Inc.	—	Long-term investment		6,806	US$	3,250		34	US$	3,250
	Alchip Technologies Limited	—	Long-term investment		2,579	US$	2,950		18	US$	2,950

Emerging Alliance	Common stock
	Global Investment Holding, Inc.	—	Long-term investment		10,000		100,000		6		100,000
	RichWave Technology Corp.	—	Long-term investment		2,600	US$	867		13	US$	867
	NetLogic Microsystems, Inc.	—	Long-term investment		113	US$	1,388		1	US$	1,388

	Preferred stock
	Quake Technologies, Inc.	—	Long-term investment		601	US$	450		1	US$	450
	Pixim, Inc.	—	Long-term investment		1,721	US$	2,382		3	US$	2,382
	Newport Opticom, Inc.	—	Long-term investment		962	US$	250		6	US$	250
	Ikanos Communication, Inc.	—	Long-term investment		7,446	US$	3,125		3	US$	3,125

(Continued)

- 47 -


				December 31, 2004
										Market Value or
						Carrying Value				Net Asset Value
	Marketable Securities	Relationship with	Financial Statement	Shares/Units		(US$ in		Percentage of		(US$ in
Held Company Name	Type and Name	the Company	Account	(In Thousand)		Thousand)		Ownership		Thousand)		Note
	Quicksilver Technology, Inc.	—	Long-term investment		1,049	US$	—		4	US$	—
	Mosaic Systems, Inc.	—	Long-term investment		2,481	US$	12		6	US$	12
	Zenesis Technologies, Inc.	—	Long-term investment		1,204	US$	699		4	US$	699
	Reflectivity, Inc.	—	Long-term investment		4,848	US$	2,479		4	US$	2,479
	Teknovus, Inc.	—	Long-term investment		5,556	US$	1,000		3	US$	1,000
	Miradia, Inc. (Formerly XHP	—	Long-term investment		3,040	US$	1,000		4	US$	1,000
	Microsystems, Inc.) Axiom Microdevices, Inc.	—	Long-term investment		1,000	US$	1,000		5	US$	1,000
	Optichron, Inc.	—	Long-term investment		714	US$	1,000		6	US$	1,000
	Audience, Inc.	—	Long-term investment		1,654	US$	250		2	US$	250
	Next IO, Inc.	—	Long-term investment		800	US$	500		2	US$	500
	NuCORE Technology Inc.	—	Long-term investment		2,254	US$	1,455		2	US$	1,455
	Centrality Communications, Inc.	—	Long-term investment		809	US$	1,000		2	US$	1,000
	Layer N Networks, Inc.	—	Long-term investment		1,905	US$	1,000		2	US$	1,000

VTAF II	Common stock
	Yobon Technologies, Inc.	—	Long-term investment		1,675	US$	787		17	US$	787
	Sentelic, Corp.	—	Long-term investment		600	US$	1,022		15	US$	1,022
	Ivyon Technology, Inc.	—	Long-term investment		200	US$	775		10	US$	775
	Preferred stock
	Powerprecise Solutions, Inc.	—	Long-term investment		258	US$	250		3	US$	250
	Tzero Technologies, Inc.	—	Long-term investment		244	US$	500		2	US$	500
	Miradia, Inc.	—	Long-term investment		1,809	US$	1,600		2	US$	1,600
	Agelia Technologies, Inc.	—	Long-term investment		1,149	US$	1,000		2	US$	1,000
	Audience, Inc.	—	Long-term investment		531	US$	102		1	US$	102
	Axiom Microdevices, Inc.	—	Long-term investment		686	US$	700		5	US$	700
	Next IO, Inc.	—	Long-term investment		216	US$	182		—	US$	182

GUC	Bond funds
	Grand Cathay	—	Short-term investment		3,608		45,543		N/A		45,544
	TIIM	—	Short-term investment		703		9,698		N/A		9,698
	Polaris De Li	—	Short-term investment		1,550		22,800		N/A		22,800
	EnTrust Kirin	—	Short-term investment		2,106		22,697		N/A		22,698
	E. Sun New Era	—	Short-term investment		1,920		20,313		N/A		20,314
	Jih Sun	—	Short-term investment		772		10,262		N/A		10,262
	EnTrust Phoenix	—	Short-term investment		2,081		30,563		N/A		30,564
	Transcend Fortune	—	Short-term investment		1,936		22,947		N/A		22,948

	Stock funds
	TIIM DaLi	—	Short-term investment		296		5,000		N/A		4,474
	UPAMC Global Select Fund of Funds	—	Short-term investment		336		3,364		N/A		3,378
	Sheng Hua 9966 Balance	—	Short-term investment		300		3,000		N/A		3,011

	Stock
	Global Unichip Corporation — NA	Subsidiary	Long-term investment		100		3,375		100		3,375

- 48 -

TABLE 4

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND INVESTEES

MARKETABLE SECURITIES ACQUIRED AND DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 2004
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)


					Beginning Balance					Acquisition				Disposal											Ending Balance
					Shares/Units		Amount			Shares/Units		Amount				Amount			Carrying			Gain (Loss)					Amount
					(Thousand)		(US$ in			(Thousand)		(US$ in		Shares/Units		(US$ in			Value			on Disposal			Shares/Units		(US$ in
	Marketable Securities Type	Financial Statement		Nature of			Thousand)					Thousand)		(Thousand)		Thousand)			(US$ in			(US$ in			(Thousand)		Thousand)
Company Name	and Name	Account	Counter-party	Relationship															Thousand)			Thousand)					(Note 1)
The Company	Money market funds
	BOA Fund	Short-term investment	BOA	—		40,000	$	1,359,120 (US$ 40,000	)		—	$	—		40,000	$	1,359,120 (US$ 40,000	)	$	1,359,120 (US$ 40,000	)	$	—			—	$	—
	GS Fund	Short-term investment	Goldman Sachs	—		20,000		679,560 (US$ 20,000	)		—		—		20,000		679,560 (US$ 20,000	)		679,560 (US$ 20,000	)		—			—		—
	Bond funds
	JF Taiwan Bond Fund	Short-term investment	JF Asset Management (Taiwan) Ltd.	—		34,343		500,000			68,021		1,000,000		23,666		350,000			346,791			3,209			78,698		1,153,209
	ABN AMRO Bond Fund	Short-term investment	ABN AMRO	—		34,794		500,000			165,257		2,400,000		65,145		950,000			943,825			6,175			134,906		1,956,175
	ABN AMRO Select Bond Fund	Short-term investment	ABN AMRO	—		—		—			18,235		200,000		—		—			—			—			18,235		200,000
	JF Taiwan First Bond Fund	Short-term investment	JF Asset Management (Taiwan) Ltd.	—		—		—			110,580		1,500,000		25,694		350,000			348,537			1,463			84,886		1,151,463
	INVESCO R.O.C Bond A Fund	Short-term investment	INVESCO Asset Management Taiwan	—		—		—			93,975		1,350,000		17,270		250,000			248,089			1,911			76,705		1,101,911
	Dresdner Bond DAM Fund	Short-term investment	Allianz Dresdner Securities Investment Consulting Co., Ltd.	—		—		—			80,833		900,000		—		—			—			—			80,833		900,000
	Barits Bond Fund	Short-term investment	Barits Securities Investment Trust Co., Ltd.	—		—		—			76,640		900,000		—		—			—			—			76,640		900,000
	Shin Kong Chi Shin Bond Fund	Short-term investment	Shinkong Investment Trust Co., Ltd.	—		—		—			151,594		2,100,000		—		—			—			—			151,594		2,100,000
	NITC Bond Fund	Short-term investment	National Investment Trust Co., Ltd.	—		—		—			3,764		600,000		—		—			—			—			3,764		600,000
	HSBC NTD Money Management Fund	Short-term investment	HSBC Asset Management (Taiwan) Ltd.	—		—		—			41,568		600,000		—		—			—			—			41,568		600,000
	Bonds under repurchase agreement	Short-term investment	Chung Shing Bills Finance Corp. and several financial institutions	—		—		1,800,000			—		2,577,163		—		4,127,714			4,127,714			—			—		249,449
	Government bonds
	1994 Government Bond Series C	Short-term investment	Chung Shing Bills Finance Corp. and several financial institutions	—		—		1,422,197			—		—		—		1,427,762			1,422,197			5,565			—		—
	2002 Government Bond Series A	Short-term investment	BNP and several financial institutions	—		—		3,157,331			—		—		—		3,169,750			3,157,331			12,419			—		—
	2002 Government Bond Series E	Short-term investment	BNP and several financial institutions	—		—		3,113,066			—		—		—		3,133,875			3,113,066			20,809			—		—
	2002 Government Bond Series J	Short-term investment	BNP and several financial institutions	—		—		—			—		2,023,206		—		2,031,500			2,023,206			8,294			—		—
	2003 Government Bond Series A	Short-term investment	BNP and several financial institutions	—		—		—			—		1,207,409		—		—			—			—			—		1,207,409
	United States Treas NTS	Short-term investment	—	—		—		—			—	US$	699,398		—	US$	506,162		US$	507,041		US$	(879	)		—	US$	192,357
	2003 Government Bond Series I	Long-term investment	FCB and several financial institutions	—		—		—			—		3,402,213		—		—			—			—			—		3,397,081
	2004 Government Bond Series A	Long-term investment	China Bills Finance Corp. and several financial institutions	—		—		—			—		2,349,573		—		—			—			—			—		2,349,573
	2004 Government Bond Series E	Long-term investment	BNP and several financial institutions	—		—		—			—		3,890,925		—		—			—			—			—		3,893,827
	2004 Kaohsiung Municipal Bond Series A	Long-term investment	KGI Securities Co., Ltd. and several financial institutions	—		—		—			—		620,000		—		—			—			—			—		620,000
	Corporate bonds
	Taiwan Power Company	Short-term investment	KGI Securities Co., Ltd.	—		—		—			—		2,777,798		—		—			—			—			—		2,777,798
	Allstate Finl Global Fdg LLC	Short-term investment	—	—		—		—			—	US$	3,171		—		—			—			—			—	US$	3,171
	American Express Co.	Short-term investment	—	—		—		—			—	US$	3,550		—		—			—			—			—	US$	3,550
	American Express Cr Corp. Mtn	Short-term investment	—	—		—		—			—	US$	3,503		—	US$	3,504		US$	3,503		US$	1			—		—
	American Gen Fin Corp. Mtn	Short-term investment	—	—		—		—			—	US$	3,130		—		—			—			—			—	US$	3,130

(Continued)

- 49 -


					Beginning Balance		Acquisition		Disposal						Ending Balance
					Shares/Units	Amount	Shares/Units	Amount		Amount	Carrying	Gain (Loss)				Amount
					(Thousand)	(US$ in	(Thousand)	(US$ in	Shares/Units	(US$ in	Value	on Disposal			Shares/Units	(US$ in
	Marketable Securities Type and	Financial Statement		Nature of		Thousand)		Thousand)	(Thousand)	Thousand)	(US$ in	(US$ in			(Thousand)	Thousand)
Company Name	Name	Account	Counter-party	Relationship							Thousand)	Thousand)				(Note 1)
	American Gen Fin Corp. Mtn	Short-term investment	—	—	—	$—	—	US$3,702	—	$—	$—	$	—		—	US$3,702
	American Honda Fin Corp. Mtn	Short-term investment	—	—	—	—	—	US$3,509	—	US$3,509	US$3,509		—		—	—
	American Honda Fin Corp. Mtn	Short-term investment	—	—	—	—	—	US$3,750	—	US$3,755	US$3,750	US$	5		—	—
	American Honda Fin Corp. Mtn	Short-term investment	—	—	—	—	—	US$3,800	—	—	—		—		—	US$3,800
	American Intl Group Inc. Mtnf	Short-term investment	—	—	—	—	—	US$3,795	—	—	—		—		—	US$3,795
	Amgen Inc.	Short-term investment	—	—	—	—	—	US$3,005	—	—	—		—		—	US$3,005
	Bank New York Inc.	Short-term investment	—	—	—	—	—	US$3,945	—	—	—		—		—	US$3,945
	Bank One Corp.	Short-term investment	—	—	—	—	—	US$3,693	—	US$3,695	US$3,693	US$	2		—	—
	Bear Stearns Cos Inc.	Short-term investment	—	—	—	—	—	US$3,805	—	US$3,816	US$3,805	US$	11		—	—
	Bear Stearns Cos Inc.	Short-term investment	—	—	—	—	—	US$3,518	—	—	—		—		—	US$3,518
	Bear Stearns Cos Inc. Medium Te	Short-term investment	—	—	—	—	—	US$3,105	—	—	—		—		—	US$3,105
	Bristol Myers Squibb Co.	Short-term investment	—	—	—	—	—	US$3,819	—	—	—		—		—	US$3,819
	Brown Forman Corp.	Short-term investment	—	—	—	—	—	US$3,277	—	US$3,280	US$3,277	US$	3		—	—
	Cardinal Health Inc.	Short-term investment	—	—	—	—	—	US$3,837	—	US$3,795	US$3,837	US$	(42	)	—	—
	Cit Group Hldgs Inc.	Short-term investment	—	—	—	—	—	US$3,203	—	—	—		—		—	US$3,203
	Citigroup Inc.	Short-term investment	—	—	—	—	—	US$3,583	—	—	—		—		—	US$3,583
	Compaq Computer Corp.	Short-term investment	—	—	—	—	—	US$3,719	—	—	—		—		—	US$3,719
	Consolidated Edison Co. NY Inc.	Short-term investment	—	—	—	—	—	US$3,687	—	—	—		—		—	US$3,687
	Countrywide Fdg Corp. Mtn	Short-term investment	—	—	—	—	—	US$3,534	—	US$3,540	US$3,534	US$	6		—	—
	Countrywide Home Lns Inc.	Short-term investment	—	—	—	—	—	US$5,210	—	—	—		—		—	US$5,210
	Credit Suisse First Boston USA	Short-term investment	—	—	—	—	—	US$3,177	—	US$3,188	US$3,177	US$	11		—	—
	Dell Computer Corp.	Short-term investment	—	—	—	—	—	US$3,054	—	—	—		—		—	US$3,054
	Diageo PLC	Short-term investment	—	—	—	—	—	US$3,459	—	—	—		—		—	US$3,459
	European Invt Bk	Short-term investment	—	—	—	—	—	US$8,315	—	—	—		—		—	US$8,315
	Federal Home Ln Mtg Corp	Short-term investment	—	—	—	—	—	US$4,237	—	—	—		—		—	US$4,237
	Federal Home Loan Mtg Assn	Short-term investment	—	—	—	—	—	US$4,847	—	—	—		—		—	US$4,847
	First Data Corp.	Short-term investment	—	—	—	—	—	US$3,013	—	—	—		—		—	US$3,013
	General Elec Cap Corp. Mtn	Short-term investment	—	—	—	—	—	US$3,507	—	US$3,498	US$3,507	US$	(9	)	—	—
	General Elec Cap Corp. Mtn	Short-term investment	—	—	—	—	—	US$3,467	—	—	—		—		—	US$3,467
	General Elec Cap Corp. Mtn	Short-term investment	—	—	—	—	—	US$3,886	—	—	—		—		—	US$3,886
	Genworth Finl Inc.	Short-term investment	—	—	—	—	—	US$3,412	—	—	—		—		—	US$3,412
	Goldman Sachs Group Inc Mtn	Short-term investment	—	—	—	—	—	US$3,505	—	—	—		—		—	US$3,505
	Goldman Sachs Group LP	Short-term investment	—	—	—	—	—	US$3,820	—	—	—		—		—	US$3,820
	Hewlett Packard Co.	Short-term investment	—	—	—	—	—	US$3,373	—	—	—		—		—	US$3,373
	Honeywell Inc.	Short-term investment	—	—	—	—	—	US$3,284	—	—	—		—		—	US$3,284
	Household Fin Corp.	Short-term investment	—	—	—	—	—	US$3,712	—	US$3,633	US$3,712	US$	(79	)	—	—
	Household Fin Corp. Mtn Bk Ent	Short-term investment	—	—	—	—	—	US$3,542	—	—	—		—		—	US$3,542
	Huntington Natl Bk	Short-term investment	—	—	—	—	—	US$3,003	—	—	—		—		—	US$3,003
	ING Sec Life Ins Ingslf	Short-term investment	—	—	—	—	—	US$3,012	—	—	—		—		—	US$3,012
	Intl Bk For Recon + Dev	Short-term investment	—	—	—	—	—	US$5,232	—	—	—		—		—	US$5,232
	JP Morgan Chase + Co.	Short-term investment	—	—	—	—	—	US$3,638	—	US$3,601	US$3,638	US$	(37	)	—	—
	JP Morgan Chase + Co.	Short-term investment	—	—	—	—	—	US$3,128	—	—	—		—		—	US$3,128
	JP Morgan Chase + Co.	Short-term investment	—	—	—	—	—	US$3,663	—	—	—		—		—	US$3,663
	Keycorp Mtn Book Entry	Short-term investment	—	—	—	—	—	US$3,500	—	—	—		—		—	US$3,500
	KFW Intl Fin Inc.	Short-term investment	—	—	—	—	—	US$5,104	—	—	—		—		—	US$5,104
	Lehman Brothers Hldgs Inc.	Short-term investment	—	—	—	—	—	US$3,417	—	US$3,381	US$3,417	US$	(36	)	—	—
	Lehman Brothers Hldgs Inc.	Short-term investment	—	—	—	—	—	US$3,705	—	—	—		—		—	US$3,705
	Lilly Eli + Co.	Short-term investment	—	—	—	—	—	US$3,750	—	—	—		—		—	US$3,750
	Merrill Lynch + Co Inc.	Short-term investment	—	—	—	—	—	US$3,497	—	US$3,498	US$3,497	US$	1		—	—
	Merrill Lynch + Co Inc.	Short-term investment	—	—	—	—	—	US$3,486	—	—	—		—		—	US$3,486
	Monumental Global Fdg II 2002A	Short-term investment	—	—	—	—	—	US$3,129	—	—	—		—		—	US$3,129
	Morgan Stanley Group Inc.	Short-term investment	—	—	—	—	—	US$5,741	—	—	—		—		—	US$5,741
	Morgan Stanley Group Inc.	Short-term investment	—	—	—	—	—	US$4,763	—	US$3,713	US$3,713		—		—	US$1,050
	Nationsbank Corp.	Short-term investment	—	—	—	—	—	US$3,644	—	—	—		—		—	US$3,644
	Nationwide Bldg Soc	Short-term investment	—	—	—	—	—	US$3,457	—	—	—		—		—	US$3,457
	Nationwide Life Global Mtn	Short-term investment	—	—	—	—	—	US$3,413	—	—	—		—		—	US$3,413
	Pepsico Inc. Mtn Book Entry	Short-term investment	—	—	—	—	—	US$3,818	—	—	—		—		—	US$3,818
	Popular North Amer Inc Mtn	Short-term investment	—	—	—	—	—	US$3,042	—	—	—		—		—	US$3,042
	Pricoa Global Fdg I Mtn	Short-term investment	—	—	—	—	—	US$3,507	—	—	—		—		—	US$3,507

(Continued)

- 50 -


					Beginning Balance		Acquisition			Disposal						Ending Balance
					Shares/Units	Amount	Shares/Units	Amount			Amount	Carrying	Gain (Loss)				Amount
					(Thousand)	(US$ in	(Thousand)	(US$ in		Shares/Units	(US$ in	Value	on Disposal			Shares/Units	(US$ in
	Marketable Securities Type and	Financial Statement		Nature of		Thousand)		Thousand)		(Thousand)	Thousand)	(US$ in	(US$ in			(Thousand)	Thousand)
Company Name	Name	Account	Counter-party	Relationship								Thousand)	Thousand)				(Note 1)
	Pricoa Global Fdg I Mtn	Short-term investment	—	—	—	$—	—	US$	3,050	—	$—	$—	$	—		—	US$	3,050
	Principal Life Global Fdg I Gl	Short-term investment	—	—	—	—	—	US$	3,168	—	—	—		—		—	US$	3,168
	Salomon Smith Barney Hldgs Inc.	Short-term investment	—	—	—	—	—	US$	3,160	—	—	—		—		—	US$	3,160
	SBC Communications Inc.	Short-term investment	—	—	—	—	—	US$	3,681	—	—	—		—		—	US$	3,681
	Shell Finance (UK) PLC	Short-term investment	—	—	—	—	—	US$	3,604	—	—	—		—		—	US$	3,604
	TIAA Global Mkts Inc.	Short-term investment	—	—	—	—	—	US$	3,631	—	US$3,131	US$3,112	US$	19		—	US$	519
	Unitedhealth Group Inc.	Short-term investment	—	—	—	—	—	US$	3,119	—	—	—		—		—	US$	3,119
	Viacom Inc.	Short-term investment	—	—	—	—	—	US$	3,177	—	US$3,135	US$3,177	US$	(42	)	—		—
	Viacom Inc.	Short-term investment	—	—	—	—	—	US$	3,172	—	US$3,175	US$3,172	US$	3		—		—
	Wachovia Corp.	Short-term investment	—	—	—	—	—	US$	3,720	—	—	—		—		—	US$	3,720
	Walmart Cda Venture Corp.	Short-term investment	—	—	—	—	—	US$	3,670	—	—	—		—		—	US$	3,670
	Washington Mut Fin Corp.	Short-term investment	—	—	—	—	—	US$	4,768	—	—	—		—		—	US$	4,768
	Washington Mut Inc.	Short-term investment	—	—	—	—	—	US$	4,735	—	—	—		—		—	US$	4,735
	Washington Post Co.	Short-term investment	—	—	—	—	—	US$	3,182	—	—	—		—		—	US$	3,182
	Wells Fargo + Co. New	Short-term investment	—	—	—	—	—	US$	3,697	—	—	—		—		—	US$	3,697
	China Steel Corporation	Long-term investment	Chung Shing Bills Finance Corp.	—	—	—	—		2,997,430	—	—	—		—		—		2,978,804
	Taiwan Power Company	Long-term investment	BNP and several financial institutions	—	—	—	—		950,646	—	—	—		—		—		915,276
	Nan Ya Plastics Corporation	Long-term investment	Chung Shing Bills Finance Corp.	—	—	—	—		408,538	—	—	—		—		—		407,526
	Formosa Plastics Corporation	Long-term investment	Chung Shing Bills Finance Corp.	—	—	—	—		406,245	—	—	—		—		—		405,485
	Formosa Petrochemical Corporation	Long-term investment	Chung Shing Bills Finance Corp.	—	—	—	—		202,980	—	—	—		—		—		202,595
	Agency bonds
	Federal Home Ln Mtg Corp.	Short-term investment	—	—	—	—	—	US$	6,096	—	—	—		—		—	US$	6,096
	Federal Home Ln Mtg Corp.	Short-term investment	—	—	—	—	—	US$	4,725	—	—	—		—		—	US$	4,725
	Federal Home Ln Mtg Corp.	Short-term investment	—	—	—	—	—	US$	3,558	—	—	—		—		—	US$	3,558
	Federal Natl Mtg Assn	Short-term investment	—	—	—	—	—	US$	5,861	—	—	—		—		—	US$	5,861
	Federal Natl Mtg Assn	Short-term investment	—	—	—	—	—	US$	3,393	—	—	—		—		—	US$	3,393
	Federal Natl Mtg Assn	Short-term investment	—	—	—	—	—	US$	6,130	—	—	—		—		—	US$	6,130
	Federal Natl Mtg Assn Gtd	Short-term investment	—	—	—	—	—	US$	6,371	—	—	—		—		—	US$	6,371
	Federal Natl Mtg Assn Mtn	Short-term investment	—	—	—	—	—	US$	7,000	—	—	—		—		—	US$	7,000
	Fnma Pool 790828	Short-term investment	—	—	—	—	—	US$	5,014	—	—	—		—		—	US$	5,014
	Gnma II Pool 081153	Short-term investment	—	—	—	—	—	US$	3,817	—	—	—		—		—	US$	3,817
	Gnma II Pool Tba Nov 30 Arms	Short-term investment	—	—	—	—	—	US$	4,829	—	US$4,829	US$4,829		—		—	—
	Government Natl Mtg Assn	Short-term investment	—	—	—	—	—	US$	4,473	—	—	—		—		—	US$	4,473
	Federal Hm Ln PC	Short-term investment	—	—	—	—	—	US$	3,466	—	—	—		—		—	US$	3,466
	Federal Home Ln Bks	Short-term investment	—	—	—	—	—	US$	5,210	—	US$4,153	US$4,168	US$	(15	)	—	US$	1,042
	Federal Home Ln Bks	Short-term investment	—	—	—	—	—	US$	4,927	—	—	—		—		—	US$	4,927
	Federal Home Ln Bks	Short-term investment	—	—	—	—	—	US$	14,938	—	US$6,980	US$6,976	US$	4		—	US$	7,962
	Federal Home Ln Bks	Short-term investment	—	—	—	—	—	US$	7,014	—	—	—		—		—	US$	7,014
	Federal Home Ln Bks	Short-term investment	—	—	—	—	—	US$	4,936	—	—	—		—		—	US$	4,936
	Federal Home Ln Bks	Short-term investment	—	—	—	—	—	US$	9,956	—	US$9,967	US$9,956	US$	11		—	—
	Federal Home Ln Bks	Short-term investment	—	—	—	—	—	US$	5,264	—	US$5,286	US$5,264	US$	22		—	—
	Federal Home Ln Bks	Short-term investment	—	—	—	—	—	US$	4,948	—	—	—		—		—	US$	4,948
	Federal Home Ln Bks	Short-term investment	—	—	—	—	—	US$	7,018	—	—	—		—		—	US$	7,018
	Federal Home Ln Bks	Short-term investment	—	—	—	—	—	US$	9,993	—	US$5,000	US$4,997	US$	3		—	US$	4,996
	Federal Home Ln Bks	Short-term investment	—	—	—	—	—	US$	7,042	—	—	—		—		—	US$	7,042
	Federal Home Ln Bks	Short-term investment	—	—	—	—	—	US$	6,098	—	—	—		—		—	US$	6,098
	Federal Home Ln Bks	Short-term investment	—	—	—	—	—	US$	13,953	—	—	—		—		—	US$	13,953
	Federal Home Ln Bks	Short-term investment	—	—	—	—	—	US$	13,983	—	—	—		—		—	US$	13,983
	Federal Home Ln Bks	Short-term investment	—	—	—	—	—	US$	13,981	—	—	—		—		—	US$	13,981
	Federal Home Ln Mtg Corp.	Short-term investment	—	—	—	—	—	US$	6,978	—	—	—		—		—	US$	6,978
	Federal Home Ln Mtg Corp.	Short-term investment	—	—	—	—	—	US$	3,388	—	—	—		—		—	US$	3,388
	Federal Home Ln Mtg Corp.	Short-term investment	—	—	—	—	—	US$	4,907	—	US$4,981	US$4,907	US$	74		—	—
	Federal Home Ln Mtg Corp.	Short-term investment	—	—	—	—	—	US$	4,953	—	—	—		—		—	US$	4,953
	Federal Home Ln Mtg Corp.	Short-term investment	—	—	—	—	—	US$	9,997	—	—	—		—		—	US$	9,997
	Federal Home Ln Mtg Corp.	Short-term investment	—	—	—	—	—	US$	9,971	—	US$9,942	US$9,971	US$	(29	)	—	—
	Federal Home Ln Mtg Corp.	Short-term investment	—	—	—	—	—	US$	11,984	—	US$10,965	US$10,986	US$	(21	)	—	US$	998

(Continued)

- 51 -


					Beginning Balance		Acquisition		Disposal						Ending Balance
					Shares/Units	Amount	Shares/Units	Amount		Amount	Carrying	Gain (Loss)					Amount
					(Thousand)	(US$ in	(Thousand)	(US$ in	Shares/Units	(US$ in	Value	on Disposal			Shares/Units		(US$ in
	Marketable Securities Type	Financial Statement		Nature of		Thousand)		Thousand)	(Thousand)	Thousand)	(US$ in	(US$ in			(Thousand)		Thousand)
Company Name	and Name	Account	Counter-party	Relationship							Thousand)	Thousand)					(Note 1)
	Federal Home Ln Mtg Corp.	Short-term investment	—	—	—	$—	—	US$4,933	—	$—	$—		$—		$—		US$4,933
	Federal Home Ln Mtg Corp. Mtn	Short-term investment	—	—	—	—	—	US$4,930	—	—	—		—		—		US$4,930
	Federal Home Loan Mtg Corp.	Short-term investment	—	—	—	—	—	US$4,903	—	—	—		—		—		US$4,903
	Federal Natl Mtg Assn	Short-term investment	—	—	—	—	—	US$11,036	—	US$10,997	US$11,036	US$	(39	)	—		—
	Federal Natl Mtg Assn	Short-term investment	—	—	—	—	—	US$10,496	—	US$10,430	US$10,496	US$	(66	)	—		—
	Federal Natl Mtg Assn	Short-term investment	—	—	—	—	—	US$5,270	—	—	—				—		US5,270
	Federal Natl Mtg Assn	Short-term investment	—	—	—	—	—	US$4,982	—	US$4,983	US$4,982		US$1			—		—
	Federal Natl Mtg Assn	Short-term investment	—	—	—	—	—	US$6,940	—	—					—		US$6,940
	Federal Natl Mtg Assn	Short-term investment	—	—	—	—	—	US$4,867	—	US$4,938	US$4,867		US$71			—		—
	Federal Natl Mtg Assn	Short-term investment	—	—	—	—	—	US$6,903	—	—	—		—		—		US$6,903
	Federal Natl Mtg Assn	Short-term investment	—	—	—	—	—	US$4,981	—	—	—		—		—		US$4,981
	Federal Natl Mtg Assn	Short-term investment	—	—	—	—	—	US$6,997	—	—	—		—		—		US$6,997
	Federal Natl Mtg Assn	Short-term investment	—	—	—	—	—	US$4,993	—	US$4,993	US$4,993		—		—		—
	Federal Natl Mtg Assn Disc Nts	Short-term investment	—	—	—	—	—	US$5,000	—	—	—		—		—		US$5,000
	Federal Natl Mtg Assn Mtn	Short-term investment	—	—	—	—	—	US$15,787	—	—	—		—		—		US$15,787
	Freddie Mac	Short-term investment	—	—	—	—	—	US$4,929	—	—	—		—		—		US$4,929
	Student Ln Marketing Assn	Short-term investment	—	—	—	—	—	US$16,000	—	US$16,000	US$16,000		—		—		—
	Corporate issued asset-backed securities
	Aesop Fdg II LLC	Short-term investment	—	—	—	—	—	US$4,955	—	—	—		—		—		US$4,955
	American Express Cr Account MA	Short-term investment	—	—	—	—	—	US$3,445	—	—	—		—		—		US$3,445
	Americredit Automobile Receivb	Short-term investment	—	—	—	—	—	US$4,949	—	—	—		—		—		US$4,949
	Banc Amer Coml Mtg Inc.	Short-term investment	—	—	—	—	—	US$5,503	—	—	—		—		—		US$5,503
	Banc Amer Mtg Secs Inc.	Short-term investment	—	—	—	—	—	US$4,030	—	—	—		—		—		US$4,030
	Bank Of Amer Lease Equip Tr	Short-term investment	—	—	—	—	—	US$4,023	—	—	—		—		—		US$4,023
	BMW Veh Owner Tr	Short-term investment	—	—	—	—	—	US$4,978	—	—	—		—		—		US$4,978
	California Infr + Economic Dev	Short-term investment	—	—	—	—	—	US$4,298	—	—	—		—		—		US$4,298
	California Infras + Economic	Short-term investment	—	—	—	—	—	US$8,383	—	—	—		—		—		US$8,383
	California Infrastructure Dev	Short-term investment	—	—	—	—	—	US$7,419	—	—	—		—		—		US$7,419
	Capital Auto Receivables Asset	Short-term investment	—	—	—	—	—	US$4,627	—	—	—		—		—		US$4,627
	Capital One Master Tr	Short-term investment	—	—	—	—	—	US$3,093	—	US$3,072	US$3,093	US$	(21	)	—		—
	Capital One Multi Asset Execut	Short-term investment	—	—	—	—	—	US$4,957	—	—	—		—		—		US$4,957
	Capital One Secd Nt Tr	Short-term investment	—	—	—	—	—	US$5,032	—	US$5,000	US$5,032	US$	(32	)	—		—
	Caterpillar Finl Asset Tr	Short-term investment	—	—	—	—	—	US$10,008	—	—	—		—		—		US$10,008
	Centex Home Equity Ln Tr	Short-term investment	—	—	—	—	—	US$3,500	—	—	—		—		—		US$3,500
	Cit Equip Coll Tr	Short-term investment	—	—	—	—	—	US$4,999	—	—	—		—		—		US$4,999
	Citibank Cr Card Issuance Tr	Short-term investment	—	—	—	—	—	US$4,959	—	—	—		—		—		US$4,959
	CHN Equip Tr	Short-term investment	—	—	—	—	—	US$5,000	—	—	—		—		—		US$5,000
	Comm 2004 Htl 1	Short-term investment	—	—	—	—	—	US$4,600	—	—	—		—		—		US$4,600
	Credit Suisse First Boston Mtg	Short-term investment	—	—	—	—	—	US$5,000	—	—	—		—		—		US$5,000
	CWABS Inc.	Short-term investment	—	—	—	—	—	US$5,000	—	—	—		—		—		US$5,000
	CWABS Inc.	Short-term investment	—	—	—	—	—	US$3,500	—	—	—		—		—		US$3,500
	CWALT Inc.	Short-term investment	—	—	—	—	—	US$4,718	—	—	—		—		—		US$4,718
	CWMBS Inc.	Short-term investment	—	—	—	—	—	US$3,129	—	—	—		—		—		US$3,129
	CWMBS Inc.	Short-term investment	—	—	—	—	—	US$4,040	—	—	—		—		—		US$4,040
	Daimlerchrysler Auto Tr	Short-term investment	—	—	—	—	—	US$4,991	—	—	—		—		—		US$4,991
	Daimlerchrysler Auto Tr	Short-term investment	—	—	—	—	—	US$4,982	—	—	—		—		—		US$4,982
	Daimlerchrysler Auto Tr	Short-term investment	—	—	—	—	—	US$4,897	—	—	—		—		—		US$4,897
	First Union Lehman Bros Mtg Tr	Short-term investment	—	—	—	—	—	US$4,177	—	—	—		—		—		US$4,177
	First USA Credit Cr Master Tr	Short-term investment	—	—	—	—	—	US$5,011	—	—	—		—		—		US$5,011
	Ford Cr Auto Owner Tr	Short-term investment	—	—	—	—	—	US$10,999	—	—	—		—		—		US$10,999
	GE Cap Cr Card Master Nt Tr	Short-term investment	—	—	—	—	—	US$4,000		US$4,003	US$4,000		US$3		—		—
	Granite Mtgs PLC	Short-term investment	—	—	—	—	—	US$5,000	—	—	—		—		—		US$5,000
	GS Mtg Secs Corp.	Short-term investment	—	—	—	—	—	US$4,000	—	—	—		—		—		US$4,000
	Harley Davidson Motorcycle Tr	Short-term investment	—	—	—	—	—	US$4,000	—	—	—		—		—		US$4,000
	Harley Davidson Motorcycle Tr	Short-term investment	—	—	—	—	—	US$5,999	—	—	—		—		—		US$5,999
	Holmes Fing No 8 PLC	Short-term investment	—	—	—	—	—	US$5,001	—	—	—		—		—		US$5,001

(Continued)

- 52 -


					Beginning Balance			Acquisition		Disposal							Ending Balance
					Shares/Units		Amount	Shares/Units	Amount			Amount	Carrying	Gain (Loss)					Amount
					(Thousand)		(US$ in	(Thousand)	(US$ in	Shares/Units		(US$ in	Value	on Disposal			Shares/Units		(US$ in
	Marketable Securities Type and	Financial Statement		Nature of			Thousand)		Thousand)	(Thousand)		Thousand)	(US$ in	(US$ in			(Thousand)		Thousand)
Company Name	Name	Account	Counter-party	Relationship									Thousand)	Thousand)					(Note 1)
	Honda Auto Receivables	Short-term investment	—	—		—	$—	—	US$ 5,000		—	$—	$—		$—			—	US$ 5,000
	Hyundai Auto Receivables Tr	Short-term investment	—	—		—	—	—	US$ 3,500		—	—	—		—			—	US$ 3,500
	Impac Secd Assets Corp.	Short-term investment	—	—		—	—	—	US$ 4,000		—	—	—		—			—	US$ 4,000
	Monumentl Global Fdg II	Short-term investment	—	—		—	—	—	US$ 3,500		—	—	—		—			—	US$ 3,500
	Navistar Finl 2003 A Owner Tr	Short-term investment	—	—		—	—	—	US$ 4,928		—	—	—		—			—	US$ 4,928
	Nissan Auto Receivables	Short-term investment	—	—		—	—	—	US$ 7,000		—	—	—		—			—	US$ 7,000
	Nissan Auto Receivables Owner Tr	Short-term investment	—	—		—	—	—	US$ 4,999		—	—	—		—			—	US$ 4,999
	Nissan Auto Receivables Owner	Short-term investment	—	—		—	—	—	US$ 4,853		—	—	—		—			—	US$ 4,853
	ONYX Accep Owner Tr	Short-term investment	—	—		—	—	—	US$ 4,913		—	—	—		—			—	US$ 4,913
	Permanent Fing No 1 PLC	Short-term investment	—	—		—	—	—	US$ 5,102		—	US$5,036	US$ 5,102	US$	(66	)		—	—
	Providian Gateway Owner Tr	Short-term investment	—	—		—	—	—	US$ 4,204		—	—	—		—			—	US$ 4,204
	Providian Gateway Owner Tr	Short-term investment	—	—		—	—	—	US$ 3,992		—	—	—		—			—	US$ 3,992
	Reliant Energy Transition Bd	Short-term investment	—	—		—	—	—	US$ 5,185		—	—	—		—			—	US$ 5,185
	Residential Asset Mtg Prods	Short-term investment	—	—		—	—	—	US$ 3,766		—	—	—		—			—	US$ 3,766
	Residential Fdg Mtg Secs I Inc	Short-term investment	—	—		—	—	—	US$ 3,947		—	—	—		—			—	US$ 3,947
	Sequoia Mtg Tr	Short-term investment	—	—		—	—	—	US$ 3,500		—	—	—		—			—	US$ 3,500
	Structured Adj Rate Mtg Ln Tr	Short-term investment	—	—		—	—	—	US$ 3,058		—	—	—		—			—	US$ 3,058
	Toyota Auto Receivables 2003 B	Short-term investment	—	—		—	—	—	US$ 4,970		—	—	—		—			—	US$ 4,970
	Triad Auto Receivables Tr	Short-term investment	—	—		—	—	—	US$ 5,042		—	—	—		—			—	US$ 5,042
	TXU Elec Delivery Transition	Short-term investment	—	—		—	—	—	US$ 8,009		—	—	—		—			—	US$ 8,009
	USAA Auto Owner Tr	Short-term investment	—	—		—	—	—	US$ 4,000		—	—	—		—			—	US$ 4,000
	Wachovia Auto Owner Tr	Short-term investment	—	—		—	—	—	US$ 6,000		—	—	—		—			—	US$ 6,000
	Wachovia Auto Owner Tr	Short-term investment	—	—		—	—	—	US$ 4,999		—	—	—		—			—	US$ 4,999
	WFS Financial Owner Trust	Short-term investment	—	—		—	—	—	US$ 5,008		—	—	—		—			—	US$ 5,008
	WFS Finl 2002 4 Owner Tr	Short-term investment	—	—		—	—	—	US$ 3,904		—	—	—		—			—	US$ 3,904
	WFS Finl 2004 2 Owner Tr	Short-term investment	—	—		—	—	—	US$ 4,994		—	—	—		—			—	US$ 4,994
	WFS Finl 2004 4 Owner Tr	Short-term investment	—	—		—	—	—	US$ 5,399		—	—	—		—			—	US$ 5,399
	Whole Auto Ln Tr	Short-term investment	—	—		—	—	—	US$ 5,967		—	—	—		—			—	US$ 5,967
	Whole Auto Ln Tr	Short-term investment	—	—		—	—	—	US$ 4,000		—	—	—		—			—	US$ 4,000
	World Omni Auto Receivables Tr	Short-term investment	—	—		—	—	—	US$ 5,963		—	—	—		—			—	US$ 5,963
	World Omni Auto Receivables Tr	Short-term investment	—	—		—	—	—	US$ 5,000		—	US$4,986	US$5,000	US$	(14	)		—	—
	Money Market Funds	Short-term investment	—	—		—	—	—	US$21,114		—	—	—		—			—	US$21,114
InveStar	Common Stock
	RichTek Technology Corp.	Short-term investment	—	—		947	US$ 121	—	—		1,595	US$6,783	US$ 184	US$	6,598			682	US$ 67
	Atheros Communication, Inc.	Short-term investment	—	—		1,205	US$3,593	—	—		1,205	US$8,972	US$3,593	US$	5,379			—	—
	Monolithic Power Systems, Inc.	Short-term investment	—	—		2,521	US$2,000	—	—		546	US$4,318	US$ 433	US$	3,885			1,975	US$ 1,567
InveStar II	Common Stock
	RichTek Technology Corp.	Short-term investment	—	—		465	US$ 346	—	—		768	US$3,394	US$ 519	US$	2,875			321	US$ 184

Note: The ending balance included the recognition of the investment income (loss) by the equity method, the cumulative translation adjustments and the bond premium or discount amortization amount.

- 53 -

TABLE 5

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND INVESTEES

ACQUISITION OF INDIVIDUAL REAL ESTATE AT COSTS OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 2004
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Company

Types of

Transaction

Nature of

Prior Transaction of Related Counter-party

Price

Purpose of

Name

Property

Transaction Date

Amount

Payment Term

Counter-party

Relationship

Owner

Relationship

Transfer Date

Amount

Reference

Acquisition

Other Terms

The Company

Fab. 12

April 21, 2004

1,484,370

By the construction progress

IDC Taiwan, Inc., Taiwan Branch (U.S.A.)

—

N/A

Public bidding

Manufacturing
purpose

None

Fab. 12

April 21, 2004

420,168

By the construction progress

CHRIST AG

—

N/A

Public bidding

Manufacturing
purpose

None

Fab. 12

April 22, 2004

224,800

By the construction progress

Allis Electric Co., Ltd.

—

N/A

Public bidding

Manufacturing
purpose

None

Fab. 12

May 12, 2004

340,307

By the construction progress

United Industry gas Corp., Ltd.

—

N/A

Public bidding

Manufacturing
purpose

None

Fab. 12

May 12, 2004

116,181

By the construction progress

United Industry gas Corp., Ltd.

—

N/A

Public bidding

Manufacturing
purpose

None

Fab. 12

May 12, 2004

133,092

By the construction progress

BOC EDWARDS, CMS

—

N/A

Public bidding

Manufacturing
purpose

None

Fab. 12

June 17, 2004

165,208

By the construction progress

Organo Corporation

—

N/A

Public bidding

Manufacturing
purpose

None

Fab. 12

July 2, 2004

225,744

By the construction progress

Marketech International Corp.

—

N/A

Public bidding

Manufacturing
purpose

None

Fab. 12

July 8, 2004

100,767

By the construction progress

Kanto Chemical Co., Inc.

—

N/A

Public bidding

Manufacturing
purpose

None

Fab. 12

July 8, 2004

466,833

By the construction progress

United Integrated Services Co., Ltd.

—

N/A

Public bidding

Manufacturing
purpose

None

Fab. 14

August 3, 2004

300,000

By the construction progress

United Integrated Services Co., Ltd.

—

N/A

Public bidding

Manufacturing
purpose

None

Fab. 12

August 5, 2004

122,969

By the construction progress

Marketech International Corp.

—

N/A

Public bidding

Manufacturing
purpose

None

Fab. 12

August 5, 2004

185,984

By the construction progress

Marketech International Corp.

—

N/A

Public bidding

Manufacturing
purpose

None

Fab. 12

August 5, 2004

182,060

By the construction progress

Marketech International Corp.

—

N/A

Public bidding

Manufacturing
purpose

None

Fab. 12

October 15, 2004

105,299

By the construction progress

IDC Taiwan, Inc., Taiwan Branch (U.S.A.)

—

N/A

Public bidding

Manufacturing
purpose

None

- 54 -

TABLE 6

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND INVESTEES

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 2004
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Transaction Details

Abnormal Transaction

Notes/Accounts Payable or Receivable

Purchase/

% to

Company Name

Related Party

Nature of Relationship

Sale

Amount

Total

Payment Terms

Unit Price

Payment Terms

Ending Balance

Total

Note

The Company

TSMC — North America

Subsidiary

Sales

142,271,732

Net 30 days after invoice date

None

15,526,964

Philips and its affiliates

Major shareholder

Sales

5,463,565

Net 30 days after monthly closing

None

581,487

GUC

Investee

Sales

371,546

—

Net 30 days after monthly closing

None

56,436

—

WaferTech

Subsidiary

Purchases

15,203,047

Net 30 days after monthly closing

None

(913,107

)

VIS

Investee

Purchases

9,169,602

Net 30 days after monthly closing

None

(1,533,938

)

SSMC

Investee

Purchases

5,869,123

Net 30 days after monthly closing

None

(207,794

)

- 55 -

TABLE 7

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND INVESTEES

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
DECEMBER 31, 2004
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)


						Overdue			Amounts Received in
Company Name	Related Party	Nature of Relationship	Ending Balance		Turnover Rate	Amount		Action Taken	Subsequent Period		Allowance for Bad Debts
The Company	TSMC — North America	Subsidiary	$	15,526,964	38 days	$	5,044,202	—	$	6,013,414	$	—
	TSMC — Shanghai	Subsidiary		1,473,365	(Note 1)		145,146	Accelerate demand on account receivables		—		—
	Philips and its affiliates	Major shareholder		581,487	49 days		7,136	—		13,726		—

Note 1: The ending balance is generated mainly from the sales of machinery, so it is not applicable for the calculation of the turnover rate.

- 56 -

TABLE 8

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND INVESTEES

NAMES, LOCATIONS, AND RELATED INFORMATION OF INVESTEES ON WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCE
DECEMBER 31, 2004
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)


								Balance as of December 31, 2004
				Original Investment Amount						Percentage				Net Income			Investment
				December 31,		December 31,		Shares		of		Carrying Value		(Loss) of the			Gain (Loss)
Investor Company	Investee Company	Location	Main Businesses and Products	2004		2003		(Thousand)		Ownership		(Note 1)		Investee			(Note 2)			Note
The Company	TSMC — North America	San Jose, California, U.S.A.	Sales and marketing of integrated circuits and semiconductor devices	$	333,178	$	333,178		11,000		100	$	502,242	$	120,587		$	112,543			Subsidiary
	TSMC — Europe	Amsterdam, the Netherlands	Marketing activities		15,749		15,749		—		100		25,439		262			262			Subsidiary
	TSMC — Japan	Yokohama, Japan	Marketing activities		83,760		83,760		6		100		102,572		2,919			2,919			Subsidiary
	TSMC — Shanghai	Shanghai, China	Manufacturing and marketing of integrated circuits and semiconductor devices		9,187,962		1,890,952		—		100		8,113,511		(727,036	)		(727,036	)		Subsidiary
	VIS	Hsin-Chu, Taiwan	Research, design, development, manufacture, packaging, testing and sale of memory integrated circuits, LSI, VLSI and related parts		8,119,816		8,119,816		409,532		28		5,401,982		4,706,668			1,329,555			Investee
	TSMC International	Tortola, British Virgin Islands	Providing investment in companies involved in the design, manufacture, and other related business in the semiconductor industry		31,445,780		31,445,780		987,968		100		23,778,997		2,598,162			2,598,162			Subsidiary
	Chi Cherng	Taipei, Taiwan	Investment activities		300,000		300,000		—		36		50,570		21,359			(664	)		Investee
	Hsin Ruey	Taipei, Taiwan	Investment activities		300,000		300,000		—		36		49,823		21,887			(491	)		Investee
	TSMC Partners	Tortola, British Virgin Islands	Investment activities		10,350		10,350		300		100		3,908,356		43,117			43,117			Subsidiary
	SSMC	Singapore	Fabrication and supply of integrated circuits		6,408,190		6,408,190		382		32		3,290,888		2,288,786			732,418			Investee
	Emerging Alliance	Cayman Islands	Investing in new start-up technology companies		1,447,957		1,179,690		—		99		823,232		(97,767	)		(97,278	)		Subsidiary
	GUC	Hsin-Chu, Taiwan	Researching, developing, manufacturing, testing and marketing of integrated circuits		409,920		409,920		39,040		47		391,626		30,424			23,279			Investee
	VisEra	Hsin-Chu, Taiwan	Manufacturing, material wholesaling and retailing of electronic spare parts		51,000		51,000		5,100		25		59,116		35,540			8,885			Investee
	VTAF II	Cayman Islands	Investing in new start-up technology companies		332,412		—		—		98		329,968		18,373			14,648			Subsidiary

Note 1: The treasury stock is deducted from the carrying value.

Note 2: The gains or losses on disposal of the stocks held by subsidiaries (treated as treasury stocks) and the paid-in capital from cash dividend distributed by parent company are excluded.

- 57 -

TABLE 9

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND INVESTEES

INFORMATION OF INVESTMENT IN MAINLAND CHINA
DECEMBER 31, 2004
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Accumulated

Outflow of

Investment

Accumulated

Total Amount

from Taiwan as

Inward

of Paid-in

Investment Flows

Carrying Value

Remittance of

Capital

January 1, 2004

Outflow

December 31,

Percentage of

Investment

as of

Earnings as of

Main Businesses and

(RMB in

Investment

(US$ in

2004 (US$ in

Ownership in

Gain (Loss)

December 31,

Investee Company

Products

Thousand)

Type

Thousand)

Inflow

Thousand)

Investment

(Note 2)

2004

TSMC (Shanghai) Company Limited

Manufacturing and marketing of integrated circuits and semiconductor devices

$9,187,962
(RMB2,284,355)

(Note 1)

$1,890,952
(US$56,000)

$7,297,010
(US$220,000)

—

$9,187,962
(US$276,000)

100

(727,036

)

8,113,511

—


Accumulated Investment in Mainland			Investment Amounts Authorized by
China as of December 31, 2004			Investment Commission, MOEA			Upper Limit on Investment
(US$ in Thousand)			(US$ in Thousand)			(US$ in Thousand)

	$9,187,962		$	11,841,207		$	11,841,207
	(US$276,000	)		(US$371,000	)		(US$371,000	)

Note 1: Direct investment in TSMC (Shanghai) US$276,000 thousand.

