TSMC commits itself to providing its
customers with the best quality and most
comprehensive services.
LETTER TO
SHAREHOLDERS
Dear Shareholders,
Year 2004 was a banner year for TSMC. We again set new records for revenues and earnings, while continuing to lead the
semiconductor dedicated foundry sector. Our production accounted for more than 7% of the total value of the world's semi-
conductor output.
TSMC's performance was anchored in our "Trinity of Strength": strength in technology development and deployment, strength
in manufacturing capacity and efficiency, and strength in building customer partnerships. For example:
● TSMC cumulatively shipped over one million wafers (8-inch equivalent) in 0.13-micron technology.
● TSMC's NexsysSM 90nm, the world's first 12-inch, low-k, 90-nanometer process to reach full production, was adopted in
more than 30 customer products after one year's ramp, and achieved product yields ahead of internal goals.
● TSMC served more than 300 customers and produced more than 5,000 products in our fabs.
With its core manufacturing and logistics competencies, TSMC's experience in integrating front-end design and back-end turn-
key services has helped customers resolve many daunting challenges in advanced chips designed with our 90nm technology.
We collaborate closely with customers, enabling them to deliver their products on time and to achieve success in their end
markets.
Financial Strength and Results
TSMC broke new records in both revenues and net income in 2004. Revenue reached NT$255.9 billion, an increase of 26.8%
compared with the previous record set in 2003. Net income was NT$92.32 billion, an increase of 95.3% compared with 2003
results, while fully diluted earnings per share were NT$3.97 (US$0.59 per ADS unit), an increase of 96.8 %. In US dollars, rev-
enue for 2004 was US$7.65 billion, an increase of 30.3%, while net income grew to US$2.76 billion, an increase of 100%.
A Long-Term Growth Engine
TSMC's consistently strong financial performance proves the company's value as a solid long-term growth engine. The cyclical
nature of the semiconductor industry is well known. Since the mid-1990s, we have taken strategic advantage of upturns. But
we are careful not to overreach, and so we weather downturns well. We have been free cash flow positive in all but one year
in our 18-year history, a track record rarely found in this industry.
5
Our recently enhanced dividend policy is a sign of our confidence in the TSMC growth engine. After the company's IPO in
1994, we made our first cash dividend payment in 2004, with a 30% cash payout ratio. We further resolved to distribute
future dividends preferentially in cash. Under a change approved by shareholders on December 21, 2004, stock dividends will
not exceed 50 percent of total distributions in future. The change will permit us more flexibility in planning future cash divi-
dend distributions.
Two-Pronged Business Strategy to Ensure Future Growth
Our strategy for continued profitable growth has two dimensions: horizontal expansion into specialty technologies platforms
in mature technologies; and vertical expansion through leadership in advanced process technologies for next-generation prod-
ucts. With specialty technologies, we can leverage our unique scale and manufacturing know-how at older, partly depreciated
fab facilities to increase capacity utilization and margins throughout the cycle.
With demand strong for our 90nm technology, we plan to substantially increase our capacity of 90nm in 2005. Our total
capacity for advanced technologies (defined as 0.13-micron and below) will more than double in 2005.
Innovation
TSMC has continued to demonstrate its leadership in semiconductor processes technology. For example, in December 2004,
TSMC announced the successful use of immersion lithography tools developed by ASML to produce fully functional 90nm
devices. These circuits represented the world's first publicly announced data indicating that immersion-based lithography sys-
tems are nearing production-ready status.
Recognition and Awards for Outstanding Achievements
TSMC continued to receive recognition and awards from around the world as a corporate role model. Among the numerous
media surveys conducted in 2004 (for example, Institutional Investor, The Asset Magazine, Asiamoney, FinanceAsia, IR
Magazine, and The Know Network), TSMC was awarded top honors in the areas of overall management, knowledge manage-
ment, corporate governance and investor relations, and was voted the "Most Admired Company" by CommonWealth
Magazine. In addition, TSMC received the Gold Medal Award from The Department of Economic Affairs of the Government of
the Republic of China in the "National Invention and Creation" category.
Other Corporate Developments
In the period from March 24 to May 21, 2004, TSMC bought back 124.72 million common shares, representing 0.6% of total
outstanding shares at that time. These repurchased shares were subsequently cancelled during the third quarter of 2004.
TSMC, TSMC North America, and WaferTech filed a series of lawsuits in late 2003 and 2004 in both state and federal courts in
California and with the U. S. International Trade Commission against Semiconductor Manufacturing International Corporation
(SMIC), SMIC (Shanghai), and SMIC Americas. The lawsuits alleged that SMIC companies infringed multiple TSMC patents and
misappropriated TSMC's trade secrets. These suits have been settled out of court. As part of the agreement, SMIC will pay
TSMC US$175 million over six years to resolve TSMC's patent infringement and trade secret claims.
6
Outlook for the Future
We believe that the world semiconductor industry is likely to expand at a compound annual growth rate of 8% to 10% within
this decade. Coming out of the industry's most severe cyclical downturn in 2001, the global semiconductor industry has expe-
rienced two consecutive years of strong growth: 18% in 2003 followed by an estimated 28% growth in 2004. We now expect
global semiconductor revenue to remain at about the same level or slightly lower in 2005. The value of the foundry segment's
output is likely to have increased from a 16% share of world IC markets in 2003 to an estimated 18% in 2004. Our trinity of
strengths and our two-pronged growth strategy, coupled with our continuing emphasis on cost efficiency, should enable
TSMC to compete well.
We have every confidence that our dedication, our operating and financial discipline, as well as our strong commitment to
innovation and customer partnership, will continue to produce the outstanding performance that has characterized TSMC
since we founded the dedicated semiconductor foundry business in 1987.
Morris Chang,
Chairman and CEO
F. C. Tseng,
Deputy CEO
Rick Tsai,
President and COO
Left to right: F.C. Tseng,
Morris Chang, Rick Tsai
TSMC served more than
300 customers and produced more than
5,000 products in 2004.
A BRIEF INTRODUCTION
TO TSMC
1. Company Profile
TSMC's establishment of a dedicated integrated circuit (IC) foundry on February 21, 1987 at Hsinchu Science Park, Taiwan,
was the first of its kind in the world. Today, 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 libraries, IP, design
tools and reference flows.
As the global leader in the dedicated foundry sector of the semiconductor industry, TSMC currently operates two 12-inch
wafer fabs, five 8-inch wafer fabs and one 6-inch fab. The Company also has substantial capacity commitments at two
wholly owned subsidiaries, WaferTech in the U.S. and TSMC (Shanghai) Company, Ltd. in China, and at a joint-venture
fab, SSMC, in Singapore. The total installed annual capacity of TSMC and its affiliates amounted to 4.8 million 8-inch
equivalent wafers in 2004.
TSMC's common shares are listed on the Taiwan Stock Exchange. The depositary receipts of its common shares are listed
on the New York Stock Exchange (NYSE) under the symbol TSM.
TSMC takes its role as a responsible corporate citizen seriously. The Company is committed to community service and
maintaining strong stakeholder relationships.
Sound corporate governance is rooted in a strong Board of Directors comprised of experienced business leaders and dis-
tinguished scholars. The Board reinforces the Company's financial integrity and management soundness. There are three
independent Board members among a total of nine directors. They are Sir Peter L. Bonfield, Professor Lester C. Thurow,
and Mr. Stan Shih. In addition, Professor Michael E. Porter is an independent supervisor. Under TSMC's Board of Directors,
the Audit Committee was established in 2002. It oversees the integrity of TSMC's financial and audit systems. The
Compensation Committee was established in June 2003. It reviews and makes recommendations on issues related to
employee and executive compensation.
1.1 Core Values
Integrity - a central value of the Company. TSMC's commitment to integrity can best be illustrated by its strong corporate
governance efforts as well as the requirement that all TSMC employees act with honesty and uprightness, as set forth in
its ethics policy and standard operating procedures.
Customer Partnership - an essential part of the Company's core competitive strength. TSMC's dedication to customer
partnership helps to foster premium competitiveness for its customers and significant returns for its shareholders.
Innovation - the wellspring of the Company's growth. TSMC demands and encourage creativity from its employees. The
spirit of innovation is applied to every aspect of the Company's business, from strategic planning to marketing to manage-
ment to technology and production.
Commitment - the driving force that makes things happen. TSMC asks of its entire staff their personal commitment to
their job and to the Company. The Company commits itself to uphold the welfare of its employees, its customers and its
shareholders.
9
1.2 Statement of Company Vision
Our vision is to be the most advanced, innovative, and largest provider of foundry services. And, in partnership with our customers, we
aim to forge the most powerful force in the semiconductor industry.
To realize our vision, we must be:
(1) a technology leader, competitive with all other industry leaders;
(2) the manufacturing leader; and
(3) the most reputable and service-oriented foundry, providing the greatest total value to customers.
1.3 Corporate Recognition
Awards honoring TSMC in 2004 included:
● Most Admired Company in Taiwan (CommonWealth Magazine, October 2004 - for the eighth consecutive year)
● Gold Medal of Contribution Award, National Invention and Creation Award ( Ministry of Economic Affairs, ROC, October 2004)
● Best Practice of Quality Management ( Industrial Development Bureau, Ministry of Economic Affairs, ROC, November 2004)
● Overall Best Company for Corporate Governance in Taiwan (Asiamoney, December 2004)
● Best Managed Company, Best Corporate Governance, and Best Investor Relations in the Taiwan region ( FinanceAsia, 2003)
● Best Investor Relations by a Taiwan Company ( IR Magazine, November 2004)
● Best Corporate Governance in Taiwan (The Asset Magazine, 2004)
● Best Investor Relations in the Technology: Semiconductors Sector: The Buy-Side View, Best Investor Relations in the Technology:
Semiconductors Sector: The Sell-Side View, Best Investor Relations in Taiwan: The Buy-Side View (Institutional Investor, July 2004)
● Dr. Morris Chang, Chairman and CEO, was selected as one of Asia's 25 Most Powerful People in Business (Fortune Magazine,
August 2004)
2. Market Overview
2.1 TSMC Achievements
In 2004, TSMC maintained its leading position in the dedicated foundry segment of the semiconductor industry, with an estimated mar-
ket share of 47%, about twice that of its closest competitor. TSMC achieved this result in the face of fierce competition from both estab-
lished competitors and new entrants to the business.
A key contributor to TSMC's strong position is its lead in advanced process technologies: 28% of TSMC's revenues in 2004 came from
geometries of 0.13-micron and below manufacturing processes. Working closely with its customers, TSMC took the lead in volume pro-
duction of many products designed with its 0.13-micron FSG (Fluorinated Silicate Glass) and low-k processes. By September 2004, TSMC
had produced and shipped more than one million 0.13-micron 8-inch equivalent wafers, placing TSMC far to the fore of foundry pro-
duction at this advanced process node. The Company had also generated many times the 0.13-micron revenue of its nearest foundry
competitor. TSMC enhanced its advanced process design reference flows to version 5.0 from version 4.0 in 2004 to include significant
new power management, design for test, design for manufacturing, flip-chip design capabilities, and the first integrated chip-to-pack-
age design capabilities. The reference flows, together with a comprehensive IP and library program, help customers reduce costs and
increase productivity before products go into production. Because they reduce barriers to new designs, they also decrease customers'
time to market.
Examples of TSMC's technology development and deployment in 2004 included:
● Advanced Technologies (90nm, low-k and 65nm)
● Silicon-on-Insulator (SOI) Technology for 90nm and 65nm nodes
● Immersion Lithography for 90nm and below
● Mixed-Signal and Radio Frequency (MS/RF) Technologies
● 90nm High Density Embedded Memory Processes
10
● Logic Processes with Nonvolatile Memory at 0.35µm and 0.25µm nodes
● 40-volt, 0.18µm High Voltage Technology
● TSMC Reference Flow 5.0 for Power Closure and Integrated Chip to Package Design
Other key contributors to TSMC's success in 2004 were its continued progress in its R&D program and its unwavering focus on cus-
tomer service.
2.2 Market Analysis
On the back of a 16% IC revenue rebound in 2003, IC revenues continued its growth trend with a 28% increase in 2004 to US$179 bil-
lion, out of the total worldwide semiconductor revenue of US$213 billion. Fabless slightly outpaced Integrated Device Manufacturers
(IDM) with a market share of 15.5% of total IC revenues in 2004. IC foundry, a manufacturing sub-segment of the IC industry that serves
fabless companies as well as IDM, had total revenue of US$19.9 billion in 2004, up 40% from a year ago, while revenues from dedicated
IC foundies reached US$16.8 billion, up 46% from 2003. It is estimated that the production value of dedicated IC foundries accounted
for 18.8% of worldwide IC revenues in 2004.
According to IC Insights, a market research company, the largest geographic segment of the market for dedicated foundry services is
North America, which accounted for 58% of the dedicated foundry revenue in 2004. The second largest market segment is Asia Pacific
(ex Japan), which accounted for 24% of the dedicated foundry revenue in 2004. European-based companies accounted for 10%, and
companies based in Japan contributed 8%.
2.3 Industry Growth Forecast
After two consecutive years of strong growth, industry consensus indicates that the semiconductor market will stay flat or slightly decline
in 2005. Inventory correction and erosion in average selling price (ASP) per IC unit are believed by market analysts to be the primary
causes for the non-growth forecast of 2005. The market is then predicted to pick up in 2006.
2.4 Foundry Market Outlook: Opportunities and Threats
TSMC believes foundry services will play an increasingly important role as the IC industry becomes more reliant on foundry services.
Industry analysts forecast that by 2009, 28.8% of global IC production value will come from dedicated foundries, as compared to 18.8%
in 2004.
Confident of future foundry growth, TSMC plans to continue its capacity expansion in the year 2005 with capital investment of approxi-
mately US$2.5 billion to US$2.7 billion. Besides continued ramping up and expansion of Fab 12, TSMC's first 12-inch production fab,
the Company is also expanding capacity at Fab 14, another 12-inch fab in Taiwan, and TSMC (Shanghai), an 8-inch fab in China.
The threat of excess capacity and falling wafer prices, however, may return over the next couple of years. To capitalize on opportunities,
to minimize competitive threats and to reduce risk, TSMC will continue focusing on high-growth segments of the industry.
2.5 China Project
The Taiwan Government granted "Phase I" approval to TSMC's application to invest in a semiconductor fabrication plant in China, and
TSMC accordingly established TSMC (Shanghai) Company Limited in August 2003.
In March 2004, TSMC submitted a "Phase II" application to the Taiwan Government for the same investment. "Phase II" approval was
granted in May 2004, and in the following month TSMC began to equip the plant with used tools and machinery relocated from TSMC's
Taiwan fabs. As of December 31, 2004, TSMC had invested a total of US$276 million in TSMC (Shanghai). TSMC (Shanghai) commenced
production of 0.35 and 0.25 micron process technologies in October 2004. The fab will ramp up its capacity to 15,000 8-inch wafers
per month by the end of 2005.
11
3. Organization
3.1 Organization Chart
Shareholders'
Meeting
Board of Directors
Chairman & CEO
Supervisors
Deputy CEO
President & COO
China Project
Research &
Development
Information
Technology
Exploratory
Research
Human
Resources
Quality &
Reliability
Corporate
Planning
World-Wide
Marketing &
Sales
Materials
Management
& Risk
Management
Operations I
Operations II
Chief
Financial
Officer &
Spokesperson
General
Counsel
Internal
Audit
Marketing
Pricing &
Business
Process
Customer
Service
Asia / Pacific
Business
TSMC Europe
TSMC Japan
TSMC North
America
China Region
Business
Development
12
3.2 Function Description
China Project
● China development strategy and execution
Research & Development
● Advanced technology research and development, mask operations, and design services
Information Technology
● Company-wide information infrastructure, e-Business strategy, and information systems development and operation
Exploratory Research
● Exploratory technology development and patent affairs management
Human Resources
● Human resources management and organizational development
Quality & Reliability
● Quality and reliability management
Corporate Planning
● Production planning & control, industrial engineering, and operational efficiency
Worldwide Marketing & Sales
● Marketing
strategy, technology, and services marketing
● Pricing & Business Processes
pricing and business management
● Customer Service
customer loyalty and solutions effectiveness
● Regional Operations
business development and account services for North America, Europe, Japan, Asia and China regions
Materials Management & Risk Management
● Purchasing, warehousing, import and export, logistics support, industrial safety, and environmental protection
Operations I
● Manufacturing operations (Fabs 2, 3, 5, 6, 7, and 8), product engineering, and back-end operations
Operations II
● Manufacturing operations (Fabs 12 and 14), new fab planning, and manufacturing technology integration
Chief Financial Officer & Spokesperson
● Finance and accounting services, including investor relations, treasury, tax, asset management, financial and accounting management
● Corporate spokesperson
General Counsel
● Corporate legal affairs, contracts, patent and other intellectual property matters
Internal Audit
● Internal audit and process compliance
13
3.3 Directors & Supervisors
Information regarding Directors & Supervisors
Title / Name
Chairman
Morris Chang
Koninklijke Philips
Electronics N. V.
Representatives: (Note 3)
Director
J. C. Lobbezoo
Director
Mario Alberto Rivas (Note 1)
Director
F. C. Tseng
Director
Stan Shih
Development Fund,
Executive Yuan
Representatives: (Note 3)
Director
Chintay Shih
Director
Sir Peter Leahy Bonfield
Date
Elected
Term
Expires
Date
First Elected
Shareholding when Elected
Current Shareholding
Spouse and Minor
Shareholding
Shares
%
Shares
%
Shares
%
06/03/2003
06/02/2006
12/10/1986
91,669,112
0.49
122,793,152
0.53
111,723
0.00
06/03/2003
06/02/2006
12/10/1986
2,554,450,279
13.72
2,576,997,318
11.08
-
-
06/03/2003
06/02/2006
05/13/1997
30,356,889
0.16
40,041,167
0.17
121,018
0.00
06/03/2003
06/02/2006
04/14/2000
2,225,077
0.01
1,348,371
0.01
14,681
0.00
06/03/2003
06/02/2006
12/10/1986
1,793,522,406
9.63
1,716,683,170
7.38
-
-
06/03/2003
06/02/2006
05/07/2002
0
0.00
0
0.00
0
0.00
Director
Lester Carl Thurow
06/03/2003
06/02/2006
05/07/2002
0
0.00
0
0.00
0
0.00
14
TSMC Shareholding by
Nominee Arrangement
(Shares)
0
0
Education and Selected Past Positions
Selected Current Positions
Ph. D., Electrical Engineering, Stanford University, USA
Chairman, Industrial Technology Research Institute
President & COO, General Instrument Corporation
CEO, TSMC
Director, Chairman and/or President of TSMC subsidiary
companies
Supervisor, Industrial Technology Research Institute
M. A., Business Economics, Erasmus University, the
Executive Vice President & Chief Financial Officer, Philips
Netherlands
Semiconductors B.V.
Chairman, Systems on Silicon Manufacturing Company Pte
Ltd.
Director, FEI Company
Masters degrees, EE Semiconductor Physics and Business
Administration, Rensselaer Polytechnic Institute, the
Netherlands
Executive Vice President, Communications Businesses, Philips
Semiconductors B.V.
Member of Philips Semiconductors' Executive Management
Corporate Vice President, Motorola Semiconductors (now
Team
Freescale Semiconductor, Inc.), Motorola, Inc.
0
Ph. D., Electrical Engineering, National Cheng-Kung University,
Taiwan
President, TSMC
President, Vanguard International Semiconductor Corp.
Deputy CEO, TSMC
Director and/or President of TSMC subsidiary companies
Chairman, Global Unichip Corp.
Director, Prosperity Venture Capital Corp.
Director, digimax, Inc.
Director, Allegro Manufacturing Pte, Ltd.
0
Honorary Doctor of International Law, Thunderbird, American
Graduate School of International Management, USA
Honorary Fellowship, University of Wales, Cardiff, UK
Honorary Doctor of Technology, The Hong Kong Polytechnic
Group Chairman, iD SoftCapital
Co-Founder, Chairman Emeritus of the Acer Group
Director, ABW (Acer, BenQ, Wistron) Family
Managing Director, Industrial Technology Research Institute
University, Hong Kong
Honorary EE Ph. D., MSEE, BSEE, National Chiao Tung
University, Taiwan
0
Ph. D., Electrical Engineering, Princeton University, USA
President, Industrial Technology Research Institute
0
Engineering, Loughborough University of Technology, UK
CEO and Chairman of the Executive Committee, British
Telecommunications Plc
Professor and Dean, College of Technology Management,
National Tsing Hua University, Taiwan
Managing Director and Special Advisor, Industrial Technology
Research Institute
Director, Industrial Technology Investment Corporation
Director, Vanguard International Semiconductor Corp.
Senior Non-Executive Director, AstraZeneca Group Plc
Director, L.M. Ericsson
Director, Mentor Graphics Corporation Inc.
Vice President, the British Quality Foundation
Member of the Citigroup International Advisory Board
Member of the Sony Corporation Advisory Board
Non-Executive Director, Corporate Board of the Department
for Constitutional Affairs
Non Executive Member of Actis LLP Supervisory Board
Non Executive Director of Her Majesty's Courts Services Board
-
-
-
-
-
-
-
-
-
0
Ph. D., Economics, Harvard University, USA
Dean, Sloan School of Management, M.I.T.
Jerome and Dorothy Lemelson Professor of Management and
-
Economics, Sloan School of Management, M.I.T.
Director, Analog Devices, Inc.
Director, E*Trade
As of 02/28/2005
Managers Are Spouse or Within
Second-degree Relative of
Consanguinity to Each Other
Title
Name
Relation
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(Continued)
15
Title / Name
Director
Rick Tsai
Koninklijke Philips
Electronics N.V.
Representatives: (Note 3)
Supervisor
Robbert J. Brakel
Development Fund,
Executive Yuan
Representatives: (Note 3)
Supervisor
James C. Ho (Note 2)
Supervisor
Michael E. Porter
Date
Elected
Term
Expires
Date
First Elected
Shareholding when Elected
Current Shareholding
Spouse and Minor
Shareholding
Shares
%
Shares
%
Shares
06/03/2003
06/02/2006
06/03/2003
19,491,738
0.10
24,497,273
0.11
06/03/2003
06/02/2006
12/10/1986
2,554,450,279
13.72
2,576,997,318
11.08
06/03/2003
06/02/2006
12/10/1986
1,793,522,406
9.63
1,716,683,170
7.38
0
-
-
%
0.00
-
-
06/03/2003
06/02/2006
05/08/2002
0
0.00
0
0.00
0
0.00
Note 1: Mr. Mario Alberto Rivas replaced Mr. Scott McGregor on December 15, 2004.
Note 2: Mr. James C. Ho replaced Ms. Susan Chang on August 20, 2004.
Note 3: Information on Directors and Supervisors that are Representatives of Juridical Person Shareholders:
Directors / Supervisors That are
Representatives of Juridical Person
Shareholders
Director: J. C. Lobbezoo
Director: Mario Alberto Rivas
Supervisor: Robbert Brakel
Director: Chintay Shih
Supervisor: James C. Ho
Juridical Person Shareholders
Koninklijke Philips Electronics N.V.
Top Ten Shareholders of Juridical Person Shareholders, or
Shareholders Owning More than 10% of Juridical Person
Shareholders
Top Ten Shareholders: Not Available
Shareholders Owned More than 10% Shares: None
Development Fund, Executive Yuan
Not Applicable
16
TSMC Shareholding
by Nominee Arrangement
(Shares)
Education and Selected Past Positions
Selected Current Positions
Ph. D., Material Science, Cornell University, USA
Executive Vice President, Worldwide Marketing and Sales,
President & COO, TSMC
Director of TSMC subsidiary companies
TSMC
President, Vanguard International Semiconductor Corp.
Drs., Business Economics, Free University of Amsterdam, the
Netherlands
Post Doctorate Controllers Programme (RC), Free University of
Vice President & CFO, Philips Mobile Display Systems
Director, Philips Electronic Industries (Taiwan) Ltd.
Director, Philips Electronic Building Elements Industries
Amsterdam, the Netherlands
(Taiwan) Ltd.
0
0
0
Ph. D., Economics, University of Pittsburgh, USA
M. A., Economics, University of Pittsburgh, USA
Executive Director, Center for Economic Deregulation and
Innovation, Council for Economic Planning and Development,
Executive Yuan
Deputy Executive Director and Executive Director, Asia-Pacific
Regional Operations Center, Council for Economic
Planning and Development, Executive Yuan
Deputy Executive Secretary, Development Fund, Executive
Yuan
Director, Taiwan High Speed Rail
0
Ph. D., Business Economics, Harvard University, USA
Bishop William Lawrence University Professor, Harvard
Business School
Director, Inforte Corporation
Director, Parametric Technology Corporation
Director, Thermo-Electron Corporation
As of 02/28/2005
Managers Are Spouse or Within
Second-degree Relative of
Consanguinity to Each Other
Title
Name
Relation
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
17
Remuneration Paid to Directors and Supervisors in 2004
Transportation
Compensation
Allowance
(Note 3)
(NT$ thousands)
(NT$ thousands)
Cash
(NT$ thousands)
Shares
1,440
127,805
25,670
10,237,505
Title / Name
Chairman & Chief Executive Officer
Morris Chang
Koninklijke Philips Electronics N.V.
Representatives:
Director
J. C. Lobbezoo
Director
Mario Alberto Rivas (Note 1)
Supervisor
Robbert J. Brakel
Director & Deputy Chief Executive Officer
F. C. Tseng
Director
Stan Shih
Development Fund, Executive Yuan
Representatives:
Director
Chintay Shih
Supervisor
James C. Ho (Note 2)
Director
Sir Peter Leahy Bonfield
Director
Lester Carl Thurow
Director & President & Chief Operating Officer
Rick Tsai
Supervisor
Michael E. Porter
Note 1: Mr. Mario Alberto Rivas replaced Mr. Scott McGregor on December 15, 2004.
Note 2: Mr. James C. Ho replaced Ms. Susan Chang on August 20, 2004.
Note 3: Although Chi Cherng Investment Co., Ltd. and Hsin Ruey Investment Co., Ltd. had stepped down from TSMC's Board on June 3, 2003, they received a pro rata
compensation in 2004 for the period that they remained on the Board in 2003.
Note 4: Average closing price per common share in December 2003, adjusted for cash and stock dividends and employee profit sharing (in stock) distributed in 2004.
18
Employee Profit Sharing
Stock
Market Price Per Share
(NT$, Note 4)
Market Value
(NT$ thousands)
Total Compensation
(NT$ thousands)
Total Compensation
Paid to Directors &
Supervisors as % of
2003 Net Income
Number of Employee
Stock Options
Granted in 2004
Other Compensation
(NT$ thousands)
53.98
552,621
707,536
1.50%
0
2,466
19
Independence Analysis of Board Members Under Taiwan SFB Criteria
Taiwan SFB provides a set of criteria to determine the independence of Board Members. The specific criteria and applicability to TSMC
Board Members are shown below in detail.
Independence Criteria of Directors and Supervisors
Title / Name
Chairman
Morris Chang
Director
Peter Leahy Bonfield
Director
Lester Carl Thurow
Director
Stan Shih
Director
J. C. Lobbezoo
Director
Mario Alberto Rivas
Director
Chintay Shih
Director
F. C. Tseng
Director
Rick Tsai
Supervisor
Robbert J. Brakel
Supervisor
James C. Ho
Supervisor
Michael E. Porter
Over five years of
experience in business, finance,
legal or areas required by the
Company
Not an employee of the Company,
nor a director, supervisor or
employee of affiliated companies
Not a natural person shareholder
directly or indirectly owning more
than 1% of the Company's out-
standing shares, nor one of the
Company's top ten natural person
shareholders
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
Note: "√" indicates meeting conditions specified above.
Board of Directors
Composition
TSMC's Board of Directors consists of nine distinguished members. Their outstanding careers and breadth of experience encompass high
technology, finance, business, and management. Three of the nine members of the Board -- Sir Peter L. Bonfield, former CEO of British
Telecommunications, Professor Lester C. Thurow of M.I.T., and Mr. Stan Shih, former Chairman of Acer Group -- are independent direc-
tors. A complete list of TSMC's directors, their qualifications and experience can be found on pages 14-17.
20
Not a spouse nor first- or second-
degree relative to any person speci-
fied in columns 3 and 4
Criteria
Not a director, supervisor or
employee of a shareholder of
juridical person of the Company
directly or indirectly owning more
than 5% of the Company's out-
standing shares, nor one of the
Company's top five shareholders of
juridical person
Not a director, supervisor, manager
or shareholder holding more than
5% of the outstanding shares of
certain companies or institutions
that have financial or business
relationship with the Company
Not an owner, partner, director,
supervisor, manager of any sole
proprietor, partnership, company
or institution and his/her spouse,
or the specialist and his/her
spouse, that provides finance,
commerce, legal consultation and
services to the Company or affiliat-
ed companies within one year
Not a juridical person or its represen-
tative as defined in Article 27 of
Company Law
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
Responsibilities
The Board's primary duty is to fulfill its oversight responsibilities for the overall business and affairs of TSMC. Day-to-day operations,
preparation of financial statements, fund raising, and investments remain the legal responsibility of the Company's management, and the
activities of the Board do not supersede or alter those responsibilities.
In conjunction with Company staff, the Board also monitors regulatory activities, such as amendments to Taiwan's laws, amendments to
the U.S. SEC rules and regulations, and changes to the New York Stock Exchange and Taiwan Stock Exchange listing requirements.
21
3.4 Management Team
Information regarding Management Team
Title / Name
Chairman & Chief Executive Officer
Morris Chang
Deputy Chief Executive Officer
F. C. Tseng
President & Chief Operating Officer
Rick Tsai
Senior Vice President
Research & Development
Shang-Yi Chiang
Senior Vice President
Worldwide Marketing & Sales
Kenneth Kin
Senior Vice President &
Chief Information Officer
Stephen T. Tso
Vice President
Materials Management & Risk Management
J. B. Chen
Vice President
Research & Development
Ping Yang
Vice President
Operations I
C. C. Wei
Vice President
Operations II
Mark Liu
Vice President
Marketing
Genda Hu
Vice President
Operations I
M. C. Tzeng
Date
Effective
03/03/1998
08/07/2001
08/07/2001
11/07/2000
Shareholding
Spouse and Minor
Shareholding
122,793,152
%
0.53
Shareholding
111,723
%
0.00
40,041,167
0.17
121,018
0.00
24,497,273
0.11
13,248,391
0.06
08/07/2001
2,781,256
0.01
11/02/2004
12,003,489
0.05
09/05/2000
6,391,916
0.03
42,265
0.00
08/07/2001
5,304,686
0.02
0
0.00
03/03/1998
4,974,702
0.02
1,192
0.00
05/11/1999
9,277,631
0.04
08/11/2000
2,121,879
0.01
0
0
0.00
0.00
08/07/2001
4,756,521
0.02
371,286
0.00
0
0
0
0
0.00
0.00
0.00
0.00
0
0
0.00
0.00
05/07/2002
1,281,909
0.01
09/08/2003
2,850,487
0.01
175,697
0.00
02/17/2004
1,103,349
0.00
08/10/2004
290,000
0.00
10/15/2003
698,015
0.00
0
0
0
0.00
0.00
0.00
01/01/2002
7,377,026
0.03
1,140,866
0.00
TSMC Shareholding by
Nominee Arrangement
(Shares)
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Vice President & General Counsel
Richard Thurston
02/08/2002
1,542,094
0.01
Vice President
Customer Partnership and Service
Chiam Wu
Vice President,
Chief Financial Officer & Spokesperson
Lora Ho
Vice President
Human Resources
P. H. Chang
Vice President
Operations II
Wei-Jen Lo
Senior Director
Internal Audit
Jan Kees van Vliet
Senior Director
Corporate Planning Organization
L. C. Tu
22
Education and Selected Past Positions
Selected Current Positions
(see page 15)
(see page 15)
(see page 15)
(see page 15)
(see page 15)
(see page 15)
Ph. D., Electrical Engineering, Stanford University, USA
Vice President, Research and Development, TSMC
Department Manager, Device Research and Applications, Hewlett-Packard Company
Director of International Sematech
Ph. D., Nuclear Engineering and Applied Physics, Columbia University, USA
Vice President, Worldwide Sales & Services, IBM Microelectronics Division
Director of TSMC Europe B.V.
Ph. D., Materials Science & Engineering, University of California, Berkeley, USA
President, WaferTech, LLC
Senior Vice President, Operations, TSMC
Director of WaferTech, LLC
Director of TSMC Partners, Ltd.
Director of United Industrial Gases Co., Ltd.
Director of Global Unichip Corp.
Director of TSMC (Shanghai) Company, Ltd.
Director of VisEra Technology Company, Ltd.
Director of System on Silicon Manufacturing Company Pte Ltd.
Director of TSMC Partners, Ltd.
Director of System on Silicon Manufacturing Company Pte Ltd.
Director and/or Supervisor TSMC subsidiary companies
Supervisor of Global Unichip Corporation
Supervisor of VisEra Technology Company, Ltd.
Master, Physics, National Tsing Hua University, Taiwan
Vice President, Tainan Site Operation, TSMC
President, TSMC-Acer Semiconductor Manufacturing Corp.
Ph. D., Electrical Engineering, University of Illinois, Champaign-Urbana, USA
Senior Vice President, U.S. Subsidiary, TSMC North America
Director, Device and Flow Design, Semiconductor Process and Device Center, Texas
Instruments Incorporated
Ph. D., Electrical Engineering, Yale University, USA
Vice President, South Site Operation, TSMC
Senior Vice President, Chartered Semiconductor Manufacturing Ltd.
Ph. D., Electrical Engineering and Computer Science, University of California, Berkeley, USA
Vice President, South Site Operation, TSMC
President, Worldwide Semiconductor Manufacturing Corp.
