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 March 2008

Taiwan Semiconductor Manufacturing Company Ltd.

(Translation of Registrant’s Name Into English)

No. 8, Li-Hsin Rd. 6,
Hsinchu Science Park,
Taiwan
(Address of Principal Executive Offices)

(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)

Form 20-F þ Form 40-F o

(Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)

Yes o No þ

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

TABLE OF CONTENTS


SIGNATURES

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: March 18, 2008	By	/s/ Lora Ho
		Lora Ho
		Vice President & Chief Financial Officer

Taiwan Semiconductor Manufacturing
Company Limited

Financial Statements for the
Years Ended December 31, 2007 and 2006 and
Independent Auditors’ Report

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders
Taiwan Semiconductor Manufacturing Company Limited

We have audited the accompanying balance sheets of Taiwan Semiconductor Manufacturing Company Limited as of December 31, 2007 and 2006, 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 Limited as of December 31, 2007 and 2006, 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, requirements of the Business Accounting Law and Guidelines Governing Business Accounting with respect to financial accounting standards, and accounting principles generally accepted in the Republic of China.

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We have also audited, 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, the consolidated financial statements of Taiwan Semiconductor Manufacturing Company Limited and subsidiaries as of and for the years ended December 31, 2007 and 2006, and have expressed an unqualified opinion on the consolidated financial statements.

January 10, 2008

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.

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Taiwan Semiconductor Manufacturing Company Limited

BALANCE SHEETS
DECEMBER 31, 2007 AND 2006
(In Thousands of New Taiwan Dollars, Except Par Value)


	2007						2006
	Amount			%			Amount			%
ASSETS

CURRENT ASSETS
Cash and cash equivalents (Notes 2 and 4)	$	72,422,102			13		$	100,139,709			17
Financial assets at fair value through profit or loss (Notes 2, 3 and 5)		42,083			—			44,601			—
Available-for-sale financial assets (Notes 2, 3 and 6)		22,267,223			4			25,967,061			5
Held-to-maturity financial assets (Notes 2 and 7)		11,526,946			2			8,510,823			2
Receivables from related parties (Note 24)		26,701,648			5			16,869,509			3
Notes and accounts receivable		17,911,328			3			16,278,164			3
Allowance for doubtful receivables (Notes 2 and 8)		(688,972	)		—			(690,931	)		—
Allowance for sales returns and others (Notes 2 and 8)		(3,856,685	)		—			(2,751,065	)		—
Other receivables from related parties (Note 24)		525,308			—			449,266			—
Other financial assets		331,698			—			653,460			—
Inventories, net (Notes 2 and 9)		20,987,142			4			19,152,214			3
Deferred income tax assets (Notes 2 and 17)		5,268,000			1			7,832,000			1
Prepaid expenses and other current assets		861,465			—			1,221,199			—


Total current assets		174,299,286			32			193,676,010			34


LONG-TERM INVESTMENTS (Notes 2, 3, 6, 7, 10 and 11)
Investments accounted for using equity method		113,048,081			21			101,044,356			18
Available-for-sale financial assets		1,397,186			—			6,647,511			1
Held-to-maturity financial assets		8,697,726			2			28,973,495			5
Financial assets carried at cost		748,160			—			712,843			—


Total long-term investments		123,891,153			23			137,378,205			24


PROPERTY, PLANT AND EQUIPMENT (Notes 2, 12 and 24)
Cost
Buildings		101,907,892			18			96,961,851			17
Machinery and equipment		589,131,625			107			527,850,728			92
Office equipment		9,167,107			2			8,659,225			2

		700,206,624			127			633,471,804			111
Accumulated depreciation		(486,725,019	)		(88	)		(417,467,250	)		(73	)
Advance payments and construction in progress		21,082,953			4			12,230,805			2


Net property, plant and equipment		234,564,558			43			228,235,359			40


INTANGIBLE ASSETS
Goodwill (Note 2)		1,567,756			—			1,567,756			—
Deferred charges, net (Notes 2 and 13)		7,172,413			1			5,593,068			1


Total intangible assets		8,740,169			1			7,160,824			1


OTHER ASSETS
Deferred income tax assets (Notes 2 and 17)		7,241,933			1			5,761,127			1
Refundable deposits		2,741,538			—			1,306,234			—
Others (Note 2)		293,986			—			67,145			—


Total other assets		10,277,457			1			7,134,506			1


TOTAL	$	551,772,623			100		$	573,584,904			100


LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES
Financial liabilities at fair value through profit or loss (Notes 2, 3 and 5)	$	247,646			—		$	10,751			—
Accounts payable		9,485,818			2			6,143,679			1
Payables to related parties (Note 24)		2,999,630			—			3,326,916			1
Income tax payable (Notes 2 and 17)		10,977,963			2			7,850,418			1
Accrued expenses and other current liabilities (Note 15)		14,700,013			3			7,903,867			1
Payables to contractors and equipment suppliers		5,389,740			1			10,669,523			2
Current portion of bonds payable (Note 14)		—			—			7,000,000			1


Total current liabilities		43,800,810			8			42,905,154			7


LONG-TERM LIABILITIES
Bonds payable (Note 14)		12,500,000			3			12,500,000			2
Other long-term payables (Note 15)		1,501,462			—			1,271,896			—
Other payables to related parties (Notes 24 and 26)		—			—			403,375			—


Total long-term liabilities		14,001,462			3			14,175,271			2


OTHER LIABILITIES
Accrued pension cost (Notes 2 and 16)		3,657,679			1			3,530,116			1
Guarantee deposits (Note 26)		2,240,677			—			3,809,961			1
Deferred credits (Notes 2 and 24)		980,593			—			1,183,118			—


Total other liabilities		6,878,949			1			8,523,195			2


Total liabilities		64,681,221			12			65,603,620			11


CAPITAL STOCK — NT$10 PAR VALUE
Authorized: 28,050,000 thousand shares in 2007
27,050,000 thousand shares in 2006
Issued: 26,427,104 thousand shares in 2007
25,829,688 thousand shares in 2006		264,271,037			48			258,296,879			45


CAPITAL SURPLUS (Notes 2 and 19)		53,732,682			10			54,107,498			10


RETAINED EARNINGS (Note 19)
Appropriated as legal capital reserve		56,406,684			10			43,705,711			8
Appropriated as special capital reserve		629,550			—			640,742			—
Unappropriated earnings		161,828,337			29			152,778,079			26


		218,864,571			39			197,124,532			34


OTHERS (Notes 2, 3, 21 and 23)
Cumulative translation adjustments		(1,072,853	)		—			(1,191,165	)		—
Unrealized gains on financial instruments		680,997			—			561,615			—
Treasury stock: 834,096 thousand shares in 2007
33,926 thousand shares in 2006		(49,385,032	)		(9	)		(918,075	)		—

		(49,776,888	)		(9	)		(1,547,625	)		—


Total shareholders’ equity		487,091,402			88			507,981,284			89


TOTAL	$	551,772,623			100		$	573,584,904			100

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

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Taiwan Semiconductor Manufacturing Company Limited

STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)


	2007				2006
	Amount		%		Amount		%

GROSS SALES (Notes 2 and 24)	$	319,167,299			$	319,210,148

SALES RETURNS AND ALLOWANCES (Note 2)		5,519,655				5,328,513


NET SALES		313,647,644		100		313,881,635		100

COST OF SALES (Notes 18 and 24)		176,223,224		56		164,163,235		52


GROSS PROFIT		137,424,420		44		149,718,400		48

UNREALIZED GROSS PROFIT FROM AFFILIATES (Note 2)		265,106		—		—		—


REALIZED GROSS PROFIT		137,159,314		44		149,718,400		48


OPERATING EXPENSES (Notes 18 and 24)
Research and development		15,913,834		5		14,601,385		5
General and administrative		7,660,776		3		7,190,422		2
Marketing		1,332,657		—		1,626,734		1


Total operating expenses		24,907,267		8		23,418,541		8


INCOME FROM OPERATIONS		112,252,047		36		126,299,859		40


NON-OPERATING INCOME AND GAINS
Equity in earnings of equity method investees, net (Notes 2 and 10)		5,468,230		2		5,526,727		2
Interest income (Note 2)		2,634,636		1		3,382,868		1
Settlement income (Note 26)		985,114		—		967,506		1
Technical service income (Notes 24 and 26)		712,162		—		670,297		—
Rental income (Note 24)		368,748		—		224,281		—
Gain on disposal of property, plant and equipment and other assets (Notes 2 and 24)		305,201		—		596,459		—
Foreign exchange gain, net (Note 2)		71,128		—		—		—
Valuation gain on financial instruments, net (Notes 2, 5 and 23)		—		—		33,850		—
Others (Note 24)		289,479		—		194,739		—


Total non-operating income and gains		10,834,698		3		11,596,727		4


NON-OPERATING EXPENSES AND LOSSES
Provision for litigation loss (Note 26j)		1,008,635		—		—		—
Interest expense		584,736		—		661,200		—
Loss on settlement and disposal of financial instruments, net (Notes 2, 5 and 23)		413,809		—		1,623,882		1
(Continued)

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Taiwan Semiconductor Manufacturing Company Limited

STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)


	2007						2006
	Amount			%			Amount			%

Valuation loss on financial instruments, net (Notes 2, 5, and 23)	$	239,413			—		$	—			—
Loss on disposal of property, plant and equipment and other assets (Note 2)		4,814			—			240,985			—
Foreign exchange loss, net (Note 2)		—			—			412,726			—
Others		83,932			—			151,294			—


Total non-operating expenses and losses		2,335,339			—			3,090,087			1


INCOME BEFORE INCOME TAX		120,751,406			39			134,806,499			43

INCOME TAX EXPENSE (Notes 2 and 17)		(11,574,313	)		(4	)		(7,550,582	)		(2	)


NET INCOME BEFORE CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES		109,177,093			35			127,255,917			41

CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES, NET OF TAX BENEFIT OF NT$82,062 THOUSAND (Note 3)		—			—			(246,186	)		—


NET INCOME	$	109,177,093			35		$	127,009,731			41


	2007				2006
	Before		After		Before		After
	Income		Income		Income		Income
	Tax		Tax		Tax		Tax

EARNINGS PER SHARE (NT$, Note 22)
Basic earnings per share	$	4.58	$	4.14	$	5.10	$	4.82

Diluted earnings per share	$	4.58	$	4.14	$	5.09	$	4.81

Certain pro forma information (after income tax) is shown as follows, based on the assumption that the Company’s stock held by subsidiaries is treated as available-for-sale financial assets instead of treasury stock (Notes 2 and 21):


	2007		2006

NET INCOME BEFORE CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES	$	109,278,855	$	127,338,237


NET INCOME	$	109,278,855	$	127,092,051


EARNINGS PER SHARE (NT$)
Basic earnings per share	$	4.14	$	4.81

Diluted earnings per share	$	4.14	$	4.81


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

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Taiwan Semiconductor Manufacturing Company Limited

STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
(In Thousands of New Taiwan Dollars, Except Dividends Per Share)


																			Others
								Retained Earnings														Unrealized
	Capital Stock							Legal		Special									Cumulative			Gain on					Total
	Shares (in				Capital			Capital		Capital			Unappropriated						Translation			Financial		Treasury			Shareholders’
	Thousands)		Amount		Surplus			Reserve		Reserve			Earnings			Total			Adjustments			Instruments		Stock			Equity

BALANCE, JANUARY 1, 2006		24,730,025	$	247,300,246	$	57,117,886		$	34,348,208	$	2,226,427		$	106,196,399		$	142,771,034		$	(640,742	)	$	—	$	(918,075	)	$	445,630,349

Appropriations of prior year’s earnings
Legal capital reserve		—		—		—			9,357,503		—			(9,357,503	)		—			—			—		—			—
Reversal of special capital reserve		—		—		—			—		(1,585,685	)		1,585,685			—			—			—		—			—
Bonus to employees — in cash		—		—		—			—		—			(3,432,129	)		(3,432,129	)		—			—		—			(3,432,129	)
Bonus to employees — in stock		343,213		3,432,129		—			—		—			(3,432,129	)		(3,432,129	)		—			—		—			—
Cash dividends to shareholders — NT$2.50 per share		—		—		—			—		—			(61,825,061	)		(61,825,061	)		—			—		—			(61,825,061	)
Stock dividends to shareholders — NT$0.15 per share		370,950		3,709,504		—			—		—			(3,709,504	)		(3,709,504	)		—			—		—			—
Bonus to directors and supervisors		—		—		—			—		—			(257,410	)		(257,410	)		—			—		—			(257,410	)
Capital surplus transferred to capital stock		370,950		3,709,504		(3,709,504	)		—		—			—			—			—			—		—			—
Net income in 2006		—		—		—			—		—			127,009,731			127,009,731			—			—		—			127,009,731
Adjustment arising from changes in percentage of ownership in equity method investees		—		—		187,095			—		—			—			—			—			—		—			187,095
Translation adjustments		—		—		—			—		—			—			—			(550,423	)		—		—			(550,423	)
Issuance of stock from exercising stock options		14,550		145,496		429,701			—		—			—			—			—			—		—			575,197
Cash dividends received by subsidiaries from the Company		—		—		82,320			—		—			—			—			—			—		—			82,320
Valuation gain on available-for-sale financial assets		—		—		—			—		—			—			—			—			242,248		—			242,248
Equity in the valuation gain on available-for-sale financial assets held by equity method investees		—		—		—			—		—			—			—			—			319,367		—			319,367


BALANCE, DECEMBER 31, 2006		25,829,688		258,296,879		54,107,498			43,705,711		640,742			152,778,079			197,124,532			(1,191,165	)		561,615		(918,075	)		507,981,284

