TSMC Sees No Impact From High Speed Railway Project in Tainan; Study Confirms Viability of TSMC Investments, Fab Sites in Tainan Science Park.

Business Editors/High-Tech Writers

HSIN-CHU, Taiwan--(BUSINESS WIRE)--Oct. 25, 2001

Adding an exclamation point to the success of Taiwan's ongoing high-tech industry development, Republic of China President Chen Shui-bian today visited the newest manufacturing operations of Taiwan Semiconductor Manufacturing Company Ltd. (TSMC or the "Company") (NYSE:TSM) in the southern city of Tainan. TSMC Chairman Dr. Morris Chang and Deputy Chief Executive Officer Dr. F.C. Tseng received President Chen and presented TSMC's ongoing investment plan, which is expected to continue within the Tainan Science-Based Industrial Park (TSIP) for the next several years at a cost of several hundred billion NT dollars.

After a welcoming speech, Dr. Chang reiterated that Taiwan has proven itself to be a suitable location for IC manufacturing.

"As long as corporate enterprise and the government continue to work together, Taiwan will maintain its competitive edge," said Dr. Chang. "Historically, TSMC has focused its investments in the Hsinchu Science-based Industrial Park, pioneering what has now become a highly successful foundry industry. Going forward, the Tainan Science-Based Industrial park will be TSMC's most important site for its semiconductor fab construction in Taiwan."

Dr. Chang added that TSMC's first TSIP fab, Fab 6, began volume production in January 1999. Construction of the second TSIP fab, Fab 14, was postponed largely due to concerns regarding possible vibration from a nearby high-speed railway project. However, a recent study conducted by TSMC reports that, through engineering technology, the effects of high-speed railway vibrations on TSMC's chip fabrication would be eliminated. As a result of this study's conclusions, Dr. Chang today confirmed that Fab 14 has resumed its construction schedule and TSMC's investment in TSIP will proceed as planned.

Dr. Tseng further outlined the results of the high speed railway vibration study and elaborated on TSMC's future investment project. He stated that TSMC has investigated high-speed railway vibration with the utmost caution, noting that about NT$ 100 billion are required to build a state-of-the-art 12-inch fab. TSMC is confident in the study's results and the company's plans for future investment in TSIP.

TSMC's railway study project team included experts in the fields of internal process, equipment and fab operations at TSMC, as well as expert consultants in geology, construction and semiconductor manufacturing equipment. With the cooperation and participation of the Taiwan High Speed Railway Company, the team embarked upon a six-month, comprehensive study of background vibrations. The study was the first of its kind in the global IC industry. Through detailed data collection, on-site testing, analysis and research, the team confirmed that, through the correct use of standard engineering techniques, TSMC's IC fabrication facilities will not be impacted by high-speed railway vibrations.

Moreover, TSMC has also accurately controlled for factors in a variety of vibration models related to IC fabrication. The team also developed equipment and fab facility specifications that correspond to these vibration models. These specifications are expected to improve TSMC's IC fabrication techniques, increasing the precision of TSMC's IC manufacturing as the company embarks on new fab construction.

Dr. Tseng emphasized that TSMC responded positively to the Taiwan government's call for "balancing between the North and South" by beginning construction at the Tainan Science Park in early 1997. At the time, TSMC launched an NT$ 400 billion investment project over the span of a decade. Over the past four years, TSMC has invested a total of NT$ 260 billion in building new fabs and in expanding capacity. In compliance with the future market demand, TSMC will continue to expand Fab 12 to full capacity, as well as begin plans to build six new 12-inch fabs in Taiwan, representing an investment of NT$ 700 billion in total.

Dr. Chang concluded that, "The dedicated foundry industry is a global industry, crossing all boundaries. With this focus on the global marketplace, TSMC is determined to construct fabs in the Mainland China and other major markets around the world. Taiwan, where TSMC was founded, will remain a vital base for TSMC's future investments."

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, seven eight-inch fabs and two six-inch wafer fabs. TSMC also has substantial capacity commitments at two joint ventures fabs (Vanguard and SSMC) and at its wholly-owned subsidiary, WaferTech. In early 2001, TSMC became the first IC manufacturer to announce a 0.10-micron technology alignment program with its customers. TSMC's corporate headquarters are in Hsin-Chu, Taiwan. For more information about TSMC please go to http://www.tsmc.com.