Ph. D., Electrical Engineering, Princeton University, USA
General Director, Electronic Research and Service Organization, Industrial Technology
Research Institute
President, Taiwan Semiconductor Industry Association
Master, Applied Chemistry, Chung Yuan University, Taiwan
Senior Director, Fab 2 Operation, TSMC
J. D., Rutgers School of Law, State University of New Jersey, USA
Ph. D., History, University of Virginia, USA
Partner, Haynes Boone, LLP
Vice President Corporate Staff, Assistant General Counsel, Texas Instruments Incorporated
M. S., Materials Science and Engineering, Oregon State University, USA
Group Vice President, Applied Materials, Inc.
Vice Chairman, Applied Materials Taiwan, Ltd.
Master, Finance, Nationl Taiwan University, Taiwan
Senior Director, Accouting, TSMC
Vice President, TI-Acer Semiconductor Manufacturing Corp.
Ph. D., Materials Science and Engineering, Purdue University, USA
Senior Director, Materials Management, TSMC
Vice President, Worldwide Semiconductor Manufacturing Corp.
Ph. D., Solid State Physics and Surface Chemistry, University of California, Berkeley, USA
Director, Advanced Technology Development & CTM Plant Manager, Intel
M. S., Management, Delft / Erasmus University, the Netherlands
Senior Director, Pricing & Business Process, TSMC
Chief Financial Officer and member of the Board of Management, Philips Taiwan
Master, Business Administration, Tulane University, USA
Senior Director, Fab 5 Operation, TSMC
As of 02/28/2005
Managers are Spouse or Within Second-degree
Relative of Consanginity to Each Other
Title
Name
Relation
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Department
Manager
M. J. Tzeng
Siblings
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
23
Compensation Paid to President and Vice Presidents
Title
Name
Salary
(NT$ thousands)
Bonus
(NT$ thousands)
Cash
(NT$ thousands)
Shares
President &
Chief Operating Officer
Rick Tsai
Senior Vice President
Research & Development
Senior Vice President
Worldwide Marketing &
Sales
Senior Vice President &
Chief Information Officer
Senior Vice President &
Chief Information Officer
Vice President
Materials Management &
Risk Management
Vice President
Research & Development
Vice President
Operations I
Vice President
Operations II
Vice President
Marketing
Vice President
Operations I
Vice President &
General Counsel
S. Y. Chiang
Kenneth Kin
Quincy Lin (Note 1)
Stephen T. Tso
J. B. Chen
Ping Yang
C. C. Wei
Mark Liu
Genda Hu
M. C. Tzeng
Richard Thurston
Vice President
Customer Partnership and
Service
Vice President, Chief
Financial Officer &
Spokesperson
Vice President
Human Resources
Vice President
Operations II
Chiam Wu
Lora Ho
P. H. Chang
Wei-Jen Lo
Note 1: Mr. Quincy Lin retired on February 28, 2005.
53,705
20,560
44,695
18,125,194
Note 2: Average closing price per common share in December 2003, adjusted for cash and stock dividends and employee profit sharing (in stock) distributed in 2004.
24
Employee Profit Sharing
Stock
Market Price Per Share
(NT$, Note 2)
Market Value
(NT$ thousands)
Total Compensation
(NT$ thousands)
Total Compensation to
President and VPs as %
2003 of Net Income
ESOP shares granted
in 2004
Other Compensation
(NT$ thousands)
53.98
978,398
1,097,359
2.32%
0
4,278
25
Employee Profit Sharing Granted to Management Team
Profit Sharing Stock
Shares
Market Price
Per Share
(NT$, Note 2)
Market Value
(NT$ thousands)
Profit Sharing
Cash
(NT$ thousands)
Total Profit
Sharing Value
(NT$ thousands)
Total Profit
Sharing Value to
Management
Team as % of
2003 Net Income
26,789,012
53.98
1,446,071
66,419
1,512,490
3.20%
Tital
Name
Chairman &
Chief Executive Officer
Deputy Chief Executive
Officer
Morris Chang
F. C. Tseng
President &
Chief Operating Officer
Rick Tsai
Senior Vice President
Research & Development
S. Y. Chiang
Senior Vice President
Worldwide Marketing &
Sales
Senior Vice President &
Chief Information Officer
Senior Vice President &
Chief Information Officer
Vice President
Materials Management &
Risk Management
Kenneth Kin
Quincy Lin (Note 1)
Stephen T. Tso
J. B. Chen
Vice President
Research & Development
Ping Yang
Vice President
Operations I
Vice President
Operations II
Vice President
Marketing
Vice President
Operations I
Vice President &
General Counsel
Vice President
Customer Partnership and
Service
Vice President
Chief Financial Officer &
Spokesperson
Vice President
Human Resources
Vice President
Operations II
Senior Director
Internal Audit
Senior Director
Corporate Planning
Organization
C. C. Wei
Mark Liu
Genda Hu
M. C. Tzeng
Richard Thurston
Chiam Wu
Lora Ho
P. H. Chang
Wei-Jen Lo
Jan Kees van Vliet
L. C. Tu
Note 1: Mr. Quincy Lin retired on February 28, 2005.
Note 2: Average closing price per common share in December 2003, adjusted for cash and stock dividends and employee profit sharing (in stock) distributed in 2004.
26
Information on Net Change in Shareholding and Net Change in Shares Pledged by Directors, Supervisors, Management
and Shareholders of 10% Shareholdings or More
2004
01/01/2005~ 02/28/2005
Net Change in Shares
Pledged (Note 1)
Net Change in
Shareholding
Net Change in Shares
Pledged (Note 1)
Unit: Share
Title / Name
Chairman & CEO
Morris Chang
Director & Supervisor
Koninklijke Philips Electronics N.V.
Representatives:
J. C. Lobbezoo
Mario Alberto Rivas
Robbert J. Brakel
Director & Deputy CEO
F. C. Tseng
Director
Stan Shih
Director & Supervisor
Development Fund, Executive Yuan
Representatives:
Chintay Shih
James C. Ho
Director
Sir Peter Leahy Bonfield
Director
Lester Carl Thurow
Director & President & COO
Rick Tsai
Supervisor
Michael E. Porter
Senior Vice President
Shang-Yi Chiang
Senior Vice President
Kenneth Kin
Senior Vice President & CIO
Stephen T. Tso
Vice President
J. B. Chen
Vice President
Ping Yang
Vice President
C. C. Wei
Vice President
Mark Liu
Vice President
Genda Hu
Vice President
M. C. Tzeng
Vice President & General Counsel
Richard Thurston
Vice President
Chiam Wu
Vice President, CFO & Spokesperson
Lora Ho
Vice President
P. H. Chang
Vice President
Wei-Jen Lo
Senior Director
Jan Kees van Vliet
Senior Director
L. C. Tu
Net Change in
Shareholding
20,409,803
318,191,017
5,981,948
166,488
211,964,972
0
0
3,619,817
0
2,898,482
908,741
0 (Note 2)
1,135,035
938,874
1,479,981
1,323,636
829,371
1,217,427
717,785
704,909
1,131,967
0
0
0
0
0
0
0
0
0
400,000
0
0 (Note 2)
0
0
0
0
0
0
0
0
0
682,861 (Note 3)
0 (Note 4)
414,449
1,150,325
0 (Note 3)
0 (Note 4)
0
0
0
0
-100,000
0
0
0
0
-240,000
0
-70,000
-200,000
0
-200,000
-340,000
-144,000
-150,000
-86,000
-36,000
-30,000
0
-80,000
0
-10,000
-10,000
-58,000
Note 1: This refers to the creation of security interest over TSMC shares in favor of creditors, usually in connection with a shareholder's own financing activities.
Note 2: Net change in shareholding or share pledged from 11/02/2004 to 12/31/2004.
Note 3: Net change in shareholding or share pledged from 02/17/2004 to 12/31/2004.
Note 4: Net change in shareholding or share pledged from 08/10/2004 to 12/31/2004.
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
27
Stock Trade with Related Party: None
Stock Pledge with Related Party: None
3.5 TSMC Long-Term Investments Ownership
Long-Term Investment
Equity Method
TSMC International Investment Ltd.
TSMC Partners, Ltd.
Systems on Silicon Manufacturing Co. Pte Ltd.
Vanguard International Semiconductor Corp.
TSMC (Shanghai) Company Ltd.
Emerging Alliance Fund, L.P.
VentureTech Alliance Fund II, L.P.
TSMC North America
Global UniChip Corp.
TSMC Japan K.K.
VisEra Technology Company Ltd.
Chi Cherng Investment Co., Ltd.
Hsin Ruey Investment Co., Ltd.
TSMC Europe B.V.
Cost Method
Non- Publicly Traded
United Industrial Gases Co. Ltd.
Shin-Etsu Handotai Taiwan Company Ltd.
Hontung Venture Capital Co., Ltd.
W. K. Technology Fund IV
Globaltop Partner I Venture Capital Corp.
Funds
Horizon Ventures
Crimson Asia Capital
Ownership by TSMC (1)
Shares
987,968,244
300,000
382,264
409,531,914
Not Applicable (Note 3)
Not Applicable (Note 3)
Not Applicable (Note 3)
11,000,000
39,040,000
6,000
5,100,000
Not Applicable (Note 3)
Not Applicable (Note 3)
200
16,782,937
10,500,000
8,391,608
5,000,000
5,000,000
Not Applicable (Note 3)
Not Applicable (Note 3)
%
100.0
100.0
32.0
27.9
100.0
99.5
98.0
100.0
47.3
100.0
25.0
35.7
35.7
100.0
10.3
7.0
10.5
1.9
1.5
12.1
1.0
Note 1: Share interest held by Koninklijke Philips Electronics N.V.
Note 2: Include 27.6% owned by Development Fund, Executive Yuan.
Note 3: Not applicable: These firms do not issue shares. TSMC's investment is measured as a percentage of ownership interest.
Note 4: Not available: Not all information is available to TSMC as of the report date.
28
Direct / Indirect Ownership by Directors, Supervisors,
and Management (2)
Shares
-
-
573,396
410,138,855
-
-
-
-
2,561,675
-
3,340,000
-
-
-
%
-
-
48.0 (Note 1)
27.9 (Note 2)
-
-
-
-
3.1
-
16.4
-
-
-
Not Available (Note 4)
Not Available (Note 4)
Not Available (Note 4)
Not Available (Note 4)
Not Available (Note 4)
Not Available (Note 4)
Not Available (Note 4)
Not Available (Note 4)
Not Available (Note 4)
Not Available (Note 4)
Total Ownership
(1) + (2)
Shares
987,968,244
300,000
955,660
819,670,769
Not Applicable (Note 3)
Not Applicable (Note 3)
Not Applicable (Note 3)
11,000,000
41,601,675
6,000
8,440,000
Not Applicable (Note 3)
Not Applicable (Note 3)
200
16,782,937
10,500,000
8,391,608
5,000,000
5,000,000
Not Applicable (Note 3)
Not Available (Note 4)
Not Applicable (Note 3)
Not Applicable (Note 3)
Not Available (Note 4)
Not Applicable (Note 3)
As of 12/31/2004
%
100.0
100.0
80.0
55.8
100.0
99.5
98.0
100.0
50.4
100.0
41.4
35.7
35.7
100.0
10.3
7.0
10.5
1.9
1.5
12.1
1.0
29
4. Capital & Shares
4.1 History of Capitalization
Unit: Share/NT$
Month/Year
Price
Par Value
02/1987
12/1988
11/1989
07/1990
12/1990
07/1991
12/1991
12/1992
08/1993
07/1994
06/1995
05/1996
07/1997
07/1998
07/1999
11/1999
06/2000
06/2000
08/2000
12/2000
07/2001
07/2002
06/2003
07/2003
06/2004
08/2004
11/2004
01/2005
02/2005
1,000
1,000
1,000
-
1,000
-
10
10
-
-
-
-
-
-
-
-
-
220
-
10
-
-
10
-
-
-
-
-
-
1,000
1,000
1,000
1,000
1,000
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
10
Authorized
Paid-in
Shares
5,510,000
5,510,000
5,510,000
5,510,000
5,510,000
551,000,000
551,000,000
551,000,000
Amount
5,510,000,000
5,510,000,000
5,510,000,000
5,510,000,000
5,510,000,000
5,510,000,000
5,510,000,000
5,510,000,000
Shares
1,377,500
2,204,000
3,306,000
3,360,797
3,911,797
391,179,700
473,829,700
551,000,000
Amount
1,377,500,000
2,204,000,000
3,306,000,000
3,360,797,000
3,911,797,000
3,911,797,000
4,738,297,000
5,510,000,000
780,000,000
7,800,000,000
608,304,000
6,083,040,000
780,000,000
7,800,000,000
780,000,000
7,800,000,000
3,000,000,000
30,000,000,000
1,439,000,000
14,390,000,000
3,000,000,000
30,000,000,000
2,654,200,000
26,542,000,000
8,500,000,000
85,000,000,000
4,081,300,000
40,813,000,000
8,500,000,000
85,000,000,000
6,047,175,967
60,471,759,670
9,100,000,000
91,000,000,000
7,548,483,035
75,484,830,350
9,100,000,000
91,000,000,000
7,670,881,717
76,708,817,170
17,800,000,000
178,000,000,000
9,990,849,423
99,908,494,230
17,800,000,000
178,000,000,000
10,105,849,423
101,058,494,230
17,800,000,000
178,000,000,000
11,689,364,587
116,893,645,870
17,800,000,000
178,000,000,000
12,989,364,587
129,893,645,870
24,600,000,000
246,000,000,000
18,132,553,051
181,325,530,510
24,600,000,000
246,000,000,000
19,922,886,745
199,228,867,450
24,600,000,000
246,000,000,000
18,622,886,745
186,228,867,450
24,600,000,000
246,000,000,000
20,266,618,984
202,666,189,840
24,600,000,000
246,000,000,000
23,376,597,005
233,765,970,050
24,600,000,000
246,000,000,000
23,251,877,005
232,518,770,050
24,600,000,000
246,000,000,000
23,251,963,693
232,519,636,930
24,600,000,000
246,000,000,000
23,252,048,432
232,520,484,320
24,600,000,000
246,000,000,000
23,252,256,555
232,522,565,550
30
Sources of Capital
Founding
Cash Offering
Cash Offering
Capitalization of Profits
Cash Offering
Par Value Change from NT$1,000 to NT$10
Cash Offering
Cash Offering: NT$582,171,120
Capitalization of Profits: NT$189,531,880
Capitalization of Profits
Capitalization of Profits
Capitalization of Profits
Capitalization of Profits
Capitalization of Profits
Capitalization of Profits
Capitalization of Profits
Conversion of ECB
Capitalization of Profits: NT$21,320,311,040 and
Capital Surplus: NT$1,879,366,020
Cash Offering (ADR)
Merger with WSMC & TSMC-ACER
Cash Offering (Preferred Stock)
Capitalization of Profits
Capitalization of Profits
Redemption of Preferred Stock
Capitalization of Profits
Capitalization of Profits
Capital Reduction : Cancellation of Treasury Shares
Exercise of Employee Stock Options
Exercise of Employee Stock Options
Exercise of Employee Stock Options
Remark
Capital Increase by Assets other
than Cash
Date of Approval & Approval Document No.
As of 02/28/2005
NO
NO
NO
NO
NO
-
NO
NO
NO
NO
NO
NO
NO
NO
NO
NO
NO
NO
NO
NO
NO
NO
NO
NO
NO
NO
NO
NO
NO
-
-
-
-
-
-
-
10/30/1992
(81) Tai Tsai Cheng (1) No. 02818
07/05/1993
(82) Tai Tsai Cheng (1) No. 01624
06/15/1994
(83) Tai Tsai Cheng (1) No. 26945
05/19/1995
(84) Tai Tsai Cheng (1) No. 29799
04/16/1996
(85) Tai Tsai Cheng (1) No. 24544
05/26/1997
(86) Tai Tsai Cheng (1) No. 40772
05/26/1998
(87) Tai Tsai Cheng (1) No. 46156
05/26/1999
(88) Tai Tsai Cheng (1) No. 48906
-
04/27/2000
(89) Tai Tsai Cheng (1) No. 34058
05/09/2000
(89) Tai Tsai Cheng (1) No. 34440
06/07/2000
(89) Tai Tsai Cheng (1) No. 47200
09/22/2000
(89) Tai Tsai Cheng (1) No. 80344
06/05/2001
(90) Tai Tsai Cheng (1) No. 135268
05/28/2002
(91) Tai Tsai Cheng (1) No. 128948
-
06/18/2003
Tai Tsai Cheng 1 Tzu No. 0920127023
05/25/2004
Tai Tsai Cheng 1 Tzu No. 0930123135
-
06/25/2002
Tai Tsai Cheng 1 Tzu No. 0910134577
06/25/2002
Tai Tsai Cheng 1 Tzu No. 0910134577
06/25/2002
Tai Tsai Cheng 1 Tzu No. 0910134577
31
4.2 Capital & Shares
Unit: Share
Type of Stock
Common Stock
Authorized Capital
Issued Shares
Listed
23,252,256,555
Non-Listed
-
Total
23,252,256,555
As of 02/28/2005
Total
Unissued Shares
1,347,743,445
24,600,000,000
4.3 Status of Shareholders
Stock: Common Share
Type of Shareholders
Number of Shareholders
Shareholding
Holding Percentage (%)
Government
Agencies
Financial
Institutions
Other Juridical
Persons
9
1,922,288,920
8.27
131
1,135,368,348
4.88
958
2,799,465,844
12.04
As of 11/22/2004 (last record date)
Foreign
Institutions &
Natural
Persons
1,731
12,491,364,497
53.72
Domestic
Natural
Persons
Total
522,128
4,903,476,084
21.09
524,957
23,251,963,693
100.00
4.4 Distribution Profile of Shareholder Ownership
Stock: Common Share
As of 11/22/2004 (last record date)
Shareholder Ownership
(Unit: Share)
1 ~ 999
1,000 ~ 5,000
5,001 ~ 10,000
10,001 ~ 15,000
15,001 ~ 20,000
20,001 ~ 30,000
30,001 ~ 40,000
40,001 ~ 50,000
50,001 ~ 100,000
100,001 ~ 200,000
200,001 ~ 400,000
400,001 ~ 600,000
600,001 ~ 800,000
800,001 ~ 1,000,000
Over 1,000,001
Total
4.5 Major Shareholders
Stock: Common Share
Number of Shareholders
Ownership
Ownership (%)
127,166
253,538
66,874
28,714
12,189
13,202
6,013
3,714
6,660
3,225
1,605
519
269
193
1,076
524,957
41,636,756
601,100,290
473,155,537
349,967,791
213,029,781
319,993,621
207,823,414
166,239,704
457,932,539
441,268,282
447,791,347
251,663,368
187,674,486
173,913,489
18,918,773,288
23,251,963,693
0.18
2.59
2.03
1.50
0.92
1.38
0.89
0.71
1.97
1.90
1.93
1.08
0.81
0.75
81.36
100.00
Rank
1
2
3
4
5
6
7
8
9
10
Shareholders
ADR-Taiwan Semiconductor Manufacturing Company, Ltd.
Koninklijke Philips Electronics N. V.
Philips Electronics Industries (Taiwan), Ltd.
Development Fund, Executive Yuan
The Growth Fund of America, Inc.
JPMorgan Chase Bank, Taipei Branch in Custody for Europacific
Growth Fund
JPMorgan Chase Bank, Taipei Branch in Custody for The New
Perspective Fund, Inc.
Government of Singapore Investment Corp. PFE. Ltd.
Bureau of Labor Insurance
Merrill Lynch International Ltd.
Total Shares Owned
3,341,753,899
2,576,997,318
1,836,016,294
1,716,683,170
464,756,085
268,009,895
254,326,011
229,044,518
205,586,322
162,330,362
32
As of 11/22/2004 (last record date)
Ownership ( % )
14.37
11.08
7.90
7.38
2.00
1.15
1.09
0.99
0.88
0.70
4.6 Other Share Information
Net Worth, Earnings, Dividends and Market Price Per Common Share
Unit: NT$, except weighted average shares and return on investment
Item
Market Price Per Share
Highest Market Price
Lowest Market Price
Average Market Price
Net Worth Per Share
Before Distribution
After Distribution
Earnings Per Share
Weighted Average Shares (thousand shares)
Earnings Per Share
Earnings Per Share (Note 3)
Dividends Per Share
Cash Dividends
Stock Dividends
Dividends from Retained Earnings
Dividends from Capital Surplus
Accumulated Undistributed Dividend
Return on Investment
Price / Earning Ratio (Note 4)
Price / Dividend Ratio (Note 5)
Cash Dividend Yield Rate (Note 6)
2003
72.5
40.1
56.4
16.24
13.52
20,231,739
2.33
2.02
0.60
1.41
-
-
24.21
94.00
0.01
2004
01/01/2005~02/28/2005
68.5
40.7
52.4
17.16
(Note 1)
23,255,086
3.97
(Note 1)
2.0
0.5
-
-
13.20
(Note 1)
(Note 1)
55.5
46.2
51.3
(Note 2)
(Note 1)
23,131,559
(Note 2)
(Note 1)
(Note 1)
(Note 1)
(Note 1)
-
(Note 2)
(Note 1)
(Note 1)
Note 1: Pending shareholder's meeting resolution
Note 2: Financials of the period not yet finalized
Note 3: Retroactive adjustment for stock dividends and bonus to employees
Note 4: Price / Earning Ratio = Average Market Price / Earnings Per Share
Note 5: Price / Dividend Ratio = Average Market Price / Cash Dividends Per Share
Note 6: Cash Dividend Yield Rate = Cash Dividends Per Share / Average Market Price
4.7 Dividend Policy
TSMC does not pay dividends when there is no profit for a particular fiscal year, except under certain conditions specified in its Articles of
Incorporation. Profits may be distributed by way of cash dividend, stock dividend, or a combination of cash and stock. Distribution of
profits is made preferably by way of cash dividends; in the past, profit distribution was generally accomplished by way of stock dividends.
Under current policy, the ratio for stock dividends may not exceed 50% of the total distribution.
4.8 Distribution of Profit
The Board adopted a proposal for 2004 profit distribution at its quarterly meeting on February 22, 2005. The proposed profit distribu-
tion will be effected upon the approval of shareholders at the Annual Shareholder Meeting on May 10, 2005.
Proposal to Distribute 2004 Profits
Unit: NT$
Bonus to Directors & Supervisors
Cash Dividends to Common Shareholders (NT$ 2.00 per share)
Stock Dividends to Common Shareholders (NT$ 0.5 per share at par value, i.e., 50 shares for each 1,000 shares
owned) (Note 1)
Employees' Profit Sharing in Cash
Employees' Profit Sharing in Stock (Note 2)
231,466,144
46,504,096,864
11,626,024,220
3,086,215,246
3,086,215,260
Note 1: Equivalent to underlying number of shares: 1,162,602,422
Note 2: Equivalent to underlying number of shares: 308,621,526
33
According to the Company's Articles of Incorporations, when allocating net profits for each fiscal year, the Company, after setting aside
regulatorily-required legal reserves, shall set aside 0.3% of the balance as bonus to directors and supervisors, and not less than 1% as
bonus to employees of the Company.
2003 profit distribution for Directors & Supervisors Compensation, and Employee Profit Sharing:
Board Resolution
(02/17/2004)
Amount (NT$)
Amount (NT$)
127,805,326
127,805,326
681,628,401
2,726,513,630
3,535,947,357
681,628,401
2,726,513,630
3,535,947,357
Actual Result
Underlying Number
of Shares
-
-
272,651,363
-
Dilution (%)
-
-
1.17
-
Directors & Supervisors Compensation
(Cash)
Employee Profit Sharing in Cash
Employee Profit Sharing in Stock
Total
The EPS of 2003 and 2004 might have varied if "Directors & Supervisors Compensation" and "Employee Profit Sharing" had been subject
to different accounting treatments:
Accounting Treatments
Treatment as Profit Distribution
Treatment as Expenses (Employee Profit Sharing in stock expensed at par value)
2003 EPS
NT$ 2.33
NT$ 2.15
2004 EPS
NT$ 3.97
NT$ 3.70
4.9 Impact to 2005 Business Performance, EPS and ROE Resulting from Stock Dividend Distribution: Not Applicable.
4.10 Buyback of Treasury Stock
Buyback Plan
Purpose
Period
Originally Planned Buyback Price Range
Class and Number of Shares Bought Back
Value of Shares Bought Back
Number of Shares Cancelled or Transferred
Accumulated Number of Shares Held
Percentage of Accumulated Shares Held to Total Outstanding Shares
As of 02/28/2005
First Buyback Plan
Due to significant volatility of the Taiwan stock
market after 2004 Taiwan presidential election, the
Company decided to buy back TSMC common
shares in the interests of shareholders.
03/24/2004 ~ 05/23/2004
NT$38.5 ~ NT$95.0 per common share
124,720,000 common shares
NT$7,059,797,818
124,720,000 common shares
0
0%
34
5. Issuance of Corporate Bonds
5.1 Corporate Bonds
Issuance
Issuing Date
Denomination
Offering Price
Total Amount
Coupon Rate
Tenure
Guarantor
Trustee
Underwriter
Legal Counsel
Auditor
Repayment
Outstanding
Domestic Unsecured Bond (IV)
Domestic Unsecured Bond (V)
12/04/2000 - 12/15/2000
01/10/2002 - 01/24/2002
As of 02/28/2005
NT$1,000,000
NT$10,000,000
Par
NT$15,000,000,000
Tranche A: 5.25% p.a.
Tranche B: 5.36% p.a.
Tranche A: 5 years
Maturity: 12/04/2005- 12/15/2005
Tranche B: 7 years
Maturity: 12/04/2007-12/14/2007
NT$1,000,000
NT$5,000,000
Par
NT$15,000,000,000
Tranche A: 2.60% p.a.
Tranche B: 2.75% p.a.
Tranche C: 3.00% p.a.
Tranche A: 5 years
Maturity: 01/10/2007-01/22/2007
Tranche B: 7 years
Maturity: 01/10/2009-01/24/2009
Tranche C: 10 years
Maturity: 01/10/2012- 01/24/2012
None
The International Commercial
Bank of China
None
TC Bank
Not Applicable
Not Applicable
Eluvzy International Law Office
Yan-an International Law Office
TN Soong & Co
Bullet
TN Soong & Co
Bullet
NT$15,000,000,000
NT$15,000,000,000
Redemption or Early Repayment Clause
None
None
Customary Covenants
Customary Covenants
tw AA (Taiwan Ratings Corporation,
11/08/2000)
tw AA (Taiwan Ratings Corporation,
12/03/2001)
Covenants
Credit Rating
Other
Rights of
Bondholders
Conversion Right
None
Amount of Converted or
Exchanged Common
Shares, ADRs or Other
Securities as of 02/28/2004
Not Applicable
Dilution Effect and Other Adverse Effects
on Existing Shareholders
Custodian
None
None
5.2 Convertible Bond: None
5.3 Exchangeable Bond: None
5.4 Bond with Warrants: None
6. Preferred Shares
6.1 Preferred Share: None
6.2 Preferred Share with Warrant: None
None
Not Applicable
None
None
35
7. Issuance of American Depositary Shares
Issuing Date
10/08/1997
11/20/1998
Issuance and Listing
NYSE
NYSE
01/12/1999
01/14/1999
NYSE
07/15/1999
NYSE
08/23/1999
09/09/1999
NYSE
02/22/2000
03/08/2000
NYSE
04/17/2000
NYSE
Total Amount (US$)
594,720,000
184,554,440
35,500,000
296,499,641
158,897,089
379,134,599
224,640,000
Offering Price per
ADS (US$)
Units Issued
Underlying
Securities
Common Shares
Represented
24.78
15.26
17.75
24.516
28.964
57.79
56.16
24,000,000
12,094,000
2,000,000
12,094,000
5,486,000
6,560,000
4,000,000
TSMC Common
Shares from Selling
Shareholders
TSMC Common
Shares from Selling
Shareholders
TSMC Common
Shares from Selling
Shareholders
TSMC Common
Shares from Selling
Shareholders
TSMC Common
Shares from Selling
Shareholders
(Pursuant to ADR
Conversion Sale
Program)
TSMC Common
Shares from Selling
Shareholders
(Pursuant to ADR
Conversion Sale
Program)
TSMC Common
Shares from Selling
Shareholders
120,000,000
60,470,000
10,000,000
60,470,000
27,430,000
32,800,000
20,000,000
Rights and
Obligations of ADS
Holders
Same as those of
Common Share
Holders
Same as those of
Common Share
Holders
Same as those of
Common Share
Holders
Same as those of
Common Share
Holders
Same as those of
Common Share
Holders
Same as those of
Common Share
Holders
Same as those of
Common Share
Holders
Trustee
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Depositary Bank
Custodian Bank
ADSs Outstanding
(Note 1)
Apportionment of
expenses for the
issuance and main-
tenance
Terms and
Conditions in the
Deposit Agreement
and Custody
Agreement
Citibank, N. A.
New York
Citibank, N. A.
Taipei Branch
24,000,000
Citibank, N. A.
New York
Citibank, N. A.
Taipei Branch
Citibank, N. A.
New York
Citibank, N. A.
Taipei Branch
46,222,650
48,222,650
Citibank, N. A.
New York
Citibank, N. A.
Taipei Branch
Citibank, N. A.
New York
Citibank, N. A.
Taipei Branch
76,893,859
83,453,859
Citibank, N. A.
New York
Citibank, N. A.
Taipei Branch
87,453,859
Citibank, N. A.
New York
Citibank, N. A.
Taipei Branch
71,407,859
(Note 2)
See Deposit
Agreement and
Custody Agreement
for Details
See Deposit
Agreement and
Custody Agreement
for Details
See Deposit
Agreement and
Custody Agreement
for Details
See Deposit
Agreement and
Custody Agreement
for Details
See Deposit
Agreement and
Custody Agreement
for Details
See Deposit
Agreement and
Custody Agreement
for Details
See Deposit
Agreement and
Custody Agreement
for Details
Closing Price per
ADS (US$)
2004
01/01/2005 -
02/28/2005
High
Low
Average
High
Low
Average
US$10.19
US$ 6.64
US$ 8.26
US$ 9.43
US$ 7.68
US$ 8.49
Note 1: TSMC has in aggregate issued 410,517,000 ADSs since 1997, which, if taking into consideration of stock dividend distributed over the period, would amount
to 668,904,257ADSs. As of February 28, 2005, total number of outstanding ADSs was 668,350,778 after 553,479 ADSs were redeemed. Stock dividend dis-
tributed in 1998, 1999, 2000, 2001, 2002, 2003 and 2004 was 45%, 23%, 28%, 40% , 10%, 8% and 14.08668% respectively.
Note 2: All fees and expenses such as underwriting fees, legal fees, listing fees and other expenses related to issuance of ADSs were borne by the selling shareholders,
while maintenance expenses such as annual listing fees and accountant fees were borne by TSMC.
Note 3: All fees and expenses such as underwriting fees, legal fees, listing fees and other expenses related to issuance of ADSs were borne by TSMC and the selling
shareholders, while maintenance expenses such as annual listing fees and accountant fees were borne by TSMC.
36
06/07/2000 -
06/15/2000
NYSE
05/14/2001 -
06/11/2001
NYSE
06/12/2001
11/27/2001
NYSE
NYSE
02/07/2002
02/08/2002
NYSE
11/21/2002 -
12/19/2002
NYSE
07/14/2003 -
07/21/2003
NYSE
11/14/2003
NYSE
1,167,873,850
240,999,660
297,649,640
320,600,000
1,001,650,000
160,097,914
908,514,880
1,077,000,000
35.75
20.63
20.63
16.03
16.75
8.73
10.40
10.77
32,667,800
11,682,000
14,428,000
20,000,000
59,800,000
18,348,000
87,357,200
100,000,000
Cash Offering and
TSMC Common Shares
from Selling
Shareholders
TSMC Common Shares
from Selling
Shareholders (Pursuant
to ADR Conversion Sale
Program)
TSMC Common Shares
from Selling
Shareholders
TSMC Common Shares
from Selling
Shareholders
TSMC Common Shares
from Selling
Shareholders
TSMC Common Shares
from Selling
Shareholders (Pursuant
to ADR Conversion Sale
Program)
TSMC Common Shares
from Selling
Shareholders
TSMC Common Shares
from Selling
Shareholders
163,339,000
58,410,000
72,140,000
100,000,000
299,000,000
91,740,000
436,786,000
500,000,000
Same as those of
Common Share Holders
Same as those of
Common Share Holders
Same as those of
Common Share Holders
Same as those of
Common Share Holders
Same as those of
Common Share Holders
Same as those of
Common Share Holders
Same as those of
Common Share Holders
Same as those of
Common Share Holders
Not Applicable
Citibank, N. A.
New York
Citibank, N. A.
Taipei Branch
156,290,739
Not Applicable
Citibank, N. A.
New York
Citibank, N. A.
Taipei Branch
170,718,739
Not Applicable
Citibank, N. A.
New York
Citibank, N. A.
Taipei Branch
259,006,235
Not Applicable
Citibank, N. A.
New York
Citibank, N. A.
Taipei Branch
144,608,739
(Note 3)
Not Applicable
Citibank, N. A.
New York
Citibank, N. A.
Taipei Branch
318,806,235
(Note 2)
Not Applicable
Citibank, N. A.
New York
Citibank, N. A.
Taipei Branch
369,019,413
Not Applicable
Citibank, N. A.
New York
Citibank, N. A.
Taipei Branch
485,898,166
Not Applicable
Citibank, N. A.
New York
Citibank, N. A.