Appropriations of prior year’s earnings
Legal capital reserve		—		—		—			12,700,973		—			(12,700,973	)		—			—			—		—			—
Reversal of special capital reserve		—		—		—			—		(11,192	)		11,192			—			—			—		—			—
Bonus to employees — in cash		—		—		—			—		—			(4,572,798	)		(4,572,798	)		—			—		—			(4,572,798	)
Bonus to employees — in stock		457,280		4,572,798		—			—		—			(4,572,798	)		(4,572,798	)		—			—		—			—
Cash dividends to shareholders — NT$3.00 per share		—		—		—			—		—			(77,489,064	)		(77,489,064	)		—			—		—			(77,489,064	)
Stock dividends to shareholders — NT$0.02 per share		51,659		516,594		—			—		—			(516,594	)		(516,594	)		—			—		—			—
Bonus to directors and supervisors		—		—		—			—		—			(285,800	)		(285,800	)		—			—		—			(285,800	)
Capital surplus transferred to capital stock		77,489		774,891		(774,891	)		—		—			—			—			—			—		—			—
Net income in 2007		—		—		—			—		—			109,177,093			109,177,093			—			—		—			109,177,093
Adjustment arising from changes in percentage of ownership in equity method investees		—		—		(28,639	)		—		—			—			—			—			—		—			(28,639	)
Translation adjustments		—		—		—			—		—			—			—			118,312			—		—			118,312
Issuance of stock from exercising stock options		10,988		109,875		326,952			—		—			—			—			—			—		—			436,827
Cash dividends received by subsidiaries from the Company		—		—		101,762			—		—			—			—			—			—		—			101,762
Valuation gain on available-for-sale financial assets		—		—		—			—		—			—			—			—			24,325		—			24,325
Equity in the valuation gain on available-for-sale financial assets held by equity method investees		—		—		—			—		—			—			—			—			95,057		—			95,057
Treasury stock repurchased by the Company		—		—		—			—		—			—			—			—			—		(48,466,957	)		(48,466,957	)


BALANCE, DECEMBER 31, 2007		26,427,104	$	264,271,037	$	53,732,682		$	56,406,684	$	629,550		$	161,828,337		$	218,864,571		$	(1,072,853	)	$	680,997	$	(49,385,032	)	$	487,091,402

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

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Taiwan Semiconductor Manufacturing Company Limited

STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
(In Thousands of New Taiwan Dollars)


	2007			2006
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	109,177,093		$	127,009,731
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		72,820,579			66,699,455
Unrealized gross profit from affiliates		265,106			—
Amortization of premium/discount of financial assets		(117,159	)		2,399
Loss (gain) on disposal of available-for-sale financial assets, net		(271,094	)		485
Equity in earnings of equity method investees, net		(5,468,230	)		(5,526,727	)
Dividends received from equity method investees		677,147			626,367
Gain on disposal of investments accounted for using equity method investees, net		—			(26,031	)
Gain on disposal of financial assets carried at cost, net		—			(212	)
Loss on impairment of financial assets carried at cost		—			36,608
Gain on disposal of property, plant and equipment and other assets, net		(300,387	)		(355,474	)
Deferred income tax		1,083,194			179,828
Loss on idle assets		—			44,072
Changes in operating assets and liabilities:
Decrease (increase) in:
Financial assets and liabilities at fair value through profit or loss		239,413			1,112,776
Receivables from related parties		(9,832,139	)		4,181,095
Notes and accounts receivable		(1,633,164	)		4,313,654
Allowance for doubtful receivables		(1,959	)		(285,413	)
Allowance for sales returns and others		1,105,620			(1,518,904	)
Other receivables from related parties		(76,042	)		985,419
Other financial assets		321,762			(99,109	)
Inventories		(1,834,928	)		(2,894,259	)
Prepaid expenses and other current assets		359,734			(49,426	)
Increase (decrease) in:
Accounts payable		3,342,139			(1,908,427	)
Payables to related parties		(327,286	)		(612,381	)
Income tax payable		3,127,545			4,034,530
Accrued expenses and other current liabilities		1,259,738			157,262
Accrued pension cost		127,563			68,724
Deferred credits		72,747			(95,745	)


Net cash provided by operating activities		174,116,992			196,080,297


CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions of:
Available-for-sale financial assets		(9,547,253	)		(98,679,832	)
Held-to-maturity financial assets		—			(18,554,027	)
Investments accounted for using equity method		(7,358,685	)		(5,515,466	)
Financial assets carried at cost		(36,333	)		(12,940	)
Property, plant and equipment		(81,303,047	)		(77,215,811	)

(Continued)

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Taiwan Semiconductor Manufacturing Company Limited

STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
(In Thousands of New Taiwan Dollars)


	2007			2006
Proceeds from disposal or redemption of:
Available-for-sale financial assets	$	18,844,520		$	73,212,019
Held-to-maturity financial assets		17,325,120			10,410,000
Financial assets carried at cost		—			71,191
Investments accounted for using equity method		—			37,946
Property, plant and equipment and other assets		54,509			1,277,729
Proceeds from return of capital by investees		433,551			162,354
Increase in deferred charges		(2,685,610	)		(1,272,355	)
Increase in refundable deposits		(1,435,304	)		(1,222,592	)
Increase in other asset		(232,575	)		—


Net cash used in investing activities		(65,941,107	)		(117,301,784	)


CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of bonds payable		(7,000,000	)		—
Increase (decrease) in guarantee deposits		(1,569,284	)		917,016
Cash dividends		(77,489,064	)		(61,825,061	)
Cash bonus paid to employees		(4,572,798	)		(3,432,129	)
Bonus to directors and supervisors		(285,800	)		(257,410	)
Repurchase of treasury stock		(45,413,373	)		—
Proceeds from exercise of employee stock options		436,827			575,197


Net cash used in financing activities		(135,893,492	)		(64,022,387	)


NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(27,717,607	)		14,756,126

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR		100,139,709			85,383,583


CASH AND CASH EQUIVALENTS, END OF YEAR	$	72,422,102		$	100,139,709


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid	$	661,200		$	661,200

Income tax paid	$	7,330,401		$	3,189,528


INVESTING AND FINANCING ACTIVITIES AFFECTING BOTH CASH AND NON-CASH ITEMS
Acquisition of property, plant, and equipment	$	76,023,264		$	79,026,104
Decrease (increase) in payables to contractors and equipment suppliers		5,279,783			(1,810,293	)

Cash paid	$	81,303,047		$	77,215,811


Repurchase of treasury stock	$	48,466,957		$	—
Increase in accrued expenses and other current liabilities		(3,053,584	)		—

Cash paid	$	45,413,373		$	—

(Continued)

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Taiwan Semiconductor Manufacturing Company Limited

STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
(In Thousands of New Taiwan Dollars)


	2007		2006
NON-CASH INVESTING AND FINANCING ACTIVITIES
Current portion of bonds payable	$	—	$	7,000,000

Current portion of other payables to related parties (under payables to related parties)	$	—	$	688,591

Current portion of other long-term payable (under accrued expenses and other current liabilities)	$	3,673,182	$	617,892

Transfer of available-for-sale financial assets and other net assets to investments accounted for using equity method (Note 6)	$	—	$	39,687,637


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

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Taiwan Semiconductor Manufacturing Company Limited

NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)


1.		GENERAL

		Taiwan Semiconductor Manufacturing Company Limited (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.

		As of December 31, 2007 and 2006, the Company had 20,555 and 20,202 employees, respectively.


2.		SIGNIFICANT ACCOUNTING POLICIES

		The financial statements are presented in conformity with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers, Business Accounting Law, Guidelines Governing Business Accounting, 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, law 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 assets held for trading purposes and assets expected to be converted to cash, sold or consumed within one year from the balance sheet date. Current liabilities are obligations incurred for trading purposes and obligations expected to be settled 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

		Repurchase agreements collateralized by government bonds, asset-backed commercial papers and corporate notes acquired with maturities of less than three months from the date of purchase are classified as cash equivalents. The carrying amount approximates fair value.

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		Financial Assets/Liabilities at Fair Value Through Profit or Loss

		Derivatives that do not meet the criteria for hedge accounting are initially recognized at fair value, with transaction costs expensed as incurred. The derivatives are remeasured at fair value subsequently with changes in fair value recognized in earnings. A regular way purchase or sale of financial assets is accounted for using settlement date accounting.

		Fair value is estimated using valuation techniques incorporating estimates and assumptions that are consistent with prevailing market conditions. When the fair value is positive, the derivative is recognized as a financial asset; when the fair value is negative, the derivative is recognized as a financial liability.

		Available-for-Sale Financial Assets

		Available-for-sale financial assets are initially recognized at fair value plus transaction costs that are directly attributable to the acquisition. Changes in fair value from subsequent remeasurement are reported as a separate component of shareholders’ equity. The corresponding accumulated gains or losses are recognized in earnings when the financial asset is derecognized from the balance sheet. A regular way purchase or sale of financial assets is accounted for using settlement date accounting.

		The fair value of structured time deposits is estimated using valuation techniques. Fair value of open-end mutual funds is determined using the net assets value at the end of the year. For debt securities, fair value is determined using the average of bid and asked prices at the end of the year.

		If there is objective evidence which indicates that a financial asset is impaired, a loss is recognized. If, in a subsequent period, the amount of the impairment loss decreases, for debt securities, the amount of the decrease is recognized in earnings, provided that the decrease is clearly attributable to an event which occurred after the impairment loss was recognized.

		Held-to-maturity Financial Assets

		Financial instruments for which the Company has a positive intention and ability to hold to maturity are categorized as held-to-maturity financial assets and are carried at amortized cost under the effective interest method except for structured time deposits which are carried at acquisition cost. Those financial assets are initially recognized at fair value plus transaction costs that are directly attributable to the acquisition. Gains or losses are recognized at the time of derecognition, impairment or amortization. A regular way purchase or sale of financial assets is accounted for using settlement date accounting.

		If there is objective evidence which indicates that a financial asset is impaired, a loss is recognized. If, in a subsequent period, the amount of the impairment loss decreases and the decrease is clearly attributable to an event which occurred after the impairment loss was recognized, the previously recognized impairment loss is reversed to the extent of the decrease. The reversal may not result in a carrying amount that exceeds the amortized cost that would have been determined as if no impairment loss had been recognized.

		Allowance for Doubtful Receivables

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

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		Revenue Recognition and Allowance for Sales Returns and Others

		The Company recognizes revenue when evidence of an arrangement exists, the rewards of ownership and significant risk of the goods has been transferred to the buyer, price is fixed or determinable, and collectibility is reasonably assured. Provisions for estimated sales returns and others are generally recorded in the period the related revenue is recognized, based on historical experience, management’s judgment, and any known factors that would significantly affect the allowance.

		Sales prices are determined using 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 sales occur for some customers. Since the receivables from sales are collectible within one year and such transactions are frequent, fair value of the receivables is equivalent to the nominal amount of the cash to be 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 balance sheet date. Market value represents replacement cost for raw materials, supplies and spare parts and net realizable value for work in process and finished goods. The Company assesses the impact of changing technology on its inventories on hand and writes off inventories that are considered obsolete. Year-end inventories are evaluated for estimated excess quantities and obsolescence based on a demand forecast within a specific time horizon, which is generally 180 days or less. Estimated losses on scrap and slow-moving items are recognized and included in the allowance for losses.

		Investments Accounted for Using Equity Method

		Investments in companies wherein the Company exercises significant influence over the operating and financial policy decisions are accounted for using the equity method. The Company’s share of the net income or net loss of an investee is recognized in the “equity in earnings/losses of equity method investees, net” account. Prior to January 1, 2006, the difference, if any, between the cost of investment and the Company’s proportionate share of the investee’s equity was amortized by the straight-line method over five years, with the amortization recorded in the “equity in earnings/losses of equity method investees, net” account. Effective January 1, 2006, pursuant to the revised Statement of Financial Accounting Standards No. 5, “Long-term Investments Accounted for Using the Equity Method” (SFAS No. 5), the cost of an investment shall be analyzed and the cost of investment in excess of the fair value of identifiable net assets acquired, representing goodwill, shall not be amortized and instead shall be tested for impairment annually. If the fair value of identifiable net assets acquired exceeds the cost of investment, the excess shall be proportionately allocated as reductions to fair values of non-current assets (except for financial assets other than investments accounted for using the equity method and deferred income tax assets). The accounting treatment for the investment premiums paid before January 1, 2006 is the same as that for goodwill which is no longer being amortized; while investment discounts continue to be amortized over the remaining periods. When an indication of impairment is identified, the carrying amount of the investment is reduced, with the related impairment loss recognized in earnings.

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

		Gains or losses on sales from the Company to equity method investees are deferred in proportion to the Company’s ownership percentages in the investees until such gains or losses are realized through transactions with third parties. The entire amount of the gains or losses on sales to investees over which the Company has a controlling interest is deferred until such gains or losses are realized through subsequent sales of the related products to third parties. Gains or losses on sales from equity method investees to the Company are deferred in proportion to the Company’s ownership percentages in the investees until they are

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		realized through transactions with third parties. Gains or losses on sales between equity method investees over each of which the Company has control are deferred in proportion to the Company’s weighted-average ownership percentage in the investee which records gains or losses. In transactions between equity method investees over either or both of which the Company has no control, gains or losses on sales are deferred in proportion to the multiplication of the Company’s weighted-average ownership percentages in the investees. Such gains or losses are recorded until they are realized through transactions with third parties.

		If an investee’s functional currency is a foreign currency, differences will result from the translation of the investee’s financial statements into the reporting currency of the Company. Such differences are charged or credited to cumulative translation adjustments, a separate component of shareholders’ equity.

		Financial Assets Carried at Cost

		Investments for which the Company does not exercise significant influence and that do not have a quoted market price in an active market and whose fair value cannot be reliably measured, such as non-publicly traded stocks and mutual funds, are carried at their original cost. The costs of non-publicly traded stocks and mutual funds are determined using the weighted-average method. If there is objective evidence which indicates that a financial asset is impaired, a loss is recognized. A subsequent reversal of such impairment loss is not allowed.

		Cash dividends are recognized as investment income upon resolution of shareholders of an investee but are accounted for as a reduction to the original cost of investment if such dividends are declared on the earnings of the investee attributable to the period prior to the purchase of the investment. Stock dividends are recorded as an increase in the number of shares held and do not affect investment income. The cost per share is recalculated based on the new total number of shares. Any difference between the initial carrying amount of a debt security and the amount due at maturity is amortized using the effective interest method, with the amortization recognized in earnings.

		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 indication of impairment is identified, any excess of the carrying amount of an asset over its recoverable amount is recognized as a loss. If the recoverable amount increases in a subsequent period, the amount previously recognized as impairment would be reversed and recognized as a gain. However, the adjusted amount may not exceed the carrying amount that would have been determined, net of depreciation, as if no impairment loss had been recognized. Significant additions, renewals and betterments incurred during the construction period are capitalized. Maintenance and repairs are expensed as incurred.

