TSMC Reports Second Quarter EPS of NT$0.96

Total current liabilities were NT$132 billion at the end of the quarter, compared to NT$45 billion at the end of the previous quarter. The increase was mainly due to NT$ 77.5 billion and NT$4.6 billion payables accrued for cash dividends and employee bonuses, respectively.

As a result, net working capital decreased to NT$172 billion with a current ratio of 2.3.



    IV - 2. Receivable/Inventory Days   2Q07       1Q07     2Q06

    Days of Receivable                    44         47       44
    Days of Inventory                     52         52       47


    Receivable/Inventory Days Trend:

Days of receivable were 44 days in 2Q07, compared to 47 days in the previous quarter.

     Days of inventory remained flat at 52 days.



    IV - 3. Debt Service

    (In NT billions)                    2Q07       1Q07     2Q06

    Cash & Marketable Securities       233.1      217.4    211.6
    Interest-Bearing Debt               26.3       26.2     27.2
    Net Cash Reserves                  206.8      191.2    184.4



    Debt Service:

As a result of the free cash flows generated during the quarter, net cash reserves -- defined as the excess of cash and short-term marketable securities over interest-bearing debt -- increased by NT$16 billion to reach NT$207 billion in 2Q07.

    V. Cash Flow & CapEx



    V - 1. Cash Flow Analysis

    (In NT billions)                    2Q07       1Q07     2Q06

    Net Income                          25.5       18.8     34.0
    Depreciation & Amortization         19.6       20.3     17.9
    Other Op Sources/(Uses)            (10.4)      (1.0)    (1.5)
    Total Op Sources/(Uses)             34.7       38.1     50.4

    Capital Expenditure                (25.3)     (14.0)   (21.4)
    Marketable Financial Instruments    15.8        3.5     (7.8)
    Other Investing Sources/(Uses)      (0.7)      (2.9)    (1.1)

    Net Investing Sources/(Uses)       (10.2)     (13.4)   (30.3)

    Repayment of Bonds Payable           0.0       (2.5)     0.0
    Other Financing Sources/(Uses)      (0.5)      (0.3)     0.1
    Net Financing Sources/(Uses)        (0.5)      (2.8)     0.1
    Net Cash Position Changes           24.0       21.9     20.2
    Exchange Rate Changes & Others      (0.9)       0.6     (0.0)
    Ending Cash Balance                163.4      140.3    141.5



    Summary of Cash Flow:

During second quarter of 2007, TSMC generated NT$35 billion in cash from operating activities, mainly from net income of NT$25 billion and depreciation & amortization of NT$20 billion, offset in part by the change in net working capital.

Net cash used in investment activities totaled NT$10 billion, mainly due to capital expenditures of NT$25 billion, partially offset by an NT$16 billion in net proceeds from the disposition of marketable financial instruments.

Net cash used in financing activities was NT$1 billion during the quarter.

As a result, TSMC ended the quarter with a cash balance of NT$163 billion, NT$23 billion higher than in 1Q07.

V - 2. Operating and Free Cash Flows

For the chart of V - 2. Operating and Free Cash Flows, please refer to http://www.tsmc.com/uploadfile/ir/quarterly/index_charts.pdf .

Operating and Free Cash Flows:

TSMC continues to generate strong operating cash flows and free cash flows. Cash flows generated from operating activities were NT$35 billion. Free cash flows, defined as the excess of operating cash flows over capital expenditures, totaled NT$9 billion in 2Q07, compared to NT$24 billion generated in the previous quarter, mainly due to higher level of capital expenditures in 2Q07.



    V - 3. Capital Expenditures

    (In US$ Million)                    2Q07       1Q07      YTD

    TSMC                                 747        419    1,166
    XinTec and GUC                        13          3       16
    TSMC Shanghai & WaferTech              4          2        6
    Other TSMC Subsidiaries                2          0        2
    Total TSMC                           766        424    1,190



    Capital Expenditures:

Capital expenditures for TSMC consolidated group totaled US$766 million during the quarter. Most of the spending was for the purchase of 12-inch production equipment.

For year 2007, total capital expenditures for TSMC consolidated group is expected to be in the range of US$2.6 billion to US$2.8 billion, unchanged from our previous guidance.

    VI. Recap of Recent Important Events & Announcements

    -- TSMC  Announces  Winners  of  Second  TSMC  Outstanding  Student  Research
              Award  (2007/06/29)
        --  TSMC  Announces  Active  Accuracy  Assurance  Initiative  (2007/06/04)
        --  TSMC  Unveils  Reference  Flow  8.0  to  Address  45nm  Design  Challenges
              (2007/06/04)
        --  AMD  Chooses  TSMC  65nm  Process  for  GPU  Product  Line  (2007/05/22)
        --  TSMC  Successfully  Completes  Secondary  Offering  of  240  Million  ADSs
              Priced  at  US$10.68  Per  Share  (2007/05/18)
        --  TSMC  and  Spansion  Sign  Joint  Development  Agreement  to  Expand  MirrorBit
              Technology  Applicability  at  40nm  and  Below  (2007/05/15)
        --  TSMC  Board  Approves  Expansion  of  45  Nanometer  Capacity  (2007/05/08)
        --  TSMC  Shareholders  Approve  NT$3.0  Cash  and  0.5%  Stock  Dividend
              (2007/05/07)

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