Taipei Branch
585,898,166
See Deposit Agreement
and Custody Agreement
for Details
See Deposit Agreement
and Custody Agreement
for Details
See Deposit Agreement
and Custody Agreement
for Details
See Deposit Agreement
and Custody Agreement
for Details
See Deposit Agreement
and Custody Agreement
for Details
See Deposit Agreement
and Custody Agreement
for Details
See Deposit Agreement
and Custody Agreement
for Details
See Deposit Agreement
and Custody Agreement
for Details
37
8. Status of Employee Stock Option Plan (ESOP)
8.1 Issuance of Employee Stock Options
ESOP Granted
Approval Date by the Securities and
Futures Bureau
Issue (Grant) Date
Number of Options Granted
Percentage of Shares Exercisable to
Outstanding Common Shares
First Grant
06/25/2002
08/22/2002
18,909,700
0.10154%
Second Grant
06/25/2002
11/08/2002
1,085,000
0.00583%
Third Grant
06/25/2002
03/07/2003
6,489,514
0.03485%
Option Duration
10 years
10 years
10 years
Source of Option Shares
New Common Share
New Common Share
New Common Share
Vesting Schedule
2nd Year: up to 50%
3rd Year: up to 75%
4th Year: up to 100%
2nd Year: up to 50%
3rd Year: up to 75%
4th Year: up to 100%
2nd Year: up to 50%
3rd Year: up to 75%
4th Year: up to 100%
Shares Exercised
Value of Shares Exercised (NT$)
Shares Unexercised
Original Grant Price Per Share (NT$)
Adjusted Exercise Price Per Share (NT$)
Percentage of Shares Unexercised to
Outstanding Common Shares
Impact to Shareholders' Equity
317,550
13,273,590
18,919,793
53.0
41.8
0.08137%
62,000
2,498,600
1,288,513
51.0
40.3
0.00554%
0
0
6,765,199
41.6
32.8
0.02909%
Dilution to Shareholders'
Equity is limited
Dilution to Shareholders'
Equity is limited
Dilution to Shareholders'
Equity is limited
8.2 ESOP Granted to Management Team and to Top 10 Employees with an Individual Grant Value over NT$30,000,000
Title
Name
Number of Options Granted
(Note 2)
% of Shares Exercisable to
Outstanding Common
Shares
Chairman &
Chief Executive Officer
President &
Chief Operating Officer
Senior Vice President
Senior Vice President
Vice President
Vice President
Vice President &
General Counsel
Morris Chang (Note 1)
Rick Tsai (Note 1)
Stephen T. Tso (Note 1)
Kenneth Kin (Note 1)
C. C. Wei (Note 1)
Mark Liu (Note 1)
Richard Thurston (Note 1)
3,147,813
0.01354%
Note 1: TSMC granted options to certain of its officers (as listed above) as a result of their voluntary selection to exchange part of their profit sharing for stock options
in 2003.
Note 2: Number of Options Granted includes the additional shares due to stock dividend distributed in 2004.
38
As of 02/28/2005
Fourth Grant
06/25/2002
06/06/2003
23,090,550
0.12399%
Fifth Grant
10/29/2003
12/03/2003
842,900
0.00453%
Sixth Grant
10/29/2003
02/19/2004
15,720
0.00008%
Seventh Grant
10/29/2003
05/11/2004
11,167,817
0.05510%
Eighth Grant
10/29/2003
08/11/2004
135,300
0.00058%
10 years
10 years
10 years
10 years
10 years
New Common Share
New Common Share
New Common Share
New Common Share
New Common Share
2nd Year: up to 50%
3rd Year: up to 75%
4th Year: up to 100%
2nd Year: up to 50%
3rd Year: up to 75%
4th Year: up to 100%
2nd Year: up to 50%
3rd Year: up to 75%
4th Year: up to 100%
2nd Year: up to 50%
3rd Year: up to 75%
4th Year: up to 100%
2nd Year: up to 50%
3rd Year: up to 75%
4th Year: up to 100%
0
0
23,437,165
58.5
46.2
0.10080%
0
0
736,033
66.5
57.8
0.00317%
0
0
15,258
63.5
55.2
0.00007%
0
0
11,355,403
57.5
49.9
0.04884%
0
0
135,300
43.8
43.8
0.00058%
Dilution to Shareholders'
Equity is limited
Dilution to Shareholders'
Equity is limited
Dilution to Shareholders'
Equity is limited
Dilution to Shareholders'
Equity is limited
Dilution to Shareholders'
Equity is limited
Exercised
Unexercised
Shares Exercised
Exercise Price
Per Share
Value of Shares
Exercised (NT$)
% of Shares
Exercised to
Outstanding
Common Shares
Shares
Unexercised
Adjusted Grant
Price Per Share
Value of Shares
Unexercised
(NT$)
% of Shares
Unexercised to
Outstanding
Common Shares
As of 02/28/2005
0
0
0
0
3,147,813
32.8
103,248,266
0.01354%
39
9. Status of Mergers and Acquisitions: No mergers or acquisitions were undertaken in 2004.
10. Corporate Governance
Maintaining the highest standards of corporate governance has been an integral expression of TSMC's core values since its founding.
TSMC advocates and upholds operational transparency and respect for shareholder rights. We believe that the basis for successful corpo-
rate governance is a sound and effective Board of Directors. In line with this principle, TSMC's Board of Directors established an Audit
Committee in 2002 and a Compensation Committee in 2003.
During 2004, TSMC received numerous awards for being the best managed company in Taiwan with respect to corporate governance.
However, we believe that good governance is fundamentally a global issue. We hold ourselves to world class standards of integrity and
fairness, and our benchmarks for transparency and disclosure are international ones.
10.1 Audit Committee
The Audit Committee assists the Board in fulfilling its financial oversight responsibilities, which include reviewing the Company's financial
reports, the Company's auditing and accounting policies and procedures, and the Company's systems of internal control.
TSMC's Audit Committee is empowered by its Charter to conduct any study or investigation it deems appropriate to discharge its respon-
sibilities. It has direct access to TSMC's internal auditors, the Company's outside independent auditors, and all employees of the Company.
The Committee is authorized to retain and oversee special legal, accounting or other consultants as it deems appropriate to fulfill its char-
ter purposes.
As of March 2005, there were four members on the Audit Committee: three independent directors and a supervisor of TSMC. The
Committee meets at least four times a year. The Audit Committee convened four regular meetings and two special meetings in 2004.
10.2 Compensation Committee
The Compensation Committee assists the Board in discharging its responsibilities related to compensation and benefit policies, plans and
programs of TSMC, and evaluation and compensation of TSMC's executives, directors and supervisors.
As of March 2005, the Compensation Committee was comprised of five members: three independent directors serving as voting mem-
bers of the Committee, and two non-voting directors. The Committee meets at least four times a year. The Compensation Committee
convened four regular meetings in 2004.
40
10.3 Taiwan Corporate Governance Implementation as Required by SFB
Item
Implementation Status
1. Shareholding Structure & Shareholders' Rights
(1) The way of handling shareholder sugges-
tions or disputes
TSMC has designated relevant departments, such as Investor
Relations, Public Relations, Legal, etc., to handle shareholder's sug-
gestions or disputes.
(2) The Company's possession of major share-
holder's list and the list of ultimate owners
of these major shareholders
TSMC tracks the shareholdings of directors, supervisors, officers, and
shareholders holding more than 10% of the outstanding shares of
TSMC.
(3) Risk Management Mechanism and Fire Wall
between the Company and its affiliates
TSMC has established relevant guidelines in its "Internal Control
System" policy and procedures.
2. Composition and Responsibilities of the Board
of Directors
(1) Independent Directors
Sir Peter Leahy Bonfield, Prof. Lester Carl Thurow, and Mr. Stan Shih
are independent directors of TSMC.
(2) Regular evaluation of external auditors'
independency
The Audit Committee regularly evaluates the independency of exter-
nal auditors.
3. Composition and Responsibilities of
Supervisors
(1) Independent Supervisor(s)
Prof. Michael E. Porter is an independent supervisor of TSMC.
(2) Communication channel with employees or
shareholders
The employees and managers of relevant departments regularly
report and present Company information to the Independent
Supervisor; all Supervisor have access to Company employees or man-
agers for information they need.
Reason for
Non-Implementation
Not Applicable
Not Applicable
Not Applicable
4. Communication channel with stakeholders
TSMC designates relevant departments to communicate with stake-
holders on a case by case basis.
Not Applicable
5. Information Disclosure
(1) Establishment of corporate website to dis-
close information regarding the Company's
financials, business and corporate gover-
nance status
(2) Other information disclosure channels (e.g.
English website, appointing responsible
people to handle information collection and
disclosure, appointing spokesperson, web-
casting investors conference)
TSMC discloses information through its website www.tsmc.com.
Not Applicable
TSMC has designated relevant departments (e.g. Investor Relations,
Public Relations, etc.) to handle the collection and disclosure of infor-
mation as required by relevant laws and regulations of Taiwan and
other jurisdictions.
TSMC has designated spokespersons as required by relevant regula-
tion.
TSMC is the first Taiwan company that webcasts live investor confer-
ences.
6. Operations of the Company's audit committee
and other committees of the Board of
Directors
TSMC's Board of Directors has established an Audit Committee and a
Compensation Committee. Please refer to "Corporate Governance"
section on page 40 of this Annual Report for the details.
Not Applicable
7. If the Company has established corporate governance policies based on TSE Corporate Governance Best Practice Principles, please describe dis-
crepancy between the policies and their implementation:
For the status of TSMC's corporate governance, please refer to "Corporate Governance" section on page 40 of this Annual Report.
(Continued)
41
8. Other important information to facilitate better understanding of the Company's corporate governance practices (e.g. directors' and supervisors'
training, directors' and supervisors' attendance of the board of director's meetings, the implementation of risk management policies and risk eval-
uation measures, the implementation of consumers/customers protection policies, the implementation of directors recusing themselves in case of
conflicts of interests situations, purchasing insurance for directors and supervisors, and social responsibilities.) :
(1) From time to time, TSMC provides to directors and supervisors information and training concerning regulatory requirements and developments
as related to director' and supervisors' activities. TSMC management also regularly present Company's business and other information to direc-
tors and supervisors.
(2) The Board convened four regular meetings and one special meeting in 2004. Meeting attendance was as follows:
Name of Directors/
Supervisor
Directors:
Morris Chang
Peter L. Bonfield
Lester C. Thurow
Stan Shih
Jan Lobbezoo
Scott McGregor
Chintay Shih
F. C. Tseng
Rick Tsai
Supervisors:
Michael E. Porter
Robbert Brakel
Susan Chang
James C. Ho (appointed in August 20, 2004 to replace Susan Chang)
Number of Meetings of Board
of Directors Attended in 2004
5
4
4
4
5
5
5
5
5
0 (Note)
5
1
1
(3) TSMC conducts risk management and risk evaluation pursuant to the internal policies established in accordance with relevant laws and regula-
tions.
(4) TSMC's directors recuse themselves from voting on matters in which their interests conflict with TSMC's.
(5) TSMC maintains D&O Insurance for its directors, supervisors, and officers.
(6) TSMC established the "TSMC Education and Culture Foundation" in 1998 to perform its social responsibilities.
Note: Supervisor Michael E. Porter meets regularly with the Company's management in Taiwan. The management also reports to him periodically in the U.S. on the
Company's business operations and financial statements, and seeks his advice on the Company's business strategy from time to time.
42
11. Social Responsibility Information
11.1 TSMC Education and Culture Foundation
TSMC is dedicated to being a leading corporate citizen and has been an active sponsor of educational and cultural activities in Taiwan. In
order to better consolidate and organize our contributions and fulfill our commitment to social responsibility, TSMC established the
TSMC Education and Culture Foundation (TSMC Foundation) in 1998. Dr. F. C. Tseng, Deputy CEO of TSMC, has served as Chairman of
the Foundation since 2002. Last year, in addition to existing long term projects, the Foundation started several new initiatives, including
the "TSMC Scholarship", "TSMC Youth Novel Writing and Book Review Award" and "TSMC Volunteer Program".
Commitment to Education
To encourage underprivileged college students to pursue their education, in 2004 the Foundation created the TSMC Scholarship Fund.
We have committed NT$25 million over five years to help at least 250 students among five universities with outstanding academic per-
formance to complete their college education. TSMC continues to support National Tsing Hua University in its effort to establish the
School of Technology Management －TSMC Hall. The purpose of this project, to which TSMC is contributing a total of NT$150 million, is
to facilitate the training of technology professionals with management skill. Furthermore, the Foundation is committed to supporting
related academic programs at leading universities with the objective of advancing technology education. To increase general public inter-
est in science and technology, we also sponsored various science education programs in 2004, including the Tai-Yu Wu science writing
award, Tai-Yu Wu science camp and C. S. Wu science camp.
Sponsorship of Art Events and Aesthetic Education
In 2004, we created "The TSMC Youth Novel Writing and Book Review Award" to promote creative writing and literary reading interest
among youth. The competition was widely acclaimed, with 500 novels and 300 book reviews from all over Taiwan submitted for consid-
eration. The Foundation sponsors outstanding national arts events and cultural exhibitions, including the "Taipei Museum of Modern Arts"
to increase public interest and participation in fine arts. To stimulate interest in the arts from an early age, we promote children's aesthet-
ic education. Year 2004 was the third consecutive year to support the "TSMC Aesthetic Education Tour", which organizes annual tours for
nearly 10,000 children from rural areas throughout Taiwan to visit museums and fine arts institutes.
The first TSMC Youth Literary
Awards Ceremony
43
Contributions to the TSMC Site Community
We strive to enrich the site communities and make them better places to live. TSMC is thus committed to promoting various educational,
artistic and charitable initiatives at two of our largest operating sites, "Hsinchu" and "Tainan". In 2004, we once again sponsored the
"TSMC Hsinchu Art Festival". This year's themes included "Classical Drama", "Children's Esthetic Programs" and a series of "Stories of
Creativity" lectures. The Festival brought high-quality artistic events to the local community and created opportunities for the local audi-
ence to enjoy the beauty of the fine arts. In the summer of 2004, the Foundation also assisted "Tao-Shan" primary school in Hsinchu
County successfully to cope with devastating typhoon damage. The school was relocated and provided with operational support that
enabled it to continue serving students in spite of the storm. In Tainan, we continued to sponsor the "National Cheng Kung University
Culture and Art Festival" and to support the publication of the picture book "The Beauty of Tainan".
Dedication to Employee Volunteer Program
In addition to financial sponsorships, TSMC encourages employees to give back to the communities in which they live and work, thus
directly contributing to the improvement of the society as a whole. We initiated and organized the "TSMC Guide Volunteer Program" at
the National Museum of Natural Science, in which TSMC employees serve as guides on weekends for the IC exhibition we sponsor. In
2004, 200 volunteers joined the program and served a total of 4,000 hours and 170,000 visitors to the museum. We also initiated the
"TSMC Book Reading Volunteer Program", started in September 2004 with 50 members. The program provides book reading events at
rural schools in the Hsinchu area, stimulating the reading interest of children and inspiring them towards a better tomorrow.
11.2 Other Social Issues
Health and Safety Performance
TSMC is committed to achieving the highest standards of health and safety. TSMC offers comprehensive health care and employee assis-
tance programs at all of its operating sites. Employees have access to on-site clinics, stress management and counseling services, a 24-
hour nursing service, annual physical check-ups, women's health services, cancer screening, on-site fitness facilities and programs, weight
management services, and a series of health awareness programs. All employees have access to the company's web-based wellness infor-
mation and health programs.
Policies and Procedures Relating to Adherence to Environmental, Safety and Health Regulations
TSMC believes its environmental, safety and health (ESH) practices should not only meet the relevant legal requirements, but also bench-
mark recognized international practices. The Company's goals are to prevent pollution and efficiently use all resources, prevent incidents,
improve employees' safety and health, protect property and establish a work environment that promotes the well-being of our employees
and the communities in which we operate. In 2004, TSMC continued its efforts on Environmental Accounting, Life Cycle Assessment,
Green Procurement, Traffic Safety, Employee Ergonomics Promotion and Contractor Management.
TSMC actively incorporates risk management concepts in new building design and process development. In order to minimize potential
operational losses, the Company regularly evaluates and enhances electrical and seismic protection during installation of tools and equip-
ment, thus reducing the risk of operation interruption.
Equal Opportunity Employment
TSMC believes in equal opportunity employment and values the diversity its staff contributes. Recruitment is conducted via open selection
and is based on candidate merit to meet the needs of each position, regardless of race, gender, age, religion, nationality or affiliation.
44
Supplier Selection Process and Criteria Regarding Social and Environmental Issues
In 2004, TSMC conducted a "Green Supply Chain Project" sponsored by the IDB (Industrial Development Bureau). This project has set up a
green procurement procedure for requesting raw material suppliers to set up environmental management systems and to officially
declare that they do not and will not use prohibited substances.
Social and Environmental Impacts of TSMC's Outsourced Operations and Contractors
TSMC has promoted a "Responsible Care Program" to assist contractors to enhance the Company's Environmental, Safety and Health
(ESH) management system. TSMC collected input from contractors and communicated its expectations on ESH performance to its con-
tractors annually. Drawing on content from the Voluntary Protection Program (VPP), TSMC has developed an "ESH Auditing Manual" used
for auditing major contractors.
Social and Environmental Impacts of TSMC's Suppliers
TSMC has conducted a "Life Cycle Assessment" (LCA) for 6-inch and 8-inch wafer processes to evaluate the environmental impact from
and on the manufacturing process and supply chain. This study collected and analyzed data from the entire chip manufacturing chain,
from raw materials suppliers to finished products, and included statistics for such items as energy and raw materials consumption and
generation of pollutants. The LCA study has established an eco-profile and the values of environmental loadings of chip manufacturing,
which can be provided to TSMC's customers upon request.
45
TSMC's in-house mask shop is one of
the world's largest mask making facilities.
OPERATIONAL
HIGHLIGHTS
1. Business Activities
1.1 Business Scope
TSMC excels in all aspects of its business. This excellence includes process technologies, wafer manufacturing and logistics,
capacity utilization, customer service, as well as a wide range of support services including design services, mask manufac-
turing, wafer probing, and in-house bumping and testing. The essence of our foundry business is the success of our cus-
tomers. TSMC continually strives to provide the overall best value to its customers.
1.2 Customer Applications
Over the past 18 years, more than five hundred customers worldwide have relied on TSMC to manufacture chips used
across the entire spectrum of electronic applications. A far from exhaustive list of applications includes computers and
peripherals, information appliances, wired and wireless communications systems, automotive and industrial equipment, as
well as consumer electronics such as DVDs, digital TVs, game consoles, and digital still cameras (DSCs).
The rapid evolution of end products drives our customers to utilize TSMC's innovative technologies and services, while
concurrently propelling TSMC to further its own technology development. As always, success depends on leading rather
than following industry trends.
1.3 Net Sales over the Last Two Years
Unit: Quantity (8-inch wafer)
Amount (NT$ thousands)
Wafer
Package
Other
Total
Domestic
Export
Domestic
Export
Domestic
Export
Domestic
Export
2004
2003
Quantity
Amount
Quantity
Amount
1,012,161
33,226,052
734,922
24,704,913
3,781,577
192,108,136
2,895,843
156,792,897
110
12,135
231,568
12,749,599
13,497
39,298
1,891,631
16,004,875
175
66,238
14,771
37,963
18,960
5,094,196
2,211,759
13,081,616
1,025,768
35,129,817
749,868
26,935,632
4,034,443
220,862,610
3,000,044
174,968,709
47
1.4 Production over the Last Two Years
Unit: Capacity / Quantity (8-inch wafer)
Amount (NT$ thousands)
Year
2004
2003
2. Customers
Wafers
Capacity
4,787,523
4,013,855
Quantity
4,799,657
3,588,871
Amount
127,840,620
108,043,471
TSMC's global customers have diverse product specialties, and enjoy prominent standing in various business segments of the semiconduc-
tor industry. Fabless segment customers include Altera Corporation, ATI Technologies, Inc., Broadcom Corporation, Marvell Semiconductor,
Inc., nVidia Corporation, Qualcomm Inc. and VIA Technologies, Inc. IDM customers include Analog Devices, Inc., Freescale Semiconductor,
Inc., Philips Semiconductors, and Texas Instruments, Inc. TSMC's business with nVidia Corporation amounted to over 10% of Company
revenue in 2003. Due to substantial increase of revenue and more diversified customer base, no single customer accounted for more
than 10% of Company revenue in 2004.
2.1 Customer Service
TSMC is a service-oriented company and believes customer service is the critical factor in enhancing customer loyalty. In turn, customer
loyalty leads to higher levels of customer retention and expansion of business relationships. TSMC's goal is to maintain its position as the
most advanced and largest technology and foundry service provider. TSMC believes that achieving this goal will help retain existing cus-
tomers, attract new customers, and strengthen their partnership relationship with TSMC.
To facilitate customer interaction and information access on a real-time basis, TSMC has established a range of internet-based services
covering applications in design collaboration, engineering collaboration, and logistic collaboration. They are collectively branded as
eFoundrysm.
2.2 Customer Satisfaction
TSMC conducts regular reviews and surveys to ensure that customers' needs are being adequately addressed. Continual improvement
plans supplemented by customer feedback are an integral part of this business process.
2.3 Market Expansion/Penetration
TSMC continues to diversify its customer base while supporting the growth of its existing customers. Of 300 active customers in 2004,
45 were new. TSMC's customers also gained market share, notably in a number of end applications in computers, wired communications,
wireless communications, and consumer electronics.
48
3. Raw Material Supply
Major
Materials
Wafer
Major Suppliers
Market Status
Procurement Strategy
MEMC
S. E. H.
Siltronic
SUMCO
There are four suppliers combined provide over
80% of the world's wafer capacity.
Each supplier has multiple manufacturing sites,
including USA, Asia and Europe, to meet cus-
tomer and market demands.
Chemicals
Merck
Tai-Young High Tech (TYS)
These two companies are major bulk chemical
suppliers worldwide.
The chemical raw materials of these two suppli-
ers are imported from Japan or Taiwan local pro-
ducers, primarily to support the Taiwan market.
Photoresist
AZ
Shin-Etsu Chemical
Sumitomo
T. O. K.
These four companies are worldwide major pho-
toresist suppliers.
These four suppliers are competitors in the
Taiwan market. They all store stock in Taiwan
and provide just in time service.
Specialty Gases
Air Liquide
Air Products
BOC
Taiyo Toyo Sanso
These four companies are worldwide major spe-
cialty gas suppliers.
These four suppliers are competitors; their prod-
ucts are mutually replaceable.
Other domestic suppliers are available and ready
to penetrate the Taiwan market, thus facilitation
TSMC to secure better commercial terms in the
future.
TSMC's suppliers of silicon wafer are required
to pass stringent quality certification proce-
dures.
TSMC procure wafers from multiple sources to
ensure adequate supplies for volume manufac-
turing and to reinforce risk management.
TSMC maintains competitive price and service
agreements with its wafer suppliers and when
necessary includes strategic and collaborative
agreements with key suppliers.
TSMC reviews quality, delivery, cost and service
performance of its wafer suppliers and reflects
the reviews in TSMC's orders accordingly.
An periodical audit of each wafer supplier's
physical quality system ensures TSMC maxi-
mum quality maintenance.
Both suppliers have localized many of their
operations closer to TSMC's major manufactur-
ing centers, improving inventory and quality
control significantly.
TSMC audits the suppliers' physical quality to
maintain specifications and ensure quality con-
trol.
TSMC provides a three-month forecast of
rolling demand to its photoresist suppliers to
give them adequate preparation time.
TSMC monitors suppliers' inventory status
through their respective monthly inventory
reports.
TSMC's IQC personnel conduct monthly physi-
cal inventory checks at suppliers' warehouses
to confirm material quality and availability.
TSMC conducts annual audits of each suppli-
er's physical quality system to ensure quality,
supply, and availability of photoresist.
TSMC's four major specialty gas suppliers are
located in Japan, USA and the UK, providing
sufficient geographic dispersion to minimize
supply risk.
Products of four suppliers are mutually
replaceable, ensuring competitive pricing and
quality service.
TSMC requires each supplier to provide
monthly inventory reports as a measure to
monitor and ensures steady provisions.
TSMC conducts annual audits of each suppli-
er's physical quality system to ensure quality
and supply availability of specialty gases.
49
4. Employees
Attracting and retaining the right talent is one of the key objectives of TSMC's human resources strategy. TSMC's total workforce num-
bered 18,597 as of year-end 2004, representing an increase of 15.8% from year-end 2003. TSMC recruited 94 managers, 1,873 profes-
sionals and 3,013 technicians during the year. By the end of February 2005, TSMC's total workforce reached 18,570.
In 2004, the Company employed a total of 1,853 managers and 6,671 professionals. Of the 1,853 managers, 11.1% were female. Non-
Taiwanese nationals made up 2.5% of TSMC's workforce at the managerial and professional levels. By the end of February 2005, there
were 1,882 managers and 6,715 professionals.
TSMC's staff are well educated: 2.4% of employees hold PhD's, 26.5% Master's degrees, 17.6% university Bachelor's degrees, 23.9% other
college degrees, and 29.6% high school diplomas.
The following tables show the TSMC personnel structure from 2003 to February 28, 2005.
TSMC Workforce Structure by Job Title
Manager
Professional
Assistant Engineer / Clerical Staff
Technician
Total
12/31/2003
12/31/2004
02/28/2005
1,627
5,697
816
7,926
16,066
1,853
6,671
754
9,319
18,597
1,882
6,715
750
9,223
18,570
TSMC Workforce Structure by Gender, Age and Years Served
Gender
Male
Female
Average Age
Average Service Year
4.1 Human Capital
12/31/2003
12/31/2004
02/28/2005
43.2%
56.8%
30.3
4.6
45.4%
54.6%
30.5
4.6
45.8%
54.2%
30.6
4.8
TSMC strives to create and maintain an environment that provides favorable workplace conditions, offers personal challenges, and sup-
ports career development. TSMC also encourages the development of professional know-how, a positive attitude, affirmative values, hon-
est behavior and genuine commitment to succeed as a member of the TSMC team. There were no labor disputes that caused the compa-
ny financial losses from January 1, 2004 to February 28, 2005.
4.2 People Development
Continuous learning is the cornerstone of TSMC's employee development strategy. TSMC provides its employees with a range of techni-
cal, professional and management training programs, and promotes "On-the-Job Training" (OJT) initiatives for new employees. Since its
launch in 2002, the Individual Development Plan (IDP) program has become an effective tool to enhance organizational learning in the
area of employees' personal development as well as the Company's business needs.
50
4.3 Employee Satisfaction
TSMC conducts an annual Employee Satisfaction Survey to determine levels of employee involvement and engagement. As an indicator of
employee satisfaction, TSMC was recognized as a "2003 Best Employer in Asia" and a "Best Employer in Taiwan" in a survey conducted by
Hewitt Associates, the Asia Wall Street Journal, and the Far Eastern Economic Review.
To foster a dynamic and fulfilling work environment, TSMC launched a series of company-wide employee relations programs in 2004,
such as Zest-for-Life@TSMC. These programs include an annual sports day, family day, engineer/secretary festival, and "heart talk" speech-
es, Employee Assistance Programs (EAPs), and many other programs and events.
4.4 Compensation
The Company's compensation program consists of cash compensation and profit sharing. Cash compensation includes monthly salary
and a quarterly variable incentive bonus. The profit sharing program consists of cash and stocks. The Company appropriates a certain
percentage of its earnings available to common stockholders for distribution to employees under the profit sharing program. The pur-
pose of this distribution is threefold: to reward employees' contributions appropriately; to encourage employees to work consistently and
continuously to ensure the success of the Company; and to link employees' interests with those of TSMC's shareholders. The amount and
form of the distribution depend on the recommendation of the Compensation Committee to the Board of Directors and are subject to
shareholder approval at the Annual General Meeting. Individual awards are based on each employee's job responsibility, contribution and
performance.
In line with respective local market practices, the Company either grants stock options or distributes performance bonuses to overseas
employees. Stock option grants are based on the policies outlined in TSMC's "Employee Stock Option Program." The options are granted
for a period of ten years, with a vesting schedule of 50% upon completion of a two-year period, 75% after three years and 100% after
four years. Distribution of performance bonuses is based on operating results as well as individual employees' performances.
5. Innovation
5.1 R&D Organization and Investment
TSMC increased its R&D investment and expanded its world-class R&D organization to extend Moore's Law and provide best-in-class
semiconductor technology and design solutions to our customers. Overall, R&D staff grew by 10.3% in 2004, while total expenditure
reached over NT$12.5 billion. For advanced process development, TSMC strengthened the capability and expanded the capacity of its
300mm R&D pilot line in 2004. This expansion served to accommodate its growing R&D development activities to support additional
business growth with our customers.
In 2004, the former CTO office and its Exploratory Technology function, and the Design Service function were fully integrated with the
rest of R&D to speed up the introduction of new logic transistors, memory devices, and interconnect into TSMC technology offering.
TSMC also expanded its external R&D partnership and alliance activities with tool and materials vendors, International Sematech, as well
as the ASIC/SoC technology alliance with Freescale, Philips, and STMicroelectronics. A new SOI joint development alliance was formed
with Freescale to develop cutting-edge 90nm and 65nm SOI technology
and to set up basic SOI design infrastructure. This new alliance supple-
ments the Company's mainstream internal bulk CMOS technology R&D.
In addition, TSMC also strengthened its collaborative research with key
partners for design-process co-optimization, which will enable the best
technology and design solutions for product success in the complex and
challenging nanometer era.
51
5.2 R&D Accomplishments in 2004
Reflecting its ongoing commitment to innovation, TSMC was granted 460 US patents and 516 ROC patents in 2004. With a growing
number of key patent disclosures and patents granted over the past years, TSMC now has a rich and strong patent portfolio, as well as
other significant intellectual property assets. Our intellectual capital not only is a key to maintaining our technology leadership and inde-
pendence, but also provides the Company with cross-licensing and royalty benefits.
TSMC pioneered immersion lithography and worked closely with tool partners to set up the infrastructure and to enable readiness of pro-
totyping and production of tools. This technology can extend the resolution capability of conventional 193nm imaging tools down to the
32nm technology node, without having to rely on expensive, high-risk 157nm alternatives. In 2004, TSMC demonstrated the manufac-
turing feasibility of 193nm immersion lithography using the state-of-the-art 90nm process. This is a breakthough.
TSMC continued to expand its advanced device and large-diameter wafer manufacturing. In 2004, TSMC's 12-inch Fab 12 qualified the
Company's industry-leading manufacturable 90nm CMOS logic process featuring advanced Cu/low-k interconnects. TSMC also proved
the baseline process of a 65nm CMOS logic platform featuring a gate length in the range of 35-45nm. A 6T-SRAM design with industry-
leading cell size was functionally proven with the 65nm baseline process. TSMC also worked on demonstrating an extreme low-k dielec-
tric process. Development of a 45nm CMOS logic platform was also initiated in 2004.
TSMC continued to engage in, and expand, exploratory research activities such as strained-Si processes, high-k gate dielectrics, metal
gates, nano devices, SOI technology, MRAM, and advanced RFIC features. These activities cover long-term, potentially high-payoff, and
over-the-horizon technologies. Several novel innovations arising from this exploratory research were published in 2004, including 5nm
nanowire devices, functional 1Mb MRAM devices, and innovative strained-Si techniques on both bulk silicon and SOI substrates. In addi-
tion to preparing the way for future industry developments, this exploratory work also strengthens TSMC's future patent position.
5.3 Spectrum of New Technologies
In addition to the highlights noted above, TSMC introduced a rich mix of new process technologies. For example,
Mixed-Signal/Radio Frequency Technology
TSMC developed a 90nm mixed signal/radio frequency (MS/RF) technology and offered it to customers for mass production, with excel-
lent product performance. The new technology features a high-performance metal inductor with a high quality factor of more than 20,
making RF SoC a reality.
Silicon Germanium BiCMOS Technology
TSMC completed process qualification of a foundry-based 0.18µm versatile SiGe BiCMOS technology for mass production. This integrat-
ed technology enables microwave power amplifier applications as well as provides a single chip solution for high performance, low
power, low noise, wired and wireless applications.
0.18µm CMOS Image Sensor Process
Following strong growth in volume production of the 0.18µm 3T CMOS image sensor process, TSMC developed and qualified a higher
performance 0.18µm 4T pinned-diode CMOS image sensor process. This new process is aimed at small pixel-size, high-resolution and
high-performance pixel arrays for high-end imaging applications. Because it is fully compatible with TSMC's 0.18µm CMOS logic and
embedded memory processes, it enhances the System-On-Chip (SoC) platform for consumer and industrial applications such as mobile
phones, DSCs, security and other image sensor markets.
Embedded High Density Memory Technology
TSMC saw stronger demand for embedded high-density memory from customers who urgently need a SoC solution for applications such
as handheld devices, games, DSCs, HDDs & communication applications. TSMC's 0.13µm 1T-Q, which is a smaller, higher density version
of planar 1T-RAM, passed qualification and entered volume production in 2004. TSMC's 90nm 1T-MIM featuring a 0.21µm2 MIM capaci-
52
tor with high-k dielectric demonstrated 100% yield at 8Mb memory density. This cell size is only one-fifth that of the most aggressive 6T-
SRAM in the 90nm technology node. Qualification is in progress and volume production will be initiated in the second half of 2005.
Flash/Embedded Flash Technology
TSMC's 0.18µm embedded Flash technology was qualified for production release in 2004. Several customers currently have production
runs underway utilizing this technology. In addition, a self-aligned Flash with 32Mb density is now in volume production. Development
work on 0.18µm automotive embFlash technology is in progress, with fully functional 8Mb IP demonstrated in 2004. Meanwhile, TSMC's
0.13µm embedded Flash technology creates synergy between devices at the 0.18µm and 0.13µm nodes. Both excellent data retention
and endurance were demonstrated in 2004 on 8Mb IP with a new copper backend process.
Mask Technology
Mask technology is an integral part of advanced lithography. TSMC has proprietary resolution-enhancement techniques that are closely
optimized with our in-house mask-making technology, including optical proximity correction, phase-shift, and other resolution-assist
mask features. TSMC mask facilities feature state-of-the-art mask writers, etchers, and inspection and repair tools for both R&D and pro-
duction use. TSMC's strength in mask technology R&D and production provides significant benefits to our customers in terms of technical
excellence, quality, fast cycle time, and one-stop service. In 2004, the Company successfully established high-quality, cost-effective 65nm
generation mask-making technology and mass production capability. We also demonstrated mask technology capabilities for the coming
45nm generation of devices. The Company has also developed metrology using e-beam, scatterometry, and electrical techniques to sup-
port wafer lithography and mask making.