		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 and assets leased to others, the related cost and accumulated depreciation are deducted from the corresponding accounts, with any gain or loss recorded as non-operating gains or losses in the period of sale or disposal.

		When property, plant and equipment are determined to be idle or useless, they are transferred to idle assets at the lower of the net realizable value or carrying amount. Depreciation on the idle assets is provided continuously, and the idle assets are tested for impairment on a periodical basis.

		Intangible Assets

		Goodwill represents the excess of the consideration paid for acquisition over the fair value of identifiable net assets acquired. Prior to January 1, 2006, goodwill was amortized using the straight-line method over the estimated life of 10 years. Effective January 1, 2006, pursuant to the newly revised Statement of Financial Accounting Standards No. 25, “Business Combinations — Accounting Treatment under Purchase Method” (SFAS No. 25), goodwill is no longer amortized and instead is tested for impairment annually. If

- 13 -

		an event occurs or circumstances change which indicated that the fair value of goodwill is more likely than not below its carrying amount, an impairment loss is recognized. A subsequent reversal of such impairment loss is not allowed.

		Deferred charges consist of technology license fees, software and system design costs and other charges. The amounts are amortized over the following periods: 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 years. When an indication of impairment is identified, any excess of the carrying amount of an asset over its recoverable amount is recognized as a loss. If the recoverable amount increases in a subsequent period, the previously recognized impairment loss would be reversed and recognized as a gain. However, the adjusted amount may not exceed the carrying amount that would have been determined, net of amortization, as if no impairment loss had been recognized.

		Effective January 1, 2007, the Company adopted the newly released Statement of Financial Accounting Standards No. 37, “Accounting for Intangible Assets”. The Company had reassessed the useful lives and the amortization method of its recognized intangible assets at the effective date. Expenditures related to research activities and those related to development activities that do not meet the criteria for capitalization are charged to expenses when incurred.

		Pension Costs

		For employees who participate in defined contribution pension plans, pension costs are recorded based on the actual contributions made to employees’ individual pension accounts during their service periods. For employees who participate in defined benefit pension plans, pension costs are recorded based on actuarial calculations.

		Income Tax

		The Company applies intra-period and inter-period allocations for its income tax whereby (1) a portion of current year’s income tax expense is allocated to the cumulative effect of changes in accounting principles; and (2) 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 credits arising from purchases of machinery, equipment and technology, research and development expenditures, personnel training expenditures, 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.

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

		The R.O.C. government enacted the Alternative Minimum Tax Act (the AMT Act), which became effective on January 1, 2006. The alternative minimum tax (AMT) imposed under the AMT Act is a supplemental tax levied at a rate of 10% which is payable if the income tax payable determined pursuant to the Income Tax Law is below the minimum amount prescribed under the AMT Act. The taxable income for calculating the AMT includes most of the tax-exempt income under various laws and statutes. The Company has considered the impact of the AMT Act in the determination of its tax liabilities.

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		Stock-based Compensation

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

		Treasury Stock

		Treasury stock is stated at cost and shown as a deduction in 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 on a pro rata basis. 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 transactions and to retained earnings for any remaining amount. The Company’s stock held by its subsidiaries is treated as treasury stock and reclassified from investments accounted for using equity method to treasury stock. The gains resulted from disposal of the treasury stock held by subsidiaries and cash dividends received by subsidiaries from the Company are recorded under capital surplus — treasury stock transactions.

		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 earnings.

		At the balance sheet date, monetary assets and liabilities denominated in foreign currencies are revalued at prevailing exchange rates with the resulting gains or losses recognized in earnings.

		Recent Accounting Pronouncements

		In March 2007, the Accounting Research and Development Foundation of the R.O.C. issued an interpretation that requires companies to record the bonus paid to directors, supervisors and employees as an expense rather than an appropriation of earnings. This interpretation should be applied to financial statements for fiscal years beginning on or after January 1, 2008.

		The Accounting Research and Development Foundation of the R.O.C. issued Statement of Financial Accounting Standards No. 39, “Accounting for Share-based Payment” (SFAS No. 39) in August 2007, which requires companies to record share-based payment transactions in the financial statements at fair value. SFAS No.39 should be applied to financial statements for fiscal years beginning on or after January 1, 2008.

		The Accounting Research and Development Foundation of the R.O.C. revised Statement of Financial Accounting Standards No. 10, “Accounting for Inventories” (SFAS No. 10) in November 2007, which requires inventories to be stated at the lower of cost or net realizable value item by item. Inventories are recorded by the specific identification method, first-in, first-out method or weighted average method. The last-in, first-out method is no longer permitted. The revised SFAS No. 10 should be applied to financial statements for the fiscal years beginning on or after January 1, 2009. Early adoption is permitted.


3.		ACCOUNTING CHANGES

On January 1, 2006, the Company adopted the newly released Statements of Financial Accounting Standards No. 34, “Financial Instruments: Recognition and Measurement” (SFAS No. 34) and No. 36, “Financial Instruments: Disclosure and Presentation.”

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		The Company had categorized its financial assets and liabilities upon initial adoption of the newly released SFASs. The adjustments made to the carrying amounts of the financial instruments categorized as financial assets or liabilities at fair value through profit or loss were included in the cumulative effect of changes in accounting principles; the adjustments made to the carrying amounts of those categorized as available-for-sale financial assets were recognized as adjustments to shareholders’ equity.

		The effect of adopting the newly released SFASs is summarized as follows:


	Recognized as Cumulative Effect of Changes in Accounting Principles (Net of Tax)			Recognized as a Separate Component of Shareholders’ Equity

Financial assets or liabilities at fair value through profit or loss	$	(246,186	)	$	—
Available-for-sale financial assets		—			—


	$	(246,186	)	$	—

		The adoption of the newly released SFASs resulted in an increase in net income before cumulative effect of changes in accounting principles of NT$280,036 thousand, an increase in net income of NT$33,850 thousand, and an increase in basic earnings per share (after income tax) of NT$0.001, for the year ended December 31, 2006.

		Effective January 1, 2006, the Company adopted the newly revised SFAS No. 5 and SFAS No. 25, which prescribe that investment premiums, representing goodwill, be assessed for impairment at least on an annual basis instead of being amortized. Such a change in accounting principle did not have a material effect on the Company’s financial statements as of and for the year ended December 31, 2006.


4.		CASH AND CASH EQUIVALENTS


	December 31
	2007		2006

Cash and deposits in banks	$	61,832,143	$	68,898,115
Repurchase agreements collateralized by government bonds		10,067,843		31,241,594
Asset-backed commercial papers		522,116		—


	$	72,422,102	$	100,139,709

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5.		FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS


	December 31
	2007		2006
Derivatives — financial assets

Forward exchange contracts	$	6,516	$	—
Cross currency swap contracts		35,567		44,601


	$	42,083	$	44,601


Derivatives — financial liabilities

Forward exchange contracts	$	183,916	$	—
Cross currency swap contracts		63,730		10,751


	$	247,646	$	10,751

		The Company entered into derivative contracts during the years ended December 31, 2007 and 2006 to manage exposures due to fluctuations of foreign exchange rates. The derivative contracts entered into by the Company did not meet the criteria for hedge accounting prescribed by SFAS No. 34. Therefore, the Company did not apply hedge accounting treatment for its derivative contracts.

		Outstanding forward exchange contracts as of December 31, 2007:


		Contract
		Amount
	Maturity Date	(in Thousands)
December 31, 2007

Sell US$/buy NT$	January 2008	US$100,000
Sell EUR/buy NT$	February 2008 to July 2008	EUR 48,000

Outstanding cross currency swap contracts as of December 31, 2007 and 2006:


	Contract	Range of	Range of
	Amount	Interest Rates	Interest Rates
Maturity Date	(in Thousands)	Paid	Received

December 31, 2007

January 2008 to February 2008	US$975,000	3.53%-5.60%	0.02%-3.01%

December 31, 2006

January 2007 to February 2007	US$820,000	3.19%-5.91%	0.90%-3.25%

For the years ended December 31, 2007 and 2006, net losses arising from derivative financial instruments were NT$924,316 thousand (including realized settlement losses of NT$684,903 thousand and valuation losses of NT$239,413 thousand) and NT$1,615,796 thousand (including realized settlement losses of NT$1,649,646 thousand and valuation gains of NT$33,850 thousand), respectively.

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6.		AVAILABLE-FOR-SALE FINANCIAL ASSETS


	December 31
	2007			2006

Open-end mutual funds	$	14,966,675		$	25,967,061
Government bonds		4,146,082			1,998,067
Corporate bonds		4,052,242			4,150,202
Structured time deposits		499,410			499,242

		23,664,409			32,614,572
Current portion		(22,267,223	)		(25,967,061	)


	$	1,397,186		$	6,647,511

		In 2004, the Company entered into investment management agreements with three well-known financial institutions (fund managers) to manage its investment portfolios. In accordance with the investment guidelines and terms specified in these agreements, the securities invested by the fund managers cannot be below a pre-defined credit rating. In the second half year of 2006, the Company transferred investment portfolios managed by the fund managers of US$1,277,789 thousand to TSMC Global Ltd. (TSMC-Global), a subsidiary of TSMC. The transferred investment portfolios held by TSMC Global are still being managed by the same fund managers in accordance with the aforementioned investment guidelines and terms.

		Structured time deposits categorized as available-for-sale financial assets consisted of the following:


	Principal		Carrying
	Amount		Amount		Interest Rate			Maturity Date

December 31, 2007

Step-up callable deposits
Domestic deposits	$	500,000	$	499,410		1.76	%	March 2008


December 31, 2006

Step-up callable deposits
Domestic deposits	$	500,000	$	499,242		1.76	%	March 2008

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


7.		HELD-TO-MATURITY FINANCIAL ASSETS


	December 31
	2007			2006

Corporate bonds	$	10,900,247		$	13,742,541
Government bonds		7,824,425			12,070,657
Structured time deposits		1,500,000			11,671,120

		20,224,672			37,484,318
Current portion		(11,526,946	)		(8,510,823	)


	$	8,697,726		$	28,973,495

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As of December 31, 2007 and 2006, structured time deposits categorized as held-to-maturity financial assets consisted of the following:


	Principal		Interest		Range of
	Amount		Receivable		Interest Rates	Maturity Date
December 31, 2007

Step-up callable deposits
Domestic deposits	$	1,500,000	$	5,585	1.77%-1.83%	April 2008 to October 2008


December 31, 2006

Step-up callable deposits
Domestic deposits	$	4,500,000	$	13,928	1.40%-1.83%	June 2007 to October 2008
Callable range accrual deposits
Domestic deposits		3,911,520		4,808	(See below)	September 2009 to December 2009
Foreign deposits		3,259,600		4,998	(See below)	October 2009 to January 2010


	$	11,671,120	$	23,734

The amount of interest earned from the callable range accrual deposits is based on a pre-defined range as determined by the 3-month or 6-month LIBOR plus an agreed upon rate ranging between 2.10% and 3.45%. Based on the terms of the contracts, if the 3-month or 6-month LIBOR moves outside of the pre-defined range, the interest paid to the Company is at a fixed rate between zero and 1.5%. Under the terms of the contracts, the bank has the right to cancel the contracts prior to the maturity date.

As of December 31, 2007, no structured time deposit was resided in banks located in foreign countries. As of December 31, 2006, the principal of the deposits that resided in banks located in Hong Kong and Singapore amounted to US$80,000 thousand and US$20,000 thousand, respectively.


8.		ALLOWANCES FOR DOUBTFUL RECEIVABLES, SALES RETURNS AND OTHERS

Movements of the allowance for doubtful receivables were as follows:


	Years Ended December 31
	2007			2006

Balance, beginning of year	$	690,931		$	976,344
Write-off		(1,959	)		(285,413	)


Balance, end of year	$	688,972		$	690,931

Movements of the allowance for sales returns and others were as follows:


	Years Ended December 31
	2007			2006

Balance, beginning of year	$	2,751,065		$	4,269,969
Provision		5,519,655			5,328,513
Write-off		(4,414,035	)		(6,847,417	)


Balance, end of year	$	3,856,685		$	2,751,065

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9.		INVENTORIES, NET


	December 31
	2007			2006

Finished goods	$	3,811,212		$	4,754,342
Work in process		15,867,005			13,251,174
Raw materials		1,428,592			1,515,996
Supplies and spare parts		612,128			421,648

		21,718,937			19,943,160
Allowance for losses		(731,795	)		(790,946	)


	$	20,987,142		$	19,152,214


10.		INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD


	December 31
	2007				2006
			% of				% of
	Carrying		Owner-		Carrying		Owner-
	Amount		ship		Amount		ship

TSMC Global (Note 6)	$	44,204,188		100	$	42,496,592		100
TSMC International Investment Ltd. (TSMC International)		27,688,565		100		26,593,749		100
Vanguard International Semiconductor Corporation (VIS)		11,024,568		36		5,741,870		27
Systems on Silicon Manufacturing Company Pte Ltd. (SSMC)		9,092,741		39		7,960,869		39
TSMC (Shanghai) Company Limited (TSMC-Shanghai)		8,622,715		100		9,027,984		100
TSMC Partners, Ltd. (TSMC Partners)		4,734,180		100		4,433,819		100
TSMC North America (TSMC-North America)		2,255,647		100		2,014,990		100
Xintec Inc. (Xintec)		1,501,521		43		—		—
VentureTech Alliance Fund II, L.P. (VTAF II)		1,170,841		98		733,130		98
VentureTech Alliance Fund III, L.P. (VTAF III)		906,536		98		228,005		98
Global UniChip Corporation (GUC)		823,552		37		629,755		38
Emerging Alliance Fund, L.P. (Emerging Alliance)		467,873		99		793,585		99
Chi Cherng Investment Co., Ltd. (Chi Cherng)		173,429		36		115,507		36
Hsin Ruey Investment Co., Ltd. (Hsin Ruey)		171,658		36		114,297		36
TSMC Japan Limited (TSMC-Japan)		104,929		100		95,757		100
Taiwan Semiconductor Manufacturing Company Europe B.V. (TSMC-Europe)		88,702		100		49,741		100
TSMC Korea Limited (TSMC-Korea)		16,436		100		14,706		100


	$	113,048,081			$	101,044,356

		In November 2006, the Company acquired 81 thousand shares in SSMC for SGD115,227 thousand from EDB Investments Pte Ltd. under a Shareholders Agreement. After the acquisition, the number of SSMC shares owned by the Company increased to 463 thousand and the Company’s percentage of ownership increased from 32% to 39%.