Note 2: Amount was recognized based on the audited financial statements.

- 58 -

Taiwan Semiconductor Manufacturing
Company Ltd. and Subsidiaries

Consolidated Financial Statements for the
Years Ended December 31, 2004 and 2003 and
Independent Auditors’ Report

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and the Shareholders
Taiwan Semiconductor Manufacturing Company Ltd.

We have audited the accompanying consolidated balance sheets of Taiwan Semiconductor Manufacturing Company Ltd. and subsidiaries (the Company) as of December 31, 2004 and 2003, and the related consolidated statements of income, changes in shareholders’ equity and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Taiwan Semiconductor Manufacturing Company Ltd. and subsidiaries as of December 31, 2004 and 2003, and the results of their operations and their cash flows for the years then ended, in conformity with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers and generally accepted accounting principles in the Republic of China.

January 13, 2005 (January 30, 2005 as to Note 22m)

Notice to Readers

The accompanying consolidated financial statements are intended only to present the consolidated financial position, results of operations and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdiction. The standards, procedures and practices to audit such consolidated financial statements are those generally accepted and applied in the Republic of China.

- 1 -

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2004 AND 2003
(In Thousands of New Taiwan Dollars, Except Par Value)


	2004						2003
	Amount			%			Amount			%
ASSETS

CURRENT ASSETS
Cash and cash equivalents (Notes 2, 3 and 4)	$	74,302,351			15		$	102,988,896			26
Short-term investments, net (Notes 2 and 4)		54,107,951			11			13,611,536			3
Receivables from related parties (Note 20)		654,377			—			920,444			—
Notes receivable		2,942			—			9,893			—
Accounts receivable		31,211,481			7			28,495,269			7
Allowance for doubtful receivables (Note 2)		(982,843	)		—			(1,020,398	)		—
Allowance for sales returns and others (Note 2)		(3,342,450	)		(1	)		(2,135,843	)		—
Other receivables from related parties (Note 20)		141,578			—			131,731			—
Other financial assets (Notes 2 and 23)		2,212,371			—			1,373,705			—
Inventories, net (Notes 2 and 5)		15,555,937			3			12,135,324			3
Deferred income tax assets, net (Notes 2 and 14)		8,917,986			2			8,398,205			2
Prepaid expenses and other current assets		1,667,401			—			1,632,908			—


Total current assets		184,449,082			37			166,541,670			41


LONG-TERM INVESTMENTS (Notes 2, 6, 18 and 23)
Equity method		9,143,612			2			7,255,239			2
Cost method		3,266,330			1			3,492,775			1
Long-term bonds		15,170,167			3			—			—
Other investments		10,521,740			2			—			—


Total long-term investments		38,101,849			8			10,748,014			3


PROPERTY, PLANT AND EQUIPMENT (Notes 2, 7, 10 and 20)
Cost
Land and land improvements		803,508			—			855,394			—
Buildings		97,882,699			19			79,778,533			20
Machinery and equipment		433,130,364			87			371,315,729			91
Office equipment		8,538,225			2			7,457,538			2
Leased assets		566,243			—			726,585			—

Total cost		540,921,039			108			460,133,779			113
Accumulated depreciation		(331,253,866	)		(66	)		(275,013,069	)		(68	)
Advance payments and construction in progress		49,244,153			10			26,733,553			7


Net property, plant and equipment		258,911,326			52			211,854,263			52


GOODWILL (Note 2)		7,115,510			1			8,720,917			2


OTHER ASSETS
Deferred charges, net (Notes 2, 8 and 22)		8,992,452			2			7,992,016			2
Deferred income tax assets, net (Notes 2 and 14)		1,649,979			—			1,111,367			—
Refundable deposits (Note 20)		106,448			—			199,522			—
Others		127,445			—			232,762			—


Total other assets		10,876,324			2			9,535,667			2


TOTAL	$	499,454,091			100		$	407,400,531			100


	2004						2003
	Amount			%			Amount			%
LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES
Short-term bank loans (Note 9)	$	383,004			—		$	407,736			—
Payables to related parties (Note 20)		2,217,815			1			3,248,289			1
Accounts payable		7,264,419			2			6,438,604			2
Payable to contractors and equipment suppliers		33,427,702			6			7,232,103			2
Accrued expenses and other current liabilities (Notes 2, 12 and 22)		10,126,368			2			8,094,191			2
Current portion of bonds payable (Note 11)		10,500,000			2			5,000,000			1


Total current liabilities		63,919,308			13			30,420,923			8


LONG-TERM LIABILITIES
Long-term bank loans (Note 10)		1,915,020			—			8,800,302			2
Bonds payables (Note 11)		19,500,000			4			30,000,000			7
Other long-term payables (Note 12)		7,964,975			2			3,300,829			1
Other payables to related parties (Notes 20 and 22)		2,317,972			—			—			—
Liability under capital lease (Notes 2 and 7)		566,243			—			726,585			—


Total long-term liabilities		32,264,210			6			42,827,716			10


OTHER LIABILITIES
Accrued pension cost (Notes 2 and 13)		3,101,707			1			2,601,450			1
Guarantee deposits (Note 22)		412,881			—			763,889			—
Others		714,949			—			1,483,245			—


Total other liabilities		4,229,537			1			4,848,584			1


MINORITY INTEREST IN SUBSIDIARIES (Note 2)		75,737			—			88,999			—


Total liabilities		100,488,792			20			78,186,222			19


SHAREHOLDERS’ EQUITY (Notes 2 and 16)
Capital stock — $10 par value
Authorized: 24,600,000 thousand shares
Issued: 23,251,964 thousand shares in 2004 and 20,266,619 thousands shares in 2003		232,519,637			47			202,666,189			50
Capital surplus		56,537,259			11			56,855,885			14
Retained earnings:
Appropriated as legal reserve		25,528,007			5			20,802,137			5
Appropriated as special reserve		—			—			68,945			—
Unappropriated earnings		88,202,009			18			50,229,008			12
Others:
Unrealized loss on long-term investments (Note 2)		—			—			(35	)		—
Cumulative translation adjustments (Note 2)		(2,226,427	)		(1	)		225,408			—
Treasury stock (at cost) — 45,521 thousand shares in 2004 and 40,597 thousand shares in 2003 (Notes 2 and 18)		(1,595,186	)		—			(1,633,228	)		—


Total shareholders’ equity		398,965,299			80			329,214,309			81


TOTAL	$	499,454,091			100		$	407,400,531			100

The accompanying notes are an integral part of the consolidated financial statements.

- 2 -

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
(In Thousands of New Taiwan Dollars, Except Consolidated Earnings Per Share)


	2004					2003
	Amount			%		Amount			%
GROSS SALES (Notes 2 and 20)	$	261,947,351				$	207,279,137

SALES RETURNS AND ALLOWANCES (Note 2)		(4,734,733	)				(4,282,325	)


NET SALES (Note 24)		257,212,618			100		202,996,812			100

COST OF SALES (Notes 15 and 20)		141,393,435			55		128,113,334			63


GROSS PROFIT		115,819,183			45		74,883,478			37


OPERATING EXPENSES (Notes 15, 20 and 24)
Research and development		12,516,434			5		12,712,695			6
General and administrative		11,454,374			4		8,199,965			4
Marketing		3,366,701			1		2,670,237			2


Total operating expenses		27,337,509			10		23,582,897			12


INCOME FROM OPERATIONS		88,481,674			35		51,300,581			25


NON-OPERATING INCOME AND GAINS (Note 24)
Investment income recognized by equity method, net (Notes 2 and 6)		2,094,137			1		—			—
Interest (Notes 2 and 23)		1,858,359			1		888,107			1
Gain on sales of investments, net (Note 2)		914,541			—		3,538,081			2
Technical service income (Notes 20 and 22)		423,804			—		209,764			—
Gain on disposal of property, plant and equipment (Note 2)		242,785			—		438,809			—
Other (Note 20)		556,598			—		594,551			—


Total non-operating income and gains		6,090,224			2		5,669,312			3


NON-OPERATING EXPENSES AND LOSSES (Note 24)
Interest (Notes 2, 7 and 23)		1,528,908			1		1,891,009			1
Foreign exchange loss, net (Notes 2 and 23)		382,164			—		755,100			1
Loss on impairment of long-term investments (Note 2)		350,608			—		652,718			—
Loss on disposal of property, plant and equipment (Note 2)		131,148			—		374,126			—
Unrealized valuation loss of short-term investments (Note 2)		75,212			—		—			—
Loss on impairment of property, plant and equipment and idle assets (Note 2)		—			—		1,506,199			1

(Continued)

- 3 -

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
(In Thousands of New Taiwan Dollars, Except Consolidated Earnings Per Share)


	2004					2003
	Amount			%		Amount			%
Investment loss recognized by equity method, net (Notes 2 and 6)	$	—			—	$	294,244			—
Other		138,271			—		317,852			—


Total non-operating expenses and losses		2,606,311			1		5,791,248			3


INCOME BEFORE INCOME TAX AND MINORITY INTEREST (Note 24)		91,965,587			36		51,178,645			25

INCOME TAX BENEFIT (EXPENSE) (Notes 2 and 14)		363,426			—		(3,922,957	)		(2	)


INCOME BEFORE MINORITY INTEREST		92,329,013			36		47,255,688			23

MINORITY INTEREST IN LOSS (INCOME) OF SUBSIDIARIES (Notes 2 and 24)		(12,898	)		—		3,012			—


CONSOLIDATED NET INCOME	$	92,316,115			36	$	47,258,700			23


	2004				2003
	Income Before				Income Before
	Income Tax and				Income Tax and
	Minority		Consolidated		Minority		Consolidated
	Interest		Net Income		Interest		Net Income
CONSOLIDATED EARNINGS PER SHARE (NT$, Note 19)
Basic earnings per share	$	3.96	$	3.97	$	2.19	$	2.02

Diluted earnings per share	$	3.95	$	3.97	$	2.19	$	2.02

(Concluded)

The accompanying notes are an integral part of the consolidated financial statements.

- 4 -

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
(In Thousands of New Taiwan Dollars)


	Capital Stock Issued																										Unrealized
	Preferred Stock						Common Stock									Retained Earnings											Loss on			Cumulative			Treasury			Total
	Shares						Shares						Capital			Legal		Special			Unappropriated						Long-term			Translation			Stock			Shareholders’
	(Thousand)			Amount			(Thousand)			Amount			Surplus			Reserve		Reserve			Earnings			Total			Investments			Adjustments			(Note 18)			Equity

BALANCE, JANUARY 1, 2003		1,300,000		$	13,000,000			18,622,887		$	186,228,867		$	57,004,789		$	18,641,108	$	—		$	22,151,089		$	40,792,197		$	(194,283	)	$	945,129		$	(1,923,492	)	$	295,853,207

Redemption and retirement of preferred stock		(1,300,000	)		(13,000,000	)		—			—			—			—		—			—			—			—			—			—			(13,000,000	)

Appropriations of prior year’s earnings
Legal reserve		—			—			—			—			—			2,161,029		—			(2,161,029	)		—			—			—			—			—
Special reserve		—			—			—			—			—			—		68,945			(68,945	)		—			—			—			—			—
Bonus to employees — stock		—			—			153,901			1,539,013			—			—		—			(1,539,013	)		(1,539,013	)		—			—			—			—
Cash dividends paid for preferred stock		—			—			—			—			—			—		—			(455,000	)		(455,000	)		—			—			—			(455,000	)
Stock dividends — 8%		—			—			1,489,831			14,898,309			—			—		—			(14,898,309	)		(14,898,309	)		—			—			—			—
Remuneration to directors and supervisors		—			—			—			—			—			—		—			(58,485	)		(58,485	)		—			—			—			(58,485	)

Net income in 2003		—			—			—			—			—			—		—			47,258,700			47,258,700			—			—			—			47,258,700

Adjustment arising from changes in ownership percentage in investees		—			—			—			—			(158,924	)		—		—			—			—			—			—			—			(158,924	)

Reversal of unrealized loss on long-term investment of investees		—			—			—			—			—			—		—			—			—			194,248			—			—			194,248

Translation adjustments		—			—			—			—			—			—		—			—			—			—			(719,721	)		—			(719,721	)

Treasury stock — sales of parent company stock held by subsidiaries		—			—			—			—			10,020			—		—			—			—			—			—			290,264			300,284


BALANCE, DECEMBER 31, 2003		—			—			20,266,619			202,666,189			56,855,885			20,802,137		68,945			50,229,008			71,100,090			(35	)		225,408			(1,633,228	)		329,214,309

Appropriations of prior year’s earnings
Legal reserve		—			—			—			—			—			4,725,870		—			(4,725,870	)		—			—			—			—			—
Reversal of special reserve		—			—			—			—			—			—		(68,945	)		68,945			—			—			—			—			—
Bonus to employees — cash		—			—			—			—			—			—					(681,628	)		(681,628	)		—			—			—			(681,628	)
Bonus to employees — stock		—			—			272,651			2,726,514			—			—		—			(2,726,514	)		(2,726,514	)		—			—			—			—
Cash dividends paid for preferred stock		—			—			—			—			—			—		—			(184,493	)		(184,493	)		—			—			—			(184,493	)
Cash dividends — 6%		—			—			—			—			—			—		—			(12,159,971	)		(12,159,971	)		—			—			—			(12,159,971	)
Stock dividends — 14%		—			—			2,837,327			28,373,267			—			—		—			(28,373,267	)		(28,373,267	)		—			—			—			—
Remuneration to directors and supervisors		—			—			—			—			—			—		—			(127,805	)		(127,805	)		—			—			—			(127,805	)

Net income in 2004		—			—			—			—			—			—		—			92,316,115			92,316,115			—			—			—			92,316,115

Adjustment arising from changes in ownership percentage in investees		—			—			—			—			34,059			—		—			—			—			—			—			—			34,059

Reversal of unrealized loss on long-term investment of investees		—			—			—			—			—			—		—			—			—			35			—			—			35

Translation adjustments		—			—			—			—			—			—		—			—			—			—			(2,451,835	)		—			(2,451,835	)

Issuance of stock arising from exercising stock options		—			—			87			867			2,757			—		—			—			—			—			—			—			3,624

Cash dividends received by subsidiaries from parent company		—			—			—			—			22,781			—		—			—			—			—			—			—			22,781

Treasury stock — sales of the parent company stock held by subsidiaries		—			—			—			—			1,864			—		—			—			—			—			—			38,042			39,906

Treasury stock — repurchased by the Company		—			—			—			—			—			—		—			—			—			—			—			(7,059,798	)		(7,059,798	)

Retirement of treasury stock		—			—			(124,720	)		(1,247,200	)		(380,087	)		—		—			(5,432,511	)		(5,432,511	)		—			—			7,059,798			—


BALANCE, DECEMBER 31, 2004		—		$	—			23,251,964		$	232,519,637		$	56,537,259		$	25,528,007	$	—		$	88,202,009		$	113,730,016		$	—		$	(2,226,427	)	$	(1,595,186	)	$	398,965,299

The accompanying notes are an integral part of the consolidated financial statements.

- 5 -

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
(In Thousands of New Taiwan Dollars)


	2004			2003
CASH FLOWS FROM OPERATING ACTIVITIES
Consolidated net income	$	92,316,115		$	47,258,700
Adjustments to reconcile consolidated net income to net cash provided by operating activities:
Depreciation and amortization		69,818,457			69,161,317
Deferred income taxes		(1,058,393	)		3,665,383
Investment loss (income) recognized by equity method, net		(2,094,137	)		294,244
Amortization of premium/discount of long-term bond investments		28,673			—
Loss on impairment of property, plant and equipment, and idle assets		—			1,506,199
Loss on impairment of long-term investments		350,608			652,718
Gain on sales of long-term investments, net		(85,203	)		(78,694	)
Gain on disposal of property, plant and equipment, net		(111,637	)		(64,683	)
Accrued pension cost		500,257			389,890
Minority interest in income (loss) of subsidiaries		12,898			(3,012	)
Changes in operating assets and liabilities:
Decrease (increase) in:
Receivables from related parties		266,067			(544,764	)
Notes receivable		6,951			50,347
Accounts receivable		(2,716,212	)		(8,964,567	)
Allowance for doubtful receivables		(37,555	)		87,405
Allowance for sales returns and others		1,206,607			(236,672	)
Inventories, net		(3,420,613	)		(933,878	)
Other receivables from related parties		(9,847	)		(67,752	)
Other financial assets		(777,100	)		(347,161	)
Prepaid expenses and other current assets		(34,493	)		605,001
Increase (decrease) in:
Payables to related parties		(1,499,968	)		1,472,140
Accounts payable		825,815			1,300,012
Accrued expenses and other current liabilities		(336,385	)		834,941


Net cash provided by operating activities		153,150,905			116,037,114


CASH FLOWS FROM INVESTING ACTIVITIES
Increase in short-term investments, net		(43,554,878	)		(13,326,339	)
Acquisitions of:
Long-term investments		(23,054,379	)		(1,412,335	)
Property, plant and equipment		(81,094,557	)		(37,870,907	)
Proceeds from disposal of:
Long-term investments		165,243			505,702
Property, plant, and equipment		1,812,633			177,312
Increase in deferred charges		(2,405,673	)		(2,138,087	)
Decrease in refundable deposits		93,074			357,744

(Continued)

- 6 -

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
(In Thousands of New Taiwan Dollars)


	2004			2003
Decrease in other assets	$	51,604		$	4,610
Decrease in minority interest in subsidiaries		(26,160	)		(3,487	)


Net cash used in investing activities		(148,013,093	)		(53,705,787	)


CASH FLOWS FROM FINANCING ACTIVITIES
Cash dividends paid for common stock		(12,137,190	)		—
Repurchase of treasury stock		(7,059,798	)		—
Repayments on:
Long-term bank loans		(6,656,152	)		(8,915,557	)
Bonds payable		(5,000,000	)		(4,000,000	)
Short-term bank loans		—			(309,807	)
Cash bonus paid to employees		(681,628	)		—
Decrease in guarantee deposits		(351,008	)		(631,177	)
Cash dividends paid for preferred stock		(184,493	)		(455,000	)
Remuneration paid to directors and supervisors		(127,805	)		(58,485	)
Proceeds from:
Disposal of treasury stock		39,906			300,284
Issuance of stock arising from exercising stock options		3,624			—
Redemption of preferred stock		—			(13,000,000	)


Net cash used in financing activities		(32,154,544	)		(27,069,742	)


NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(27,016,732	)		35,261,585

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS		(1,669,813	)		(62,893	)

CASH AND CASH EQUIVALENTS, BEGINNING OF THE YEAR		102,988,896			67,790,204


CASH AND CASH EQUIVALENTS, END OF THE YEAR	$	74,302,351		$	102,988,896


SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid (excluding the amount capitalized of NT$278,334 thousand and NT$139,516 thousand in 2004 and 2003, respectively, Note 7)	$	1,470,333		$	1,982,594

Income tax paid	$	389,189		$	218,954

(Continued)

- 7 -

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
(In Thousands of New Taiwan Dollars)


	2004		2003
NONCASH INVESTING AND FINANCING ACTIVITIES
Current portion of bonds payable	$	10,500,000	$	5,000,000

Current portion of other payables to related parties (under payables to related parties)	$	492,022	$	—

Current portion of other long-term payables (under accrued expenses and other current liabilities)	$	1,505,345	$	1,591,972

Reclassification of long-term investments to short-term investments	$	343,950	$	140,984

Reclassification of short-term investments to long-term investments	$	3,402,413	$	—

(Concluded)

The accompanying notes are an integral part of the consolidated financial statements.

- 8 -

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)

1.		GENERAL

		Taiwan Semiconductor Manufacturing Company Ltd. (TSMC), a Republic of China (R.O.C.) corporation, was incorporated as a venture among the Government of the R.O.C., acting through the Development Fund of the Executive Yuan; Philips Electronics N.V. and certain of its affiliates (Philips); and certain other private investors. On September 5, 1994, its shares were listed on the Taiwan Stock Exchange (TSE). On October 8, 1997, TSMC listed some of its shares of stock on the New York Stock Exchange (NYSE) in the form of American Depositary Shares (ADSs).

		TSMC is engaged mainly in the manufacturing, selling, packaging, testing and computer-aided designing of integrated circuits and other semiconductor devices, and the manufacturing of masks.

		TSMC has six direct wholly-owned subsidiaries: TSMC International Investment Ltd. (TSMC International), TSMC North America (TSMC — North America), Taiwan Semiconductor Manufacturing Company Europe B.V. (TSMC — Europe), TSMC Japan K. K. (TSMC — Japan), TSMC (Shanghai) Company Limited (TSMC — Shanghai) and TSMC Partners, Ltd. (TSMC Partners). In addition, TSMC has the following consolidating subsidiaries: a 99.5% owned subsidiary, Emerging Alliance Fund, L.P. (Emerging Alliance) , a 98% owned subsidiary, VentureTech Alliance Fund II, L.P. (VTAF II, a newly established entity in 2004) and two 36% owned affiliates — Chi Cherng Investment Co., Ltd. (Chi Cherng, which is 36% owned by TSMC and 64% owned by Hsin Ruey Investment Co., Ltd.) and Hsin Ruey Investment Co., Ltd. (Hsin Ruey, which is 36% owned by TSMC and 64% owned by Chi Cherng). TSMC International has two wholly-owned subsidiaries — TSMC Development, Inc. (TSMC Development) and TSMC Technology, Inc. (TSMC Technology), and two 97% owned subsidiaries - InveStar Semiconductor Development Fund, Inc. (InveStar) and InveStar Semiconductor Development Fund, Inc. (II) LDC (InveStar II). TSMC Development has a 99.996% owned subsidiary, WaferTech, LLC (WaferTech).

		The following diagram presents information regarding the relationship and ownership percentages among TSMC and its consolidated subsidiaries as of December 31, 2004:

(SUBSIDIARY RELATIONSHIP CHART)

- 9 -

		TSMC — North America is engaged in the sales and marketing of integrated circuits and semiconductor devices. TSMC — Europe and TSMC — Japan are engaged mainly in marketing activities. TSMC Technology is engaged mainly in engineering support activities. TSMC — Shanghai is engaged in the manufacturing and marketing of integrated circuits and other semiconductor devices. TSMC Partners, TSMC Development, Chi Cherng and Hsin Ruey are engaged in investing activities. TSMC International is engaged in providing investment in companies involved in the design, manufacture, and other related business in the semiconductor industry. Emerging Alliance, VTAF II, InveStar and InveStar II are engaged in investing in new start-up technology companies. WaferTech is engaged in the manufacturing, selling, testing and computer-aided designing of integrated circuits and other semiconductor devices.

2.		SIGNIFICANT ACCOUNTING POLICIES

		The consolidated financial statements are presented in conformity with Guidelines Governing the Preparation of Financial Reports by Securities Issuers and accounting principles generally accepted in the R.O.C.

		For the convenience of readers, the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the R.O.C. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language financial statements shall prevail.

		Significant accounting policies are summarized as follows:

		Consolidation

		TSMC consolidates the accounts of all majority (directly and indirectly) owned subsidiaries. All significant intercompany balances and transactions have been eliminated.

		The consolidated financial statements include, as of and for the years ended December 31, 2004 and 2003, the accounts of TSMC, TSMC — North America, TSMC — Europe, TSMC — Japan, TSMC — Shanghai, TSMC Partners, Emerging Alliance, VTAF II, Chi Cherng, Hsin Ruey and TSMC International and its subsidiaries, InveStar, InveStar II, TSMC Development (including WaferTech) and TSMC Technology.

		TSMC and the foregoing subsidiaries are hereinafter referred to collectively as the “Company”.

		Minority interests in WaferTech (0.004%), Emerging Alliance (0.5%), VTAF II (2%), InveStar (3%) and InveStar II (3%) are presented separately in the consolidated financial statements.

		Use of Estimates

		The preparation of financial statements in conformity with the aforementioned guidelines and principles requires management to make reasonable assumptions and estimates of matters that are inherently uncertain. The actual results may differ from management’s estimates.

		Classification of Current and Noncurrent Assets and Liabilities

		Current assets are those expected to be converted to cash, sold or consumed within one year from the balance sheet date. Current liabilities are obligations due on demand within one year from the balance sheet date. Assets and liabilities that are not classified as current are noncurrent assets and liabilities, respectively.

		Cash Equivalents

		Government bonds under repurchase agreements and notes acquired with maturities less than three months from the date of purchase are classified as cash equivalents.

- 10 -

		Short-term Investments

		Short-term investments primarily consist of corporate bonds, asset-backed securities, bond funds, agency bonds, government bonds and others.

		Short-term investments are recorded at historical cost and are carried at the lower of cost or market value as of the balance sheet date. An allowance for decline in value is provided and is charged to current earnings when the aggregate carrying value of the investments exceeds the aggregate market value. A reversal of the allowance is recorded for a subsequent recovery of the market value.

		The cost of funds and listed stocks sold are counted for using the weighted-average method; whereas the other securities are accounted for using the specific identification method.

		The market value of funds is determined using the net asset value of the funds at the end of the year, and the market value of listed stocks is determined using the average-closing price of the listed stocks for the last month of the year. The others are determined using the average of bid and ask prices as of the balance sheet date.

		Cash dividends are recorded as investment income in the current year.

		Allowance for Doubtful Receivables

		An allowance for doubtful receivable is provided based on a review of the collectibility of accounts receivables. The Company determines the amount of allowance for doubtful accounts by examining the historical collection experience and current trends in the credit quality of its customers as well as its internal credit policies.

		Revenue Recognition and Allowance for Sales Returns and Others

		The Company recognizes net sales when the earnings process is complete, as evidenced by an agreement with the customer, transfer of title and acceptance have occurred, if applicable, a fixed or determinable price and the collectibility is reasonably assured. Allowance for sales returns and pricing discounts is estimated based on historical experience and any known factors that would affect the allowance. Such provisions are deducted from sales in the year the products are sold and the estimated related costs are deducted from cost of sales.

		Sales are determined using the fair value taking into account related sales discounts agreed to by the Company and its customers. Sales agreements typically provide that payment is due 30 days from invoice date for a majority of the customers and 30 to 45 days after the end of the month in which the sales occur for some customers. Since the receivables from sales are collectible within one year and such transactions are frequent, the fair value of receivables is equivalent to the nominal amount of cash received.

		Inventories

		Inventories are stated at the lower of cost or market value. Inventories are recorded at standard cost and adjusted to the approximate weighted-average cost at the end of the year. Market value represents net replacement cost for raw materials, supplies and spare parts. Market value represents net realizable value for finished goods and work in process. The Company assesses the impact of changing technology on its inventory on hand and writes off inventories that are considered obsolete. Ending inventories are evaluated for estimated excess quantities and obsolescence based on demand forecast within a specific time horizon, generally 180 days or less, and the estimated losses on scrap and slow-moving items are recognized in the allowance for losses.

- 11 -

		Long-term Investments

		Investments in companies wherein the Company exercises significant influence on the operating and financial policy decisions are accounted for using the equity method of accounting. The Company’s proportionate share in the net income or net loss of investee companies is recognized in the “investment income/loss recognized by equity method, net” account. When equity investments are made, the difference, if any, between the cost of investment and the Company’s proportionate share of investee’s net equity is amortized using the straight-line method over five years and is recorded in the “investment income/loss recognized by equity method, net” account.

		When the Company subscribes to additional investee shares at a percentage different from its existing equity interest, the resulting carrying amount of the investment in the investee differs from the amount of Company’s proportionate share in the investee’s net equity. The Company records such difference as an adjustment to long-term investments with the corresponding amount charged or credited to capital surplus.

		Investments in companies wherein the Company does not exercise significant influence are recorded at historical cost. Cash dividends are recognized as investment income in the year received but are accounted for as reductions in the carrying amount of the long-term investments if the dividends are received in the same year that the related investments are acquired. Stock dividends are recorded as an increase in the number of shares held and do not affect investment income or the carrying amount of the investment. An allowance is recognized for any decline in the market value of investments with readily ascertainable fair market value with the corresponding amount recorded as an unrealized loss, a component of shareholders’ equity. A reversal of the allowance will result from a subsequent recovery of the market value of such investments. The carrying amounts of investments whose fair market values are not readily ascertainable are reduced to reflect an other-than-temporary decline in their values, with the related impairment loss charged to income.

		Investments in foreign mutual funds are stated at the lower of aggregate cost or net asset value. An allowance is recognized when the net assets value of the funds is lower than their cost, with the corresponding amount recorded as a reduction to shareholders’ equity. A reversal of the allowance will result from a subsequent recovery of the net asset value.

		The costs of stocks and mutual funds sold are determined using the weighted-average method.

		Investments in long-term bonds are stated at amortized cost. The discount or premium is amortized over the duration period using the interest method, and recorded as an adjustment to interest income.

		When investments in publicly-traded stocks are reclassified from short-term investments to long-term investments or from long-term investments to short-term investments, the Company recognizes a loss to the extent, if any, that the market value of such investments is lower than the carrying amount, and the market value becomes the new basis.

		If an investee company recognizes an unrealized loss on its long-term investments using the lower-of-cost-or-market method, the Company also recognizes a corresponding unrealized loss in proportion to its ownership percentage in the investee company and records the amount as a component of its shareholders’ equity.

		Gains or losses on sales from the Company to investee companies accounted for using the equity method are deferred in proportion to the Company’s ownership percentage in the investee companies until realized through transactions with third parties. The entire amount of the gains or losses on sales to majority-owned subsidiaries is deferred until such gains or losses are realized through the subsequent sales of the related products to third parties.

- 12 -

		Gains or losses on sales from investee companies to the Company are deferred in proportion to the Company’s ownership percentages in the investee companies until realized through transactions with third parties.

		If an investee’s functional currency is a foreign currency, translation adjustments will result from the process of translating the investee’s financial statements into the reporting currency of the Company. Such adjustments are accumulated and reported as a separate component of shareholders’ equity.

		Property, Plant and Equipment, Assets Leased to Others, Leased Assets and Idle Assets

		Property, plant and equipment and assets leased to others are stated at cost less accumulated depreciation. When impairment is determined, the related assets are stated at the lower of fair value or book value. Idle assets are stated at the lower of net realizable value or book value. Significant additions, renewals and betterments incurred during the construction period are capitalized. Maintenance and repairs are expensed in the year incurred. Interest expense incurred for the project during the purchase and construction period is also capitalized. Properties covered by agreements qualifying as capital leases are carried at the lower of the leased equipment’s market value or the present value of the minimum lease payments at the inception date of the lease.

		Depreciation is computed using the straight-line method over the following estimated service lives: land improvements — 20 years; buildings — 10 to 20 years; machinery and equipment — 5 to 10 years; office equipment — 3 to 15 years; and leased assets — 20 years.

		Upon sale or disposal of property, plant and equipment, the related cost and accumulated depreciation are removed from the corresponding accounts, with any gain or loss credited or charged to non-operating income or expenses in the year of sale or disposal.

		Goodwill

		Goodwill represents the excess of the consideration paid for acquisition over the fair market value of identifiable net assets acquired and acquisition costs. Goodwill is amortized using the straight-line method over the estimated life of 10 years.

		Deferred Charges

		Deferred charges consist of technology license fees, software and system design costs and other charges. The amounts are amortized as follows: technology license fees — the shorter of the estimated life of the technology or the term of the technology transfer contract, software and system design costs and other charges — 3 or 5 years.

		Pension Costs

		TSMC records net periodic pension costs on the basis of actuarial calculations. Unrecognized net transition obligation and unrecognized net gains or losses are amortized over 25 years.

		Income Tax

		The Company uses an inter-period tax allocation method for income tax. Deferred income tax assets and liabilities are recognized for the tax effects of temporary differences, unused tax credits, and net operating loss carryforwards. Valuation allowances are provided to the extent, if any, that it is more likely than not that deferred income tax assets will not be realized. A deferred tax asset or liability is classified as current or non-current in accordance with the classification of its related asset or liability. However, if a deferred tax asset or liability does not relate to an asset or liability in the financial statements, then it is classified as either current or noncurrent based on the expected length of time before it is realized or settled.

- 13 -

		Any tax credits arising from the purchases of machinery, equipment and technology, research and development expenditures, personnel training, and investments in important technology-based enterprises are recognized using the flow-through method.

		Adjustments to prior years’ tax liabilities are added to or deducted from the current year’s tax provision.

		Income taxes on unappropriated earnings (excluding earnings from foreign consolidating subsidiaries) of 10% are expensed in the year of shareholder approval which is the year subsequent to the year the earnings are generated.

		Stock-based Compensation

		Employee stock option plans that are amended or have options granted on or after January 1, 2004 must be accounted for by the interpretations issued by the Accounting Research and Development Foundation. The Company adopted the intrinsic value method and any compensation cost determined using this method is charged to expense over the employee vesting period.

		Treasury Stock

		When the Company repurchases its outstanding common stock, the cost of the reacquired stock is recorded as treasury stock as a reduction to shareholders’ equity. When the Company retires treasury stock, the treasury stock account is reduced and the common stock as well as the capital surplus — additional paid-in capital are reversed in proportionate to the equity percentage of the retirement. When the book value of the treasury stock exceeds the sum of the par value and additional paid-in capital, the difference is charged to capital surplus — treasury stock and to retained earnings for any remaining amount. The Company’s stock held by its subsidiaries is also treated as treasury stock and reclassified from long-term investments to treasury stock. The cash dividends received by the subsidiaries from the Company are recorded under capital surplus — treasury stock.

		Foreign-Currency Transactions

		Foreign currency transactions are recorded in New Taiwan dollars at the rates of exchange in effect when the transactions occur. Exchange gains or losses derived from foreign currency transactions or monetary assets and liabilities denominated in foreign currencies are recognized in current income. At the end of each year, assets and liabilities denominated in foreign currencies are revalued at the prevailing exchange rates with the resulting gains or losses recognized in current income.

		Derivative Financial Instruments

		The Company enters into foreign currency forward contracts to manage currency exposures in cash flow and in foreign-currency-denominated assets and liabilities. The contracts are recorded in New Taiwan dollars at the current rate of exchange of the contract date. The differences in the New Taiwan dollar amounts translated using the spot rates and the amounts translated using the contracted forward rates on the contract date are amortized over the terms of the forward contracts using the straight-line method. At the end of each year, the receivables or payables arising from forward contracts are restated using the prevailing spot rates at the balance sheet date with the resulting differences charged to income. In addition, the receivables and payables related to the forward contracts of the same counter party are netted with the resulting amount presented as either an asset or a liability. Any resulting gain or loss upon settlement is credited or charged to income in the year of settlement.

- 14 -

		The Company enters into cross-currency swap contracts to manage currencies exposures on foreign currency denominated assets and liabilities. The principal amount is recorded using the spot rates at the contract date. The differences in the New Taiwan dollar amounts translated using the spot rates and the amounts translated using the contracted rates on the contract date are amortized over the terms of the contracts using the straight-line method. At the end of each year, the receivables or payables arising from cross-currency swap contracts are restated using the prevailing spot rate with the resulting differences charged to income. In addition, the receivables and payables related to the contracts are netted with the resulting amount presented as either an asset or a liability. The difference in interest computed pursuant to the contracts on each settlement date or the balance sheet date is recorded as an adjustment to the interest income or expense associated with the hedged items. Any resulting gain or loss upon settlement is credited or charged to income in the year of settlement.

		The Company enters into interest rate swap contracts to manage exposures to changes in interest rates on existing assets or liabilities. These transactions are accounted for on an accrual basis, in which the cash settlement receivable or payable is recorded as an adjustment to interest income or expense associated with the hedged items.

		The premiums paid for the foreign currency option contracts entered into for hedging purposes are amortized and charged to income on a straight-line basis over the term of the related contract. Any resulting gain upon exercise settlement is credited or charged to income in the year of exercise.

		Translation of Foreign-currency Financial Statements

		R.O.C. SFAS No. 14, “Accounting for Foreign-Currency Transactions,” applies to foreign subsidiaries that use the local foreign currency as their functional currency. The financial statements of foreign subsidiaries are translated into New Taiwan dollars at the following exchange rates: Assets and liabilities — current rate on balance sheet date; shareholders’ equity — historical rate; income and expenses — average rate during the year. The resulting translation adjustment is recorded as a separate component of shareholders’ equity.

		Reclassifications

		Certain accounts in the consolidated financial statements as of and for the year ended December 31, 2003 have been reclassified to conform to the consolidated financial statements as of and for the year ended December 31, 2004.

3.		CASH AND CASH EQUIVALENTS


	2004		2003
Cash and bank deposits	$	54,608,985	$	97,041,537
Government bonds acquired under repurchase agreements		19,215,153		5,947,359
Corporate issued notes		478,213		—

	$	74,302,351	$	102,988,896

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SHORT-TERM INVESTMENTS


	2004			2003
Corporate bonds	$	13,554,598		$	—
Corporate issued asset-backed securities		11,766,877			—
Bond funds		10,662,758			1,000,000
Agency bonds		8,633,889			—
Government bonds		7,346,858			7,692,595
Money market funds		1,640,973			3,068,213
Government bonds acquired under repurchase agreements		249,449			1,800,000
Listed stocks		168,299			50,728
Commercial papers		95,666			—
Corporate issued notes		63,796			—

		54,183,163			13,611,536
Allowance for valuation losses		(75,212	)		—

	$	54,107,951		$	13,611,536

Market value	$	54,990,545		$	14,054,511

		The Company entered into investment management agreements with three well-known financial institutions (fund managers) to manage investment portfolios for the Company. In accordance with the investment guidelines and terms in these agreements, the securities invested by the fund managers cannot be below a pre-defined credit rating. As of December 31, 2004, the Company had investment portfolios with these fund managers that aggregated to an original amount of US$1,200,000 thousand. The investment portfolios included securities such as corporate bonds, asset-backed securities, agency bonds, government bonds and others. Securities acquired with maturities less than three months from the date of purchase were reclassified as cash equivalents.

5.		INVENTORIES, NET


	2004			2003
Finished goods	$	3,526,036		$	2,881,499
Work in process		11,437,466			9,100,199
Raw materials		993,151			465,745
Supplies and spare parts		1,176,735			1,052,075

		17,133,388			13,499,518
Allowance for losses		(1,577,451	)		(1,364,194	)

	$	15,555,937		$	12,135,324

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LONG-TERM INVESTMENTS


	2004				2003
			% of				% of
	Carrying		Owner-		Carrying		Owner-
	Amount		ship		Amount		ship
Equity method
Vanguard International Semiconductor Corporation (VIS)	$	5,401,982		28	$	4,077,198		28
Systems on Silicon Manufacturing Company Pte Ltd. (SSMC)		3,290,888		32		2,759,376		32
Global UniChip Corporation (GUC)		391,626		47		368,434		47
VisEra Technologies Company Ltd. (VisEra)		59,116		25		50,231		25

		9,143,612				7,255,239

Cost method
Common stocks
Publicly traded stocks		71,832		—		26,728		—
Non-publicly traded stocks		1,226,499		—		1,156,769		—
Preferred stocks		1,677,865		—		2,038,662		—
Funds		290,134		—		270,616		—

		3,266,330				3,492,775

Long-term bonds
Government bonds		10,260,481		—		—		—
Corporate bonds
China Steel Corporation		2,978,804		—		—		—
Taiwan Power Company		915,276		—		—		—
Nan Ya Plastics Corporation		407,526		—		—		—
Formosa Plastics Corporation		405,485		—		—		—
Formosa Petrochemical Corporation		202,595		—		—		—

		15,170,167				—

Other investments		10,521,740		—		—		—

	$	38,101,849			$	10,748,014

		On January 8, 2003, TSMC’s investee, VIS, issued 600,000 thousand shares of common stock at a price of NT$7 per share of which TSMC purchased a total of 230,882 thousand shares. VIS reduced its capital on August 11, 2004 in order to decrease its accumulated deficit. The number of shares of VIS held by TSMC after the capital reduction declined from 787,016 thousand shares to 409,532 thousand shares. TSMC’s ownership percentage remained the same.

		For the years ended December 31, 2004 and 2003, net investment income and loss recognized from the equity method investees was NT$2,094,137 thousand and NT$294,244 thousand, respectively. The carrying amounts of investments accounted for under the equity method and the related investment income or losses were determined based on the audited financial statements of the investees as of and for the same periods as the Company.

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As of December 31, 2004, other investments consist of the following:


					Range of
	Nominal		Carrying		Interest
	Amount		Amount		Rates			Maturity Date
Step-up callable deposits
Domestic bank	$	2,000,000	$	2,007,681		2.05%-2.20	%		July 2007 to August 2007
Foreign bank		2,138,340		2,152,394		1.44%-4.75	%		June 2007 to August 2007
Callable range accrual deposits
Foreign bank		6,383,400		6,414,151	(See below)			September 2009 to December 2009

	$	10,521,740	$	10,574,226

		During the year ended December 31, 2004, the Company deposited funds into structured-time deposits with the following terms:

		The interest rate of the step-up callable deposits is determined by the Company and the related banks.

		The amount of interest earned by the Company for the callable range accrual deposits is based on a pre-defined range as determined by the 3-month or 6-month LIBOR rate plus an agreed upon rate ranging between 2.1% and 3.45%. Based on the terms of the deposits, if the 3-month or 6-month LIBOR rate moves outside of the pre-defined range, the interest paid to the Company is at a minimum rate of 1.5%. Under the term of the contracts, the bank has the right to cancel the contracts prior to the maturity date.

		Deposits that reside in banks located in Hong Kong and Singapore amounted to NT$2,553,360 thousand and NT$638,340 thousand, respectively.

7.		PROPERTY, PLANT AND EQUIPMENT

		Accumulated depreciation consisted of the following:


	2004		2003
Land improvements	$	172,484	$	154,062
Buildings		38,160,322		31,665,779
Machinery and equipment		287,204,368		238,392,296
Office equipment		5,683,577		4,800,932
Leased assets		33,115		—

	$	331,253,866	$	275,013,069

Information on the status of the expansion or construction plans of TSMC’s manufacturing facilities as of December 31, 2004 is as follows:

Estimated

Accumulated

Expected Date of

Construction/Expansion Plan

Total Cost

Expenditures

Commencement

Fab 12 expansion

58,744,200

41,870,300

January 2005

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		Interest expense for the years ended December 31, 2004 and 2003 was NT$1,807,242 thousand and NT$2,030,525 thousand, respectively (before deducting capitalized amounts of NT$278,334 thousand in 2004 and NT$139,516 thousand in 2003, respectively). The interest rates used for purposes of calculating the capitalized amounts were 1.89% to 2.89% and 1.77% to 5.283% in 2004 and 2003, respectively.

		The Company entered into agreements to lease certain buildings that qualify as capital leases. The term of the lease is from December 2003 to December 2013.

8.		DEFERRED CHARGES, NET


	2004		2003
Technology license fees	$	6,534,899	$	5,084,684
Software and system design costs		2,213,636		2,719,199
Other		243,917		188,133

	$	8,992,452	$	7,992,016

SHORT-TERM BANK LOANS


	2004		2003
Unsecured loan in U.S. dollars:
US$12,000 thousand, repayable by June 2006, annual interest at 2.80% and 1.52% in 2004 and 2003, respectively	$	383,004	$	407,736

10.

LONG-TERM BANK LOANS


	2004		2003
Unsecured loan:
US$60,000 thousand, repayable by December 2006, annual interest at 2.475% and 1.56% in 2004 and 2003, respectively	$	1,915,020	$	2,038,680
Secured loan:
US$199,000 thousand; annual interest at 1.8275% in 2003		—		6,761,622

	$	1,915,020	$	8,800,302

As of December 31, 2004, all the assets of WaferTech with a carrying amount of approximately NT$15,955,936 thousand (US$499,920 thousand) were pledged for the secured loan. WaferTech is required to maintain compliance with certain financial covenants defined in the agreement. As of December 31, 2004, WaferTech was in compliance with all such financial covenants. Under the unsecured loan agreement, the Company is required maintain compliance with certain financial covenants which, if violated, could result in payment of the obligation prior to the originally scheduled payment date. The Company was in compliance with the financial covenants as of December 31, 2004.

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11.

BONDS PAYABLE


	2004		2003
Domestic unsecured bonds:
Issued in December 2000 and repayable in December 2005 and 2007 in two equal payments, 5.25% and 5.36% interest payable annually, respectively	$	15,000,000	$	15,000,000
Issued in January 2002 and repayable in January 2007, 2009 and 2012 in three equal payments, 2.6%, 2.75% and 3.00% interest payable annually, respectively		15,000,000		15,000,000
Issued in October 1999 and repayable in October 2004, 5.95% interest payable annually		—		5,000,000

	$	30,000,000	$	35,000,000

As of December 31, 2004, future principal repayments for the Company’s bonds are as follows:


Year of Repayment	Amount
2005	$	10,500,000
2007		7,000,000
2009		8,000,000
2010 and thereafter		4,500,000

	$	30,000,000

12.

OTHER LONG-TERM PAYABLES


	2004		2003
Payables for acquisition of property, plant and equipment (Note 22k)	$	6,030,007	$	—
Payables for royalties		3,440,313		4,892,801

		9,470,320		4,892,801
Less — current portion		1,505,345		1,591,972

	$	7,964,975	$	3,300,829

TSMC entered into several license arrangements for certain semiconductor-related patents. Future minimum payments under the agreements as of December 31, 2004 are as follows:


Year	Amount
2005	$	1,505,345
2006		466,786
2007		446,838
2008		255,336
2009 and thereafter		766,008

	$	3,440,313

The current portion of other long-term payables is recorded in the “accrued expenses and other current liabilities” account.

-20-

13.		PENSION PLAN

		TSMC has a defined benefit pension plan for all regular employees that provides benefits based on the employee’s length of service and average monthly salary and wages for the six-month period prior to retirement. TSMC contributes an amount equal to 2% of salaries and wages paid each month to a pension fund (the Fund). The Fund is administered by a pension fund monitoring committee (the Committee) and deposited in the Committee’s name in the Central Trust of China.

		Information on the pension plan is summarized as follows:

Components of net periodic pension cost


	2004			2003
Service cost	$	632,594		$	502,116
Interest cost		128,315			109,671
Projected return on plan assets		(41,925	)		(41,154	)
Amortization		8,300			2,409

Net periodic pension cost	$	727,284		$	573,042

Reconciliation of the funded status of the plan and accrued pension cost


	2004			2003
Benefit obligation
Vested benefit obligation	$	67,104		$	21,895
Nonvested benefit obligation		2,704,251			2,184,593

Accumulated benefit obligation		2,771,355			2,206,488
Additional benefits based on future salaries		2,132,721			1,752,208

Projected benefit obligation		4,904,076			3,958,696
Fair value of plan assets		(1,447,540	)		(1,207,264	)

Funded status		3,456,536			2,751,432
Unrecognized net transitional obligation		(132,791	)		(141,091	)
Unrecognized net loss		(222,549	)		(10,090	)

Accrued pension cost	$	3,101,196		$	2,600,251

Vested benefit	$	76,003		$	22,261

c. Actuarial assumptions
Discount rated used in determining present values		3.25	%		3.25	%
Future salary increase rate		3.00	%		3.00	%
Expected rate of return on plan assets		3.25	%		3.25	%
d. Contributions to the Fund	$	226,339		$	181,106

e. Payments from the Fund	$	1,446		$	3,490

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14.

INCOME TAX

A reconciliation of income tax on income before income tax and minority interest at the statutory rate and income tax expense is as follows:


	2004			2003
Income tax based on income before income tax and minority interest at the statutory rate	$	(24,685,380	)	$	(12,881,547	)
Tax-exempt income		14,712,500			5,255,750
Temporary and permanent differences		186,719			732,681

Current income tax on income before income tax credits	$	(9,786,161	)	$	(6,893,116	)

Income tax benefit (expense) consists of:


	2004			2003
Current income tax on income before income tax credits	$	(9,786,161	)	$	(6,893,116	)
Additional 10% income tax on unappropriated earnings		(823,932	)		(1,273,482	)
Income tax credits		10,470,862			7,917,070
Other income tax		(555,588	)		(7,988	)
Net change in deferred income tax assets and liabilities
Net operating loss carryforwards		(1,652,983	)		535,725
Investment tax credits		234,690			(917,759	)
Temporary differences		1,131,331			(300,848	)
Net change in valuation allowance of deferred income tax assets		1,345,355			(2,982,501	)
Adjustment of prior years’ taxes		(148	)		(58	)

Income tax benefit (expense)	$	363,426		$	(3,922,957	)

Deferred income tax assets (liabilities) consist of the following:


	2004			2003
Current
Investment tax credits	$	8,849,000		$	8,322,000
Temporary differences		319,717			385,221
Valuation allowance		(250,731	)		(309,016	)

	$	8,917,986		$	8,398,205

Noncurrent
Net operating loss carryforwards	$	6,735,080		$	8,388,063
Investment tax credits		17,035,584			17,327,894
Temporary differences		(7,760,152	)		(8,956,987	)
Valuation allowance		(14,360,533	)		(15,647,603	)

	$	1,649,979		$	1,111,367

	d.		Integrated income tax information:

			The balances of the imputation credit account (ICA) of the TSMC as of December 31, 2004 and 2003 were zero and NT$2,832 thousand, respectively.

			The expected and actual creditable ratio of TSMC for distribution of earnings of 2004 and 2003 was zero and 0.03%, respectively.

