Freescale and TSMC to Develop Silicon-on-Insulator Technology; Agreement Focuses on 65-nm SOI Joint Development.

AUSTIN, Texas & HSINCHU, Taiwan -- Freescale Semiconductor, Inc. (NYSE: FSL) and Taiwan Semiconductor Manufacturing Company (TSMC) (TAIEX: 2330)(NYSE: TSM) have signed an agreement to jointly develop a new generation of silicon-on-insulator (SOI) high-performance transistor front-end technology targeted for the 65-nanometer advanced CMOS process node. The three-year agreement also provides TSMC with manufacturing rights to Freescale's 90-nm silicon-on-insulator (SOI) technology.

"Freescale has valued experience and expertise in SOI manufacturing, while TSMC leads the foundry industry in the development of advanced processes including SOI technology," said Ping Yang, vice president of research and development at TSMC. "The combined strengths of the two companies will create a competitive SOI technology."

"Freescale has been providing customers with high-performance SOI products for four years," said Freescale Chief Technology Officer Dr. Claudine Simson. "TSMC has been a long-time valuable foundry provider to Freescale. The company is also a great partner through the joint development program we have with Philips and STMicroelectronics in Crolles, France, near Grenoble. We have an excellent long-term relationship with TSMC and look forward to developing together this 65-nm SOI high-performance transistor technology."

TSMC and Freescale have been developing SOI technology independently for a number of years. Freescale has developed three generations of SOI technology since the mid-1980s. The company has shipped more than 7 million SOI-enabled products since it started production in 2001. It is currently establishing a 90-nm CMOS SOI manufacturing platform in its Dan Noble Center facilities in Austin, Texas, USA, for next-generation high performance networking and computing products. TSMC has been independently developing SOI technology starting from 0.13um technology node since the late 1990s. TSMC has reported excellent SOI device performance and SRAM cell compactness.

The collaboration is expected to enable faster time to market of 65-nm SOI technology for innovative applications in a variety of markets. During the joint development of the 65-nm SOI high-performance transistor front-end technology, the two companies are expected to develop independently their own 65-nm metallization back-end technology tailored to their specific market applications. Freescale will apply the overall technology to 65-nm SOI chips at 300 millimeter in the Crolles2 joint R&D and pilot manufacturing facility in France, which it shares with Philips and STMicroelectronics. TSMC may apply the technology in its Taiwan facilities, with a high-speed version that targets performance-driven applications in networking and computing and a low-power version for handheld and portable applications.

About SOI Technology

SOI process technology allows transistors to switch faster than bulk CMOS, making it attractive for applications requiring high performance, i.e., higher speed concurrent with reduced power consumption. The technology can also be optimized for very low power consumption.

SOI technology is an enhancement to standard CMOS processes that uses a silicon substrate with a buried insulating layer (as opposed to bulk substrates for standard CMOS technology), thereby isolating the active transistor elements. This lowers the capacitances between the silicon substrate and the active transistor area, and enables reduced power consumption, as well as higher speed for digital circuits. By using high-resistivity substrates, it also provides better isolation and reduced substrate losses, all desirable for RF functionality. Freescale was among the first in the industry to solve the technical challenges of SOI and enter volume production.

The 65-nm SOI high-performance transistor joint development project will be located at Freescale's Dan Noble Center in Austin, Texas, USA, where Freescale's SOI technologies were previously developed and are now manufactured in volume.

About Freescale Semiconductor

Freescale Semiconductor, Inc. (NYSE:FSL) is a global leader in the design and manufacture of embedded semiconductors for the automotive, consumer, industrial, networking and wireless markets. Freescale became a publicly traded company in July, 2004 after more than 50 years as part of Motorola, Inc. (NYSE:MOT). The company is based in Austin, Texas, and has design, research and development, manufacturing or sales operations in more than 30 countries. Freescale Semiconductor's 2003 sales were $4.9 billion (US). For more information: www.freescale.com.

About TSMC

TSMC is the world's largest dedicated semiconductor foundry, providing the industry's leading process technology and the foundry industry's largest portfolio of process-proven library, IP, design tools and reference flows. The company operates two advanced 300mm wafer fabs, five eight-inch fabs and one six-inch wafer fab. TSMC also has substantial capacity commitments at its wholly-owned subsidiary, WaferTech and TSMC (Shanghai), and its joint venture fab, SSMC. In early 2001, TSMC became the first IC manufacturer to announce a 90-nm technology alignment program with its customers. TSMC's corporate headquarters are in Hsinchu, Taiwan. For more information about TSMC please see www.tsmc.com.

This release contains forward-looking statements as defined in Section 21E of the Securities Exchange Act of 1934, including statements about future business operations, financial performance and market conditions. Such forward-looking statements involve risks and uncertainties inherent in business forecasts as further described in our filings under the Securities Exchange Act.

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