		In January 2007, the Company acquired 90,526 thousand shares in Xintec, representing 43% of its total common shares, for NT$1,357,890 thousand.

- 20 -

		In August 2007, the Company acquired additional 169,600 thousand shares in VIS for NT$4,927,865 thousand; after the acquisition, the Company’s percentage of ownership in VIS increased from 27% to 36%.

		For the years ended December 31, 2007 and 2006, net equity in earnings of equity method investees of NT$5,468,230 thousand and NT$5,526,727 thousand were recognized, respectively. The related equity in earnings of equity method investees were determined based on the audited financial statements of the investees for the same periods as the Company.

		As of December 31, 2007 and 2006, fair values of publicly traded stocks in investments accounted for using equity method were NT$24,319,275 thousand and NT$17,044,040 thousand, respectively.

		Movements of the difference between the cost of investments and the Company’s share in investees’ net assets allocated to depreciable assets for the years ended December 31, 2007 and 2006 were as follows:


	Year Ended December 31
	2007			2006

Balance, beginning of year	$	943,277		$	(17,764	)
Addition		2,081,282			1,010,846
Reduction		(347,171	)		(49,805	)


Balance, end of year	$	2,677,388		$	943,277

Movements of the aforementioned difference allocated to goodwill for the years ended December 31, 2007 and 2006 were as follows:


	Year Ended December 31
	2007		2006

Balance, beginning of year	$	213,984	$	—
Addition		773,365		213,984


Balance, end of year	$	987,349	$	213,984


11.		FINANCIAL ASSETS CARRIED AT COST


	December 31
	2007		2006

Non-publicly traded stocks	$	364,913	$	364,913
Mutual funds		383,247		347,930


	$	748,160	$	712,843

- 21 -


12.		PROPERTY, PLANT AND EQUIPMENT


	Year Ended December 31, 2007
	Balance,
	Beginning of										Balance,
	Year		Additions		Disposals			Reclassification			End of Year
Cost
Buildings	$	96,961,851	$	5,025,296	$	(31,835	)	$	(47,420	)	$	101,907,892
Machinery and equipment		527,850,728		61,793,498		(487,386	)		(25,215	)		589,131,625
Office equipment		8,659,225		936,003		(328,555	)		(99,566	)		9,167,107

		633,471,804	$	67,754,797	$	(847,776	)	$	(172,201	)		700,206,624

Accumulated depreciation
Buildings		49,595,917		7,783,832	$	(30,957	)		1,036			57,349,828
Machinery and equipment		361,401,800		61,492,223		(459,113	)		(156,839	)		422,278,071
Office equipment		6,469,533		958,315		(328,363	)		(2,365	)		7,097,120

		417,467,250	$	70,234,370	$	(818,433	)	$	(158,168	)		486,725,019

Advance payments and construction in progress		12,230,805	$	8,268,467	$	—		$	583,681			21,082,953


Net	$	228,235,359									$	234,564,558


	Year Ended December 31, 2006
	Balance,
	Beginning of		Additions									Balance,
	Year		(Deduction)			Disposals			Reclassification			End of Year
Cost
Buildings	$	90,769,622	$	7,160,975		$	(964,370	)	$	(4,376	)	$	96,961,851
Machinery and equipment		459,850,773		73,454,632			(5,218,678	)		(235,999	)		527,850,728
Office equipment		7,850,035		1,046,724			(196,984	)		(40,550	)		8,659,225

		558,470,430	$	81,662,331		$	(6,380,032	)	$	(280,925	)		633,471,804

Accumulated depreciation
Buildings		42,902,526		7,441,573			(748,011	)		(171	)		49,595,917
Machinery and equipment		310,626,317		55,880,978			(4,869,587	)		(235,908	)		361,401,800
Office equipment		5,662,986		1,009,599			(196,629	)		(6,423	)		6,469,533

		359,191,829	$	64,332,150		$	(5,814,227	)	$	(242,502	)		417,467,250

Advance payments and construction in progress		14,867,032	$	(2,636,227	)	$	—		$	—			12,230,805


Net	$	214,145,633										$	228,235,359

No interest was capitalized during the years ended December 31, 2007 and 2006.


13.		DEFERRED CHARGES, NET


	Year Ended December 31, 2007
	Balance,
	Beginning of													Balance,
	Year		Additions		Amortization			Deduction			Reclassification			End of Year

Technology license fees	$	4,038,551	$	3,263,950	$	(1,656,113	)	$	—		$	(296,451	)	$	5,349,937
Software and system design costs		1,517,575		1,181,579		(820,183	)		(51	)		(569,648	)		1,309,272
Others		36,942		283,990		(104,179	)		—			296,451			513,204


	$	5,593,068	$	4,729,519	$	(2,580,475	)	$	(51	)	$	(569,648	)	$	7,172,413

- 22 -


	Year Ended December 31, 2006
	Balance,
	Beginning of											Balance,
	Year		Additions		Amortization			Deduction		Reclassification		End of Year

Technology license fees	$	4,985,806	$	373,054	$	(1,320,309	)	$	—	$	—	$	4,038,551
Software and system design costs		1,623,276		899,301		(1,006,141	)		—		1,139		1,517,575
Others		72,062		—		(35,120	)		—		—		36,942


	$	6,681,144	$	1,272,355	$	(2,361,570	)	$	—	$	1,139	$	5,593,068


14.		BONDS PAYABLE


	December 31
	2007		2006
Domestic unsecured bonds:
Issued in December 2000 and repayable in December 2007, 5.36% interest payable annually	$	—	$	4,500,000
Issued in January 2002 and repayable in January 2007, 2009 and 2012 in three installments, 2.60%, 2.75% and 3.00% interest payable annually, respectively		12,500,000		15,000,000

		12,500,000		19,500,000
Current portion		—		(7,000,000	)


	$	12,500,000	$	12,500,000

As of December 31, 2007, future principal repayments for the Company’s bonds were as follows:


Year of Repayment	Amount

2009	$	8,000,000
2012		4,500,000


	$	12,500,000


15.		OTHER LONG-TERM PAYABLES

Most of the payables resulted from license agreements for certain semiconductor-related patents. As of December 31, 2007, future payments for other long-term payables were as follows:


Year of Payment	Amount

2008	$	3,673,182
2009		582,027
2010		497,676
2011		421,759

		5,174,644
Current portion (classified under accrued expenses and other current liabilities)		(3,673,182	)


	$	1,501,462

- 23 -


16.		PENSION PLANS

		The Labor Pension Act (the Act) became effective on July 1, 2005. The employees who were subject to the Labor Standards Law prior to July 1, 2005 were allowed to choose to be subject to the pension mechanism under the Act with their seniority as of July 1, 2005 retained or continue to be subject to the pension mechanism under the Labor Standards Law. Employees who joined the Company after July 1, 2005 can only be subject to the pension mechanism under the Act.

		The pension mechanism under the Act is deemed a defined contribution plan. Pursuant to the Act, the Company has made monthly contributions equal to 6% of each employee’s monthly salary to employees’ pension accounts starting from July 1, 2005, and recognized pension costs of NT$616,548 thousand and NT$618,975 thousand for the years ended December 31, 2007 and 2006, respectively.

		The Company has a defined benefit plan under the Labor Standards Law that provides benefits based on an employee’s length of service and average monthly salary for the six-month period prior to retirement. The Company contributes an amount equal to 2% of salaries paid each month to a pension fund (the Fund), which is administered by the pension fund monitoring committee (the Committee) and deposited in the Committee’s name in the Bank of Taiwan (originally the Central Trust of China, which was merged into the Bank of Taiwan on July 1, 2007).

		Pension information on the defined benefit plan is summarized as follows:

Components of net periodic pension cost for the year


	2007			2006

Service cost	$	184,232		$	178,432
Interest cost		155,297			163,740
Projected return on plan assets		(50,326	)		(49,115	)
Amortization		35,596			12,339


Net periodic pension cost	$	324,799		$	305,396

Reconciliation of funded status of the plan and accrued pension cost at December 31, 2007 and 2006


	2007			2006

Benefit obligation
Vested benefit obligation	$	120,146		$	102,920
Nonvested benefit obligation		3,450,818			3,873,239

Accumulated benefit obligation		3,570,964			3,976,159
Additional benefits based on future salaries		2,428,786			2,964,923

Projected benefit obligation		5,999,750			6,941,082
Fair value of plan assets		(2,199,189	)		(1,945,572	)

Funded status		3,800,561			4,995,510
Unrecognized net transition obligation		(107,891	)		(116,191	)
Unrecognized net loss		(34,991	)		(1,349,203	)


Accrued pension cost	$	3,657,679		$	3,530,116


Vested benefits	$	125,443		$	106,645

- 24 -


	2007			2006

c. Actuarial assumptions at December 31, 2007 and 2006

Discount rate used in determining present values		2.75	%		2.25	%
Future salary increase rate		3.00	%		3.00	%
Expected rate of return on plan assets		3.00	%		2.50	%

d. Contributions to the Fund for the year	$	200,732		$	230,577


e. Payments from the Fund for the year	$	15,003		$	10,823


17.		INCOME TAX

A reconciliation of income tax expense based on “income before income tax” at statutory rate and income tax currently payable was as follows:


	Years Ended December 31
	2007			2006

Income tax expense based on “income before income tax” at statutory rate (25%)	$	30,187,852		$	33,701,625
Tax effect of the following:
Tax-exempt income		(7,602,675	)		(12,274,041	)
Temporary and permanent differences		(789,073	)		(2,080,110	)
Cumulative effect of changes in accounting principles		—			(82,062	)
Additional tax at 10% on unappropriated earnings		2,686,561			1,156,130
Income tax credits used		(13,740,683	)		(12,715,377	)


Income tax currently payable	$	10,741,982		$	7,706,165

Income tax expense consisted of the following:


	Years Ended December 31
	2007			2006

Income tax currently payable	$	10,741,982		$	7,706,165
Other income tax adjustments		(250,863	)		(335,411	)
Net change in deferred income tax assets
Investment tax credits		5,120,137			3,908,879
Temporary differences		(302,847	)		(1,522,734	)
Valuation allowance		(3,734,096	)		(2,206,317	)


Income tax expense	$	11,574,313		$	7,550,582

- 25 -

Net deferred income tax assets consisted of the following:


	December 31
	2007			2006

Current deferred income tax assets
Investment tax credits	$	5,268,000		$	7,832,000

Noncurrent deferred income tax assets, net
Investment tax credits	$	9,568,755		$	12,124,892
Temporary differences		1,143,311			840,464
Valuation allowance		(3,470,133	)		(7,204,229	)


	$	7,241,933		$	5,761,127

	d.		Integrated income tax information:

			The balance of the imputation credit account as of December 31, 2007 and 2006 was NT$3,012,848 thousand and NT$828,612 thousand, respectively.

			The estimated creditable ratio for distribution of earnings of 2007 and 2006 was 1.86% and 5.23%, respectively.

			The imputation credit allocated to shareholders is based on its balance as of the date of dividend distribution. The estimated creditable ratio may change when the actual distribution of imputation credit is made.

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

As of December 31, 2007, investment tax credits consisted of the following:


		Total		Remaining
		Creditable		Creditable		Expiry
Law/Statute	Item	Amount		Amount		Year

Statute for Upgrading Industries	Purchase of machinery and equipment	$	238,012	$	—	2007
			3,177,254		—	2008
			6,029,704		—	2009
			6,508,673		6,508,673	2010
			3,696,375		3,696,375	2011


		$	19,650,018	$	10,205,048


Statute for Upgrading Industries	Research and development expenditures	$	1,245,142	$	—	2007
			2,560,454		—	2008
			1,486,845		1,029,080	2009
			1,781,376		1,781,376	2010
			1,654,065		1,654,065	2011


		$	8,727,882	$	4,464,521

(Continued)

- 26 -


		Total		Remaining
		Creditable		Creditable		Expiry
Law/Statute	Item	Amount		Amount		Year

Statute for Upgrading Industries	Personnel training expenditures	$	16,197	$	—	2007
			16,155		—	2008
			46,130		46,130	2009
			41,252		41,252	2010


		$	119,734	$	87,382


Statute for Upgrading Industries	Investments in important technology-based enterprises	$	79,804	$	79,804	2010

(Concluded)

The profits generated from the following projects are exempt from income tax for a four- or five-year period:


		Tax-exemption Period

Construction of Fab 12 — module A		2004 to 2007
Construction of Fab 14 — module A		2006 to 2010
Construction of Fab 14 — module B		2007 to 2011

The tax authorities have examined income tax returns of the Company through 2004.


18.		LABOR COST, DEPRECIATION AND AMORTIZATION


	Year Ended December 31, 2007
			Classified as
	Classified as		Operating
	Cost of Sales		Expenses		Total
Labor cost
Salary	$	9,201,605	$	4,392,243	$	13,593,848
Labor and health insurance		608,748		337,124		945,872
Pension		605,879		335,596		941,475
Meal		434,106		167,962		602,068
Welfare		183,463		110,894		294,357
Others		175,781		12,011		187,792


	$	11,209,582	$	5,355,830	$	16,565,412


Depreciation	$	66,375,152	$	3,816,399	$	70,191,551

Amortization	$	1,801,193	$	778,185	$	2,579,378

- 27 -


	Year Ended December 31, 2006
			Classified as
	Classified as		Operating
	Cost of Sales		Expenses		Total
Labor cost
Salary	$	9,877,603	$	4,172,915	$	14,050,518
Labor and health insurance		686,125		352,085		1,038,210
Pension		610,873		313,416		924,289
Meal		449,505		159,302		608,807
Welfare		184,560		99,323		283,883
Others		225,615		19,784		245,399


	$	12,034,281	$	5,116,825	$	17,151,106


Depreciation	$	61,028,727	$	3,296,764	$	64,325,491

Amortization	$	1,430,069	$	918,011	$	2,348,080


19.		SHAREHOLDERS’ EQUITY

		As of December 31, 2007, 1,132,867 thousand ADSs of the Company were traded on the NYSE. The number of common shares represented by the ADSs is 5,664,337 thousand (one ADS represents five common shares).