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			The imputation credits allocated to the shareholders are based on the balance as of the date of dividend distribution. The expected creditable ratio for distribution of earnings of 2004 may be adjusted when the allocation of the imputation credits is made.

	e.		TSMC’s earnings generated prior to December 31, 1997 have been appropriated.

	f.		As of December 31, 2004, TSMC’s investment tax credits consisted of the following:


		Total		Remaining
		Creditable		Creditable		Expiry
Regulation	Items	Amounts		Amounts		Year
Statute for Upgrading Industries	Purchase of machinery and equipment	$	4,448,442	$	—		2004
			3,819,937		116,189		2005
			4,886,439		4,886,439		2006
			4,140,462		4,140,462		2007
			6,309,182		6,309,182		2008

		$	23,604,462	$	15,452,272

Statute for Upgrading Industries	Research and development expenditures	$	2,270,013	$	—		2004
			3,147,071		3,147,071		2005
			3,342,952		3,342,952		2006
			1,976,913		1,976,913		2007
			1,843,800		1,843,800		2008

		$	12,580,749	$	10,310,736

Statute for Upgrading Industries	Personnel training	$	48,659	$	—		2004
			29,448		29,448		2005
			27,312		27,312		2006
			26,780		26,780		2007

		$	132,199	$	83,540

Statute for Upgrading Industries	Investments in important technology-based enterprises	$	38,036	$	38,036		2005

	g.		As of December 31, 2004, the net operating loss carryforwards were generated from WaferTech, TSMC Development and TSMC Technology and will expire at various dates through 2024.

	h.		The sales generated from the following expansion and construction of TSMC’s manufacturing plants are exempt from income tax:


	Tax-Exemption Period
Construction of Fab 6		2001 to 2004
Construction of Fab 8 - module B		2002 to 2005
Expansion of Fab 2 - modules A and B, Fab 3, Fab 4, Fab 5 and Fab 6		2003 to 2006
Construction of Fab 12		2004 to 2007

The tax authorities have examined income tax returns of TSMC through 2000. However, TSMC is contesting the assessment of the tax authority for 1992 and 1998. TSMC believes that any additional assessment will not have a material adverse effect on TSMC.

-23-

15.

LABOR COST, DEPRECIATION AND AMORTIZATION EXPENSES


	Year Ended December 31, 2004						Year Ended December 31, 2003
			Classified as						Classified as
	Classified as		Operating				Classified as		Operating
	Cost of Sales		Expenses		Total		Cost of Sales		Expenses		Total
Labor cost
Salary	$	10,719,632	$	5,886,769	$	16,606,401	$	9,014,068	$	4,647,912	$	13,661,980
Labor and health insurance		572,210		320,785		892,995		476,687		245,357		722,044
Pension		472,329		271,186		743,515		379,845		193,718		573,563
Other		430,777		531,876		962,653		339,500		304,398		643,898

	$	12,194,948	$	7,010,616	$	19,205,564	$	10,210,100	$	5,391,385	$	15,601,485

Depreciation	$	61,703,792	$	2,563,408	$	64,267,200	$	61,988,138	$	2,398,768	$	64,386,906

Amortization	$	2,496,827	$	3,052,160	$	5,548,987	$	1,385,594	$	3,367,462	$	4,753,056

16.		SHAREHOLDERS’ EQUITY

		Common Stock, Capital Surplus and Earnings

		TSMC has issued a total of 668,351 thousand ADSs which are traded on the NYSE as of December 31, 2004. The number of common shares represented by the ADSs is 3,341,754 thousand shares (one ADS represents five common shares).

		Capital surplus can only be used to offset a deficit under the Company Law of the R.O.C. However, the capital surplus generated from donations and the excess of the issue price over the par value of capital stock (including the stock issued for new capital, mergers, convertible bonds and the surplus arising from treasury stock transactions) may be appropriated as stock dividends restricted to a certain percentage based on shareholders’ ownership.

		As of December 31, 2004 and 2003, the capital surplus consisted of the following:


	2004		2003
From merger	$	24,003,546	$	24,132,297
Additional paid-in capital		23,051,675		23,172,550
From long-term investments		121,354		87,295
From convertible bonds		9,360,424		9,410,632
Donations		55		55
Treasury stock		205		53,056

Total	$	56,537,259	$	56,855,885

TSMC’s Articles of Incorporation, as revised on December 21, 2004, provide that the following shall be appropriated from annual earnings to the extent that the annual earnings exceed any cumulative deficit:

	a.		10% legal reserve; until the amount of total legal reserve equals the TSMC’s paid-in capital;

	b.		Special reserve in accordance with relevant laws or regulations;

	c.		Remuneration to directors and supervisors and bonuses to employees at 0.3% and at least 1% of the remainder, respectively. Individuals eligible for the employee bonuses may include employees of affiliated companies as approved by the board of directors or a representative of the board of directors;

	d.		The appropriation of any remaining balance shall be approved by the shareholders.

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		Dividends may be distributed by way of cash dividend or stock dividend at the discretion of TSMC. As the operation of TSMC is at a steady growth stage, distribution of profits shall be made preferably by way of cash dividend. Distribution of profits may also be made by way of stock dividend; provided however, the ratio for stock dividend shall not exceed 50% of total distribution.

		Any appropriations of net income are recorded in the financial statements in the year of shareholder approval.

		An appropriation for legal reserve is required until the reserve equals the aggregate par value of TSMC’s issued capital stock. The reserve can only be used to offset a deficit or be distributed as a stock dividend up to 50% of the reserve balance when the reserve balance has reached 50% of the aggregate par value of the issued capital stock of TSMC.

		A special reserve equivalent to the net debit balance of the other components of shareholder’s equity (for example, unrealized loss on long-term investments and cumulative translation adjustments, but excluding treasury stock), shall be made from unappropriated earnings pursuant to existing regulations promulgated by the R.O.C. Securities and Futures Bureau (SFB). Any special reserve appropriated may be reversed to the extent that the net debit balance of the related account reverses.

		The appropriations of the earnings of 2003 and 2002 were approved in the shareholders’ meeting on May 11, 2004 and June 3, 2003, respectively. The appropriations and dividend per share are as follows:


						Dividend Per Share
	Appropriation of Earnings					(NT$)
	For Fiscal			For Fiscal		For Fiscal		For Fiscal
	Year 2003			Year 2002		Year 2003		Year 2002
Legal reserve	$	4,725,870		$	2,161,029
Special reserve		(68,945	)		68,945
Bonus paid to employees — in cash		681,628			—
Bonus paid to employees — in stock		2,726,514			1,539,013
Preferred stock dividend — in cash		184,493			455,000	$	0.35	$	0.35
Common stock dividend — in cash		12,159,971			—		0.60		—
Common stock dividend — in stock		28,373,267			14,898,309		1.41		0.80
Remuneration to directors and supervisors — in cash		127,805			58,485

	$	48,910,603		$	19,180,781

The amount of the above appropriation of earnings for 2003 and 2002 is consistent with the resolution of the meetings of board of directors on February 17, 2004 and March 4, 2003, respectively. However, the Company Law of the R.O.C. states TSMC, as a holder of treasury stock shall not participate in the appropriations of earnings. Therefore, the actual cash dividend per share and stock dividend per share are slightly more than those in the aforementioned resolution. If the above employee bonus paid in stock had been paid in cash and all of the bonus to employees and remuneration to directors and supervisors had been charged against income for 2003 and 2002, the after income tax basic earnings per share for the years ended December 31, 2003 and 2002 would have decreased from NT$2.33 to NT$2.15 and NT$ 1.14 to NT$1.05, respectively. The shares distributed as a bonus to employees represented 1.35% and 0.83% of TSMC’s total outstanding common shares as of December 31, 2003 and 2002, respectively.

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		As of January 13, 2005, the board of directors of TSMC has not resolved the appropriation for earnings of 2004.

		The above information about the appropriations of bonus to employees and remuneration to directors and supervisors is available at Market Observation System website.

		Under the Integrated Income Tax System that became effective on January 1, 1998, the R.O.C. resident shareholders are allowed a tax credit for their proportionate share of the income tax paid by TSMC on earnings generated since January 1, 1998.

		Preferred Stock

		TSMC issued 1,300,000 thousand shares of unlisted Series A — preferred stock to certain investors on November 29, 2000. All of the preferred stock was redeemed at par value and retired on May 29, 2003. Under TSMC’s Articles of Incorporation, TSMC is no longer authorized to issue preferred stock.

		The preferred shareholders had the following rights and the related terms and conditions prior to redemption:

		Preferred shareholders

	a.		Are entitled to receive cumulative cash dividends at an annual rate of 3.5%.

	b.		Are not entitled to receive any common stock dividends (whether declared out of unappropriated earnings or capital surplus).

	c.		Have priority over the holders of common shares to the assets of TSMC available for distribution to shareholders upon liquidation or dissolution; however, the pre-emptive rights to the assets shall not exceed the issue price of the shares.

	d.		Have voting rights similar to that of the holders of common shares.

	e.		Have no right to convert their shares into common shares. The preferred shares are to be redeemed within thirty months from their issuance. The preferred shareholders have the aforementioned rights and TSMC’s related obligations remain the same until the preferred shares are redeemed by TSMC.

17.		STOCK-BASED COMPENSATION PLANS

		Stock Option Plans

		TSMC’s Employee Stock Option Plans, the 2003 Plan and the 2002 Plan, were approved on October 29, 2003 and June 25, 2002, respectively. The maximum number of units authorized to be granted under 2003 Plan and the 2002 Plan is 120,000 thousand and 100,000 thousand, respectively, with each unit representing one common share of stock. The option rights may be granted to qualified employees of TSMC or any of its domestic or foreign subsidiaries, in which TSMC’s shareholding with voting rights, directly or indirectly, is more than fifty percent (50%). The option rights of both plans are valid for ten years and exercisable at certain percentages subsequent to the second anniversary of the grant date. Under the terms of the plans, stock option rights are granted at an exercise price equal to the closing price of TSMC’s common shares listed on the TSE on the date of grant. Under the 2003 Plan and the 2002 Plan, units that were never granted, or had been granted and subsequently cancelled were expired as of December 31, 2004.

-26-

		On November 2, 2004, the board of directors of TSMC approved the 2004 Plan, in which the maximum number of units authorized to be granted is 11,000 thousand, with each unit representing one common share of stock. The option rights may be granted to qualified employees of TSMC or any of its domestic or foreign subsidiaries, in which TSMC’s shareholding with voting rights, directly or indirectly, is more than fifty percent (50%). The option rights of the plans are valid for ten years and exercisable at certain percentages subsequent to the second anniversary of the grant date. Under the terms of the plan, stock option rights are granted at an exercise price equal to the closing price of TSMC’s common shares listed on the TSE on the date of grant. The 2004 plan was approved by Bureau of Monetary Affairs, Financial Supervisory Commission of the R.O.C. on January 6, 2005.

		Information on outstanding stock options for the years ended December 31, 2004 and 2003 is as follows:


	2003 Plan					2002 Plan
	Number of			Weighted-		Number of			Weighted-
	Outstanding			Average		Outstanding			Average
	Stock Option			Exercise		Stock Option			Exercise
	Rights			Price		Rights			Prices
	(in Thousands)			(NT$)		(in Thousands)			(NT$)
Year ended December 31, 2004

Beginning outstanding balance		842			57.8		48,515			42.7
Options granted		13,199			49.9		7,201			42.6
Options exercised		—			—		(87	)		41.8
Options cancelled		(1,404	)		50.9		(3,899	)		44.2


Ending outstanding balance		12,637					51,730


Year ended December 31, 2003

Beginning outstanding balance		—			—		19,369			48.6
Options granted		843			66.5		32,031			50.3
Options cancelled		(1	)		66.5		(2,885	)		48.7


Ending outstanding balance		842					48,515

		The number of outstanding option rights and exercise prices have been adjusted to reflect the appropriations of dividends in accordance with the plans.

		As of December 31, 2004, information on outstanding and exercisable option rights is as follows:


			Options Outstanding						Options Exercisable
					Weighted-
			Number of		Average		Weighted-		Number of		Weighted-
	Range of		Outstanding		Remaining		Average		Exercisable		Average
	Exercise		Options (in		Contractual		Exercise		Options (in		Exercise
	Price (NT$)		Thousands)		Life (Years)		Price (NT$)		Thousands)		Price (NT$)
2003 Plan	$	43.8-$57.8		12,637		9.34	$	50.3		—	$	—
2002 Plan	$	32.8-$46.2		51,730		8.09		42.6		10,307		41.7


				64,367		8.33		44.1		10,307		41.7

-27-


Method:	Black-Scholes Model
Assumptions:
Expected dividend yield		1.00	%
Expected volatility		43.77%-46.15	%
Risk free interest rate		3.07%-3.85	%
Expected life	5 years

Net income:
Net income as reported	$	92,316,115
Pro forma net income		92,257,355


	NT$
Earnings per share (EPS) — after income tax:
Basic EPS as reported		3.97
Pro forma basic EPS		3.97
Diluted EPS as reported		3.97
Pro forma diluted EPS		3.97

		The estimated weighted average fair value for the options granted during the year ended December 31, 2004 was NT$19.73 per option.

		In 1996, WaferTech adopted an Executive Incentive Plan, which was amended in 1997. According to the 1997 amendment, the Board of Directors of WaferTech approved the Senior Executive Incentive Plan and the Employee Incentive Plan (the WaferTech Plans) under which officers, key employees and non-employee directors may be granted stock option rights. The WaferTech Plans provide for 15,150 thousand option rights available for grant. For option rights granted to date, the option purchase price was equal to or exceeded the fair market value at the date of grant. The options will expire if not exercised at specified dates ranging from May 2006 and June 2011. In December 2000, WaferTech implemented a Stock Option Buyback Program (Buyback). The Buyback program provides employees with the right to sell back to WaferTech all vested stock options and outstanding ownership interests granted under the WaferTech Plans. As of December 31, 2004, the outstanding and exercisable stock options were 134 thousand and 133 thousand, respectively, and US$616 thousand was accrued in connection with the Buyback program.

		Stock Appreciation Rights

		In December 2000, WaferTech and TSMC — North America implemented a stock appreciation rights program (Appreciation). The Appreciation plan is designed to provide employees with a long-term incentive plan that tracks the appreciation of TSMC common stock through Stock Appreciation Rights (SARs). SARs provide each participant the right to receive, upon exercise, an amount in cash from WaferTech and TSMC — North America that is the excess of the market price of TSMC common stock on TSE on the date of exercise over the exercise price. As of December 31, 2004, WaferTech and TSMC — North America accrued US$381 thousand and US$1,360 thousand, respectively, in connection with the Appreciation. During 2002, benefits under the Appreciation plan for TSMC — North America were replaced by the stock option plans aforementioned.

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18.

TREASURY STOCK (COMMON STOCK)

(Shares in Thousand)


	Beginning		Increase/				Ending
	Shares		Dividend		Decrease		Shares
Year ended December 31, 2004
Reclassification of parent company stock held by subsidiaries from long-term investments		40,597		5,676		752		45,521
Repurchase under share buyback plan		—		124,720		124,720		—

		40,597		130,396		125,472		45,521


Year ended December 31, 2003
Reclassification of parent company stock held by subsidiaries from long-term investments		42,001		3,357		4,761		40,597

		Proceeds from the sale of treasury stock for the years ended December 31, 2004 and 2003 were NT$39,906 thousand and NT$331,945 thousand, respectively. TSMC’s capital stock held by a subsidiary as an investment is recorded as treasury stock, with the holder having the same rights as other common shareholders. As of December 31, 2004 and 2003, the book value of the treasury stock was NT$1,595,186 thousand and NT$1,633,228 thousand, respectively; the market value was NT$2,241,009 thousand and NT$2,548,788 thousand, respectively.

		TSMC held a special meeting of the board of directors and approved a share buyback plan to repurchase TSMC’s common shares listed on the TSE during the period from March 24, 2004 to May 23, 2004. TSMC repurchased 124,720 thousand common shares for a total of NT$7,059,798 thousand. All the treasury stock repurchased under the buyback plan was retired on August 16, 2004.

19.		CONSOLIDATED EARNINGS PER SHARE (EPS)

		EPS is computed as follows:


							EPS (NT$)
							Income
	Amounts (Numerator)						Before
	Income Before				Number of		Income
	Income Tax				Shares		Tax and		Consolidated
	and Minority		Consolidated		(Denominator)		Minority		Net
	Interest		Net Income		(Thousand)		Interest		Income
Year ended December 31, 2004

Basic EPS
Income available to common shareholders	$	91,965,587	$	92,316,115		23,248,682	$	3.96	$	3.97

Effect of diluted securities — stock options		—		—		6,404


Diluted EPS
Income available to common shareholders (including effect of diluted potential common stock)	$	91,965,587	$	92,316,115		23,255,086	$	3.95	$	3.97

(Continued)

-29-


									EPS (NT$)
									Income
	Amounts (Numerator)								Before
	Income Before						Number of		Income
	Income Tax						Shares		Tax and		Consolidated
	and Minority			Consolidated			(Denominator)		Minority		Net
	Interest			Net Income			(Thousand)		Interest		Income
Year ended December 31, 2003
Net income	$	51,178,645		$	47,258,700
Less — preferred stock dividends		(184,493	)		(184,493	)

Basic EPS
Income available to common shareholders		50,994,152			47,074,207			23,327,354	$	2.19	$	2.02

Effect of diluted potential common stock — stock options		—			—			9,599


Diluted EPS
Income available to common shareholders (including effect of diluted potential common stock)	$	50,994,152		$	47,074,207			23,336,953	$	2.19	$	2.02

20.		RELATED PARTY TRANSACTIONS

		The significant transactions with related parties in addition to those disclosed in other notes are summarized as follows:

	a.		Industrial Technology Research Institute (ITRI), the Chairman of TSMC is one it its directors

	b.		Philips, a major shareholder of TSMC

	c.		Investees of the TSMC

			VIS SSMC GUC VisEra


	2004				2003
	Amount		%		Amount		%
For the years
Sales
Philips and its affiliates	$	5,463,565		2	$	3,577,054		2
Others		458,999		—		610,534		—

	$	5,922,564		2	$	4,187,588		2

Purchase
VIS	$	9,169,602		21	$	4,910,810		15
SSMC		5,869,123		13		5,519,805		17

	$	15,038,725		34	$	10,430,615		32

(Continued)

-30-


	2004				2003
	Amount		%		Amount		%
Manufacturing expenses — technical assistance fee (Note 22a)	$	907,047		1	$	3,023,741		3

Philips

General and administrative expenses — rental expenses
GUC	$	13,186		2	$	—		—


Research and development expenses
GUC	$	11,688		—	$	—		—


Proceeds from disposal of property, plant and equipment
VIS	$	33,974		2	$	15,125		9

Non-operating income and gains
SSMC (primarily technical service income, see Note 22e)	$	364,505		6	$	201,869		4
VIS (primarily technical service income, see Note 22j)		117,760		2		251		—
VisEra		28,917		—		—		—

	$	511,182		8	$	202,120		4

At December 31
Receivables
Philips and its affiliates	$	581,487		89	$	895,063		97
Others		72,890		11		25,381		3

	$	654,377		100	$	920,444		100


Other receivables
SSMC	$	63,701		45	$	13,228		10
VIS		47,599		34		118,503		90
VisEra		30,278		21		—		—

	$	141,578		100	$	131,731		100


Payables
VIS	$	1,533,938		69	$	1,034,074		32
Philips and its affiliates		469,494		21		1,579,568		49
SSMC		207,794		10		634,647		19
GUC		6,589		—		—		—

	$	2,217,815		100	$	3,248,289		100

Other long-term payables
Philips and its affiliates	$	2,317,972		100	$	—		—

Refundable deposits
VIS	$	—		—	$	150,840		76

-31-

		The terms of sales to related parties are not significantly different from those to third parties. For other related parties transactions, since there are no other similar transactions to follow, the prices are determined in accordance with the related contractual agreements.

21.		SIGNIFICANT LONG-TERM OPERATING LEASES

		TSMC leases land from the Science-Based Industrial Park Administration. These agreements expire on various dates from March 2008 to December 2020. The agreements can be renewed upon their expiration.

		TSMC — North America leases its office premises and certain equipment under non-cancelable operating agreements. TSMC - Europe and TSMC — Japan entered into lease agreements for their office premises. The leases will expire between 2005 and 2010. The agreements can be renewed upon their expiration.

		As of December 31, 2004, future remaining lease payments are as follows:


Year	Amount
2005	$	354,259
2006		352,988
2007		340,748
2008		325,563
2009		322,534
2010 and thereafter		1,513,025

	$	3,209,117

22.		SIGNIFICANT COMMITMENTS AND CONTINGENCIES

		The significant commitments and contingencies of the Company as of December 31, 2004 are as follows:

	a.		On June 20, 2004, TSMC and Philips revised the Technical Cooperation Agreement, which was originally signed on May 12, 1997, with an effective date from January 1, 2004 for five years. Upon expiration, this amended Technical Cooperation Agreement will be terminated at the expiration date and will not be automatically renewed. Under this amended Technical Cooperation Agreement, TSMC will pay Philips royalties based on fixed amounts mutually agreed-on, rather than under certain percentage of TSMC’s annual net sales. TSMC and Philips also agree to cross license the patents owned by each party. TSMC also obtained through Philips a number of patent cross licenses.

	b.		Under a technical cooperation agreement with ITRI, TSMC shall reserve and allocate up to 35% of certain of its production capacity for use by the Ministry of Economic Affairs (MOEA) or any other party designated by the MOEA.

	c.		Under several foundry agreements, TSMC shall reserve a portion of its production capacity for certain major customers that have guarantee deposits with TSMC. As of December 31, 2004, TSMC had a total of US$12,802 thousand of guarantee deposits.

	d.		Under a Shareholders Agreement entered into with Philips and EDB Investments Pte Ltd. on March 30, 1999, the parties formed a joint venture company, SSMC, for the purpose of constructing an integrated circuit foundry in Singapore. As of December 31, 2004, TSMC’s equity interest in SSMC was 32%. TSMC and Philips committed to buy specific percentages of the production capacity of SSMC. If any party defaults on the commitment and the capacity utilization of SSMC falls below a specific percentage of its total capacity, the defaulting party is required to compensate SSMC for all related unavoidable costs.

-32-

	e.		TSMC provides technical services to SSMC under a Technical Cooperation Agreement (the Agreement) entered into on May 12, 1999. TSMC receives compensation for such services computed at a specific percentage of net selling price of certain products sold by SSMC. The Agreement shall remain in force for ten years and may be automatically renewed for successive periods of five years each unless pre-terminated by either party under certain conditions.

	f.		Under a Technology Transfer Agreement (TTA) with National Semiconductor Corporation (National) entered into on June 27, 2000, TSMC shall receive payments for the licensing of certain technology to National. The agreement was to remain in force for ten years and could be automatically renewed for successive periods of two years thereafter unless either party gives notice for early termination under certain conditions. In January 2003, TSMC and National entered into a Termination Agreement whereby the TTA was terminated for convenience. Under the Termination Agreement, TSMC will be relieved of any further obligation to transfer any additional technology. In addition, TSMC granted National an option to request the transfer of certain technologies under the same terms and conditions as the terminated TTA. The option will expire in January 2008.

	g.		Beginning in 2001, TSMC entered into several licensing arrangements for certain semiconductor patents. The terms of the contracts range from five to ten years with payments to be made in the form of royalties over the term of the related contracts. TSMC has recorded the related amounts as a liability with the corresponding amounts recorded as deferred charges which are amortized and charged to cost of sales on a straight-line basis over the estimated life of the technology or the term of the contract, whichever is shorter.

	h.		In November 2002, TSMC entered into an Amended and Restated Joint Technology Cooperation Agreement with Philips, Motorola, Inc. and STMicroelectronics to jointly develop 90-nm to 65-nm advanced CMOS Logic and e-DRAM technologies. TSMC also agreed to align 0.12 micron CMOS Logic technology to enhance its foundry business opportunities. TSMC will contribute process technologies and share a portion of the costs associated with this joint development project.

	i.		In December 2003, TSMC entered into a Technology Development and License Agreement with Motorola, Inc. to jointly develop 65-nm SOI (silicon on insulator) technology. TSMC will also license related 90-nm SOI technology from Motorola, Inc. Any intellectual properties arising out of the co-development project shall be jointly owned by the parties. In accordance with the agreement, TSMC will pay royalties to Motorola, Inc. and will share a portion of the costs associated with the joint development project.

	j.		TSMC provides a technology transfer to VIS under a Manufacturing License and Technology Transfer Agreement entered into in August 2004. TSMC receives compensation for such technology transfer in the form of royalty payments from VIS computed at specific percentages of net selling price of certain products sold by VIS. VIS agreed to reserve its certain capacity to manufacture for TSMC certain products at prior as agreed by the parties.

	k.		Under an agreement signed with a certain company, TSMC — Shanghai has the obligation to purchase certain assets within a specified period at the price agreed upon by both parties. TSMC — Shanghai will compensate the other party in case of a breach of the agreement.

	l.		Amounts available under unused letters of credit as of December 31, 2004 were NT$6,480 thousand, US$1,282 thousand and SG$85 thousand. Among the unused letters of credit, TSMC — North America has an outstanding irrevocable standby letter of credit for US$1,078 thousand. The standby letter of credit was entered into as security to the landlord of TSMC — North America’s office spaces in San Jose, California. The standby letter of credit will expire in October, 2005.

-33-

The Company filed a series of lawsuits in late 2003 and 2004 in both state and federal courts in California and with the U.S. International Trade Commission against Semiconductor Manufacturing International Corporation (SMIC), SMIC (Shanghai), and SMIC Americas. The lawsuits alleged that SMIC companies infringed multiple patents of the Company and misappropriated the Company’s trade secrets. These suits have been settled out of court on January 30, 2005. As part of the agreement, SMIC will pay TSMC US$175 million over six years to resolve the Company’s patent infringement and trade secret claims.

23.		ADDITIONAL DISCLOSURES

		Following are the additional disclosures required by the SFB for the Company and its investees:

	a.		Financing provided: Please see Table 1 attached;

	b.		Endorsement/guarantee provided: Please see Table 2 attached;

	c.		Marketable securities held: Please see Table 3 attached;

	d.		Marketable securities acquired and disposed of at costs or prices of at least NT$100 million or 20% of the paid-in capital: Please see Table 4 attached;

	e.		Acquisition of individual real estate properties at costs of at least NT$100 million or 20% of the paid-in capital: Please see Table 5 attached;

	f.		Disposal of individual real estate properties at prices of at least NT$100 million or 20% of the paid-in capital: None;

	g.		Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the capital: Please see Table 6 attached;

	h.		Receivable from related parties amounting to at least NT$100 million or 20% of the paid-in capital: Please see Table 7 attached;

	i.		Names, locations, and related information of investees of which the Company exercises significant influence: Please see Table 8 attached;

	j.		Financial instrument transactions:

	1)		Derivative financial instruments

			The Company entered into derivative financial instrument transactions for the years ended December 31, 2004 and 2003 to manage exposures related to foreign exchange rate and interest rate fluctuations. Certain information on these contracts is as follows:

Outstanding forward exchange contracts as of December 31, 2004 and 2003 are as follows:


Financial			Contract Amount
Instruments	Currency	Maturity Date	(in Thousands)
2004
Sell	US$/NT$	January 2005 to March 2005	US$	733,000
Sell	US$/EUR	January 2005	US$	159,081

(Continued)

-34-


Financial			Contract Amount
Instruments	Currency	Maturity Date	(in Thousands)
2003
Sell	US$/NT$	January 2004 to July 2004	US$	1,805,000
Buy	EUR/US$	January 2004	EUR	7,500
Buy	JPY/US$	January 2004	JPY	748,405

			As of December 31, 2004 and 2003, receivables from forward exchange contracts (included in the “other financial assets” account) aggregate to approximately NT$392,534 thousand, and NT$76,385 thousand, respectively; payables from forward exchange contracts (included in the “other current liabilities” account) aggregate to approximately NT$559 thousand and NT$174,018 thousand, respectively.

	b)		Cross currency swaps

			Outstanding cross currency swap contracts as of December 31, 2004 are as follows:

Range of

Contract Amount

Range of

Interest Rate

Maturity Date

(in Thousands)

Interest Rate Paid

Received

January 2005 to June 2005

US$

1,420,000

1.28%-2.72

0.49%-1.17

			As of December 31, 2004, receivables from the cross currency swap contracts (included in the “other financial assets” account) were approximately NT$761,030 thousand.

			Net exchange gain or loss arising from forward exchange contracts and cross currency swap contracts was recognized in the “foreign exchange loss, net” account and the difference in interest was recorded in interest income or expense.

	c)		Interest rate swaps

			Outstanding contracts as of December 31, 2004 and 2003 were as follows:


		Contract Amount
Contract Date	Period	(in Thousands)
2004
September 2003	September 2003 to December 2005	$	500,000
October 2003	October 2003 to December 2005		500,000
October 2003	October 2003 to December 2005		500,000
October 2003	October 2003 to December 2005		500,000
October 2003	October 2003 to December 2005		500,000
November 2003	November 2003 to December 2005		500,000

(Continued)

-35-


		Contract Amount
Contract Date	Period	(in Thousands)
2003
September 2003	September 2003 to December 2005	$	500,000
October 2003	October 2003 to December 2005		500,000
October 2003	October 2003 to December 2005		500,000
October 2003	October 2003 to December 2005		500,000
October 2003	October 2003 to December 2005		500,000
November 2003	November 2003 to December 2005		500,000
July 1999	July 1999 to June 2004	US$	2,857

	d)		Option contracts

			During 2004, the Company did not enter into any foreign currency option contracts.

			There were no outstanding option contracts as of December 31, 2003. The Company entered into foreign currency option contracts for hedging purposes; therefore, the related premiums and the foreign exchange gain or loss are recognized in the “foreign exchange loss, net” account.

	e)		Transaction risk

	i)		Credit risk. Credit risk represents the positive net settlement amount of those contracts with positive fair values at the balance sheet date. The positive net settlement amount represents the loss incurred by the Company if the counter-parties breached the contracts. The banks, which are the counter-parties to the foregoing derivative financial instruments, are reputable financial institutions. Management believes its exposure related to the potential default by those counter-parties is low.

	ii)		Market price risk. All derivative financial instruments are intended as hedges for fluctuations in foreign exchange rates and interest rates. Gains or losses from these hedging instruments are likely to be offset by gains or losses from the hedged items. Interest rate risks are also controlled as the expected cost of capital is fixed. Thus, market price risks are believed to be low.

	iii)		Cash flow risk and the amount and period of future cash needs.

			As of December 31, 2004, the Company’s future cash needs for outstanding forward exchange contracts and cross currency swap contracts are as follows:


	Inflow		Outflow
Term	(In Thousands)		(In Thousands)
Within one year	$	69,761,484	US$	2,312,081
	EUR 118,500

The Company has sufficient operating capital to meet the above cash needs. In addition, there will be corresponding cash inflow for the cash outflow. Therefore, the cash flow risk is low.

-36-

Fair values of financial instruments were as follows:


	2004					2003
	Carrying					Carrying
	Amount		Fair Value			Amount			Fair Value
	(In Thousands)					(In Thousands)
Non-derivative financial instruments

Assets
Short-term investments, net	$	54,107,951	$	54,990,545		$	13,611,536		$	14,054,511
Long-term investments (securities with market price)		31,165,721		34,265,072			4,103,926			10,976,671
Liabilities
Bonds payable (including current portion)		30,000,000		30,607,341			35,000,000			35,850,377

Derivative financial instruments

Forward exchange contracts (buy)		—		—			2,351			3,037
Forward exchange contracts (sell)		391,975		317,090			(99,984	)		40,638
Cross currency swap contracts		761,030		760,012			—			—
Interest rate swap contracts		4,361		(22,714	)		—			2,093

			The above financial instruments do not include cash and cash equivalents, receivables, other financial assets, payables, and payable to contractors and equipment suppliers. The carrying amounts of the aforementioned instruments reported in the balance sheet approximate their fair values.

			The above financial instruments also exclude refundable deposits, guarantee deposits, long-term investments that do not have quoted market prices as well as other long-term payables. The future cash inflow and outflow of the deposits approximate their fair values. Some of long-term investments do not have quoted market prices; therefore, fair values for those long-term investments are not shown above. The fair value of other long-term payables is determined using the discounted value of expected cash flows, which approximates the carrying value.

			Fair values of financial instruments were determined as follows:

	a)		Fair value of short-term and publicly traded long-term investments is based on quoted market prices.

	b)		The fair value of bonds payable is the quoted market value.

	c)		Fair value of derivative financial instruments is the amount receivable from or payable to the counter-party if the contracts were terminated on the balance sheet date.

Information on investment in Mainland China

	1)		The name of the investee company in mainland China, the main businesses and products, its issued capital, method of investment, information on inflow or outflow of capital, ratio of ownership, equity in the net gain or net loss, ending balance, amount received as earnings distributions from the investment, and the limitation on investment: Please see Table 9 attached.

	2)		Significant direct or indirect transactions with the investee company, its prices and terms of payment, unrealized gain or loss, and other related information which is helpful to understand the impact of investment in mainland China on financial reports: Please see Note 20.

-37-

24.

SEGMENT FINANCIAL INFORMATION

Geographic information:


					Adjustments
					and
	Overseas		Taiwan		Elimination			Consolidated
2004
Sales to unaffiliated customers	$	143,801,130	$	113,411,488	$	—		$	257,212,618
Transfers between geographic areas		15,657,797		142,580,939		(158,238,736	)		—


Total sales	$	159,458,927	$	255,992,427	$	(158,238,736	)	$	257,212,618


Gross profit	$	6,173,780	$	110,160,584	$	(515,181	)	$	115,819,183

Operating expenses									(27,337,509	)
Non-operating income and gains									6,090,224
Non-operating expenses and losses									(2,606,311	)


Income before income tax and minority interest								$	91,965,587


Minority interest in income of subsidiaries								$	12,898


Identifiable assets	$	89,000,906	$	416,076,665	$	(43,725,329	)	$	461,352,242

Long-term investments									38,101,849


Total assets								$	499,454,091


2003

Sales to unaffiliated customers	$	118,851,382	$	84,145,430	$	—		$	202,996,812
Transfers between geographic areas		11,494,868		117,758,911		(129,253,779	)		—


Total sales	$	130,346,250	$	201,904,341	$	(129,253,779	)	$	202,996,812

Gross profit	$	2,392,944	$	72,891,637	$	(401,103	)	$	74,883,478

Operating expenses									(23,582,897	)
Non-operating income and gains									5,669,312
Non-operating expenses and losses									(5,791,248	)


Income before income tax and minority interest								$	51,178,645


Minority interest in loss of subsidiaries								$	3,012

(Continued)

-38-


					Adjustments
					and
	Overseas		Taiwan		Elimination			Consolidated
Identifiable assets	$	52,276,269	$	358,451,509	$	(14,075,261	)	$	396,652,517

Long-term investments									10,748,014


Total assets								$	407,400,531

	b.		Gross export sales

			The export sales information is determined based on billed regions. Gross export sales for the years ended December 31, 2004 and 2003 were NT$92,455,415 thousand and NT$59,868,104 thousand, respectively. There were no export sales to a region that accounted for more than 10% of the Company’s total sales.

	c.		Major customer

			In 2004, there is no customer accounted for at least 10% of the Company’s total sales. The Company only has one customer that accounts for at least 10% of its total sales in 2003. The sales to such customer amounted to $21,893,320 thousand and $31,220,104 thousand in 2004 and 2003, representing 8% and 15% of its total sales, respectively.

-39-

TABLE 1

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND SUBSIDIARIES

FINANCING PROVIDED
FOR THE YEAR ENDED DECEMBER 31, 2004
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Financing

Maximum

Financing Limit

Company's

Financial

Balance for

Ending

Type of

Reasons for

for Each

Financing Amount

Statement

the Period

Balance

Interest

Financing

Transaction

Short-term

Allowance for

Collateral

Borrowing

Limits

No.

Financing Name

Counter-party

Account

(US$ in Thousand)

Rate

(Note 1)

Amounts

Financing

Bad Debt

Item

Value

Company

(US$ in Thousand)

TSMC International

TSMC Development

Other receivables

1,915,020

1.50

—

Operating capital

—

N/A

31,532,982

(US$60,000)

(US$987,968)

(Note 2)

TSMC Technology

Other receivables

319,170

—

(US$10,000)

TSMC Partners

TSMC Development

Other receivables

2,553,360

1.50

—

Operating capital

—

N/A

(Note 3)

(US$80,000)

Note 1:		The No. 2 represents necessary for short-term financing.

Note 2:		Not exceeding the issued capital of the Company.

Note 3:		Generally not exceeding the issued capital of the Company, unless approved by all members of the board.

-40-

TABLE 2

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND SUBSIDIARIES

ENDORSEMENT/GUARANTEE PROVIDED
FOR THE YEAR ENDED DECEMBER 31, 2004
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Ratio of

Accumulated Amount

Counter-party

Limits on Each

Value of

of Collateral to

Maximum

Nature of

Counter-party’s

Maximum

Property, Plant

Net Equity of the

Collateral/Guarantee

Endorsement/

Relationship

Endorsement/

Balance for the Year

Ending Balance

Collateral

Latest Financial

Amounts Allowable

No.

Guarantee Provider

Name

(Note 2)

Guarantee Amounts

(US$ in Thousand)

and Equipment

Statement

(Note 1)

The Company

TSMC Development

Not exceed 10% of the net worth of the Company, and also limiting to the total capital issued of the endorsement/guarantee company, unless otherwise approved by Board of Directors.

1,915,020

—

0.48

99,741,325

(US$60,000)

TSMC — North America

1,276,680

—

0.32

(US$40,000)

WaferTech

14,043,480

—

(US$440,000)

Note 1:		25% of the net worth of the Company as of December 31, 2004.

Note 2:		The No. 2 represents a subsidiary in which the Company holds directly over 50% of the equity interest. The No. 3 represents an investee in which the Company holds directly and indirectly over 50% of the equity interest.

-41-

TABLE 3

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND SUBSIDIARIES

MARKETABLE SECURITIES HELD
DECEMBER 31, 2004
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)


				December 31, 2004
										Market Value or Net
		Relationship with	Financial Statement	Shares/Units		Carrying Value		Percentage of		Asset Value
Held Company Name	Marketable Securities Type and Name	the Company	Account	(In Thousands of)		(US$ in Thousand)		Ownership		(US$ in Thousand)		Note
The Company	Government bonds
	2003 Government Bond Series A	—	Short-term investment		—	$	1,207,409		N/A	$	1,202,028
	United States Treas NTS	—	Short-term investment		—	US$	192,357		N/A	US$	191,824
	2003 Government Bond Series I	—	Long-term investment		—		3,397,081		N/A		3,393,982
	2004 Government Bond Series A	—	Long-term investment		—		2,349,573		N/A		2,352,973
	2004 Government Bond Series E	—	Long-term investment		—		3,893,827		N/A		3,892,025
	2004 Kaohsiung Municipal Bond Series A	—	Long-term investment		—		620,000		N/A		620,000

	Bonds under repurchase agreement	—	Short-term investment		—		249,449		N/A		251,593

	Bond funds
	JF Taiwan Bond Fund	—	Short-term investment		78,698		1,153,209		N/A		1,169,406
	ABN AMRO Bond Fund	—	Short-term investment		134,906		1,956,175		N/A		1,978,785
	JF Taiwan First Bond Fund	—	Short-term investment		84,886		1,151,463		N/A		1,162,632
	INVESCO R.O.C. Bond A Fund	—	Short-term investment		76,705		1,101,911		N/A		1,111,932
	Dresdner Bond DAM Fund	—	Short-term investment		80,833		900,000		N/A		910,904
	Barits Bond Fund	—	Short-term investment		76,640		900,000		N/A		907,765
	Shinkong Chi Shin Bond Fund	—	Short-term investment		151,594		2,100,000		N/A		2,115,554
	ABN AMRO Select Bond Fund	—	Short-term investment		18,235		200,000		N/A		201,183
	NITC Bond Fund	—	Short-term investment		3,764		600,000		N/A		602,703
	HSBC NTD Money Management Fund	—	Short-term investment		41,568		600,000		N/A		601,958

	Stock
	Taiwan Mask Corp.	—	Short-term investment		1,787		6,528		—		27,552
	TSMC International	Subsidiary	Long-term investment		987,968		23,778,997		100		23,778,997
	VIS	Investee	Long-term investment		409,532		5,401,982		28		8,493,692
	TSMC Partners	Subsidiary	Long-term investment		300		3,908,356		100		3,908,356
	SSMC	Investee	Long-term investment		382		3,290,888		32		3,290,888
	TSMC - North America	Subsidiary	Long-term investment		11,000		502,242		100		1,179,352	Treasury stock of NT$677,110 thousand is
												deducted from the carrying value.
	GUC	Investee	Long-term investment		39,040		391,626		47		418,272
	TSMC - Japan	Subsidiary	Long-term investment		6		102,572		100		102,572
	VisEra	Investee	Long-term investment		5,100		59,116		25		59,116
	TSMC - Europe	Subsidiary	Long-term investment		—		25,439		100		25,439
	United Industrial Gases Co., Ltd.	—	Long-term investment		16,783		193,584		10		284,036
	Shin-Etsu Handotai Taiwan Co., Ltd.	—	Long-term investment		10,500		105,000		7		170,940

(Continued)

-42-


				December 31, 2004
										Market Value or Net
		Relationship with	Financial Statement	Shares/Units		Carrying Value		Percentage of		Asset Value
Held Company Name	Marketable Securities Type and Name	the Company	Account	(In Thousand)		(US$ in Thousand)		Ownership		(US$ in Thousand)		Note
	W.K. Technology Fund IV	—	Long-term investment		5,000	$	50,000		2	$	55,146
	Hontung Venture Capital Co., Ltd.	—	Long-term investment		8,392		83,916		10		53,571
	Globaltop Partner I Venture Capital Corp.	—	Long-term investment		5,000		50,000		1		49,909

	Corporate bonds
	Taiwan Power Company	—	Short-term investment		—		2,777,798		N/A		2,749,413
	Abbott Labs	—	Short-term investment		—	US$	2,732		N/A	US$	2,709
	Abbott Labs	—	Short-term investment		—	US$	1,581		N/A	US$	1,587
	Ace Ltd	—	Short-term investment		—	US$	1,046		N/A	US$	1,042
	AIG Sunamerica Global Fing IX	—	Short-term investment		—	US$	1,032		N/A	US$	1,028
	Allstate Finl Global Fdg LLC	—	Short-term investment		—	US$	3,171		N/A	US$	3,096
	American Express Co.	—	Short-term investment		—	US$	3,550		N/A	US$	3,503
	American Gen Fin Corp.	—	Short-term investment		—	US$	1,768		N/A	US$	1,765
	American Gen Fin Corp. Mtn	—	Short-term investment		—	US$	3,130		N/A	US$	3,087
	American Gen Fin Corp. Mtn	—	Short-term investment		—	US$	1,058		N/A	US$	1,042
	American Honda Fin Corp. Mtn	—	Short-term investment		—	US$	3,800		N/A	US$	3,803
	American Intl Group Inc. Mtnf	—	Short-term investment		—	US$	3,795		N/A	US$	3,795
	Amgen Inc.	—	Short-term investment		—	US$	3,005		N/A	US$	2,991
	Amsouth Bk Birmingham Ala	—	Short-term investment		—	US$	1,972		N/A	US$	1,978
	ANZ Cap Tr I	—	Short-term investment		—	US$	1,012		N/A	US$	1,001
	Bank New York Inc.	—	Short-term investment		—	US$	1,525		N/A	US$	1,509
	Bank New York Inc.	—	Short-term investment		—	US$	3,945		N/A	US$	3,943
	Bank Scotland Treas Svcs PLC	—	Short-term investment		—	US$	2,715		N/A	US$	2,717
	Bank Utd Houston TX Mtbn	—	Short-term investment		—	US$	580		N/A	US$	574
	Bear Stearns Cos Inc.	—	Short-term investment		—	US$	3,518		N/A	US$	3,493
	Bear Stearns Cos Inc. Medium Te	—	Short-term investment		—	US$	3,105		N/A	US$	3,105
	Berkshire Hathaway Fin Corp.	—	Short-term investment		—	US$	1,498		N/A	US$	1,494
	Bristol Myers Squibb Co.	—	Short-term investment		—	US$	3,819		N/A	US$	3,788
	British Telecommunications PLC	—	Short-term investment		—	US$	2,104		N/A	US$	2,091
	Cargill Inc.	—	Short-term investment		—	US$	2,120		N/A	US$	2,079
	Chase Manhattan Corp. New	—	Short-term investment		—	US$	1,628		N/A	US$	1,613
	Cit Group Hldgs Inc.	—	Short-term investment		—	US$	3,203		N/A	US$	3,195
	Citigroup Inc.	—	Short-term investment		—	US$	2,000		N/A	US$	2,002
	Citigroup Inc.	—	Short-term investment		—	US$	1,033		N/A	US$	1,033
	Citigroup Inc.	—	Short-term investment		—	US$	3,583		N/A	US$	3,523
	Colonial Pipeline Co.	—	Short-term investment		—	US$	1,625		N/A	US$	1,612
	Compaq Computer Corp.	—	Short-term investment		—	US$	3,719		N/A	US$	3,593
	Consolidated Edison Co. NY Inc.	—	Short-term investment		—	US$	3,687		N/A	US$	3,618
	Corestates Cap Corp.	—	Short-term investment		—	US$	1,062		N/A	US$	1,060
	Countrywide Fdg Corp. Mtn	—	Short-term investment		—	US$	2,158		N/A	US$	2,151
	Countrywide Home Lns Inc.	—	Short-term investment		—	US$	5,210		N/A	US$	5,157

(Continued)

-43-


				December 31, 2004
										Market Value or Net
		Relationship with	Financial Statement	Shares/Units		Carrying Value		Percentage of		Asset Value
Held Company Name	Marketable Securities Type and Name	the Company	Account	(In Thousand)		(US$ in Thousand)		Ownership		(US$ in Thousand)		Note
	Credit Suisse Fb USA Inc.	—	Short-term investment		—	US$	2,645		N/A	US$	2,599
	Credit Suisse First Boston	—	Short-term investment		—	US$	786		N/A	US$	779
	Credit Suisse First Boston USA	—	Short-term investment		—	US$	2,249		N/A	US$	2,240
	Daimlerchrysler North Amer	—	Short-term investment		—	US$	997		N/A	US$	999
	Daimlerchrysler North Amer Hld	—	Short-term investment		—	US$	749		N/A	US$	755
	Dell Computer Corp.	—	Short-term investment		—	US$	3,054		N/A	US$	3,025
	Den Danske BK Aktieselskab	—	Short-term investment		—	US$	2,192		N/A	US$	2,166
	Deutsche Telkom Intl Fin BV	—	Short-term investment		—	US$	1,852		N/A	US$	1,838
	Diageo PLC	—	Short-term investment		—	US$	3,459		N/A	US$	3,477
	Dow Chem Co.	—	Short-term investment		—	US$	921		N/A	US$	911
	European Invt Bk	—	Short-term investment		—	US$	8,315		N/A	US$	8,236
	Fifth Third Bk Cincinnati OH	—	Short-term investment		—	US$	2,419		N/A	US$	2,466
	First Data Corp.	—	Short-term investment		—	US$	3,013		N/A	US$	2,986
	First Un Corp.	—	Short-term investment		—	US$	970		N/A	US$	965
	Fleet Finl Group Inc. New	—	Short-term investment		—	US$	494		N/A	US$	493
	Fleet Finl Corp Inc. New	—	Short-term investment		—	US$	975		N/A	US$	962
	Ford Mtr Cr Co.	—	Short-term investment		—	US$	1,542		N/A	US$	1,535
	FPL Group Cap Inc.	—	Short-term investment		—	US$	1,001		N/A	US$	990
	FPL Group Cap Inc.	—	Short-term investment		—	US$	860		N/A	US$	846
	General Elec Cap Corp. Mtn	—	Short-term investment		—	US$	3,467		N/A	US$	3,455
	General Elec Cap Corp. Mtn	—	Short-term investment		—	US$	1,040		N/A	US$	1,040
	General Elec Cap Corp. Mtn	—	Short-term investment		—	US$	3,886		N/A	US$	3,878
	Genworth Finl Inc.	—	Short-term investment		—	US$	3,412		N/A	US$	3,408
	Goldman Sachs Group Inc. Mtn	—	Short-term investment		—	US$	3,505		N/A	US$	3,494
	Goldman Sachs Group LP	—	Short-term investment		—	US$	1,637		N/A	US$	1,599
	Goldman Sachs Group LP	—	Short-term investment		—	US$	1,100		N/A	US$	1,075
	Greenpoint Finl Corp.	—	Short-term investment		—	US$	974		N/A	US$	972
	GTE Corp.	—	Short-term investment		—	US$	2,134		N/A	US$	2,109
	Hancock John Global Fdg Mtn	—	Short-term investment		—	US$	1,003		N/A	US$	986
	Hartford Finl Svcs Group Inc.	—	Short-term investment		—	US$	765		N/A	US$	758
	Hartford Finl Svcs Group Inc.	—	Short-term investment		—	US$	296		N/A	US$	296
	Heller Finl Inc.	—	Short-term investment		—	US$	1,171		N/A	US$	1,163
	Hershey Foods Corp.	—	Short-term investment		—	US$	1,627		N/A	US$	1,606
	Hewlett Packard Co.	—	Short-term investment		—	US$	3,373		N/A	US$	3,305
	Honeywell Inc.	—	Short-term investment		—	US$	3,284		N/A	US$	3,218
	Household Fin Corp.	—	Short-term investment		—	US$	529		N/A	US$	522
	Household Fin Corp.	—	Short-term investment		—	US$	2,993		N/A	US$	2,985
	Household Fin Corp. Mtn Bk Ent	—	Short-term investment		—	US$	3,542		N/A	US$	3,510
	HSBC USA Inc. New	—	Short-term investment		—	US$	1,154		N/A	US$	1,134
	Huntington Natl Bk	—	Short-term investment		—	US$	3,003		N/A	US$	3,000
	Huntington Natl Bk Columbus OH	—	Short-term investment		—	US$	2,954		N/A	US$	2,961
	ING Bank	—	Short-term investment		—	US$	2,114		N/A	US$	2,113
	ING Sec Life Ins Ingslf	—	Short-term investment		—	US$	3,012		N/A	US$	3,007
	Intl Bk For Recon + Dev	—	Short-term investment		—	US$	5,232		N/A	US$	5,102
	JP Morgan Chase + Co.	—	Short-term investment		—	US$	1,043		N/A	US$	1,039
	Jackson Natl Life Global Fdg	—	Short-term investment		—	US$	1,036		N/A	US$	1,032
	Jackson Natl Life Global Fdg S	—	Short-term investment		—	US$	2,998		N/A	US$	2,988

(Continued)