Design Services
TSMC announced Reference Flow 5.0 at the 2004 Design Automation Conference. This new Reference Flow addresses several key issues
for chip designs based on advanced process technology. With it, TSMC continues to set industry standards for foundries in providing
solutions for advanced design methodologies. Having launched the industry's first multiple-Vt library, TSMC continued adding more
advanced features such as back-bias and design-for-manufacturing (DFM) compliance layouts in 2004 in order to address today's top
design challenges involving power management and DFM.
5.4 R&D Plans for 2005
Moving forward, TSMC's R&D focus will be on Nexsys sm 65nm, 45nm-logic / mixed signal technology platforms, and related embedded
memory for SoC applications in 300mm wafers. Intense effort will be devoted to qualifying the 65nm node with superior transistor per-
formance featuring a strong strained Si process and sub-0.5µm2 6T SRAM cell size, both in bulk CMOS and SOI. The development efforts
on 45nm should produce new technology advances in 2005, particularly in the pioneering areas of high-k gate dielectrics, metal gates,
and extreme-low-k interconnects.
Other development projects include: 65nm mixed signal/RF for communication applications; qualification of 90nm embedded 1T MIM
memory for high-density applications; 0.13µm embedded Flash IP development; 0.13µm 4T CMOS image sensor technology; 0.18µm
high-voltage process modules; as well as low power, low cost, customized SiGe RF BiCMOS technologies.
TSMC plans to maintain its long-term lead over competitors in the foundry industry through a strong exploratory technology research
program. The R&D team will explore process capabilities beyond the 45nm technology node, for 25nm geometries and smaller.
Exploratory work continues on new transistors and process technologies such as SOI, 3D structures, MRAM, strained-layer CMOS and
novel SoC features. The fruits of exploratory technology development are being evaluated for implementation at future technology nodes
such as 45nm and 32nm. The goal is to extend Moore's law through innovative in-house work, as well as collaborating with industry
leaders and academia to push the envelope in finding cost-effective solutions.
TSMC plans to continue working closely with international consortia and photolithography equipment suppliers to ensure timely develop-
ment of 193 high NA scanner technology, liquid immersion lithography, and massively parallel E-Beam direct write and EUV scanner
53
technology to support process development at the 45nm node and beyond. TSMC will also continue to collaborate with mask inspection
equipment suppliers to develop aerial image inspection techniques. This will help ensure that TSMC maintains the Company's leadership
position in mask quality and cycle time, and continues to meet aggressive R&D, prototyping and production requirements.
TSMC will continue to invest heavily to expand R&D capabilities. With a highly competent and dedicated R&D team and an unwavering
commitment to innovation, TSMC is confident of its ability to deliver the best and most cost-effective SoC technologies for our customers
and support our business growth.
6. Efficiency
Yield Management
Reducing the time to achieve yield maturity for new products is a very important goal to TSMC. TSMC has developed a comprehensive
technology transfer methodology -- from R&D to production -- to shorten the new technology learning curve. TSMC has a proven record
in delivering the industry's best-yield performance to customers.
Delivery Management
TSMC has a proven record of providing customers with a consistent product delivered on time. To become even more responsive to
change, TSMC has re-engineered its demand fulfillment system as well as developed a state-of-the-art manufacturing scheduling system
to further enhance our delivery accuracy
Cycle Time Management
Delivering products with short demand fulfillment cycle time is key to our customers' business success. To create this value for our cus-
tomers, TSMC has developed a sophisticated manufacturing scheduling and dispatching system, as well as embarked on Lean manufac-
turing approach.
Flexible Manufacturing Management
Flexible Manufacturing is a crucial element addressing the current unpredictability of forecasting demand. TSMC is able to meet sudden
customer demand surges, due in large part to our cluster Fab capability as well as extensive performance matching know-how for tools
and factories (Fabs).
Inventory Management
TSMC made great progress in 2004 on materials planning methodology development, which improves current operations through sys-
tematic, easy-to-measure, consistent and integrated IT platform. The results are demonstrated by the accuracy of materials requirements,
management of abnormal materials consumption, and reduction of excess inventory for both TSMC and suppliers. TSMC's standard
usage monitor mechanism not only enhances the sensitivity of abnormal usage detection but also facilitates usage alignment among
fabs.
Knowledge Management
TSMC has built the industry's leading, state-of-the-art knowledge management system. TSMC's vast repository system for the capture of
key knowledge also features a sophisticated expert system that embeds this captured knowledge into our engineering system. TSMC is
the only Taiwan company that has been awarded the Most Admired Knowledge Enterprises (MAKE) award, the most prestigious award in
the knowledge management community, in 2002 and 2003.
7. Quality
TSMC commits itself to providing its customers with the best quality wafers for their products. TSMC Quality and Reliability (Q&R) part-
ners with customers and the entire TSMC team to achieve "quality-in-time" for customers' time to market. In the design stage, Q&R tech-
nical services assist customers to design-in their product reliability requirements. Q&R also works with R&D in process development to
54
assure reliability performance, not only for a variety of circuit devices, but also for different types of IC packages. Systems have been
deployed by Q&R to ensure robust quality in managing production dynamics in meeting customers' business demand. To sustain produc-
tion quality and minimize customer risk when deviation occurs, manufacturing quality monitoring and event management span all critical
stages -- from raw material supply, mask making, real time in-process monitoring, to wafer sort/assembly, and customer field quality per-
formance. Leading edge, fast-turn-around failure analysis techniques are used from process development to customer production issues.
TSMC Q&R is also responsible to lead the company towards the ultimate goal of zero defect through continuous improvement programs
in terms of cost consciousness, efficient systems and effective methodologies. Customer feedback indicates that products shipped from
TSMC have either met or exceeded their field quality requirements in the marketplace. From independent surveys, customers have consis-
tently ranked TSMC overall quality higher than the competition. Also, in 2004, TSMC received certification for the third consecutive year
of ISO/TS 16949 that meets the Automotive industry's quality requirement.
8. Environmental Protection
PFCs Emission and Air Quality Control
TSMC has endorsed a Memorandum of Understanding (MOU) between the Taiwan Semiconductor Industrial Association and ROC-
Environmental Protection Administration (EPA), where TSMC is committed to reducing perfluorinated compounds (PFCs) emission to 10%
below the average of 1997 and 1999 by 2010. Based on the MOU, TSMC has set up a PFCs reduction policy and implementation
roadmap. To achieve committed reduction target, approaches like process optimization, chemical replacement and abatement are neces-
sary. Installation of PFCs abatement tools for etching process has been included at the beginning stage of new fab. Moreover, the emis-
sion of volatile organic compounds, acid gases, and alkali gases are also well controlled in compliance with regulation.
Water Consumption and Conservation
To improve water recovery rate and reduce water consumption, TSMC has focused on developing reclamation technology for the
Chemical Mechanical Polishing (CMP) process wastewater in 8-inch and 12-inch fabs. In 2004, TSMC successfully launched the CMP
wastewater reclamation system to reduce natural water consumption.
Energy Consumption and Conservation
TSMC continuously seeks to conserve energy to reduce the emission of carbon dioxide. Major energy conservation accomplishments
include adopting inverters in air conditioning, exhaust, and process water systems, to control power output according to actual require-
ments so as to save energy.
Waste Disposal and Land Contamination
Industrial waste that cannot be reused or recycled are either incinerated or sent to designated landfills. TSMC's waste solvents and sludge
(CaF2) were reused by cement plants as complementary fuel and raw material. Waste sulfuric acid, copper sulfate and phosphoric acid
were recycled for downgraded industrial use. Furthermore, based on the monitoring results of soil and groundwater, all the lands of
TSMC's fabs are free from contamination, according to the standards set by the Soil and Groundwater Pollution Remediation Act of EPA.
Environmental Performance
Starting in 2001, the Dow Jones Sustainability Indexes (DJSI) components have listed TSMC each year for its exceptional achievements in
corporate sustainability.
TSMC has also put significant efforts on ESH improvement programs. Two national awards were received in 2004, including: (1) "Annual
Environmental Protection Award for Enterprises" from the EPA, and (2) "Water Conservation Outstanding Performance Awards" from the
Water Resources Agency.
Environmental Compliance Record
Penalties or fines due to environmental pollution event in 2004: None.
55
9. Important Contracts
Technology Cooperation Agreement
Term of Agreement: 1997 - 2008
Contracting Party:
Koninklijke Philips Electronics N.V. ("Philips")
Summary:
TSMC is obliged to pay to Philips fixed amounts of license fees for third party patent cross licenses obtained through
Philips. TSMC and Philips agree to cross license the patents owned by each party.
Manufacturing Agreement
Term of Agreement: 02/16/1996 - 12/31/2005, automatically renewed for one year terms, unless terminated with a six-month prior writ-
ten notice by TSMC
Contracting Party: WaferTech, LLC ("WaferTech")
Summary:
TSMC has the right to purchase the entire installed capacity of WaferTech during the production period.
Shareholders Agreement
Term of Agreement: Effective as of 03/30/1999 and may be terminated as provided in the Agreement
Contracting Parties: Koninklijke Philips Electronics N.V. ("Philips") and EDB Investments Pte Ltd. ("EDBI")
Summary:
TSMC, Philips and EDBI established a joint venture "Systems on Silicon Manufacturing Company Pte Ltd." ("SSMC") to
build an IC foundry in Singapore. TSMC holds 32% of the shares. Philips and TSMC are committed to purchasing a
certain percentage of SSMC's capacity.
Technology Cooperation Agreement
Term of Agreement: 03/30/1999 - 03/29/2009
Contracting Party:
Systems on Silicon Manufacturing Company Pte Ltd. ("SSMC")
Summary:
TSMC agreed to transfer certain of its process technologies to SSMC, and SSMC agreed to pay TSMC a certain per-
centage of the net selling prices of SSMC products.
Patent License Agreement
Term of Agreement: 10/26/2001 - 12/31/2006
Contracting Party:
A multinational company
Summary:
The parties entered into cross license arrangements for certain semiconductor patents. TSMC pays license fees to the
said company.
Foundry Related Agreements
Term of Agreement: 1995 - 2006
Contracting Parties: Several multinational companies
Summary:
TSMC guarantees a pre-determined capacity for a set number of years to customers. In return, customers deposit a
certain amount of money with TSMC.
Manufacturing Agreement
Term of Agreement: 04/01/2004 - 03/31/2006
Contracting Party:
Vanguard International Semiconductor Corporation ("VIS")
Summary:
VIS reserves certain capacity to manufacture certain TSMC products at prices as agreed by the parties. TSMC agreed
to transfer certain technology to VIS and to receive compensation from VIS in the form of royalty payments.
56
Patent License Agreement
Term of Agreement: 11/01/2002 - 10/31/2012
Contracting Party:
A multinational company
Summary:
The parties entered into cross license arrangements for certain semiconductor patents. TSMC pays license fees to the
said company.
Patent License Agreement
Term of Agreement: 07/01/2002 - 6/30/2009
Contracting Party:
A multinational company
Summary:
The parties entered into cross license arrangements for certain semiconductor patents. TSMC pays license fees to the
said company.
Patent License Agreement
Term of Agreement: 01/01/2001 - 12/31/2011
Contracting Party:
A multinational company
Summary:
The parties entered into cross license arrangements for certain semiconductor patents. TSMC pays license fees to the
said company.
Amended and Restated Joint Technology Cooperation Agreement
Term of Agreement: 07/16/2001 - 12/31/2005
Contracting Parties: STMicroelectronics NV, Philips Semiconductors International B.V., Freescale Semiconductor, Inc.
Summary:
The parties entered into a joint technology cooperation arrangement for the development of certain high-perform-
ance and advanced semiconductor technologies.
Technology Development and License Agreement
Term of Agreement: 12/04/2003 - 12/03/2007
Contracting Party:
Freescale Semiconductor, Inc.
Summary:
The parties agreed jointly to develop certain advanced SOI process technologies and to cross license related intellec-
tual property rights.
Settlement Agreement
Term of Agreement: 01/30/2005 - 12/31/2010
Contracting Party:
Semiconductor Manufacturing International Corp. ("SMIC") and certain of its subsidiaries
Summary:
The parties settled their patent infringement and trade secret misappropriation disputes, wherein SMIC agreed to
pay TSMC US$175 million over six years.
57
Innovation is the wellspring of TSMC growth.
We received 460 US patents and added
516 ROC patents to our porfolio in 2004.
FINANCING PLANS AND
IMPLEMENTATION
Corporate Bond
1. Financing Plans
Source of Fund
Issuance
Issue Date
Tenor
Coupon Rate
Outstanding
Corporate Bond
01/10/2002 -
Tranche A: 5 years
Tranche A: 2.60% p.a.
Tranche A: NT$ 2.5 billion
01/24/2002
Tranche B: 7 years
Tranche B: 2.75% p.a.
Tranche B: NT$ 8.0 billion
Tranche C: 10 years
Tranche C: 3.00% p.a.
Tranche C: NT$ 4.5 billion
Use of Fund
Project
The proceeds of the bond finance a part of Fab 14 whose total
investment is expected to reach NT$77.63 billion.
Expansion Plan
Fund Used From 2002 To
2004 (NT$ thousands)
Future Fund Use
(NT$ thousands)
30,838,480
46,791,520
Approved by the Securities and Futures Commission and disclosed on the Taiwan Stock Exchange Market Observation Post
System on December 17, 2001.
2. Status of Implementation & Benefits
Project commenced in 2002 and production ramping-up has begun since the fourth quarter of 2004.
59
TSMC is the first foundry to reach the
full production of 12-inch, low-k,
90nm process.
FINANCIAL STATUS,
OPERATING RESULTS,
AND RISK MANAGEMENT
1. Financial Position
Unit: NT$ thousands
Item
Current Assets
Fixed Assets
Other Assets
Total Assets
2004
2003
Difference
173,667,311
158,526,272
15,141,039
227,976,400
188,286,752
39,689,648
12,616,636
11,638,485
978,151
487,553,210
396,416,862
91,136,348
Current Liabilities
60,638,852
30,537,984
30,100,868
Long-term Liabilities
27,949,059
36,664,569
(8,715,510)
Total Liabilities
Capital Stock
Capital Surplus
88,587,911
67,202,553
21,385,358
232,519,637
202,666,189
29,853,448
56,537,259
56,855,885
(318,626)
Retained Earnings
113,730,016
71,100,090
42,629,926
Total Shareholders' Equity
398,965,299
329,214,309
69,750,990
%
10
21
8
23
99
-24
32
15
-1
60
21
1.1 Analysis of Deviation over 20%
● The increase in fixed assets was mainly due to acquisition of new equipment for advanced technology capacity expan-
sion.
● The increase in current liabilities was primarily due to an increase in equipment payables and a reclassification of bonds
payable from noncurrent portion to current.
● Long-term liabilities decreased as a result of the above reclassification to current liabilties.
● The increase in retained earnings was due to much better operating results in 2004.
1.2 Major Impact on Financial Position : There was no significant impact on the Company's financial position.
1.3 Future Plan on Financial Position : Not Applicable
61
2. Operating Results
Unit: NT$ thousands
Item
Gross Sales
Sales Returns and Allowances
Net Sales
Cost of Sales
Gross Profit
Operating Expense
Operating Income
Non-operating Income
Non-operating Expense
Income before Tax
Tax Credit (Expense)
Income after Tax
2004
2003
260,726,896
206,157,918
(4,734,469)
255,992,427
145,831,843
110,160,584
23,337,806
86,822,778
6,859,714
1,903,908
91,778,584
537,531
92,316,115
(4,253,577)
201,904,341
129,012,704
72,891,637
20,244,060
52,647,577
2,665,799
4,285,101
51,028,275
(3,769,575)
47,258,700
Difference
54,568,978
(480,892)
54,088,086
16,819,139
37,268,947
3,093,746
34,175,201
4,193,915
(2,381,193)
40,750,309
4,307,106
45,057,415
%
26
11
27
13
51
15
65
157
-56
80
-114
95
2.1 Analysis of Deviation over 20%
● Increase in net sales and gross profit: The increase of net sales was mainly due to increased wafer shipment partially offset by lower ASP
and unfavorable foreign exchange rate. The improved gross profit was primarily due to higher capacity utilization and better product
mix.
● Increase in non-operating income: The increase was primarily due to higher investment income. In addition, interest income increased
as a result of increased bond investment.
● Decrease in non-operating expense: The decrease was largely due to a lack of asset write-off loss and lower exchange loss.
● Decrease in tax expense: The decrease was primarily due to a higher tax credits.
2.2 Reasons for changing the Company's major business; explain the variance resulting from the adjustment of selling
prices or costs, the increase or decrease of quantity and the combination of production and selling, or the replacement of
old products. If the Company's operation strategy, market situation, economic environment or other internal or external
factors has changed or expects to have any significant change, explain the fact, influencing factors and the possible
impact to the Company's future finance and responding proposal: Not Applicable
2.3 Planned selling quantities and its base for next year. Explain the major factors that keep the Company's forecast sales
quantity to rise or decline: Please refer to "Letter To Shareholders".
2.4 Gross Profit Deviation Analysis
Unit: NT$ millions
Gross Profit in
2004
Gross Profit in
2003
Difference
Price Difference
Cost Difference
Mix and Volume Difference
110,161
72,892
37,269
(12,905)
18,426
31,748
1. Market competition
caused unfavorable price
variance.
2. Technology advance-
ment caused a price
decline in matured tech-
nology.
Favorable cost variacne
came from continous cost
reduction activities and a
lower depreciation as a
result of fully-depreciated
assets.
1. Revenue from advanced technology (≤ 0.13µm) increased
from 17% in 2003 to 28% in 2004. In addition, capacity
utilization improved from 89% in 2003 to 100% in 2004.
The product mix improvement and higher utilization
resulted in higher gross profit.
2. Wafer shipment grew 35% in 2004. This quantity differ-
ence resulted in higher gross profit.
62
3. Cash Flow
Unit: NT$ thousands
Cash Balance
12/31/2003
Net Cash Provided by
Operating Activities in
2004
Net Cash Outflows from
Investing and Financing
Activities in 2004
Cash Balance
12/31/2004
Remedy for Cash Shortfall
Investment Plan
Financing Plan
98,288,002
143,680,218
(176,436,402)
65,531,818
-
-
3.1 Analysis of Cash Flow
● NT$143.7 billion net cash provided by operating activities: Mainly from net income and depreciation/amortization.
● NT$176.4 billion net cash outflows from investing and financing activities: This represents the sum of (1) NT$150.9 billion of invest-
ment activities, including capital expenditures, short-term and long-term cash investments, and (2) NT$25.6 billion of financing activi-
ties, mainly over cash divideds, shares buyback and repayment of corporate bonds.
3.2 Remedy for Cash Shortfall and Liquidity Analysis : Because TSMC enjoys a cashflow surplus, remedial actions are not required.
3.3 Cash Flow Projection for Next Year: TSMC does not provide financial projections, including cash flow projections.
4. Major Capital Expenditure
4.1 Major Capital Expenditure and Source of Capital
Unit: NT$ thousands
Plan
Actual or Planned
Source of Capital
Actual or Planned
Completion Date
up to 12/31/2004
Total Amount
up to 12/31/2004
Production Equipment
Owner's Equity/Bond
Completed
146,569,133
44,023,305
31,467,451
71,078,377
R&D Equipment
Owner's Equity/Bond
Completed
7,997,602
3,104,963
2,892,584
2,000,055
Note: Can not be reasonably estimated at the time of preparation.
The Execution of Major Capital Expenditure
2002
2003
2004
2005
(Note)
2006
(Note)
-
-
-
-
4.2 Estimated Possible Benefit
With the above-mentioned capital spending, it is estimated that TSMC production capacity may be increased by 800,000 8-inch equiva-
lent wafers per annum in 2005 and onwards.
Other Benefits (e.g. Product Quality, Anti-Pollution, Cost Reduction and etc.): Please refer to "Operational Highlights".
5. Long-Term Investment
None of the current year investments exceeded 5% of the Company's capital.
6. Risk Management
6.1 Environmental, Safety and Health (ESH) Risk and Emergencies and Natural Disasters
TSMC is committed to maintaining a comprehensive risk management system dedicated to the safety, security, and protection of people,
property, and the environment. In order to deal with emergencies and natural disasters at each facility, management has developed com-
prehensive plans and procedures that focus on loss prevention, emergency response, crisis management, and business recovery. TSMC
has adopted the International Standard on Environmental Management System (ISO 14001) as its standard for environmental manage-
ment. TSMC Fabs 2, 3, 5, 6, 7, 8 and 12 have been ISO 14001 and OHSAS 18001 certified.
63
6.2 Management of Financial Operations
Existing internal policies and procedures with respect to high-risk/high-leveraged investment, lending/endorsement and
guarantee for other parties, and financial derivatives transactions
In order to manage financial risk, TSMC does not make high-risk or high-leveraged financial investments. To control various types of
financial transactions, the Company has established internal policies and procedures based on sound financial and business practices; all
in compliance with the relevant rules and regulations issued by the Taiwan Securities and Futures Commission. TSMC policies and proce-
dures include "Policies and Procedures for Financial Derivatives Transactions," "Procedures for Lending Funds to Other Parties," "Procedures
for Acquisition or Disposal of Assets," and "Procedures for Endorsement and Guarantee." The financial transactions of a "derivative" nature
that TSMC enters into are strictly for hedging purposes and not for any trading or speculative purpose.
Covenants
TSMC s subsidiaries -- TSMC Development, Inc. and TSMC North America -- separately have entered into loan facility agreements. In con-
nection with those agreements, TSMC provides guarantees up to US$100 million in aggregate. Customary Borrower and/or Guarantor
covenants exist in those agreements.
6.3 Internal Management of Economic Risk
Interest Rate Fluctuation
TSMC's exposure to interest rate risks derives primarily from long-term debt obligations that are incurred in the normal course of busi-
ness. In order to limit its exposure to interest rate risks, TSMC finances its funding needs through issuance of long-term, fixed-rate debt.
Foreign Exchange Volatility
The Company is exposed to foreign exchange risks for both revenues and procurement. Most of TSMC s revenues derive from the export
of its products (approximately, 86% in 2004). Meanwhile, a substantial portion of the Company's procurement of equipment, tools and
material is imported. TSMC hedges its foreign exchange exposure mainly through forward currency contracts.
Inflation
Inflation in Taiwan was approximately 1.62% in 2004. It did not have a significant impact on TSMC operations and profits.
6.4 Political and Regulatory Environment
TSMC's management team closely monitors political and regulatory developments that could have a material impact on TSMC business
and operations. Political and regulatory developments did not have any material adverse effect on TSMC during 2004.
Since TSMC is also an NYSE listed company, TSMC is required to comply with the provisions of the U.S. Sarbanes-Oxley Act and relevant
regulations that are applicable to non-US companies. TSMC has taken measures to ensure compliance with applicable regulatory require-
ments, and will continue to monitor regulatory developments and implement changes as necessary for compliance.
6.5 Contingent Plans for Events That May Have a Significant Adverse Impact on the Company's Business and Image
TSMC maintains the highest degree of integrity, ethics, and fairness in managing and running its operations. TSMC has established a poli-
cy of "Ethics and Business Conduct," and its management does not tolerate unethical behavior or compromise of its core values and prin-
ciples.
TSMC pays special attention to emergency preparedness for natural and man-made disasters such as typhoons, earthquakes, and envi-
ronmental contamination. We have established extensive contingency planning, including the establishment of processes and procedures
for creating emergency task forces as and when necessary. In such a situation, contingency planning would include the preparation of a
thorough analysis of the emergency, its impact, alternatives, and solutions for each possible scenario, and appropriate precautionary
and/or recovery measures. Each task force's responsibility would be to ensure TSMC's ability to conduct business with as little personal
harm, business disruption, and financial impact as possible under the circumstances. As of the date of this Annual Report, there are no
reportable material events necessitating the activation of such contingencies.
64
6.6 Litigation Proceedings
To protect its intellectual capital, trade secrets and other assets, TSMC may initiate, as appropriate, litigation against third parties. TSMC,
TSMC North America, and WaferTech filed a series of lawsuits in late 2003 and 2004 in both state and federal courts in California and
with the U. S. International Trade Commission against Semiconductor Manufacturing International Corporation ("SMIC"), SMIC (Shanghai),
and SMIC Americas. The lawsuits alleged that SMIC companies infringed multiple TSMC patents and misappropriated TSMC's trade
secrets. These suits have been settled out of court on January 30, 2005. As part of the agreement, SMIC will pay TSMC US$175 million
over six years to resolve TSMC's patent infringement and trade secret claims.
TSMC receives from time to time, as is the case for many high-technology companies, communications from third parties asserting that
TSMC's technologies, designs, and manufacturing processes may infringe certain patents or other intellectual property rights. TSMC takes
these matters seriously, investigates all such claims, and takes appropriate action as circumstances require.
TSMC was not involved in any material litigation in 2004 and is not currently involved in any material litigation.
6.7 Potential benefits and risks associated with mergers and acquisitions
In 2004, and as of the date of this Annual Report, TSMC has not consummated any merger and acquisition activities.
6.8 Potential benefits and risks associated with capacity expansion
To meet customers' demands, TSMC increased its annual production capacity by approximately 800,000 8-inch equivalent wafers in
2004. The average utilization rates for the four quarters of 2004 were 105%, 106%, 103%, and 88%, respectively. As of the date of this
Annual Report, the benefits brought about by such capacity expansion have been in line with TSMC's expectation. If market conditions
become less favorable than management anticipates, some benefits associated with such capacity expansion may not be realized.
6.9 Potential risks associated with purchase or sales concentration
TSMC procures raw materials from multiple sources to ensure adequate supplies for volume production and to mitigate purchase con-
centration risks.
No individual customer accounted for more than 10% of TSMC's net sales in 2004.
6.10 Potential impact and risks associated with significant transfer of shareholdings by TSMC's directors, supervisors and
major shareholders who own 10 percent or more of TSMC's total outstanding shares
In 2004, and as of the date of this Annual Report, none of TSMC's directors, supervisors and major shareholders has disposed of signifi-
cant numbers of shares.
6.11 Potential impact and risks associated with replacement of management
In 2004, and as of the date of this Annual Report, there were no such risks for TSMC.
6.12 Other material risks
In 2004, and as of the date of this Annual Report, there were no other material risks for TSMC.
7. Other Necessary Supplement: None
65
FINANCIAL
INFORMATION
Year 2004 was a banner year for TSMC.
We again set new records for revenues and earnings.
67
1. Condensed Balance Sheet
Financial analysis from 2000-2004
Unit: NT$ thousands
Item
Current assets
Long-term investments
Fixed assets
Other assets
Current liabilities
Before distribution
After distribution
Long-term liabilities
Other liabilities
Capital stock
Capital surplus
Retained earnings
Before distribution
After distribution
Unrealized loss on long-term investment
Cumulative transaction adjustments
Total Assets
Total Liabilities
Before distribution
After distribution
Total Equity
Before distribution
After distribution
*Subject to change after shareholders' meeting resolution
2. Condensed Statement of Income
Financial analysis from 2000-2004
Unit:NT$ thousands (Except EPS:NT$)
Item
Net sales
Gross profit*
Income from operations
Non-operating Income
Non-operating Expense
Interest revenue
Interest expense
Income from operations of continued
2000
85,950,586
33,422,010
207,005,370
14,594,492
41,188,662
41,814,102
29,000,000
9,030,097
129,893,646
55,285,821
76,924,173
24,866,848
(71,564)
(278,377)
340,972,458
2001
63,652,726
32,869,391
215,499,242
23,713,325
25,210,619
25,799,467
24,000,000
9,333,990
181,325,531
57,128,433
37,507,410
19,015,226
-
1,228,701
335,734,684
2002
94,747,405
34,978,495
217,192,263
23,097,348
31,160,103
31,673,588
39,281,665
3,720,536
199,228,867
57,004,789
40,792,197
23,841,390
(194,283)
945,129
370,015,511
2003
158,526,272
37,965,353
188,286,752
11,638,485
30,537,984
43,691,881
33,300,829
3,363,740
202,666,189
56,855,885
71,100,090
26,846,412
(35)
225,408
396,416,862
79,218,759
79,844,199
58,544,609
59,133,457
74,162,304
74,675,789
67,202,553
80,356,450
261,753,699
261,128,259
277,190,075
276,601,227
295,853,207
295,339,722
329,214,309
316,060,412
2004
173,667,311
73,292,863
227,976,400
12,616,636
60,638,852
*
23,752,940
4,196,119
232,519,637
56,537,259
113,730,016
*
-
(2,226,427)
487,553,210
88,587,911
*
398,965,299
*
2000
166,228,420
75,996,839
60,541,105
5,409,307
2,112,818
1,575,460
1,858,197
2001
125,888,003
36,381,051
17,342,286
2,891,557
9,575,128
1,365,919
1,951,830
2002
160,961,329
51,967,145
34,176,306
1,762,893
8,826,744
1,008,147
2,119,935
2003
201,904,341
72,891,637
52,647,577
2,665,799
4,285,101
819,377
1,576,343
2004
255,992,427
110,160,584
86,822,778
6,859,714
1,903,908
1,762,347
1,352,738
segments-before tax
63,837,594
10,658,715
27,112,455
51,028,275
91,778,584
Income from operations of continued
segments-after tax
Net income
Earnings per share
Capitalized interest
65,106,194
65,106,194
5.71 **
2.86 ***
72,903
14,483,174
14,483,174
0.83 **
0.60 ***
207,297
21,610,291
21,610,291
1.14 **
0.91 ***
165,857
47,258,700
47,258,700
2.33 **
2.02 ***
138,668
92,316,115
92,316,115
3.97 **
262,109
* Certain accounts of 2000 have been reclassified to conform to 2001 through 2004 classifications
** Based on weighted average shares outstanding in each year
***Retroactive adjustment for capitalization of unappropriated earnings and bonus to employees
68
3. Financial Analysis
Financial analysis from 2000-2004
Capital
Analysis
Liquidity Analysis
Operating
Performance Analysis
Profitability Analysis
Cash flow
Leverage
Others
Debts ratio (%)
Long-term fund to fixed assets (%)
Current ratio (%)
Quick ratio (%)
Times interest earned (times)
Average collection turnover (times)
Days sales outstanding
Average inventory turnover (times)
Average inventory turnover days
Average payment turnover (times)
Fixed assets turnover (times)
Total assets turnover (times)
Return on total assets (%)
Return on equity (%)
Operating income to capital stock (%)
Profit before tax to capital stock (%)
Cost to Revenue Ratio (%)
Profit after tax to net sales (%)
Net worth per share (NTD)
Earnings per share (NTD) (Note1)
Dividends per share (NTD)
Cash dividends (NTD)
Stock dividends (NTD)
Cash flow ratio (%)
Cash flow adequacy ratio (%)
Cash flow reinvestment ratio (%)
Operating leverage
Financial leverage
Royalty Expense (NT$K)
Royalty Revenue (NT$K)
Gross Margin (NT$K)
Sales and Marketing Costs (NT$K) (Note2)
Effective Tax Rate (%)
Working Capital (NT$K)
Capital Expenditure (NT$K)
2000
23.23
140.46
208.68
178.13
34.02
7.70
47.42
10.77
33.90
10.76
0.80
0.49
24.12
31.43
46.61
49.15
54.28
39.17
21.28
2.86
2.80
-
2.80
213.17
106.03
22.47
2.34
1.03
2,477,021
23,557
75,996,839
2,420,409
7.54
44,761,924
79,720,461
2001
17.44
139.76
252.48
211.92
5.84
5.32
68.61
9.19
39.70
11.52
0.58
0.37
4.76
5.37
9.56
5.88
71.10
11.50
15.70
0.60
4.00
-
4.00
284.27
105.73
16.00
6.14
1.13
3,715,200
55,077
36,381,051
2,175,747
17.56
38,442,107
68,002,448
2002
20.04
154.30
304.07
264.11
12.79
9.08
40.20
11.57
31.55
20.72
0.74
0.44
6.63
7.54
17.15
13.61
67.71
13.43
15.19
0.91
1.00
-
1.00
302.59
122.72
17.88
3.88
1.07
6,232,338
204,350
51,967,145
1,140,424
16.55
63,587,302
54,443,595
2003
16.95
192.53
519.11
478.38
30.67
9.17
39.92
12.14
30.06
14.41
1.07
0.51
12.67
15.12
25.98
25.18
63.90
23.41
16.24
2.02
0.80
-
0.80
355.85
145.42
17.71
3.21
1.03
5,221,718
209,764
72,891,637
1,193,520
18.27
127,988,288
37,247,465
2004
18.17
185.42
286.40
261.92
57.67
9.34
39.10
11.63
31.39
14.39
1.12
0.53
21.16
25.36
37.34
39.47
56.97
36.06
17.16
3.97
2.01
0.60
1.41
236.94
149.94
18.12
2.46
1.02
2,870,259
423,804
110,160,584
1,454,362
11.85
113,028,459
76,171,356
Note1: Retroactive adjustment for capitalization of unappropriated earnings and bonus to employees.
Note2: Certain accounts of 2000 through 2002 have been reclassified to conform to 2003 and 2004 classifications.