		Capital surplus can only be used to offset a deficit under the Company Law. However, the capital surplus generated from donations and the excess of the issuance price over the par value of capital stock (including the stock issued for new capital, mergers, convertible bonds and the surplus from treasury stock transactions) may be appropriated as stock dividends, which are limited to a certain percentage of the Company’s paid-in capital.

		Capital surplus consisted of the following:


	December 31
	2007		2006

From merger	$	24,003,546	$	24,003,546
Additional paid-in capital		19,526,492		19,974,431
From convertible bonds		9,360,424		9,360,424
From treasury stock transactions		490,950		389,188
From long-term investments		351,215		379,854
Donations		55		55


	$	53,732,682	$	54,107,498

The Company’s Articles of Incorporation provide that, when allocating the net profits for each fiscal year, the Company shall first offset its losses in previous years and then set aside the following items accordingly:

	a.		Legal capital reserve at 10% of the profits left over, until the accumulated legal capital reserve has equaled the Company’s paid-in capital;

	b.		Special capital reserve in accordance with relevant laws or regulations or as requested by the authorities in charge;

- 28 -

	c.		Bonus to directors and bonus to employees of the Company of not more than 0.3% and not less than 1% of the remainder, respectively. Directors who also serve as executive officers of the Company are not entitled to receive the bonus to directors. The Company may issue stock bonuses to employees of an affiliated company meeting the conditions set by the Board of Directors or, by the person duly authorized by the Board of Directors;

	d.		Any balance left over shall be allocated according to the resolution of the shareholders’ meeting.

		The Company’s Articles of Incorporation also provide that profits of the Company may be distributed by way of cash dividend and/or stock dividend. However, 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 that the ratio for stock dividend shall not exceed 50% of the total distribution.

		Any appropriations of the profits are recorded in the year of shareholder approval and given effect to in the financial statements of that year.

		The Company no longer has supervisors since January 1, 2007. The required duties of supervisors are being fulfilled by the Audit Committee.

		The appropriation for legal capital reserve shall be made until the reserve equals the Company’s paid-in capital. The reserve may be used to offset a deficit, or be distributed as dividends and bonuses for the portion in excess of 50% of the paid-in capital if the Company has no unappropriated earnings and the reserve balance has exceeded 50% of the Company’s paid-in capital. The Company Law also prescribes that, when the reserve has reached 50% of the Company’s paid-in capital, up to 50% of the reserve may be transferred to capital.

		A special capital reserve equivalent to the net debit balance of the other components of shareholders’ equity (for example, cumulative translation adjustments and unrealized loss on financial assets, but excluding treasury stock) shall be made from unappropriated earnings pursuant to existing regulations promulgated by the Securities and Futures Bureau (SFB). Any special reserve appropriated may be reversed to the extent that the net debit balance reverses.

		The appropriations of earnings for 2006 and 2005 had been approved in the shareholders’ meetings held on May 7, 2007 and May 16, 2006, respectively. The appropriations and dividends per share were as follows:


							Dividends Per Share
	Appropriation of Earnings						(NT$)
	For Fiscal			For Fiscal			For Fiscal		For Fiscal
	Year 2006			Year 2005			Year 2006		Year 2005

Legal capital reserve	$	12,700,973		$	9,357,503
Special capital reserve		(11,192	)		(1,585,685	)
Bonus to employees — in cash		4,572,798			3,432,129
Bonus to employees — in stock		4,572,798			3,432,129
Cash dividends to shareholders		77,489,064			61,825,061		$	3.00	$	2.50
Stock dividends to shareholders		516,594			3,709,504			0.02		0.15
Bonus to directors and supervisors		285,800			257,410


	$	100,126,835		$	80,428,051

The shareholders’ meeting held on May 7, 2007 also resolved to distribute stock dividends out of capital surplus in the amount of NT$774,891 thousand.

- 29 -

		The amounts of the appropriations of earnings for 2006 and 2005 were consistent with the resolutions of the meetings of the Board of Directors held on February 6, 2007 and February 14, 2006, respectively. If the above bonus to employees, directors and supervisors had been paid entirely in cash and charged to earnings of 2006 and 2005, the basic earnings per share (after income tax) for the years ended December 31, 2006 and 2005 shown in the respective financial statements would have decreased from NT$4.93 to NT$4.56 and NT$3.79 to NT$3.50, respectively. The shares distributed as a bonus to employees represented 1.77 % and 1.39% of the Company’s total outstanding common shares as of December 31, 2006 and 2005, respectively.

		As of January 10, 2008, the Board of Directors had not resolved the appropriation for earnings of 2007.

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

		Under the Integrated Income Tax System that became effective on January 1, 1998, 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.


20.		STOCK-BASED COMPENSATION PLANS

		The Company’s Employee Stock Option Plans under the 2004 Plan, 2003 Plan and 2002 Plan were approved by the SFB on January 6, 2005, October 29, 2003 and June 25, 2002, respectively. The maximum number of options authorized to be granted under the 2004 Plan, 2003 Plan and 2002 Plan was 11,000 thousand, 120,000 thousand and 100,000 thousand, respectively, with each option eligible to subscribe for one common share when exercisable. The options 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 options of all 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 plans, the options are granted at an exercise price equal to the closing price of the Company’s common shares listed on the TSE on the grant date.

		Options of the plans that had never been granted or had been granted but were subsequently cancelled had expired as of December 31, 2007.

		Information about outstanding options for the years ended December 31, 2007 and 2006 was as follows:


				Weighted-
				Average
	Number of			Exercise
	Options			Price
	(in Thousands)			(NT$)
Year ended December 31, 2007

Balance, beginning of year		52,814		$	37.9
Options granted		1,094			37.9
Options exercised		(10,988	)		39.8
Options cancelled		(1,045	)		45.9


Balance, end of year		41,875			37.4

- 30 -


				Weighted-
				Average
	Number of			Exercise
	Options			Price
	(in Thousands)			(NT$)
Year ended December 31, 2006

Balance, beginning of year		67,758		$	39.4
Options granted		2,758			40.1
Options exercised		(14,550	)		40.1
Options cancelled		(3,152	)		43.7


Balance, end of year		52,814			39.6

		The numbers of outstanding options and exercise prices have been adjusted to reflect the appropriations of earnings in accordance with the plans. The options granted were the result of the aforementioned adjustment.

		As of December 31, 2007, information about outstanding and exercisable options was as follows:


	Options Outstanding						Options Exercisable
			Weighted-		Weighted-				Weighted-
			average		average				average
Range of	Number of		Remaining		Exercise		Number of		Exercise
Exercise	Options (in		Contractual		Price		Options (in		Price
Price (NT$)	Thousands)		Life (Years)		(NT$)		Thousands)		(NT$)

$25.9-$36.4		28,527		5.16	$	33.1		28,528	$	33.1
$38.9-$51.3		13,348		6.89		46.6		6,838		46.4


		41,875				37.4		35,366		35.6

No compensation cost was recognized under the intrinsic value method for the years ended December 31, 2007 and 2006. Had the Company used the fair value based method to evaluate the options granted after January 1, 2004, using the Black-Scholes model, the assumptions and pro forma results of the Company would have been as follows:


	Years Ended December 31
	2007		2006
Assumptions:
Expected dividend yield	1.00%-3.44%		1.00%-3.44%
Expected volatility	43.77%-46.15%		43.77%-46.15%
Risk free interest rate	3.07%-3.85%		3.07%-3.85%
Expected life	5 years		5 years
Net income:
Net income as reported	$109,177,093		$127,009,731
Pro forma net income	109,095,663		126,889,209
Earnings per share (EPS) — after income tax (NT$):
Basic EPS as reported	$	4.14	$	4.82
Pro forma basic EPS		4.14		4.81
Diluted EPS as reported		4.14		4.81
Pro forma diluted EPS		4.14		4.81

- 31 -


21.		TREASURY STOCK

(Shares in Thousands)


	Beginning				Stock		Ending
	Shares		Addition		Dividends		Shares

Year ended December 31, 2007

Parent company stock held by subsidiaries		33,926		—		170		34,096
Repurchase under share buyback plan		—		800,000		—		800,000


		33,926		800,000		170		834,096

Year ended December 31, 2006

Parent company stock held by subsidiaries		32,938		—		988		33,926

		As of December 31, 2007 and 2006, the book value of the treasury stock was NT$49,385,032 thousand and NT$918,075 thousand; the market value was NT$51,713,947 thousand and NT$2,290,026 thousand, respectively. The Company’s common shares held by subsidiaries were treated as treasury stock and the holders are entitled to the rights of shareholders, with the exception of voting rights.

		The Company held a meeting of the Board of Directors and approved a share buyback plan to repurchase the Company’s common shares up to 800,000 shares listed on the TSE during the period from November 14, 2007 to January 13, 2008 for the buyback price in the range from NT$43.2 to NT$94.2. As of December 31, 2007, the Company had repurchased 800,000 thousand common shares for a total cost of NT$48,466,957 thousand. All the treasury stock repurchased will be retired in 2008.


22.		EARNINGS PER SHARE


	Years Ended December 31
	2007				2006
	Before		After		Before			After
	Income Tax		Income Tax		Income Tax			Income Tax
Basic EPS (NT$)
Income before cumulative effect of changes in accounting principles	$	4.58	$	4.14	$	5.11		$	4.83
Cumulative effect of changes in accounting principles		—		—		(0.01	)		(0.01	)


Income for the year	$	4.58	$	4.14	$	5.10		$	4.82


Diluted EPS (NT$)
Income before cumulative effect of changes in accounting principles	$	4.58	$	4.14	$	5.10		$	4.82
Cumulative effect of changes in accounting principles		—		—		(0.01	)		(0.01	)


Income for the year	$	4.58	$	4.14	$	5.09		$	4.81

- 32 -

EPS is computed as follows:


					Number of		EPS (NT$)
	Amounts (Numerator)				Shares		Before		After
	Before		After		(Denominator)		Income		Income
	Income Tax		Income Tax		(in Thousands)		Tax		Tax
Year ended December 31, 2007

Basic EPS
Income available to common shareholders	$	120,751,406	$	109,177,093		26,346,582	$	4.58	$	4.14

Effect of dilutive potential common stock — stock options		—		—		21,668


Diluted EPS
Income available to common shareholders (including effect of dilutive potential common stock)	$	120,751,406	$	109,177,093		26,368,250	$	4.58	$	4.14


Year ended December 31, 2006

Basic EPS
Income available to common shareholders	$	134,478,251	$	127,009,731		26,374,757	$	5.10	$	4.82

Effect of dilutive potential common stock — stock options		—		—		24,101


Diluted EPS
Income available to common shareholders (including effect of dilutive potential common stock)	$	134,478,251	$	127,009,731		26,398,858	$	5.09	$	4.81


23.		DISCLOSURES FOR FINANCIAL INSTRUMENTS

Fair values of financial instruments were as follows:


	December 31
	2007				2006
	Carrying				Carrying
	Amount		Fair Value		Amount		Fair Value
Assets

Financial assets at fair value through profit or loss	$	42,083	$	42,083	$	44,601	$	44,601
Available-for-sale financial assets		23,664,409		23,664,409		32,614,572		32,614,572
Held-to-maturity financial assets		20,224,672		20,192,188		37,484,318		37,375,517

Liabilities

Financial liabilities at fair value through profit or loss	$	247,646	$	247,646	$	10,751	$	10,751
Bonds payable (including current portion)		12,500,000		12,669,987		19,500,000		19,817,149
Other long-term payables (including current portion)		5,174,644		5,174,644		2,981,754		2,981,754

Methods and assumptions used in the estimation of fair values of financial instruments

	1)		The aforementioned financial instruments do not include cash and cash equivalents, receivables, other financial assets, payables, and payables to contractors and equipment suppliers. The carrying amounts of these financial instruments approximate their fair values due to their short maturities.

	2)		Fair values of financial assets/liabilities at fair value through profit or loss were estimated using valuation techniques incorporating estimates and assumptions that were consistent with prevailing market conditions.

- 33 -

	3)		Fair values of available-for-sale and held-to-maturity financial assets were based on their quoted market prices; except for structured time deposits of which the fair values were estimated using valuation techniques.

	4)		Fair value of bonds payable was based on their quoted market price.

	5)		Fair value of other long-term payables was based on the present value of expected cash flows, which approximates their carrying amount.

	c.		The changes in fair value during the years ended December 31, 2007 and 2006 of derivatives estimated using valuation techniques were recognized as losses of NT$239,413 thousand and gains of NT$33,850 thousand, respectively.

	d.		As of December 31, 2007 and 2006, financial assets exposed to fair value interest rate risk were NT$43,931,164 thousand and NT$70,143,491 thousand, respectively; financial liabilities exposed to fair value interest rate risk were NT$247,646 thousand and NT$10,751 thousand, respectively, and financial assets exposed to cash flow interest rate risk were nil and NT$7,171,120 thousand, respectively.

	e.		Movements of the unrealized gain on financial instruments for the years ended December 31, 2007 and 2006 were as follows:


	Year Ended December 31, 2007
				Equity in
	Valuation			Valuation
	Gain			Gain on
	on Available-			Available-for-
	for-sale			sale Financial
	Financial			Assets Held by
	Assets			Investees		Total

Balance, beginning of year	$	242,248		$	319,367	$	561,615
Recognized directly in shareholders’ equity		295,419			95,057		390,476
Removed from shareholders’ equity and recognized in earnings		(271,094	)		—		(271,094	)


Balance, end of year	$	266,573		$	414,424	$	680,997


	Year Ended December 31, 2006
			Equity in
	Valuation		Valuation
	Gain		Gain on
	on Available-		Available-for-
	for-sale		sale Financial
	Financial		Assets Held by
	Assets		Investees		Total

Balance, beginning of year	$	—	$	—	$	—
Recognized directly in shareholders’ equity		241,763		319,367		561,130
Removed from shareholders’ equity and recognized in losses		485		—		485


Balance, end of year	$	242,248	$	319,367	$	561,615

- 34 -

Information about financial risks

	1)		Market risk. The derivative financial instruments categorized as financial assets/liabilities at fair value through profit or loss are mainly used to hedge the exchange rate fluctuations of foreign-currency assets and liabilities; therefore, the market risk of derivatives will be offset by the foreign exchange risk of these hedged items. Available-for-sale financial assets held by the Company are mainly fixed-interest-rate debt securities; therefore, the fluctuations in market interest rates will result in changes in fair values of these debt securities.