-44-


				December 31, 2004
										Market Value or Net
		Relationship with	Financial Statement	Shares/Units		Carrying Value		Percentage of		Asset Value
Held Company Name	Marketable Securities Type and Name	the Company	Account	(In Thousand)		(US$ in Thousand)		Ownership		(US$ in Thousand)		Note
	JP Morgan Chase + Co.	—	Short-term investment		—	US$	3,663		N/A	US$	3,629
	Keycorp Mtn Book Entry	—	Short-term investment		—	US$	3,500		N/A	US$	3,502
	KFW Intl Fin Inc.	—	Short-term investment		—	US$	5,104		N/A	US$	5,027
	Kraft Foods Inc.	—	Short-term investment		—	US$	773		N/A	US$	765
	Kraft Foods Inc.	—	Short-term investment		—	US$	1,037		N/A	US$	1,036
	Lehman Brothers Hldgs Inc.	—	Short-term investment		—	US$	1,163		N/A	US$	1,162
	Lehman Brothers Hldgs Inc.	—	Short-term investment		—	US$	3,705		N/A	US$	3,634
	Lehman Brothers Hldgs Inc.	—	Short-term investment		—	US$	2,171		N/A	US$	2,154
	Lilly Eli + Co.	—	Short-term investment		—	US$	3,750		N/A	US$	3,749
	Lincoln Natl Corp. In	—	Short-term investment		—	US$	519		N/A	US$	518
	Merita Bk Ltd NY Brh	—	Short-term investment		—	US$	538		N/A	US$	533
	Merrill Lynch + Co. Inc.	—	Short-term investment		—	US$	3,486		N/A	US$	3,481
	Metropolitan Life Global Mtn	—	Short-term investment		—	US$	1,907		N/A	US$	1,910
	Monumental Global Fdg II	—	Short-term investment		—	US$	2,500		N/A	US$	2,501
	Monumental Global Fdg II	—	Short-term investment		—	US$	1,534		N/A	US$	1,516
	Monumental Global Fdg II 2002A	—	Short-term investment		—	US$	1,045		N/A	US$	1,034
	Morgan Stanley	—	Short-term investment		—	US$	2,136		N/A	US$	2,128
	Morgan Stanley Group Inc.	—	Short-term investment		—	US$	3,638		N/A	US$	3,628
	Morgan Stanley Group Inc.	—	Short-term investment		—	US$	1,050		N/A	US$	1,048
	National Westminster Bk PLC	—	Short-term investment		—	US$	1,433		N/A	US$	1,422
	Nationsbank Corp.	—	Short-term investment		—	US$	3,644		N/A	US$	3,549
	Nationwide Bldg Soc	—	Short-term investment		—	US$	3,457		N/A	US$	3,477
	Nationwide Life Global Mtn	—	Short-term investment		—	US$	1,463		N/A	US$	1,469
	Pepsico Inc. Mtn Book Entry	—	Short-term investment		—	US$	3,818		N/A	US$	3,817
	PNC Fdg Corp.	—	Short-term investment		—	US$	1,080		N/A	US$	1,075
	Popular North Amer Inc. Mtn	—	Short-term investment		—	US$	3,042		N/A	US$	3,022
	Premark Intl Inc.	—	Short-term investment		—	US$	2,954		N/A	US$	2,914
	Pricoa Global Fdg I Mtn	—	Short-term investment		—	US$	3,507		N/A	US$	3,503
	Pricoa Global Fdg I Mtn	—	Short-term investment		—	US$	3,050		N/A	US$	3,047
	Principal Life Global Fdg I Gl	—	Short-term investment		—	US$	3,168		N/A	US$	3,102
	Protective Life Secd Trs	—	Short-term investment		—	US$	2,920		N/A	US$	2,969
	Prudential Ins Co. Amer	—	Short-term investment		—	US$	2,648		N/A	US$	2,610
	Reinsurance Group Amer Inc.	—	Short-term investment		—	US$	2,091		N/A	US$	2,089
	Royal Bk Scotland Group PLC	—	Short-term investment		—	US$	1,563		N/A	US$	1,547
	Royal Bk Scotland Group PLC	—	Short-term investment		—	US$	564		N/A	US$	558
	Royal Bk Scotland Group PLC	—	Short-term investment		—	US$	369		N/A	US$	364
	Safeco Corp.	—	Short-term investment		—	US$	765		N/A	US$	763
	Salomon Smith Barney Hldgs Inc.	—	Short-term investment		—	US$	3,160		N/A	US$	3,100
	Sara Lee Corp.	—	Short-term investment		—	US$	1,596		N/A	US$	1,601
	SBC Communications Inc.	—	Short-term investment		—	US$	3,681		N/A	US$	3,617
	SBC Communications Inc.	—	Short-term investment		—	US$	2,251		N/A	US$	2,245
	Scotland Intl Fin B V 144A	—	Short-term investment		—	US$	1,533		N/A	US$	1,532
	Shell Finance (UK) PLC	—	Short-term investment		—	US$	3,604		N/A	US$	3,553
	SLM Corp.	—	Short-term investment		—	US$	500		N/A	US$	501
	SLM Corp. Medium Term Nts	—	Short-term investment		—	US$	2,950		N/A	US$	2,985
	SP Powerassets Ltd Global	—	Short-term investment		—	US$	991		N/A	US$	992
	Suntrust Bks Inc.	—	Short-term investment		—	US$	1,062		N/A	US$	1,060
	Swedbank Sparbanken Svenge AB	—	Short-term investment		—	US$	1,084		N/A	US$	1,067

(Continued)

-45-


				December 31, 2004
										Market Value or Net
		Relationship with	Financial Statement	Shares/Units		Carrying Value		Percentage of		Asset Value
Held Company Name	Marketable Securities Type and Name	the Company	Account	(In Thousand)		(US$ in Thousand)		Ownership		(US$ in Thousand)		Note
	TIAA Global Mkts Inc.	—	Short-term investment		—	US$	519		N/A	US$	514
	Tribune Co. Med Trm Nts	—	Short-term investment		—	US$	2,943		N/A	US$	2,965
	Union Planters	—	Short-term investment		—	US$	2,755		N/A	US$	2,704
	Unitedhealth Group Inc.	—	Short-term investment		—	US$	3,119		N/A	US$	3,097
	US Bk Natl Assn Cincinnati OH	—	Short-term investment		—	US$	2,669		N/A	US$	2,687
	Virginia Elec + Pwr Co.	—	Short-term investment		—	US$	2,884		N/A	US$	2,838
	Vodafone Group PLC New	—	Short-term investment		—	US$	2,559		N/A	US$	2,561
	Wachovia Corp.	—	Short-term investment		—	US$	3,720		N/A	US$	3,600
	Wal Mart Cda Venture Corp.	—	Short-term investment		—	US$	3,670		N/A	US$	3,602
	Washington Mut Fin Corp.	—	Short-term investment		—	US$	4,768		N/A	US$	4,689
	Washington Mut Inc.	—	Short-term investment		—	US$	4,735		N/A	US$	4,682
	Washington Post Co.	—	Short-term investment		—	US$	3,182		N/A	US$	3,180
	Wells Fargo + Co. New	—	Short-term investment		—	US$	3,697		N/A	US$	3,631
	Westfield Cap Corp. Ltd	—	Short-term investment		—	US$	1,999		N/A	US$	1,999
	China Steel Corporation	—	Long-term investment		—		2,978,804		N/A		2,977,695
	Taiwan Power Company	—	Long-term investment		—		915,276		N/A		914,582
	Nan Ya Plastics Corporation	—	Long-term investment		—		407,526		N/A		407,484
	Formosa Plastics Corporation	—	Long-term investment		—		405,485		N/A		405,322
	Formosa Petrochemical Corporation	—	Long-term investment		—		202,595		N/A		200,000

	Agency bonds				—
	Fed Hm Ln Pc	—	Short-term investment		—	US$	3,466		N/A	US$	3,462
	Federal Home Ln Bks	—	Short-term investment		—	US$	2,532		N/A	US$	2,520
	Federal Home Ln Bks	—	Short-term investment		—	US$	1,042		N/A	US$	1,024
	Federal Home Ln Bks	—	Short-term investment		—	US$	4,927		N/A	US$	4,947
	Federal Home Ln Bks	—	Short-term investment		—	US$	7,962		N/A	US$	7,939
	Federal Home Ln Bks	—	Short-term investment		—	US$	7,014		N/A	US$	6,924
	Federal Home Ln Bks	—	Short-term investment		—	US$	4,936		N/A	US$	4,949
	Federal Home Ln Bks	—	Short-term investment		—	US$	4,948		N/A	US$	4,944
	Federal Home Ln Bks	—	Short-term investment		—	US$	2,454		N/A	US$	2,468
	Federal Home Ln Bks	—	Short-term investment		—	US$	7,018		N/A	US$	7,004
	Federal Home Ln Bks	—	Short-term investment		—	US$	4,996		N/A	US$	4,973
	Federal Home Ln Bks	—	Short-term investment		—	US$	7,042		N/A	US$	6,985
	Federal Home Ln Bks	—	Short-term investment		—	US$	6,098		N/A	US$	6,084
	Federal Home Ln Bks	—	Short-term investment		—	US$	2,909		N/A	US$	2,907
	Federal Home Ln Bks	—	Short-term investment		—	US$	13,953		N/A	US$	13,898
	Federal Home Ln Bks	—	Short-term investment		—	US$	13,983		N/A	US$	13,946
	Federal Home Ln Bks	—	Short-term investment		—	US$	13,981		N/A	US$	13,946
	Federal Home Ln Mtg Corp	—	Short-term investment		—	US$	6,978		N/A	US$	6,928
	Federal Home Ln Mtg Corp.	—	Short-term investment		—	US$	3,388		N/A	US$	3,419
	Federal Home Ln Mtg Corp	—	Short-term investment		—	US$	4,953		N/A	US$	4,941
	Federal Home Ln Mtg Corp.	—	Short-term investment		—	US$	9,997		N/A	US$	9,943
	Federal Home Ln Mtg Corp.	—	Short-term investment		—	US$	998		N/A	US$	993
	Federal Home Ln Mtg Corp.	—	Short-term investment		—	US$	4,933		N/A	US$	4,936
	Federal Home Ln Mtg Corp. Mtn	—	Short-term investment		—	US$	4,930		N/A	US$	4,938
	Federal Home Loan Mtg Assn	—	Short-term investment		—	US$	4,847		N/A	US$	4,891
	Federal Home Loan Mtg Corp.	—	Short-term investment		—	US$	4,903		N/A	US$	4,943

(Continued)

-46-


				December 31, 2004
										Market Value or Net
		Relationship with	Financial Statement	Shares/Units		Carrying Value		Percentage of		Asset Value
Held Company Name	Marketable Securities Type and Name	the Company	Account	(In Thousand)		(US$ in Thousand)		Ownership		(US$ in Thousand)		Note
	Federal Natl Mtg Assn	—	Short-term investment		—	US$	5,270		N/A	US$	5,237
	Federal Natl Mtg Assn	—	Short-term investment		—	US$	6,940		N/A	US$	6,937
	Federal Natl Mtg Assn	—	Short-term investment		—	US$	6,903		N/A	US$	6,917
	Federal Natl Mtg Assn	—	Short-term investment		—	US$	4,981		N/A	US$	4,953
	Federal Natl Mtg Assn	—	Short-term investment		—	US$	6,997		N/A	US$	6,983
	Federal Natl Mtg Assn Mtn	—	Short-term investment		—	US$	15,787		N/A	US$	15,798
	Federal Natl Mtg Assn Mtn	—	Short-term investment		—	US$	7,000		N/A	US$	6,976
	Freddie Mac	—	Short-term investment		—	US$	4,929		N/A	US$	4,934
	Fed Hm Ln Pc Pool E89857	—	Short-term investment		—	US$	2,535		N/A	US$	2,531
	Fed Hm Ln Pc Pool G11295	—	Short-term investment		—	US$	2,277		N/A	US$	2,273
	Federal Home Ln Mtg Corp.	—	Short-term investment		—	US$	6,096		N/A	US$	6,075
	Federal Home Ln Mtg Corp.	—	Short-term investment		—	US$	4,435		N/A	US$	4,440
	Federal Home Ln Mtg Corp.	—	Short-term investment		—	US$	3,558		N/A	US$	3,539
	Federal Home Ln Mtg Corp.	—	Short-term investment		—	US$	3,645		N/A	US$	3,615
	Federal Natl Mtg Assn	—	Short-term investment		—	US$	4,242		N/A	US$	4,188
	Federal Natl Mtg Assn	—	Short-term investment		—	US$	2,141		N/A	US$	2,126
	Federal Natl Mtg Assn	—	Short-term investment		—	US$	4,765		N/A	US$	4,719
	Federal Natl Mtg Assn Gtd	—	Short-term investment		—	US$	3,486		N/A	US$	3,446
	FNMA Pool 685116	—	Short-term investment		—	US$	1,003		N/A	US$	1,002
	FNMA Pool 725095	—	Short-term investment		—	US$	2,008		N/A	US$	2,003
	FNMA Pool 790828	—	Short-term investment		—	US$	4,807		N/A	US$	4,773
	FNMA Pool 793932	—	Short-term investment		—	US$	994		N/A	US$	994
	FNMA Pool 794040	—	Short-term investment		—	US$	1,021		N/A	US$	1,020
	FNMA Pool 795548	—	Short-term investment		—	US$	977		N/A	US$	975
	FNMA Pool 806642	—	Short-term investment		—	US$	2,006		N/A	US$	2,004
	GNMA II Pool 081150	—	Short-term investment		—	US$	999		N/A	US$	997
	GNMA II Pool 081153	—	Short-term investment		—	US$	3,789		N/A	US$	3,766
	Government Natl Mtg Assn	—	Short-term investment		—	US$	1,734		N/A	US$	1,700

	Corporate issued asset-backed securities
	Aegis Asset Backed Secs Tr	—	Short-term investment		—	US$	2,000		N/A	US$	2,004
	Aesop Fed II LLC	—	Short-term investment		—	US$	4,955		N/A	US$	4,963
	Aesop Fed II LLC	—	Short-term investment		—	US$	1,912		N/A	US$	1,888
	American Express Cr Account Ma	—	Short-term investment		—	US$	3,445		N/A	US$	3,427
	American Home Mtg Invt Tr	—	Short-term investment		—	US$	949		N/A	US$	949
	Americredit Automobile Receiv	—	Short-term investment		—	US$	2,002		N/A	US$	1,998
	Americredit Automobile Rec Tr	—	Short-term investment		—	US$	1,055		N/A	US$	1,048
	Americredit Automobile Rec Tr	—	Short-term investment		—	US$	2,000		N/A	US$	1,990
	Americredit Automobile Receivb	—	Short-term investment		—	US$	4,949		N/A	US$	4,912
	Atlantic City Elc Trns Fdg LLC	—	Short-term investment		—	US$	926		N/A	US$	923
	Banc Amer Coml Mtg Inc.	—	Short-term investment		—	US$	5,364		N/A	US$	5,315
	Banc Amer Mtg Secs Inc.	—	Short-term investment		—	US$	4,030		N/A	US$	4,006
	Bank of Amer Lease Equip Tr	—	Short-term investment		—	US$	4,023		N/A	US$	3,995
	Bear Stearns Alt A Tr	—	Short-term investment		—	US$	1,478		N/A	US$	1,489
	Bear Stearns Asset Backed Secs	—	Short-term investment		—	US$	2,000		N/A	US$	2,000
	BMW Veh Owner Tr	—	Short-term investment		—	US$	4,978		N/A	US$	4,941
	California Infr + Economic Dev	—	Short-term investment		—	US$	4,298		N/A	US$	4,230

(Continued)

-47-


				December 31, 2004
										Market Value or Net
		Relationship with	Financial Statement	Shares/Units		Carrying Value		Percentage of		Asset Value
Held Company Name	Marketable Securities Type and Name	the Company	Account	(In Thousand)		(US$ in Thousand)		Ownership		(US$ in Thousand)		Note
	California Infras + Economic	—	Short-term investment		—	US$	6,126		N/A	US$	6,064
	California Infrastructure Dev	—	Short-term investment		—	US$	5,089		N/A	US$	5,035
	Capital Auto Receivables Asset	—	Short-term investment		—	US$	4,018		N/A	US$	3,992
	Capital One Auto Fin Tr	—	Short-term investment		—	US$	319		N/A	US$	318
	Capital One Auto Fin Tr	—	Short-term investment		—	US$	1,147		N/A	US$	1,145
	Capital One Auto Fin Tr	—	Short-term investment		—	US$	3,000		N/A	US$	2,989
	Capital One Multi Asset Execut	—	Short-term investment		—	US$	4,957		N/A	US$	4,977
	Caterpillar Finl Asset Tr	—	Short-term investment		—	US$	10,008		N/A	US$	9,923
	Centex Home Equity Ln Tr	—	Short-term investment		—	US$	3,500		N/A	US$	3,493
	Cit Equip Coll Tr	—	Short-term investment		—	US$	4,999		N/A	US$	4,991
	Citibank Cr Card Issuance Tr	—	Short-term investment		—	US$	4,959		N/A	US$	4,965
	Citicorp Mtg Secs	—	Short-term investment		—	US$	2,364		N/A	US$	2,363
	CNH Equip Tr	—	Short-term investment		—	US$	5,000		N/A	US$	4,952
	Comm 2004 Htl 1	—	Short-term investment		—	US$	4,600		N/A	US$	4,607
	Credit Suisse First Boston Mtg	—	Short-term investment		—	US$	4,209		N/A	US$	4,178
	CWABS Inc.	—	Short-term investment		—	US$	1,647		N/A	US$	1,662
	CWABS Inc.	—	Short-term investment		—	US$	1,903		N/A	US$	1,907
	CWABS Inc.	—	Short-term investment		—	US$	1,907		N/A	US$	1,912
	CWABS Inc.	—	Short-term investment		—	US$	2,000		N/A	US$	1,997
	CWABS Inc.	—	Short-term investment		—	US$	5,000		N/A	US$	5,055
	CWABS Inc.	—	Short-term investment		—	US$	3,500		N/A	US$	3,541
	CWALT Inc.	—	Short-term investment		—	US$	4,292		N/A	US$	4,277
	CWABS Inc.	—	Short-term investment		—	US$	2,317		N/A	US$	2,298
	CWABS Inc.	—	Short-term investment		—	US$	4,040		N/A	US$	4,040
	Daimlerchrysler Auto Tr	—	Short-term investment		—	US$	4,991		N/A	US$	4,970
	Daimlerchrysler Auto Tr	—	Short-term investment		—	US$	4,982		N/A	US$	4,970
	Daimlerchrysler Auto Tr	—	Short-term investment		—	US$	4,897		N/A	US$	4,893
	Detroit Edison Securitization	—	Short-term investment		—	US$	674		N/A	US$	671
	Fifth Third Auto Tr	—	Short-term investment		—	US$	3,000		N/A	US$	2,999
	Finance Amer Mtg Ln Tr	—	Short-term investment		—	US$	985		N/A	US$	986
	First Franklin Mtg Ln Tr	—	Short-term investment		—	US$	2,002		N/A	US$	2,006
	First Horizon Abs Tr	—	Short-term investment		—	US$	2,000		N/A	US$	2,000
	First Union Lehman Bros Mtg Tr	—	Short-term investment		—	US$	3,567		N/A	US$	3,534
	First USA Credit Cr Master Tr	—	Short-term investment		—	US$	5,011		N/A	US$	5,008
	Ford Cr Auto Owner Tr	—	Short-term investment		—	US$	10,999		N/A	US$	10,936
	Granite Mtgs PLC	—	Short-term investment		—	US$	5,000		N/A	US$	5,000
	GS Auto Ln Tr	—	Short-term investment		—	US$	2,948		N/A	US$	2,970
	GS Mtg Secs Corp.	—	Short-term investment		—	US$	2,944		N/A	US$	2,944
	Harley Davidson Motorcycle Tr	—	Short-term investment		—	US$	3,417		N/A	US$	3,400
	Harley Davidson Motorcycle Tr	—	Short-term investment		—	US$	5,999		N/A	US$	5,938
	Holmes Fing No 8 PLC	—	Short-term investment		—	US$	5,001		N/A	US$	5,052
	Honda Auto Receivables	—	Short-term investment		—	US$	5,000		N/A	US$	4,991
	Household Automotive Tr	—	Short-term investment		—	US$	513		N/A	US$	511
	Hyundai Auto Receivables Tr	—	Short-term investment		—	US$	3,500		N/A	US$	3,468
	IMPAC Cmb Tr	—	Short-term investment		—	US$	1,414		N/A	US$	1,413
	IMPAC Cmb Tr	—	Short-term investment		—	US$	988		N/A	US$	988
	IMPAC Secd Assets Corp.	—	Short-term investment		—	US$	3,570		N/A	US$	3,566

(Continued)

-48-


				December 31, 2004
										Market Value or Net
		Relationship with	Financial Statement	Shares/Units		Carrying Value		Percentage of		Asset Value
Held Company Name	Marketable Securities Type and Name	the Company	Account	(In Thousand)		(US$ in Thousand)		Ownership		(US$ in Thousand)		Note
	Long Beach Accep Auto Receivab	—	Short-term investment		—	US$	2,526		N/A	US$	2,502
	Merrill Lynch Mtg Invs Inc.	—	Short-term investment		—	US$	1,460		N/A	US$	1,460
	Merrill Lynch Mtg Invs Inc.	—	Short-term investment		—	US$	1,500		N/A	US$	1,502
	Monumentl Global Fdg II	—	Short-term investment		—	US$	1,000		N/A	US$	1,001
	National City Auto Receivables	—	Short-term investment		—	US$	1,206		N/A	US$	1,207
	Navistar finl 2003 A Owner Tr	—	Short-term investment		—	US$	4,928		N/A	US$	4,889
	Nissan Auto Receivables	—	Short-term investment		—	US$	7,000		N/A	US$	6,958
	Nissan Auto Receivables Own Tr	—	Short-term investment		—	US$	4,999		N/A	US$	4,993
	Nissan Auto Receivables Owner	—	Short-term investment		—	US$	4,853		N/A	US$	4,872
	ONYX Accep Owner Tr	—	Short-term investment		—	US$	963		N/A	US$	961
	ONYX Accep Owner Tr	—	Short-term investment		—	US$	4,913		N/A	US$	4,933
	Providian Gateway Owner Tr	—	Short-term investment		—	US$	4,204		N/A	US$	4,201
	Providian Gateway Owner Tr	—	Short-term investment		—	US$	3,992		N/A	US$	3,982
	Reliant Energy Transition Bd	—	Short-term investment		—	US$	5,185		N/A	US$	5,117
	Residential Asset Mtg Prods	—	Short-term investment		—	US$	3,731		N/A	US$	3,672
	Residential Asset Mtg Prods	—	Short-term investment		—	US$	3,000		N/A	US$	2,980
	Residential Fdg Mtg Secs I Inc.	—	Short-term investment		—	US$	3,659		N/A	US$	3,631
	Sequoia Mtg Tr	—	Short-term investment		—	US$	2,504		N/A	US$	2,513
	Sequoia Mtg Tr	—	Short-term investment		—	US$	1,960		N/A	US$	1,955
	Sequoia Mtg Tr	—	Short-term investment		—	US$	1,488		N/A	US$	1,486
	Sequoia Mtg Tr	—	Short-term investment		—	US$	2,000		N/A	US$	2,000
	Sequoia Mtg Tr	—	Short-term investment		—	US$	3,500		N/A	US$	3,500
	Structured Adj Rate Mtg Ln Tr	—	Short-term investment		—	US$	3,037		N/A	US$	3,031
	Structured Asset Secs Corp.	—	Short-term investment		—	US$	1,403		N/A	US$	1,394
	Thoornburg Mtg Secs Tr	—	Short-term investment		—	US$	1,921		N/A	US$	1,923
	Toyota Auto Receivables 2003B	—	Short-term investment		—	US$	4,970		N/A	US$	4,930
	Triad Auto Receivables Tr	—	Short-term investment		—	US$	5,042		N/A	US$	4,997
	TXU Elec Delivery Transition	—	Short-term investment		—	US$	7,736		N/A	US$	7,715
	USAA Auto Owner Tr	—	Short-term investment		—	US$	4,000		N/A	US$	3,991
	Wachovia Auto Owner Tr	—	Short-term investment		—	US$	6,000		N/A	US$	5,991
	Wachovia Auto Owner Tr	—	Short-term investment		—	US$	4,999		N/A	US$	4,995
	WFS Financial Owner Trust	—	Short-term investment		—	US$	5,008		N/A	US$	4,989
	WFS Finl 2004 2 Owner Tr	—	Short-term investment		—	US$	4,994		N/A	US$	4,992
	WFS Finl 2004 4 Owner Tr	—	Short-term investment		—	US$	5,399		N/A	US$	5,342
	Whole Auto Ln Tr	—	Short-term investment		—	US$	5,967		N/A	US$	5,966
	Whole Auto Ln Tr	—	Short-term investment		—	US$	4,000		N/A	US$	3,969
	Whole Auto Ln Tr	—	Short-term investment		—	US$	3,000		N/A	US$	2,964
	World Omni Auto Receivables Tr	—	Short-term investment		—	US$	5,963		N/A	US$	5,906

	Commercial papers		Short-term investment		—	US$	2,997		N/A	US$	2,997

	Corporate issued notes		Short-term investment		—	US$	1,999		N/A	US$	1,999

(Continued)

-49-


				December 31, 2004
										Market Value or Net
		Relationship with	Financial Statement	Shares/Units		Carrying Value		Percentage of		Asset Value
Held Company Name	Marketable Securities Type and Name	the Company	Account	(In Thousands)		(US$ in Thousand)		Ownership		(US$ in Thousand)		Note
	Money market funds		Short-term investment		—	US$	21,114		N/A	US$	21,114

	Equity
	Horizon Venture Fund I, L.P.	—	Long-term investment		—		246,485		N/A		246,485
	Crimson Asia Capital Ltd., L.P.	—	Long-term investment		—		43,649		N/A		43,649
TSMC — North America	TSMC stock	Parent company	Short-term investment		14,151		677,110		—		696,661

Chi Cherng	TSMC stock	Parent company	Short-term investment		15,670		458,564		—		771,451

Hsin Ruey	TSMC stock	Parent company	Short-term investment		15,700		459,512		—		772,897

TSMC International	Money market fund

	BOA Fund	—	Short-term investment		30,300	US$	30,300		N/A	US$	30,300

	Stock
	InveStar	Subsidiary	Long-term investment		24,320	US$	34,514		97	US$	34,514
	InveStar II	Subsidiary	Long-term investment		51,300	US$	34,534		97	US$	34,534
	TSMC Development	Subsidiary	Long-term investment		1	US$	603,993		100	US$	603,993
	TSMC Technology	Subsidiary	Long-term investment		1	US$	5,544		100	US$	5,544
	3DFX Interactive Inc.	—	Long-term investment		68		—		—		—

TSMC Development	WaferTech stock	Subsidiary	Long-term investment		—	US$	484,060		99	US$	484,060

InveStar	Common stock
	RichTek Technology Corp.	—	Short-term investment		682	US$	67		—	US$	1,370
	Advanced Power Electronics Corp.	—	Short-term investment		1,108	US$	502		—	US$	697
	Broadtek Electronics Corp.	—	Short-term investment		869	US$	275		—	US$	225
	Monolithic Power Systems, Inc.	—	Short-term investment		1,975	US$	1,567		—	US$	19,910
	SiRF Technology Holdings, Inc.	—	Short-term investment		90	US$	393		—	US$	1,157
	Broadtek Electronics Corp.	—	Long-term investment		145	US$	46		—	US$	38
	Programmable Microelectronics
	(Taiwan), Corp.	—	Long-term investment		575	US$	208		1	US$	208
	Global Testing Corp.	—	Long-term investment		13,268	US$	5,670		9	US$	5,670
	RichTek Technology Corp.	—	Long-term investment		842	US$	83		1	US$	1,692
	Signia Technologies, Inc.	—	Long-term investment		701	US$	202		3	US$	202
	Incentia Design Systems, Inc.	—	Long-term investment		365	US$	92		1	US$	92
	Advanced Power Electronics Corp.	—	Long-term investment		1,123	US$	508		2	US$	706
	Capella Microsystems (Taiwan), Inc.	—	Long-term investment		530	US$	154		4	US$	154

	Preferred stock
	Integrated Memory Logic, Inc.	—	Long-term investment		1,831	US$	1,221		12	US$	1,221
	Sensory, Inc.	—	Long-term investment		1,404	US$	125		6	US$	125
	Sonics, Inc.	—	Long-term investment		2,686	US$	3,530		4	US$	3,530
	NanoAmp Solutions, Inc.	—	Long-term investment		541	US$	853		2	US$	853
	Memsic, Inc.	—	Long-term investment		2,727	US$	1,500		10	US$	1,500
	Reflectivity, Inc.	—	Long-term investment		1,064	US$	741		2	US$	741

(Continued)

-50-


				December 31, 2004
										Market Value or Net
		Relationship with	Financial Statement	Shares/Units		Carrying Value		Percentage of		Asset Value
Held Company Name	Marketable Securities Type and Name	the Company	Account	(In Thousands)		(US$ in Thousand)		Ownership		(US$ in Thousand)		Note
	IP Unity	—	Long-term investment		1,008	US$	494		2	US$	494
	Tropian, Inc.	—	Long-term investment		1,758	US$	471		3	US$	471

InveStar II	Common stock
	RichTek Technology Corp.	—	Short-term investment		321	US$	184		—	US$	645
	Monolithic Power Systems, Inc.	—	Short-term investment		864	US$	2,081		—	US$	8,716
	eChannel Option Holding, Inc.	—	Long-term investment		358	US$	251		4	US$	251
	eLCOS Microdisplay Technology, Ltd.	—	Long-term investment		270	US$	27		1	US$	27
	Signia Technologies, Inc.	—	Long-term investment		351	US$	101		1	US$	101
	Procoat Technology, Inc.	—	Long-term investment		5,123	US$	1,940		10	US$	1,940
	RichTek Technology Corp.	—	Long-term investment		395	US$	226		1	US$	794
	Programmable Microelectronics
	(Taiwan), Inc.	—	Long-term investment		177	US$	50		—	US$	50
	Auden Technology MFG. Co., Ltd.	—	Long-term investment		953	US$	738		4	US$	738
	GeoVision, Inc.	—	Long-term investment		471	US$	127		1	US$	127
	EoNex Technologies, Inc.	—	Long-term investment		55	US$	3,048		5	US$	3,048
	Conwise Technology Corporation, Ltd.	—	Long-term investment		2,800	US$	490		14	US$	490
	EON Technology, Corp.	—	Long-term investment		3,276	US$	1,175		8	US$	1,175
	Goyatek Technology, Corp.	—	Long-term investment		2,088	US$	545		7	US$	545
	Trendchip Technologies Corp.	—	Long-term investment		2,000	US$	861		5	US$	861
	Ralink Technology (Taiwan), Inc.	—	Long-term investment		1,833	US$	791		3	US$	791
	Silicon Data International Co., Inc.	—	Long-term investment		2,000	US$	204		3	US$	204
	Capella Microsystems (Taiwan), Inc.	—	Long-term investment		419	US$	122		3	US$	122

	Preferred stock
	Memsic, Inc.	—	Long-term investment		2,289	US$	1,560		8	US$	1,560
	eLCOS Microdisplay Technology, Ltd.	—	Long-term investment		2,667	US$	3,500		15	US$	3,500
	NanoAmp Solutions, Inc.	—	Long-term investment		375	US$	1,500		1	US$	1,500
	Advanced Analogic Technology, Inc.	—	Long-term investment		948	US$	1,261		2	US$	1,261
	Sonics, Inc.	—	Long-term investment		1,582	US$	3,082		5	US$	3,082
	Reflectivity, Inc.	—	Long-term investment		4,255	US$	2,205		5	US$	2,205
	Tropian, Inc.	—	Long-term investment		1,464	US$	393		2	US$	393
	Kilopass Technologies, Inc.	—	Long-term investment		3,887	US$	2,000		19	US$	2,000
	FangTek, Inc.	—	Long-term investment		6,806	US$	3,250		34	US$	3,250
	Alchip Technologies Limited	—	Long-term investment		2,579	US$	2,950		18	US$	2,950

Emerging Alliance	Common stock
	Global Investment Holding, Inc.	—	Long-term investment		10,000		100,000		6		100,000
	RichWave Technology Corp.	—	Long-term investment		2,600	US$	867		13	US$	867
	NetLogic Microsystems, Inc.	—	Long-term investment		113	US$	1,388		1	US$	1,388

	Preferred stock
	Quake Technologies, Inc.	—	Long-term investment		601	US$	450		1	US$	450
	Pixim, Inc.	—	Long-term investment		1,721	US$	2,382		3	US$	2,382
	Newport Opticom, Inc.	—	Long-term investment		962	US$	250		6	US$	250
	Ikanos Communication, Inc.	—	Long-term investment		7,446	US$	3,125		3	US$	3,125

(Continued)

-51-


				December 31, 2004
										Market Value or Net
		Relationship with	Financial Statement	Shares/Units		Carrying Value		Percentage of		Asset Value
Held Company Name	Marketable Securities Type and Name	the Company	Account	(In Thousands)		(US$ in Thousand)		Ownership		(US$ in Thousand)		Note
	Quicksilver Technology, Inc.	—	Long-term investment		1,049	US$-			4	US$-
	Mosaic Systems, Inc.	—	Long-term investment		2,481	US$	12		6	US$	12
	Zenesis Technologies, Inc.	—	Long-term investment		1,204	US$	699		4	US$	699
	Reflectivity, Inc.	—	Long-term investment		4,848	US$	2,479		4	US$	2,479
	Teknovus, Inc.	—	Long-term investment		5,556	US$	1,000		3	US$	1,000
	Miradia, Inc. (Formerly XHP
	Microsystems, Inc.)	—	Long-term investment		3,040	US$	1,000		4	US$	1,000
	Axiom Microdevices, Inc.	—	Long-term investment		1,000	US$	1,000		5	US$	1,000
	Optichron, Inc.	—	Long-term investment		714	US$	1,000		6	US$	1,000
	Audience, Inc.	—	Long-term investment		1,654	US$	250		2	US$	250
	Next IO, Inc.	—	Long-term investment		800	US$	500		2	US$	500
	NuCORE Technology Inc.	—	Long-term investment		2,254	US$	1,455		2	US$	1,455
	Centrality Communications, Inc.	—	Long-term investment		809	US$	1,000		2	US$	1,000
	Layer N Networks, Inc.	—	Long-term investment		1,905	US$	1,000		2	US$	1,000

VTAF II	Common stock
	Yobon Technologies, Inc.	—	Long-term investment		1,675	US$	787		17	US$	787
	Sentelic, Corp.	—	Long-term investment		600	US$	1,022		15	US$	1,022
	Ivyon Technology, Inc.	—	Long-term investment		200	US$	775		10	US$	775

	Preferred stock
	Powerprecise Solutions, Inc.	—	Long-term investment		258	US$	250		3	US$	250
	Tzero Technologies, Inc.	—	Long-term investment		244	US$	500		2	US$	500
	Miradia, Inc.	—	Long-term investment		1,809	US$	1,600		2	US$	1,600
	Agelia Technologies, Inc.	—	Long-term investment		1,149	US$	1,000		2	US$	1,000
	Audience, Inc.	—	Long-term investment		531	US$	102		1	US$	102
	Axiom Microdevices, Inc.	—	Long-term investment		686	US$	700		5	US$	700
	Next IO, Inc.	—	Long-term investment		216	US$	182		—	US$	182

GUC	Bond funds
	Grand Cathay	—	Short-term investment		3,608		45,543		N/A		45,544
	TIIM	—	Short-term investment		703		9,698		N/A		9,698
	Polaris De Li	—	Short-term investment		1,550		22,800		N/A		22,800
	EnTrust Kirin	—	Short-term investment		2,106		22,697		N/A		22,698
	E. Sun New Era	—	Short-term investment		1,920		20,313		N/A		20,314
	Jih Sun	—	Short-term investment		772		10,262		N/A		10,262
	EnTrust Phoenix	—	Short-term investment		2,081		30,563		N/A		30,564
	Transcend Fortune	—	Short-term investment		1,936		22,947		N/A		22,948

	Stock funds
	TIIM DaLi	—	Short-term investment		296		5,000		N/A		4,474
	UPAMC Global Select Fund of Funds	—	Short-term investment		336		3,364		N/A		3,378
	Sheng Hua 9966 Balance	—	Short-term investment		300		3,000		N/A		3,011

	Stock
	Global Unichip Corporation - NA	Subsidiary	Long-term investment		100		3,375		100		3,375

-52-

TABLE 4

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND SUBSIDIARIES

MARKETABLE SECURITIES ACQUIRED AND DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 2004
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)


					Beginning Balance					Acquisition				Disposal											Ending Balance
																			Carrying			Gain (Loss)					Amount
					Shares/		Amount			Shares/		Amount		Shares/		Amount			Value			on Disposal			Shares/		(US$ in
	Marketable Securities	Financial Statement		Nature of	Units		(US$ in			Units		(US$ in		Units		(US$ in			(US$ in			(US$ in			Units		Thousand)
Company Name	Type and Name	Account	Counter-party	Relationship	(Thousand)		Thousand)			(Thousand)		Thousand)		(Thousand)		Thousand)			Thousand)			Thousand)			(Thousand)		(Note 1)
The Company	Money market funds
	BOA Fund	Short-term investment	BOA	—		40,000	$	1,359,120			—	$	—		40,000	$	1,359,120		$	1,359,120		$	—			—	$	—
								(US 40,000	)								(US 40,000	)		(US 40,000	)
	GS Fund	Short-term investment	Goldman Sachs	—		20,000		679,560			—		—		20,000		679,560			679,560			—			—	—
								(US 20,000	)								(US 20,000	)		(US 20,000	)
	Bond funds
	JF Taiwan Bond Fund	Short-term investment	JF Asset Management (Taiwan) Ltd.	—		34,343		500,000			68,021		1,000,000		23,666		350,000			346,791			3,209			78,698		1,153,209
	ABN AMRO Bond Fund	Short-term investment	ABN AMRO	—		34,794		500,000			165,257		2,400,000		65,145		950,000			943,825			6,175			134,906		1,956,175
	ABN AMRO Select Bond Fund	Short-term investment	ABN AMRO	—		—		—			18,235		200,000		—		—			—			—			18,235		200,000
	JF Taiwan First Bond Fund	Short-term investment	JF Asset Management (Taiwan) Ltd.	—		—		—			110,580		1,500,000		25,694		350,000			348,537			1,463			84,886		1,151,463
	INVESCO R.O.C Bond A Fund	Short-term investment	INVESCO Asset Management Taiwan	—		—		—			93,975		1,350,000		17,270		250,000			248,089			1,911			76,705		1,101,911
	Dresdner Bond DAM Fund	Short-term investment	Allianz Dresdner Securities Investment Consulting Co., Ltd.	—		—		—			80,833		900,000		—		—			—			—			80,833		900,000
	Barits Bond Fund	Short-term investment	Barits Securities Investment Trust Co., Ltd.	—		—		—			76,640		900,000		—		—			—			—			76,640		900,000
	Shin Kong Chi Shin Bond Fund	Short-term investment	Shinkong Investment Trust Co., Ltd.	—		—		—			151,594		2,100,000		—		—			—			—			151,594		2,100,000
	NITC Bond Fund	Short-term investment	National Investment Trust Co., Ltd.	—		—		—			3,764		600,000		—		—			—			—			3,764		600,000
	HSBC NTD Money Management Fund	Short-term investment	HSBC Asset Management (Taiwan) Ltd.	—		—		—			41,568		600,000		—		—			—			—			41,568		600,000

	Bonds under repurchase agreement	Short-term investment	Chung Shing Bills Finance Corp. and several financial institutions	—		—		1,800,000			—		2,577,163		—		4,127,714			4,127,714			—			—		249,449

	Government bonds
	1994 Government Bond Series C	Short-term investment	Chung Shing Bills Finance Corp. and several financial institutions	—		—		1,422,197			—		—		—		1,427,762			1,422,197			5,565			—	—
	2002 Government Bond Series A	Short-term investment	BNP and several financial institutions	—		—		3,157,331			—		—		—		3,169,750			3,157,331			12,419			—	—
	2002 Government Bond Series E	Short-term investment	BNP and several financial institutions	—		—		3,113,066			—		—		—		3,133,875			3,113,066			20,809			—	—
	2002 Government Bond Series J	Short-term investment	BNP and several financial institutions	—		—		—			—		2,023,206		—		2,031,500			2,023,206			8,294			—	—
	2003 Government Bond Series A	Short-term investment	BNP and several financial institutions	—		—		—			—		1,207,409		—		—			—			—			—		1,207,409
	United States Treas NTS	Short-term investment	—	—		—		—			—	US$	699,398		—	US$	506,162		US$	507,041		US$	(879	)		—	US$	192,357
	2003 Government Bond Series I	Long-term investment	FCB and several financial institutions	—		—		—			—		3,402,213		—		—			—			—			—		3,397,081
	2004 Government Bond Series A	Long-term investment	China Bills Finance Corp. and several financial institutions	—		—		—			—		2,349,573		—		—			—			—			—		2,349,573
	2004 Government Bond Series E	Long-term investment	BNP and several financial institutions	—		—		—			—		3,890,925		—		—			—			—			—		3,893,827
	2004 Kaohsiung Municipal Bond Series A	Long-term investment	KGI Securities Co., Ltd. and several financial institutions	—		—		—			—		620,000		—		—			—			—			—		620,000

	Corporate bonds
	Taiwan Power Company	Short-term investment	KGI Securities Co., Ltd.	—		—		—			—		2,777,798		—		—			—			—			—		2,777,798
	Allstate Finl Global Fdg LLC	Short-term investment	—	—		—		—			—	US$	3,171		—		—			—			—			—	US$	3,171
	American Express Co.	Short-term investment	—	—		—		—			—	US$	3,550		—		—			—			—			—	US$	3,550
	American Express Cr Corp. Mtn	Short-term investment	—	—		—		—			—	US$	3,503		—	US$	3,504		US$	3,503		US$	1			—	—
	American Gen Fin Corp. Mtn	Short-term investment	—	—		—		—			—	US$	3,130		—		—			—			—			—	US$	3,130
	American Gen Fin Corp. Mtn	Short-term investment	—	—		—		—			—	US$	3,702		—		—			—			—			—	US$	3,702
	American Honda Fin Corp. Mtn	Short-term investment	—	—		—		—			—	US$	3,509		—	US$	3,509		US$	3,509			—			—	—
	American Honda Fin Corp. Mtn	Short-term investment	—	—		—		—			—	US$	3,750		—	US$	3,755		US$	3,750		US$	5			—	—
	American Honda Fin Corp. Mtn	Short-term investment	—	—		—		—			—	US$	3,800		—		—			—			—			—	US$	3,800

(Continued)

- 53 -

Beginning Balance

Acquisition

Disposal

Ending Balance

Carrying

Gain (Loss)

Amount

Shares/

Amount

Shares/

Amount

Shares/

Amount

Value

on Disposal

Shares/

(US$ in

Marketable Securities

Financial Statement

Nature of

Units

(US$ in

Units

(US$ in

Units

(US$ in

Units

Thousand)

Company Name

Type and Name

Account

Counter-party

Relationship

(Thousand)

Thousand)

(Thousand)

Thousand)

(Thousand)

Thousand)

(Thousand)

(Note 1)

American Intl Group Inc. Mtnf

Short-term investment

—

$ —

—

US$ 3,795

—

$ —

—

US$ 3,795

Amgen Inc.

Short-term investment

—

US$ 3,005

—

US$ 3,005

Bank New York Inc.

Short-term investment

—

US$ 3,945

—

US$ 3,945

Bank One Corp.

Short-term investment

—

US$ 3,693

—

US$ 3,695

US$ 3,693

US$ 2

—

Bear Stearns Cos Inc.

Short-term investment

—

US$ 3,805

—

US$ 3,816

US$ 3,805

US$ 11

—

Bear Stearns Cos Inc.

Short-term investment

—

US$ 3,518

—

US$ 3,518

Bear Stearns Cos Inc. Medium Te

Short-term investment

—

US$ 3,105

—

US$ 3,105

Bristol Myers Squibb Co.

Short-term investment

—

US$ 3,819

—

US$ 3,819

Brown Forman Corp.

Short-term investment

—

US$ 3,277

—

US$ 3,280

US$ 3,277

US$ 3

—

Cardinal Health Inc.

Short-term investment

—

US$ 3,837

—

US$ 3,795

US$ 3,837

US$ (42

)

—

Cit Group Hldgs Inc.

Short-term investment

—

US$ 3,203

—

US$ 3,203

Citigroup Inc.

Short-term investment

—

US$ 3,583

—

US$ 3,583

Compaq Computer Corp.

Short-term investment

—

US$ 3,719

—

US$ 3,719

Consolidated Edison Co. NY Inc.

Short-term investment

—

US$ 3,687

—

US$ 3,687

Countrywide Fdg Corp. Mtn

Short-term investment

—

US$ 3,534

—

US$ 3,540

US$ 3,534

US$ 6

—

Countrywide Home Lns Inc.

Short-term investment

—

US$ 5,210

—

US$ 5,210

Credit Suisse First Boston USA

Short-term investment

—

US$ 3,177

—

US$ 3,188

US$ 3,177

US$ 11

—

Dell Computer Corp.

Short-term investment

—

US$ 3,054

—

US$ 3,054

Diageo PLC

Short-term investment

—

US$ 3,459

—

US$ 3,459

European Invt Bk

Short-term investment

—

US$ 8,315

—

US$ 8,315

Federal Home Ln Mtg Corp

Short-term investment

—

US$ 4,237

—

US$ 4,237

Federal Home Loan Mtg Assn

Short-term investment

—

US$ 4,847

—

US$ 4,847

First Data Corp.

Short-term investment

—

US$ 3,013

—

US$ 3,013

General Elec Cap Corp. Mtn

Short-term investment

—

US$ 3,507

—

US$ 3,498

US$ 3,507

US$ (9

)

—

General Elec Cap Corp. Mtn

Short-term investment

—

US$ 3,467

—

US$ 3,467

General Elec Cap Corp. Mtn

Short-term investment

—

US$ 3,886

—

US$ 3,886

Genworth Finl Inc.

Short-term investment

—

US$ 3,412

—

US$ 3,412

Goldman Sachs Group Inc Mtn

Short-term investment

—

US$ 3,505

—

US$ 3,505

Goldman Sachs Group LP

Short-term investment

—

US$ 3,820

—

US$ 3,820

Hewlett Packard Co.

Short-term investment

—

US$ 3,373

—

US$ 3,373

Honeywell Inc.

Short-term investment

—

US$ 3,284

—

US$ 3,284

Household Fin Corp.

Short-term investment

—

US$ 3,712

—

US$ 3,633

US$ 3,712

US$ (79

)

—

Household Fin Corp. Mtn Bk Ent

Short-term investment

—

US$ 3,542

—

US$ 3,542

Huntington Natl Bk

Short-term investment

—

US$ 3,003

—

US$ 3,003

ING Sec Life Ins Ingslf

Short-term investment

—

US$ 3,012

—

US$ 3,012

Intl Bk For Recon + Dev

Short-term investment

—

US$ 5,232

—

US$ 5,232

JP Morgan Chase + Co.

Short-term investment

—

US$ 3,638

—

US$ 3,601

US$ 3,638

US$ (37

)

—

JP Morgan Chase + Co.

Short-term investment

—

US$ 3,128

—

US$ 3,128

JP Morgan Chase + Co.

Short-term investment

—

US$ 3,663

—

US$ 3,663

Keycorp Mtn Book Entry

Short-term investment

—

US$ 3,500

—

US$ 3,500

KFW Intl Fin Inc.

Short-term investment

—

US$ 5,104

—

US$ 5,104

Lehman Brothers Hldgs Inc.

Short-term investment

—

US$ 3,417

—

US$ 3,381

US$ 3,417

US$ (36

)

—

Lehman Brothers Hldgs Inc.

Short-term investment

—

US$ 3,705

—

US$ 3,705

Lilly Eli + Co.

Short-term investment

—

US$ 3,750

—

US$ 3,750

Merrill Lynch + Co Inc.

Short-term investment

—

US$ 3,497

—

US$ 3,498

US$ 3,497

US$ 1

—

Merrill Lynch + Co Inc.

Short-term investment

—

US$ 3,486

—

US$ 3,486

Monumental Global Fdg II 2002A

Short-term investment

—

US$ 3,129

—

US$ 3,129

Morgan Stanley Group Inc.

Short-term investment

—

US$ 5,741

—

US$ 5,741

Morgan Stanley Group Inc.

Short-term investment

—

US$ 4,763

—

US$ 3,713

—

US$ 1,050

Nationsbank Corp.

Short-term investment

—

US$ 3,644

—

US$ 3,644

Nationwide Bldg Soc

Short-term investment

—

US$ 3,457

—

US$ 3,457

Nationwide Life Global Mtn

Short-term investment

—

US$ 3,413

—

US$ 3,413

Pepsico Inc. Mtn Book Entry

Short-term investment

—

US$ 3,818

—

US$ 3,818

Popular North Amer Inc Mtn

Short-term investment

—

US$ 3,042

—

US$ 3,042

Pricoa Global Fdg I Mtn

Short-term investment

—

US$ 3,507

—

US$ 3,507

Pricoa Global Fdg I Mtn

Short-term investment

—

US$ 3,050

—

US$ 3,050

Principal Life Global Fdg I Gl

Short-term investment

—

US$ 3,168

—

US$ 3,168

Salomon Smith Barney Hldgs Inc.

Short-term investment

—

US$ 3,160

—

US$ 3,160

SBC Communications Inc.