*The calculation formula of financial analysis was listed as follows :
1. Capital Structure Analysis
(1) Debts ratio
(2) Long-term fund to fixed assets
= Total Liabilities / Total Assets
= (Shareholders' Equity + Long-term Liabilities)/
2. Liquidity Analysis
(1) Current ratio
(2) Quick ratio
Net Properties
= Current Assets / Current Liabilities
= (Current Assets - Inventories - Prepaid
Expenses) / Current Liabilities
(2) Return on equity
(3) Cost to Revenue Ratio
(4) Profit after tax to net sales
(5) Earnings per share
= Net Income / Average Shareholders' Equity
= Cost of Goods Sold / Net Sales
= Net Income / Net Sales
= ( Net Income - Preferred Stock Dividend ) /
(6) Net worth per share
= ( Shareholders' Equity - Preferred Sock ) /
Number of shares outstanding
Weighted Average Number of Shares Outstanding
(3) Times interest earned
= Earnings before Interest and Taxes /
Interest Expenses
5. Cash flow
(1) Cash flow ratio
3. Operating Performance Analysis
(1) Average collection turnover
(2) Days sales outstanding
(3) Average inventory turnover
(4) Average inventory turnover days = 365 / Inventory Turnover rate
(5) Average payment turnover
(6) Fixed assets turnover
(7) Total assets turnover
= Net Sales / Average Trade Receivables
= 365 / Receivables Turnover rate
= Cost of Sales / Average Inventory
= Cost of Sales / Average Trade Payables
= Net Sales / Net Properties
= Net Sales / Total Assets
= Net Cash Provided by Operating Activities /
Current Liabilities
(2) Cash flow adequacy ratio
= Five-year sum of cash from operations /
(3) Cash flow reinvestment ratio
= ( Cash Provided by Operating Activities -
Five-year sum of capital expenditures, inventory
additions, and cash dividend
Cash Dividends ) / ( Gross Plant + Investment +
Other Assets + Working Capital )
6. Leverage
4. Profitability Analysis
(1) Return on total assets
= ( Net Income + Interest Expenses *
Operations
(1 - Effective tax rate ) ) /Average Total Assets
(2) Financial leverage
= Income from Operations / ( Income from
(1) Operating leverage
= ( Net Sales - Variable Cost ) / Income from
Operations - Interest Expenses )
69
4. Condensed Interim Balance Sheet by Quarter
Unit: NT$ thousands
March 31, 2004
June 30, 2004
September 30, 2004
December 31, 2004
Amount
%
Amount
%
Amount
%
Amount
%
175,716,905
37,978,462
195,932,438
11,409,716
421,037,521
42
9
46
3
100
173,815,349
49,216,494
200,281,787
16,513,218
439,826,848
40
11
46
3
100
177,681,922
58,185,933
207,155,918
19,483,919
462,507,692
38
13
45
4
100
173,667,311
73,292,863
227,976,400
12,616,636
487,553,210
36
15
47
2
100
ASSEETS
Current assets
Long-term investments
Fixed assets
Other assets
TOTAL ASSETS
LIABILITIES AND SHAREHOLDERS'
EQUITY
LIABILITIES
Current liabilities
Long-term liabilities
Other liabilities
TOTAL LIABILITIES
SHAREHOLDERS' EQUITY
38,081,342
32,999,977
3,370,160
74,451,479
9
8
1
18
48
13
21
-
-
-
82
49,046,758
36,260,196
3,446,140
88,753,094
233,765,970
56,885,914
69,045,214
53,132
(9)
(8,676,467)
351,073,754
11
8
1
20
53
13
16
-
-
(2)
80
44,232,342
34,914,936
4,097,624
83,244,902
232,518,770
56,529,100
91,535,211
300,345
(3,967)
(1,616,669)
379,262,790
9
8
1
18
50
12
20
-
-
-
82
60,638,852
23,752,940
4,196,119
88,587,911
232,519,637
56,537,259
113,730,016
(2,226,427)
-
(1,595,186)
398,965,299
12
5
1
18
48
11
23
-
-
-
82
Capital stock
Capital surplus
Retained earnings
Cummulative translation adjustments
Unrealized loss on long-term investment
Treasury stock (at cost)
TOTAL SHAREHOLDERS' EQUITY
202,666,189
56,860,879
89,889,292
(728,208)
-
(2,102,110)
346,586,042
TOTAL LIABILITIES AND SHAREHOLD-
ERS' EQUITY
421,037,521
100
439,826,848
100
462,507,692
100
487,553,210
100
70
5. Condensed Interim Satement of Income by Quarter
Unit:NT$ thousands (Except EPS:NT$)
GROSS SALES
SALES RETURNS AND ALLOWANCES
NET SALES
COST OF SALES
GROSS PROFIT
OPERATING EXPENSES
INCOME FROM OPERATIONS
NON-OPERATING INCOME
Investment income recognized by equity
method-net
Interest
Technical service income
Gain on disposal of property, plant and
equipment
Gain (loss) on sales of investments
Others
Total Non-Operating Income
NON-OPERATING EXPENSES
Interest
Foreign exchange loss (gain), net
Loss on disposal of property, plant and
equipment
Unrealized valuation loss on short-term
investments
Others
Total Non-Operating Expenses
Q1, 2004
Q2, 2004
Q3, 2004
Q4, 2004
2004
Amount
%
Amount
%
Amount
%
Amount
%
Amount
%
58,785,691
(1,272,486)
57,513,205
34,783,992
22,729,213
5,188,564
17,540,649
66,196,574
(1,327,333)
64,869,241
36,730,069
28,139,172
6,005,671
22,133,501
70,797,355
(1,062,318)
69,735,037
37,595,584
32,139,453
6,018,743
26,120,710
100
57
43
9
34
64,947,276
(1,072,332)
63,874,944
36,722,198
27,152,746
6,124,828
21,027,918
260,726,896
(4,734,469)
255,992,427
145,831,843
110,160,584
23,337,806
86,822,778
100
57
43
9
34
100
57
43
10
33
100
54
46
9
37
100
60
40
9
31
802,676
256,296
56,983
59,087
94,477
92,135
1,361,654
330,172
122,117
6,749
-
7,832
466,870
1
1
-
-
-
-
2
1
-
-
-
-
1
1,251,290
302,296
54,113
55,015
4,167
46,163
1,713,044
272,809
420,474
26,164
-
6,573
726,020
2
-
-
-
-
-
2
-
1
-
-
-
1
1,377,781
501,820
216,487
30,797
13,127
184,660
2,324,672
274,791
(3,826)
30,563
-
14,857
316,385
2
1
-
-
-
-
3
-
-
-
-
-
-
608,572
701,935
96,221
19,248
(21,452)
55,820
1,460,344
474,966
(215,685)
44,246
75,212
15,894
394,633
1
1
-
-
-
-
2
1
-
-
-
-
1
34
-
34
2
1
-
-
-
-
3
1
-
-
-
-
1
36
-
36
4,040,319
1,762,347
423,804
164,147
90,319
378,778
6,859,714
1,352,738
323,080
107,722
75,212
45,156
1,903,908
91,778,584
537,531
92,316,115
3.97
INCOME BEFORE INCOME TAX
18,435,433
32
23,120,525
35
28,128,997
40
22,093,629
INCOME TAX BENEFIT(EXPENSE)
353,769
1
289,075
-
(195,818)
-
90,505
NET INCOME
18,789,202
33
23,409,600
35
27,933,179
40
22,184,134
EARNINGS PER SHARE AFTER TAX
0.93
0.88
1.20
0.96
6. Auditors' Opinion from 2000 to 2004
Year
2000
2001
2002
2003
2004
CPA
Shu-Chieh Huang, Yung-Do Way
Shu-Chieh Huang, Yung-Do Way
Shu-Chieh Huang, Yung-Do Way
Yu-Feng Huang, Yung-Do Way
Hung-Wen Huang, Ming-Cheng Chang
Audit Opinion
An Unqualified Opinion
An Unqualified Opinion
A Modified Unqualified Opinion
A Modified Unqualified Opinion
An Unqualified Opinion
Deloitte Touche Tohmatsu
12F, No. 156, Sec. 3, Min-Sheng E. Rd., Taipei, Taiwan, R.O.C.
Tel : 886-2-2545-9988
71
7. Supervisors' Report
The Board of Directors has prepared and submitted to the Supervisors the Company's 2004 Business Report, Financial Statements, and
proposal for allocation of profits. The CPA firm of Deloitte & Touche was retained to audit TSMC's Financial Statements. The auditors have
submitted to the Board a report relating to the Financial Statements. The Business Report, Financial Statements, and profit allocation pro-
posal have been examined by and determined to be correct and accurate by the undersigned, the supervisors of Taiwan Semiconductor
Manufacturing Company Limited. According to Article 219 of the Company Law, we hereby submit this report.
Taiwan Semiconductor Manufacturing Company Limited
Supervisor
Robbert J. Brakel
Supervisor
James C. Ho
Supervisor Michael E. Porter
March 11, 2005
8. Financial Difficulties
The Company should disclose the financial impact to the Company if the Company and its affiliated companies incur any financial or cash
flow difficulties from 2004 until February 28, 2005: None
72
9. Financial Statements and Independent Auditors' Report
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Taiwan Semiconductor Manufacturing Company, Ltd.
We have audited the accompanying balance sheets of Taiwan Semiconductor Manufacturing Company, Ltd. as of December 31, 2004
and 2003, and the related statements of income, changes in shareholders' equity and cash flows for the years then ended. These finan-
cial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial state-
ments 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 account-
ing principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Taiwan
Semiconductor Manufacturing Company, Ltd. as of December 31, 2004 and 2003, and the results of its operations and its cash flows for
the years then ended in conformity with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers and account-
ing principles generally accepted in the Republic of China.
We have also audited the consolidated financial statements of Taiwan Semiconductor Manufacturing Company, Ltd. as of and for the
years ended December 31, 2004 and 2003, and have expressed an unqualified opinion on such financial statements.
January 13, 2005 (January 30, 2005 as to Note 20m)
Notice to Readers
The accompanying financial statements are intended only to present the financial position, results of operations and cash flows in accor-
dance 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 orig-
inal Chinese version or any difference in the interpretation of the two versions, the Chinese-language auditors' report and financial state-
ments shall prevail.
73
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD.
BALANCE SHEETS
DECEMBER 31, 2004 AND 2003
(In Thousands of New Taiwan Dollars, Except Par Value)
ASSETS
CURRENT ASSETS
Cash and cash equivalents (Notes 2, 3 and 4)
Short-term investments, net (Notes 2 and 4)
Receivables from related parties (Note 18)
Notes receivable
Accounts receivable
Allowance for doubtful receivables (Note 2)
Allowance for sales returns and others (Note 2)
Other receivables from related parties (Note 18)
Other financial assets (Notes 2 and 21)
Inventories, net (Notes 2 and 5)
Deferred income tax assets (Notes 2 and 12)
Prepaid expenses and other current assets
Total current assets
LONG-TERM INVESTMENTS (Notes 2, 6, 16 and 21)
Equity method
Cost method
Long-term bonds
Other investments
Total long-term investments
PROPERTY, PLANT AND EQUIPMENT (Notes 2, 7 and 18)
Cost
Buildings
Machinery and equipment
Office equipment
Accumulated depreciation
Advance payments and construction in progress
Net property, plant and equipment
GOODWILL (Note 2)
OTHER ASSETS
Deferred charges, net (Notes 2, 8 and 20)
Deferred income tax assets (Notes 2 and 12)
Refundable deposits (Note 18)
Assets leased to others, net (Note 2)
Idle assets (Note 2)
Total other assets
TOTAL
The accompanying notes are an integral part of the financial statements.
$
2004
Amount
65,531,818
52,979,095
16,186,083
2,942
15,323,939
(980,461)
(3,327,914)
1,617,339
2,406,736
14,171,945
8,849,000
906,789
173,667,311
46,828,322
772,634
15,170,167
10,521,740
73,292,863
84,299,167
390,719,215
7,041,132
482,059,514
(300,006,201)
45,923,087
227,976,400
1,916,146
8,845,144
1,645,003
85,413
78,613
46,317
10,700,490
$
%
14
11
4
-
3
-
(1)
-
-
3
2
-
36
10
-
3
2
15
17
80
1
98
(61)
10
47
-
2
-
-
-
-
2
2003
Amount
%
98,288,002
12,559,019
14,867,662
9,893
13,907,914
(1,016,022)
(2,126,025)
132,963
689,440
10,907,158
8,322,000
1,984,268
158,526,272
37,262,237
703,116
-
-
37,965,353
71,277,031
332,252,225
6,180,495
409,709,751
(247,514,312)
26,091,313
188,286,752
2,264,536
7,947,331
1,070,596
177,379
84,347
94,296
9,373,949
25
3
4
-
4
-
(1)
-
-
3
2
-
40
10
-
-
-
10
18
84
1
103
(62)
6
47
1
2
-
-
-
-
2
$
487,553,210
100
$
396,416,862
100
74
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable
Payables to related parties (Note 18)
Payables to contractors and equipment suppliers
Accrued expenses and other current liabilities (Notes 2, 10 and 20)
Current portion of long-term bonds payable (Note 9)
$
Total current liabilities
LONG-TERM LIABILITIES
Bonds payable (Note 9)
Other long-term payables (Notes 10 and 20)
Other payables to related parties (Notes 18 and 20)
Total long-term liabilities
OTHER LIABILITIES
Accrued pension cost (Notes 2 and 11)
Guarantee deposits (Note 20)
Deferred credits - gain on intercompany (Notes 2 and 18)
Total other liabilities
Total liabilities
SHAREHOLDERS' EQUITY (Notes 2 and 14)
Capital stock - $10 par value
Authorized: 24,600,000 thousand shares
Issued: 23,251,964 thousand shares in 2004 and 20,266,619
thousand shares in 2003
Capital surplus
Retained earnings
Appropriated as legal reserve
Appropriated as special reserve
Unappropriated earnings
Others
Unrealized loss on long-term investments
Cumulative translation adjustments
Treasury stock (at cost) - 45,521 thousand shares in 2004 and
40,597 thousand shares in 2003 (Notes 2 and 16)
2004
2003
Amount
%
Amount
%
6,488,617
3,198,490
31,154,309
9,297,436
10,500,000
$
1
1
6
2
2
6,083,876
4,500,140
7,117,884
7,836,084
5,000,000
60,638,852
12
30,537,984
19,500,000
1,934,968
2,317,972
23,752,940
3,101,196
412,393
682,530
4,196,119
4
-
1
5
1
-
-
1
30,000,000
3,300,829
-
33,300,829
2,600,251
763,489
-
3,363,740
2
1
2
2
1
8
7
1
-
8
1
-
-
1
88,587,911
18
67,202,553
17
232,519,637
56,537,259
25,528,007
-
88,202,009
-
(2,226,427)
(1,595,186)
48
11
5
-
18
-
-
-
202,666,189
56,855,885
20,802,137
68,945
50,229,008
(35)
225,408
(1,633,228)
51
14
5
-
13
-
-
-
Total shareholders' equity
398,965,299
82
329,214,309
83
TOTAL
$
487,553,210
100
$
396,416,862
100
75
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD.
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)
GROSS SALES (Notes 2 and 18)
$
260,726,896
$ 206,157,918
SALES RETURNS AND ALLOWANCES (Note 2)
(4,734,469)
(4,253,577)
2004
2003
Amount
%
Amount
%
NET SALES
COST OF SALES (Notes 13 and 18)
GROSS PROFIT
OPERATING EXPENSES (Notes 13 and 18)
Research and development
General and administrative
Marketing
Total operating expenses
INCOME FROM OPERATIONS
NON-OPERATING INCOME AND GAINS
Investment income recognized by equity method, net (Notes 2 and 6)
Interest (Notes 2 and 21)
Technical service income (Notes 18 and 20)
Gain on disposal of property, plant and equipment (Notes 2 and 18)
Gain on sales of investments (Note 2)
Other (Note 18)
Total non-operating income and gains
NON-OPERATING EXPENSES AND LOSSES
Interest (Notes 2, 7, 9 and 21)
Foreign exchange loss, net (Notes 2 and 21)
Loss on disposal of property, plant and equipment (Note 2)
Unrealized valuation loss on short-term investments (Notes 2 and 4)
Loss on property, plant and equipment and idle assets (Note 2)
Other
Total non-operating expenses and losses
INCOME BEFORE INCOME TAX
INCOME TAX BENEFIT (EXPENSE) (Notes 2 and 12)
NET INCOME
255,992,427
100
201,904,341
100
145,831,843
110,160,584
12,516,434
9,367,010
1,454,362
23,337,806
57
43
5
3
1
9
129,012,704
72,891,637
12,712,695
6,337,845
1,193,520
20,244,060
86,822,778
34
52,647,577
4,040,319
1,762,347
423,804
164,147
90,319
378,778
6,859,714
1,352,738
323,080
107,722
75,212
-
45,156
1,903,908
2
1
-
-
-
-
3
1
-
-
-
-
-
1
791,424
819,377
209,764
438,804
114,817
291,613
2,665,799
1,576,343
909,496
373,472
-
1,401,585
24,205
4,285,101
$
$
91,778,584
36
$
51,028,275
537,531
-
(3,769,575)
92,316,115
36
$
47,258,700
64
36
6
3
1
10
26
-
1
-
-
-
-
1
1
-
-
-
1
-
2
25
(2)
23
(Continued)
76
EARNINGS PER SHARE (NT$, Note 17)
Basic earnings per share
Diluted earnings per share
2004
2003
Before
Income Tax
After
Income Tax
Before
Income Tax
After
Income Tax
$
$
3.95
3.95
$
$
3.97
3.97
$
$
2.18
2.18
$
$
2.02
2.02
The pro forma net income and earnings per share (after income tax) are based on the assumption that the stock of parent company held by its sub-
sidiaries is treated as an investment instead of the treasury stock, and are shown as follows (Notes 2 and 16):
NET INCOME
EARNINGS PER SHARE (NT$)
Basic earnings per share
Diluted earnings per share
The accompanying notes are an integral part of the financial statements.
$
$
$
2004
2003
92,340,760
$
47,337,094
3.96
3.96
$
$
2.02
2.02
(Concluded)
77
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD.
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
(In Thousands of New Taiwan Dollars)
Capital Stock Issued
Preferred Stock
Common Stock
Shares
(in thousand)
Amount
Shares
(in thousand)
Amount
BALANCE, JANUARY 1, 2003
1,300,000
$ 13,000,000
18,622,887
$ 186,228,867
Redemption and retirement of preferred stock
(1,300,000)
(13,000,000)
-
-
Appropriations of prior year's earnings
Legal reserve
Special reserve
Bonus to employees - stock
Cash dividends paid for preferred stock
Stock dividends - 8%
Remuneration to directors and supervisors
Net income in 2003
Adjustment arising from changes in ownership percentage in investees
Reversal of unrealized loss on long-term investment of investees
Translation adjustments
Treasury stock - sales of parent company stock held by subsidiaries
BALANCE, DECEMBER 31, 2003
Appropriations of prior year's earnings
Legal reserve
Reversal of special reserve
Bonus to employees - cash
Bonus to employees - stock
Cash dividends paid for preferred stocks
Cash dividends - 6%
Stock dividends - 14%
Remuneration to directors and supervisors
Net income in 2004
Adjustment arising from changes in ownership percentage in investees
Reversal of unrealized loss on long-term investment of investees
Translation adjustments
Issuance of stock arising from exercising stock options
Cash dividends received by subsidiaries from parent company
Treasury stock - sales of the parent company stock held by subsidiaries
Treasury stock - repurchased by the Company
Retirement of treasury stock
BALANCE, DECEMBER 31, 2004
The accompanying notes are an integral part of the financial statements.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
153,901
-
1,489,831
-
-
-
1,539,013
-
14,898,309
-
-
-
-
-
-
-
-
-
-
-
20,266,619
202,666,189
-
-
-
272,651
-
-
2,837,327
-
-
-
-
2,726,514
-
-
28,373,267
-
-
-
-
-
87
-
-
-
-
-
-
-
867
-
-
-
(124,720)
(1,247,200)
23,251,964
$ 232,519,637
78
Capital
Surplus
Retained Earnings
Legal
Reserve
Special
Reserve
Unappropriated
Earnings
Total
Unrealized
Loss on
Long-term
Investments
Cumulative
Translation
Adjustments
Treasury
Stock
(Note 16)
Total
Shareholders'
Equity
$ 57,004,789
$ 18,641,108
$
-
-
-
-
-
-
-
-
(158,924)
-
-
10,020
-
2,161,029
-
-
-
-
-
-
-
-
-
-
-
-
-
68,945
-
-
-
-
-
-
-
-
-
$ 22,151,089
$ 40,792,197
$
(194,283)
$ 945,129
$ (1,923,492)
$
295,853,207
-
-
(2,161,029)
(68,945)
(1,539,013)
(455,000)
(14,898,309)
(58,485)
-
-
(1,539,013)
(455,000)
(14,898,309)
(58,485)
47,258,700
47,258,700
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
194,248
-
-
-
-
-
-
-
-
-
-
-
-
(719,721)
-
-
-
-
-
-
-
-
-
-
-
-
290,264
(13,000,000)
-
-
-
(455,000)
-
(58,485)
47,258,700
(158,924)
194,248
(719,721)
300,284
56,855,885
20,802,137
68,945
50,229,008
71,100,090
(35)
225,408
(1,633,228)
329,214,309
-
-
-
-
-
-
-
-
-
34,059
-
-
2,757
22,781
1,864
-
(380,087)
4,725,870
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$ 56,537,259
$ 25,528,007
$
-
(68,945)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(4,725,870)
68,945
(681,628)
(2,726,514)
(184,493)
(12,159,971)
(28,373,267)
(127,805)
-
-
(681,628)
(2,726,514)
(184,493)
(12,159,971)
(28,373,267)
(127,805)
92,316,115
92,316,115
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(5,432,511)
(5,432,511)
$ 88,202,009
$ 113,730,016
$
-
-
-
-
-
-
-
-
-
-
35
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2,451,835)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
38,042
-
-
(681,628)
-
(184,493)
(12,159,971)
-
(127,805)
92,316,115
34,059
35
(2,451,835)
3,624
22,781
39,906
(7,059,798)
(7,059,798)
7,059,798
-
$ (2,226,427)
$ (1,595,186)
$ 398,965,299
79
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
(In Thousands of New Taiwan Dollars)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income
Adjustments to reconcile net income to net cash provided by
operating activities
Depreciation and amortization
Deferred income taxes
Investment income recognized by equity method, net
Amortization of premium/discount of long-term bond investments
Loss on property, plant, and equipment, and idle assets
Gain on sales of long-term investments, net
Gain on disposal of property, plant and equipment, net
Accrued pension cost
Changes in operating assets and liabilities
Decrease (increase) in
Receivables from related parties
Notes receivable
Accounts receivable
Allowance for doubtful receivables
Allowance for sales returns and others
Other receivables from related parties
Other financial assets
Inventories, net
Prepaid expenses and other current assets
Increase (decrease) in
Payables to related parties
Accounts payable
Accrued expenses and other liabilities
2004
2003
$
92,316,115
$
47,258,700
63,072,140
(1,101,407)
(4,040,319)
28,673
-
(2,216)
(56,425)
500,945
(1,318,421)
6,951
(1,416,025)
(35,561)
1,201,889
(11,496)
(1,655,730)
(3,264,787)
1,077,479
(1,771,144)
404,741
(255,184)
61,786,114
3,639,971
(791,424)
-
1,401,585
(79,149)
(65,332)
389,709
(4,752,698)
50,347
(4,412,467)
86,158
(237,042)
(64,439)
189,024
(566,822)
121,298
2,033,142
1,234,642
1,447,119
Net cash provided by operating activities
143,680,218
108,668,436
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in short-term investments
Acquisitions of
Long-term investments
Property, plant and equipment
Proceeds from disposal of
Long-term investments
Property, plant and equipment
Increase in deferred charges
Decrease in refundable deposits
Decrease in other assets
(43,822,489)
(30,290,982)
(76,171,356)
7,822
1,713,934
((2,404,130)
91,966
-
(12,529,448)
(3,006,374)
(37,247,465)
476,405
177,307
(2,137,932)
366,090
9,250
Net cash used in investing activities
(150,875,235)
(53,892,167)
(Continued)
80
CASH FLOWS FROM FINANCING ACTIVITIES
Cash dividends paid for common stock
Repurchase of treasury stock
Repayment of long-term bonds payable
Cash bonus paid to employees
Decrease in guarantee deposits
Cash dividends paid for preferred stock
Remuneration paid to directors and supervisors
Proceeds from issuance of new shares arising from exercises of stock
options
Redemption of preferred stock
Net cash used in financing activities
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF THE YEAR
CASH AND CASH EQUIVALENTS, END OF THE YEAR
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid (excluding the amount capitalized of NT$262,109
thousand and NT$138,668 thousand in 2004 and 2003, respec-
tively, Note 7)
Income tax paid
NONCASH INVESTING AND FINANCING ACTIVITIES
Current portion of long-term bonds payable
Current portion of other payables to related parties (under payables
to related parties)
Current portion of other long-term payables (under accrued expenses
and other current liabilities)
Reclassification of short-term investments to long-term investments
Reclassification of long-term investments to short-term investments
The accompanying notes are an integral part of the financial statements.
2004
2003
$
$
$
$
$
$
$
$
$
(12,159,971)
(7,059,798)
(5,000,000)
(681,628)
(351,096)
(184,493)
(127,805)
3,624
-
(25,561,167)
(32,756,184)
98,288,002
65,531,818
1,379,287
309,522
10,500,000
492,022
1,505,345
3,402,413
-
$
$
$
$
$
$
$
$
$
-
-
(4,000,000)
-
(631,577)
(455,000)
(58,485)
-
(13,000,000)
(18,145,062)
36,631,207
61,656,795
98,288,002
1,652,579
2,500
5,000,000
-
1,591,972
-
29,571
(Concluded)
81
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD.
NOTES TO FINANCIAL STATEMENTS
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)
1. Organization and Operations
Taiwan Semiconductor Manufacturing Company, Ltd. (the Company or TSMC), a Republic of China (R.O.C.) corporation, was incorporat-
ed as a venture among the Government of the R.O.C., acting through the Development Fund of the Executive Yuan; Philips Electronics
N.V. and certain of its affiliates (Philips); and certain other private investors. On September 5, 1994, its shares were listed on the Taiwan
Stock Exchange (TSE). On October 8, 1997, TSMC listed some of its shares of stock on the New York Stock Exchange (NYSE) in the form
of American Depositary Shares (ADSs).
The Company is engaged mainly in the manufacturing, selling, packaging, testing and computer-aided designing of integrated circuits
and other semiconductor devices and the manufacturing of masks.
2. Summary of Significant Accounting Policies
The financial statements are presented in conformity with Guidelines Governing the Preparation of Financial Reports by Securities Issuers
and accounting principles generally accepted in the R.O.C.
For the convenience of readers, the accompanying financial statements have been translated into English from the original Chinese ver-
sion prepared and used in the R.O.C. If there is any conflict between the English version and the original Chinese version or any difference
in the interpretation of the two versions, the Chinese-language financial statements shall prevail.
Significant accounting policies are summarized as follows:
Use of Estimates
The preparation of financial statements in conformity with the aforementioned guidelines and principles requires management to make
reasonable assumptions and estimates of matters that are inherently uncertain. The actual results may differ from management's estimates.
Classification of Current and Noncurrent Assets and Liabilities
Current assets are those expected to be converted to cash, sold or consumed within one year from the balance sheet date. Current liabili-
ties are obligations due on demand within one year from the balance sheet date. Assets and liabilities that are not classified as current
are noncurrent assets and liabilities, respectively.
Cash Equivalents
Government bonds under repurchase agreements and notes acquired with maturities less than three months from the date of purchase
are classified as cash equivalents.
Short-term Investments
Short-term investments primarily consist of corporate bonds, asset-backed securities, bond funds, agency bonds, government bonds
and others.
Short-term investments are recorded at historical cost and are carried at the lower of cost or market value as of the balance sheet date.
An allowance for decline in value is provided and is charged to current earnings when the aggregate carrying value of the investments
82
exceeds the aggregate market value. A reversal of the allowance is recorded for a subsequent recovery of the market value.
The cost of funds and listed stocks sold are counted for using the weighted-average method; whereas the other securities are accounted
for using the specific identification method.
The market value of funds is determined using the net asset value of the funds at the end of the year, and the market value of listed
stocks is determined using the average-closing price of the listed stocks for the last month of the year. The others are determined using
the average of bid and ask prices as of the balance sheet date.
Cash dividends are recorded as investment income in the current year.
Allowance for Doubtful Receivables
An allowance for doubtful receivables is provided based on a review of the collectibility of accounts receivables. The Company determines
the amount of allowance for doubtful accounts by examining the historical collection experience and current trends in the credit quality
of its customers as well as its internal credit policies.
Revenue Recognition and Allowance for Sales Returns and Others
The Company recognizes net sales when the earnings process is complete, as evidenced by an agreement with the customer, transfer of
title and acceptance, if applicable, have occurred, as well as the price is fixed or determinable price and the collectibility is reasonably
assured. Allowance for sales returns and pricing discounts is estimated based on historical experience and any known factors that would
affect the allowance. Such provisions are deducted from sales in the year the products are sold and the estimated related costs are
deducted from cost of sales.
Sales are determined using the fair value taking into account related sales discounts agreed to by the Company and its customers. Sales
agreements typically provide that payment is due 30 days from invoice date for a majority of the customers and 30 to 45 days after the
end of the month in which the sales occur for some customers. Since the receivables from sales are collectible within one year and such
transactions are frequent, the fair value of receivables is equivalent to the nominal amount of cash received.
Inventories
Inventories are stated at the lower of cost or market value. Inventories are recorded at standard cost and adjusted to the approximate
weighted-average cost at the end of the year. Market value represents replacement cost for raw materials, supplies and spare parts.
Market value represents net realizable value for finished goods and work in process. The Company assesses the impact of changing tech-
nology on its inventory on hand and writes off inventories that are considered obsolete. Ending inventories are evaluated for estimated
excess quantities and obsolescence based on demand forecast within a specific time horizon, generally 180 days or less, and the estimat-
ed losses on scrap and slow-moving items are recognized in the allowance for losses.
Long-term Investments
Investments in companies wherein the Company exercises significant influence on the operating and financial policy decisions are
accounted for using the equity method of accounting. The Company's proportionate share in the net income or net loss of investee com-
panies is recognized in the "investment income/loss recognized by equity method, net" account. When equity investments are made, the
difference, if any, between the cost of investment and the Company's proportionate share of the investee's net equity is amortized using
the straight-line method over five years and is also recorded in the "investment income/loss recognized by equity method, net" account.
83
When the Company subscribes to additional investee shares at a percentage different from its existing equity interest, the resulting carry-
ing amount of the investment in the investee differs from the amount of Company's proportionate share in the investee's net equity. The
Company records such difference as an adjustment to long-term investments with the corresponding amount charged or credited to cap-
ital surplus.
Investments in companies wherein the Company does not exercise significant influence are recorded at historical cost. Cash dividends are
recognized as dividend income in the year received but are accounted for as reductions in the carrying amount of the long-term invest-
ments if the dividends are received in the same year that the related investments are acquired. Stock dividends are recorded as an
increase in the number of shares held and do not affect investment income or the carrying amount of the investment. An allowance is
recognized for any decline in the market value of investments with readily ascertainable fair market value with the corresponding amount
recorded as an unrealized loss, a component of shareholders' equity. A reversal of the allowance will result from a subsequent recovery of
the market value of such investments. The carrying amounts of investments whose fair market values are not readily ascertainable are
reduced to reflect an other-than-temporary decline in their values, with the related impairment loss charged to income.
Investments in foreign mutual funds are stated at the lower of aggregate cost or net asset value. An allowance is recognized when the
net asset value of the funds is lower than their cost, with the corresponding amount recorded as a reduction to shareholders' equity. A
reversal of the allowance will result from a subsequent recovery of the net asset value.
The costs of stocks and mutual funds sold are determined using the weighted-average method.
Investments in long-term bonds are stated at amortized cost. The discount or premium is amortized over the duration period using the
interest method, and recorded as an adjustment to interest income.
When investments in publicly-traded stocks are reclassified from short-term investments to long-term investments or from long-term
investments to short-term investments, the Company recognizes a loss to the extent, if any, that the market value of such investments is
lower than the carrying amount, and the market value becomes the new basis.
If an investee company recognizes an unrealized loss on its long-term investment using the lower-of-cost-or-market method, the
Company also recognizes a corresponding unrealized loss in proportion to its ownership percentage in the investee company and records
the amount as a component of its shareholders' equity.
Gains or losses on sales from the Company to investee companies accounted for using the equity method are deferred in proportion to
the Company's ownership percentage in the investee companies until realized through transactions with third parties. The entire amount
of the gains or losses on sales to majority-owned subsidiaries is deferred until such gains or losses are realized through the subsequent
sales of the related products to third parties.
Gains or losses on sales from investee companies to the Company are deferred in proportion to the Company's ownership percentages in
the investee companies until realized through transactions with third parties.
If an investee's functional currency is a foreign currency, translation adjustments will result from the process of translating the investee's
financial statements into the reporting currency of the Company. Such adjustments are accumulated and reported as a separate compo-
nent of shareholders' equity.
Property, Plant and Equipment, Assets Leased to Others and Idle Assets
Property, plant and equipment and assets leased to others are stated at cost less accumulated depreciation. When an impairment is
determined, the related assets are stated at the lower of fair value or book value. Idle assets are stated at the lower of net realizable value
or book value. Significant additions, renewals and betterments incurred during the construction period are capitalized. Maintenance and
repairs are expensed in the year incurred. Interest expense incurred during the purchase and construction period is also capitalized.
84
Depreciation is computed using the straight-line method over the following estimated service lives: buildings - 10 to 20 years; machinery
and equipment - 5 years; and office equipment - 3 to 5 years.
Upon sale or disposal of property, plant and equipment, the related cost and accumulated depreciation are removed from the correspon-
ding accounts, with any gain or loss credited or charged to non-operating income or expenses in the year of sale or disposal.
Goodwill
Goodwill represents the excess of the consideration paid for acquisition over the fair market value of identifiable net assets acquired and
acquisition costs. Goodwill is amortized using the straight-line method over the estimated life of 10 years.
Deferred Charges
Deferred charges consist of technology license fees, software and system design costs and other charges. The amounts are amortized as
follows: technology license fees - the shorter of the estimated life of the technology or the term of the technology transfer contract; soft-
ware and system design costs and other charges - 3 or 5 years.
Pension Costs
The Company records net periodic pension costs on the basis of actuarial calculations. Unrecognized net transition obligation and unrec-
ognized net gains or losses are amortized over 25 years.