	2)		Credit risk. Credit risk represents the potential loss that would be incurred by the Company if the counter-parties or third-parties breached contracts. Financial instruments with positive fair values at the balance sheet date are evaluated for credit risk. The counter-parties or third-parties to the foregoing financial instruments are reputable financial institutions, business organizations, and government agencies. Management believes that the Company’s exposure to default by those parties is low.

	3)		Liquidity risk. The Company has sufficient operating capital to meet cash needs upon settlement of derivative financial instruments and bonds payable. Therefore, the liquidity risk is low.

	4)		Cash flow interest rate risk. The Company mainly invests in fixed-interest-rate debt securities. Therefore, cash flows are not expected to fluctuate significantly due to changes in market interest rates.


24.		RELATED PARTY TRANSACTIONS

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

	a.		Philips, one of the major shareholders of the Company, which has become a non-related party since March 2007.

	b.		Subsidiaries TSMC-North America TSMC-Europe TSMC-Japan TSMC-Shanghai TSMC-Korea

	c.		Investees GUC (with a controlling interest) VIS (accounted for using equity method) SSMC (accounted for using equity method)

	d.		Indirect subsidiaries WaferTech, LLC (WaferTech) TSMC Technology, Inc. (TSMC Technology) TSMC Design Technology Canada, Inc. (TSMC Canada)

	e.		Indirect investee

			VisEra Technology Company, Ltd. (VisEra), an indirect investee accounted for using equity method.

- 35 -

	f.		Others

			Related parties over which the Company has control or exercises significant influence but with which the Company had no material transactions.

Transactions with the aforementioned parties, other than those disclosed in other notes, are summarized as follows:


	2007				2006
	Amount		%		Amount		%
For the year

Sales
TSMC-North America	$	192,846,641		61	$	190,459,073		60
Philips		—		—		4,024,990		1
Others		1,072,708		—		972,872		—


	$	193,919,349		61	$	195,456,935		61


Purchases
WaferTech	$	8,774,750		18	$	12,530,552		27
TSMC-Shanghai		5,828,541		12		4,405,843		10
SSMC		5,468,410		11		6,820,632		15
VIS		4,188,107		9		3,911,838		8
Others		1,028		—		—		—


	$	24,260,836		50	$	27,668,865		60


Manufacturing expenses
VisEra	$	39,078		—	$	—		—
Philips		—		—		755,904		1


	$	39,078		—	$	755,904		1


Marketing expenses — commission
TSMC-Europe	$	316,748		24	$	236,454		15
TSMC-Japan		220,858		16		254,758		16
TSMC-Korea		26,818		2		9,981		—


	$	564,424		42	$	501,193		31


General and administrative expenses — rental
GUC	$	6,139		—	$	14,606		—


Research and development expenses
TSMC Technology (primarily consulting fees)	$	354,423		2	$	37,559		—
TSMC Canada (primarily consulting fees)		129,665		1		—		—
GUC		56,887		1		39,421		—
Others		44,168		—		—		—


	$	585,143		4	$	76,980		—

- 36 -


	2007				2006
	Amount		%		Amount		%

Sales of property, plant and equipment
TSMC-Shanghai	$	3,295		6	$	401,561		44
WaferTech		546		1		—		—


	$	3,841		7	$	401,561		44


Non-operating income and gains
VIS (primarily technical service income, see Note 26h)	$	346,260		3	$	261,237		2
TSMC-Shanghai (primarily technical service income)		338,038		3		278,295		2
VisEra (primarily rental income)		321,799		3		246,242		2
SSMC (primarily technical service income, see Note 26e)		290,586		3		314,953		3
Others		1,731		—		—		—


	$	1,298,414		12	$	1,100,727		9


As of December 31

Receivables
TSMC-North America	$	26,626,880		100	$	16,461,956		97
Philips		—		—		250,919		2
Others		74,768		—		156,634		1


	$	26,701,648		100	$	16,869,509		100


Other receivables
TSMC-Shanghai	$	151,037		29	$	123,853		28
VIS		118,749		22		121,911		27
TSMC-North America		98,885		19		59,547		13
SSMC		84,778		16		69,568		15
VisEra		40,101		8		58,980		13
Others		31,758		6		15,407		4


	$	525,308		100	$	449,266		100


Payables
VIS	$	838,584		28	$	717,562		22
WaferTech		784,280		26		864,733		26
SSMC		655,029		22		459,305		14
TSMC-Shanghai		596,581		20		478,714		14
Philips		—		—		688,591		21
Others		125,156		4		118,011		3


	$	2,999,630		100	$	3,326,916		100


Other long-term payables Philips (Note 25a)	$	—		—	$	403,375		100

- 37 -


	2007				2006
	Amount		%		Amount		%

Deferred credits
TSMC-Shanghai	$	510,564		52	$	723,661		61
VisEra		62,175		6		124,350		11


	$	572,739		58	$	848,011		72

		The terms of sales to related parties were not significantly different from those of sales to third parties. For other related party transactions, prices were determined in accordance with mutual agreements.

		The Company deferred the gains (classified under the deferred credits) derived from sales of property, plant and equipment to TSMC-Shanghai and VisEra, and then recognized such gains (classified under the non-operating income and gains) over the depreciable lives of the disposed assets.

		The Company leased part of its office space from GUC and also leased certain buildings and facilities to VisEra. The related rental expense and rental income were classified under non-operating expenses and income, respectively. The lease terms and prices were determined in accordance with mutual agreements.


25.		SIGNIFICANT LONG-TERM LEASES

		The Company leases several parcels of land from the Science Park Administration. These operating leases expire on various dates from March 2008 to December 2027 and can be renewed upon expiration.

		As of December 31, 2007, future lease payments were as follows:


Year	Amount

2008	$	325,608
2009		304,578
2010		255,380
2011		253,798
2012		253,798
2013 and thereafter		1,741,955


	$	3,135,117


26.		SIGNIFICANT COMMITMENTS AND CONTINGENCIES

The significant commitments and contingencies of the Company as of December 31, 2007, except those disclosed in other notes, were as follows:

On June 20, 2004, the Company and Philips (Philips parted with its semiconductor company which was renamed as NXP B.V. in September 2006) amended the Technical Cooperation Agreement, which was originally signed on May 12, 1997. The amended Technical Cooperation Agreement is for five years beginning from January 1, 2004. Upon expiration, this amended Technical Cooperation Agreement will be terminated and will not be automatically renewed; however, the patent cross license arrangement between the Company and Philips (now NXP B.V.) will survive the expiration of the amended Technical Cooperation Agreement. Under this amended Technical Cooperation Agreement, the Company will pay Philips (now NXP B.V.) royalties based on a fixed amount mutually agreed-on, rather than under a certain percentage of the Company’s annual net sales. The Company and Philips (now NXP B.V.) agreed to cross license the patents owned by each party. The Company also obtained through Philips (now NXP B.V.) a number of cross patent licenses.

- 38 -

	b.		Under a technical cooperation agreement with ITRI, the R.O.C. Government or its designee approved by the Company can use up to 35% of the Company’s capacity if the Company’s outstanding commitments to its customers are not prejudiced. The term of this agreement is for five years beginning from January 1, 1987 and is automatically renewed for successive periods of five years unless otherwise terminated by either party with one year prior notice. The agreement was automatically renewed in 1992, 1997, 2002, and on January 1, 2007.

	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, 2007, the Company had a total of US$68,391 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, which is an integrated circuit foundry in Singapore. The Company’s equity interest in SSMC was 32%. Nevertheless, Philips parted with its semiconductor company which was renamed as NXP B.V. in September 2006. The Company and NXP B.V. purchased all the SSMC shares owned by EDB Investments Pte Ltd. pro rata according to the Shareholders Agreement on November 15, 2006. After the purchase, the Company and NXP B.V. currently own approximately 39% and 61% of the SSMC shares, respectively. The Company and Philips (now NXP B.V.) committed to buy specific percentages of the production capacity of SSMC. The Company and Philips (now NXP B.V.) are required, in the aggregate, to purchase up to 70% of SSMC’s capacity, but the Company alone is not required to purchase more than 28% of the capacity. If any party defaults on the commitment and the capacity utilization of SSMC falls below a specific percentage of its 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 all 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 written notice for early termination under certain conditions. In January 2003, the Company and National entered into a Termination Agreement whereby the TTA was terminated. Under the Termination Agreement, the Company will be relieved of any further obligation to transfer any additional technology. In addition, the Company granted National an option to request prior to January 2008 the transfer of certain technologies under the same terms and conditions as the terminated TTA. National did not make such request by the deadline, therefore the option has expired in January 2008.

	g.		In December 2003, the Company entered into a Technology Development and License Agreement with Freescale Semiconductor, Inc. to jointly develop 65-nm SOI (silicon on insulator) technology. The Company will also license related 90-nm SOI technology from Freescale Semiconductor, 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 Freescale Semiconductor, Inc. and will share a portion of the costs associated with the joint development project.

	h.		The Company provides a technology transfer to VIS under a Manufacturing License and Technology Transfer Agreement entered into on April 1, 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 prices as agreed by the parties.

- 39 -

	i.		TSMC, TSMC-North America and WaferTech filed a series of lawsuits in late 2003 and 2004 against Semiconductor Manufacturing International Corporation, SMIC (Shanghai) and SMIC Americas (aggregately referring to as “SMIC”). The lawsuits alleged that SMIC infringed multiple TSMC, TSMC-North America and WaferTech patents and misappropriated TSMC, TSMC-North America and WaferTech’s trade secrets. These suits were settled out of court on January 30, 2005. As part of the settlement, Semiconductor Manufacturing International Corporation shall pay US$175 million over six years to resolve TSMC, TSMC-North America and WaferTech’s claims. As of December 31, 2007, SMIC had paid US$ 90 million in accordance with the terms of this settlement agreement. In August 2006, TSMC, TSMC-North America and WaferTech filed a lawsuit against SMIC in Alameda County Superior Court in California for breach of aforementioned settlement agreement, breach of promissory notes and trade secret misappropriation, seeking injunctive relief and monetary damages. In September 2006, SMIC filed a cross-complaint against TSMC, TSMC-North America and WaferTech in the same court, alleging TSMC, TSMC-North America and WaferTech of breach of the settlement agreement and implied covenant of good faith and fair dealing, in response to TSMC, TSMC-North America and WaferTech’s August complaint. In November 2006, SMIC filed a complaint with Beijing People’s High Court against TSMC, TSMC-North America and WaferTech alleging defamation and breach of good faith. The California State Superior Court of Alameda County issued an Order on TSMC, TSMC-North America and WaferTech’s pre-trial motion for a preliminary injunction against SMIC on September 7, 2007. In the Order, the Court found “TSMC has demonstrated a significant likelihood that it will ultimately prevail on the merits of its claim for breach of certain paragraphs of the (2005) Settlement Agreement” with SMIC. The Court also found “TSMC has demonstrated a significant probability of establishing that SMIC retains and is using TSMC Information in SMIC’s 0.13um and smaller technologies, and there is significant threat of serious irreparable harm to TSMC if SMIC were to disclose or transfer that information before final resolution of the case.” Therefore, the Court ordered that, effective immediately, SMIC must provide advance notice and an opportunity for TSMC, TSMC-North America and WaferTech to object before disclosing items enumerated in the Court Order to SMIC’s third party partners. The Court, however, did not grant a preliminary injunction as requested by TSMC, TSMC-North America and WaferTech. The result of the above-mentioned litigation cannot be determined at this time.

	j.		In April 2004, UniRAM Technology, Inc. filed an action with the US District Court in the Northern District of California against TSMC and TSMC North America, alleging patent infringement and trade secret misappropriation and seeking injunctive relief and damages. A jury in the District Court made a verdict in September 2007, awarding US$30.5 million to the plaintiff. TSMC intends to pursue remedies against this verdict.


27.		ADDITIONAL DISCLOSURES

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

	a.		Financing provided: None;

	b.		Endorsement/guarantee provided: None;

	c.		Marketable securities held: Please see Table 1 attached;

	d.		Marketable securities acquired or disposed of at costs or prices of at least NT$100 million or 20% of the paid-in capital: Please see Table 2 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 3 attached;

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

- 40 -

	g.		Total purchases from or sales to related parties of at least NT$100 million or 20% of the paid-in capital: Please see Table 4 attached;

	h.		Receivable from related parties amounting to at least NT$100 million or 20% of the paid-in capital: Please see Table 5 attached;

	i.		Names, locations, and related information of investees on which the Company exercises significant influence: Please see Table 6 attached;

	j.		Information about derivatives of investees over which the Company has a controlling interest:

			TSMC-Shanghai entered into forward exchange contracts during the year ended December 31, 2007 to manage exposures due to foreign exchange rate fluctuations. As of December 31, 2007, no forward exchange contract was outstanding.

			For the year ended December 31, 2007, net gains arising from forward exchange contracts of TSMC-Shanghai were NT$2,181 thousand (including realized settlement gains of NT$2,064 thousand and valuation losses of NT$117 thousand).

			Xintec entered into forward exchange contracts during the year ended December 31, 2007 to manage exposures due to foreign exchange rate fluctuations. Outstanding forward exchange contracts as of December 31, 2007:


		Contract
		Amount
	Maturity Date	(in Thousands)

Sell US$/buy NT$	January 2008	US$11,000

			For the year ended December 31, 2007, net losses arising from forward exchange contracts of Xintec were NT$2,834 thousand (including realized settlement losses of NT$1,283 thousand and valuation losses of NT$1,551 thousand).

	k.		Information on investment in Mainland China

	1)		The name of the investee in mainland China, the main businesses and products, its issued capital, method of investment, information on inflow or outflow of capital, percentage of ownership, equity in the net gain or net loss, ending balance, amount received as dividends from the investee, and the limitation on investee: Please see Table 7 attached.

	2)		Significant direct or indirect transactions with the investee, 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 24.


28.		SEGMENT FINANCIAL INFORMATION

	a.		Industry financial information

			The Company operates in one industry. Therefore, the disclosure of industry financial information is not applicable to the Company.

- 41 -

	b.		Geographic information

			The Company has no significant foreign operations. Therefore, the disclosure of geographic information is not applicable to the Company.

	c.		Export sales


	Years Ended December 31
Area	2007		2006

Americas	$	159,721,699	$	153,974,683
Asia		77,616,258		102,121,046
Europe and others		40,287,628		29,109,649


	$	277,625,585	$	285,205,378

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

	d.		Major customers representing at least 10% of gross sales


	Years Ended December 31
	2007				2006
	Amount		%		Amount		%

Customer A	$	37,350,210		12	$	33,610,918		11

Sales to Customer A above were made through TSMC-North America.