Short-term investment

—

US$ 3,681

—

US$ 3,681

(Continued)

- 54 -


					Beginning Balance		Acquisition			Disposal						Ending Balance
												Carrying	Gain (Loss)				Amount
					Shares/	Amount	Shares/	Amount		Shares/	Amount	Value	on Disposal			Shares/	(US$ in
	Marketable Securities	Financial Statement		Nature of	Units	(US$ in	Units	(US$ in		Units	(US$ in	(US$ in	(US$ in			Units	Thousand)
Company Name	Type and Name	Account	Counter-party	Relationship	(Thousand)	Thousand)	(Thousand)	Thousand)		(Thousand)	Thousand)	Thousand)	Thousand)			(Thousand)	(Note 1)
	Shell Finance (UK) PLC	Short-term investment	—	—	—	$ —	—	US$	3,604	—	$ —	$ —	$	—		—	US$	3,604
	TIAA Global Mkts Inc.	Short-term investment	—	—	—	—	—	US$	3,631	—	US$ 3,131	US$ 3,112	US$	19		—	US$	519
	Unitedhealth Group Inc.	Short-term investment	—	—	—	—	—	US$	3,119	—	—	—		—		—	US$	3,119
	Viacom Inc.	Short-term investment	—	—	—	—	—	US$	3,177	—	US$ 3,135	US$ 3,177	US$	(42	)	—	—
	Viacom Inc.	Short-term investment	—	—	—	—	—	US$	3,172	—	US$ 3,175	US$ 3,172	US$	3		—	—
	Wachovia Corp.	Short-term investment	—	—	—	—	—	US$	3,720	—	—	—		—		—	US$	3,720
	Walmart Cda Venture Corp.	Short-term investment	—	—	—	—	—	US$	3,670	—	—	—		—		—	US$	3,670
	Washington Mut Fin Corp.	Short-term investment	—	—	—	—	—	US$	4,768	—	—	—		—		—	US$	4,768
	Washington Mut Inc.	Short-term investment	—	—	—	—	—	US$	4,735	—	—	—		—		—	US$	4,735
	Washington Post Co.	Short-term investment	—	—	—	—	—	US$	3,182	—	—	—		—		—	US$	3,182
	Wells Fargo + Co. New	Short-term investment	—	—	—	—	—	US$	3,697	—	—	—		—		—	US$	3,697
	China Steel Corporation	Long-term investment	Chung Shing Bills Finance Corp.	—	—	—	—		2,997,430	—	—	—		—		—		2,978,804
	Taiwan Power Company	Long-term investment	BNP and several financial institutions	—	—	—	—		950,646	—	—	—		—		—		915,276
	Nan Ya Plastics Corporation	Long-term investment	Chung Shing Bills Finance Corp.	—	—	—	—		408,538	—	—	—		—		—		407,526
	Formosa Plastics Corporation	Long-term investment	Chung Shing Bills Finance Corp.	—	—	—	—		406,245	—	—	—		—		—		405,485
	Formosa Petrochemical Corporation	Long-term investment	Chung Shing Bills Finance Corp.	—	—	—	—		202,980	—	—	—		—		—		202,595

	Agency bonds
	Federal Home Ln Mtg Corp.	Short-term investment	—	—	—	—	—	US$	6,096	—	—	—		—		—	US$	6,096
	Federal Home Ln Mtg Corp.	Short-term investment	—	—	—	—	—	US$	4,725	—	—	—		—		—	US$	4,725
	Federal Home Ln Mtg Corp.	Short-term investment	—	—	—	—	—	US$	3,558	—	—	—		—		—	US$	3,558
	Federal Natl Mtg Assn	Short-term investment	—	—	—	—	—	US$	5,861	—	—	—		—		—	US$	5,861
	Federal Natl Mtg Assn	Short-term investment	—	—	—	—	—	US$	3,393	—	—	—		—		—	US$	3,393
	Federal Natl Mtg Assn	Short-term investment	—	—	—	—	—	US$	6,130	—	—	—		—		—	US$	6,130
	Federal Natl Mtg Assn Gtd	Short-term investment	—	—	—	—	—	US$	6,371	—	—	—		—		—	US$	6,371
	Federal Natl Mtg Assn Mtn	Short-term investment	—	—	—	—	—	US$	7,000	—	—	—		—		—	US$	7,000
	Fnma Pool 790828	Short-term investment	—	—	—	—	—	US$	5,014	—	—	—		—		—	US$	5,014
	Gnma II Pool 081153	Short-term investment	—	—	—	—	—	US$	3,817	—	—	—		—		—	US$	3,817
	Gnma II Pool Tba Nov 30 Arms	Short-term investment	—	—	—	—	—	US$	4,829	—	US$ 4,829	US$ 4,829		—		—	—
	Government Natl Mtg Assn	Short-term investment	—	—	—	—	—	US$	4,473	—	—	—		—		—	US$	4,473
	Federal Hm Ln PC	Short-term investment	—	—	—	—	—	US$	3,466	—	—	—		—		—	US$	3,466
	Federal Home Ln Bks	Short-term investment	—	—	—	—	—	US$	5,210	—	US$ 4,153	US$ 4,168	US$	(15	)	—	US$	1,042
	Federal Home Ln Bks	Short-term investment	—	—	—	—	—	US$	4,927	—	—	—		—		—	US$	4,927
	Federal Home Ln Bks	Short-term investment	—	—	—	—	—	US$	14,938	—	US$ 6,980	US$ 6,976	US$	4		—	US$	7,962
	Federal Home Ln Bks	Short-term investment	—	—	—	—	—	US$	7,014	—	—	—		—		—	US$	7,014
	Federal Home Ln Bks	Short-term investment	—	—	—	—	—	US$	4,936	—	—	—		—		—	US$	4,936
	Federal Home Ln Bks	Short-term investment	—	—	—	—	—	US$	9,956	—	US$ 9,967	US$ 9,956	US$	11		—	—
	Federal Home Ln Bks	Short-term investment	—	—	—	—	—	US$	5,264	—	US$ 5,286	US$ 5,264	US$	22		—	—
	Federal Home Ln Bks	Short-term investment	—	—	—	—	—	US$	4,948	—	—	—		—		—	US$	4,948
	Federal Home Ln Bks	Short-term investment	—	—	—	—	—	US$	7,018	—	—	—		—		—	US$	7,018
	Federal Home Ln Bks	Short-term investment	—	—	—	—	—	US$	9,993	—	US$ 5,000	US$ 4,997	US$	3		—	US$	4,996
	Federal Home Ln Bks	Short-term investment	—	—	—	—	—	US$	7,042	—	—	—		—		—	US$	7,042
	Federal Home Ln Bks	Short-term investment	—	—	—	—	—	US$	6,098	—	—	—		—		—	US$	6,098
	Federal Home Ln Bks	Short-term investment	—	—	—	—	—	US$	13,953	—	—	—		—		—	US$	13,953
	Federal Home Ln Bks	Short-term investment	—	—	—	—	—	US$	13,983	—	—	—		—		—	US$	13,983
	Federal Home Ln Bks	Short-term investment	—	—	—	—	—	US$	13,981	—	—	—		—		—	US$	13,981
	Federal Home Ln Mtg Corp.	Short-term investment	—	—	—	—	—	US$	6,978	—	—	—		—		—	US$	6,978
	Federal Home Ln Mtg Corp.	Short-term investment	—	—	—	—	—	US$	3,388	—	—	—		—		—	US$	3,388
	Federal Home Ln Mtg Corp.	Short-term investment	—	—	—	—	—	US$	4,907	—	US$ 4,981	US$ 4,907	US$	74		—	—
	Federal Home Ln Mtg Corp.	Short-term investment	—	—	—	—	—	US$	4,953	—	—	—		—		—	US$	4,953
	Federal Home Ln Mtg Corp.	Short-term investment	—	—	—	—	—	US$	9,997	—	—	—		—		—	US$	9,997
	Federal Home Ln Mtg Corp.	Short-term investment	—	—	—	—	—	US$	9,971	—	US$ 9,942	US$ 9,971	US$	(29	)	—	—
	Federal Home Ln Mtg Corp.	Short-term investment	—	—	—	—	—	US$	11,984	—	US$10,965	US$10,986	US$	(21	)	—	US$	998
	Federal Home Ln Mtg Corp.	Short-term investment	—	—	—	—	—	US$	4,933	—	—	—		—		—	US$	4,933
	Federal Home Ln Mtg Corp. Mtn	Short-term investment	—	—	—	—	—	US$	4,930	—	—	—		—		—	US$	4,930
	Federal Home Loan Mtg Corp.	Short-term investment	—	—	—	—	—	US$	4,903	—	—	—		—		—	US$	4,903
	Federal Natl Mtg Assn	Short-term investment	—	—	—	—	—	US$	11,036	—	US$ 10,997	US$ 11,036	US$	(39	)	—	—
	Federal Natl Mtg Assn	Short-term investment	—	—	—	—	—	US$	10,496	—	US$ 10,430	US$ 10,496	US$	(66	)	—	—

(Continued)

- 55 -


					Beginning Balance		Acquisition		Disposal						Ending Balance
											Carrying	Gain (Loss)				Amount
					Shares/	Amount	Shares/	Amount	Shares/	Amount	Value	on Disposal			Shares/	(US$ in
	Marketable Securities	Financial Statement		Nature of	Units	(US$ in	Units	(US$ in	Units	(US$ in	(US$ in	(US$ in			Units	Thousand)
Company Name	Type and Name	Account	Counter-party	Relationship	(Thousand)	Thousand)	(Thousand)	Thousand)	(Thousand)	Thousand)	Thousand)	Thousand)			(Thousand)	(Note 1)
	Federal Natl Mtg Assn	Short-term investment	—	—	—	$ —	—	US$ 5,270	—	$ —	$ —	$			—	US$ 5,270
	Federal Natl Mtg Assn	Short-term investment	—	—	—	—	—	US$ 4,982	—	US$ 4,983	US$ 4,982	US$	1		—	—
	Federal Natl Mtg Assn	Short-term investment	—	—	—	—	—	US$ 6,940	—	—					—	US$ 6,940
	Federal Natl Mtg Assn	Short-term investment	—	—	—	—	—	US$ 4,867	—	US$ 4,938	US$ 4,867	US$	71		—	—
	Federal Natl Mtg Assn	Short-term investment	—	—	—	—	—	US$ 6,903	—	—	—		—		—	US$ 6,903
	Federal Natl Mtg Assn	Short-term investment	—	—	—	—	—	US$ 4,981	—	—	—		—		—	US$ 4,981
	Federal Natl Mtg Assn	Short-term investment	—	—	—	—	—	US$ 6,997	—	—	—		—		—	US$ 6,997
	Federal Natl Mtg Assn	Short-term investment	—	—	—	—	—	US$ 4,993	—	US$ 4,993	US$ 4,993		—		—	—
	Federal Natl Mtg Assn Disc Nts	Short-term investment	—	—	—	—	—	US$ 5,000	—	—	—		—		—	US$ 5,000
	Federal Natl Mtg Assn Mtn	Short-term investment	—	—	—	—	—	US$ 15,787	—	—	—		—		—	US$ 15,787
	Freddie Mac	Short-term investment	—	—	—	—	—	US$ 4,929	—	—	—		—		—	US$ 4,929
	Student Ln Marketing Assn	Short-term investment	—	—	—	—	—	US$ 16,000	—	US$ 16,000	US$ 16,000		—		—	—

	Corporate issued asset-backed securities
	Aesop Fdg II LLC	Short-term investment	—	—	—	—	—	US$ 4,955	—	—	—		—		—	US$ 4,955
	American Express Cr Account MA	Short-term investment	—	—	—	—	—	US$ 3,445	—	—	—		—		—	US$ 3,445
	Americredit Automobile Receivb	Short-term investment	—	—	—	—	—	US$ 4,949	—	—	—		—		—	US$ 4,949
	Banc Amer Coml Mtg Inc.	Short-term investment	—	—	—	—	—	US$ 5,503	—	—	—		—		—	US$ 5,503
	Banc Amer Mtg Secs Inc.	Short-term investment	—	—	—	—	—	US$ 4,030	—	—	—		—		—	US$ 4,030
	Bank Of Amer Lease Equip Tr	Short-term investment	—	—	—	—	—	US$ 4,023	—	—	—		—		—	US$ 4,023
	BMW Veh Owner Tr	Short-term investment	—	—	—	—	—	US$ 4,978	—	—	—		—		—	US$ 4,978
	California Infr + Economic Dev	Short-term investment	—	—	—	—	—	US$ 4,298	—	—	—		—		—	US$ 4,298
	California Infras + Economic	Short-term investment	—	—	—	—	—	US$ 8,383	—	—	—		—		—	US$ 8,383
	California Infrastructure Dev	Short-term investment	—	—	—	—	—	US$ 7,419	—	—	—		—		—	US$ 7,419
	Capital Auto Receivables Asset	Short-term investment	—	—	—	—	—	US$ 4,627	—	—	—		—		—	US$ 4,627
	Capital One Master Tr	Short-term investment	—	—	—	—	—	US$ 3,093	—	US$ 3,072	US$ 3,093	US$	(21	)	—	—
	Capital One Multi Asset Execut	Short-term investment	—	—	—	—	—	US$ 4,957	—	—	—		—		—	US$ 4,957
	Capital One Secd Nt Tr	Short-term investment	—	—	—	—	—	US$ 5,032	—	US$ 5,000	US$ 5,032	US$	(32	)	—	—
	Caterpillar Finl Asset Tr	Short-term investment	—	—	—	—	—	US$ 10,008	—	—	—		—		—	US$ 10,008
	Centex Home Equity Ln Tr	Short-term investment	—	—	—	—	—	US$ 3,500	—	—	—		—		—	US$ 3,500
	Cit Equip Coll Tr	Short-term investment	—	—	—	—	—	US$ 4,999	—	—	—		—		—	US$ 4,999
	Citibank Cr Card Issuance Tr	Short-term investment	—	—	—	—	—	US$ 4,959	—	—	—		—		—	US$ 4,959
	CHN Equip Tr	Short-term investment	—	—	—	—	—	US$ 5,000	—	—	—		—		—	US$ 5,000
	Comm 2004 Htl 1	Short-term investment	—	—	—	—	—	US$ 4,600	—	—	—		—		—	US$ 4,600
	Credit Suisse First Boston Mtg	Short-term investment	—	—	—	—	—	US$ 5,000	—	—	—		—		—	US$ 5,000
	CWABS Inc.	Short-term investment	—	—	—	—	—	US$ 5,000	—	—	—		—		—	US$ 5,000
	CWABS Inc.	Short-term investment	—	—	—	—	—	US$ 3,500	—	—	—		—		—	US$ 3,500
	CWALT Inc.	Short-term investment	—	—	—	—	—	US$ 4,718	—	—	—		—		—	US$ 4,718
	CWABS Inc.	Short-term investment	—	—	—	—	—	US$ 3,129	—	—	—		—		—	US$ 3,129
	CWABS Inc.	Short-term investment	—	—	—	—	—	US$ 4,040	—	—	—		—		—	US$ 4,040
	Daimlerchrysler Auto Tr	Short-term investment	—	—	—	—	—	US$ 4,991	—	—	—		—		—	US$ 4,991
	Daimlerchrysler Auto Tr	Short-term investment	—	—	—	—	—	US$ 4,982	—	—	—		—		—	US$ 4,982
	Daimlerchrysler Auto Tr	Short-term investment	—	—	—	—	—	US$ 4,897	—	—	—		—		—	US$ 4,897
	First Union Lehman Bros Mtg Tr	Short-term investment	—	—	—	—	—	US$ 4,177	—	—	—		—		—	US$ 4,177
	First USA Credit Cr Master Tr	Short-term investment	—	—	—	—	—	US$ 5,011	—	—	—		—		—	US$ 5,011
	Ford Cr Auto Owner Tr	Short-term investment	—	—	—	—	—	US$ 10,999	—	—	—		—		—	US$ 10,999
	GE Cap Cr Card Master Nt Tr	Short-term investment	—	—	—	—	—	US$ 4,000		US$ 4,003	US$ 4,000	US$	3		—	—
	Granite Mtgs PLC	Short-term investment	—	—	—	—	—	US$ 5,000	—	—	—		—		—	US$ 5,000
	GS Mtg Secs Corp.	Short-term investment	—	—	—	—	—	US$ 4,000	—	—	—		—		—	US$ 4,000
	Harley Davidson Motorcycle Tr	Short-term investment	—	—	—	—	—	US$ 4,000	—	—	—		—		—	US$ 4,000
	Harley Davidson Motorcycle Tr	Short-term investment	—	—	—	—	—	US$ 5,999	—	—	—		—		—	US$ 5,999
	Holmes Fing No 8 PLC	Short-term investment	—	—	—	—	—	US$ 5,001	—	—	—		—		—	US$ 5,001
	Honda Auto Receivables	Short-term investment	—	—	—	—	—	US$ 5,000	—	—	—		—		—	US$ 5,000
	Hyundai Auto Receivables Tr	Short-term investment	—	—	—	—	—	US$ 3,500	—	—	—		—		—	US$ 3,500
	Impac Secd Assets Corp.	Short-term investment	—	—	—	—	—	US$ 4,000	—	—	—		—		—	US$ 4,000
	Monumentl Global Fdg II	Short-term investment	—	—	—	—	—	US$ 3,500	—	—	—		—		—	US$ 3,500
	Navistar Finl 2003 A Owner Tr	Short-term investment	—	—	—	—	—	US$ 4,928	—	—	—		—		—	US$ 4,928
	Nissan Auto Receivables	Short-term investment	—	—	—	—	—	US$ 7,000	—	—	—		—		—	US$ 7,000

(Continued)

- 56 -


					Beginning Balance			Acquisition		Disposal							Ending Balance
													Carrying	Gain (Loss)					Amount
					Shares/		Amount	Shares/	Amount	Shares/		Amount	Value	on Disposal			Shares/		(US$ in
	Marketable Securities	Financial Statement		Nature of	Units		(US$ in	Units	(US$ in	Units		(US$ in	(US$ in	(US$ in			Units		Thousand)
Company Name	Type and Name	Account	Counter-party	Relationship	(Thousand)		Thousand)	(Thousand)	Thousand)	(Thousand)		Thousand)	Thousand)	Thousand)			(Thousand)		(Note 1)
	Nissan Auto Receivables Owner Tr	Short-term investment	—	—		—	$ —	—	US$ 4,999		—	$ —	$ —	$	—			—	US$ 4,999
	Nissan Auto Receivables Owner	Short-term investment	—	—		—	—	—	US$ 4,853		—	—	—		—			—	US$ 4,853
	ONYX Accep Owner Tr	Short-term investment	—	—		—	—	—	US$ 4,913		—	—	—		—			—	US$ 4,913
	Permanent Fing No 1 PLC	Short-term investment	—	—		—	—	—	US$ 5,102		—	US$ 5,036	US$ 5,102	US$	(66	)		—	—
	Providian Gateway Owner Tr	Short-term investment	—	—		—	—	—	US$ 4,204		—	—	—		—			—	US$ 4,204
	Providian Gateway Owner Tr	Short-term investment	—	—		—	—	—	US$ 3,992		—	—	—		—			—	US$ 3,992
	Reliant Energy Transition Bd	Short-term investment	—	—		—	—	—	US$ 5,185		—	—	—		—			—	US$ 5,185
	Residential Asset Mtg Prods	Short-term investment	—	—		—	—	—	US$ 3,766		—	—	—		—			—	US$ 3,766
	Residential Fdg Mtg Secs I Inc	Short-term investment	—	—		—	—	—	US$ 3,947		—	—	—		—			—	US$ 3,947
	Sequoia Mtg Tr	Short-term investment	—	—		—	—	—	US$ 3,500		—	—	—		—			—	US$ 3,500
	Structured Adj Rate Mtg Ln Tr	Short-term investment	—	—		—	—	—	US$ 3,058		—	—	—		—			—	US$ 3,058
	Toyota Auto Receivables 2003 B	Short-term investment	—	—		—	—	—	US$ 4,970		—	—	—		—			—	US$ 4,970
	Triad Auto Receivables Tr	Short-term investment	—	—		—	—	—	US$ 5,042		—	—	—		—			—	US$ 5,042
	TXU Elec Delivery Transition	Short-term investment	—	—		—	—	—	US$ 8,009		—	—	—		—			—	US$ 8,009
	USAA Auto Owner Tr	Short-term investment	—	—		—	—	—	US$ 4,000		—	—	—		—			—	US$ 4,000
	Wachovia Auto Owner Tr	Short-term investment	—	—		—	—	—	US$ 6,000		—	—	—		—			—	US$ 6,000
	Wachovia Auto Owner Tr	Short-term investment	—	—		—	—	—	US$ 4,999		—	—	—		—			—	US$ 4,999
	WFS Financial Owner Trust	Short-term investment	—	—		—	—	—	US$ 5,008		—	—	—		—			—	US$ 5,008
	WFS Finl 2002 4 Owner Tr	Short-term investment	—	—		—	—	—	US$ 3,904		—	—	—		—			—	US$ 3,904
	WFS Finl 2004 2 Owner Tr	Short-term investment	—	—		—	—	—	US$ 4,994		—	—	—		—			—	US$ 4,994
	WFS Finl 2004 4 Owner Tr	Short-term investment	—	—		—	—	—	US$ 5,399		—	—	—		—			—	US 5,399
	Whole Auto Ln Tr	Short-term investment	—	—		—	—	—	US$ 5,967		—	—	—		—			—	US$ 5,967
	Whole Auto Ln Tr	Short-term investment	—	—		—	—	—	US$ 4,000		—	—	—		—			—	US$ 4,000
	World Omni Auto Receivables Tr	Short-term investment	—	—		—	—	—	US$ 5,963		—	—	—		—			—	US$ 5,963
	World Omni Auto Receivables Tr	Short-term investment	—	—		—	—	—	US$ 5,000		—	US$ 4,986	US$ 5,000	US$	(14	)		—	—

	Money market funds	Short-term investment	—	—		—	—	—	US$ 21,114		—	—	—		—			—	US$ 21,114
InveStar	Common stock
	RichTek Technology Corp.	Short-term investment	—	—		947	US$ 121	—	—		1,595	US$ 6,783	US$ 184	US$	6,598			682	US$ 67
	Atheros Communication, Inc.	Short-term investment	—	—		1,205	US$ 3,593	—	—		1,205	US$ 8,972	US$ 3,593	US$	5,379			—	—
	Monolithic Power Systems, Inc.	Short-term investment	—	—		2,521	US$ 2,000	—	—		546	US$ 4,318	US$ 433	US$	3,885			1,975	US$ 1,567

InveStar II	Common stock
	RichTek Technology Corp.	Short-term investment	—	—		465	US$ 346	—	—		768	US$ 3,394	US$ 519	US$	2,875			321	US$ 184

Note:

The ending balance included the recognition of the investment income (loss) by the equity method, the cumulative translation adjustments and the bond premium or discount amortization amount.

- 57 -

TABLE 5

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND SUBSIDIARIES

ACQUISITION OF INDIVIDUAL REAL ESTATE AT COSTS OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 2004
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Types of

Transaction

Nature of

Prior Transaction of Related Counter-party

Price

Purpose of

Company Name

Property

Transaction Date

Amount

Payment Term

Counter-party

Relationship

Owner

Relationship

Transfer Date

Amount

Reference

Acquisition

Other Terms

The Company

Fab. 12

April 21, 2004

1,484,370

By the construction progress

IDC Taiwan, Inc., Taiwan Branch (U.S.A.)

—

N/A

Public bidding

Manufacturing purpose

None

Fab. 12

April 21, 2004

420,168

By the construction progress

CHRIST AG

—

N/A

Public bidding

Manufacturing purpose

None

Fab. 12

April 22, 2004

224,800

By the construction progress

Allis Electric Co., Ltd.

—

N/A

Public bidding

Manufacturing purpose

None

Fab. 12

May 12, 2004

340,307

By the construction progress

United Industry gas Corp., Ltd.

—

N/A

Public bidding

Manufacturing purpose

None

Fab. 12

May 12, 2004

116,181

By the construction progress

United Industry gas Corp., Ltd.

—

N/A

Public bidding

Manufacturing purpose

None

Fab. 12

May 12, 2004

133,092

By the construction progress

BOC EDWARDS, CMS

—

N/A

Public bidding

Manufacturing purpose

None

Fab. 12

June 17, 2004

165,208

By the construction progress

Organo Corporation

—

N/A

Public bidding

Manufacturing purpose

None

Fab. 12

July 2, 2004

225,744

By the construction progress

Marketech International Corp.

—

N/A

Public bidding

Manufacturing purpose

None

Fab. 12

July 8, 2004

100,767

By the construction progress

Kanto Chemical Co., Inc.

—

N/A

Public bidding

Manufacturing purpose

None

Fab. 12

July 8, 2004

466,833

By the construction progress

United Integrated Services Co., Ltd.

—

N/A

Public bidding

Manufacturing purpose

None

Fab. 14

August 3, 2004

300,000

By the construction progress

United Integrated Services Co., Ltd.

—

N/A

Public bidding

Manufacturing purpose

None

Fab. 12

August 5, 2004

122,969

By the construction progress

Marketech International Corp.

—

N/A

Public bidding

Manufacturing purpose

None

Fab. 12

August 5, 2004

185,984

By the construction progress

Marketech International Corp.

—

N/A

Public bidding

Manufacturing purpose

None

Fab. 12

August 5, 2004

182,060

By the construction progress

Marketech International Corp.

—

N/A

Public bidding

Manufacturing purpose

None

Fab. 12

October 15, 2004

105,299

By the construction progress

IDC Taiwan, Inc., Taiwan Branch (U.S.A.)

—

N/A

Public bidding

Manufacturing purpose

None

- 58 -

TABLE 6

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND SUBSIDIARIES

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 2004
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Notes/Accounts Payable

Transaction Details

Abnormal Transaction

or Receivable

Purchase/

% to

Company Name

Related Party

Nature of Relationship

Sale

Amount

Total

Payment Terms

Unit Price

Payment Terms

Ending Balance

Total

Note

The Company

TSMC — North America

Subsidiary

Sales

142,271,732

Net 30 days after invoice date

None

15,526,964

Philips and its affiliates

Major shareholder

Sales

5,463,565

Net 30 days after monthly closing

None

581,487

GUC

Investee

Sales

371,546

Net 30 days after monthly closing

None

56,436

—

WaferTech

Subsidiary

Purchases

15,203,047

Net 30 days after monthly closing

None

(913,107

)

VIS

Investee

Purchases

9,169,602

Net 30 days after monthly closing

None

(1,533,938

)

SSMC

Investee

Purchases

5,869,123

Net 30 days after monthly closing

None

(207,794

)

- 59 -

TABLE 7

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND SUBSIDIARIES

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
DECEMBER 31, 2004
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Amount

Received in

Allowance

Overdue

Subsequent

for Bad

Company Name

Related Party

Nature of Relationship

Ending Balance

Turnover Rate

Amount

Action Taken

Period

Debts

The Company

TSMC — North America

Subsidiary

15,526,964

38 days

5,044,202

—

6,013,414

$ —

TSMC — Shanghai

Subsidiary

1,473,365

(Note)

145,146

Accelerate demand on account receivables

—

Philips and its affiliates

Major shareholder

581,487

49 days

7,136

—

13,726

—

Note:

The ending balance is generated mainly from the sales of machinery, so it is not applicable for the calculation of the turnover rate.

- 60 -

TABLE 8

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND SUBSIDIARIES

NAMES, LOCATIONS, AND RELATED INFORMATION OF INVESTEES ON WHICH THE COMPANY EXERCISES
SIGNIFICANT INFLUENCE
DECEMBER 31, 2004
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)


				Original Investment Amount				Balance as of December 31, 2004
										Percentage		Carrying		Net Income			Investment
				December 31,		December 31,		Shares		of		Value		(Loss) of the			Gain (Loss)
Investor Company	Investee Company	Location	Main Businesses and Products	2004		2003		(Thousand)		Ownership		(Note 1)		Investee			(Note 2)			Note
The Company	TSMC — North America	San Jose, California, U.S.A.	Sales and marketing of integrated circuits and semiconductor devices	$	333,178	$	333,178		11,000		100	$	502,242	$	120,587		$	112,543		Subsidiary
	TSMC — Europe	Amsterdam, the Netherlands	Marketing activities		15,749		15,749		—		100		25,439		262			262		Subsidiary
	TSMC — Japan	Yokohama, Japan	Marketing activities		83,760		83,760		6		100		102,572		2,919			2,919		Subsidiary
	TSMC — Shanghai	Shanghai, China	Manufacturing and marketing of integrated circuits and semiconductor devices		9,187,962		1,890,952		—		100		8,113,511		(727,036	)		(727,036	)	Subsidiary
	VIS	Hsin-Chu, Taiwan	Research, design, development, manufacture, packaging, testing and sale of memory integrated circuits, LSI, VLSI and related parts		8,119,816		8,119,816		409,532		28		5,401,982		4,706,668			1,329,555		Investee
	TSMC International	Tortola, British Virgin Islands	Providing investment in companies involved in the design, manufacture, and other related business in the semiconductor industry		31,445,780		31,445,780		987,968		100		23,778,997		2,598,162			2,598,162		Subsidiary
	Chi Cherng	Taipei, Taiwan	Investment activities		300,000		300,000		—		36		50,570		21,359			(664	)	Investee
	Hsin Ruey	Taipei, Taiwan	Investment activities		300,000		300,000		—		36		49,823		21,887			(491	)	Investee
	TSMC Partners	Tortola, British Virgin Islands	Investment activities		10,350		10,350		300		100		3,908,356		43,117			43,117		Subsidiary
	SSMC	Singapore	Fabrication and supply of integrated circuits		6,408,190		6,408,190		382		32		3,290,888		2,288,786			732,418		Investee
	Emerging Alliance	Cayman Islands	Investing in new start-up technology companies		1,447,957		1,179,690		—		99		823,232		(97,767	)		(97,278	)	Subsidiary
	GUC	Hsin-Chu, Taiwan	Researching, developing, manufacturing, testing and marketing of integrated circuits		409,920		409,920		39,040		47		391,626		30,424			23,279		Investee
	VisEra	Hsin-Chu, Taiwan	Manufacturing, material wholesaling and retailing of electronic spare parts		51,000		51,000		5,100		25		59,116		35,540			8,885		Investee
	VTAF II	Cayman Islands	Investing in new start-up technology companies		332,412		—		—		98		329,968		18,373			14,648		Subsidiary

Note 1:		The treasury stock is deducted from the carrying value.

Note 2:		The gains or losses on disposal of the stocks held by subsidiaries (treated as treasury stocks) and the paid-in capital from cash dividend distributed by parent company are excluded.

- 61 -

TABLE 9

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND SUBSIDIARIES

INFORMATION OF INVESTMENT IN MAINLAND CHINA
DECEMBER 31, 2004
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Accumulated

Outflow of

Accumulated

Total

Investment

Inward

Amount

from Taiwan

Carrying

Remittance

of Paid-in

as of

Investment Flows

as of

Value

of Earnings

Capital

January 1,

Outflow

December 31,

Percentage of

Investment

as of

Main Businesses and

(RMB in

Investment

2004 (US$ in

(US$ in

2004 (US$ in

Ownership in

Gain (Loss)

December 31,

Investee Company

Products

Thousand)

Type

Thousand)

Inflow

Thousand)

Investment

(Note 2)

2004

TSMC (Shanghai) Company Limited

Manufacturing and marketing of integrated circuits and semiconductor devices

$9,187,962
(RMB2,284,355)

(Note 1)

$1,890,952
(US$56,000)

$7,297,010
(US$220,000)

$ —

$9,187,962
(US$276,000)

100

(727,036

)

8,113,511

$ —


Accumulated Investment in Mainland	Investment Amounts Authorized by
China as of December 31, 2004	Investment Commission, MOEA	Upper Limit on Investment
(US$ in Thousand)	(US$ in Thousand)	(US$ in Thousand)
$9,187,962	$11,841,207	$11,841,207
(US$276,000)	(US$371,000)	(US$371,000)

Note 1:		Direct investment in TSMC (Shanghai) US$276,000 thousand.

Note 2:		Amount was recognized based on the audited financial statements.

- 62 -

Taiwan Semiconductor Manufacturing
Company Ltd. and Affiliates

Combined Financial Statements for the
Year Ended December 31, 2004 and
Independent Accountants’ Review Report

REPRESENTATION LETTER

The combined balance sheet as of December 31, 2004 and the combined statement of income for the year ended December 31, 2004 of Taiwan Semiconductor Manufacturing Company Ltd. and affiliates were prepared in conformity with the Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises, relevant regulations and accounting principles generally accepted in the Republic of China.

No misrepresentations were made and no important matters were concealed in the preparation of the combined financial statements of Taiwan Semiconductor Manufacturing Company Ltd.

Very truly yours,

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD.

/s/ Morris Chang

MORRIS CHANG
Chairman

January 13, 2005 (January 30, 2005 as to Note 23o)

INDEPENDENT ACCOUNTANTS’ REVIEW REPORT

The Board of Directors and Shareholders
Taiwan Semiconductor Manufacturing Company Ltd.

We have reviewed the combined balance sheet as of December 31, 2004 and the related combined statement of income for the year then ended of Taiwan Semiconductor Manufacturing Company Ltd. and affiliates. Our review was made in accordance with the Guidelines for the Review of Combined Financial Statements of Affiliates. It is substantially less in scope than an examination in accordance with auditing standards generally accepted in the Republic of China (R.O.C.), the objective of which is the expression of an opinion regarding the combined balance sheet and the combined statement of income taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the combined balance sheet and the combined statement of income referred to above in order for them to be in conformity with the “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises” in the R.O.C., and the R.O.C. regulations governing the preparation of financial statements of public company and generally accepted accounting principles in the R.O.C.

January 13, 2005 (January 30, 2005 as to Note 23o)

Notice to Readers

The accompanying combined financial statements are intended only to present the combined financial position, results of operations and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdiction. The standards, procedures and practices to audit such combined financial statements are those generally accepted and applied in the Republic of China.

For the convenience of readers, the accountants’ review report and the accompanying combined financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language accountants’ review report and combined financial statements shall prevail.

-1-

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND AFFILIATES

COMBINED BALANCE SHEET
DECEMBER 31, 2004
(In Thousands of New Taiwan Dollars, Except Par Value)
(Reviewed, Not Audited)


ASSETS	Amount			%
CURRENT ASSETS
Cash and cash equivalents (Notes 2, 4 and 5)	$	74,531,410			15
Short-term investments, net (Notes 2 and 5)		54,303,642			11
Receivables from related parties (Note 21)		1,077,818			—
Notes receivable		14,746			—
Accounts receivable		31,274,596			6
Allowance for doubtful receivables (Note 2)		(986,360	)		—
Allowance for sales returns and others (Note 2)		(3,342,450	)		(1	)
Other receivables from related parties (Note 21)		111,300			—
Other financial assets (Notes 2 and 24)		2,229,551			1
Inventories, net (Notes 2 and 6)		15,649,596			3
Deferred income tax assets, net (Notes 2 and 15)		8,917,986			2
Prepaid expenses and other current assets (Note 2)		1,751,699			—

Total current assets		185,533,534			37

LONG-TERM INVESTMENTS (Notes 2, 7, 19 and 24)
Equity method		8,692,870			2
Cost method		3,266,330			1
Long-term bonds		15,170,167			3
Other investments		10,521,740			2

Total long-term investments		37,651,107			8

PROPERTY, PLANT AND EQUIPMENT (Notes 2, 8, 11 and 21)
Cost
Land and land improvements		803,508			—
Buildings		98,086,317			20
Machinery and equipment		433,168,964			86
Office equipment		8,551,372			2
Leased assets		566,243			—
Other equipment		152,133			—

Total cost		541,328,537			108
Accumulated depreciation		(331,323,140	)		(66	)
Advance payments and construction in progress		49,247,068			10

Net property, plant and equipment		259,252,465			52

GOODWILL (Note 2)		7,088,864			1

OTHER ASSETS
Deferred charges, net (Notes 2, 9 and 23)		9,218,900			2
Deferred income tax assets, net (Notes 2 and 15)		1,649,979			—
Refundable deposits		106,952			—
Others (Note 8)		175,830			—

Total other assets		11,151,661			2

TOTAL	$	500,677,631			100


LIABILITIES AND SHAREHOLDERS’ EQUITY	Amount			%
CURRENT LIABILITIES
Short-term bank loans (Note 10)	$	383,004			—
Payables to related parties (Note 21)		2,241,748			—
Accounts payable		7,583,723			2
Payables to contractors and equipment suppliers		33,437,308			7
Accrued expenses and other current liabilities (Notes 2, 13 and 23)		10,325,040			2
Current portion of long-term liabilities (Notes 11 and 12)		10,505,489			2

Total current liabilities		64,476,312			13

LONG-TERM LIABILITIES
Long-term bank loans (Note 11)		1,926,735			—
Bonds payables (Note 12)		19,500,000			4
Other long-term payables (Note 13)		7,964,975			2
Other payables to related parties (Notes 21 and 23)		2,317,972			—
Liability under capital lease (Notes 2 and 8)		566,243			—

Total long-term liabilities		32,275,925			6

OTHER LIABILITIES
Accrued pension cost (Notes 2 and 14)		3,113,552			1
Guarantee deposits (Note 23)		412,881			—
Others		714,949			—

Total other liabilities		4,241,382			1

MINORITY INTEREST IN AFFILIATES (Note 2)		718,713			—

Total liabilities		101,712,332			20

SHAREHOLDERS’ EQUITY (Notes 2 and 17)
Capital stock — $10 par value
Authorized: 24,600,000 thousand shares
Issued: 23,251,964 thousand shares		232,519,637			46
Capital surplus		56,537,259			11
Retained earnings:
Appropriated as legal reserve		25,528,007			5
Unappropriated earnings		88,202,009			18
Cumulative translation adjustments (Note 2)		(2,226,427	)		—
Treasury stock (at cost) — 45,521 thousand shares (Notes 2 and 19)		(1,595,186	)		—

Total shareholders’ equity		398,965,299			80

TOTAL	$	500,677,631			100

The accompanying notes are an integral part of the combined financial statements.

-2-

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND AFFILIATES

COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2004
(In Thousands of New Taiwan Dollars, Except Combined Earnings Per Share)
(Reviewed, Not Audited)


	Amount			%
GROSS SALES (Notes 2 and 21)	$	264,348,362
SALES RETURNS AND ALLOWANCES (Note 2)		(4,737,127	)

NET SALES (Note 25)		259,611,235			100
COST OF SALES (Notes 16 and 21)		143,375,116			55

GROSS PROFIT		116,236,119			45

OPERATING EXPENSES (Notes 16, 21 and 25)
Research and development		12,703,145			5
General and administrative		11,542,135			5
Marketing		3,403,503			1

Total operating expenses		27,648,783			11

INCOME FROM OPERATIONS		88,587,336			34

NON-OPERATING INCOME AND GAINS (Note 25)
Investment income recognized by equity method, net (Notes 2 and 7)		2,061,973			1
Interest (Notes 2 and 24)		1,860,614			1
Gain on sales of investments, net (Note 2)		922,650			—
Technical service income (Notes 21 and 23)		423,804			—
Gain on disposal of property, plant and equipment (Note 2)		247,021			—
Other (Note 21)		527,952			—

Total non-operating income and gains		6,044,014			2

NON-OPERATING EXPENSES AND LOSSES (Note 25)
Interest (Notes 2, 8 and 24)		1,528,908			1
Foreign exchange loss, net (Notes 2 and 24)		390,858			—
Loss on impairment of long-term investments (Note 2)		350,608			—
Loss on disposal of property, plant and equipment (Note 2)		131,779			—
Unrealized valuation loss of short-term investments (Note 2)		75,708			—
Other		134,247			—

Total non-operating expenses and losses		2,612,108			1

(Continued)

-3-


	Amount			%
INCOME BEFORE INCOME TAX AND MINORITY INTEREST (Note 25)	$	92,019,242			35
INCOME TAX BENEFIT (Notes 2 and 15)		352,453			—

INCOME BEFORE MINORITY INTEREST		92,371,695			35
MINORITY INTEREST IN INCOME OF AFFILIATES (Notes 2 and 25)		(55,580	)		—

COMBINED NET INCOME	$	92,316,115			35


	Income Before
	Income Tax and		Combined
	Minority		Net
	Interest		Income
COMBINED EARNINGS PER SHARE (NT$, Note 20)
Basic earnings per share	$	3.96	$	3.97

Diluted earnings per share	$	3.96	$	3.97

(Concluded)

The accompanying notes are an integral part of the combined financial statements.

-4-

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD.
AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)
(Reviewed, Not Audited)

1.		GENERAL

		Taiwan Semiconductor Manufacturing Company Ltd. (TSMC), a Republic of China (R.O.C.) corporation, was incorporated as a venture among the Government of the R.O.C., acting through the Development Fund of the Executive Yuan; Philips Electronics N.V. and certain of its affiliates (Philips); and certain other private investors. On September 5, 1994, its shares were listed on the Taiwan Stock Exchange (TSE). On October 8, 1997, TSMC listed some of its shares of stock on the New York Stock Exchange (NYSE) in the form of American Depositary Shares (ADSs).

		TSMC is engaged mainly in the manufacturing, selling, packaging, testing and computer-aided designing of integrated circuits and other semiconductor devices, and the manufacturing of masks.

		TSMC has six direct wholly-owned subsidiaries: TSMC International Investment Ltd. (TSMC International), TSMC North America (TSMC — North America), Taiwan Semiconductor Manufacturing Company Europe B.V. (TSMC — Europe), TSMC Japan K. K. (TSMC — Japan), TSMC (Shanghai) Company Limited (TSMC — Shanghai) and TSMC Partners, Ltd. (TSMC Partners). In addition, TSMC has the following consolidating subsidiaries: a 99.5% owned subsidiary, Emerging Alliance Fund, L.P. (Emerging Alliance) , a 98% owned subsidiary, VentureTech Alliance Fund II, L.P. (VTAF II) and two 36% owned affiliates — Chi Cherng Investment Co., Ltd. (Chi Cherng, which is 36% owned by TSMC and 64% owned by Hsin Ruey Investment Co., Ltd.) and Hsin Ruey Investment Co., Ltd. (Hsin Ruey, which is 36% owned by TSMC and 64% owned by Chi Cherng). TSMC International has two wholly-owned subsidiaries — TSMC Development, Inc. (TSMC Development) and TSMC Technology, Inc. (TSMC Technology), and two 97% owned subsidiaries — InveStar Semiconductor Development Fund, Inc. (InveStar) and InveStar Semiconductor Development Fund, Inc. (II) LDC (InveStar II). TSMC Development has a 99.996% owned subsidiary, WaferTech, LLC (WaferTech). TSMC has two affiliates over which TSMC exercises significant influence: a 47% owned affiliate, Global UniChip Corporation (GUC), and a 25% owned affiliate, VisEra Technologies Co., Ltd. (VisEra). GUC has a wholly-owned subsidiary, Global Unichip Corp. — NA (GUC — NA).

		The following diagram presents information regarding the relationship and ownership percentages among TSMC and its affiliates as of December 31, 2004:

(CHART)

-5-

		TSMC — North America is engaged in the sales and marketing of integrated circuits and semiconductor devices. TSMC — Europe and TSMC — Japan are engaged mainly in marketing activities. TSMC Technology is engaged mainly in engineering support activities. TSMC — Shanghai is engaged in the manufacturing and marketing of integrated circuits and other semiconductor devices. TSMC Partners, TSMC Development, Chi Cherng and Hsin Ruey are engaged in investing activities. TSMC International is engaged in providing investment in companies involved in the design, manufacture, and other related business in the semiconductor industry. Emerging Alliance, VTAF II, InveStar and InveStar II are engaged in investing in new start-up technology companies. WaferTech is engaged in the manufacturing, selling, testing and computer-aided designing of integrated circuits and other semiconductor devices. GUC is engaged in the researching, developing, manufacturing, testing and marketing of integrated circuits. VisEra is engaged in the manufacturing, material wholesaling and retailing of electronic spare parts. GUC — NA is engaged in providing consulting services for products in the North America region.

2.		SIGNIFICANT ACCOUNTING POLICIES

		The combined financial statements are presented in conformity with Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises in the R.O.C. and regulations governing the preparation of financial statements of public companies and generally accepted accounting principles in the R.O.C.

		For the convenience of readers, the accompanying combined financial statements have been translated into English from the original Chinese version prepared and used in the R.O.C. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language financial statements shall prevail.

		Significant accounting policies are summarized as follows:

		Combination

		All significant intercompany balances and transactions have been eliminated in the combined financial statements. The combined financial statements include, as of and for the year ended December 31, 2004, the accounts of all directly and indirectly majority owned subsidiaries of TSMC, and the accounts of GUC, GUC — NA and VisEra that TSMC exercises significant influence on. TSMC and the foregoing affiliates are hereinafter referred to collectively as the “Company”.

		Minority interests in the aforementioned affiliates are presented separately in the combined financial statements.

		Use of Estimates

		The preparation of financial statements in conformity with the aforementioned regulations and principles requires management to make reasonable assumptions and estimates of matters that are inherently uncertain. The actual results may differ from management’s estimates.

		Classification of Current and Noncurrent Assets and Liabilities

		Current assets are those expected to be converted to cash, sold or consumed within one year from the balance sheet date. Current liabilities are obligations due on demand within one year from the balance sheet date. Assets and liabilities that are not classified as current are noncurrent assets and liabilities, respectively.

		Cash Equivalents

		Government bonds under repurchase agreements and notes acquired with maturities less than three months from the date of purchase are classified as cash equivalents.

-6-

		Short-term Investments

		Short-term investments primarily consist of corporate bonds, asset-backed securities, bond and stock funds, agency bonds, government bonds and others.

		Short-term investments are recorded at historical cost and are carried at the lower of cost or market value as of the balance sheet date. An allowance for decline in value is provided and is charged to current earnings when the aggregate carrying value of the investments exceeds the aggregate market value. A reversal of the allowance is recorded for a subsequent recovery of the market value.

		The cost of funds and listed stocks sold are accounted for using the weighted-average method; whereas the other securities are accounted for using the specific identification method.

		The market value of funds is determined using the net asset value of the funds at the end of the year, and the market value of listed stocks is determined using the average-closing price of the listed stocks for the last month of the year. The others are determined using the average of bid and ask prices as of the balance sheet date.

		Cash dividends are recorded as investment income in the current year.

		Allowance for Doubtful Receivables

		Allowances for doubtful receivables are provided based on a review of the collectibility of accounts receivables. The Company determines the amount of allowance for doubtful accounts by examining the historical collection experience and current trends in the credit quality of its customers as well as its internal credit policies.

		Revenue Recognition and Allowance for Sales Returns and Others

		The Company recognizes net sales when the earnings process is complete, as evidenced by an agreement with the customer, transfer of title and acceptance have occurred or services provided, if applicable, a fixed or determinable price and the collectibility is reasonably assured. Allowance for sales returns and pricing discounts is estimated based on historical experience and any known factors that would affect the allowance. Such provisions are deducted from sales in the year the products are sold and the estimated related costs are deducted from cost of sales.

		Sales are determined using the fair value taking into account related sales discounts agreed to by the Company and its customers. Sales agreements typically provide that payment is due 30 days from invoice date for a majority of the customers and 30 to 45 days after the end of the month in which the sales occur for some customers. Since the receivables from sales are collectible within one year and such transactions are frequent, the fair value of receivables is equivalent to the nominal amount of cash received.

		Inventories

		Inventories are stated at the lower of cost or market value. Inventories are recorded using the weighted-average cost method, or recorded at standard cost and adjusted to the approximate weighted-average cost at the end of the year. Market value represents net replacement cost for raw materials, supplies and spare parts. Market value represents net realizable value for finished goods and work in process. The Company assesses the impact of changing technology on its inventory on hand and writes off inventories that are considered obsolete. Ending inventories are evaluated for estimated excess quantities and obsolescence based on demand forecast within a specific time horizon, generally 180 days or less, and the estimated losses on scrap and slow-moving items are recognized in the allowance for losses.

-7-

		Long-term Investments

		Investments in companies wherein the Company exercises significant influence on the operating and financial policy decisions are accounted for using the equity method of accounting. The Company’s proportionate share in the net income or net loss of investee companies is recognized in the “investment income/loss recognized by equity method, net” account. When equity investments are made, the difference, if any, between the cost of investment and the Company’s proportionate share of investee’s net equity is amortized using the straight-line method over five years and is recorded in the “investment income/loss recognized by equity method, net” account.

		When the Company subscribes to additional investee shares at a percentage different from its existing equity interest, the resulting carrying amount of the investment in the investee differs from the amount of Company’s proportionate share in the investee’s net equity. The Company records such difference as an adjustment to long-term investments with the corresponding amount charged or credited to capital surplus.

		Investments in companies wherein the Company does not exercise significant influence are recorded at historical cost. Cash dividends are recognized as investment income in the year received but are accounted for as reductions in the carrying amount of the long-term investments if the dividends are received in the same year that the related investments are acquired. Stock dividends are recorded as an increase in the number of shares held and do not affect investment income or the carrying amount of the investment. An allowance is recognized for any decline in the market value of investments with readily ascertainable fair market value with the corresponding amount recorded as an unrealized loss, a component of shareholders’ equity. A reversal of the allowance will result from a subsequent recovery of the market value of such investments. The carrying amounts of investments whose fair market values are not readily ascertainable are reduced to reflect an other-than-temporary decline in their values, with the related impairment loss charged to income.

		Investments in foreign mutual funds are stated at the lower of aggregate cost or net asset value. An allowance is recognized when the net assets value of the funds is lower than their cost, with the corresponding amount recorded as a reduction to shareholders’ equity. A reversal of the allowance will result from a subsequent recovery of the net asset value.

		The costs of stocks and mutual funds sold are determined using the weighted-average method.

		Investments in long-term bonds are stated at amortized cost. The discount or premium is amortized over the duration period using the interest method, and recorded as an adjustment to interest income.

		When investments in publicly-traded stocks are reclassified from short-term investments to long-term investments or from long-term investments to short-term investments, the Company recognizes a loss to the extent, if any, that the market value of such investments is lower than the carrying amount, and the market value becomes the new basis.

		If an investee company recognizes an unrealized loss on its long-term investments using the lower-of-cost-or-market method, the Company also recognizes a corresponding unrealized loss in proportion to its ownership percentage in the investee company and records the amount as a component of its shareholders’ equity.

		Gains or losses on sales from the Company to investee companies accounted for using the equity method are deferred in proportion to the Company’s ownership percentage in the investee companies until realized through transactions with third parties. The entire amount of the gains or losses on sales to majority-owned subsidiaries is deferred until such gains or losses are realized through the subsequent sales of the related products to third parties.

		Gains or losses on sales from investee companies to the Company are deferred in proportion to the Company’s ownership percentages in the investee companies until realized through transactions with third parties.

-8-

		If an investee’s functional currency is a foreign currency, translation adjustments will result from the process of translating the investee’s financial statements into the reporting currency of the Company. Such adjustments are accumulated and reported as a separate component of shareholders’ equity.