Income Tax
The Company uses an inter-period tax allocation method for income tax. Deferred income tax assets and liabilities are recognized for the
tax effects of temporary differences and unused tax credits. Valuation allowances are provided to the extent, if any, that it is more likely
than not that deferred income tax assets will not be realized. A deferred tax asset or liability is classified as current or noncurrent in accor-
dance with the classification of its related asset or liability. However, if a deferred tax asset or liability does not relate to an asset or liability
in the financial statements, then it is classified as either current or noncurrent based on the expected length of time before it is realized
or settled.
Any tax credit arising from the purchases of machinery, equipment and technology, research and development expenditures, personnel
training, and investments in important technology-based enterprises are recognized using the flow-through method.
Adjustments of prior years' tax liabilities are added to or deducted from the current year's tax provision.
Income taxes on unappropriated earnings of 10% are expensed in the year of shareholder approval which is the year subsequent to the
year the earnings are generated.
Stock-based Compensation
Employee stock option plans that are amended or have options granted on or after January 1, 2004 must be accounted for by the inter-
pretations issued by the Accounting Research and Development Foundation. The Company adopted the intrinsic value method and any
compensation cost determined using this method is charged to expense over the employee vesting period.
Treasury Stock
When the Company repurchases its outstanding common stock, the cost of the reacquired stock is recorded as treasury stock as a reduc-
tion to shareholders' equity. When the Company retires treasury stock, the treasury stock account is reduced and the common stock as
well as the capital surplus - additional paid-in capital are reversed in proportionate to the equity percentage of the retirement. When the
book value of the treasury stock exceeds the sum of the par value and additional paid-in capital, the difference is charged to capital sur-
plus - treasury stock and to retained earnings for any remaining amount. The Company's stock held by its subsidiaries is also treated as
treasury stock and reclassified from long-term investments to treasury stock. The cash dividends received by the subsidiaries from the
Company are recorded under capital surplus - treasury stock.
85
Foreign Currency Transactions
Foreign currency transactions are recorded in New Taiwan dollars at the rates of exchange in effect when the transactions occur.
Exchange gains or losses derived from foreign currency transactions or monetary assets and liabilities denominated in foreign currencies
are recognized in current income. At the end of each year, assets and liabilities denominated in foreign currencies are revalued at the pre-
vailing exchange rates with the resulting gains or losses recognized in current income.
Derivative Financial Instruments
The Company enters into foreign currency forward contracts to manage currency exposures in cash flow and in foreign-currency-denomi-
nated assets and liabilities. The contracts are recorded in New Taiwan dollars at the current rate of exchange of the contract date. The dif-
ferences in the New Taiwan dollar amounts translated using the spot rates and the amounts translated using the contracted forward
rates on the contract date are amortized over the terms of the forward contracts using the straight-line method. At the end of each year,
the receivables or payables arising from forward contracts are restated using the prevailing spot rates at the balance sheet date with the
resulting differences charged to income. In addition, the receivables and payables related to the forward contracts of the same counter
party are netted with the resulting amount presented as either an asset or a liability. Any resulting gain or loss upon settlement is credited
or charged to income in the year of settlement.
The Company enters into cross-currency swap contracts to manage currencies exposures on foreign currency denominated assets and lia-
bilities. The principal amount is recorded using the spot rates at the contract date. The differences in the New Taiwan dollar amounts
translated using the spot rates and the amounts translated using the contracted rates on the contract date are amortized over the terms
of the contracts using the straight-line method. At the end of each year, the receivables or payables arising from cross-currency swap
contracts are restated using the prevailing spot rate with the resulting differences charged to income. In addition, the receivables and
payables related to the contracts are netted with the resulting amount presented as either an asset or a liability. The difference in interest
computed pursuant to the contracts on each settlement date or the balance sheet date is recorded as an adjustment to the interest
income or expense associated with the hedged items. Any resulting gain or loss upon settlement is credited or charged to income in the
year of settlement.
The Company enters into interest rate swap contracts to manage exposures to changes in interest rates on existing assets or liabilities.
These transactions are accounted for on an accrual basis, in which the cash settlement receivable or payable is recorded as an adjustment
to interest income or expense associated with the hedged items.
The premiums paid for the foreign currency option contracts entered into for hedging purposes are amortized and charged to income on
a straight-line basis over the term of the related contract. Any resulting gain upon exercise settlement is credited or charged to income in
the year of exercise.
Reclassifications
Certain accounts in the financial statements as of and for the year ended December 31, 2003 have been reclassified to conform to the
financial statements as of and for the year ended December 31, 2004.
86
3. Cash and Cash Equivalents
Cash and bank deposits
Government bonds acquired under repurchase agreements
Corporate issued notes
4. Short-Term Investments
Corporate bonds
Corporate issued asset-backed securities
Bond funds
Agency bonds
Government bonds
Money market funds
Government bonds acquired under repurchase agreements
Commercial papers
Corporate issued notes
Listed stocks
Allowance for valuation losses
Market value
$
2004
45,838,453
19,215,153
478,212
$
2003
92,340,643
5,947,359
-
$ 65,531,818
$
98,288,002
2004
13,554,598
11,766,877
10,662,758
8,633,889
7,346,858
673,888
249,449
95,666
63,796
6,528
53,054,307
(75,212)
$
2003
-
-
1,000,000
-
7,692,595
2,038,680
1,800,000
-
-
27,744
12,559,019
-
52,979,095
$
12,559,019
52,979,095
$
12,703,444
$
$
$
The Company entered into investment management agreements with three well-known financial institutions (fund managers) to manage
investment portfolios for the Company. In accordance with the investment guidelines and terms in these agreements, the securities
invested by the fund managers cannot be below a pre-defined credit rating. As of December 31, 2004, the Company had investment
portfolios with these fund managers that aggregated to an original amount of US$1,200,000 thousand. The investment portfolios
included securities such as corporate bonds, asset-backed securities, agency bonds, government bonds and others. Securities acquired
with maturities less than three months from the date of purchase were reclassified as cash equivalents.
5. Inventories, Net
Finished goods
Work in process
Raw materials
Supplies and spare parts
Allowance for losses
$
2004
3,229,417
10,713,178
808,722
779,368
15,530,685
(1,358,740)
$
2003
2,716,195
8,292,327
445,357
674,548
12,128,427
(1,221,269)
$
14,171,945
$
10,907,158
87
6. Long-Term Investments
2004
2003
Carrying
Amount
% of
Owner-ship
Carrying
Amount
% of
Owner-ship
Equity method
TSMC International Investment Ltd. (TSMC International)
TSMC (Shanghai) Company Limited (TSMC - Shanghai)
Vanguard International Semiconductor Corporation (VIS)
TSMC Partners, Ltd. (TSMC Partners)
Systems on Silicon Manufacturing Company Pte Ltd. (SSMC)
Emerging Alliance Fund, L.P. (Emerging Alliance)
TSMC North America (TSMC - North America)
Global UniChip Corporation (GUC)
VentureTech Alliance Fund II, L.P. (VTAF II)
TSMC Japan K. K. (TSMC - Japan)
VisEra Technologies Company, Limited (VisEra)
Chi Cherng Investment Co., Ltd. (Chi Cherng)
Hsin Ruey Investment Co., Ltd. (Hsin Ruey)
Taiwan Semiconductor Manufacturing Company Europe B.V. (TSMC -
$ 23,778,997
8,113,511
5,401,982
3,908,356
3,290,888
823,232
502,242
391,626
329,968
102,572
59,116
50,570
49,823
Europe)
Cost method
Non-publicly traded stocks
Funds
Long-term bonds
Government bonds
Corporate bonds
China Steel Corporation
Taiwan Power Company
Nan Ya Plastics Corporation
Formosa Plastics Corporation
Formosa Petrochemical Corporation
Other investments
25,439
46,828,322
482,500
290,134
772,634
10,260,481
2,978,804
915,276
407,526
405,485
202,595
15,170,167
10,521,740
100
100
28
100
32
99
100
47
98
100
25
36
36
100
-
-
-
-
-
-
-
-
-
$ 22,654,743
1,901,428
4,077,198
4,116,934
2,759,376
704,744
417,858
368,434
-
101,722
50,231
42,941
42,006
24,622
37,262,237
432,500
270,616
703,116
-
-
-
-
-
-
-
-
100
100
28
100
32
99
100
47
-
100
25
36
36
100
-
-
-
-
-
-
-
-
-
$ 73,292,863
$ 37,965,353
On January 8, 2003, the Company's investee, VIS, issued 600,000 thousand shares of common stock at a price of NT$7 per share of
which the Company purchased a total of 230,882 thousand shares. VIS reduced its capital on August 11, 2004 in order to decrease its
accumulated deficit. The number of shares of VIS held by the Company after the capital reduction declined from 787,016 thousand
shares to 409,532 thousand shares. The Company's ownership percentage remained the same.
For the years ended December 31, 2004 and 2003, net investment income recognized from the equity method investees was
NT$4,040,319 thousand and NT$791,424 thousand, respectively. The carrying amounts of investments accounted for under the equity
method and the related investment income or losses were determined based on the audited financial statements of the investees as of
and for the same periods as the Company.
88
As of December 31, 2004, other investments consist of the following:
Nominal
Amount
Carrying
Amount
Range of
Interest Rates
Maturity Date
Step-up callable deposits
Domestic bank
Foreign bank
Callable range accrual deposits
$ 2,000,000
2,138,340
$ 2,007,681
2,152,394
2.05%-2.20%
1.44%-4.75%
July 2007 to August 2007
June 2007 to August 2007
Foreign bank
6,383,400
6,414,151
(See below)
September 2009 to
December 2009
$ 10,521,740
$ 10,574,226
During the year ended December 31, 2004, the Company deposited funds into structured-time deposits with the following terms:
The interest rate of the step-up callable deposits is determined by the Company and the related banks.
The amount of interest earned by the Company for the callable range accrual deposits is based on a pre-defined range as determined by
the 3-month or 6-month LIBOR rate plus an agreed upon rate ranging between 2.1% and 3.45%. Based on the terms of the deposits, if
the 3-month or 6-month LIBOR rate moves outside of the pre-defined range, the interest paid to the Company is at minimum of 1.5%.
Under the term of contracts, the bank has the right to cancel the contracts before the maturity date.
Deposits that reside in Hong Kong and Singapore amounted to NT$2,553,360 thousand and NT$638,340 thousand, respectively.
7. Property, Plant and Equipment
Accumulated depreciation consisted of the following:
Buildings
Machinery and equipment
Office equipment
2004
35,546,918
259,782,721
4,676,562
300,006,201
$
$
2003
29,384,609
214,296,129
3,833,574
247,514,312
$
$
Information on the status of the expansion or construction plans of the Company's manufacturing facilities as of December 31, 2004 is as
follows:
Construction / Expansion Plan
Estimated
Total Cost
Accumulated
Expenditures
Expected Date of Commencement
Fab 12 expansion
$ 58,744,200
$ 41,870,300
January 2005
Interest expense for the years ended December 31, 2004 and 2003 was NT$ 1,614,847 thousand and NT$1,715,011 thousand, respec-
tively (before deducting capitalized amounts of NT$262,109 thousand in 2004 and NT$138,668 thousand in 2003, respectively). The
interest rates used for purposes of calculating the capitalized amounts was 2.80% and 2.80% to 5.283% in 2004 and 2003, respectively.
89
8. Deferred Charges, Net
Technology license fees
Software and system design costs
Other
9. Bonds Payable
Domestic unsecured bonds:
Issued in October 1999 and repayable in October 2004, 5.95%
interest payable annually
Issued in December 2000 and repayable in December 2005 and
2007 in two equal payments, 5.25% and 5.36% interest payable
annually, respectively
Issued in January 2002 and repayable in January 2007, 2009 and
2012 in three equal payments, 2.60%, 2.75% and 3.00% interest
payable annually, respectively
$
$
$
2004
6,534,899
2,160,636
149,609
8,845,144
2003
5,084,684
2,718,270
144,377
7,947,331
$
$
2004
2003
-
$
5,000,000
15,000,000
15,000,000
15,000,000
15,000,000
$
30,000,000
$
35,000,000
As of December 31, 2004, future principal repayments for the Company's bonds are as follows:
Year of Repayment
2005
2007
2009
2010 and thereafter
10. Other Long-Term Payables
Amount
10,500,000
7,000,000
8,000,000
4,500,000
30,000,000
$
$
The Company entered into several license arrangements for certain semiconductor-related patents. Future payments under the agree-
ments as of December 31, 2004 are as follows:
Year
2005
2006
2007
2008
2009 and thereafter
Amount
1,505,345
466,786
446,838
255,336
766,008
3,440,313
$
$
The current portion of other long-term payables is recorded in the "accrued expenses and other current liabilities" account.
90
11. Pension Plan
The Company has a defined benefit pension plan for all regular employees that provides benefits based on the employee's length of serv-
ice and average monthly salary and wages for the six-month period prior to retirement. The Company contributes an amount equal to
2% of salaries and wages paid each month to a Pension Fund (the Fund). The Fund is administered by a pension fund monitoring com-
mittee (the Committee) and deposited in the Committee's name in the Central Trust of China.
Information on the pension plan is summarized as follows:
a. Components of net periodic pension cost
Service cost
Interest cost
Projected return on plan assets
Amortization
Net periodic pension cost
b. Reconciliation of the funded status of the plan and accrued pension cost
Benefit obligation
Vested benefit obligation
Nonvested benefit obligation
Accumulated benefit obligation
Additional benefits based on future salaries
Projected benefit obligation
Fair value of plan assets
Funded status
Unrecognized net transitional obligation
Unrecognized net loss
Accrued pension cost
Vested benefit
c. Actuarial assumptions
Discount rated used in determining present values
Future salary increase rate
Expected rate of return on plan assets
d. Contributions to the Fund
$
$
$
$
$
2004
632,594
128,315
(41,925)
8,300
727,284
2004
67,104
2,704,251
2,771,355
2,132,721
4,904,076
(1,447,540)
3,456,536
(132,791)
(222,549)
3,101,196
76,003
2004
3.25%
3.00%
3.25%
$
$
$
$
$
2003
502,116
109,671
(41,154)
2,409
573,042
2003
21,895
2,184,593
2,206,488
1,752,208
3,958,696
(1,207,264)
2,751,432
(141,091)
(10,090)
2,600,251
22,261
2003
3.25%
3.00%
3.25%
2004
2003
$
226,339
$
181,106
91
e. Payments from the Fund
12. Income Tax
2004
1,446
$
2003
3,490
$
a. A reconciliation of income tax on income before income tax at the statutory rate and income tax expense is as follows:
2004
2003
Income tax based on "income before income tax" at statutory
rate (25%)
Tax-exempt income
Temporary and permanent differences
Current income tax on income before income tax credits
b. Income tax benefit (expense) consists of:
Current income tax on income before income tax credits
Additional 10% income tax on unappropriated earnings
Income tax credits
Other income tax
Net change in deferred income tax assets and liabilities
Investment tax credits
Temporary differences
Net change in valuation allowance of deferred income tax assets
Income tax benefit (expense)
c. Deferred income tax assets (liabilities) consisted of the following:
Current:
Investment tax credits
Noncurrent:
Investment tax credits
Temporary differences
Valuation allowance
d.Integrated income tax information:
$
$
$
$
$
$
(22,944,646)
15,372,913
(2,077,362)
(9,649,095)
2004
(9,649,095)
(821,767)
10,470,862
(563,876)
234,690
1,034,916
(168,199)
$
$
$
(12,757,069)
5,255,750
728,904
(6,772,415)
2003
(6,772,415)
(1,271,759)
7,917,070
(2,500)
(917,759)
80,390
(2,802,602)
537,531
$
(3,769,575)
2004
8,849,000
17,035,584
(2,450,535)
(12,940,046)
1,645,003
2003
8,322,000
17,327,894
(3,485,451)
(12,771,847)
1,070,596
$
$
The balances of the imputation credit account (ICA) as of December 31, 2004 and 2003 were zero and NT$2,832 thousand, respectively.
The expected and actual creditable ratio for distribution of earnings of 2004 and 2003 was zero and 0.03%, respectively.
The imputation credits allocated to the shareholders are based on the balance as of the date of dividend distribution. The expected
creditable ratio for distribution of earnings of 2004 may be adjusted when the allocation of the imputation credits is made.
92
e. All earnings generated prior to December 31, 1997 have been appropriated.
f. As of December 31, 2004, investment tax credits consisted of the following:
Regulation
Items
Statute for Upgrading
Industries
Purchase of machinery
and equipment
Law
Items
Statute for Upgrading
Industries
Research and development
expenditures
Statute for Upgrading
Industries
Personnel training
Statute for Upgrading
Industries
Investments in important
technology-based enterprises
Total
Creditable
Amounts
4,448,442
3,819,937
4,886,439
4,140,462
6,309,182
$
Remaining
Creditable
Amounts
-
116,189
4,886,439
4,140,462
6,309,182
23,604,462
$
15,452,272
Total
Creditable
Amounts
2,270,013
3,147,071
3,342,952
1,976,913
1,843,800
12,580,749
48,659
29,448
27,312
26,780
132,199
38,036
$
$
$
$
$
Remaining
Creditable
Amounts
-
3,147,071
3,342,952
1,976,913
1,843,800
10,310,736
-
29,448
27,312
26,780
83,540
38,036
$
$
$
$
$
$
$
Expiry Year
2004
2005
2006
2007
2008
Expiry Year
2004
2005
2006
2007
2008
2004
2005
2006
2007
2005
g. The sales generated from the following expansion and construction of the Company's manufacturing plants are exempt from income tax:
Construction of Fab 6
Construction of Fab 8 - module B
Expansion of Fab 2 - modules A and B, Fab 3, Fab 4, Fab 5 and Fab 6
Construction of Fab 12
Tax-Exemption Period
2001 to 2004
2002 to 2005
2003 to 2006
2004 to 2007
h. The tax authorities have examined income tax returns of the Company through 2000. However, the Company is contesting the assess-
ment of the tax authority for 1992 and 1998. The Company believes that any additional assessment will not have a material adverse
effect on the Company.
93
13. Labor Cost, Depreciation and Amortization Expenses
Year Ended December 31, 2004
Year Ended December 31, 2003
Classified as
Cost of Sales
Classified as
Operating
Expenses
Total
Classified as
Cost of Sales
Classified as
Operating
Expenses
Total
$ 8,832,324
$ 4,160,867
$ 12,993,191
$
7,392,295
$ 3,093,658
$ 10,485,953
571,853
471,646
398,428
309,585
255,482
356,877
881,438
727,128
755,305
476,687
379,845
273,780
239,067
190,507
159,569
715,754
570,352
433,349
$ 10,274,251
$ 5,082,811
$ 15,357,062
$ 8,522,607
$
3,682,801
$ 12,205,408
Labor cost
Salary
Labor and health
insurance
Pension
Other
Depreciation
Amortization
$ 56,001,719
$ 2,496,827
$ 2,429,967
$ 2,137,893
$ 58,431,686
$ 4,634,720
$ 55,699,522
$ 1,385,594
$ 2,298,375
$ 2,399,724
$ 57,997,897
$ 3,785,318
14. Shareholders' Equity
Common Stock, Capital Surplus and Earnings
The Company has issued a total of 668,351 thousand ADSs which are traded on the NYSE as of December 31, 2004. The number of
common shares represented by the ADSs is 3,341,754 thousand shares (one ADS represents five common shares).
Capital surplus can only be used to offset a deficit under the Company Law of the R.O.C. However, the capital surplus generated from
donations and the excess of the issue price over the par value of capital stock (including the stock issued for new capital, mergers, con-
vertible bonds and the surplus arising from treasury stock transactions) may be appropriated as stock dividends restricted to a certain per-
centage based on shareholders' ownership.
As of December 31, 2004 and 2003, the capital surplus consisted of the following:
From merger
Additional paid-in capital
From long-term investments
From convertible bonds
Donations
Treasury stock
2004
24,003,546
23,051,675
121,354
9,360,424
55
205
56,537,259
$
$
2003
24,132,297
23,172,550
87,295
9,410,632
55
53,056
56,855,885
$
$
The Company's Articles of Incorporation as revised on December 21, 2004, provide that the following shall be appropriated from annual
earnings to the extent that the annual earnings exceed any cumulative deficit:
a. 10% legal reserve; until the amount of total legal reserve equals the Company's paid-in capital;
b. Special reserve in accordance with relevant laws or regulations;
c. Remuneration to directors and supervisors and bonuses to employees at 0.3% and at least 1% of the remainder, respectively.
Individuals eligible for the employee bonuses may include employees of affiliated companies as approved by the board of directors or a
representative of the board of directors;
94
d. The appropriation of any remaining balance shall be approved by the shareholders.
Dividends may be distributed by way of cash dividend or stock dividend at the discretion of the Company. As the operation of the
Company is at a steady growth stage, distribution of profits shall be made preferably by way of cash dividend. Distribution of profits may
also be made by way of stock dividend; provided however, the ratio for stock dividend shall not exceed 50% of total distribution.
Any appropriations of net income are recorded in the financial statements in the year of shareholder approval.
An appropriation for legal reserve is required until the reserve equals the aggregate par value of the Company's issued capital stock. The
reserve can only be used to offset a deficit or be distributed as a stock dividend up to 50% of the reserve balance when the reserve bal-
ance has reached 50% of the aggregate par value of the issued capital stock of the Company.
A special reserve equivalent to the net debit balance of the other components of shareholder's equity (for example, unrealized loss on
long-term investments and cumulative translation adjustments, but excluding treasury stock), shall be made from unappropriated earn-
ings pursuant to existing regulations promulgated by the R.O.C. Securities and Futures Bureau (SFB). Any special reserve appropriated
may be reversed to the extent that the net debit balance of the related account reverses.
The appropriations of the earnings of 2003 and 2002 were approved in the shareholders' meeting on May 11, 2004 and June 3, 2003,
respectively. The appropriations and dividend per share are as follows:
Legal reserve
Special reserve
Bonus paid to employees - in cash
Bonus paid to employees - in stock
Preferred stock dividend - in cash
Common stock dividend - in cash
Common stock dividend - in stock
Remuneration to directors and supervisors - in cash
Appropriation of Earnings
Dividend Per Share (NT$)
$
For Fiscal
Year 2003
4,725,870
(68,945)
681,628
2,726,514
184,493
12,159,971
28,373,267
127,805
$
For Fiscal
Year 2002
2,161,029
68,945
-
1,539,013
455,000
-
14,898,309
58,485
$ 48,910,603
$ 19,180,781
For Fiscal
Year 2003
For Fiscal
Year 2002
$
$
0.35
0.60
1.41
0.35
-
0.80
The amount of the above appropriation of earnings for 2003 and 2002 is consistent with the resolution of the meetings of board of
directors on February 17, 2004 and March 4, 2003, respectively. However, the Company Law of the R.O.C. states TSMC, as a holder of
treasury stock shall not participate in the appropriations of earnings. Therefore, the actual cash dividend per share and stock dividend per
share are slightly more than those in the aforementioned resolution. If the above employee bonus paid in stock had been paid in cash
and all of the bonus to employees and remuneration to directors and supervisors had been charged against income for 2003 and 2002,
the after income tax basic earnings per share for the years ended December 31, 2003 and 2002 would have decreased from NT$2.33 to
NT$2.15 and NT$1.14 to NT$1.05, respectively. The shares distributed as a bonus to employees represented 1.35% and 0.83% of the
Company's total outstanding common shares as of December 31, 2003 and 2002, respectively.
As of January 13, 2005, the board of directors have not resolved the appropriation for earnings of 2004.
The above information about the appropriations of bonus to employees and remuneration to directors and supervisors is available at
Market Observation System website.
Under the Integrated Income Tax System that became effective on January 1, 1998, the R.O.C. resident shareholders are allowed a tax
credit for their proportionate share of the income tax paid by the Company on earnings generated since January 1, 1998.
95
Preferred Stock
The Company issued 1,300,000 thousand shares of unlisted Series A - preferred stock to certain investors on November 29, 2000. All of
the preferred stock was redeemed at par value and retired on May 29, 2003. Under the Company's Articles of Incorporation, the
Company is no longer authorized to issue preferred stock.
The preferred shareholders had the following rights and the related terms and conditions prior to redemption:
Preferred shareholders
a. Are entitled to receive cumulative cash dividends at an annual rate of 3.5%.
b. Are not entitled to receive any common stock dividends (whether declared out of unappropriated earnings or capital surplus).
c. Have priority over the holders of common shares to the assets of TSMC available for distribution to shareholders upon liquidation or
dissolution; however, the pre-emptive rights to the assets shall not exceed the issue price of the shares.
d. Have voting rights similar to that of the holders of common shares.
e. Have no right to convert their shares into common shares. The preferred shares are to be redeemed within thirty months from their
issuance. The preferred shareholders have the aforementioned rights and the Company's related obligations remain the same until the
preferred shares are redeemed by the Company.
15. Stock-Based Compensation Plans
The Company's Employee Stock Option Plans, the 2003 Plan and the 2002 Plan, were approved on October 29, 2003 and June 25, 2002,
respectively. The maximum number of units authorized to be granted under 2003 Plan and the 2002 Plan is 120,000 thousand and
100,000 thousand, respectively, with each unit representing one common share of stock. The option rights may be granted to qualified
employees of the Company or any of its domestic or foreign subsidiaries, in which the Company's shareholding with voting rights, directly
or indirectly, is more than fifty percent (50%). The option rights of both plans are valid for ten years and exercisable at certain percent-
ages subsequent to the second anniversary of the grant date. Under the terms of the plans, stock option rights are granted at an exercise
price equal to the closing price of the Company's common shares listed on the TSE on the date of grant. Under the 2003 Plan and the
2002 Plan, units that were never granted, or had been granted and subsequently cancelled were expired as of December 31, 2004.
On November 2, 2004, the board of directors approved the 2004 Plan, in which the maximum number of units authorized to be granted
is 11,000 thousand, with each unit representing one common share of stock. The option rights may be granted to qualified employees of
the Company or any of its domestic or foreign subsidiaries, in which the Company's shareholding with voting rights, directly or indirectly,
is more than fifty percent (50%). The option rights of the plans are valid for ten years and exercisable at certain percentages subsequent
to the second anniversary of the grant date. Under the terms of the plan, stock option rights are granted at an exercise price equal to the
closing price of the Company's common shares listed on the TSE on the date of grant. The 2004 plan was approved by Bureau of
Monetary Affairs, Financial Supervisory Commission of the R.O.C. on January 6, 2005.
96
Information on outstanding stock options for the years ended December 31, 2004 and 2003 is as follows:
Year ended December 31, 2004
Beginning outstanding balance
Options granted
Options exercised
Options cancelled
Ending outstanding balance
Year ended December 31, 2003
Beginning outstanding balance
Options granted
Options cancelled
Ending outstanding balance
2003 Plan
2002 Plan
Number of
Outstanding
Stock Option
Rights
(in thousand)
Weighted-
Average
Exercise
Price
(NT$)
Number of
Outstanding
Stock Option
Rights
(in thousand)
Weighted-
Average
Exercise
Prices
(NT$)
842
13,199
-
(1,404)
12,637
-
843
(1)
842
57.8
49.9
-
50.9
-
66.5
66.5
48,515
7,201
(87)
(3,899)
51,730
19,369
32,031
(2,885)
48,515
42.7
42.6
41.8
44.2
48.6
50.3
48.7
The number of outstanding option rights and exercise prices have been adjusted to reflect the appropriations of dividends in accordance
with the plans.
As of December 31, 2004, information on outstanding and exercisable option rights is as follows:
Range of
Exercise
Price (NT$)
43.8-57.8
32.8-46.2
Options Outstanding
Options Exercisable
Number of
Outstanding
Options
(in thousand)
Weighted-
Average
Remaining
Contractual
Life (Years)
Weighted-
Average
Exercise
Price (NT$)
Number of
Exercisable
Options
(in thousand)
Weighted-
Average
Exercise
Price (NT$)
12,637
51,730
64,367
9.34
8.09
8.33
50.3
42.6
44.1
-
10,307
10,307
-
41.7
41.7
2003 plan
2002 plan
Total
The compensation cost recognized for the year ended December 31, 2004 was zero. Had the Company used the fair value based method
to evaluate the options granted, the method, assumptions and pro forma results of the Company for the year ended December 31, 2004
would have been as follows:
Method
Assumptions:
Expected dividend yield
Expected volatility
Risk free interest rate
Expected life
Net income:
Net income as reported
Pro forma net income
Amount
1.00%
43.77%-46.15%
3.07%-3.85%
5 years
$ 92,316,115
92,257,355
(Continued)
97
Earnings per share (EPS) - after income tax:
Basic EPS as reported
Pro forma basic EPS
Diluted EPS as reported
Pro forma diluted EPS
NT$
3.97
3.97
3.97
3.97
The estimated weighted average fair value for the options granted during the year ended December 31, 2004 was NT$19.73 per option.
16. Treasury Stock (Common Stock)
Year ended December 31, 2004
Reclassification of parent company stock held by
subsidiaries from long-term investment
Repurchase under share buyback plan
Year ended December 31, 2003
Reclassification of parent company stock held by
subsidiaries from long-term investment
Beginning
Shares
Increase/
Dividend
Decrease
Ending
Shares
(Shares in thousand)
40,597
-
40,597
5,676
124,720
752
124,720
130,396
125,472
45,521
-
45,521
42,001
3,357
4,761
40,597
Proceeds from the sale of treasury stock for the years ended December 31, 2004 and 2003 were NT$39,906 thousand and NT$331,945
thousand, respectively. The Company's capital stock held by a subsidiary as an investment is recorded as treasury stock, with the holder
having the same rights as other common shareholders. As of December 31, 2004 and 2003, the book value of the treasury stock was
NT$1,595,186 thousand and NT$1,633,228 thousand, respectively; the market value was NT$2,241,009 thousand and NT$2,548,788
thousand, respectively.
The Company held a special meeting of the board of directors and approved a share buyback plan to repurchase the Company's common
shares listed on the TSE during the period from March 24, 2004 to May 23, 2004. The Company repurchased 124,720 thousand common
shares for a total of NT$7,059,798 thousand. All the treasury stock repurchased under the buyback plan was retired on August 16, 2004.
98
17. Earnings Per Share
EPS is computed as follows:
Year ended December 31, 2004
Basic EPS
Amounts (Numerator)
Before
Income Tax
After
Income Tax
Number of
Shares
(Denominator)
(in thousand)
EPS (NT$)
Before
Income
Tax
After
Income
Tax
Income available to common shareholders
Effect of diluted securities - stock options
$ 91,778,584
-
$ 92,316,115
-
23,248,682
6,404
$
3.95
$
3.97
Diluted EPS
Income available to common shareholders (includ-
ing effect of diluted potential common stock)
Year ended December 31, 2003
Net Income
Less - preferred stock dividends
Basic EPS
Income available to common shareholders
Effect of diluted potential common stock - stock
options
Diluted EPS
Income available to common shareholders (includ-
ing effect of diluted potential common stock)
$ 91,778,584
$ 92,316,115
23,255,086
$
3.95
$
3.97
$ 51,028,275
(184,493)
$ 47,258,700
(184,493)
50,843,782
47,074,207
23,327,354
$
2.18
$
2.02
-
-
9,599
$ 50,843,782
$ 47,074,207
23,336,953
$
2.18
$
2.02
18. Related Party Transactions
The Company engages in business transactions with the following related parties:
a. Industrial Technology Research Institute (ITRI); the Chairman of the Company is one of its directors
b.Philips; a major shareholder of the Company
c. Subsidiaries
TSMC - North America
TSMC - Europe
TSMC - Japan
TSMC - Shanghai
d.Investees
VIS
SSMC
GUC
VisEra
99
e. Indirect subsidiaries
WaferTech, LLC (WaferTech)
TSMC Technology, Inc. (TSMC Technology)
The significant transactions with the aforementioned parties in addition to those disclosed in other notes are summarized as follows:
2004
2003
Amount
%
Amount
%
For the years
Sales
TSMC - North America
Philips and its affiliates
Others
Purchase
WaferTech
VIS
SSMC
TSMC - Shanghai
Manufacturing expenses - technical assistance fee (See Note 20a)
Philips
Marketing expenses - commission
TSMC - Japan
TSMC - Europe
General and administrative expense - rental expenses
GUC
Research and development expenses
GUC
Sales of property, plant and equipment
TSMC - Shanghai
VIS
Non-operating income and gains
SSMC (primarily technical service income, see Note 20e)
VIS (primarily technical service income, see Note 20j)
VisEra
WaferTech
$
$
$
$
$
$
$
$
$
$
$
$
$
142,271,732
5,463,565
466,345
148,201,642
15,203,047
9,169,602
5,869,123
12,752
30,254,524
907,047
253,341
202,678
456,019
13,186
11,688
2,969,347
33,974
3,003,321
364,505
117,760
28,917
3,267
514,449
55
2
-
57
34
21
13
-
68
1
17
14
31
2
-
96
1
97
5
2
-
-
7
$
$
$
$
$
$
$
$
$
$
$
$
$
117,758,911
3,577,054
610,534
121,946,499
11,433,083
4,910,810
5,519,805
-
21,863,698
3,023,741
215,202
154,262
369,464
-
-
-
15,125
15,125
201,869
251
-
2,794
204,914
57
2
-
59
36
15
17
-
68
3
18
13
31
-
-
-
9
9
8
-
-
-
8
(Continued)
100
At end of year
Receivables
TSMC - North America
Philips and its affiliates
Others
Other receivables
TSMC - Shanghai
SSMC
VIS
Others
Payables
VIS
WaferTech
Philips and its affiliates
SSMC
Others
Other long-term payables
Philips and its affiliates
Deferred credits - gain on intercompany
TSMC - Shanghai (disposal of property, plant and equipment)
Refundable deposits
VIS
2004
2003
Amount
%
Amount
%
$
$
$
15,526,964
581,487
77,632
96
4
-
16,186,083
100
1,472,880
63,701
47,599
33,159
91
4
3
2
13,946,638
895,063
25,961
94
6
-
14,867,662
100
-
-
118,503
14,460
-
-
89
11
1,617,339
100
$
132,963
100
1,533,938
913,107
469,494
207,794
74,157
3,198,490
2,317,972
48
29
15
6
2
100
100
682,530
100
-
-
$
$
$
$
1,034,074
1,184,642
1,579,568
634,647
67,209
23
27
35
14
1
4,500,140
100
-
-
-
-
150,840
85
$
$
$
$
$
$
$
$
$
The terms of sales to related parties are not significantly different from those to third parties. For other related parties transactions, since
there are no other similar transactions to follow, the prices are determined in accordance with the related contractual agreements.