- 42 -

TABLE1

Taiwan Semiconductor Manufacturing Company Limited and Investees

MARKETABLE SECURITIES HELD
DECEMBER 31, 2007
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)


				December 31, 2007
									Market Value or Net
				Shares/Units		Carrying Value		Percentage of	Asset Value
Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	(in Thousands)		(US$ in Thousands)		Ownership	(US$ in Thousands)		Note
The Company	Open-end mutual funds
	NITC Bond Fund	—	Available-for-sale financial assets		12,239	$	2,045,935	N/A	$	2,045,935
	Fuh Hwa Bond	—	²		132,997		1,801,674	N/A		1,801,674
	NITC Taiwan Bond	—	²		103,016		1,474,856	N/A		1,474,856
	ING Taiwan Bond Fund	—	²		85,581		1,310,030	N/A		1,310,030
	Prudential Financial Bond Fund	—	²		83,306		1,236,728	N/A		1,236,728
	President James Bond	—	²		77,128		1,208,799	N/A		1,208,799
	JF Taiwan Bond Fund	—	²		59,049		915,252	N/A		915,252
	ING Taiwan Income Fund	—	²		54,621		878,682	N/A		878,682
	Taishin Lucky Fund	—	²		68,945		718,556	N/A		718,556
	AIG Taiwan Bond Fund	—	²		54,469		705,033	N/A		705,033
	Cathay Bond Fund	—	²		60,126		703,824	N/A		703,824
	Dresdner Bond DAM Fund	—	²		54,319		639,542	N/A		639,542
	JF First Bond Fund	—	²		35,324		504,206	N/A		504,206
	HSBC Taiwan Money Management Fund	—	²		27,416		413,504	N/A		413,504
	INVESCO Bond Fund	—	²		27,176		410,054	N/A		410,054

	Government bond
	2003 Government Bond Series B	—	Available-for-sale financial assets		—		2,349,163	N/A		2,349,163
	2004 Government Bond Series B	—	²		—		1,197,121	N/A		1,197,121
	2006 Government Bond Series D	—	²		—		399,733	N/A		399,733
	2004 Government Bond Series G	—	²		—		200,065	N/A		200,065
	2006 Government Bond Series D	—	Held-to-maturity financial assets		—		3,651,840	N/A		3,647,566
	2003 Government Bond Series B	—	²		—		1,647,947	N/A		1,647,413
	2003 Asian Development Bank Govt. Bond	—	²		—		855,088	N/A		875,103
	2003 Government Bond Series F	—	²		—		799,049	N/A		797,744
	2003 Government Bond Series H	—	²		—		400,709	N/A		399,825
	European Investment Bank Bonds	—	²		—		379,829	N/A		400,000
	2003 European Bank for Reconstruction and Development Govt. Bond Series A	—	²		—		89,963	N/A		90,000

	Corporate bond
	Hua Nan Bank	—	Available-for-sale financial assets		—		1,573,338	N/A		1,573,338
	Cathay Bank	—	²		—		1,180,440	N/A		1,180,440
	Taiwan Power Company	—	²		—		899,200	N/A		899,200
	Formosa Petrochemical Corporation	—	²		—		399,264	N/A		399,264
	Formosa Petrochemical Corporation	—	Held-to-maturity financial assets		—		3,581,667	N/A		3,547,308
	Taiwan Power Company	—	²		—		2,630,064	N/A		2,629,939
	Nan Ya Plastics Corporation	—	²		—		1,804,346	N/A		1,796,764
	CPC Corporation, Taiwan	—	²		—		1,200,318	N/A		1,199,461
	China Steel Corporation	—	²		—		1,000,000	N/A		987,430
	Formosa Plastic Corporation	—	²		—		391,134	N/A		391,011
	Shanghai commercial & Saving Bank	—	²		—		292,718	N/A		292,648

(Continued)

- 43 -


				December 31, 2007
										Market Value or Net
				Shares/Units		Carrying Value		Percentage of		Asset Value
Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	(in Thousands)		(US$ in Thousands)		Ownership		(US$ in Thousands)		Note
	Stocks

	TSMC Global	Subsidiary	Investment accounted for using equity method		1	$	44,204,188		100	$	44,204,188
	TSMC International	Subsidiary	²		987,968		27,688,565		100		27,688,565
	VIS	Investee accounted for using equity method	²		616,240		11,024,568		36		14,974,643
	SSMC	Investee accounted for using equity method	²		463		9,092,741		39		8,123,596
	TSMC Partners	Subsidiary	²		300		4,734,180		100		4,734,180
	TSMC-North America	Subsidiary	²		11,000		2,255,647		100		2,255,647
	Xintec	Investee with a controlling financial interest	²		91,703		1,501,521		43		1,419,627
	GUC	Investee with a controlling financial interest	²		42,572		823,552		37		9,344,632
	TSMC-Japan	Subsidiary	²		6		104,929		100		104,929
	TSMC-Europe	Subsidiary	²		—		88,702		100		88,702
	TSMC-Korea	Subsidiary	²		80		16,436		100		16,436
	United Industrial Gases Co., Ltd.	—	Financial assets carried at cost		16,783		193,584		10		305,599
	Shin-Etsu Handotai Taiwan Co., Ltd.	—	²		10,500		105,000		7		321,254
	W.K. Technology Fund IV	—	²		4,000		40,000		2		52,690
	Hontung Venture Capital Co., Ltd.	—	²		2,633		26,329		10		20,536

	Fund
	Horizon Ventures Fund	—	Financial assets carried at cost		—		312,949		12		312,949
	Crimson Asia Capital	—	²		—		70,298		1		70,298

	Capital
	TSMC-Shanghai	Subsidiary	Investment accounted for using equity method		—		8,622,715		100		8,621,163
	VTAF II	Subsidiary	²		—		1,170,841		98		1,166,386
	VTAF III	Subsidiary	²		—		906,536		98		896,703
	Emerging Alliance	Subsidiary	²		—		467,873		99		467,873
	Chi Cheng	Subsidiary	²		—		173,429		36		631,993	Treasury stock of
												NT$458,564 thousand
												is deducted from
												the carrying value
	Hsin Ruey	Subsidiary	²		—		171,658		36		631,169	Treasury stock of
												NT$459,511 thousand
												is deducted from
												the carrying value

Chi Cherng	Stocks
	TSMC	Parent Company	Available-for-sale financial assets		17,032		1,055,984		—		1,055,984
	VIS	Investee accounted for using equity method	Investments accounted for using equity method		5,082		109,815		—		123,491
Hsin Ruey	Stocks
	TSMC	Parent Company	Available-for-sale financial assets		17,064		1,057,963		—		1,057,963
	VIS	Investee accounted for using equity method	Investments accounted for using equity method		3,748		85,718		—		91,067
TSMC International	Stocks
	InveStar	Subsidiary	Investments accounted for using equity method		8,721	US$	42,038		97	US$	42,038
	InveStar II	Subsidiary	²		43,048	US$	57,594		97	US$	57,594
	TSMC Development	Subsidiary	²		1	US$	674,084		100	US$	674,084
	TSMC Technology	Subsidiary	²		1	US$	6,592		100	US$	6,592

(Continued)

- 44 -


				December 31, 2007
									Market Value or Net
				Shares/Units		Carrying Value		Percentage of	Asset Value
Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	(in Thousands)		(US$ in Thousands)		Ownership	(US$ in Thousands)		Note
TSMC Development	Stocks
	WaferTech	Subsidiary	Investments accounted for using equity method		—	US$	227,469	100	US$	227,469

TSMC Partners	Common stock
	VisEra Holding Company	Investee accounted for using equity method	Investments accounted for using equity method		43,000	US$	67,948	49	US$	67,948
	TSMC Canada	Subsidiary	²		2,300	US$	2,877	100	US$	2,877

Emerging Alliance	Common stock
	Pixim, Inc.	—	Financial assets carried at cost		1,036	US$	275	—	US$	275
	RichWave Technology Corp.	—	²		4,247	US$	1,648	13	US$	1,648
	Global Investment Holding Inc.	—	²		10,800	$	100,000	6	$	100,000

	Preferred stock
	Audience, Inc.	—	Financial assets carried cost		1,654	US$	250	1	US$	250
	Axiom Microdevices, Inc.	—	²		1,000	US$	1,000	1	US$	1,000
	Miradia, Inc.	—	²		3,040	US$	1,000	3	US$	1,000
	Mobilygen	—	²		1,415	US$	750	1	US$	750
	Mosaic Systems, Inc.	—	²		2,481	US$	12	6	US$	12
	Next IO, Inc.	—	²		800	US$	500	4	US$	500
	Optichron, Inc.	—	²		714	US$	1,000	3	US$	1,000
	Optimal Corporation	—	²		—	US$	229	—	US$	229
	Pixim, Inc.	—	²		3,606	US$	862	2	US$	862
	Teknovus, Inc.	—	²		6,977	US$	1,327	2	US$	1,327

	Capital
	VentureTech Alliance Holdings	Subsidiary	Investments accounted for using equity method		—		—	10		—

VTAF II	Common stock
	Yobon	—	Financial assets carried at cost		1,875	US$	919	13	US$	919
	Sentelic	—	²		1,200	US$	2,040	15	US$	2,040
	Leadtrend	—	²		1,265	US$	660	5	US$	660
	RichWave Technology Corp.	—	²		1,043	US$	730	2	US$	730

	Preferred stock
	5V Technologies, Inc.	—	Financial assets carried cost		2,357	US$	1,768	11	US$	1,768
	Ageia Technologies, Inc.	—	²		2,030	US$	2,074	2	US$	2,074
	Aquantia Corporation	—	²		1,786	US$	2,273	5	US$	2,273
	Audience, Inc.	—	²		2,989	US$	814	2	US$	814
	Axiom Microdevices, Inc.	—	²		5,044	US$	2,088	4	US$	2,088
	Beceem Communications	—	²		650	US$	1,600	1	US$	1,600
	GemFire Corporation	—	²		600	US$	68	1	US$	68
	Impinj, Inc.	—	²		475	US$	1,000	—	US$	1,000
	Miradia, Inc.	—	²		3,416	US$	3,106	3	US$	3,106
	Mobilygen	—	²		569	US$	149	1	US$	149
	Next IO, Inc.	—	²		216	US$	182	—	US$	182
	Optichron, Inc.	—	²		1,050	US$	1,844	2	US$	1,844
	Pixim, Inc.	—	²		3,279	US$	641	2	US$	641
	Power Analog Microelectronics	—	²		3,039	US$	2,409	13	US$	2,409
	QST Holding, LLC	—	²		—	US$	145	3	US$	145
	Teknovus, Inc.	—	²		1,599	US$	454	—	US$	454

(Continued)

- 45 -


				December 31, 2007
										Market Value or Net
				Shares/Units		Carrying Value		Percentage of		Asset Value
Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	(in Thousands)		(US$ in Thousands)		Ownership		(US$ in Thousands)		Note
	Tzero Technologies, Inc.	—	Financial assets carried cost		730	US$	1,500		2	US$	1,500
	Xceive	—	²		714	US$	1,000		2	US$	1,000

	Capital
	VentureTech Alliance Holdings	Subsidiary	Investments accounted for using equity method		—		—		10		—

VTAF III	Common stock
	Mutual-pak Technology Co., Ltd.	Subsidiary	Investments accounted for using equity method		4,590	US$	1,672		51	US$	1,672

	Preferred stock
	Advasense Sensors, Inc.	—	²		1,929	US$	1,834		6	US$	1,834
	Auramicro, Inc.	—	²		2,500	US$	750		17	US$	750
	Exclara, Inc. (Formerly Synpitec, Inc.)	—	²		14,513	US$	2,412		19	US$	2,412
	M2000, Inc.	—	²		3,000	US$	3,000		5	US$	3,000
	Neoconix, Inc.	—	²		2,458	US$	4,000		6	US$	4,000
	Powervation, Ltd.	—	²		191	US$	2,930		19	US$	2,930
	Quellan, Inc	—	²		3,106	US$	3,500		6	US$	3,500
	Silicon Technical Services, LLC	—	²		1,055	US$	1,208		2	US$	1,208
	Tilera, Inc.	—	²		1,698	US$	2,360		3	US$	2,360
	Validity Sensors, Inc.	—	²		6,424	US$	2,545		3	US$	2,545

	Convertible bond
	GTBF, Inc.	—	Financial assets carried at cost		—	US$	1,500		N/A	US$	1,500

	Capital
	VentureTech Alliance Holdings	Subsidiary	Investments accounted for using equity method		—		—		80		—

InveStar	Common stock
	Monolithic Power Systems, Inc.	—	Financial assets at fair value through profit or loss		1,352	US$	29,024		7	US$	29,024
	Memsic, Inc.	—	Available-for-sale financial assets		1,364	US$	13,812		9	US$	13,812
	Capella Microsystems (Taiwan), Inc	—	Financial assets carried at cost		530	US$	154		2	US$	154

	Preferred stock
	Integrated Memory Logic, Inc.	—	Financial assets carried at cost		2,872	US$	1,221		9	US$	1,221
	IP Unity, Inc.	—	²		1,008	US$	494		1	US$	494
	NanoAmp Solutions, Inc.	—	²		541	US$	853		2	US$	853
	Sonics, Inc.	—	²		1,844	US$	3,530		2	US$	3,530

InveStar II	Common stock
	Monolithic Power Systems, Inc	—	Financial assets at fair value through profit or loss		864	US$	18,561		3	US$	18,561
	Rich Tek Technology Corp.	—	²		152	US$	1,371		—	US$	1,371
	Geo Vision, Inc.	—	²		6	US$	59		—	US$	59
	Memsic, Inc.	—	Available-for-sale financial assets		1,145	US$	11,594		7	US$	11,594
	Rich Tek Technology Corp.	—	²		261	US$	2,362		—	US$	2,362
	Geo Vision, Inc.	—	²		15	US$	135		—	US$	135
	eLCOS Microdisplay Technology, Ltd.	—	Financial assets carried at cost		270	US$	27		1	US$	27
	EoNEX Technologies, Inc.	—	²		55	US$	3,048		5	US$	3,048
	Sonics, Inc.	—	²		2,220	US$	32		—	US$	32
	Epic Communication, Inc.	—	²		191	US$	37		1	US$	37
	EON Technology, Corp.	—	²		4,243	US$	1,175		6	US$	1,175
	Goyatek Technology, Corp.	—	²		2,088	US$	545		7	US$	545
	Trendchip Technologies Corp.	—	²		1,000	US$	574		4	US$	574