		Property, Plant and Equipment, Assets Leased to Others, Leased Assets and Idle Assets

		Property, plant and equipment and assets leased to others are stated at cost less accumulated depreciation. When impairment is determined, the related assets are stated at the lower of fair value or book value. Idle assets are stated at the lower of net realizable value or book value. Significant additions, renewals and betterments incurred during the construction period are capitalized. Maintenance and repairs are expensed in the year incurred. Interest expense incurred for the project during the purchase and construction period is also capitalized. Properties covered by agreements qualifying as capital leases are carried at the lower of the leased equipment’s market value or the present value of the minimum lease payments at the inception date of the lease.

		Depreciation is computed using the straight-line method over the following estimated service lives: land improvements — 20 years; buildings — 10 to 50 years; machinery and equipment — 3 to 10 years; office equipment — 3 to 15 years; leased assets — 20 years and other equipment — 3 to 10 years.

		Upon sale or disposal of property, plant and equipment, the related cost and accumulated depreciation are removed from the corresponding accounts, with any gain or loss credited or charged to non-operating income or expenses in the year of sale or disposal.

		Goodwill

		Goodwill represents the excess of the consideration paid for acquisition over the fair market value of identifiable net assets acquired and acquisition costs. Goodwill is amortized using the straight-line method over the estimated life of 10 years.

		Deferred Charges

		Deferred charges consist of technology license fees, software and system design costs and other charges. The amounts are amortized as follows: technology license fees — the shorter of the estimated life of the technology or the term of the technology transfer contract, software and system design costs and other charges — 2 or 5 years.

		Pension Costs

		Net periodic pension costs are recorded based on actuarial calculations. The unrecognized net gains or losses and unrecognized net transition obligation are amortized over 25 years or over the remaining service period of the employees.

		Income Tax

		The Company uses an inter-period tax allocation method for income tax. Deferred income tax assets and liabilities are recognized for the tax effects of temporary differences, unused tax credits, and net operating loss carryforwards. Valuation allowances are provided to the extent, if any, that it is more likely than not that deferred income tax assets will not be realized. A deferred tax asset or liability is classified as current or non-current in accordance with the classification of its related asset or liability. However, if a deferred tax asset or liability does not relate to an asset or liability in the financial statements, then it is classified as either current or noncurrent based on the expected length of time before it is realized or settled.

		Any tax credits arising from the purchases of machinery, equipment and technology, research and development expenditures, personnel training, and investments in important technology-based enterprises are recognized using the flow-through method.

-9-

		Adjustments to prior years’ tax liabilities are added to or deducted from the current year’s tax provision.

		Income taxes on unappropriated earnings (excluding earnings from foreign combined affiliates) of 10% are expensed in the year of shareholder approval which is the year subsequent to the year the earnings are generated.

		Stock-based Compensation

		Employee stock option plans that are amended or have options granted on or after January 1, 2004 must be accounted for by the interpretations issued by the Accounting Research and Development Foundation. The Company adopted the intrinsic value method and any compensation cost determined using this method is charged to expense over the employee vesting period.

		Treasury Stock

		When the Company repurchases its outstanding common stock, the cost of the reacquired stock is recorded as treasury stock as a reduction to shareholders’ equity. When the Company retires treasury stock, the treasury stock account is reduced and the common stock as well as the capital surplus-additional paid-in capital are reversed in proportionate to the equity percentage of the retirement. When the book value of the treasury stock exceeds the sum of the par value and additional paid-in capital, the difference is charged to capital surplus - treasury stock and to retained earnings for any remaining amount. The Company’s stock held by its subsidiaries is also treated as treasury stock and reclassified from long-term investments to treasury stock. The cash dividends received by the subsidiaries from the Company are recorded under capital surplus — treasury stock.

		Foreign-currency Transactions

		Foreign currency transactions are recorded in New Taiwan dollars at the rates of exchange in effect when the transactions occur. Exchange gains or losses derived from foreign currency transactions or monetary assets and liabilities denominated in foreign currencies are recognized in current income. At the end of each year, assets and liabilities denominated in foreign currencies are revalued at the prevailing exchange rates with the resulting gains or losses recognized in current income.

		Derivative Financial Instruments

		The Company enters into foreign currency forward contracts to manage currency exposures in cash flow and in foreign-currency-denominated assets and liabilities. The contracts are recorded in New Taiwan dollars at the current rate of exchange of the contract date. The differences in the New Taiwan dollar amounts translated using the spot rates and the amounts translated using the contracted forward rates on the contract date are amortized over the terms of the forward contracts using the straight-line method. At the end of each year, the receivables or payables arising from forward contracts are restated using the prevailing spot rates at the balance sheet date with the resulting differences charged to income. In addition, the receivables and payables related to the forward contracts of the same counter party are netted with the resulting amount presented as either an asset or a liability. Any resulting gain or loss upon settlement is credited or charged to income in the year of settlement.

		The Company enters into cross-currency swap contracts to manage currencies exposures on foreign currency denominated assets and liabilities. The principal amount is recorded using the spot rates at the contract date. The differences in the New Taiwan dollar amounts translated using the spot rates and the amounts translated using the contracted rates on the contract date are amortized over the terms of the contracts using the straight-line method. At the end of each year, the receivables or payables arising from cross-currency swap contracts are restated using the prevailing spot rate with the resulting differences charged to income. In addition, the receivables and payables related to the contracts are netted with the resulting amount presented as either an asset or a liability. The difference in interest computed pursuant to the contracts on each settlement date or the balance sheet date is recorded as an adjustment to the interest

-10-

income or expense associated with the hedged items. Any resulting gain or loss upon settlement is credited or charged to income in the year of settlement.

		The Company enters into interest rate swap contracts to manage exposures to changes in interest rates on existing assets or liabilities. These transactions are accounted for on an accrual basis, in which the cash settlement receivable or payable is recorded as an adjustment to interest income or expense associated with the hedged items.

		Translation of Foreign-currency Financial Statements

		R.O.C. SFAS No. 14, “Accounting for Foreign-currency Transactions,” applies to foreign subsidiaries that use the local foreign currency as their functional currency. The financial statements of foreign subsidiaries are translated into New Taiwan dollars at the following exchange rates: Assets and liabilities — current rate on balance sheet date; shareholders’ equity — historical rate; income and expenses — average rate during the year. The resulting translation adjustment is recorded as a separate component of shareholders’ equity.

3.		SIGNIFICANT ELIMINATION ENTRIES

		Significant transactions and balances with affiliates that have been eliminated upon combination are as follows:


Company	Account	Amount		Transaction Entity
TSMC	Payables to related parties	$	913,107	WaferTech
			23,091	TSMC — Europe
			21,978	TSMC — Japan
			12,591	TSMC — Shanghai
			8,027	TSMC Technology
			6,589	GUC
			1,881	TSMC — North America
	Deferred credits — gain on intercompany		682,530	TSMC — Shanghai
	Receivables from related parties		15,526,964	TSMC — North America
			56,436	GUC
			4,285	WaferTech
			458	TSMC — Shanghai
	Other receivables from related parties		1,472,880	TSMC — Shanghai
			30,278	VisEra
			2,881	TSMC Technology
	Sales		142,271,732	TSMC — North America
			371,546	GUC
			6,535	WaferTech
			811	TSMC — Shanghai
	Purchases		15,203,047	WaferTech
			12,752	TSMC — Shanghai
	Research and development expenses		11,688	GUC
	General and administrative expenses — rent		13,186	GUC
	Marketing expenses — commissions		253,341	TSMC — Japan
			202,678	TSMC — Europe

(Continued)

-11-


Company	Account	Amount		Transaction Entity
	Other non-operating income and gains	$	28,917	VisEra
			3,267	WaferTech
TSMC International	Other receivables		1,915,020	TSMC Development
	Interest receivable		30,931	TSMC Development
	Deferred revenue		630,271	TSMC Technology
	Interest income		8,919	TSMC Technology
	Interest income		30,656	TSMC Development
TSMC Partners	Other receivables		9,795,268	TSMC International
	Other receivables		2,553,360	TSMC Development
	Interest receivable		41,242	TSMC Development
	Deferred revenue		8,631,210	TSMC International
	Interest income		40,875	TSMC Development
TSMC Technology	Accounts receivable		2,129	WaferTech
	Management service income		14,832	WaferTech
GUC	Accrued expenses		1,103	GUC — NA
	Operating expenses		8,680	GUC — NA
TSMC — North America	Accounts receivable		18,510	GUC
	Accounts receivable		99,262	VisEra

CASH AND CASH EQUIVALENTS


	2004
Cash and bank deposits	$	54,838,044
Government bonds acquired under repurchase agreements		19,215,153
Corporate issued notes		478,213


	$	74,531,410

SHORT-TERM INVESTMENTS


	2004
Corporate bonds	$	13,554,598
Corporate issued asset-backed securities		11,766,877
Bond and stock funds		10,858,945
Agency bonds		8,633,889
Government bonds		7,346,858
Money market funds		1,640,973
Government bonds acquired under repurchase agreements		249,449
Listed stocks		168,299
Commercial papers		95,666
Corporate issued notes		63,796

		54,379,350
Allowance for valuation losses		(75,708	)


	$	54,303,642


Market value	$	55,186,236

-12-

		The Company entered into investment management agreements with three well-known financial institutions (fund managers) to manage investment portfolios for the Company. In accordance with the investment guidelines and terms in these agreements, the securities invested by the fund managers cannot be below a pre-defined credit rating. As of December 31, 2004, the Company had investment portfolios with these fund managers that aggregated to an original amount of US$1,200,000 thousand. The investment portfolios included securities such as corporate bonds, asset-backed securities, agency bonds, government bonds and others. Securities acquired with maturities less than three months from the date of purchase were reclassified as cash equivalents.

6.		INVENTORIES, NET


	2004
Finished goods	$	3,547,705
Work in process		11,509,775
Raw materials		993,151
Supplies and spare parts		1,176,735

		17,227,366
Allowance for losses		(1,577,770	)


	$	15,649,596

LONG-TERM INVESTMENTS


	2004
			% of
	Carrying		Owner-
	Amount		Ship
Equity method
Vanguard International Semiconductor Corporation (VIS)	$	5,401,982		28
Systems on Silicon Manufacturing Company Pte Ltd. (SSMC)		3,290,888		32

		8,692,870


Cost method
Common stocks
Publicly traded stocks		71,832		—
Non-publicly traded stocks		1,226,499		—
Preferred stocks		1,677,865		—
Funds		290,134		—

		3,266,330


Long-term bonds
Government bonds		10,260,481		—
Corporate bonds
China Steel Corporation		2,978,804		—
Taiwan Power Company		915,276		—
Nan Ya Plastics Corporation		407,526		—
Formosa Plastics Corporation		405,485		—
Formosa Petrochemical Corporation		202,595		—

		15,170,167


Other investments		10,521,740		—


	$	37,651,107

-13-

		VIS reduced its capital on August 11, 2004 in order to decrease its accumulated deficit. The number of shares of VIS held by TSMC after the capital reduction declined from 787,016 thousand shares to 409,532 thousand shares. TSMC’s ownership percentage remained the same.

		For the year ended December 31, 2004, net investment income recognized from the equity method investees was NT$2,061,973 thousand. The carrying amounts of investments accounted for under the equity method and the related investment income or losses were determined based on the audited financial statements of the investees as of and for the same periods as the Company.

		As of December 31, 2004, other investments consist of the following:


	Nominal		Carrying		Range of
	Amount		Amount		Interest Rates	Maturity Date
Step-up callable deposits

Domestic bank	$	2,000,000	$	2,007,681	2.05%-2.20%	July 2007 to August 2007
Foreign bank		2,138,340		2,152,394	1.44%-4.75%	June 2007 to August 2007

Callable range accrual deposits

Foreign bank		6,383,400		6,414,151	(See below)	September 2009
						to December 2009


	$	10,521,740	$	10,574,226

		During the year ended December 31, 2004, the Company deposited funds into structured-time deposits with the following terms:

		The interest rate of the step-up callable deposits is determined by the Company and the related banks.

		The amount of interest earned by the Company for the callable range accrual deposits is based on a pre-defined range as determined by the 3-month or 6-month LIBOR rate plus an agreed upon rate ranging between 2.1% and 3.45%. Based on the terms of the deposits, if the 3-month or 6-month LIBOR rate moves outside of the pre-defined range, the interest paid to the Company is at a minimum rate of 1.5%. Under the term of the contracts, the bank has the right to cancel the contracts prior to the maturity date.

		Deposits that reside in banks located in Hong Kong and Singapore amounted to NT$2,553,360 thousand and NT$638,340 thousand, respectively.

8.		PROPERTY, PLANT AND EQUIPMENT

		Accumulated depreciation consisted of the following:


	2004
Land improvements	$	172,484
Buildings		38,161,926
Machinery and equipment		287,229,318
Office equipment		5,685,185
Leased assets		33,115
Other equipment		41,112


	$	331,323,140

-14-

Information on the status of the expansion or construction plans of TSMC’s manufacturing facilities as of December 31, 2004 is as follows:

Estimated

Accumulated

Expected Date of

Construction/Expansion Plan

Total Cost

Expenditures

Commencement

Fab 12 expansion

58,744,200

41,870,300

January 2005

		Interest expense for the year ended December 31, 2004 was NT$1,807,242 thousand (before deducting capitalized amounts of NT$278,334 thousand in 2004). The interest rates used for purposes of calculating the capitalized amounts were 1.89% to 2.89% in 2004.

		The Company entered into agreements to lease certain buildings that qualify as capital leases. The term of the lease is from December 2003 to December 2013. Certain buildings that are leased to others are accounted for as operating leases. The related carrying amount is recorded as in the “Other assets” account.

9.		DEFERRED CHARGES, NET


	2004
Technology license fees	$	6,642,884
Software and system design costs		2,251,709
Others		324,307


	$	9,218,900

10.

SHORT-TERM BANK LOANS


	2004
Unsecured loan in U.S. dollars:
US$12,000 thousand, repayable by June 2006, annual interest at 2.80%	$	383,004

11.

LONG-TERM BANK LOANS


	2004
Unsecured loan:
US$60,000 thousand, repayable by December 2006, annual interest at 2.475%	$	1,915,020
Science Park Administration (SPA) SOC loan, repayable by October 2008 in 20 equal payments, interest-free		10,443
SPA DSP loan, repayable by July 2007 in 20 equal payments, interest-free		6,761

		1,932,224
Less — current portion		5,489


	$	1,926,735

-15-

		As of December 31, 2004, all the assets of WaferTech with a carrying amount of approximately NT$15,955,936 thousand (US$499,920 thousand) were pledged for the credit line of the secured loan (no secured loan was outstanding as of December 31, 2004). WaferTech is required to maintain compliance with certain financial covenants defined in the agreement. As of December 31, 2004, WaferTech was in compliance with all such financial covenants. Under the unsecured loan agreement, the Company is required maintain compliance with certain financial covenants which, if violated, could result in payment of the obligation prior to the originally scheduled payment date. The Company was in compliance with the financial covenants as of December 31, 2004.

		As of December 31, 2004, principal repayments under the Company’s long-term bank loans are as follows:


Year of Repayment	Amount
2005	$	5,489
2006		1,920,509
2007		4,137
2008		2,089


	$	1,932,224

12.

BONDS PAYABLE


	2004
Domestic unsecured bonds:
Issued in December 2000 and repayable in December 2005 and 2007 in two equal payments, 5.25% and 5.36% interest payable annually, respectively	$	15,000,000
Issued in January 2002 and repayable in January 2007, 2009 and 2012 in three equal payments, 2.6%, 2.75% and 3.00% interest, payable annually, respectively		15,000,000


	$	30,000,000

As of December 31, 2004, future principal repayments for the Company’s bonds are as follows:


Year of Repayment	Amount
2005	$	10,500,000
2007		7,000,000
2009		8,000,000
2010 and thereafter		4,500,000


	$	30,000,000

13.

OTHER LONG-TERM PAYABLES


	2004
Payables for acquisition of property, plant and equipment (Note 23k)	$	6,030,007
Payables for royalties		3,440,313

		9,470,320
Less — current portion		1,505,345


	$	7,964,975

-16-

TSMC entered into several license arrangements for certain semiconductor-related patents. Future minimum payments under the agreements as of December 31, 2004 are as follows:


Year	Amount
2005	$	1,505,345
2006		466,786
2007		446,838
2008		255,336
2009 and thereafter		766,008


	$	3,440,313

		The current portion of other long-term payables is recorded in the “accrued expenses and other current liabilities” account.

14.		PENSION PLAN

		TSMC and GUC have defined benefit plans for all regular employees that provide benefits based on the employee’s length of service and average monthly salary and wages for the six-month period prior to retirement and one-month period prior to retirement, respectively.

		TSMC and GUC contribute at an amount equal to 2% of salaries and wages paid each month to their respective pension funds (the Funds). The Funds are administered by their respective pension fund monitoring committees (the Committees) and deposited in the Committees’ name in the Central Trust of China.

		Information on the pension plans is summarized as follows:

Components of net periodic pension cost


	2004
Service cost	$	638,652
Interest cost		129,039
Projected return on plan assets		(42,071	)
Amortization		8,829


Net periodic pension cost	$	734,449

Reconciliation of the funded status of the plans and accrued pension cost


	2004
Benefit obligation
Vested benefit obligation	$	69,424
Nonvested benefit obligation		2,711,898

Accumulated benefit obligation		2,781,322
Additional benefits based on future salaries		2,138,852

Projected benefit obligation		4,920,174
Fair value of plan assets		(1,455,148	)

Funded status		3,465,026

(Continued)

-17-


		2004
	Unrecognized net transitional obligation	$	(135,516	)
	Unrecognized net loss		(216,469	)


	Accrued pension cost	$	3,113,041


	Vested benefit	$	78,579


c.	Actuarial assumptions

	Discount rated used in determining present values		3.25%-3.50	%
	Future salary increase rate		3.00	%
	Expected rate of return on plan assets		2.50%-3.25	%

d.	Contributions to the Funds	$	228,523


e.	Payments from the Funds	$	1,446

15.

INCOME TAX

A reconciliation of income tax on income before income tax and minority interest at the statutory rate and income tax expense is as follows:


	2004
Income tax based on income before income tax and minority interest at the statutory rate	$	(24,704,552	)
Tax-exempt income		14,712,500
Temporary and permanent differences		187,005


Current income tax on income before income tax credits	$	(9,805,047	)

Income tax benefit consists of:


	2004
Current income tax on income before income tax credits	$	(9,805,047	)
Additional 10% income tax on unappropriated earnings		(823,932	)
Net operating loss carryforwards		769
Income tax credits		10,478,158
Other income tax		(555,794	)
Net change in deferred income tax assets and liabilities
Net operating loss carryforwards		(1,656,944	)
Investment tax credits		249,932
Temporary differences		1,132,188
Net change in valuation allowance of deferred income tax assets		1,333,217
Adjustment of prior years’ taxes		(94	)


Income tax benefit	$	352,453

(Continued)

-18-

Deferred income tax assets (liabilities) consist of the following:


	2004
Current
Investment tax credits	$	8,867,307
Net operating loss carryforwards		12,134
Temporary differences		321,478
Valuation allowance		(282,933	)


	$	8,917,986


Noncurrent
Net operating loss carryforwards	$	6,773,516
Investment tax credits		17,136,517
Temporary differences		(7,757,244	)
Valuation allowance		(14,502,810	)


	$	1,649,979

	d.		Integrated income tax information:

			The balance of the imputation credit account (ICA) of the TSMC as of December 31, 2004 was zero.

			The expected creditable ratio of TSMC for distribution of earnings of 2004 was zero.

			The imputation credits allocated to the shareholders are based on the balance as of the date of dividend distribution. The expected creditable ratio for distribution of earnings of 2004 may be adjusted when the allocation of the imputation credits is made.

	e.		TSMC’s earnings generated prior to December 31, 1997 have been appropriated.

	f.		As of December 31, 2004, the Company’s investment tax credits consisted of the following:


			Total		Remaining
			Creditable		Creditable		Expiry
Regulation	Items		Amounts		Amounts		Year
Statute for Upgrading		Purchase of machinery and
Industries	equipment		$	4,448,442	$	—		2004
				3,819,937		116,189		2005
				4,886,611		4,886,611		2006
				4,140,462		4,140,462		2007
				6,309,182		6,309,182		2008

			$	23,604,634	$	15,452,444


Statute for Upgrading		Research and development
Industries	expenditures		$	2,270,013	$	—		2004
				3,165,378		3,165,378		2005
				3,363,356		3,363,356		2006
				2,015,531		2,015,531		2007
				1,885,311		1,885,311		2008


			$	12,699,589	$	10,429,576

(Continued)

-19-


		Total		Remaining
		Creditable		Creditable		Expiry
Regulation	Items	Amounts		Amounts		Year
Statute for Upgrading	Personnel training	$	48,659	$	—		2004
Industries			29,448		29,448		2005
			27,358		27,358		2006
			26,962		26,962		2007


		$	132,427	$	83,768


Statute for Upgrading	Investments in important
Industries	technology-based enterprises	$	38,036	$	38,036		2005

			As of December 31, 2004, the net operating loss carryforwards were generated from WaferTech, TSMC Development, TSMC Technology and GUC and will expire at various dates through 2024.

	g.		The sales generated from the following expansion and construction of TSMC’s manufacturing plants are exempt from income tax:


	Tax-Exemption Periods
Construction of Fab 6		2001 to 2004
Construction of Fab 8 - module B		2002 to 2005
Expansion of Fab 2 - modules A and B, Fab 3 and Fab 4, Fab 5 and Fab 6		2003 to 2006
Construction of Fab 12		2004 to 2007

		The tax authorities have examined income tax returns of TSMC through 2000. However, TSMC is contesting the assessment of the tax authority for 1992 and 1998. TSMC believes that any additional assessment will not have a material adverse effect on TSMC.

16.		LABOR COST, DEPRECIATION AND AMORTIZATION EXPENSE


	For the Year Ended December 31, 2004
			Classified as
	Classified as		Operating
	Cost of Sales		Expenses		Total
Labor cost
Salary	$	10,730,104	$	6,018,288	$	16,748,392
Labor and health insurance		572,829		328,637		901,466
Pension		472,918		277,870		750,788
Other		431,082		537,129		968,211


	$	12,206,933	$	7,161,924	$	19,368,857


Depreciation	$	61,705,023	$	2,598,009	$	64,303,032

Amortization	$	2,496,897	$	3,111,875	$	5,608,772

17.		SHAREHOLDERS’ EQUITY

		TSMC has issued a total of 668,351 thousand ADSs which are traded on the NYSE as of December 31, 2004. The number of common shares represented by the ADSs is 3,341,754 thousand shares (one ADS represents five common shares).

-20-

		Capital surplus can only be used to offset a deficit under the Company Law of the R.O.C. However, the capital surplus generated from donations and the excess of the issue price over the par value of capital stock (including the stock issued for new capital, mergers, convertible bonds and the surplus arising from treasury stock transactions) may be appropriated as stock dividends restricted to a certain percentage based on shareholders’ ownership.

		As of December 31, 2004, the capital surplus consisted of the following:


	2004
From merger	$	24,003,546
Additional paid-in capital		23,051,675
From long-term investments		121,354
From convertible bonds		9,360,424
Donations		55
Treasury stock		205


Total	$	56,537,259

	a.		10% legal reserve; until the amount of total legal reserve equals the TSMC’s paid-in capital;

	b.		Special reserve in accordance with relevant laws or regulations;

	c.		Remuneration to directors and supervisors and bonuses to employees at 0.3% and at least 1% of the remainder, respectively. Individuals eligible for the employee bonuses may include employees of affiliated companies as approved by the board of directors or a representative of the board of directors;

	d.		The appropriation of any remaining balance shall be approved by the shareholders.

		Dividends may be distributed by way of cash dividend or stock dividend at the discretion of TSMC. As the operation of TSMC is at a steady growth stage, distribution of profits shall be made preferably by way of cash dividend. Distribution of profits may also be made by way of stock dividend; provided however, the ratio for stock dividend shall not exceed 50% of total distribution.

		Any appropriations of net income are recorded in the financial statements in the year of shareholder approval.

		An appropriation for legal reserve is required until the reserve equals the aggregate par value of TSMC’s issued capital stock. The reserve can only be used to offset a deficit or be distributed as a stock dividend up to 50% of the reserve balance when the reserve balance has reached 50% of the aggregate par value of the issued capital stock of TSMC.

		A special reserve equivalent to the net debit balance of the other components of shareholder’s equity (for example, unrealized loss on long-term investments and cumulative translation adjustments, but excluding treasury stock), shall be made from unappropriated earnings pursuant to existing regulations promulgated by the R.O.C. Securities and Futures Bureau (SFB). Any special reserve appropriated may be reversed to the extent that the net debit balance of the related account reverses.

-21-

The appropriation of the earnings of 2003 was approved in the shareholders’ meeting on May 11, 2004. The appropriations and dividend per share are as follows:


	Appropriation			Dividend Per
	of Earnings			Share (NT$)
Legal reserve	$	4,725,870
Special reserve		(68,945	)
Bonus paid to employees — in cash		681,628
Bonus paid to employees — in stock		2,726,514
Preferred stock dividend — in cash		184,493		$	0.35
Common stock dividend — in cash		12,159,971			0.60
Common stock dividend — in stock		28,373,267			1.41
Remuneration to directors and supervisors — in cash		127,805


	$	48,910,603

		The amount of the above appropriation of earnings for 2003 is consistent with the resolution of the meeting of board of directors on February 17, 2004. However, the Company Law of the R.O.C. states TSMC, as a holder of treasury stock shall not participate in the appropriations of earnings. Therefore, the actual cash dividend per share and stock dividend per share are slightly more than those in the aforementioned resolution. If the above employee bonus paid in stock had been paid in cash and all of the bonus to employees and remuneration to directors and supervisors had been charged against income for 2003, the after income tax basic earnings per share for the year ended December 31, 2003 would have decreased from NT$2.33 to NT$2.15. The shares distributed as a bonus to employees represented 1.35% of TSMC’s total outstanding common shares as of December 31, 2003.

		As of January 13, 2005, the board of directors of TSMC has not resolved the appropriation for earnings of 2004.

		The above information about the appropriations of bonus to employees and remuneration to directors and supervisors is available at Market Observation System website.

		Under the Integrated Income Tax System that became effective on January 1, 1998, the R.O.C. resident shareholders are allowed a tax credit for their proportionate share of the income tax paid by TSMC on earnings generated since January 1, 1998.

18.		STOCK-BASED COMPENSATION PLANS

		Stock Option Plans

		TSMC’s Employee Stock Option Plans, the TSMC 2003 Plan and the TSMC 2002 Plan, were approved on October 29, 2003 and June 25, 2002, respectively. The maximum number of units authorized to be granted under the TSMC 2003 Plan and the TSMC 2002 Plan is 120,000 thousand and 100,000 thousand, respectively, with each unit representing one common share of stock. The option rights may be granted to qualified employees of TSMC or any of its domestic or foreign subsidiaries, in which TSMC’s shareholding with voting rights, directly or indirectly, is more than fifty percent (50%). The option rights of both plans are valid for ten years and exercisable at certain percentages subsequent to the second anniversary of the grant date. Under the terms of the plans, stock option rights are granted at an exercise price equal to the closing price of TSMC’s common shares listed on the TSE on the date of grant. Under the TSMC 2003 Plan and the TSMC 2002 Plan, units that were never granted, or had been granted and subsequently cancelled were expired as of December 31, 2004.

-22-

		GUC’s Employee Stock Option Plans, the GUC 2003 Plan and the GUC 2002 Plan, were approved on January 23, 2003 and July 1, 2002, respectively. The maximum number of units authorized to be granted under the GUC 2003 Plan and the GUC 2002 Plan is 7,535 units and 5,000 units, respectively, with each unit representing one thousand common shares of stock. The option rights may be granted to qualified employees of GUC. The option rights of both plans are valid for six years and exercisable at certain percentages subsequent to the second anniversary of the grant date. Under the GUC 2002 Plan and the GUC 2003 Plan, units that were never granted, or had been granted and subsequently cancelled were expired as of December 31, 2004.

		On August 16, 2004, GUC’s 2004 stock option plan (the GUC 2004 Plan) was approved by the Bureau of Monetary Affairs, Financial Supervisory Commission of the R.O.C. The maximum number of units authorized to be granted is 2,500 units, with each unit representing one thousand common shares of stock. The option rights may be granted to qualified employees of GUC and its subsidiary. The option rights of GUC 2004 plan are valid for six years and exercisable at certain percentages subsequent to the second anniversary of the grant date. As of December 31, 2004, no option rights under the GUC 2004 Plan have been granted.

		On November 2, 2004, the board of directors of TSMC approved the 2004 stock option plan ( the TSMC 2004 Plan), in which the maximum number of units authorized to be granted is 11,000 thousand, with each unit representing one common share of stock. The option rights may be granted to qualified employees of TSMC or any of its domestic or foreign subsidiaries, in which TSMC’s shareholding with voting rights, directly or indirectly, is more than fifty percent (50%). The option rights of the plans are valid for ten years and exercisable at certain percentages subsequent to the second anniversary of the grant date. Under the terms of the plan, stock option rights are granted at an exercise price equal to the closing price of TSMC’s common shares listed on the TSE on the date of grant. The TSMC 2004 plan was approved by the Bureau of Monetary Affairs, Financial Supervisory Commission of the R.O.C. on January 6, 2005.

		Information on TSMC’s outstanding stock options for the year ended December 31, 2004 is as follows:


	TSMC 2003 Plan					TSMC 2002 Plan
	Number of			Weighted-		Number of			Weighted-
	Outstanding			Average		Outstanding			Average
	Stock Option			Exercise		Stock Option			Exercise
	Rights			Price		Rights			Prices
	(in Thousands)			(NT$)		(in Thousands)			(NT$)
Beginning outstanding balance		842			57.8		48,515			42.7
Options granted		13,199			49.9		7,201			42.6
Options exercised		—			—		(87	)		41.8
Options cancelled		(1,404	)		50.9		(3,899	)		44.2


Ending outstanding balance		12,637					51,730

The number of outstanding option rights and exercise prices have been adjusted to reflect the appropriations of dividends in accordance with the above plans.

-23-

Information on GUC’s outstanding stock options for the year ended December 31, 2004 is as follows:

GUC 2003 Plan

GUC 2002 Plan

Weighted-

Number of

Average

Number of

Average

Outstanding

Exercise

Outstanding

Exercise

Stock Option

Price

Stock Option

Prices

Rights

(NT$)

Rights

(NT$)

Beginning outstanding balance

2,058

10.5

5,000

10.5

Options granted

831

10.5

—

Ending outstanding balance

2,889

5,000

As of December 31, 2004, information on outstanding and exercisable option rights is as follows:


			Options Outstanding						Options Exercisable
					Weighted-
			Number of		Average		Weighted-		Number of		Weighted-
	Range of		Outstanding		Remaining		Average		Exercisable		Average
	Exercise		Options (in		Contractual		Exercise		Options (in		Exercise
	Price (NT$)		Thousands)		Life (Years)		Price (NT$)		Thousands)		Price (NT$)
TSMC 2003 Plan	$	43.8-$57.8		12,637		9.34	$	50.3		—	$	—
TSMC 2002 Plan	$	32.8-$46.2		51,730		8.09		42.6		10,307		41.7

				64,367		8.33		44.1		10,307		41.7


			Options Outstanding						Options Exercisable
							Weighted-				Weighted-
	Range of		Number of		Remaining		Average		Number of		Average
	Exercise		Outstanding		Contractual		Exercise		Exercisable		Exercise
	Price (NT$)		Options		Life (Years)		Price (NT$)		Options		Price (NT$)
GUC 2003 Plan		10.5		2,889		4.17-5.42		10.5		—		—
GUC 2002 Plan		10.5		5,000		3.58-4.17		10.5		4,238		10.5

				7,889		3.58-5.42		10.5		4,238		10.5

The compensation cost recognized by the Company for the year ended December 31, 2004 was zero. Had the Company used the fair value based method to evaluate the options granted, the method, assumptions and pro forma results of the Company for the year ended December 31, 2004 would have been as follows:


Method:	Black-Scholes Model
Assumptions:
Expected dividend yield		0%-1.00%
Expected volatility		38.74%-46.15%
Risk free interest rate		2.56%-3.85%
Expected life	5-6 years
Net income:
Net income as reported	$	92,316,115
Pro forma net income		92,256,103

-24-


	NT$
Earnings per share (EPS) — after income tax:
Basic EPS as reported		3.97
Pro forma basic EPS		3.97
Diluted EPS as reported		3.97
Pro forma diluted EPS		3.97

The estimated weighted average fair value for the options granted of TSMC and GUC during the year ended December 31, 2004 was NT$19.73 and NT$4.42 per option, respectively.

In 1996, WaferTech adopted an Executive Incentive Plan, which was amended in 1997. According to the 1997 amendment, the Board of Directors of WaferTech approved the Senior Executive Incentive Plan and the Employee Incentive Plan (the WaferTech Plans) under which officers, key employees and non-employee directors may be granted stock option rights. The WaferTech Plans provide for 15,150 thousand option rights available for grant. For option rights granted to date, the option purchase price was equal to or exceeded the fair market value at the date of grant. The options will expire if not exercised at specified dates ranging from May 2006 and June 2011. In December 2000, WaferTech implemented a Stock Option Buyback Program (Buyback). The Buyback program provides employees with the right to sell back to WaferTech all vested stock options and outstanding ownership interests granted under the WaferTech Plans. As of December 31, 2004, the outstanding and exercisable stock options were 134 thousand and 133 thousand, respectively, and US$616 thousand was accrued in connection with the Buyback program.

Stock Appreciation Rights

In December 2000, WaferTech and TSMC — North America implemented a stock appreciation rights program (Appreciation). The Appreciation plan is designed to provide employees with a long-term incentive plan that tracks the appreciation of TSMC common stock through Stock Appreciation Rights (SARs). SARs provide each participant the right to receive, upon exercise, an amount in cash from WaferTech and TSMC — North America that is the excess of the market price of TSMC common stock on TSE on the date of exercise over the exercise price. As of December 31, 2004, WaferTech and TSMC — North America accrued US$381 thousand and US$1,360 thousand, respectively, in connection with the Appreciation. During 2002, benefits under the Appreciation plan for TSMC — North America were replaced by the TSMC stock option plans aforementioned.

19.

TREASURY STOCK (COMMON STOCK)


	(Shares in Thousand)
	Beginning		Increase/				Ending
Year ended December 31, 2004	Shares		Dividend		Decrease		Shares
Reclassification of parent company stock held by subsidiaries from long-term investments		40,597		5,676		752		45,521
Repurchase under share buyback plan		—		124,720		124,720		—

		40,597		130,396		125,472		45,521

Proceeds from the sale of treasury stock for the year ended December 31, 2004 were NT$39,906 thousand. TSMC’s capital stock held by a subsidiary as an investment is recorded as treasury stock, with the holder having the same rights as other common shareholders. As of December 31, 2004, the book value of the treasury stock was NT$1,595,186 thousand; the market value was NT$2,241,009 thousand.

-25-

TSMC held a special meeting of the board of directors and approved a share buyback plan to repurchase TSMC’s common shares listed on the TSE during the period from March 24, 2004 to May 23, 2004. TSMC repurchased 124,720 thousand common shares for a total of NT$7,059,798 thousand. All the treasury stock repurchased under the buyback plan was retired on August 16, 2004.

20.

EARNINGS PER SHARE

EPS for the year ended December 31, 2004 is computed as follows:


	Amounts (Numerator)						EPS (NT$)
							Income
	Income				Number		Before
	Before Income				of		Income
	Tax and				Shares		Tax and		Combined
	Minority		Combined		(Denominator)		Minority		Net
	Interest		Net Income		(Thousand)		Interest		Income
Basic EPS
Income available to common shareholders	$	92,019,242	$	92,316,115		23,248,682	$	3.96	$	3.97

Effect of diluted securities
— stock options		—		—		6,404

Diluted earnings per share
Income available to common shareholders	$	92,019,242	$	92,316,115		23,255,086	$	3.96	$	3.97

21.

RELATED PARTY TRANSACTIONS

Except as disclosed elsewhere in the combined financial statements, the following is a summary of significant related party transactions:

	a.		Industrial Technology Research Institute (ITRI), the Chairman of TSMC is one of its directors

	b.		Philips, a major shareholder of TSMC

	c.		Investees of TSMC

			VIS
			SSMC

	d.		Omnivision International Holding, Ltd. (Omnivision), a shareholder holding a 25% ownership in VisEra

-26-

Huawei Semiconductor (Shanghai) Co., Ltd. (Huawei), the president of which is the president of VisEra


	2004
For the year ended	Amount		%
Sales
Philips and its affiliates	$	5,463,565		2
Omnivision		1,969,396		1
Other		87,453		—

	$	7,520,414		3

Purchase
VIS	$	9,169,602		21
SSMC		5,869,123		13
Huawei		195,965		—

	$	15,234,690		34

Manufacturing expenses — technical assistance fees
Philips (see Note 23a)	$	907,047		1

Proceeds from disposal of property, plant and equipment
VIS	$	33,974		2

Non-operating income and gains
SSMC (primarily technical service income; see Note 23e)	$	364,505		6
VIS (primarily technical service income; see Note 23j)		117,760		2

	$	482,265		8

At end of the year
Receivables
Philips and its affiliates	$	581,487		54
Omnivision		479,877		44
ITRI		16,454		2

	$	1,077,818		100

Other Receivables
SSMC	$	63,701		57
VIS		47,599		43

	$	111,300		100

Payables
VIS	$	1,533,938		69
Philips and its affiliates		469,494		21
SSMC		207,794		9
Huawei		30,522		1

	$	2,241,748		100

Other long-term payables
Philips and its affiliates	$	2,317,972		100

-27-

The terms of sales to related parties are not significantly different from those to third parties. For other related parties transactions, since there are no other similar transactions to follow, the prices are determined in accordance with the related contractual agreements.

22.

SIGNIFICANT LONG-TERM OPERATING LEASES

		TSMC leases land from the SPA. These agreements expire on various dates from March 2008 to December 2020. The agreements can be renewed upon their expiration.

		TSMC — North America leases its office premises and certain equipment under non-cancelable operating agreements. TSMC - Europe and TSMC — Japan entered into lease agreements for their office premises. The leases will expire between 2005 and 2010. The agreements can be renewed upon their expiration.

		GUC leases land from the SPA. The agreement will expire in December 2021. The agreement can be renewed upon their expiration.

		As of December 31, 2004 future remaining lease payments are as follows:


Year	Amount
2005	$	356,284
2006		355,013
2007		342,773
2008		327,588
2009		324,559
2010 and thereafter		1,537,325

	$	3,243,542

23.

SIGNIFICANT COMMITMENTS AND CONTINGENCIES

The significant commitments and contingencies of the Company as of December 31, 2004 are as follows:

On June 20, 2004, TSMC and Philips revised the Technical Cooperation Agreement, which was originally signed on May 12, 1997, with an effective date from January 1, 2004 for five years. Upon expiration, this amended Technical Cooperation Agreement will be terminated at the expiration date and will not be automatically renewed. Under this amended Technical Cooperation Agreement, TSMC will pay Philips royalties based on fixed amounts mutually agreed-on, rather than under certain percentage of TSMC’s annual net sales. TSMC and Philips also agree to cross license the patents owned by each party. TSMC also obtained through Philips a number of patent cross licenses.

Under a technical cooperation agreement with ITRI, TSMC shall reserve and allocate up to 35% of certain of its production capacity for use by the Ministry of Economic Affairs (MOEA) or any other party designated by the MOEA.

Under several foundry agreements, TSMC shall reserve a portion of its production capacity for certain major customers that have guarantee deposits with TSMC. As of December 31, 2004, TSMC had a total of US$12,802 thousand of guarantee deposits.

-28-

Under a Shareholders Agreement entered into with Philips and EDB Investments Pte Ltd. on March 30, 1999, the parties formed a joint venture company, SSMC, for the purpose of constructing an integrated circuit foundry in Singapore. As of December 31, 2004, TSMC’s equity interest in SSMC was 32%. TSMC and Philips committed to buy specific percentages of the production capacity of SSMC. If any party defaults on the commitment and the capacity utilization of SSMC falls below a specific percentage of its total capacity, the defaulting party is required to compensate SSMC for all related unavoidable costs.

	e.		TSMC provides technical services to SSMC under a Technical Cooperation Agreement (the Agreement) entered into on May 12, 1999. TSMC receives compensation for such services computed at a specific percentage of net selling price of certain products sold by SSMC. The Agreement shall remain in force for ten years and may be automatically renewed for successive periods of five years each unless pre-terminated by either party under certain conditions.

	f.		Under a Technology Transfer Agreement (TTA) with National Semiconductor Corporation (National) entered into on June 27, 2000, TSMC shall receive payments for the licensing of certain technology to National. The agreement was to remain in force for ten years and could be automatically renewed for successive periods of two years thereafter unless either party gives notice for early termination under certain conditions. In January 2003, TSMC and National entered into a Termination Agreement whereby the TTA was terminated for convenience. Under the Termination Agreement, TSMC will be relieved of any further obligation to transfer any additional technology. In addition, TSMC granted National an option to request the transfer of certain technologies under the same terms and conditions as the terminated TTA. The option will expire in January 2008.

	g.		Beginning in 2001, TSMC entered into several licensing arrangements for certain semiconductor patents. The terms of the contracts range from five to ten years with payments to be made in the form of royalties over the term of the related contracts. TSMC has recorded the related amounts as a liability with the corresponding amounts recorded as deferred charges which are amortized and charged to cost of sales on a straight-line basis over the estimated life of the technology or the term of the contract, whichever is shorter.

	h.		In November 2002, TSMC entered into an Amended and Restated Joint Technology Cooperation Agreement with Philips, Motorola, Inc. and STMicroelectronics to jointly develop 90-nm to 65-nm advanced CMOS Logic and e-DRAM technologies. TSMC also agreed to align 0.12 micron CMOS Logic technology to enhance its foundry business opportunities. TSMC will contribute process technologies and share a portion of the costs associated with this joint development project.

	i.		In December 2003, TSMC entered into a Technology Development and License Agreement with Motorola, Inc. to jointly develop 65-nm SOI (silicon on insulator) technology. TSMC will also license related 90-nm SOI technology from Motorola, Inc. Any intellectual properties arising out of the co-development project shall be jointly owned by the parties. In accordance with the agreement, TSMC will pay royalties to Motorola, Inc. and will share a portion of the costs associated with the joint development project.

	j.		TSMC provides a technology transfer to VIS under a Manufacturing License and Technology Transfer Agreement entered into in August 2004. TSMC receives compensation for such technology transfer in the form of royalty payments from VIS computed at specific percentages of net selling price of certain products sold by VIS. VIS agreed to reserve its certain capacity to manufacture for TSMC certain products at prior as agreed by the parties.

	k.		Under an agreement signed with a certain company, TSMC — Shanghai has the obligation to purchase certain assets within a specified period at the price agreed upon by both parties. TSMC — Shanghai will compensate the other party in case of a breach of the agreement.

-29-

GUC entered into a research and development project (DSP core) with the SPA. In accordance with the contract, the SPA provided a NT$13,522 thousand grant (DSP grants) to GUC during the period of January 2000 to June 2001 for the development of new products. GUC should repay the loan after the accomplishment of the project. In addition, GUC should also pay the SPA a 2% royalty fee based on the sales of the developed products every three months for the subsequent three years, starting from the first date of the product sale. The total royalty should not exceed 60% of the DSP grants.

	m.		GUC entered into a research and development project (Platform Development for System-On-a-Chip Integration, Verification and Testing) with the SPA. In accordance with the contract, the SPA provided a NT$13,923 thousand grant (SOC grants) to GUC during the period of April 2001 to September 2002 for the development of new products. GUC should repay the loan after the accomplishment of the project. In addition, GUC should also pay the SPA a 2% royalty fee based on the sales of the developed products every three months for the subsequent three years, starting from the first date of the product sale. The total royalty should not exceed the 60% of the SOC grants.

	n.		Amounts available under unused letters of credit as of December 31, 2004 were NT$6,480 thousand, US$1,282 thousand and SG$85 thousand. Among the unused letters of credit, TSMC - North America has an outstanding irrevocable standby letter of credit for US$1,078 thousand. The standby letter of credit was entered into as security to the landlord of TSMC — North America’s office spaces in San Jose, California. The standby letter of credit will expire in October, 2005.

	o.		The Company filed a series of lawsuits in late 2003 and 2004 in both state and federal courts in California and with the U.S. International Trade Commission against Semiconductor Manufacturing International Corporation (SMIC), SMIC (Shanghai), and SMIC Americas. The lawsuits alleged that SMIC companies infringed multiple patents of the Company and misappropriated the Company’s trade secrets. These suits have been settled out of court on January 30, 2005. As part of the agreement, SMIC will pay TSMC US$175 million over six years to resolve the Company’s patent infringement and trade secret claims.

24.

ADDITIONAL DISCLOSURES

Following are the additional disclosures required by the SFB for the Company and its investees:

	a.		Financing provided: Please see Table 1 attached;

	b.		Endorsement/guarantee provided: Please see Table 2 attached;

	c.		Marketable securities held: Please see Table 3 attached;

	d.		Marketable securities acquired and disposed of at costs or prices of at least NT$100 million or 20% of the paid-in capital: Please see Table 4 attached;

	e.		Acquisition of individual real estate properties at costs of at least NT$100 million or 20% of the paid-in capital: Please see Table 5 attached;

	f.		Disposal of individual real estate properties at prices of at least NT$100 million or 20% of the paid-in capital: None;

	g.		Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the capital: Please see Table 6 attached;

	h.		Receivable from related parties amounting to at least NT$100 million or 20% of the paid-in capital: Please see Table 7 attached;

-30-

	i.		Names, locations, and related information of investees of which the Company exercises significant influence: Please see Table 8 attached;

	j.		Financial instrument transactions:

Derivative financial instruments

The Company entered into derivative financial instrument transactions for the year ended December 31, 2004 to manage exposures related to foreign exchange rate and interest rate fluctuations. Certain information on these contracts is as follows:

Outstanding forward exchange contracts as of December 31, 2004 are as follows:

Financial

Contract Amount

Instruments

Currency

Maturity Date

(in Thousands)

Sell

US$/NT$

January 2005 to March 2005

US$

733,000

Sell

US$/EUR

January 2005

US$

159,081

As of December 31, 2004, receivables from forward exchange contracts (included in the “other financial assets” account) aggregate to approximately NT$392,534 thousand; payables from forward exchange contracts (included in the “other current liabilities” account) aggregate to approximately NT$559 thousand.

Cross currency swaps

Outstanding cross currency swap contracts as of December 31, 2004 are as follows:


			Range of
	Contract Amount	Range of	Interest Rate
Maturity Date	(in Thousands)	Interest Rate Paid	Received
January 2005 to June 2005	US$1,420,000	1.28%-2.72%	0.49%-1.17%

			As of December 31, 2004, receivables from the cross currency swap contracts (included in the “other financial assets” account) were approximately NT$761,030 thousand.

			Net exchange gain or loss arising from forward exchange contracts and cross currency swap contracts was recognized in the “foreign exchange loss, net” account and the difference in interest was recorded in interest income or expense.

Interest rate swaps

Outstanding contracts as of December 31, 2004 were as follows:


Contract Date	Period	Contract Amount
September 2003	September 2003 to December 2005	$	500,000
October 2003	October 2003 to December 2005		500,000
October 2003	October 2003 to December 2005		500,000
October 2003	October 2003 to December 2005		500,000
October 2003	October 2003 to December 2005		500,000
November 2003	November 2003 to December 2005		500,000

-31-

Transaction risk

	i)		Credit risk. Credit risk represents the positive net settlement amount of those contracts with positive fair values at the balance sheet date. The positive net settlement amount represents the loss incurred by the Company if the counter-parties breached the contracts. The banks, which are the counter-parties to the foregoing derivative financial instruments, are reputable financial institutions. Management believes its exposure related to the potential default by those counter-parties is low.

	ii)		Market price risk. All derivative financial instruments are intended as hedges for fluctuations in foreign exchange rates and interest rates. Gains or losses from these hedging instruments are likely to be offset by gains or losses from the hedged items. Interest rate risks are also controlled as the expected cost of capital is fixed. Thus, market price risks are believed to be low.

	iii)		Cash flow risk and the amount and period of future cash needs.

			As of December 31, 2004, the Company’s future cash needs for outstanding forward exchange contracts and cross currency swap contracts are as follows:


	Inflow		Outflow
Term	(In Thousands)		(In Thousands)
Within one year	$	69,761,484	US$ 2,312,081
	EUR	118,500

The Company has sufficient operating capital to meet the above cash needs. In addition, there will be corresponding cash inflow for the cash outflow. Therefore, the cash flow risk is low.

Fair values of financial instruments were as follows:


	2004
	Carrying
	Amount		Fair Value
Non-derivative financial instruments
Assets
Short-term investments, net	$	54,303,642	$	55,186,236
Long-term investments (securities with market price)		31,165,721		34,265,072
Liabilities
Bonds payable (including current portion)		30,000,000		30,607,341

Derivative financial instruments
Forward exchange contracts (sell)		391,975		317,090
Cross currency swap contracts		761,030		760,012
Interest rate swap contracts		4,361		(22,714	)

The above financial instruments do not include cash and cash equivalents, receivables, other financial assets, payables, and payable to contractors and equipment suppliers. The carrying amounts of the aforementioned instruments reported in the balance sheet approximate their fair values.

-32-

			The above financial instruments also exclude refundable deposits, guarantee deposits, long-term investments that do not have quoted market prices as well as other long-term payables. The future cash inflow and outflow of the deposits approximate their fair values. Some of long-term investments do not have quoted market prices; therefore, fair values for those long-term investments are not shown above. The fair value of other long-term payables is determined using the discounted value of expected cash flows, which approximates the carrying value.

			Fair values of financial instruments were determined as follows:

	a)		Fair value of short-term and publicly traded long-term investments is based on quoted market prices.

	b)		The fair value of bonds payable is the quoted market value.

	c)		Fair value of derivative financial instruments is the amount receivable from or payable to the counter-party if the contracts were terminated on the balance sheet date.