19. Significant Long-Term Operating Leases
The Company leases land from the Science-Based Industrial Park Administration. These agreements expire on various dates from March
2008 to December 2020. The agreements can be renewed upon their expiration.
Future remaining lease payments are as follows:
Year
2005
2006
2007
2008
2009
2010 and thereafter
Amount
$ 238,411
238,411
238,411
220,246
214,192
1,422,637
$
2,572,308
101
20. Significant Commitments and Contingencies
The significant commitments and contingencies as of December 31, 2004 are as follows:
a. On June 20, 2004, the Company and Philips revised the Technical Cooperation Agreement, which was originally signed on May 12,
1997, with an effective date from January 1, 2004 for five years. Upon expiration, this amended Technical Cooperation Agreement will
be terminated at the expiration date and will not be automatically renewed. Under this amended Technical Cooperation Agreement,
the Company will pay Philips royalties based on a fixed amounts mutually agreed-on, rather than under certain percentage of the
Company's annual net sales. The Company and Philips agree to cross license the patents owned by each party. The Company also
obtained through Philips a number of patent cross licenses.
b. Under a technical cooperation agreement with ITRI, the Company shall reserve and allocate up to 35% of certain of its production
capacity for use by the Ministry of Economic Affairs (MOEA) or any other party designated by the MOEA.
c. Under several foundry agreements, the Company shall reserve a portion of its production capacity for certain major customers that
have guarantee deposits with the Company. As of December 31, 2004, the Company had a total of US$12,802 thousand of guarantee
deposits.
d. Under a Shareholders Agreement entered into with Philips and EDB Investments Pte Ltd. on March 30, 1999, the parties formed a joint
venture company, SSMC, for the purpose of constructing an integrated circuit foundry in Singapore. As of December 31, 2004, the
Company's equity interest in SSMC was 32%. The Company and Philips committed to buy specific percentages of the production
capacity of SSMC. If any party defaults on the commitment and the capacity utilization of SSMC falls below a specific percentage of its
total capacity, the defaulting party is required to compensate SSMC for all related unavoidable costs.
e. The Company provides technical services to SSMC under a Technical Cooperation Agreement (the Agreement) entered into on May 12,
1999. The Company receives compensation for such services computed at a specific percentage of net selling price of certain products
sold by SSMC. The Agreement shall remain in force for ten years and may be automatically renewed for successive periods of five years
each unless pre-terminated by either party under certain conditions.
f. Under a Technology Transfer Agreement (TTA) with National Semiconductor Corporation (National) entered into on June 27, 2000, the
Company shall receive payments for the licensing of certain technology to National. The agreement was to remain in force for ten
years and could be automatically renewed for successive periods of two years thereafter unless either party gives notice for early termi-
nation under certain conditions. In January 2003, the Company and National entered into a Termination Agreement whereby the TTA
was terminated for convenience. Under the Termination Agreement, the Company will be relieved of any further obligation to transfer
any additional technology. In addition, the Company granted National an option to request the transfer of certain technologies under
the same terms and conditions as the terminated TTA. The option will expire in January 2008.
102
g. Beginning in 2001, the Company entered into several licensing arrangements for certain semiconductor patents. The terms of the con-
tracts range from five to ten years with payments to be made in the form of royalties over the term of the related contracts. The
Company has recorded the related amounts as a liability with the corresponding amounts recorded as deferred charges which are
amortized and charged to cost of sales on a straight-line basis over the estimated life of the technology or the term of the contract,
whichever is shorter.
h. In November 2002, the Company entered into an Amended and Restated Joint Technology Cooperation Agreement with Philips,
Motorola, Inc. and STMicroelectronics to jointly develop 90-nm to 65-nm advanced CMOS Logic and e-DRAM technologies. The
Company also agreed to align 0.12 micron CMOS Logic technology to enhance its foundry business opportunities. The Company will
contribute process technologies and share a portion of the costs associated with this joint development project.
i. In December 2003, the Company entered into a Technology Development and License Agreement with Motorola, Inc. to jointly devel-
op 65-nm SOI (silicon on insulator) technology. The Company will also license related 90-nm SOI technology from Motorola, Inc. Any
intellectual properties arising out of the co-development project shall be jointly owned by the parties. In accordance with the agree-
ment, the Company will pay royalties to Motorola, Inc. and will share a portion of the costs associated with the joint development
project.
j. The Company provides a technology transfer to VIS under a Manufacturing License and Technology Transfer Agreement entered into in
August 2004. The Company receives compensation for such technology transfer in the form of royalty payments from VIS computed at
specific percentages of net selling price of certain products sold by VIS. VIS agreed to reserve its certain capacity to manufacture for
the Company certain products at prior as agreed by the parties.
k. Amounts available under unused letters of credit as of December 31, 2004 were NT$6,480 thousand, US$204 thousand and SG$85
thousand.
l. The Company provided guarantees on loans amounting to US$60,000 thousand and US$40,000 thousand for TSMC Development,
Inc. (TSMC Development) and TSMC - North America, respectively.
m. TSMC, TSMC - North America and WaferTech filed a series of lawsuits in late 2003 and 2004 in both state and federal courts in
California and with the U.S. International Trade Commission against Semiconductor Manufacturing International Corporation ("SMIC"),
SMIC (Shanghai) and SMIC Americas. The lawsuits alleged that SMIC companies infringed multiple TSMC patents and misappropriated
TSMC's trade secrets. These suits have been settled out of court on January 30, 2005. As part of the agreement, SMIC will pay TSMC
US$175 million over six years to resolve TSMC's patent infringement and trade secret claims.
103
21. Additional Disclosures
Following are the additional disclosures required by the SFB for the Company and its investees:
a. Financing provided: Please see Table 1 attached;
b. Endorsement/guarantee provided: Please see Table 2 attached;
c. Marketable securities held: Please see Table 3 attached;
d. Marketable securities acquired and disposed of at costs or prices of at least NT$100 million or 20% of the paid-in capital: Please see
Table 4 attached;
e. Acquisition of individual real estate at costs of at least NT$100 million or 20% of the paid-in capital: Please see Table 5 attached;
f. Disposal of individual real estate at prices of at least NT$100 million or 20% of the paid-in capital: None;
g. Total purchase from or sale to related parties amounting to at least NT$100 million or 20% of the paid-in capital: Please see Table 6
attached;
h. Receivable from related parties amounting to at least NT$100 million or 20% of the paid-in capital: Please see Table 7 attached;
i. Names, locations, and related information of investees of which the Company exercises significant influence: Please see Table 8
attached;
j. Financial instrument transactions:
1) Derivative financial instruments
The Company entered into derivative financial instrument transactions for the years ended December 31, 2004 and 2003 to manage
exposures related to foreign exchange rate and interest rate fluctuations. Certain information on these contracts is as follows:
a) Outstanding forward exchange contracts as of December 31, 2004 and 2003 are as follows:
Financial Instruments
Currency
Maturity Date
2004
Sell
Sell
2003
Sell
Buy
Buy
US$/NT$
US$/EUR
US$/NT$
EUR/US$
JPY/US$
January 2005 to March 2005
January 2005
January 2004 to July 2004
January 2004
January 2004
Contract Amount
(in thousand)
US$
US$
US$
EUR
JPY
733,000
159,081
1,805,000
7,500
748,405
104
As of December 31, 2004 and 2003, receivables from forward exchange contracts (included in the "other financial assets"
account) aggregate approximately NT$392,534 thousand, and NT$76,385 thousand; payables from forward exchange contracts
(included in the "other current liabilities" account) aggregate approximately NT$559 thousand and NT$174,018 thousand.
b) Cross currency swaps
Outstanding cross currency swap contracts as of December 31, 2004 are as follows:
Maturity Date
Contract Amount
(in Thousands)
Range of Interest
Rate Paid
Range of Interest
Rate Received
January 2005 to June 2005
US$
1,420,000
1.28%-2.72%
0.49%-1.17%
As of December 31, 2004, receivables from the cross currency swap contracts (included in the "other financial assets" account)
was approximately NT$761,030 thousand.
Net exchange gain or loss arising from forward exchange contracts and cross currency swap contracts was recognized in the "for-
eign exchange loss, net" account and the difference in interest was recorded in interest income or expense.
c) Interest rate swaps
Outstanding contracts as of December 31, 2004 and 2003 were as follows:
Contract Date
Period
2004
September 2003
October 2003
October 2003
October 2003
October 2003
November 2003
2003
September 2003
October 2003
October 2003
October 2003
October 2003
November 2003
July 1999
d) Option contracts
September 2003 to December 2005
October 2003 to December 2005
October 2003 to December 2005
October 2003 to December 2005
October 2003 to December 2005
November 2003 to December 2005
September 2003 to December 2005
October 2003 to December 2005
October 2003 to December 2005
October 2003 to December 2005
October 2003 to December 2005
November 2003 to December 2005
July 1999 to June 2004
Contract Amount
(in thousand)
NT$
NT$
NT$
NT$
NT$
NT$
NT$
NT$
NT$
NT$
NT$
NT$
US$
500,000
500,000
500,000
500,000
500,000
500,000
500,000
500,000
500,000
500,000
500,000
500,000
2,857
During 2004, the Company did not enter into any foreign currency option contracts.
There were no outstanding option contracts as of December 31, 2003. The Company entered into foreign currency option con-
tracts for hedging purposes; therefore, the related premiums and the foreign exchange gain or loss are recognized in the "foreign
exchange loss, net" account.
105
e) Transaction risk
i) Credit risk. Credit risk represents the positive net settlement amount of those contracts with positive fair values at the balance
sheet date. The positive net settlement amount represents the loss incurred by the Company if the counter-parties breached the
contracts. The banks, which are the counter-parties to the foregoing derivative financial instruments, are reputable financial
institutions. Management believes its exposure related to the potential default by those counter-parties is low.
ii) Market price risk. All derivative financial instruments are intended as hedges for fluctuations in foreign exchange rates and inter-
est rates. Gains or losses from these hedging instruments are likely to be offset by gains or losses from the hedged items.
Interest rate risks are also controlled as the expected cost of capital is fixed. Thus, market price risks are believed to be low.
iii) Cash flow risk and the amount and period of future cash needs.
As of December 31, 2004, the Company's future cash needs for outstanding forward exchange contracts and cross currency
swap contracts are as follows:
Term
Within one year
Inflow
(in thousand)
NT$ 69,761,484
EUR 118,500
Outflow
(in thousand)
US$ 2,312,081
The Company has sufficient operating capital to meet the above cash needs. In addition, there will be corresponding cash inflow
for the cash outflow. Therefore, the cash flow risk is low.
2) Fair values of financial instruments were as follows:
2004
2003
Carrying
Amount
Fair Value
Carrying
Amount
Fair Value
Non-derivative financial instruments
Assets
Short-term investments, net
Long-term investments (securities with market price)
$ 52,979,095
20,572,150
$ 52,979,095
23,657,754
$ 12,559,019
4,077,198
$ 12,703,444
10,465,676
Liabilities
Bonds payable (including current portion)
30,000,000
30,607,341
35,000,000
35,850,377
Derivative financial instruments
Forward exchange contracts (buy)
Forward exchange contracts (sell)
Cross currency swap contracts
Interest rate swap contracts
-
391,975
761,030
4,361
-
317,090
760,012
(22,714)
2,351
(99,984)
-
-
3,037
40,638
-
2,093
The above financial instruments do not include cash and cash equivalents, receivables, other financial assets, payables, and payable
to contractors and equipment suppliers. The carrying amounts of the aforementioned instruments reported in the balance sheet
approximate their fair values.
106
The above financial instruments also exclude refundable deposits, guarantee deposits, long-term investments that do not have quot-
ed market prices as well as other long-term payables. The future cash inflow and outflow of the deposits approximate their fair val-
ues. Some of long-term investments do not have quoted market prices; therefore, fair values for those long-term investments are
not shown above. The fair value of other long-term payables is determined using the discounted value of expected cash flows,
which approximates the carrying value.
Fair values of financial instruments were determined as follows:
a) Fair value of short-term and publicly traded long-term investments is based on quoted market prices.
b) The fair value of bonds payable is the quoted market value.
c) Fair value of derivative financial instruments is the amount receivable from or payable to the counter-party if the contracts were
terminated on the balance sheet date.
k. Information on investment in Mainland China
1) The name of the investee company in mainland China, the main businesses and products, its issued capital, method of investment,
information on inflow or outflow of capital, ratio of ownership, equity in the net gain or net loss, ending balance, amount received
as earnings distributions from the investment, and the limitation on investment: Please see Table 9 attached.
2) Significant direct or indirect transactions with the investee company, its prices and terms of payment, unrealized gain or loss, and
other related information which is helpful to understand the impact of investment in mainland China on financial reports: Please see
Note 18.
22. Segment Financial Information
a. Gross export sales
Area
Americas
Asia and others
Europe
2004
113,948,320
91,057,215
19,084,530
224,090,065
$
$
2003
103,600,081
63,349,186
11,706,059
178,655,326
$
$
The export sales information is based on amounts billed to customers within the area.
b. Major customers representing at least 10% of net total sales:
In 2004, there is no customer accounted for at least 10% of the Company's total sales. The Company only has one customer that
accounts for at least 10% of its total sales in 2003. The sales to such customer amounted to $21,893,320 thousand and $31,220,104
thousand in 2004 and 2003, representing 8% and 15% of its total sales, respectively.
107
TABLE 1
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD. AND INVESTEES
FINANCING PROVIDED
FOR THE YEAR ENDED DECEMBER 31, 2004
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
No.
Financing Name
Counter-party
Financial Statement Account
1
TSMC International
TSMC Development
Other receivables
TSMC Technology
Other receivables
2
TSMC Partners
TSMC Development
Other receivables
Maximum Balance
for the Period
(US$ in thousand)
Ending Balance
(US$ in thousand)
$
(US$
(US$
(US$
1,915,020
60,000)
$
(US$
319,170
10,000)
1,915,020
60,000)
-
2,553,360
80,000)
(US$
2,553,360
80,000)
Note 1: The No. 2 represents necessary for short-term financing.
Note 2: Not exceeding the issued capital of the Company.
Note 3: Generally not exceeding the issued capital of the Company, unless approved by all members of the board.
TABLE 2
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD. AND INVESTEES
ENDORSEMENT/GUARANTEE PROVIDED
FOR THE YEAR ENDED DECEMBER 31, 2004
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
No.
Endorsement/
Guarantee Provider
Name
Nature of Relationship
(Note 2)
Limits on Each Counter-party's Endorsement/
Guarantee Amounts
Counter-party
0
The Company
TSMC Development
TSMC - North America
WaferTech
Not exceed 10% of the net worth of the Company, and also
limiting to the total capital issued of the
endorsement/guarantee company, unless otherwise
approved by Board of Directors.
3
2
3
Note 1: 25% of the net worth of the Company as of December 31, 2004.
Note 2: The No. 2 represents a subsidiary in which the Company holds directly over 50% of the equity interest.
The No. 3 represents an investee in which the Company holds directly and indirectly over 50% of the equity interest.
108
Interest Rate
Type of Financing
(Note 1)
Transaction
Amounts
Reasons for
Short-term
Financing
Allowance for
Bad Debt
1.50%
-
1.50%
$
2
-
2
-
-
-
Operating capital
$
-
Operating capital
-
-
-
Collateral
Item
Value
Financing Limit
for
Each Borrowing
Company
Financing
Company's
Financing
Amount Limits
(US$ in thousand)
$
-
-
-
-
-
-
N/A
$ 31,532,982
(US$ 987,968)
(Note 2)
N/A
(Note 3)
Maximum Balance for the Year
(US$ in thousand)
Ending Balance
(US$ in thousand)
Value of Collateral Property,
Plant and Equipment
Ratio of Accumulated Amount of
Collateral to Net Equity of the
Latest Financial Statement
Maximum Collateral/Guarantee
Amounts Allowable
(Note 1)
$
(US$
(US$
(US$
1,915,020
60,000)
1,276,680
40,000)
14,043,480
440,000)
$
$
(US$
(US$
1,915,020
60,000)
1,276,680
40,000)
-
-
-
-
$ 99,741,325
0.48%
0.32%
-
109
TABLE 3
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD. AND INVESTEES
MARKETABLE SECURITIES HELD
DECEMBER 31, 2004
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
Held Company Name
Marketable Securities Type and Name
Relationship with the
Company
Financial Statement
Account
The Company
Government bonds
2003 Government Bond Series A
United States Treas NTS
2003 Government Bond Series I
2004 Government Bond Series A
2004 Government Bond Series E
2004 Kaohsiung Municipal Bond Series A
Bonds under repurchase agreement
Bond funds
JF Taiwan Bond Fund
ABN AMRO Bond Fund
JF Taiwan First Bond Fund
INVESCO R.O.C. Bond A Fund
Dresdner Bond DAM Fund
Barits Bond Fund
Shinkong Chi Shin Bond Fund
ABN AMRO Select Bond Fund
NITC Bond Fund
HSBC NTD Money Management Fund
Stock
Taiwan Mask Corp.
TSMC International
VIS
TSMC Partners
SSMC
TSMC - North America
GUC
TSMC - Japan
VisEra
TSMC - Europe
United Industrial Gases Co., Ltd.
Shin-Etsu Handotai Taiwan Co., Ltd.
W.K. Technology Fund IV
Hontung Venture Capital Co., Ltd.
Globaltop Partner I Venture Capital Corp.
Corporate bonds
Taiwan Power Company
Abbott Labs
Abbott Labs
Ace Ltd
AIG Sunamerica Global Fing IX
Allstate Finl Global Fdg LLC
American Express Co.
American Gen Fin Corp.
American Gen Fin Corp. Mtn
American Gen Fin Corp. Mtn
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Subsidiary
Investee
Subsidiary
Investee
Subsidiary
Investee
Subsidiary
Investee
Subsidiary
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Short-term investment
Short-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
110
December 31, 2004
Shares/Units
(in thousand)
Carrying Value
(US$ in thousand)
Percentage of
Ownership
Market Value or
Net Asset Value
(US$ in thousand)
Note
-
-
-
-
-
-
-
78,698
134,906
84,886
76,705
80,833
76,640
151,594
18,235
3,764
41,568
1,787
987,968
409,532
300
382
11,000
39,040
6
5,100
-
16,783
10,500
5,000
8,392
5,000
-
-
-
-
-
-
-
-
-
-
$ 1,207,409
US$ 192,357
3,397,081
2,349,573
3,893,827
620,000
249,449
1,153,209
1,956,175
1,151,463
1,101,911
900,000
900,000
2,100,000
200,000
600,000
600,000
6,528
23,778,997
5,401,982
3,908,356
3,290,888
502,242
391,626
102,572
59,116
25,439
193,584
105,000
50,000
83,916
50,000
2,777,798
2,732
1,581
1,046
1,032
3,171
3,550
1,768
3,130
1,058
US$
US$
US$
US$
US$
US$
US$
US$
US$
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
-
100
28
100
32
100
47
100
25
100
10
7
2
10
1
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
$ 1,202,028
US$ 191,824
3,393,982
2,352,973
3,892,025
620,000
251,593
1,169,406
1,978,785
1,162,632
1,111,932
910,904
907,765
2,115,554
201,183
602,703
601,958
27,552
23,778,997
8,493,692
3,908,356
3,290,888
1,179,352
418,272
102,572
59,116
25,439
284,036
170,940
55,146
53,571
49,909
2,749,413
2,709
1,587
1,042
1,028
3,096
3,503
1,765
3,087
1,042
US$
US$
US$
US$
US$
US$
US$
US$
US$
Treasury stock of NT$677,110 thou-
sand is deducted from the carrying
value.
(Continued)
111
Held Company Name
Marketable Securities Type and Name
Relationship with the
Company
Financial Statement
Account
American Honda Fin Corp. Mtn
American Intl Group Inc. Mtnf
Amgen Inc.
Amsouth Bk Birmingham Ala
ANZ Cap Tr I
Bank New York Inc.
Bank New York Inc.
Bank Scotland Treas Svcs PLC
Bank Utd Houston TX Mtbn
Bear Stearns Cos Inc.
Bear Stearns Cos Inc. Medium Te
Berkshire Hathaway Fin Corp.
Bristol Myers Squibb Co.
British Telecommunications PLC
Cargill Inc.
Chase Manhattan Corp. New
Cit Group Hldgs Inc.
Citigroup Inc.
Citigroup Inc.
Citigroup Inc.
Colonial Pipeline Co.
Compaq Computer Corp.
Consolidated Edison Co. NY Inc.
Corestates Cap Corp.
Countrywide Fdg Corp. Mtn
Countrywide Home Lns Inc.
Credit Suisse Fb USA Inc.
Credit Suisse First Boston
Credit Suisse First Boston USA
Daimlerchrysler North Amer
Daimlerchrysler North Amer Hld
Dell Computer Corp.
Den Danske BK Aktieselskab
Deutsche Telkom Intl Fin BV
Diageo PLC
Dow Chem Co.
European Invt Bk
Fifth Third Bk Cincinnati OH
First Data Corp.
First Un Corp.
Fleet Finl Group Inc. New
Fleet Finl Corp Inc. New
Ford Mtr Cr Co.
FPL Group Cap Inc.
FPL Group Cap Inc.
General Elec Cap Corp. Mtn
General Elec Cap Corp. Mtn
General Elec Cap Corp. Mtn
Genworth Finl Inc.
Goldman Sachs Group Inc. Mtn
Goldman Sachs Group LP
Goldman Sachs Group LP
Greenpoint Finl Corp.
GTE Corp.
Hancock John Global Fdg Mtn
Hartford Finl Svcs Group Inc.
Hartford Finl Svcs Group Inc.
Heller Finl Inc.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
112
December 31, 2004
Shares/Units
(in thousand)
Carrying Value
(US$ in thousand)
Percentage of
Ownership
Market Value or
Net Asset Value
(US$ in thousand)
Note
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
3,800
3,795
3,005
1,972
1,012
1,525
3,945
2,715
580
3,518
3,105
1,498
3,819
2,104
2,120
1,628
3,203
2,000
1,033
3,583
1,625
3,719
3,687
1,062
2,158
5,210
2,645
786
2,249
997
749
3,054
2,192
1,852
3,459
921
8,315
2,419
3,013
970
494
975
1,542
1,001
860
3,467
1,040
3,886
3,412
3,505
1,637
1,100
974
2,134
1,003
765
296
1,171
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
3,803
3,795
2,991
1,978
1,001
1,509
3,943
2,717
574
3,493
3,105
1,494
3,788
2,091
2,079
1,613
3,195
2,002
1,033
3,523
1,612
3,593
3,618
1,060
2,151
5,157
2,599
779
2,240
999
755
3,025
2,166
1,838
3,477
911
8,236
2,466
2,986
965
493
962
1,535
990
846
3,455
1,040
3,878
3,408
3,494
1,599
1,075
972
2,109
986
758
296
1,163
(Continued)
113
Held Company Name
Marketable Securities Type and Name
Relationship with the
Company
Financial Statement
Account
Hershey Foods Corp.
Hewlett Packard Co.
Honeywell Inc.
Household Fin Corp.
Household Fin Corp.
Household Fin Corp. Mtn Bk Ent
HSBC USA Inc.New
Huntington Natl Bk
Huntington Natl Bk Columbus OH
ING Bank
ING Sec Life Ins Ingslf
Intl Bk For Recon + Dev
JP Morgan Chase + Co.
Jackson Natl Life Global Fdg
Jackson Natl Life Global Fdg S
JP Morgan Chase + Co.
Keycorp Mtn Book Entry
KFW Intl Fin Inc.
Kraft Foods Inc.
Kraft Foods Inc.
Lehman Brothers Hldgs Inc.
Lehman Brothers Hldgs Inc.
Lehman Brothers Hldgs Inc.
Lilly Eli + Co.
Lincoln Natl Corp. In
Merita Bk Ltd NY Brh
Merrill Lynch + Co. Inc.
Metropolitan Life Global Mtn
Monumental Global Fdg II
Monumental Global Fdg II
Monumental Global Fdg II 2002A
Morgan Stanley
Morgan Stanley Group Inc.
Morgan Stanley Group Inc.
National Westminster Bk PLC
Nationsbank Corp.
Nationwide Bldg Soc
Nationwide Life Global Mtn
Pepsico Inc. Mtn Book Entry
PNC Fdg Corp.
Popular North Amer Inc. Mtn
Premark Intl Inc.
Pricoa Global Fdg I Mtn
Pricoa Global Fdg I Mtn
Principal Life Global Fdg I Gl
Protective Life Secd Trs
Prudential Ins Co. Amer
Reinsurance Group Amer Inc.
Royal Bk Scotland Group PLC
Royal Bk Scotland Group PLC
Royal Bk Scotland Group PLC
Safeco Corp.
Salomon Smith Barney Hldgs Inc.
Sara Lee Corp.
SBC Communications Inc.
SBC Communications Inc.
Scotland Intl Fin B V 144A
Shell Finance (UK) PLC
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
114
December 31, 2004
Shares/Units
(in thousand)
Carrying Value
(US$ in thousand)
Percentage of
Ownership
Market Value or
Net Asset Value
(US$ in thousand)
Note
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
1,627
3,373
3,284
529
2,993
3,542
1,154
3,003
2,954
2,114
3,012
5,232
1,043
1,036
2,998
3,663
3,500
5,104
773
1,037
1,163
3,705
2,171
3,750
519
538
3,486
1,907
2,500
1,534
1,045
2,136
3,638
1,050
1,433
3,644
3,457
1,463
3,818
1,080
3,042
2,954
3,507
3,050
3,168
2,920
2,648
2,091
1,563
564
369
765
3,160
1,596
3,681
2,251
1,533
3,604
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
1,606
3,305
3,218
522
2,985
3,510
1,134
3,000
2,961
2,113
3,007
5,102
1,039
1,032
2,988
3,629
3,502
5,027
765
1,036
1,162
3,634
2,154
3,749
518
533
3,481
1,910
2,501
1,516
1,034
2,128
3,628
1,048
1,422
3,549
3,477
1,469
3,817
1,075
3,022
2,914
3,503
3,047
3,102
2,969
2,610
2,089
1,547
558
364
763
3,100
1,601
3,617
2,245
1,532
3,553
(Continued)
115
Held Company Name
Marketable Securities Type and Name
Relationship with the
Company
Financial Statement
Account
SLM Corp.
SLM Corp. Medium Term Nts
SP Powerassets Ltd Global
Suntrust Bks Inc.
Swedbank Sparbanken Svenge AB
TIAA Global Mkts Inc.
Tribune Co. Med Trm Nts
Union Planters
Unitedhealth Group Inc.
US Bk Natl Assn Cincinnati OH
Virginia Elec + Pwr Co.
Vodafone Group PLC New
Wachovia Corp.
Wal Mart Cda Venture Corp.
Washington Mut Fin Corp.
Washington Mut Inc.
Washington Post Co.
Wells Fargo + Co. New
Westfield Cap Corp. Ltd
China Steel Corporation
Taiwan Power Company
Nan Ya Plastics Corporation
Formosa Plastics Corporation
Formosa Petrochemical Corporation
Agency bonds
Fed Hm Ln Pc
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Mtg Corp
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp. Mtn
Federal Home Loan Mtg Assn
Federal Home Loan Mtg Corp.
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn Mtn
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
116
December 31, 2004
Shares/Units
(in thousand)
Carrying Value
(US$ in thousand)
Percentage of
Ownership
Market Value or
Net Asset Value
(US$ in thousand)
Note
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
500
2,950
991
1,062
1,084
519
2,943
2,755
3,119
2,669
2,884
2,559
3,720
3,670
4,768
4,735
3,182
3,697
1,999
2,978,804
915,276
407,526
405,485
202,595
3,466
US$
2,532
US$
1,042
US$
4,927
US$
7,962
US$
7,014
US$
4,936
US$
4,948
US$
2,454
US$
7,018
US$
4,996
US$
7,042
US$
6,098
US$
US$
2,909
US$ 13,953
US$ 13,983
US$ 13,981
6,978
US$
3,388
US$
4,953
US$
9,997
US$
998
US$
4,933
US$
4,930
US$
4,847
US$
4,903
US$
5,270
US$
6,940
US$
6,903
US$
US$
4,981
6,997
US$
US$ 15,787
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
501
2,985
992
1,060
1,067
514
2,965
2,704
3,097
2,687
2,838
2,561
3,600
3,602
4,689
4,682
3,180
3,631
1,999
2,977,695
914,582
407,484
405,322
200,000
3,462
US$
2,520
US$
1,024
US$
4,947
US$
7,939
US$
6,924
US$
4,949
US$
4,944
US$
2,468
US$
7,004
US$
4,973
US$
6,985
US$
6,084
US$
US$
2,907
US$ 13,898
US$ 13,946
US$ 13,946
6,928
US$
3,419
US$
4,941
US$
9,943
US$
993
US$
4,936
US$
4,938
US$
4,891
US$
4,943
US$
5,237
US$
6,937
US$
6,917
US$
US$
4,953
6,983
US$
US$ 15,798
(Continued)
117
Held Company Name
Marketable Securities Type and Name
Relationship with the
Company
Financial Statement
Account
Federal Natl Mtg Assn Mtn
Freddie Mac
Fed Hm Ln Pc Pool E89857
Fed Hm Ln Pc Pool G11295
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn Gtd
FNMA Pool 685116
FNMA Pool 725095
FNMA Pool 790828
FNMA Pool 793932
FNMA Pool 794040
FNMA Pool 795548
FNMA Pool 806642
GNMA II Pool 081150
GNMA II Pool 081153
Government Natl Mtg Assn
Corporate issued asset-backed securities
Aegis Asset Backed Secs Tr
Aesop Fed II LLC
Aesop Fed II LLC
American Express Cr Account Ma
American Home Mtg Invt Tr
Americredit Automobile Receiv
Americredit Automobile Rec Tr
Americredit Automobile Rec Tr
Americredit Automobile Receivb
Atlantic City Elc Trns Fdg LLC
Banc Amer Coml Mtg Inc.
Banc Amer Mtg Secs Inc.
Bank of Amer Lease Equip Tr
Bear Stearns Alt A Tr
Bear Stearns Asset Backed Secs
BMW Veh Owner Tr
California Infr + Economic Dev
California Infras + Economic
California Infrastructure Dev
Capital Auto Receivables Asset
Capital One Auto Fin Tr
Capital One Auto Fin Tr
Capital One Auto Fin Tr
Capital One Multi Asset Execut
Caterpillar Finl Asset Tr
Centex Home Equity Ln Tr
Cit Equip Coll Tr
Citibank Cr Card Issuance Tr
Citicorp Mtg Secs
CNH Equip Tr
Comm 2004 Htl 1
Credit Suisse First Boston Mtg
CWABS Inc.
CWABS Inc.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
118
December 31, 2004
Shares/Units
(in thousand)
Carrying Value
(US$ in thousand)
Percentage of
Ownership
Market Value or
Net Asset Value
(US$ in thousand)
Note
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
7,000
4,929
2,535
2,277
6,096
4,435
3,558
3,645
4,242
2,141
4,765
3,486
1,003
2,008
4,807
994
1,021
977
2,006
999
3,789
1,734
2,000
US$
4,955
US$
1,912
US$
3,445
US$
949
US$
2,002
US$
1,055
US$
2,000
US$
4,949
US$
926
US$
5,364
US$
4,030
US$
4,023
US$
1,478
US$
2,000
US$
4,978
US$
4,298
US$
6,126
US$
5,089
US$
4,018
US$
319
US$
1,147
US$
3,000
US$
US$
4,957
US$ 10,008
3,500
US$
4,999
US$
4,959
US$
2,364
US$
5,000
US$
4,600
US$
4,209
US$
1,647
US$
1,903
US$
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
6,976
4,934
2,531
2,273
6,075
4,440
3,539
3,615
4,188
2,126
4,719
3,446
1,002
2,003
4,773
994
1,020
975
2,004
997
3,766
1,700
2,004
4,963
1,888
3,427
949
1,998
1,048
1,990
4,912
923
5,315
4,006
3,995
1,489
2,000
4,941
4,230
6,064
5,035
3,992
318
1,145
2,989
4,977
9,923
3,493
4,991
4,965
2,363
4,952
4,607
4,178
1,662
1,907
(Continued)
119
Held Company Name
Marketable Securities Type and Name
Relationship with the
Company
Financial Statement
Account
CWABS Inc.
CWABS Inc.
CWABS Inc.
CWABS Inc.
CWALT Inc.
CWABS Inc.
CWABS Inc.
Daimlerchrysler Auto Tr
Daimlerchrysler Auto Tr
Daimlerchrysler Auto Tr
Detroit Edison Securitization
Fifth Third Auto Tr
Finance Amer Mtg Ln Tr
First Franklin Mtg Ln Tr
First Horizon Abs Tr
First Union Lehman Bros Mtg Tr
First USA Credit Cr Master Tr
Ford Cr Auto Owner Tr
Granite Mtgs PLC
GS Auto Ln Tr
GS Mtg Secs Corp.
Harley Davidson Motorcycle Tr
Harley Davidson Motorcycle Tr
Holmes Fing No 8 PLC
Honda Auto Receivables
Household Automotive Tr
Hyundai Auto Receivables Tr
IMPAC Cmb Tr
IMPAC Cmb Tr
IMPAC Secd Assets Corp.
Long Beach Accep Auto Receivab
Merrill Lynch Mtg Invs Inc.
Merrill Lynch Mtg Invs Inc.