(Continued)

- 46 -


				December 31, 2007
									Market Value or Net
				Shares/Units		Carrying Value		Percentage of	Asset Value
Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	(in Thousands)		(US$ in Thousands)		Ownership	(US$ in Thousands)		Note
	Capella Microsystems (Taiwan), Inc	—	Financial assets carried at cost		534	US$	210	2	US$	210
	Ralink Technology (Taiwan), Inc.	—	²		2,383	US$	791	3	US$	791
	Auden Technology MFG. Co., Ltd	—	²		1,049	US$	223	4	US$	223

	Preferred stock
	Alchip Technologies Limited	—	Financial assets carried at cost		6,128	US$	2,950	15	US$	2,950
	eLCOS Microdisplay Technology, Ltd.	—	²		3,500	US$	3,500	8	US$	3,500
	FangTek, Inc.	—	²		6,931	US$	3,250	16	US$	3,250
	Kilopass Technology, Inc.	—	²		3,887	US$	2,000	6	US$	2,000
	NanoAmp Solutions, Inc.	—	²		375	US$	1,500	1	US$	1,500
	Sonics, Inc.	—	²		2,115	US$	3,082	6	US$	3,082

Tsmc Global	Agency bonds
	Fed Hm Ln Pc Pool 1b1225	—	Available-for-sale financial assets		—	US$	139	N/A	US$	139
	Fed Hm Ln Pc Pool 1b2566	—	²		—	US$	157	N/A	US$	157
	Fed Hm Ln Pc Pool 1b2632	—	²		—	US$	178	N/A	US$	178
	Fed Hm Ln Pc Pool 1b2642	—	²		—	US$	234	N/A	US$	234
	Fed Hm Ln Pc Pool 1b2776	—	²		—	US$	340	N/A	US$	340
	Fed Hm Ln Pc Pool 1b2792	—	²		—	US$	223	N/A	US$	223
	Fed Hm Ln Pc Pool 1b2810	—	²		—	US$	296	N/A	US$	296
	Fed Hm Ln Pc Pool 1b7453	—	²		—	US$	2,805	N/A	US$	2,805
	Fed Hm Ln Pc Pool 1g0038	—	²		—	US$	296	N/A	US$	296
	Fed Hm Ln Pc Pool 1g0053	—	²		—	US$	367	N/A	US$	367
	Fed Hm Ln Pc Pool 1g0104	—	²		—	US$	142	N/A	US$	142
	Fed Hm Ln Pc Pool 1g1282	—	²		—	US$	4,077	N/A	US$	4,077
	Fed Hm Ln Pc Pool 1g1411	—	²		—	US$	3,618	N/A	US$	3,618
	Fed Hm Ln Pc Pool 1h2520	—	²		—	US$	2,669	N/A	US$	2,669
	Fed Hm Ln Pc Pool 1h2524	—	²		—	US$	1,970	N/A	US$	1,970
	Fed Hm Ln Pc Pool 780870	—	²		—	US$	721	N/A	US$	721
	Fed Hm Ln Pc Pool 781959	—	²		—	US$	3,834	N/A	US$	3,834
	Fed Hm Ln Pc Pool 782785	—	²		—	US$	254	N/A	US$	254
	Fed Hm Ln Pc Pool 782837	—	²		—	US$	494	N/A	US$	494
	Fed Hm Ln Pc Pool 782968	—	²		—	US$	1,147	N/A	US$	1,147
	Fed Hm Ln Pc Pool 783022	—	²		—	US$	536	N/A	US$	536
	Fed Hm Ln Pc Pool 783026	—	²		—	US$	303	N/A	US$	303
	Fed Hm Ln Pc Pool B19205	—	²		—	US$	7,103	N/A	US$	7,103
	Fed Hm Ln Pc Pool E89857	—	²		—	US$	1,347	N/A	US$	1,347
	Fed Hm Ln Pc Pool G11295	—	²		—	US$	1,126	N/A	US$	1,126
	Fed Hm Ln Pc Pool M80855	—	²		—	US$	2,942	N/A	US$	2,942
	Federal Home Ln Mtg Corp.	—	²		—	US$	1,784	N/A	US$	1,784
	Federal Home Ln Mtg Corp.	—	²		—	US$	1,832	N/A	US$	1,832
	Federal Home Ln Mtg Corp.	—	²		—	US$	2,360	N/A	US$	2,360
	Federal Home Ln Mtg Corp.	—	²		—	US$	2,742	N/A	US$	2,742
	Federal Home Ln Mtg Corp.	—	²		—	US$	2,178	N/A	US$	2,178
	Federal Home Ln Mtg Corp.	—	²		—	US$	3,665	N/A	US$	3,665
	Federal Home Ln Mtg Corp.	—	²		—	US$	2,136	N/A	US$	2,136
	Federal Home Ln Mtg Corp.	—	²		—	US$	3,275	N/A	US$	3,275
	Federal Home Ln Mtg Corp.	—	²		—	US$	3,044	N/A	US$	3,044
	Federal National Mort Assoc	—	²		—	US$	2,844	N/A	US$	2,844
	Federal Natl Mtg Assn	—	²		—	US$	2,059	N/A	US$	2,059
	Federal Natl Mtg Assn	—	²		—	US$	2,194	N/A	US$	2,194
	Federal Natl Mtg Assn	—	²		—	US$	2,011	N/A	US$	2,011
	Federal Natl Mtg Assn	—	²		—	US$	3,567	N/A	US$	3,567
	Federal Natl Mtg Assn Gtd	—	²		—	US$	1,717	N/A	US$	1,717

(Continued)

- 47 -


				December 31, 2007
									Market Value or Net
				Shares/Units		Carrying Value		Percentage of	Asset Value
Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	(in Thousands)		(US$ in Thousands)		Ownership	(US$ in Thousands)		Note
	Fnma Pool 255883	—	Available-for-sale financial assets		—	US$	3,126	N/A	US$	3,126
	Fnma Pool 555549	—	²		—	US$	1,385	N/A	US$	1,385
	Fnma Pool 555715	—	²		—	US$	171	N/A	US$	171
	Fnma Pool 632399	—	²		—	US$	390	N/A	US$	390
	Fnma Pool 662401	—	²		—	US$	560	N/A	US$	560
	Fnma Pool 667766	—	²		—	US$	1,310	N/A	US$	1,310
	Fnma Pool 680932	—	²		—	US$	1,110	N/A	US$	1,110
	Fnma Pool 681393	—	²		—	US$	2,388	N/A	US$	2,388
	Fnma Pool 685116	—	²		—	US$	599	N/A	US$	599
	Fnma Pool 691283	—	²		—	US$	3,442	N/A	US$	3,442
	Fnma Pool 694287	—	²		—	US$	20	N/A	US$	20
	Fnma Pool 703711	—	²		—	US$	467	N/A	US$	467
	Fnma Pool 725095	—	²		—	US$	1,023	N/A	US$	1,023
	Fnma Pool 730033	—	²		—	US$	169	N/A	US$	169
	Fnma Pool 740934	—	²		—	US$	1,110	N/A	US$	1,110
	Fnma Pool 742232	—	²		—	US$	23	N/A	US$	23
	Fnma Pool 750798	—	²		—	US$	22	N/A	US$	22
	Fnma Pool 773246	—	²		—	US$	229	N/A	US$	229
	Fnma Pool 790828	—	²		—	US$	2,009	N/A	US$	2,009
	Fnma Pool 793932	—	²		—	US$	438	N/A	US$	438
	Fnma Pool 794040	—	²		—	US$	608	N/A	US$	608
	Fnma Pool 795548	—	²		—	US$	234	N/A	US$	234
	Fnma Pool 799664	—	²		—	US$	94	N/A	US$	94
	Fnma Pool 799868	—	²		—	US$	32	N/A	US$	32
	Fnma Pool 804764	—	²		—	US$	396	N/A	US$	396
	Fnma Pool 804852	—	²		—	US$	330	N/A	US$	330
	Fnma Pool 804962	—	²		—	US$	388	N/A	US$	388
	Fnma Pool 805163	—	²		—	US$	408	N/A	US$	408
	Fnma Pool 806642	—	²		—	US$	777	N/A	US$	777
	Fnma Pool 806721	—	²		—	US$	635	N/A	US$	635
	Fnma Pool 814418	—	²		—	US$	343	N/A	US$	343
	Fnma Pool 815626	—	²		—	US$	2,301	N/A	US$	2,301
	Fnma Pool 819423	—	²		—	US$	538	N/A	US$	538
	Fnma Pool 821129	—	²		—	US$	512	N/A	US$	512
	Fnma Pool 888249	—	²		—	US$	60	N/A	US$	60
	Fnma Pool 888499	—	²		—	US$	2,438	N/A	US$	2,438
	Fnma Pool 888502	—	²		—	US$	236	N/A	US$	236
	Fnma Pool 888507	—	²		—	US$	911	N/A	US$	911
	Fnma Pool 888515	—	²		—	US$	1,730	N/A	US$	1,730
	Fnma Pool 888519	—	²		—	US$	123	N/A	US$	123
	Fnma Pool 888527	—	²		—	US$	69	N/A	US$	69
	Fnma Pool 888738	—	²		—	US$	4,935	N/A	US$	4,935
	Fnma Pool 888793	—	²		—	US$	5,697	N/A	US$	5,697
	Fnma Pool 900296	—	²		—	US$	3,276	N/A	US$	3,276
	Gnma Ii Pool 081150	—	²		—	US$	470	N/A	US$	470
	Gnma Ii Pool 081153	—	²		—	US$	1,423	N/A	US$	1,423
	Fed Home Ln Bank	—	²		—	US$	5,175	N/A	US$	5,175
	Federal Farm Cr Bks	—	²		—	US$	3,511	N/A	US$	3,511
	Federal Home Ln Bks	—	²		—	US$	8,977	N/A	US$	8,977
	Federal Home Ln Bks	—	²		—	US$	8,939	N/A	US$	8,939
	Federal Home Ln Bks	—	²		—	US$	4,965	N/A	US$	4,965
	Federal Home Ln Bks	—	²		—	US$	5,969	N/A	US$	5,969
	Federal Home Ln Bks	—	²		—	US$	4,980	N/A	US$	4,980

(Continued)

- 48 -


				December 31, 2007
									Market Value or Net
				Shares/Units		Carrying Value		Percentage of	Asset Value
Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account	(in Thousands)		(US$ in Thousands)		Ownership	(US$ in Thousands)		Note
	Federal Home Ln Bks	—	Available-for-sale financial assets		—	US$	19,023	N/A	US$	19,023
	Federal Home Ln Bks	—	²		—	US$	5,134	N/A	US$	5,134
	Federal Home Ln Mtg Disc Nts	—	²		—	US$	22,342	N/A	US$	22,342
	Federal Home Loan Bank	—	²		—	US$	4,621	N/A	US$	4,621
	Federal Home Loan Banks	—	²		—	US$	21,500	N/A	US$	21,500
	Federal Natl Mtg Assn	—	²		—	US$	5,169	N/A	US$	5,169
	Federal Natl Mtg Assn Medium	—	²		—	US$	3,512	N/A	US$	3,512
	Federal Natl Mtg Assn Mtn	—	²		—	US$	2,982	N/A	US$	2,982
	Federal Natl Mtg Assn Mtn	—	²		—	US$	3,171	N/A	US$	3,171
	Federal Natl Mtg Assn Mtn	—	²		—	US$	3,398	N/A	US$	3,398
	Federal Natl Mtg Assn Mtn	—	²		—	US$	3,066	N/A	US$	3,066
	Tennessee Valley Auth	—	²		—	US$	6,068	N/A	US$	6,068

	Corporate bonds

	Abbott Labs	—	Available-for-sale financial assets		—	US$	1,510	N/A	US$	1,510
	American Gen Fin Corp.	—	²		—	US$	3,139	N/A	US$	3,139
	American Gen Fin Corp. Mtn	—	²		—	US$	3,451	N/A	US$	3,451
	American Gen Fin Corp. Mtn	—	²		—	US$	1,962	N/A	US$	1,962
	American Honda Fin Corp. Mtn	—	²		—	US$	3,107	N/A	US$	3,107
	Ameritech Capital Funding Co.	—	²		—	US$	489	N/A	US$	489
	Amgen Inc.	—	²		—	US$	2,978	N/A	US$	2,978
	Anz Cap Tr I	—	²		—	US$	984	N/A	US$	984
	Atlantic Richfield Co.	—	²		—	US$	2,216	N/A	US$	2,216
	Axa Finl Inc.	—	²		—	US$	2,147	N/A	US$	2,147
	Beneficial Corp. Mtn Bk Entry	—	²		—	US$	2,274	N/A	US$	2,274
	Burlington Res Inc.	—	²		—	US$	3,653	N/A	US$	3,653
	Chase Manhattan Corp. New	—	²		—	US$	1,520	N/A	US$	1,520
	Chase Manhattan Corp. New	—	²		—	US$	2,099	N/A	US$	2,099
	Chase Manhattan Corp. New	—	²		—	US$	3,483	N/A	US$	3,483
	Cit Group Hldgs Inc.	—	²		—	US$	2,982	N/A	US$	2,982
	Cit Group Inc. New	—	²		—	US$	2,435	N/A	US$	2,435
	Consolidated Edison Inc.	—	²		—	US$	2,990	N/A	US$	2,990
	Credit Suisse First Boston Usa	—	²		—	US$	2,229	N/A	US$	2,229
	Deere John Cap Corp. Mtn Bk Ent	—	²		—	US$	2,215	N/A	US$	2,215
	Depfa Acs Bank	—	²		—	US$	20,402	N/A	US$	20,402
	Fleet Boston Corp.	—	²		—	US$	2,620	N/A	US$	2,620
	Ge Global Ins Hldg Corp.	—	²		—	US$	1,914	N/A	US$	1,914
	General Dynamics Corp.	—	²		—	US$	2,133	N/A	US$	2,133