Information on investment in Mainland China

The name of the investee company in mainland China, the main businesses and products, its issued capital, method of investment, information on inflow or outflow of capital, ratio of ownership, equity in the net gain or net loss, ending balance, amount received as earnings distributions from the investment, and the limitation on investment: Please see Table 9 attached.

Significant direct or indirect transactions with the investee company, its prices and terms of payment, unrealized gain or loss, and other related information which is helpful to understand the impact of investment in mainland China on financial reports: Please see Note 21.

25.

SEGMENT FINANCIAL INFORMATION

Geographic information for the year ended December 31, 2004:


					Adjustments
	Overseas		Taiwan		and Elimination			Combined
Sales to unaffiliated customers	$	142,650,532	$	116,960,703	$	—		$	259,611,235
Transfers between geographic areas		16,808,395		142,005,640		(158,814,035	)		—

Total sales	$	159,458,927	$	258,966,343	$	(158,814,035	)	$	259,611,235

Gross profit	$	6,173,780	$	110,588,670	$	(526,331	)	$	116,236,119

Operating expenses									(27,648,783	)
Non-operating income and gains									6,044,014
Non-operating expenses and losses									(2,612,108	)

Income before income tax and minority interest								$	92,019,242

Minority interest in income of affiliates								$	55,580

(Continued)

-33-


					Adjustments
	Overseas		Taiwan		and Elimination			Combined
Identifiable assets	$	89,451,648	$	417,993,101	$	(44,418,225	)	$	463,026,524

Long-term investments									37,651,107

Total assets								$	500,677,631

Gross export sales

The export sales information is determined based on billed regions. Gross export sales for the year ended December 31, 2004 were NT$95,066,154 thousand. There were no export sales to a region that accounted for more than 10% of the Company’s total sales.

Major customer

The Company has no customer that accounts for more than 10% of its total sales in 2004.

-34-

TABLE 1

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND AFFILIATES

FINANCING PROVIDED
FOR THE YEAR ENDED DECEMBER 31, 2004
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Financing

Maximum

Financing

Company's

Balance

Limit

Financing

for the

Ending

Reasons

Allowance

for

Amount

Period

Balance

Type of

for

Each

Limits

Financing

Financial Statement

(US$ in

Interest

Financing

Transaction

Short-term

Bad

Collateral

Borrowing

(US$ in

No.

Name

Counter-party

Account

Thousand)

Rate

(Note 1)

Amounts

Financing

Debt

Item

Value

Company

Thousand)

TSMC Inter-
national

TSMC Development

Other receivables

$1,915,020
(US$60,000)

1.50

—

Operating capital

—

N/A

$31,532,982
(US$987,968)
(Note 2)

TSMC Technology

Other receivables

319,170
(US$10,000)

—

TSMC Partners

TSMC Development

Other receivables

2,553,360
(US$80,000)

1.50

—

Operating capital

—

N/A

(Note 3)


Note 1:		The No. 2 represents necessary for short-term financing.

Note 2:		Not exceeding the issued capital of the Company.

Note 3:		Generally not exceeding the issued capital of the Company, unless approved by all members of the board.

-35-

TABLE 2

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND AFFILIATES

ENDORSEMENT/GUARANTEE PROVIDED
FOR THE YEAR ENDED DECEMBER 31, 2004
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Ratio of Accumulated

Counter-party

Limits on Each

Maximum

Value of

Amount of Collateral

Maximum

Endorsement/

Nature of

Counter-party's

Balance

Collateral

to Net Equity of the

Collateral/Guarantee

Guarantee

Relationship

Endorsement/

for the Year

Ending Balance

Property, Plant

Latest Financial

Amounts Allowable

No.

Provider

Name

(Note 2)

Guarantee Amounts

(US$ in Thousand)

and Equipment

Statement

(Note 1)

The Company

TSMC Development

Not exceed 10% of the net worth of the Company, and also limiting to the total capital issued of the endorsement/guarantee company, unless otherwise approved by Board of Directors.

$1,915,020
(US$ 60,000)

—

0.48

99,741,325

TSMC— North America

1,276,680
(US$ 40,000)

—

0.32

WaferTech

14,043,480
(US$ 440,000)

—


Note 1:		25% of the net worth of the Company as of December 31, 2004.

Note 2:		The No. 2 represents a subsidiary in which the Company holds directly over 50% of the equity interest.
		The No. 3 represents an investee in which the Company holds directly and indirectly over 50% of the equity interest.

-36-

TABLE 3

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND AFFILIATES

MARKETABLE SECURITIES HELD
DECEMBER 31, 2004
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)


					December 31, 2004
											Market Value or
							Carrying Value				Net Asset Value
		Relationship with		Financial Statement	Shares/Units		(US$ in		Percentage of		(US$ in
Held Company Name	Marketable Securities Type and Name	the Company		Account	(In Thousands of)		Thousand)		Ownership		Thousand)		Note
The Company	Government bonds
	2003 Government Bond Series A		—	Short-term investment		—	$	1,207,409		N/A	$	1,202,028
	United States Treas NTS		—	Short-term investment		—	US$	192,357		N/A	US$	191,824
	2003 Government Bond Series I		—	Long-term investment		—		3,397,081		N/A		3,393,982
	2004 Government Bond Series A		—	Long-term investment		—		2,349,573		N/A		2,352,973
	2004 Government Bond Series E		—	Long-term investment		—		3,893,827		N/A		3,892,025
	2004 Kaohsiung Municipal Bond Series A		—	Long-term investment		—		620,000		N/A		620,000

	Bonds under repurchase agreement		—	Short-term investment		—		249,449		N/A		251,593

	Bond funds
	JF Taiwan Bond Fund		—	Short-term investment		78,698		1,153,209		N/A		1,169,406
	ABN AMRO Bond Fund		—	Short-term investment		134,906		1,956,175		N/A		1,978,785
	JF Taiwan First Bond Fund		—	Short-term investment		84,886		1,151,463		N/A		1,162,632
	INVESCO R.O.C. Bond A Fund		—	Short-term investment		76,705		1,101,911		N/A		1,111,932
	Dresdner Bond DAM Fund		—	Short-term investment		80,833		900,000		N/A		910,904
	Barits Bond Fund		—	Short-term investment		76,640		900,000		N/A		907,765
	Shinkong Chi Shin Bond Fund		—	Short-term investment		151,594		2,100,000		N/A		2,115,554
	ABN AMRO Select Bond Fund		—	Short-term investment		18,235		200,000		N/A		201,183
	NITC Bond Fund		—	Short-term investment		3,764		600,000		N/A		602,703
	HSBC NTD Money Management Fund		—	Short-term investment		41,568		600,000		N/A		601,958

	Stock
	Taiwan Mask Corp.		—	Short-term investment		1,787		6,528		—		27,552
	TSMC International	Subsidiary		Long-term investment		987,968		23,778,997		100		23,778,997
	VIS	Investee		Long-term investment		409,532		5,401,982		28		8,493,692
	TSMC Partners	Subsidiary		Long-term investment		300		3,908,356		100		3,908,356
	SSMC	Investee		Long-term investment		382		3,290,888		32		3,290,888
	TSMC— North America	Subsidiary		Long-term investment		11,000		502,242		100		1,179,352	Treasury stock of NT$677,110 thousand is deducted from the carrying value.

	GUC	Investee		Long-term investment		39,040		391,626		47		418,272
	TSMC— Japan	Subsidiary		Long-term investment		6		102,572		100		102,572
	VisEra	Investee		Long-term investment		5,100		59,116		25		59,116
	TSMC— Europe	Subsidiary		Long-term investment		—		25,439		100		25,439
	United Industrial Gases Co., Ltd.		—	Long-term investment		16,783		193,584		10		284,036
	Shin-Etsu Handotai Taiwan Co., Ltd.		—	Long-term investment		10,500		105,000		7		170,940

(Continued)

- 37 -


					December 31, 2004
											Market Value or
							Carrying Value				Net Asset Value
		Relationship with		Financial Statement	Shares/Units		(US$ in		Percentage of		(US$ in
Held Company Name	Marketable Securities Type and Name	the Company		Account	(In Thousands of)		Thousand)		Ownership		Thousand)		Note
	W.K. Technology Fund IV		—	Long-term investment		5,000	$	50,000		2	$	55,146
	Hontung Venture Capital Co., Ltd.		—	Long-term investment		8,392		83,916		10		53,571
	Globaltop Partner I Venture Capital Corp.		—	Long-term investment		5,000		50,000		1		49,909

	Corporate bonds
	Taiwan Power Company		—	Short-term investment		—		2,777,798		N/A		2,749,413
	Abbott Labs		—	Short-term investment		—	US$	2,732		N/A	US$	2,709
	Abbott Labs		—	Short-term investment		—	US$	1,581		N/A	US$	1,587
	Ace Ltd		—	Short-term investment		—	US$	1,046		N/A	US$	1,042
	AIG Sunamerica Global Fing IX		—	Short-term investment		—	US$	1,032		N/A	US$	1,028
	Allstate Finl Global Fdg LLC		—	Short-term investment		—	US$	3,171		N/A	US$	3,096
	American Express Co.		—	Short-term investment		—	US$	3,550		N/A	US$	3,503
	American Gen Fin Corp.		—	Short-term investment		—	US$	1,768		N/A	US$	1,765
	American Gen Fin Corp. Mtn		—	Short-term investment		—	US$	3,130		N/A	US$	3,087
	American Gen Fin Corp. Mtn		—	Short-term investment		—	US$	1,058		N/A	US$	1,042
	American Honda Fin Corp. Mtn		—	Short-term investment		—	US$	3,800		N/A	US$	3,803
	American Intl Group Inc. Mtnf		—	Short-term investment		—	US$	3,795		N/A	US$	3,795
	Amgen Inc.		—	Short-term investment		—	US$	3,005		N/A	US$	2,991
	Amsouth Bk Birmingham Ala		—	Short-term investment		—	US$	1,972		N/A	US$	1,978
	ANZ Cap Tr I		—	Short-term investment		—	US$	1,012		N/A	US$	1,001
	Bank New York Inc.		—	Short-term investment		—	US$	1,525		N/A	US$	1,509
	Bank New York Inc.		—	Short-term investment		—	US$	3,945		N/A	US$	3,943
	Bank Scotland Treas Svcs PLC		—	Short-term investment		—	US$	2,715		N/A	US$	2,717
	Bank Utd Houston TX Mtbn		—	Short-term investment		—	US$	580		N/A	US$	574
	Bear Stearns Cos Inc.		—	Short-term investment		—	US$	3,518		N/A	US$	3,493
	Bear Stearns Cos Inc. Medium Te		—	Short-term investment		—	US$	3,105		N/A	US$	3,105
	Berkshire Hathaway Fin Corp.		—	Short-term investment		—	US$	1,498		N/A	US$	1,494
	Bristol Myers Squibb Co.		—	Short-term investment		—	US$	3,819		N/A	US$	3,788
	British Telecommunications PLC		—	Short-term investment		—	US$	2,104		N/A	US$	2,091
	Cargill Inc.		—	Short-term investment		—	US$	2,120		N/A	US$	2,079
	Chase Manhattan Corp. New		—	Short-term investment		—	US$	1,628		N/A	US$	1,613
	Cit Group Hldgs Inc.		—	Short-term investment		—	US$	3,203		N/A	US$	3,195
	Citigroup Inc.		—	Short-term investment		—	US$	2,000		N/A	US$	2,002
	Citigroup Inc.		—	Short-term investment		—	US$	1,033		N/A	US$	1,033
	Citigroup Inc.		—	Short-term investment		—	US$	3,583		N/A	US$	3,523
	Colonial Pipeline Co.		—	Short-term investment		—	US$	1,625		N/A	US$	1,612
	Compaq Computer Corp.		—	Short-term investment		—	US$	3,719		N/A	US$	3,593
	Consolidated Edison Co. NY Inc.		—	Short-term investment		—	US$	3,687		N/A	US$	3,618
	Corestates Cap Corp.		—	Short-term investment		—	US$	1,062		N/A	US$	1,060
	Countrywide Fdg Corp. Mtn		—	Short-term investment		—	US$	2,158		N/A	US$	2,151
	Countrywide Home Lns Inc.		—	Short-term investment		—	US$	5,210		N/A	US$	5,157

(Continued)

- 38 -


					December 31, 2004
										Market Value or
							Carrying Value			Net Asset Value
		Relationship with		Financial Statement	Shares/Units		(US$ in		Percentage of	(US$ in
Held Company Name	Marketable Securities Type and Name	the Company		Account	(In Thousands of)		Thousand)		Ownership	Thousand)		Note
	Credit Suisse Fb USA Inc.		—	Short-term investment		—	US$	2,645	N/A	US$	2,599
	Credit Suisse First Boston		—	Short-term investment		—	US$	786	N/A	US$	779
	Credit Suisse First Boston USA		—	Short-term investment		—	US$	2,249	N/A	US$	2,240
	Daimlerchrysler North Amer		—	Short-term investment		—	US$	997	N/A	US$	999
	Daimlerchrysler North Amer Hld		—	Short-term investment		—	US$	749	N/A	US$	755
	Dell Computer Corp.		—	Short-term investment		—	US$	3,054	N/A	US$	3,025
	Den Danske BK Aktieselskab		—	Short-term investment		—	US$	2,192	N/A	US$	2,166
	Deutsche Telkom Intl Fin BV		—	Short-term investment		—	US$	1,852	N/A	US$	1,838
	Diageo PLC		—	Short-term investment		—	US$	3,459	N/A	US$	3,477
	Dow Chem Co.		—	Short-term investment		—	US$	921	N/A	US$	911
	European Invt Bk		—	Short-term investment		—	US$	8,315	N/A	US$	8,236
	Fifth Third Bk Cincinnati OH		—	Short-term investment		—	US$	2,419	N/A	US$	2,466
	First Data Corp.		—	Short-term investment		—	US$	3,013	N/A	US$	2,986
	First Un Corp.		—	Short-term investment		—	US$	970	N/A	US$	965
	Fleet Finl Group Inc. New		—	Short-term investment		—	US$	494	N/A	US$	493
	Fleet Finl Corp Inc. New		—	Short-term investment		—	US$	975	N/A	US$	962
	Ford Mtr Cr Co.		—	Short-term investment		—	US$	1,542	N/A	US$	1,535
	FPL Group Cap Inc.		—	Short-term investment		—	US$	1,001	N/A	US$	990
	FPL Group Cap Inc.		—	Short-term investment		—	US$	860	N/A	US$	846
	General Elec Cap Corp. Mtn		—	Short-term investment		—	US$	3,467	N/A	US$	3,455
	General Elec Cap Corp. Mtn		—	Short-term investment		—	US$	1,040	N/A	US$	1,040
	General Elec Cap Corp. Mtn		—	Short-term investment		—	US$	3,886	N/A	US$	3,878
	Genworth Finl Inc.		—	Short-term investment		—	US$	3,412	N/A	US$	3,408
	Goldman Sachs Group Inc. Mtn		—	Short-term investment		—	US$	3,505	N/A	US$	3,494
	Goldman Sachs Group LP		—	Short-term investment		—	US$	1,637	N/A	US$	1,599
	Goldman Sachs Group LP		—	Short-term investment		—	US$	1,100	N/A	US$	1,075
	Greenpoint Finl Corp.		—	Short-term investment		—	US$	974	N/A	US$	972
	GTE Corp.		—	Short-term investment		—	US$	2,134	N/A	US$	2,109
	Hancock John Global Fdg Mtn		—	Short-term investment		—	US$	1,003	N/A	US$	986
	Hartford Finl Svcs Group Inc.		—	Short-term investment		—	US$	765	N/A	US$	758
	Hartford Finl Svcs Group Inc.		—	Short-term investment		—	US$	296	N/A	US$	296
	Heller Finl Inc.		—	Short-term investment		—	US$	1,171	N/A	US$	1,163
	Hershey Foods Corp.		—	Short-term investment		—	US$	1,627	N/A	US$	1,606
	Hewlett Packard Co.		—	Short-term investment		—	US$	3,373	N/A	US$	3,305
	Honeywell Inc.		—	Short-term investment		—	US$	3,284	N/A	US$	3,218
	Household Fin Corp.		—	Short-term investment		—	US$	529	N/A	US$	522
	Household Fin Corp.		—	Short-term investment		—	US$	2,993	N/A	US$	2,985
	Household Fin Corp. Mtn Bk Ent		—	Short-term investment		—	US$	3,542	N/A	US$	3,510
	HSBC USA Inc. New		—	Short-term investment		—	US$	1,154	N/A	US$	1,134
	Huntington Natl Bk		—	Short-term investment		—	US$	3,003	N/A	US$	3,000
	Huntington Natl Bk Columbus OH		—	Short-term investment		—	US$	2,954	N/A	US$	2,961
	ING Bank		—	Short-term investment		—	US$	2,114	N/A	US$	2,113
	ING Sec Life Ins Ingslf		—	Short-term investment		—	US$	3,012	N/A	US$	3,007
	Intl Bk For Recon + Dev		—	Short-term investment		—	US$	5,232	N/A	US$	5,102
	JP Morgan Chase + Co.		—	Short-term investment		—	US$	1,043	N/A	US$	1,039
	Jackson Natl Life Global Fdg		—	Short-term investment		—	US$	1,036	N/A	US$	1,032
	Jackson Natl Life Global Fdg S		—	Short-term investment		—	US$	2,998	N/A	US$	2,988

(Continued)

- 39 -


					December 31, 2004
										Market Value or
							Carrying Value			Net Asset Value
		Relationship with		Financial Statement	Shares/Units		(US$ in		Percentage of	(US$ in
Held Company Name	Marketable Securities Type and Name	the Company		Account	(In Thousands of)		Thousand)		Ownership	Thousand)		Note
	JP Morgan Chase + Co.		—	Short-term investment		—	US$	3,663	N/A	US$	3,629
	Keycorp Mtn Book Entry		—	Short-term investment		—	US$	3,500	N/A	US$	3,502
	KFW Intl Fin Inc.		—	Short-term investment		—	US$	5,104	N/A	US$	5,027
	Kraft Foods Inc.		—	Short-term investment		—	US$	773	N/A	US$	765
	Kraft Foods Inc.		—	Short-term investment		—	US$	1,037	N/A	US$	1,036
	Lehman Brothers Hldgs Inc.		—	Short-term investment		—	US$	1,163	N/A	US$	1,162
	Lehman Brothers Hldgs Inc.		—	Short-term investment		—	US$	3,705	N/A	US$	3,634
	Lehman Brothers Hldgs Inc.		—	Short-term investment		—	US$	2,171	N/A	US$	2,154
	Lilly Eli + Co.		—	Short-term investment		—	US$	3,750	N/A	US$	3,749
	Lincoln Natl Corp. In		—	Short-term investment		—	US$	519	N/A	US$	518
	Merita Bk Ltd NY Brh		—	Short-term investment		—	US$	538	N/A	US$	533
	Merrill Lynch + Co. Inc.		—	Short-term investment		—	US$	3,486	N/A	US$	3,481
	Metropolitan Life Global Mtn		—	Short-term investment		—	US$	1,907	N/A	US$	1,910
	Monumental Global Fdg II		—	Short-term investment		—	US$	2,500	N/A	US$	2,501
	Monumental Global Fdg II		—	Short-term investment		—	US$	1,534	N/A	US$	1,516
	Monumental Global Fdg II 2002A		—	Short-term investment		—	US$	1,045	N/A	US$	1,034
	Morgan Stanley		—	Short-term investment		—	US$	2,136	N/A	US$	2,128
	Morgan Stanley Group Inc.		—	Short-term investment		—	US$	3,638	N/A	US$	3,628
	Morgan Stanley Group Inc.		—	Short-term investment		—	US$	1,050	N/A	US$	1,048
	National Westminster Bk PLC		—	Short-term investment		—	US$	1,433	N/A	US$	1,422
	Nationsbank Corp.		—	Short-term investment		—	US$	3,644	N/A	US$	3,549
	Nationwide Bldg Soc		—	Short-term investment		—	US$	3,457	N/A	US$	3,477
	Nationwide Life Global Mtn		—	Short-term investment		—	US$	1,463	N/A	US$	1,469
	Pepsico Inc. Mtn Book Entry		—	Short-term investment		—	US$	3,818	N/A	US$	3,817
	PNC Fdg Corp.		—	Short-term investment		—	US$	1,080	N/A	US$	1,075
	Popular North Amer Inc. Mtn		—	Short-term investment		—	US$	3,042	N/A	US$	3,022
	Premark Intl Inc.		—	Short-term investment		—	US$	2,954	N/A	US$	2,914
	Pricoa Global Fdg I Mtn		—	Short-term investment		—	US$	3,507	N/A	US$	3,503
	Pricoa Global Fdg I Mtn		—	Short-term investment		—	US$	3,050	N/A	US$	3,047
	Principal Life Global Fdg I Gl		—	Short-term investment		—	US$	3,168	N/A	US$	3,102
	Protective Life Secd Trs		—	Short-term investment		—	US$	2,920	N/A	US$	2,969
	Prudential Ins Co. Amer		—	Short-term investment		—	US$	2,648	N/A	US$	2,610
	Reinsurance Group Amer Inc.		—	Short-term investment		—	US$	2,091	N/A	US$	2,089
	Royal Bk Scotland Group PLC		—	Short-term investment		—	US$	1,563	N/A	US$	1,547
	Royal Bk Scotland Group PLC		—	Short-term investment		—	US$	564	N/A	US$	558
	Royal Bk Scotland Group PLC		—	Short-term investment		—	US$	369	N/A	US$	364
	Safeco Corp.		—	Short-term investment		—	US$	765	N/A	US$	763
	Salomon Smith Barney Hldgs Inc.		—	Short-term investment		—	US$	3,160	N/A	US$	3,100
	Sara Lee Corp.		—	Short-term investment		—	US$	1,596	N/A	US$	1,601
	SBC Communications Inc.		—	Short-term investment		—	US$	3,681	N/A	US$	3,617
	SBC Communications Inc.		—	Short-term investment		—	US$	2,251	N/A	US$	2,245
	Scotland Intl Fin B V 144A		—	Short-term investment		—	US$	1,533	N/A	US$	1,532
	Shell Finance (UK) PLC		—	Short-term investment		—	US$	3,604	N/A	US$	3,553
	SLM Corp.		—	Short-term investment		—	US$	500	N/A	US$	501
	SLM Corp. Medium Term Nts		—	Short-term investment		—	US$	2,950	N/A	US$	2,985
	SP Powerassets Ltd Global		—	Short-term investment		—	US$	991	N/A	US$	992
	Suntrust Bks Inc.		—	Short-term investment		—	US$	1,062	N/A	US$	1,060
	Swedbank Sparbanken Svenge AB		—	Short-term investment		—	US$	1,084	N/A	US$	1,067

(Continued)

- 40 -


					December 31, 2004
										Market Value or
							Carrying Value			Net Asset Value
		Relationship with		Financial Statement	Shares/Units		(US$ in		Percentage of	(US$ in
Held Company Name	Marketable Securities Type and Name	the Company		Account	(In Thousands of)		Thousand)		Ownership	Thousand)		Note
	TIAA Global Mkts Inc.		—	Short-term investment		—	US$	519	N/A	US$	514
	Tribune Co. Med Trm Nts		—	Short-term investment		—	US$	2,943	N/A	US$	2,965
	Union Planters		—	Short-term investment		—	US$	2,755	N/A	US$	2,704
	Unitedhealth Group Inc.		—	Short-term investment		—	US$	3,119	N/A	US$	3,097
	US Bk Natl Assn Cincinnati OH		—	Short-term investment		—	US$	2,669	N/A	US$	2,687
	Virginia Elec + Pwr Co.		—	Short-term investment		—	US$	2,884	N/A	US$	2,838
	Vodafone Group PLC New		—	Short-term investment		—	US$	2,559	N/A	US$	2,561
	Wachovia Corp.		—	Short-term investment		—	US$	3,720	N/A	US$	3,600
	Wal Mart Cda Venture Corp.		—	Short-term investment		—	US$	3,670	N/A	US$	3,602
	Washington Mut Fin Corp.		—	Short-term investment		—	US$	4,768	N/A	US$	4,689
	Washington Mut Inc.		—	Short-term investment		—	US$	4,735	N/A	US$	4,682
	Washington Post Co.		—	Short-term investment		—	US$	3,182	N/A	US$	3,180
	Wells Fargo + Co. New		—	Short-term investment		—	US$	3,697	N/A	US$	3,631
	Westfield Cap Corp. Ltd		—	Short-term investment		—	US$	1,999	N/A	US$	1,999
	China Steel Corporation		—	Long-term investment		—		2,978,804	N/A		2,977,695
	Taiwan Power Company		—	Long-term investment		—		915,276	N/A		914,582
	Nan Ya Plastics Corporation		—	Long-term investment		—		407,526	N/A		407,484
	Formosa Plastics Corporation		—	Long-term investment		—		405,485	N/A		405,322
	Formosa Petrochemical Corporation		—	Long-term investment		—		202,595	N/A		200,000

	Agency bonds				—
	Fed Hm Ln Pc		—	Short-term investment		—	US$	3,466	N/A	US$	3,462
	Federal Home Ln Bks		—	Short-term investment		—	US$	2,532	N/A	US$	2,520
	Federal Home Ln Bks		—	Short-term investment		—	US$	1,042	N/A	US$	1,024
	Federal Home Ln Bks		—	Short-term investment		—	US$	4,927	N/A	US$	4,947
	Federal Home Ln Bks		—	Short-term investment		—	US$	7,962	N/A	US$	7,939
	Federal Home Ln Bks		—	Short-term investment		—	US$	7,014	N/A	US$	6,924
	Federal Home Ln Bks		—	Short-term investment		—	US$	4,936	N/A	US$	4,949
	Federal Home Ln Bks		—	Short-term investment		—	US$	4,948	N/A	US$	4,944
	Federal Home Ln Bks		—	Short-term investment		—	US$	2,454	N/A	US$	2,468
	Federal Home Ln Bks		—	Short-term investment		—	US$	7,018	N/A	US$	7,004
	Federal Home Ln Bks		—	Short-term investment		—	US$	4,996	N/A	US$	4,973
	Federal Home Ln Bks		—	Short-term investment		—	US$	7,042	N/A	US$	6,985
	Federal Home Ln Bks		—	Short-term investment		—	US$	6,098	N/A	US$	6,084
	Federal Home Ln Bks		—	Short-term investment		—	US$	2,909	N/A	US$	2,907
	Federal Home Ln Bks		—	Short-term investment		—	US$	13,953	N/A	US$	13,898
	Federal Home Ln Bks		—	Short-term investment		—	US$	13,983	N/A	US$	13,946
	Federal Home Ln Bks		—	Short-term investment		—	US$	13,981	N/A	US$	13,946
	Federal Home Ln Mtg Corp		—	Short-term investment		—	US$	6,978	N/A	US$	6,928
	Federal Home Ln Mtg Corp.		—	Short-term investment		—	US$	3,388	N/A	US$	3,419
	Federal Home Ln Mtg Corp		—	Short-term investment		—	US$	4,953	N/A	US$	4,941
	Federal Home Ln Mtg Corp.		—	Short-term investment		—	US$	9,997	N/A	US$	9,943
	Federal Home Ln Mtg Corp.		—	Short-term investment		—	US$	998	N/A	US$	993
	Federal Home Ln Mtg Corp.		—	Short-term investment		—	US$	4,933	N/A	US$	4,936
	Federal Home Ln Mtg Corp. Mtn		—	Short-term investment		—	US$	4,930	N/A	US$	4,938
	Federal Home Loan Mtg Assn		—	Short-term investment		—	US$	4,847	N/A	US$	4,891
	Federal Home Loan Mtg Corp.		—	Short-term investment		—	US$	4,903	N/A	US$	4,943

(Continued)

- 41 -


					December 31, 2004
										Market Value or
							Carrying Value			Net Asset Value
		Relationship with		Financial Statement	Shares/Units		(US$ in		Percentage of	(US$ in
Held Company Name	Marketable Securities Type and Name	the Company		Account	(In Thousands of)		Thousand)		Ownership	Thousand)		Note
	Federal Natl Mtg Assn		—	Short-term investment		—	US$	5,270	N/A	US$	5,237
	Federal Natl Mtg Assn		—	Short-term investment		—	US$	6,940	N/A	US$	6,937
	Federal Natl Mtg Assn		—	Short-term investment		—	US$	6,903	N/A	US$	6,917
	Federal Natl Mtg Assn		—	Short-term investment		—	US$	4,981	N/A	US$	4,953
	Federal Natl Mtg Assn		—	Short-term investment		—	US$	6,997	N/A	US$	6,983
	Federal Natl Mtg Assn Mtn		—	Short-term investment		—	US$	15,787	N/A	US$	15,798
	Federal Natl Mtg Assn Mtn		—	Short-term investment		—	US$	7,000	N/A	US$	6,976
	Freddie Mac		—	Short-term investment		—	US$	4,929	N/A	US$	4,934
	Fed Hm Ln Pc Pool E89857		—	Short-term investment		—	US$	2,535	N/A	US$	2,531
	Fed Hm Ln Pc Pool G11295		—	Short-term investment		—	US$	2,277	N/A	US$	2,273
	Federal Home Ln Mtg Corp.		—	Short-term investment		—	US$	6,096	N/A	US$	6,075
	Federal Home Ln Mtg Corp.		—	Short-term investment		—	US$	4,435	N/A	US$	4,440
	Federal Home Ln Mtg Corp.		—	Short-term investment		—	US$	3,558	N/A	US$	3,539
	Federal Home Ln Mtg Corp.		—	Short-term investment		—	US$	3,645	N/A	US$	3,615
	Federal Natl Mtg Assn		—	Short-term investment		—	US$	4,242	N/A	US$	4,188
	Federal Natl Mtg Assn		—	Short-term investment		—	US$	2,141	N/A	US$	2,126
	Federal Natl Mtg Assn		—	Short-term investment		—	US$	4,765	N/A	US$	4,719
	Federal Natl Mtg Assn Gtd		—	Short-term investment		—	US$	3,486	N/A	US$	3,446
	FNMA Pool 685116		—	Short-term investment		—	US$	1,003	N/A	US$	1,002
	FNMA Pool 725095		—	Short-term investment		—	US$	2,008	N/A	US$	2,003
	FNMA Pool 790828		—	Short-term investment		—	US$	4,807	N/A	US$	4,773
	FNMA Pool 793932		—	Short-term investment		—	US$	994	N/A	US$	994
	FNMA Pool 794040		—	Short-term investment		—	US$	1,021	N/A	US$	1,020
	FNMA Pool 795548		—	Short-term investment		—	US$	977	N/A	US$	975
	FNMA Pool 806642		—	Short-term investment		—	US$	2,006	N/A	US$	2,004
	GNMA II Pool 081150		—	Short-term investment		—	US$	999	N/A	US$	997
	GNMA II Pool 081153		—	Short-term investment		—	US$	3,789	N/A	US$	3,766
	Government Natl Mtg Assn		—	Short-term investment		—	US$	1,734	N/A	US$	1,700

	Corporate issued asset-backed securities
	Aegis Asset Backed Secs Tr		—	Short-term investment		—	US$	2,000	N/A	US$	2,004
	Aesop Fed II LLC		—	Short-term investment		—	US$	4,955	N/A	US$	4,963
	Aesop Fed II LLC		—	Short-term investment		—	US$	1,912	N/A	US$	1,888
	American Express Cr Account Ma		—	Short-term investment		—	US$	3,445	N/A	US$	3,427
	American Home Mtg Invt Tr		—	Short-term investment		—	US$	949	N/A	US$	949
	Americredit Automobile Receiv		—	Short-term investment		—	US$	2,002	N/A	US$	1,998
	Americredit Automobile Rec Tr		—	Short-term investment		—	US$	1,055	N/A	US$	1,048
	Americredit Automobile Rec Tr		—	Short-term investment		—	US$	2,000	N/A	US$	1,990
	Americredit Automobile Receivb		—	Short-term investment		—	US$	4,949	N/A	US$	4,912
	Atlantic City Elc Trns Fdg LLC		—	Short-term investment		—	US$	926	N/A	US$	923
	Banc Amer Coml Mtg Inc.		—	Short-term investment		—	US$	5,364	N/A	US$	5,315
	Banc Amer Mtg Secs Inc.		—	Short-term investment		—	US$	4,030	N/A	US$	4,006
	Bank of Amer Lease Equip Tr		—	Short-term investment		—	US$	4,023	N/A	US$	3,995
	Bear Stearns Alt A Tr		—	Short-term investment		—	US$	1,478	N/A	US$	1,489
	Bear Stearns Asset Backed Secs		—	Short-term investment		—	US$	2,000	N/A	US$	2,000
	BMW Veh Owner Tr		—	Short-term investment		—	US$	4,978	N/A	US$	4,941
	California Infr + Economic Dev		—	Short-term investment		—	US$	4,298	N/A	US$	4,230

(Continued)

- 42 -


					December 31, 2004
										Market Value or
							Carrying Value			Net Asset Value
		Relationship with		Financial Statement	Shares/Units		(US$ in		Percentage of	(US$ in
Held Company Name	Marketable Securities Type and Name	the Company		Account	(In Thousands of)		Thousand)		Ownership	Thousand)		Note
	California Infras + Economic		—	Short-term investment		—	US$	6,126	N/A	US$	6,064
	California Infrastructure Dev		—	Short-term investment		—	US$	5,089	N/A	US$	5,035
	Capital Auto Receivables Asset		—	Short-term investment		—	US$	4,018	N/A	US$	3,992
	Capital One Auto Fin Tr		—	Short-term investment		—	US$	319	N/A	US$	318
	Capital One Auto Fin Tr		—	Short-term investment		—	US$	1,147	N/A	US$	1,145
	Capital One Auto Fin Tr		—	Short-term investment		—	US$	3,000	N/A	US$	2,989
	Capital One Multi Asset Execut		—	Short-term investment		—	US$	4,957	N/A	US$	4,977
	Caterpillar Finl Asset Tr		—	Short-term investment		—	US$	10,008	N/A	US$	9,923
	Centex Home Equity Ln Tr		—	Short-term investment		—	US$	3,500	N/A	US$	3,493
	Cit Equip Coll Tr		—	Short-term investment		—	US$	4,999	N/A	US$	4,991
	Citibank Cr Card Issuance Tr		—	Short-term investment		—	US$	4,959	N/A	US$	4,965
	Citicorp Mtg Secs		—	Short-term investment		—	US$	2,364	N/A	US$	2,363
	CNH Equip Tr		—	Short-term investment		—	US$	5,000	N/A	US$	4,952
	Comm 2004 Htl 1		—	Short-term investment		—	US$	4,600	N/A	US$	4,607
	Credit Suisse First Boston Mtg		—	Short-term investment		—	US$	4,209	N/A	US$	4,178
	CWABS Inc.		—	Short-term investment		—	US$	1,647	N/A	US$	1,662
	CWABS Inc.		—	Short-term investment		—	US$	1,903	N/A	US$	1,907
	CWABS Inc.		—	Short-term investment		—	US$	1,907	N/A	US$	1,912
	CWABS Inc.		—	Short-term investment		—	US$	2,000	N/A	US$	1,997
	CWABS Inc.		—	Short-term investment		—	US$	5,000	N/A	US$	5,055
	CWABS Inc.		—	Short-term investment		—	US$	3,500	N/A	US$	3,541
	CWALT Inc.		—	Short-term investment		—	US$	4,292	N/A	US$	4,277
	CWABS Inc.		—	Short-term investment		—	US$	2,317	N/A	US$	2,298
	CWABS Inc.		—	Short-term investment		—	US$	4,040	N/A	US$	4,040
	Daimlerchrysler Auto Tr		—	Short-term investment		—	US$	4,991	N/A	US$	4,970
	Daimlerchrysler Auto Tr		—	Short-term investment		—	US$	4,982	N/A	US$	4,970
	Daimlerchrysler Auto Tr		—	Short-term investment		—	US$	4,897	N/A	US$	4,893
	Detroit Edison Securitization		—	Short-term investment		—	US$	674	N/A	US$	671
	Fifth Third Auto Tr		—	Short-term investment		—	US$	3,000	N/A	US$	2,999
	Finance Amer Mtg Ln Tr		—	Short-term investment		—	US$	985	N/A	US$	986
	First Franklin Mtg Ln Tr		—	Short-term investment		—	US$	2,002	N/A	US$	2,006
	First Horizon Abs Tr		—	Short-term investment		—	US$	2,000	N/A	US$	2,000
	First Union Lehman Bros Mtg Tr		—	Short-term investment		—	US$	3,567	N/A	US$	3,534
	First USA Credit Cr Master Tr		—	Short-term investment		—	US$	5,011	N/A	US$	5,008
	Ford Cr Auto Owner Tr		—	Short-term investment		—	US$	10,999	N/A	US$	10,936
	Granite Mtgs PLC		—	Short-term investment		—	US$	5,000	N/A	US$	5,000
	GS Auto Ln Tr		—	Short-term investment		—	US$	2,948	N/A	US$	2,970
	GS Mtg Secs Corp.		—	Short-term investment		—	US$	2,944	N/A	US$	2,944
	Harley Davidson Motorcycle Tr		—	Short-term investment		—	US$	3,417	N/A	US$	3,400
	Harley Davidson Motorcycle Tr		—	Short-term investment		—	US$	5,999	N/A	US$	5,938
	Holmes Fing No 8 PLC		—	Short-term investment		—	US$	5,001	N/A	US$	5,052
	Honda Auto Receivables		—	Short-term investment		—	US$	5,000	N/A	US$	4,991
	Household Automotive Tr		—	Short-term investment		—	US$	513	N/A	US$	511
	Hyundai Auto Receivables Tr		—	Short-term investment		—	US$	3,500	N/A	US$	3,468
	IMPAC Cmb Tr		—	Short-term investment		—	US$	1,414	N/A	US$	1,413
	IMPAC Cmb Tr		—	Short-term investment		—	US$	988	N/A	US$	988
	IMPAC Secd Assets Corp.		—	Short-term investment		—	US$	3,570	N/A	US$	3,566

(Continued)

- 43 -


					December 31, 2004
										Market Value or
							Carrying Value			Net Asset Value
		Relationship with		Financial Statement	Shares/Units		(US$ in		Percentage of	(US$ in
Held Company Name	Marketable Securities Type and Name	the Company		Account	(In Thousands of)		Thousand)		Ownership	Thousand)		Note
	Long Beach Accep Auto Receivab		—	Short-term investment		—	US$	2,526	N/A	US$	2,502
	Merrill Lynch Mtg Invs Inc.		—	Short-term investment		—	US$	1,460	N/A	US$	1,460
	Merrill Lynch Mtg Invs Inc.		—	Short-term investment		—	US$	1,500	N/A	US$	1,502
	Monumentl Global Fdg II		—	Short-term investment		—	US$	1,000	N/A	US$	1,001
	National City Auto Receivables		—	Short-term investment		—	US$	1,206	N/A	US$	1,207
	Navistar finl 2003 A Owner Tr		—	Short-term investment		—	US$	4,928	N/A	US$	4,889
	Nissan Auto Receivables		—	Short-term investment		—	US$	7,000	N/A	US$	6,958
	Nissan Auto Receivables Own Tr		—	Short-term investment		—	US$	4,999	N/A	US$	4,993
	Nissan Auto Receivables Owner		—	Short-term investment		—	US$	4,853	N/A	US$	4,872
	ONYX Accep Owner Tr		—	Short-term investment		—	US$	963	N/A	US$	961
	ONYX Accep Owner Tr		—	Short-term investment		—	US$	4,913	N/A	US$	4,933
	Providian Gateway Owner Tr		—	Short-term investment		—	US$	4,204	N/A	US$	4,201
	Providian Gateway Owner Tr		—	Short-term investment		—	US$	3,992	N/A	US$	3,982
	Reliant Energy Transition Bd		—	Short-term investment		—	US$	5,185	N/A	US$	5,117
	Residential Asset Mtg Prods		—	Short-term investment		—	US$	3,731	N/A	US$	3,672
	Residential Asset Mtg Prods		—	Short-term investment		—	US$	3,000	N/A	US$	2,980
	Residential Fdg Mtg Secs I Inc.		—	Short-term investment		—	US$	3,659	N/A	US$	3,631
	Sequoia Mtg Tr		—	Short-term investment		—	US$	2,504	N/A	US$	2,513
	Sequoia Mtg Tr		—	Short-term investment		—	US$	1,960	N/A	US$	1,955
	Sequoia Mtg Tr		—	Short-term investment		—	US$	1,488	N/A	US$	1,486
	Sequoia Mtg Tr		—	Short-term investment		—	US$	2,000	N/A	US$	2,000
	Sequoia Mtg Tr		—	Short-term investment		—	US$	3,500	N/A	US$	3,500
	Structured Adj Rate Mtg Ln Tr		—	Short-term investment		—	US$	3,037	N/A	US$	3,031
	Structured Asset Secs Corp.		—	Short-term investment		—	US$	1,403	N/A	US$	1,394
	Thoornburg Mtg Secs Tr		—	Short-term investment		—	US$	1,921	N/A	US$	1,923
	Toyota Auto Receivables 2003B		—	Short-term investment		—	US$	4,970	N/A	US$	4,930
	Triad Auto Receivables Tr		—	Short-term investment		—	US$	5,042	N/A	US$	4,997
	TXU Elec Delivery Transition		—	Short-term investment		—	US$	7,736	N/A	US$	7,715
	USAA Auto Owner Tr		—	Short-term investment		—	US$	4,000	N/A	US$	3,991
	Wachovia Auto Owner Tr		—	Short-term investment		—	US$	6,000	N/A	US$	5,991
	Wachovia Auto Owner Tr		—	Short-term investment		—	US$	4,999	N/A	US$	4,995
	WFS Financial Owner Trust		—	Short-term investment		—	US$	5,008	N/A	US$	4,989
	WFS Finl 2004 2 Owner Tr		—	Short-term investment		—	US$	4,994	N/A	US$	4,992
	WFS Finl 2004 4 Owner Tr		—	Short-term investment		—	US$	5,399	N/A	US$	5,342
	Whole Auto Ln Tr		—	Short-term investment		—	US$	5,967	N/A	US$	5,966
	Whole Auto Ln Tr		—	Short-term investment		—	US$	4,000	N/A	US$	3,969
	Whole Auto Ln Tr		—	Short-term investment		—	US$	3,000	N/A	US$	2,964
	World Omni Auto Receivables Tr		—	Short-term investment		—	US$	5,963	N/A	US$	5,906

	Commercial papers			Short-term investment		—	US$	2,997	N/A	US$	2,997

	Corporate issued notes			Short-term investment		—	US$	1,999	N/A	US$	1,999

(Continued)

- 44 -


					December 31, 2004
											Market Value or
							Carrying Value				Net Asset Value
		Relationship with		Financial Statement	Shares/Units		(US$ in		Percentage of		(US$ in
Held Company Name	Marketable Securities Type and Name	the Company		Account	(In Thousands of)		Thousand)		Ownership		Thousand)		Note
	Money market funds			Short-term investment		—	US$	21,114		N/A	US$	21,114

	Equity
	Horizon Venture Fund I, L.P.		—	Long-term investment		—		246,485		N/A		246,485
	Crimson Asia Capital Ltd., L.P.		—	Long-term investment		—		43,649		N/A		43,649
TSMC— North America	TSMC stock	Parent company		Short-term investment		14,151		677,110		—		696,661

Chi Cherng	TSMC stock	Parent company		Short-term investment		15,670		458,564		—		771,451

Hsin Ruey	TSMC stock	Parent company		Short-term investment		15,700		459,512		—		772,897

TSMC International	Money market fund
	BOA Fund		—	Short-term investment		30,300	US$	30,300		N/A	US$	30,300

	Stock
	InveStar	Subsidiary		Long-term investment		24,320	US$	34,514		97	US$	34,514
	InveStar II	Subsidiary		Long-term investment		51,300	US$	34,534		97	US$	34,534
	TSMC Development	Subsidiary		Long-term investment		1	US$	603,993		100	US$	603,993
	TSMC Technology	Subsidiary		Long-term investment		1	US$	5,544		100	US$	5,544
	3DFX Interactive Inc.		—	Long-term investment		68		—		—	—

TSMC Development	WaferTech stock	Subsidiary		Long-term investment		—	US$	484,060		99	US$	484,060

InveStar	Common stock
	RichTek Technology Corp.		—	Short-term investment		682	US$	67		—	US$	1,370
	Advanced Power Electronics Corp.		—	Short-term investment		1,108	US$	502		—	US$	697
	Broadtek Electronics Corp.		—	Short-term investment		869	US$	275		—	US$	225
	Monolithic Power Systems, Inc.		—	Short-term investment		1,975	US$	1,567		—	US$	19,910
	SiRF Technology Holdings, Inc.		—	Short-term investment		90	US$	393		—	US$	1,157
	Broadtek Electronics Corp.		—	Long-term investment		145	US$	46		—	US$	38
	Programmable Microelectronics (Taiwan), Corp.		—	Long-term investment		575	US$	208		1	US$	208
	Global Testing Corp.		—	Long-term investment		13,268	US$	5,670		9	US$	5,670
	RichTek Technology Corp.		—	Long-term investment		842	US$	83		1	US$	1,692
	Signia Technologies, Inc.		—	Long-term investment		701	US$	202		3	US$	202
	Incentia Design Systems, Inc.		—	Long-term investment		365	US$	92		1	US$	92
	Advanced Power Electronics Corp.		—	Long-term investment		1,123	US$	508		2	US$	706
	Capella Microsystems (Taiwan), Inc.		—	Long-term investment		530	US$	154		4	US$	154

	Preferred stock
	Integrated Memory Logic, Inc.		—	Long-term investment		1,831	US$	1,221		12	US$	1,221
	Sensory, Inc.		—	Long-term investment		1,404	US$	125		6	US$	125
	Sonics, Inc.		—	Long-term investment		2,686	US$	3,530		4	US$	3,530
	NanoAmp Solutions, Inc.		—	Long-term investment		541	US$	853		2	US$	853
	Memsic, Inc.		—	Long-term investment		2,727	US$	1,500		10	US$	1,500
	Reflectivity, Inc.		—	Long-term investment		1,064	US$	741		2	US$	741

(Continued)

- 45 -


					December 31, 2004
											Market Value or
							Carrying Value				Net Asset Value
		Relationship with		Financial Statement	Shares/Units		(US$ in		Percentage of		(US$ in
Held Company Name	Marketable Securities Type and Name	the Company		Account	(In Thousands of)		Thousand)		Ownership		Thousand)		Note
	IP Unity		—	Long-term investment		1,008	US$	494		2	US$	494
	Tropian, Inc.		—	Long-term investment		1,758	US$	471		3	US$	471

InveStar II	Common stock
	RichTek Technology Corp.		—	Short-term investment		321	US$	184		—	US$	645
	Monolithic Power Systems, Inc.		—	Short-term investment		864	US$	2,081		—	US$	8,716
	eChannel Option Holding, Inc.		—	Long-term investment		358	US$	251		4	US$	251
	eLCOS Microdisplay Technology, Ltd.		—	Long-term investment		270	US$	27		1	US$	27
	Signia Technologies, Inc.		—	Long-term investment		351	US$	101		1	US$	101
	Procoat Technology, Inc.		—	Long-term investment		5,123	US$	1,940		10	US$	1,940
	RichTek Technology Corp.		—	Long-term investment		395	US$	226		1	US$	794
	Programmable Microelectronics
	(Taiwan), Inc.		—	Long-term investment		177	US$	50		—	US$	50
	Auden Technology MFG. Co., Ltd.		—	Long-term investment		953	US$	738		4	US$	738
	GeoVision, Inc.		—	Long-term investment		471	US$	127		1	US$	127
	EoNex Technologies, Inc.		—	Long-term investment		55	US$	3,048		5	US$	3,048
	Conwise Technology Corporation, Ltd.		—	Long-term investment		2,800	US$	490		14	US$	490
	EON Technology, Corp.		—	Long-term investment		3,276	US$	1,175		8	US$	1,175
	Goyatek Technology, Corp.		—	Long-term investment		2,088	US$	545		7	US$	545
	Trendchip Technologies Corp.		—	Long-term investment		2,000	US$	861		5	US$	861
	Ralink Technology (Taiwan), Inc.		—	Long-term investment		1,833	US$	791		3	US$	791
	Silicon Data International Co., Inc.		—	Long-term investment		2,000	US$	204		3	US$	204
	Capella Microsystems (Taiwan), Inc.		—	Long-term investment		419	US$	122		3	US$	122

	Preferred stock
	Memsic, Inc.		—	Long-term investment		2,289	US$	1,560		8	US$	1,560
	eLCOS Microdisplay Technology, Ltd.		—	Long-term investment		2,667	US$	3,500		15	US$	3,500
	NanoAmp Solutions, Inc.		—	Long-term investment		375	US$	1,500		1	US$	1,500
	Advanced Analogic Technology, Inc.		—	Long-term investment		948	US$	1,261		2	US$	1,261
	Sonics, Inc.		—	Long-term investment		1,582	US$	3,082		5	US$	3,082
	Reflectivity, Inc.		—	Long-term investment		4,255	US$	2,205		5	US$	2,205
	Tropian, Inc.		—	Long-term investment		1,464	US$	393		2	US$	393
	Kilopass Technologies, Inc.		—	Long-term investment		3,887	US$	2,000		19	US$	2,000
	FangTek, Inc.		—	Long-term investment		6,806	US$	3,250		34	US$	3,250
	Alchip Technologies Limited		—	Long-term investment		2,579	US$	2,950		18	US$	2,950

Emerging Alliance	Common stock
	Global Investment Holding, Inc.		—	Long-term investment		10,000		100,000		6		100,000
	RichWave Technology Corp.		—	Long-term investment		2,600	US$	867		13	US$	867
	NetLogic Microsystems, Inc.		—	Long-term investment		113	US$	1,388		1	US$	1,388

	Preferred stock
	Quake Technologies, Inc.		—	Long-term investment		601	US$	450		1	US$	450
	Pixim, Inc.		—	Long-term investment		1,721	US$	2,382		3	US$	2,382
	Newport Opticom, Inc.		—	Long-term investment		962	US$	250		6	US$	250
	Ikanos Communication, Inc.		—	Long-term investment		7,446	US$	3,125		3	US$	3,125

(Continued)

- 46 -


					December 31, 2004
											Market Value or
							Carrying Value				Net Asset Value
		Relationship with		Financial Statement	Shares/Units		(US$ in		Percentage of		(US$ in
Held Company Name	Marketable Securities Type and Name	the Company		Account	(In Thousands of)		Thousand)		Ownership		Thousand)		Note
	Quicksilver Technology, Inc.		—	Long-term investment		1,049	US$	—		4	US$	—
	Mosaic Systems, Inc.		—	Long-term investment		2,481	US$	12		6	US$	12
	Zenesis Technologies, Inc.		—	Long-term investment		1,204	US$	699		4	US$	699
	Reflectivity, Inc.		—	Long-term investment		4,848	US$	2,479		4	US$	2,479
	Teknovus, Inc.		—	Long-term investment		5,556	US$	1,000		3	US$	1,000
	Miradia, Inc. (Formerly XHP Microsystems, Inc.)		—	Long-term investment		3,040	US$	1,000		4	US$	1,000
	Axiom Microdevices, Inc.		—	Long-term investment		1,000	US$	1,000		5	US$	1,000
	Optichron, Inc.		—	Long-term investment		714	US$	1,000		6	US$	1,000
	Audience, Inc.		—	Long-term investment		1,654	US$	250		2	US$	250
	Next IO, Inc.		—	Long-term investment		800	US$	500		2	US$	500
	NuCORE Technology Inc.		—	Long-term investment		2,254	US$	1,455		2	US$	1,455
	Centrality Communications, Inc.		—	Long-term investment		809	US$	1,000		2	US$	1,000
	Layer N Networks, Inc.		—	Long-term investment		1,905	US$	1,000		2	US$	1,000

VTAF II	Common stock
	Yobon Technologies, Inc.		—	Long-term investment		1,675	US$	787		17	US$	787
	Sentelic, Corp.		—	Long-term investment		600	US$	1,022		15	US$	1,022
	Ivyon Technology, Inc.		—	Long-term investment		200	US$	775		10	US$	775

	Preferred stock
	Powerprecise Solutions, Inc.		—	Long-term investment		258	US$	250		3	US$	250
	Tzero Technologies, Inc.		—	Long-term investment		244	US$	500		2	US$	500
	Miradia, Inc.		—	Long-term investment		1,809	US$	1,600		2	US$	1,600
	Agelia Technologies, Inc.		—	Long-term investment		1,149	US$	1,000		2	US$	1,000
	Audience, Inc.		—	Long-term investment		531	US$	102		1	US$	102
	Axiom Microdevices, Inc.		—	Long-term investment		686	US$	700		5	US$	700
	Next IO, Inc.		—	Long-term investment		216	US$	182		—	US$	182

GUC	Bond funds
	Grand Cathay		—	Short-term investment		3,608		45,543		N/A		45,544
	TIIM		—	Short-term investment		703		9,698		N/A		9,698
	Polaris De Li		—	Short-term investment		1,550		22,800		N/A		22,800
	EnTrust Kirin		—	Short-term investment		2,106		22,697		N/A		22,698
	E. Sun New Era		—	Short-term investment		1,920		20,313		N/A		20,314
	Jih Sun		—	Short-term investment		772		10,262		N/A		10,262
	EnTrust Phoenix		—	Short-term investment		2,081		30,563		N/A		30,564
	Transcend Fortune		—	Short-term investment		1,936		22,947		N/A		22,948

	Stock funds
	TIIM DaLi		—	Short-term investment		296		5,000		N/A		4,474
	UPAMC Global Select Fund of Funds		—	Short-term investment		336		3,364		N/A		3,378
	Sheng Hua 9966 Balance		—	Short-term investment		300		3,000		N/A		3,011

	Stock
	Global Unichip Corporation — NA	Subsidiary		Long-term investment		100		3,375		100		3,375

- 47 -

TABLE 4

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND AFFILIATES

MARKETABLE SECURITIES ACQUIRED AND DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 2004
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)


					Beginning Balance					Acquisition				Disposal											Ending Balance
																			Carrying			Gain (Loss)					Amount
							Amount					Amount				Amount			Value			on Disposal					(US$ in
	Marketable Securities	Financial Statement		Nature of	Shares/Units		(US$ in			Shares/Units		(US$ in		Shares/Units		(US$ in			(US$ in			(US$ in			Shares/Units		Thousand)
Company Name	Type and Name	Account	Counter-party	Relationship	(Thousand)		Thousand)			(Thousand)		Thousand)		(Thousand)		Thousand)			Thousand)			Thousand)			(Thousand)		(Note 1)
The Company	Money market funds
	BOA Fund	Short-term investment	BOA	—		40,000	$	1,359,120			—	$	—		40,000	$	1,359,120		$	1,359,120		$	—			—	$	—
								(US$40,000	)								(US$40,000	)		(US$40,000	)
	GS Fund	Short-term investment	Goldman Sachs	—		20,000		679,560			—		—		20,000		679,560			679,560			—			—		—
								(US$20,000	)								(US$20,000	)		(US$20,000	)

	Bond funds
	JF Taiwan Bond Fund	Short-term investment	JF Asset Management (Taiwan) Ltd.	—		34,343		500,000			68,021		1,000,000		23,666		350,000			346,791			3,209			78,698		1,153,209
	ABN AMRO Bond Fund	Short-term investment	ABN AMRO	—		34,794		500,000			165,257		2,400,000		65,145		950,000			943,825			6,175			134,906		1,956,175
	ABN AMRO Select Bond Fund	Short-term investment	ABN AMRO	—		—		—			18,235		200,000		—		—			—			—			18,235		200,000
	JF Taiwan First Bond Fund	Short-term investment	JF Asset Management (Taiwan) Ltd.	—		—		—			110,580		1,500,000		25,694		350,000			348,537			1,463			84,886		1,151,463
	INVESCO R.O.C Bond A Fund	Short-term investment	INVESCO Asset Management Taiwan	—		—		—			93,975		1,350,000		17,270		250,000			248,089			1,911			76,705		1,101,911
	Dresdner Bond DAM Fund	Short-term investment	Allianz Dresdner Securities Investment Consulting Co., Ltd.	—		—		—			80,833		900,000		—		—			—			—			80,833		900,000
	Barits Bond Fund	Short-term investment	Barits Securities Investment Trust Co., Ltd.	—		—		—			76,640		900,000		—		—			—			—			76,640		900,000
	Shin Kong Chi Shin Bond Fund	Short-term investment	Shinkong Investment Trust Co., Ltd.	—		—		—			151,594		2,100,000		—		—			—			—			151,594		2,100,000
	NITC Bond Fund	Short-term investment	National Investment Trust Co., Ltd.	—		—		—			3,764		600,000		—		—			—			—			3,764		600,000
	HSBC NTD Money Management Fund	Short-term investment	HSBC Asset Management (Taiwan) Ltd.	—		—		—			41,568		600,000		—		—			—			—			41,568		600,000

	Bonds under repurchase agreement	Short-term investment	Chung Shing Bills Finance Corp. and several financial institutions	—		—		1,800,000			—		2,577,163		—		4,127,714			4,127,714			—			—		249,449

	Government bonds
	1994 Government Bond Series C	Short-term investment	Chung Shing Bills Finance Corp. and several financial institutions	—		—		1,422,197			—		—		—		1,427,762			1,422,197			5,565			—		—
	2002 Government Bond Series A	Short-term investment	BNP and several financial institutions	—		—		3,157,331			—		—		—		3,169,750			3,157,331			12,419			—		—
	2002 Government Bond Series E	Short-term investment	BNP and several financial institutions	—		—		3,113,066			—		—		—		3,133,875			3,113,066			20,809			—		—
	2002 Government Bond Series J	Short-term investment	BNP and several financial institutions	—		—		—			—		2,023,206		—		2,031,500			2,023,206			8,294			—		—
	2003 Government Bond Series A	Short-term investment	BNP and several financial institutions	—		—		—			—		1,207,409		—		—			—			—			—		1,207,409
	United States Treas NTS	Short-term investment	—	—		—		—			—	US$	699,398		—	US$	506,162		US$	507,041		US$	(879	)		—	US$	192,357
	2003 Government Bond Series I	Long-term investment	FCB and several financial institutions	—		—		—			—		3,402,213		—		—			—			—			—		3,397,081
	2004 Government Bond Series A	Long-term investment	China Bills Finance Corp. and several financial institutions	—		—		—			—		2,349,573		—		—			—			—			—		2,349,573
	2004 Government Bond Series E	Long-term investment	BNP and several financial institutions	—		—		—			—		3,890,925		—		—			—			—			—		3,893,827
	2004 Kaohsiung Municipal Bond Series A	Long-term investment	KGI Securities Co., Ltd. and several financial institutions	—		—		—			—		620,000		—		—			—			—			—		620,000

	Corporate bonds
	Taiwan Power Company	Short-term investment	KGI Securities Co., Ltd.	—		—		—			—		2,777,798		—		—			—			—			—		2,777,798
	Allstate Finl Global Fdg LLC	Short-term investment	—	—		—		—			—	US$	3,171		—		—			—			—			—	US$	3,171
	American Express Co.	Short-term investment	—	—		—		—			—	US$	3,550		—		—			—			—			—	US$	3,550
	American Express Cr Corp. Mtn	Short-term investment	—	—		—		—			—	US$	3,503		—	US$	3,504		US$	3,503		US$	1			—		—
	American Gen Fin Corp. Mtn	Short-term investment	—	—		—		—			—	US$	3,130		—		—			—			—			—	US$	3,130
	American Gen Fin Corp. Mtn	Short-term investment	—	—		—		—			—	US$	3,702		—		—			—			—			—	US$	3,702
	American Honda Fin Corp. Mtn	Short-term investment	—	—		—		—			—	US$	3,509		—	US$	3,509		US$	3,509			—			—		—
	American Honda Fin Corp. Mtn	Short-term investment	—	—		—		—			—	US$	3,750		—	US$	3,755		US$	3,750		US$	5			—		—
	American Honda Fin Corp. Mtn	Short-term investment	—	—		—		—			—	US$	3,800		—		—			—			—			—	US$	3,800

(Continued)

- 48 -


					Beginning Balance				Acquisition				Disposal									Ending Balance
																	Carrying		Gain (Loss)					Amount
							Amount				Amount				Amount		Value		on Disposal					(US$ in
	Marketable Securities	Financial Statement		Nature of	Shares/Units		(US$ in		Shares/Units		(US$ in		Shares/Units		(US$ in		(US$ in		(US$ in			Shares/Units		Thousand)
Company Name	Type and Name	Account	Counter-party	Relationship	(Thousand)		Thousand)		(Thousand)		Thousand)		(Thousand)		Thousand)		Thousand)		Thousand)			(Thousand)		(Note 1)
	American Intl Group Inc. Mtnf	Short-term investment	—	—		—	$	—		—	US$	3,795		—	$	—	$	—	$	—			—	US$	3,795
	Amgen Inc.	Short-term investment	—	—		—		—		—	US$	3,005		—		—		—		—			—	US$	3,005
	Bank New York Inc.	Short-term investment	—	—		—		—		—	US$	3,945		—		—		—		—			—	US$	3,945
	Bank One Corp.	Short-term investment	—	—		—		—		—	US$	3,693		—	US$	3,695	US$	3,693	US$	2			—		—
	Bear Stearns Cos Inc.	Short-term investment	—	—		—		—		—	US$	3,805		—	US$	3,816	US$	3,805	US$	11			—		—
	Bear Stearns Cos Inc.	Short-term investment	—	—		—		—		—	US$	3,518		—		—		—		—			—	US$	3,518
	Bear Stearns Cos Inc. Medium Te	Short-term investment	—	—		—		—		—	US$	3,105		—		—		—		—			—	US$	3,105
	Bristol Myers Squibb Co.	Short-term investment	—	—		—		—		—	US$	3,819		—		—		—		—			—	US$	3,819
	Brown Forman Corp.	Short-term investment	—	—		—		—		—	US$	3,277		—	US$	3,280	US$	3,277	US$	3			—		—
	Cardinal Health Inc.	Short-term investment	—	—		—		—		—	US$	3,837		—	US$	3,795	US$	3,837	US$	(42	)		—		—
	Cit Group Hldgs Inc.	Short-term investment	—	—		—		—		—	US$	3,203		—		—		—		—			—	US$	3,203
	Citigroup Inc.	Short-term investment	—	—		—		—		—	US$	3,583		—		—		—		—			—	US$	3,583
	Compaq Computer Corp.	Short-term investment	—	—		—		—		—	US$	3,719		—		—		—		—			—	US$	3,719
	Consolidated Edison Co. NY Inc.	Short-term investment	—	—		—		—		—	US$	3,687		—		—		—		—			—	US$	3,687
	Countrywide Fdg Corp. Mtn	Short-term investment	—	—		—		—		—	US$	3,534		—	US$	3,540	US$	3,534	US$	6			—		—
	Countrywide Home Lns Inc.	Short-term investment	—	—		—		—		—	US$	5,210		—		—		—		—			—	US$	5,210
	Credit Suisse First Boston USA	Short-term investment	—	—		—		—		—	US$	3,177		—	US$	3,188	US$	$3,177	US$	11			—		—
	Dell Computer Corp.	Short-term investment	—	—		—		—		—	US$	3,054		—		—		—		—			—	US$	3,054
	Diageo PLC	Short-term investment	—	—		—		—		—	US$	3,459		—		—		—		—			—	US$	3,459
	European Invt Bk	Short-term investment	—	—		—		—		—	US$	8,315		—		—		—		—			—	US$	8,315
	Federal Home Ln Mtg Corp	Short-term investment	—	—		—		—		—	US$	4,237		—		—		—		—			—	US$	4,237
	Federal Home Loan Mtg Assn	Short-term investment	—	—		—		—		—	US$	4,847		—		—		—		—			—	US$	4,847
	First Data Corp.	Short-term investment	—	—		—		—		—	US$	3,013		—		—		—		—			—	US$	3,013
	General Elec Cap Corp. Mtn	Short-term investment	—	—		—		—		—	US$	3,507		—	US$	3,498	US$	3,507	US$	(9	)		—		—
	General Elec Cap Corp. Mtn	Short-term investment	—	—		—		—		—	US$	3,467		—		—		—		—			—	US$	3,467
	General Elec Cap Corp. Mtn	Short-term investment	—	—		—		—		—	US$	3,886		—		—		—		—			—	US$	3,886
	Genworth Finl Inc.	Short-term investment	—	—		—		—		—	US$	3,412		—		—		—		—			—	US$	3,412
	Goldman Sachs Group Inc Mtn	Short-term investment	—	—		—		—		—	US$	3,505		—		—		—		—			—	US$	3,505
	Goldman Sachs Group LP	Short-term investment	—	—		—		—		—	US$	3,820		—		—		—		—			—	US$	3,820
	Hewlett Packard Co.	Short-term investment	—	—		—		—		—	US$	3,373		—		—		—		—			—	US$	3,373
	Honeywell Inc.	Short-term investment	—	—		—		—		—	US$	3,284		—		—		—		—			—	US$	3,284
	Household Fin Corp.	Short-term investment	—	—		—		—		—	US$	3,712		—	US$	3,633	US$	3,712	US$	(79	)		—		—
	Household Fin Corp. Mtn Bk Ent	Short-term investment	—	—		—		—		—	US$	3,542		—		—		—		—			—	US$	3,542
	Huntington Natl Bk	Short-term investment	—	—		—		—		—	US$	3,003		—		—		—		—			—	US$	3,003
	ING Sec Life Ins Ingslf	Short-term investment	—	—		—		—		—	US$	3,012		—		—		—		—			—	US$	3,012
	Intl Bk For Recon + Dev	Short-term investment	—	—		—		—		—	US$	5,232		—		—		—		—			—	US$	5,232
	JP Morgan Chase + Co.	Short-term investment	—	—		—		—		—	US$	3,638		—	US$	3,601	US$	3,638	US$	(37	)		—		—
	JP Morgan Chase + Co.	Short-term investment	—	—		—		—		—	US$	3,128		—		—		—		—			—	US$	3,128
	JP Morgan Chase + Co.	Short-term investment	—	—		—		—		—	US$	3,663		—		—		—		—			—	US$	3,663
	Keycorp Mtn Book Entry	Short-term investment	—	—		—		—		—	US$	3,500		—		—		—		—			—	US$	3,500
	KFW Intl Fin Inc.	Short-term investment	—	—		—		—		—	US$	5,104		—		—		—		—			—	US$	5,104
	Lehman Brothers Hldgs Inc.	Short-term investment	—	—		—		—		—	US$	3,417		—	US$	3,381	US$	3,417	US$	(36	)		—		—
	Lehman Brothers Hldgs Inc.	Short-term investment	—	—		—		—		—	US$	3,705		—		—		—		—			—	US$	3,705
	Lilly Eli + Co.	Short-term investment	—	—		—		—		—	US$	3,750		—		—		—		—			—	US$	3,750
	Merrill Lynch + Co Inc.	Short-term investment	—	—		—		—		—	US$	3,497		—	US$	3,498	US$	3,497	US$	1			—		—
	Merrill Lynch + Co Inc.	Short-term investment	—	—		—		—		—	US$	3,486		—		—		—		—			—	US$	3,486
	Monumental Global Fdg II 2002A	Short-term investment	—	—		—		—		—	US$	3,129		—		—		—		—			—	US$	3,129
	Morgan Stanley Group Inc.	Short-term investment	—	—		—		—		—	US$	5,741		—		—		—		—			—	US$	5,741
	Morgan Stanley Group Inc.	Short-term investment	—	—		—		—		—	US$	4,763		—	US$	3,713	US$	3,713		—			—	US$	1,050
	Nationsbank Corp.	Short-term investment	—	—		—		—		—	US$	3,644		—		—		—		—			—	US$	3,644
	Nationwide Bldg Soc	Short-term investment	—	—		—		—		—	US$	3,457		—		—		—		—			—	US$	3,457
	Nationwide Life Global Mtn	Short-term investment	—	—		—		—		—	US$	3,413		—		—		—		—			—	US$	3,413
	Pepsico Inc. Mtn Book Entry	Short-term investment	—	—		—		—		—	US$	3,818		—		—		—		—			—	US$	3,818
	Popular North Amer Inc Mtn	Short-term investment	—	—		—		—		—	US$	3,042		—		—		—		—			—	US$	3,042
	Pricoa Global Fdg I Mtn	Short-term investment	—	—		—		—		—	US$	3,507		—		—		—		—			—	US$	3,507
	Pricoa Global Fdg I Mtn	Short-term investment	—	—		—		—		—	US$	3,050		—		—		—		—			—	US$	3,050
	Principal Life Global Fdg I Gl	Short-term investment	—	—		—		—		—	US$	3,168		—		—		—		—			—	US$	3,168
	Salomon Smith Barney Hldgs Inc.	Short-term investment	—	—		—		—		—	US$	3,160		—		—		—		—			—	US$	3,160
	SBC Communications Inc.	Short-term investment	—	—		—		—		—	US$	3,681		—		—		—		—			—	US$	3,681

(Continued)

- 49 -


					Beginning Balance				Acquisition				Disposal									Ending Balance
																	Carrying		Gain (Loss)					Amount
							Amount				Amount				Amount		Value		on Disposal					(US$ in
	Marketable Securities	Financial Statement		Nature of	Shares/Units		(US$ in		Shares/Units		(US$ in		Shares/Units		(US$ in		(US$ in		(US$ in			Shares/Units		Thousand)
Company Name	Type and Name	Account	Counter-party	Relationship	(Thousand)		Thousand)		(Thousand)		Thousand)		(Thousand)		Thousand)		Thousand)		Thousand)			(Thousand)		(Note 1)
	Shell Finance (UK) PLC	Short-term investment	—	—		—	$	—		—	US$	3,604		—	$	—	$	—	$	—			—	US$	3,604
	TIAA Global Mkts Inc.	Short-term investment	—	—		—		—		—	US$	3,631		—	US$	3,131	US$	3,112	US$	19			—	US$	519
	Unitedhealth Group Inc.	Short-term investment	—	—		—		—		—	US$	3,119		—		—		—		—			—	US$	3,119
	Viacom Inc.	Short-term investment	—	—		—		—		—	US$	3,177		—	US$	3,135	US$	3,177	US$	(42	)		—		—
	Viacom Inc.	Short-term investment	—	—		—		—		—	US$	3,172		—	US$	3,175	US$	3,172	US$	3			—		—
	Wachovia Corp.	Short-term investment	—	—		—		—		—	US$	3,720		—		—		—		—			—	US$	3,720
	Walmart Cda Venture Corp.	Short-term investment	—	—		—		—		—	US$	3,670		—		—		—		—			—	US$	3,670
	Washington Mut Fin Corp.	Short-term investment	—	—		—		—		—	US$	4,768		—		—		—		—			—	US$	4,768
	Washington Mut Inc.	Short-term investment	—	—		—		—		—	US$	4,735		—		—		—		—			—	US$	4,735
	Washington Post Co.	Short-term investment	—	—		—		—		—	US$	3,182		—		—		—		—			—	US$	3,182
	Wells Fargo + Co. New	Short-term investment	—	—		—		—		—	US$	3,697		—		—		—		—			—	US$	3,697
	China Steel Corporation	Long-term investment	Chung Shing Bills Finance Corp.	—		—		—		—		2,997,430		—		—		—		—			—		2,978,804
	Taiwan Power Company	Long-term investment	BNP and several financial institutions	—		—		—		—		950,646		—		—		—		—			—		915,276
	Nan Ya Plastics Corporation	Long-term investment	Chung Shing Bills Finance Corp.	—		—		—		—		408,538		—		—		—		—			—		407,526
	Formosa Plastics Corporation	Long-term investment	Chung Shing Bills Finance Corp.	—		—		—		—		406,245		—		—		—		—			—		405,485
	Formosa Petrochemical Corporation	Long-term investment	Chung Shing Bills Finance Corp.	—		—		—		—		202,980		—		—		—		—			—		202,595

	Agency bonds
	Federal Home Ln Mtg Corp.	Short-term investment	—	—		—		—		—	US$	6,096		—		—		—		—			—	US$	6,096
	Federal Home Ln Mtg Corp.	Short-term investment	—	—		—		—		—	US$	4,725		—		—		—		—			—	US$	4,725
	Federal Home Ln Mtg Corp.	Short-term investment	—	—		—		—		—	US$	3,558		—		—		—		—			—	US$	3,558
	Federal Natl Mtg Assn	Short-term investment	—	—		—		—		—	US$	5,861		—		—		—		—			—	US$	5,861
	Federal Natl Mtg Assn	Short-term investment	—	—		—		—		—	US$	3,393		—		—		—		—			—	US$	3,393
	Federal Natl Mtg Assn	Short-term investment	—	—		—		—		—	US$	6,130		—		—		—		—			—	US$	6,130
	Federal Natl Mtg Assn Gtd	Short-term investment	—	—		—		—		—	US$	6,371		—		—		—		—			—	US$	6,371
	Federal Natl Mtg Assn Mtn	Short-term investment	—	—		—		—		—	US$	7,000		—		—		—		—			—	US$	7,000
	Fnma Pool 790828	Short-term investment	—	—		—		—		—	US$	5,014		—		—		—		—			—	US$	5,014
	Gnma II Pool 081153	Short-term investment	—	—		—		—		—	US$	3,817		—		—		—		—			—	US$	3,817
	Gnma II Pool Tba Nov 30 Arms	Short-term investment	—	—		—		—		—	US$	4,829		—	US$	4,829	US$	4,829		—			—		—
	Government Natl Mtg Assn	Short-term investment	—	—		—		—		—	US$	4,473		—		—		—		—			—	US$	4,473
	Federal Hm Ln PC	Short-term investment	—	—		—		—		—	US$	3,466		—		—		—		—			—	US$	3,466
	Federal Home Ln Bks	Short-term investment	—	—		—		—		—	US$	5,210		—	US$	4,153	US$	4,168	US$	(15	)		—	US$	1,042
	Federal Home Ln Bks	Short-term investment	—	—		—		—		—	US$	4,927		—		—		—		—			—	US$	4,927
	Federal Home Ln Bks	Short-term investment	—	—		—		—		—	US$	14,938		—	US$	6,980	US$	6,976	US$	4			—	US$	7,962
	Federal Home Ln Bks	Short-term investment	—	—		—		—		—	US$	7,014		—		—		—		—			—	US$	7,014
	Federal Home Ln Bks	Short-term investment	—	—		—		—		—	US$	4,936		—		—		—		—			—	US$	4,936
	Federal Home Ln Bks	Short-term investment	—	—		—		—		—	US$	9,956		—	US$	9,967	US$	9,956	US$	11			—		—
	Federal Home Ln Bks	Short-term investment	—	—		—		—		—	US$	5,264		—	US$	5,286	US$	5,264	US$	22			—		—
	Federal Home Ln Bks	Short-term investment	—	—		—		—		—	US$	4,948		—		—		—		—			—	US$	4,948
	Federal Home Ln Bks	Short-term investment	—	—		—		—		—	US$	7,018		—		—		—		—			—	US$	7,018
	Federal Home Ln Bks	Short-term investment	—	—		—		—		—	US$	9,993		—	US$	5,000	US$	4,997	US$	3			—	US$	4,996
	Federal Home Ln Bks	Short-term investment	—	—		—		—		—	US$	7,042		—		—		—		—			—	US$	7,042
	Federal Home Ln Bks	Short-term investment	—	—		—		—		—	US$	6,098		—		—		—		—			—	US$	6,098
	Federal Home Ln Bks	Short-term investment	—	—		—		—		—	US$	13,953		—		—		—		—			—	US$	13,953
	Federal Home Ln Bks	Short-term investment	—	—		—		—		—	US$	13,983		—		—		—		—			—	US$	13,983
	Federal Home Ln Bks	Short-term investment	—	—		—		—		—	US$	13,981		—		—		—		—			—	US$	13,981
	Federal Home Ln Mtg Corp.	Short-term investment	—	—		—		—		—	US$	6,978		—		—		—		—			—	US$	6,978
	Federal Home Ln Mtg Corp.	Short-term investment	—	—		—		—		—	US$	3,388		—		—		—		—			—	US$	3,388
	Federal Home Ln Mtg Corp.	Short-term investment	—	—		—		—		—	US$	4,907		—	US$	4,981	US$	4,907	US$	74			—		—
	Federal Home Ln Mtg Corp.	Short-term investment	—	—		—		—		—	US$	4,953		—		—		—		—			—	US$	4,953
	Federal Home Ln Mtg Corp.	Short-term investment	—	—		—		—		—	US$	9,997		—		—		—		—			—	US$	9,997
	Federal Home Ln Mtg Corp.	Short-term investment	—	—		—		—		—	US$	9,971		—	US$	9,942	US$	9,971	US$	(29	)		—		—
	Federal Home Ln Mtg Corp.	Short-term investment	—	—		—		—		—	US$	11,984		—	US$	10,965	US$	10,986	US$	(21	)		—	US$	998
	Federal Home Ln Mtg Corp.	Short-term investment	—	—		—		—		—	US$	4,933		—		—		—		—			—	US$	4,933
	Federal Home Ln Mtg Corp. Mtn	Short-term investment	—	—		—		—		—	US$	4,930		—		—		—		—			—	US$	4,930
	Federal Home Loan Mtg Corp.	Short-term investment	—	—		—		—		—	US$	4,903		—		—		—		—			—	US$	4,903
	Federal Natl Mtg Assn	Short-term investment	—	—		—		—		—	US$	11,036		—	US$	10,997	US$	11,036	US$	(39	)		—		—
	Federal Natl Mtg Assn	Short-term investment	—	—		—		—		—	US$	10,496		—	US$	10,430	US$	10,496	US$	(66	)		—		—

(Continued)

- 50 -


					Beginning Balance				Acquisition				Disposal									Ending Balance
																	Carrying		Gain (Loss)					Amount
							Amount				Amount				Amount		Value		on Disposal					(US$ in
	Marketable Securities	Financial Statement		Nature of	Shares/Units		(US$ in		Shares/Units		(US$ in		Shares/Units		(US$ in		(US$ in		(US$ in			Shares/Units		Thousand)
Company Name	Type and Name	Account	Counter-party	Relationship	(Thousand)		Thousand)		(Thousand)		Thousand)		(Thousand)		Thousand)		Thousand)		Thousand)			(Thousand)		(Note 1)
	Federal Natl Mtg Assn	Short-term investment	—	—		—	$	—		—	US$	5,270		—	$	—	$	—	$	—			—	US$	5,270
	Federal Natl Mtg Assn	Short-term investment	—	—		—		—		—	US$	4,982		—	US$	4,983	US$	4,982	US$	1			—		—
	Federal Natl Mtg Assn	Short-term investment	—	—		—		—		—	US$	6,940		—		—							—	US$	6,940
	Federal Natl Mtg Assn	Short-term investment	—	—		—		—		—	US$	4,867		—	US$	4,938	US$	4,867	US$	71			—		—
	Federal Natl Mtg Assn	Short-term investment	—	—		—		—		—	US$	6,903		—		—		—		—			—	US$	6,903
	Federal Natl Mtg Assn	Short-term investment	—	—		—		—		—	US$	4,981		—		—		—		—			—	US$	4,981
	Federal Natl Mtg Assn	Short-term investment	—	—		—		—		—	US$	6,997		—		—		—		—			—	US$	6,997
	Federal Natl Mtg Assn	Short-term investment	—	—		—		—		—	US$	4,993		—	US$	4,993	US$	4,993		—			—		—
	Federal Natl Mtg Assn Disc Nts	Short-term investment	—	—		—		—		—	US$	5,000		—		—		—		—			—	US$	5,000
	Federal Natl Mtg Assn Mtn	Short-term investment	—	—		—		—		—	US$	15,787		—		—		—		—			—	US$	15,787
	Freddie Mac	Short-term investment	—	—		—		—		—	US$	4,929		—		—		—		—			—	US$	4,929
	Student Ln Marketing Assn	Short-term investment	—	—		—		—		—	US$	16,000		—	US$	16,000	US$	16,000		—			—		—

	Corporate issued asset-backed securities
	Aesop Fdg II LLC	Short-term investment	—	—		—		—		—	US$	4,955		—		—		—		—			—	US$	4,955
	American Express Cr Account MA	Short-term investment	—	—		—		—		—	US$	3,445		—		—		—		—			—	US$	3,445
	Americredit Automobile Receivb	Short-term investment	—	—		—		—		—	US$	4,949		—		—		—		—			—	US$	4,949
	Banc Amer Coml Mtg Inc.	Short-term investment	—	—		—		—		—	US$	5,503		—		—		—		—			—	US$	5,503
	Banc Amer Mtg Secs Inc.	Short-term investment	—	—		—		—		—	US$	4,030		—		—		—		—			—	US$	4,030
	Bank Of Amer Lease Equip Tr	Short-term investment	—	—		—		—		—	US$	4,023		—		—		—		—			—	US$	4,023
	BMW Veh Owner Tr	Short-term investment	—	—		—		—		—	US$	4,978		—		—		—		—			—	US$	4,978
	California Infr + Economic Dev	Short-term investment	—	—		—		—		—	US$	4,298		—		—		—		—			—	US$	4,298
	California Infras + Economic	Short-term investment	—	—		—		—		—	US$	8,383		—		—		—		—			—	US$	8,383
	California Infrastructure Dev	Short-term investment	—	—		—		—		—	US$	7,419		—		—		—		—			—	US$	7,419
	Capital Auto Receivables Asset	Short-term investment	—	—		—		—		—	US$	4,627		—		—		—		—			—	US$	4,627
	Capital One Master Tr	Short-term investment	—	—		—		—		—	US$	3,093		—	US$	3,072	US$	3,093	US$	(21	)		—		—
	Capital One Multi Asset Execut	Short-term investment	—	—		—		—		—	US$	4,957		—		—		—		—			—	US$	4,957
	Capital One Secd Nt Tr	Short-term investment	—	—		—		—		—	US$	5,032		—	US$	5,000	US$	5,032	US$	(32	)		—		—
	Caterpillar Finl Asset Tr	Short-term investment	—	—		—		—		—	US$	10,008		—		—		—		—			—	US$	10,008
	Centex Home Equity Ln Tr	Short-term investment	—	—		—		—		—	US$	3,500		—		—		—		—			—	US$	3,500
	Cit Equip Coll Tr	Short-term investment	—	—		—		—		—	US$	4,999		—		—		—		—			—	US$	4,999
	Citibank Cr Card Issuance Tr	Short-term investment	—	—		—		—		—	US$	4,959		—		—		—		—			—	US$	4,959
	CHN Equip Tr	Short-term investment	—	—		—		—		—	US$	5,000		—		—		—		—			—	US$	5,000
	Comm 2004 Htl 1	Short-term investment	—	—		—		—		—	US$	4,600		—		—		—		—			—	US$	4,600
	Credit Suisse First Boston Mtg	Short-term investment	—	—		—		—		—	US$	5,000		—		—		—		—			—	US$	5,000
	CWABS Inc.	Short-term investment	—	—		—		—		—	US$	5,000		—		—		—		—			—	US$	5,000
	CWABS Inc.	Short-term investment	—	—		—		—		—	US$	3,500		—		—		—		—			—	US$	3,500
	CWALT Inc.	Short-term investment	—	—		—		—		—	US$	4,718		—		—		—		—			—	US$	4,718
	CWABS Inc.	Short-term investment	—	—		—		—		—	US$	3,129		—		—		—		—			—	US$	3,129
	CWABS Inc.	Short-term investment	—	—		—		—		—	US$	4,040		—		—		—		—			—	US$	4,040
	Daimlerchrysler Auto Tr	Short-term investment	—	—		—		—		—	US$	4,991		—		—		—		—			—	US$	4,991
	Daimlerchrysler Auto Tr	Short-term investment	—	—		—		—		—	US$	4,982		—		—		—		—			—	US$	4,982
	Daimlerchrysler Auto Tr	Short-term investment	—	—		—		—		—	US$	4,897		—		—		—		—			—	US$	4,897
	First Union Lehman Bros Mtg Tr	Short-term investment	—	—		—		—		—	US$	4,177		—		—		—		—			—	US$	4,177
	First USA Credit Cr Master Tr	Short-term investment	—	—		—		—		—	US$	5,011		—		—		—		—			—	US$	5,011
	Ford Cr Auto Owner Tr	Short-term investment	—	—		—		—		—	US$	10,999		—		—		—		—			—	US$	10,999
	GE Cap Cr Card Master Nt Tr	Short-term investment	—	—		—		—		—	US$	4,000			US$	4,003	US$	4,000	US$	3			—		—
	Granite Mtgs PLC	Short-term investment	—	—		—		—		—	US$	5,000		—		—		—		—			—	US$	5,000
	GS Mtg Secs Corp.	Short-term investment	—	—		—		—		—	US$	4,000		—		—		—		—			—	US$	4,000
	Harley Davidson Motorcycle Tr	Short-term investment	—	—		—		—		—	US$	4,000		—		—		—		—			—	US$	4,000
	Harley Davidson Motorcycle Tr	Short-term investment	—	—		—		—		—	US$	5,999		—		—		—		—			—	US$	5,999
	Holmes Fing No 8 PLC	Short-term investment	—	—		—		—		—	US$	5,001		—		—		—		—			—	US$	5,001
	Honda Auto Receivables	Short-term investment	—	—		—		—		—	US$	5,000		—		—		—		—			—	US$	5,000
	Hyundai Auto Receivables Tr	Short-term investment	—	—		—		—		—	US$	3,500		—		—		—		—			—	US$	3,500
	Impac Secd Assets Corp.	Short-term investment	—	—		—		—		—	US$	4,000		—		—		—		—			—	US$	4,000
	Monumentl Global Fdg II	Short-term investment	—	—		—		—		—	US$	3,500		—		—		—		—			—	US$	3,500
	Navistar Finl 2003 A Owner Tr	Short-term investment	—	—		—		—		—	US$	4,928		—		—		—		—			—	US$	4,928
	Nissan Auto Receivables	Short-term investment	—	—		—		—		—	US$	7,000		—		—		—		—			—	US$	7,000

(Continued)

- 51 -


					Beginning Balance				Acquisition				Disposal									Ending Balance
																	Carrying		Gain (Loss)					Amount
							Amount				Amount				Amount		Value		on Disposal					(US$ in
	Marketable Securities	Financial Statement		Nature of	Shares/Units		(US$ in		Shares/Units		(US$ in		Shares/Units		(US$ in		(US$ in		(US$ in			Shares/Units		Thousand)
Company Name	Type and Name	Account	Counter-party	Relationship	(Thousand)		Thousand)		(Thousand)		Thousand)		(Thousand)		Thousand)		Thousand)		Thousand)			(Thousand)		(Note 1)
	Nissan Auto Receivables Owner Tr	Short-term investment	—	—		—	$	—		—	US$	4,999		—	$	—	$	—	$	—			—	US$	4,999
	Nissan Auto Receivables Owner	Short-term investment	—	—		—		—		—	US$	4,853		—		—		—		—			—	US$	4,853
	ONYX Accep Owner Tr	Short-term investment	—	—		—		—		—	US$	4,913		—		—		—		—			—	US$	4,913
	Permanent Fing No 1 PLC	Short-term investment	—	—		—		—		—	US$	5,102		—	US$	5,036	US$	5,102	US$	(66	)		—		—
	Providian Gateway Owner Tr	Short-term investment	—	—		—		—		—	US$	4,204		—		—		—		—			—	US$	4,204
	Providian Gateway Owner Tr	Short-term investment	—	—		—		—		—	US$	3,992		—		—		—		—			—	US$	3,992
	Reliant Energy Transition Bd	Short-term investment	—	—		—		—		—	US$	5,185		—		—		—		—			—	US$	5,185
	Residential Asset Mtg Prods	Short-term investment	—	—		—		—		—	US$	3,766		—		—		—		—			—	US$	3,766
	Residential Fdg Mtg Secs I Inc	Short-term investment	—	—		—		—		—	US$	3,947		—		—		—		—			—	US$	3,947
	Sequoia Mtg Tr	Short-term investment	—	—		—		—		—	US$	3,500		—		—		—		—			—	US$	3,500
	Structured Adj Rate Mtg Ln Tr	Short-term investment	—	—		—		—		—	US$	3,058		—		—		—		—			—	US$	3,058
	Toyota Auto Receivables 2003 B	Short-term investment	—	—		—		—		—	US$	4,970		—		—		—		—			—	US$	4,970
	Triad Auto Receivables Tr	Short-term investment	—	—		—		—		—	US$	5,042		—		—		—		—			—	US$	5,042
	TXU Elec Delivery Transition	Short-term investment	—	—		—		—		—	US$	8,009		—		—		—		—			—	US$	8,009
	USAA Auto Owner Tr	Short-term investment	—	—		—		—		—	US$	4,000		—		—		—		—			—	US$	4,000
	Wachovia Auto Owner Tr	Short-term investment	—	—		—		—		—	US$	6,000		—		—		—		—			—	US$	6,000
	Wachovia Auto Owner Tr	Short-term investment	—	—		—		—		—	US$	4,999		—		—		—		—			—	US$	4,999
	WFS Financial Owner Trust	Short-term investment	—	—		—		—		—	US$	5,008		—		—		—		—			—	US$	5,008
	WFS Finl 2002 4 Owner Tr	Short-term investment	—	—		—		—		—	US$	3,904		—		—		—		—			—	US$	3,904
	WFS Finl 2004 2 Owner Tr	Short-term investment	—	—		—		—		—	US$	4,994		—		—		—		—			—	US$	4,994
	WFS Finl 2004 4 Owner Tr	Short-term investment	—	—		—		—		—	US$	5,399		—		—		—		—			—	US	5,399
	Whole Auto Ln Tr	Short-term investment	—	—		—		—		—	US$	5,967		—		—		—		—			—	US$	5,967
	Whole Auto Ln Tr	Short-term investment	—	—		—		—		—	US$	4,000		—		—		—		—			—	US$	4,000
	World Omni Auto Receivables Tr	Short-term investment	—	—		—		—		—	US$	5,963		—		—		—		—			—	US$	5,963
	World Omni Auto Receivables Tr	Short-term investment	—	—		—		—		—	US$	5,000		—	US$	4,986	US$	5,000	US$	(14	)		—		—

	Money market funds	Short-term investment	—	—		—		—		—	US$	21,114		—		—		—		—			—	US$	21,114

InveStar	Common stock
	RichTek Technology Corp.	Short-term investment	—	—		947	US$	121		—		—		1,595	US$	6,783	US$	184	US$	6,598			682	US$	67
	Atheros Communication, Inc.	Short-term investment	—	—		1,205	US$	3,593		—		—		1,205	US$	8,972	US$	3,593	US$	5,379			—		—
	Monolithic Power Systems, Inc.	Short-term investment	—	—		2,521	US$	2,000		—		—		546	US$	4,318	US$	433	US$	3,885			1,975	US$	1,567

InveStar II	Common stock
	RichTek Technology Corp.	Short-term investment	—	—		465	US$	346		—		—		768	US$	3,394	US$	519	US$	2,875			321	US$	184

Note: The ending balance included the recognition of the investment income (loss) by the equity method, the cumulative translation adjustments and the bond premium or discount amortization amount.

- 52 -

TABLE 5

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND AFFILIATES

Prior Transaction of

Types

Nature

Related Counter-party

Purpose

Company

Transaction

Transfer

Price

Other

Name

Property

Date

Amount

Payment Term

Counter-party

Relationship

Owner

Relationship

Date

Amount

Reference

Acquisition

Terms

The Company

Fab. 12

April 21, 2004

1,484,370

By the construction
progress

IDC Taiwan, Inc., Taiwan Branch (U.S.A.)

—

N/A

Public bidding

Manufacturing
purpose

None

Fab. 12

April 21, 2004

420,168

By the construction
progress

CHRIST AG

—

N/A

Public bidding

Manufacturing
purpose

None

Fab. 12

April 22, 2004

224,800

By the construction
progress

Allis Electric Co., Ltd.

—

N/A

Public bidding

Manufacturing
purpose

None

Fab. 12

May 12, 2004

340,307

By the construction
progress

United Industry gas Corp., Ltd.

—

N/A

Public bidding

Manufacturing
purpose

None

Fab. 12

May 12, 2004

116,181

By the construction
progress

United Industry gas Corp., Ltd.

—

N/A

Public bidding

Manufacturing
purpose

None

Fab. 12

May 12, 2004

133,092

By the construction
progress

BOC EDWARDS, CMS

—

N/A

Public bidding

Manufacturing
purpose

None

Fab. 12

June 17, 2004

165,208

By the construction
progress

Organo Corporation

—

N/A

Public bidding

Manufacturing
purpose

None

Fab. 12

July 2, 2004

225,744

By the construction
progress

Marketech International Corp.

—

N/A

Public bidding

Manufacturing
purpose

None

Fab. 12

July 8, 2004

100,767

By the construction
progress

Kanto Chemical Co., Inc.

—

N/A

Public bidding

Manufacturing
purpose

None

Fab. 12

July 8, 2004

466,833

By the construction
progress

United Integrated Services Co., Ltd.

—

N/A

Public bidding

Manufacturing
purpose

None

Fab. 14

August 3, 2004

300,000

By the construction
progress

United Integrated Services Co., Ltd.

—

N/A

Public bidding

Manufacturing
purpose

None

Fab. 12

August 5, 2004

122,969

By the construction
progress

Marketech International Corp.

—

N/A

Public bidding

Manufacturing
purpose

None

Fab. 12

August 5, 2004

185,984

By the construction
progress

Marketech International Corp.

—

N/A

Public bidding

Manufacturing
purpose

None

Fab. 12

August 5, 2004

182,060

By the construction
progress

Marketech International Corp.

—

N/A

Public bidding

Manufacturing
purpose

None

Fab. 12

October 15, 2004

105,299

By the construction
progress

IDC Taiwan, Inc., Taiwan Branch (U.S.A.)

—

N/A

Public bidding

Manufacturing
purpose

None

- 53 -

TABLE 6

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND AFFILIATES

Abnormal

Notes/Accounts

Transaction Details

Transaction

Payable or Receivable

Company

Related

Nature of

Purchase/

% to

Payment

Unit

Payment

Ending

% to

Name

Party

Relationship

Sale

Amount

Total

Terms

Price

Terms

Balance

Total

Note

The Company

TSMC — North America

Subsidiary

Sales

142,271,732

Net 30 days after invoice date

None

15,526,964

Philips and its affiliates

Major shareholder

Sales

5,463,565

Net 30 days after monthly closing

None

581,487

GUC

Investee

Sales

371,546

—

Net 30 days after monthly closing

None

56,436

—

WaferTech

Subsidiary

Purchases

15,203,047

Net 30 days after monthly closing

None

(913,107

)

VIS

Investee

Purchases

9,169,602

Net 30 days after monthly closing

None

(1,533,938

)

SSMC

Investee

Purchases

5,869,123

Net 30 days after monthly closing

None

(207,794

)

- 54 -

TABLE 7

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND AFFILIATES

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
DECEMBER 31, 2004
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Amounts Received

Company

Related

Nature of

Ending

Turnover

Overdue

in Subsequent

Allowance for

Name

Party

Relationship

Balance

Rate

Amount

Action Taken

Period

Bad Debts

The Company

TSMC — North America

Subsidiary

15,526,964

38 days

5,044,202

—

6,013,414

—

TSMC — Shanghai

Subsidiary

1,473,365

(Note)

145,146

Accelerate demand on account receivables

—

Philips and its affiliates

Major shareholder

581,487

49 days

7,136

—

13,726

—

Note: The ending balance is generated mainly from the sales of machinery, so it is not applicable for the calculation of the turnover rate.

- 55 -

TABLE 8

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND AFFILIATES

NAMES, LOCATIONS, AND RELATED INFORMATION OF INVESTEES ON WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCE
DECEMBER 31, 2004
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)


				Original Investment Amount				Balance as of December 31, 2004
										Percentage				Net Income			Investment
				December 31,		December 31,		Shares		of		Carrying Value		(Loss) of the			Gain (Loss)
Investor Company	Investee Company	Location	Main Businesses and Products	2004		2003		(Thousand)		Ownership		(Note 1)		Investee			(Note 2)			Note

The Company	TSMC - North America	San Jose, California, U.S.A.	Sales and marketing of integrated circuits and semiconductor devices	$	333,178	$	333,178		11,000		100	$	502,242	$	120,587		$	112,543		Subsidiary
	TSMC - Europe	Amsterdam, the Netherlands	Marketing activities		15,749		15,749		—		100		25,439		262			262		Subsidiary
	TSMC - Japan	Yokohama, Japan	Marketing activities		83,760		83,760		6		100		102,572		2,919			2,919		Subsidiary
	TSMC - Shanghai	Shanghai, China	Manufacturing and marketing of integrated circuits and semiconductor devices		9,187,962		1,890,952		—		100		8,113,511		(727,036	)		(727,036	)	Subsidiary
	VIS	Hsin-Chu, Taiwan	Research, design, development, manufacture, packaging, testing and sale of memory integrated circuits, LSI, VLSI and related parts		8,119,816		8,119,816		409,532		28		5,401,982		4,706,668			1,329,555		Investee
	TSMC International	Tortola, British Virgin Islands	Providing investment in companies involved in the design, manufacture, and other related business in the semiconductor industry		31,445,780		31,445,780		987,968		100		23,778,997		2,598,162			2,598,162		Subsidiary
	Chi Cherng	Taipei, Taiwan	Investment activities		300,000		300,000		—		36		50,570		21,359			(664	)	Investee
	Hsin Ruey	Taipei, Taiwan	Investment activities		300,000		300,000		—		36		49,823		21,887			(491	)	Investee
	TSMC Partners	Tortola, British Virgin Islands	Investment activities		10,350		10,350		300		100		3,908,356		43,117			43,117		Subsidiary
	SSMC	Singapore	Fabrication and supply of integrated circuits		6,408,190		6,408,190		382		32		3,290,888		2,288,786			732,418		Investee
	Emerging Alliance	Cayman Islands	Investing in new start-up technology companies		1,447,957		1,179,690		—		99		823,232		(97,767	)		(97,278	)	Subsidiary
	GUC	Hsin-Chu, Taiwan	Researching, developing, manufacturing, testing and marketing of integrated circuits		409,920		409,920		39,040		47		391,626		30,424			23,279		Investee
	VisEra	Hsin-Chu, Taiwan	Manufacturing, material wholesaling and retailing of electronic spare parts		51,000		51,000		5,100		25		59,116		35,540			8,885		Investee
	VTAF II	Cayman Islands	Investing in new start-up technology companies		332,412		—		—		98		329,968		18,373			14,648		Subsidiary

Note 1: The treasury stock is deducted from the carrying value.

Note 2: The gains or losses on disposal of the stocks held by subsidiaries (treated as treasury stocks) and the paid-in capital from cash dividend distributed by parent company are excluded.

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TABLE 9

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND AFFILIATES

INFORMATION OF INVESTMENT IN MAINLAND CHINA
DECEMBER 31, 2004
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Accumulated

Outflow of

Investment

Accumulated

Total Amount

from Taiwan as

from Taiwan

Inward

of Paid-in

Investment Flows

as of

Carrying Value

Remittance of

Capital

January 1, 2004

Outflow

December 31,

Percentage of

Investment

as of

Earnings as of

Main Businesses and

(RMB in

Investment

(US$ in

2004 (US$ in

Ownership in

Gain (Loss)

December 31,

Investee Company

Products

Thousand)

Type

Thousand)

Inflow

Thousand)

Investment

(Note 2)

2004

TSMC (Shanghai) Company Limited

Manufacturing and marketing of integrated circuits and semiconductor devices

$9,187,962
(RMB2,284,355)

(Note 1)

$1,890,952
(US$56,000)

$7,297,010
(US$220,000)

$ —

$9,187,962
(US$276,000)

100

(727,036

)

8,113,511

$ —


Accumulated Investment in Mainland	Investment Amounts Authorized by
China as of December 31, 2004	Investment Commission, MOEA	Upper Limit on Investment
(US$ in Thousand)	(US$ in Thousand)	(US$ in Thousand)

$9,187,962 (US$276,000)	$11,841,207 (US$371,000)	$11,841,207 (US$371,000)

Note 1: Direct investment in TSMC (Shanghai) US$276,000 thousand.

Note 2: Amount was recognized based on the audited financial statements.

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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: April 25, 2005	By	/s/ Lora Ho
		Lora Ho
		Vice President & Chief Financial Officer