Monumentl Global Fdg II
National City Auto Receivables
Navistar finl 2003 A Owner Tr
Nissan Auto Receivables
Nissan Auto Receivables Own Tr
Nissan Auto Receivables Owner
ONYX Accep Owner Tr
ONYX Accep Owner Tr
Providian Gateway Owner Tr
Providian Gateway Owner Tr
Reliant Energy Transition Bd
Residential Asset Mtg Prods
Residential Asset Mtg Prods
Residential Fdg Mtg Secs I Inc.
Sequoia Mtg Tr
Sequoia Mtg Tr
Sequoia Mtg Tr
Sequoia Mtg Tr
Sequoia Mtg Tr
Structured Adj Rate Mtg Ln Tr
Structured Asset Secs Corp.
Thoornburg Mtg Secs Tr
Toyota Auto Receivables 2003B
Triad Auto Receivables Tr
TXU Elec Delivery Transition
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
120
December 31, 2004
Shares/Units
(in thousand)
Carrying Value
(US$ in thousand)
Percentage of
Ownership
Market Value or
Net Asset Value
(US$ in thousand)
Note
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,907
US$
2,000
US$
5,000
US$
3,500
US$
4,292
US$
2,317
US$
4,040
US$
4,991
US$
4,982
US$
4,897
US$
674
US$
3,000
US$
985
US$
2,002
US$
2,000
US$
3,567
US$
US$
5,011
US$ 10,999
5,000
US$
2,948
US$
2,944
US$
3,417
US$
5,999
US$
5,001
US$
5,000
US$
513
US$
3,500
US$
1,414
US$
988
US$
3,570
US$
2,526
US$
1,460
US$
1,500
US$
1,000
US$
1,206
US$
4,928
US$
7,000
US$
4,999
US$
4,853
US$
963
US$
4,913
US$
4,204
US$
3,992
US$
5,185
US$
3,731
US$
3,000
US$
3,659
US$
2,504
US$
1,960
US$
1,488
US$
2,000
US$
3,500
US$
3,037
US$
1,403
US$
1,921
US$
4,970
US$
5,042
US$
7,736
US$
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
1,912
US$
1,997
US$
5,055
US$
3,541
US$
4,277
US$
2,298
US$
4,040
US$
4,970
US$
4,970
US$
4,893
US$
671
US$
2,999
US$
986
US$
2,006
US$
2,000
US$
3,534
US$
US$
5,008
US$ 10,936
5,000
US$
2,970
US$
2,944
US$
3,400
US$
5,938
US$
5,052
US$
4,991
US$
511
US$
3,468
US$
1,413
US$
988
US$
3,566
US$
2,502
US$
1,460
US$
1,502
US$
1,001
US$
1,207
US$
4,889
US$
6,958
US$
4,993
US$
4,872
US$
961
US$
4,933
US$
4,201
US$
3,982
US$
5,117
US$
3,672
US$
2,980
US$
3,631
US$
2,513
US$
1,955
US$
1,486
US$
2,000
US$
3,500
US$
3,031
US$
1,394
US$
1,923
US$
4,930
US$
4,997
US$
7,715
US$
(Continued)
121
Held Company Name
Marketable Securities Type and Name
Relationship with the
Company
Financial Statement
Account
USAA Auto Owner Tr
Wachovia Auto Owner Tr
Wachovia Auto Owner Tr
WFS Financial Owner Trust
WFS Finl 2004 2 Owner Tr
WFS Finl 2004 4 Owner Tr
Whole Auto Ln Tr
Whole Auto Ln Tr
Whole Auto Ln Tr
World Omni Auto Receivables Tr
Commercial papers
Corporate issued notes
Money market funds
Equity
Horizon Venture Fund I, L.P.
Crimson Asia Capital Ltd., L.P.
-
-
-
-
-
-
-
-
-
-
-
-
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Long-term investment
Long-term investment
TSMC - North America
TSMC stock
Parent company
Short-term investment
Chi Cherng
Hsin Ruey
TSMC International
TSMC stock
TSMC stock
Money market fund
BOA Fund
Stock
InveStar
InveStar II
TSMC Development
TSMC Technology
3DFX Interactive Inc.
TSMC Development
WaferTech stock
InveStar
Common stock
RichTek Technology Corp.
Advanced Power Electronics Corp.
Broadtek Electronics Corp.
Monolithic Power Systems, Inc.
SiRF Technology Holdings, Inc.
Broadtek Electronics Corp.
Programmable Microelectronics (Taiwan), Corp.
Global Testing Corp.
RichTek Technology Corp.
Signia Technologies, Inc.
Incentia Design Systems, Inc.
Advanced Power Electronics Corp.
Capella Microsystems (Taiwan), Inc.
Preferred stock
Integrated Memory Logic, Inc.
Sensory, Inc.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
122
Parent company
Short-term investment
Parent company
Short-term investment
-
Short-term investment
Subsidiary
Subsidiary
Subsidiary
Subsidiary
-
Subsidiary
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
December 31, 2004
Shares/Units
(in thousand)
Carrying Value
(US$ in thousand)
Percentage of
Ownership
Market Value or
Net Asset Value
(US$ in thousand)
Note
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
14,151
15,670
15,700
30,300
24,320
51,300
1
1
68
-
682
1,108
869
1,975
90
145
575
13,268
842
701
365
1,123
530
1,831
1,404
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
4,000
6,000
4,999
5,008
4,994
5,399
5,967
4,000
3,000
5,963
2,997
1,999
US$ 21,114
246,485
43,649
677,110
458,564
459,512
US$ 30,300
US$ 34,514
US$ 34,534
US$ 603,993
US$ 5,544
-
US$ 484,060
67
US$
502
US$
US$
275
US$ 1,567
393
US$
46
US$
208
US$
5,670
US$
83
US$
202
US$
92
US$
508
US$
154
US$
US$
US$
1,221
125
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
-
-
-
N/A
97
97
100
100
-
99
-
-
-
-
-
-
1
9
1
3
1
2
4
12
6
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
3,991
5,991
4,995
4,989
4,992
5,342
5,966
3,969
2,964
5,906
2,997
1,999
US$ 21,114
246,485
43,649
696,661
771,451
772,897
US$ 30,300
US$ 34,514
US$ 34,534
US$ 603,993
5,544
US$
-
US$
484,060
1,370
US$
697
US$
US$
225
US$ 19,910
1,157
US$
38
US$
208
US$
5,670
US$
1,692
US$
202
US$
92
US$
706
US$
154
US$
US$
US$
1,221
125
(Continued)
123
Held Company Name
Marketable Securities Type and Name
Relationship with the
Company
Financial Statement
Account
InveStar II
Emerging Alliance
Sonics, Inc.
NanoAmp Solutions, Inc.
Memsic, Inc.
Reflectivity, Inc.
IP Unity
Tropian, Inc.
Common stock
RichTek Technology Corp.
Monolithic Power Systems, Inc.
eChannel Option Holding, Inc.
eLCOS Microdisplay Technology, Ltd.
Signia Technologies, Inc.
Procoat Technology, Inc.
RichTek Technology Corp.
Programmable Microelectronics (Taiwan), Inc.
Auden Technology MFG. Co., Ltd.
GeoVision, Inc.
EoNex Technologies, Inc.
Conwise Technology Corporation, Ltd.
EON Technology, Corp.
Goyatek Technology, Corp.
Trendchip Technologies Corp.
Ralink Technology (Taiwan), Inc.
Silicon Data International Co., Inc.
Capella Microsystems(Taiwan), Inc.
Preferred stock
Memsic, Inc.
eLCOS Microdisplay Technology, Ltd.
NanoAmp Solutions, Inc.
Advanced Analogic Technology, Inc.
Sonics, Inc.
Reflectivity, Inc.
Tropian, Inc.
Kilopass Technologies, Inc.
FangTek, Inc.
Alchip Technologies Limited
Common stock
Global Investment Holding, Inc.
RichWave Technology Corp.
NetLogic Microsystems, Inc.
Preferred stock
Quake Technologies, Inc.
Pixim, Inc.
Newport Opticom, Inc.
Ikanos Communication, Inc.
Quicksilver Technology, Inc.
Mosaic Systems, Inc.
Zenesis Technologies, Inc.
Reflectivity, Inc.
Teknovus, Inc.
Miradia, Inc. (Formerly XHP Microsystems, Inc.)
Axiom Microdevices, Inc.
Optichron, Inc.
Audience, Inc.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Short-term investment
Short-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
124
December 31, 2004
Shares/Units
(in thousand)
Carrying Value
(US$ in thousand)
Percentage of
Ownership
Market Value or
Net Asset Value
(US$ in thousand)
Note
2,686
541
2,727
1,064
1,008
1,758
321
864
358
270
351
5,123
395
177
953
471
55
2,800
3,276
2,088
2,000
1,833
2,000
419
2,289
2,667
375
948
1,582
4,255
1,464
3,887
6,806
2,579
10,000
2,600
113
601
1,721
962
7,446
1,049
2,481
1,204
4,848
5,556
3,040
1,000
714
1,654
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
3,530
853
1,500
741
494
471
184
2,081
251
27
101
1,940
226
50
738
127
3,048
490
1,175
545
861
791
204
122
1,560
3,500
1,500
1,261
3,082
2,205
393
2,000
3,250
2,950
100,000
867
1,388
450
2,382
250
3,125
-
12
699
2,479
1,000
1,000
1,000
1,000
250
4
2
10
2
2
3
-
-
4
1
1
10
1
-
4
1
5
14
8
7
5
3
3
3
8
15
1
2
5
5
2
19
34
18
6
13
1
1
3
6
3
4
6
4
4
3
4
5
6
2
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
3,530
853
1,500
741
494
471
645
8,716
251
27
101
1,940
794
50
738
127
3,048
490
1,175
545
861
791
204
122
1,560
3,500
1,500
1,261
3,082
2,205
393
2,000
3,250
2,950
100,000
867
1,388
450
2,382
250
3,125
-
12
699
2,479
1,000
1,000
1,000
1,000
250
(Continued)
125
Held Company Name
Marketable Securities Type and Name
Relationship with the
Company
Financial Statement
Account
VTAF II
GUC
Next IO, Inc.
NuCORE Technology Inc.
Centrality Communications, Inc.
Layer N Networks, Inc.
Common stock
Yobon Technologies, Inc.
Sentelic, Corp.
Ivyon Technology, Inc.
Preferred stock
Powerprecise Solutions, Inc.
Tzero Technologies, Inc.
Miradia, Inc.
Agelia Technologies, Inc.
Audience, Inc.
Axiom Microdevices, Inc.
Next IO, Inc.
Bond funds
Grand Cathay
TIIM
Polaris De Li
EnTrust Kirin
E. Sun New Era
Jih Sun
EnTrust Phoenix
Transcend Fortune
Stock funds
TIIM DaLi
UPAMC Global Select Fund of Funds
Sheng Hua 9966 Balance
Stock
Global Unichip Corporation - NA
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Subsidiary
Long-term investment
126
December 31, 2004
Shares/Units
(in thousand)
Carrying Value
(US$ in thousand)
Percentage of
Ownership
Market Value or
Net Asset Value
(US$ in thousand)
Note
800
2,254
809
1,905
1,675
600
200
258
244
1,809
1,149
531
686
216
3,608
703
1,550
2,106
1,920
772
2,081
1,936
296
336
300
100
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
500
1,455
1,000
1,000
787
1,022
775
250
500
1,600
1,000
102
700
182
45,543
9,698
22,800
22,697
20,313
10,262
30,563
22,947
5,000
3,364
3,000
3,375
2
2
2
2
17
15
10
3
2
2
2
1
5
-
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
100
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
500
1,455
1,000
1,000
787
1,022
775
250
500
1,600
1,000
102
700
182
45,544
9,698
22,800
22,698
20,314
10,262
30,564
22,948
4,474
3,378
3,011
3,375
127
TABLE 4
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD. AND INVESTEES
MARKETABLE SECURITIES ACQUIRED AND DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$100 MILLION OR
20% OF THE PAID-IN CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 2004
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
Company Name
Marketable Securities Type and Name
Financial Statement Account
Counter-party
Nature of
Relationship
The Company
Money market funds
BOA Fund
Short-term investment
BOA
GS Fund
Short-term investment
Goldman Sachs
Bond funds
JF Taiwan Bond Fund
ABN AMRO Bond Fund
ABN AMRO Select Bond Fund
JF Taiwan First Bond Fund
INVESCO R.O.C Bond A Fund
Dresdner Bond DAM Fund
Barits Bond Fund
Shin Kong Chi Shin Bond Fund
NITC Bond Fund
HSBC NTD Money Management Fund
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
JF Asset Management (Taiwan) Ltd.
ABN AMRO
ABN AMRO
JF Asset Management (Taiwan) Ltd.
INVESCO Asset Management Taiwan
Allianz Dresdner Securities Investment Consulting Co.,
Ltd.
Barits Securities Investment Trust Co., Ltd.
Shinkong Investment Trust Co., Ltd.
National Investment Trust Co., Ltd.
HSBC Asset Management (Taiwan) Ltd.
Bonds under repurchase agreement
Short-term investment
Chung Shing Bills Finance Corp. and several financial
institutions
Government bonds
1994 Government Bond Series C
2002 Government Bond Series A
2002 Government Bond Series E
2002 Government Bond Series J
2003 Government Bond Series A
United States Treas NTS
2003 Government Bond Series I
2004 Government Bond Series A
Short-term investment
Chung Shing Bills Finance Corp. and several financial
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Long-term investment
Long-term investment
institutions
BNP and several financial institutions
BNP and several financial institutions
BNP and several financial institutions
BNP and several financial institutions
-
FCB and several financial institutions
China Bills Finance Corp. and several financial institu-
tions
2004 Government Bond Series E
2004 Kaohsiung Municipal Bond Series A
Long-term investment
Long-term investment
BNP and several financial institutions
KGI Securities Co., Ltd. and several financial institutions
Corporate bonds
Taiwan Power Company
Allstate Finl Global Fdg LLC
American Express Co.
American Express Cr Corp. Mtn
American Gen Fin Corp. Mtn
American Gen Fin Corp. Mtn
American Honda Fin Corp. Mtn
American Honda Fin Corp. Mtn
American Honda Fin Corp. Mtn
American Intl Group Inc. Mtnf
Amgen Inc.
Bank New York Inc.
Bank One Corp.
Bear Stearns Cos Inc.
Bear Stearns Cos Inc.
Bear Stearns Cos Inc. Medium Te
Bristol Myers Squibb Co.
Brown Forman Corp.
Cardinal Health Inc.
Cit Group Hldgs Inc.
Citigroup Inc.
Compaq Computer Corp.
Consolidated Edison Co. NY Inc.
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
KGI Securities Co., Ltd.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
128
Beginning Balance
Acquisition
Disposal
Ending Balance
Shares/Units
(in thousand)
Amount
(US$ in
thousand)
Shares/Units
(in thousand)
Amount
(US$ in
thousand)
Shares/Units
(in thousand)
Amount
(US$ in
thousand)
Carrying Value
(US$ in
thousand)
Gain (Loss) on
Disposal (US$
in thousand)
Shares/Units
(in thousand)
Amount (US$ in
thousand)
(Note 1)
40,000
20,000
34,343
34,794
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
(US$
1,359,120
40,000)
679,560
(US$ 20,000)
$
-
-
-
-
500,000
500,000
-
-
-
-
-
-
-
-
1,800,000
1,422,197
3,157,331
3,113,066
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
68,021
165,257
18,235
110,580
93,975
80,833
76,640
151,594
3,764
41,568
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,000,000
2,400,000
200,000
1,500,000
1,350,000
900,000
900,000
2,100,000
600,000
600,000
2,577,163
-
-
-
2,023,206
1,207,409
699,398
3,402,213
2,349,573
3,890,925
620,000
2,777,798
3,171
3,550
3,503
3,130
3,702
3,509
3,750
3,800
3,795
3,005
3,945
3,693
3,805
3,518
3,105
3,819
3,277
3,837
3,203
3,583
3,719
3,687
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
40,000
20,000
23,666
65,145
-
25,694
17,270
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
1,359,120
(US$ 40,000)
679,560
(US$ 20,000)
$
1,359,120
(US$ 40,000)
679,560
(US$ 20,000)
$
350,000
950,000
-
350,000
250,000
-
-
-
-
-
346,791
943,825
-
348,537
248,089
-
-
-
-
-
4,127,714
4,127,714
1,427,762
1,422,197
US$
US$
US$
US$
US$
US$
US$
US$
3,169,750
3,133,875
2,031,500
-
506,162
-
-
-
-
-
-
-
3,504
-
-
3,509
3,755
-
-
-
-
3,695
3,816
-
-
-
3,280
3,795
-
-
-
-
US$
US$
US$
US$
US$
US$
US$
US$
3,157,331
3,113,066
2,023,206
-
507,041
-
-
-
-
-
-
-
3,503
-
-
3,509
3,750
-
-
-
-
3,693
3,805
-
-
-
3,277
3,837
-
-
-
-
US$
US$
US$
US$
US$
US$
US$
-
-
3,209
6,175
-
1,463
1,911
-
-
-
-
-
-
5,565
12,419
20,809
8,294
-
(879)
-
-
-
-
-
-
-
1
-
-
-
5
-
-
-
-
2
11
-
-
-
3
(42)
-
-
-
-
$
-
-
-
-
78,698
134,906
18,235
84,886
76,705
80,833
76,640
151,594
3,764
41,568
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,153,209
1,956,175
200,000
1,151,463
1,101,911
900,000
900,000
2,100,000
600,000
600,000
249,449
-
-
-
-
1,207,409
192,357
3,397,081
2,349,573
3,893,827
620,000
2,777,798
3,171
3,550
-
3,130
3,702
-
-
3,800
3,795
3,005
3,945
-
-
3,518
3,105
3,819
-
-
3,203
3,583
3,719
3,687
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
(Continued)
129
Company Name Marketable Securities Type and Name
Financial Statement Account
Counter-party
Nature of
Relationship
Countrywide Fdg Corp. Mtn
Countrywide Home Lns Inc.
Credit Suisse First Boston USA
Dell Computer Corp.
Diageo PLC
European Invt Bk
Federal Home Ln Mtg Corp
Federal Home Loan Mtg Assn
First Data Corp.
General Elec Cap Corp. Mtn
General Elec Cap Corp. Mtn
General Elec Cap Corp. Mtn
Genworth Finl Inc.
Goldman Sachs Group Inc Mtn
Goldman Sachs Group LP
Hewlett Packard Co.
Honeywell Inc.
Household Fin Corp.
Household Fin Corp. Mtn Bk Ent
Huntington Natl Bk
ING Sec Life Ins Ingslf
Intl Bk For Recon + Dev
JP Morgan Chase + Co.
JP Morgan Chase + Co.
JP Morgan Chase + Co.
Keycorp Mtn Book Entry
KFW Intl Fin Inc.
Lehman Brothers Hldgs Inc.
Lehman Brothers Hldgs Inc.
Lilly Eli + Co.
Merrill Lynch + Co Inc.
Merrill Lynch + Co Inc.
Monumental Global Fdg II 2002A
Morgan Stanley Group Inc.
Morgan Stanley Group Inc.
Nationsbank Corp.
Nationwide Bldg Soc
Nationwide Life Global Mtn
Pepsico Inc. Mtn Book Entry
Popular North Amer Inc Mtn
Pricoa Global Fdg I Mtn
Pricoa Global Fdg I Mtn
Principal Life Global Fdg I Gl
Salomon Smith Barney Hldgs Inc.
SBC Communications Inc.
Shell Finance (UK) PLC
TIAA Global Mkts Inc.
Unitedhealth Group Inc.
Viacom Inc.
Viacom Inc.
Wachovia Corp.
Walmart Cda Venture Corp.
Washington Mut Fin Corp.
Washington Mut Inc.
Washington Post Co.
Wells Fargo + Co. New
China Steel Corporation
Taiwan Power Company
Nan Ya Plastics Corporation
Formosa Plastics Corporation
Formosa Petrochemical Corporation
Agency bonds
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Chung Shing Bills Finance Corp.
BNP and several financial institutions
Chung Shing Bills Finance Corp.
Chung Shing Bills Finance Corp.
Chung Shing Bills Finance Corp.
Short-term investment
Short-term investment
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
130
Beginning Balance
Acquisition
Disposal
Ending Balance
Shares/Units
(in thousand)
Amount
(US$ in
thousand)
Shares/Units
(in thousand)
Amount
(US$ in
thousand)
Shares/Units
(in thousand)
Amount
(US$ in
thousand)
Carrying Value
(US$ in
thousand)
Gain (Loss) on
Disposal (US$
in thousand)
Shares/Units
(in thousand)
Amount (US$ in
thousand)
(Note 1)
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
3,534
5,210
3,177
3,054
3,459
8,315
4,237
4,847
3,013
3,507
3,467
3,886
3,412
3,505
3,820
3,373
3,284
3,712
3,542
3,003
3,012
5,232
3,638
3,128
3,663
3,500
5,104
3,417
3,705
3,750
3,497
3,486
3,129
5,741
4,763
3,644
3,457
3,413
3,818
3,042
3,507
3,050
3,168
3,160
3,681
3,604
3,631
3,119
3,177
3,172
3,720
3,670
4,768
4,735
3,182
3,697
2,997,430
950,646
408,538
406,245
202,980
US$
US$
6,096
4,725
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
3,540
-
3,188
-
-
-
-
-
-
3,498
-
-
-
-
-
-
-
3,633
-
-
-
-
3,601
-
-
-
-
3,381
-
-
3,498
-
-
-
3,713
-
-
-
-
-
-
-
-
-
-
-
3,131
-
3,135
3,175
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
3,534
-
3,177
-
-
-
-
-
-
3,507
-
-
-
-
-
-
-
3,712
-
-
-
-
3,638
-
-
-
-
3,417
-
-
3,497
-
-
-
3,713
-
-
-
-
-
-
-
-
-
-
-
3,112
-
3,177
3,172
-
-
-
-
-
-
-
-
-
-
-
-
-
6
-
11
-
-
-
-
-
-
(9)
-
-
-
-
-
-
-
(79)
-
-
-
-
(37)
-
-
-
-
(36)
-
-
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
19
-
(42)
3
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
-
5,210
-
3,054
3,459
8,315
4,237
4,847
3,013
-
3,467
3,886
3,412
3,505
3,820
3,373
3,284
-
3,542
3,003
3,012
5,232
-
3,128
3,663
3,500
5,104
-
3,705
3,750
-
3,486
3,129
5,741
1,050
3,644
3,457
3,413
3,818
3,042
3,507
3,050
3,168
3,160
3,681
3,604
519
3,119
-
-
3,720
3,670
4,768
4,735
3,182
3,697
2,978,804
915,276
407,526
405,485
202,595
US$
US$
6,096
4,725
(Continued)
131
Company Name Marketable Securities Type and Name
Financial Statement Account
Counter-party
Nature of
Relationship
Feferal Home Ln Mtg Corp.
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn Gtd
Federal Natl Mtg Assn Mtn
Fnma Pool 790828
Gnma II Pool 081153
Gnma II Pool Tba Nov 30 Arms
Government Natl Mtg Assn
Federal Hm Ln PC
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp. Mtn
Federal Home Loan Mtg Corp.
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn Disc Nts
Federal Natl Mtg Assn Mtn
Freddie Mac
Student Ln Marketing Assn
Corporate issued asset-backed securities
Aesop Fdg II LLC
American Express Cr Account MA
Americredit Automobile Receivb
Banc Amer Coml Mtg Inc.
Banc Amer Mtg Secs Inc.
Bank Of Amer Lease Equip Tr
BMW Veh Owner Tr
California Infr + Economic Dev
California Infras + Economic
California Infrastructure Dev
Capital Auto Receivables Asset
Capital One Master Tr
Capital One Multi Asset Execut
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
132
Beginning Balance
Acquisition
Disposal
Ending Balance
Shares/Units
(in thousand)
Amount
(US$ in
thousand)
Shares/Units
(in thousand)
Amount
(US$ in
thousand)
Shares/Units
(in thousand)
Amount
(US$ in
thousand)
Carrying Value
(US$ in
thousand)
Gain (Loss) on
Disposal (US$
in thousand)
Shares/Units
(in thousand)
Amount (US$ in
thousand)
(Note 1)
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
3,558
5,861
3,393
6,130
6,371
7,000
5,014
3,817
4,829
4,473
3,466
5,210
4,927
14,938
7,014
4,936
9,956
5,264
4,948
7,018
9,993
7,042
6,098
13,953
13,983
13,981
6,978
3,388
4,907
4,953
9,997
9,971
11,984
4,933
4,930
4,903
11,036
10,496
5,270
4,982
6,940
4,867
6,903
4,981
6,997
4,993
5,000
15,787
4,929
16,000
4,955
3,445
4,949
5,503
4,030
4,023
4,978
4,298
8,383
7,419
4,627
3,093
4,957
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
-
-
-
-
-
-
-
-
4,829
-
-
4,153
-
6,980
-
-
9,967
5,286
-
-
5,000
-
-
-
-
-
-
-
4,981
-
-
9,942
10,965
-
-
-
10,997
10,430
-
4,983
-
4,938
-
-
-
4,993
-
-
-
16,000
-
-
-
-
-
-
-
-
-
-
-
3,072
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
-
-
-
-
-
-
-
-
4,829
-
-
4,168
-
6,976
-
-
9,956
5,264
-
-
4,997
-
-
-
-
-
-
-
4,907
-
-
9,971
10,986
-
-
-
11,036
10,496
-
4,982
4,867
-
-
-
4,993
-
-
-
16,000
-
-
-
-
-
-
-
-
-
-
-
3,093
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
-
-
-
-
-
-
-
-
-
-
-
(15)
-
4
-
-
11
22
-
-
3
-
-
-
-
-
-
-
74
-
-
(29)
(21)
-
-
-
(39)
(66)
1
71
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(21)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
3,558
5,861
3,393
6,130
6,371
7,000
5,014
3,817
-
4,473
3,466
1,042
4,927
7,962
7,014
4,936
-
-
4,948
7,018
4,996
7,042
6,098
13,953
13,983
13,981
6,978
3,388
-
4,953
9,997
-
998
4,933
4,930
4,903
-
-
5,270
-
6,940
-
6,903
4,981
6,997
-
5,000
15,787
4,929
-
4,955
3,445
4,949
5,503
4,030
4,023
4,978
4,298
8,383
7,419
4,627
-
4,957
(Continued)
133
Company Name
Marketable Securities Type and Name
Financial Statement Account
Counter-party
Nature of
Relationship
Capital One Secd Nt Tr
Caterpillar Finl Asset Tr
Centex Home Equity Ln Tr
Cit Equip Coll Tr
Citibank Cr Card Issuance Tr
CHN Equip Tr
Comm 2004 Htl 1
Credit Suisse First Boston Mtg
CWABS Inc.
CWABS Inc.
CWALT Inc.
CWMBS Inc.
CWMBS Inc.
Daimlerchrysler Auto Tr
Daimlerchrysler Auto Tr
Daimlerchrysler Auto Tr
First Union Lehman Bros Mtg Tr
First USA Credit Cr Master Tr
Ford Cr Auto Owner Tr
GE Cap Cr Card Master Nt Tr
Granite Mtgs PLC
GS Mtg Secs Corp.
Harley Davidson Motorcycle Tr
Harley Davidson Motorcycle Tr
Holmes Fing No 8 PLC
Honda Auto Receivables
Hyundai Auto Receivables Tr
Impac Secd Assets Corp.
Monumentl Global Fdg II
Navistar Finl 2003 A Owner Tr
Nissan Auto Receivables
Nissan Auto Receivables Owner Tr
Nissan Auto Receivables Owner
ONYX Accep Owner Tr
Permanent Fing No 1 PLC
Providian Gateway Owner Tr
Providian Gateway Owner Tr
Reliant Energy Transition Bd
Residential Asset Mtg Prods
Residential Fdg Mtg Secs I Inc
Sequoia Mtg Tr
Structured Adj Rate Mtg Ln Tr
Toyota Auto Receivables 2003 B
Triad Auto Receivables Tr
TXU Elec Delivery Transition
USAA Auto Owner Tr
Wachovia Auto Owner Tr
Wachovia Auto Owner Tr
WFS Financial Owner Trust
WFS Finl 2002 4 Owner Tr
WFS Finl 2004 2 Owner Tr
WFS Finl 2004 4 Owner Tr
Whole Auto Ln Tr
Whole Auto Ln Tr
World Omni Auto Receivables Tr
World Omni Auto Receivables Tr
Money market funds
Common stock
RichTek Technology Corp.
Atheros Communication, Inc.
Monolithic Power Systems, Inc.
InveStar
InveStar II
Common stock
RichTek Technology Corp.
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Note: The ending balance included the recognition of the investment income (loss) by the equity method, the cumulative translation adjustments and the bond premi-
um or discount amortization amount.
134
Beginning Balance
Acquisition
Disposal
Ending Balance
Shares/Units
(in thousand)
Amount
(US$ in
thousand)
Shares/Units
(in thousand)
Amount
(US$ in
thousand)
Shares/Units
(in thousand)
Amount
(US$ in
Thousand)
Carrying Value
(US$ in
thousand)
Gain (Loss) on
Disposal (US$
in thousand)
Shares/Units
(in thousand)
Amount (US$
in thousand)
(Note 1)
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
947
1,205
2,521
US$
US$
US$
121
3,593
2,000
465
US$
346
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,032
10,008
3,500
4,999
4,959
5,000
4,600
5,000
5,000
3,500
4,718
3,129
4,040
4,991
4,982
4,897
4,177
5,011
10,999
4,000
5,000
4,000
4,000
5,999
5,001
5,000
3,500
4,000
3,500
4,928
7,000
4,999
4,853
4,913
5,102
4,204
3,992
5,185
3,766
3,947
3,500
3,058
4,970
5,042
8,009
4,000
6,000
4,999
5,008
3,904
4,994
5,399
5,967
4,000
5,963
5,000
21,114
-
-
-
-
US$
US$
US$
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,595
1,205
546
US$
US$
US$
5,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,003
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,036
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,986
-
6,783
8,972
4,318
US$
US$
US$
US$
US$
US$
US$
5,032
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,102
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,000
-
184
3,593
433
US$
US$
US$
US$
US$
US$
US$
(32)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(66)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(14)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
-
10,008
3,500
4,999
4,959
5,000
4,600
5,000
5,000
3,500
4,718
3,129
4,040
4,991
4,982
4,897
4,177
5,011
10,999
-
5,000
4,000
4,000
5,999
5,001
5,000
3,500
4,000
3,500
4,928
7,000
4,999
4,853
4,913
-
4,204
3,992
5,185
3,766
3,947
3,500
3,058
4,970
5,042
8,009
4,000
6,000
4,999
5,008
3,904
4,994
5,399
5,967
4,000
5,963
-
US$
21,114
6,598
5,379
3,885
682
-
1,975
US$
US$
67
-
1,567
768
US$
3,394
US$
519
US$
2,875
321
US$
184
135
TABLE 5
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD. AND INVESTEES
ACQUISITION OF INDIVIDUAL REAL ESTATE AT COSTS OF AT LEAST NT$100 MILLION OR 20% OF THE
PAID-IN CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 2004
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
Company
Name
Types of
Property
Transaction Date
Transaction
Amount
Payment Term
Counter-party
The Company
Fab. 12
April 21, 2004
$ 1,484,370
By the construction progress
IDC Taiwan, Inc., Taiwan Branch
Fab. 12
Fab. 12
Fab. 12
Fab. 12
Fab. 12
Fab. 12
Fab. 12
Fab. 12
Fab. 12
Fab. 14
Fab. 12
Fab. 12
Fab. 12
Fab. 12
April 21, 2004
April 22, 2004
May 12, 2004
May 12, 2004
May 12, 2004
June 17, 2004
July 02, 2004
July 08, 2004
July 08, 2004
420,168
224,800
340,307
116,181
133,092
165,208
225,744
100,767
466,833
By the construction progress
By the construction progress
By the construction progress
By the construction progress
By the construction progress
By the construction progress
By the construction progress
By the construction progress
By the construction progress
(U.S.A.)
CHRIST AG
Allis Electric Co., Ltd.
United Industry gas Corp., Ltd.
United Industry gas Corp., Ltd.
BOC EDWARDS, CMS
Organo Corporation
Marketech International Corp.
Kanto Chemical Co., Inc.
United Integrated Services Co.,
Ltd.
August 03, 2004
300,000
By the construction progress
United Integrated Services Co.,
August 05, 2004
August 05, 2004
August 05, 2004
October 15, 2004
122,969
185,984
182,060
105,299
By the construction progress
By the construction progress
By the construction progress
By the construction progress
Ltd.
Marketech International Corp.
Marketech International Corp.
Marketech International Corp.
IDC Taiwan, Inc., Taiwan Branch
(U.S.A.)
TABLE 6
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD. AND INVESTEES
TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF
THE PAID-IN CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 2004
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
Company
Name
Related Party
Nature of Relationship
The Company
TSMC - North America
Philips and its affiliates
GUC
WaferTech
VIS
SSMC
Subsidiary
Major shareholder
Investee
Subsidiary
Investee
Investee
Transaction Details
Purchase/Sale
Amount
Sales
Sales
Sales
Purchases
Purchases
Purchases
$ 142,271,732
5,463,565
371,546
15,203,047
9,169,602
5,869,123
136
Nature of
Relationship
Prior Transaction of Related Counter-party
Owner
Relationship
Transfer Date
Amount
Price Reference
Purpose of Acquisition
Other Terms
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Public bidding
Manufacturing purpose
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Public bidding
Public bidding
Public bidding
Public bidding
Public bidding
Public bidding
Public bidding
Public bidding
Public bidding
Manufacturing purpose
Manufacturing purpose
Manufacturing purpose
Manufacturing purpose
Manufacturing purpose
Manufacturing purpose
Manufacturing purpose
Manufacturing purpose
Manufacturing purpose
N/A
Public bidding
Manufacturing purpose
N/A
N/A
N/A
N/A
Public bidding
Public bidding
Public bidding
Public bidding
Manufacturing purpose
Manufacturing purpose
Manufacturing purpose
Manufacturing purpose
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
Transaction Details
Abnormal Transaction
Notes/Accounts
Payable or Receivable
Note
% to Total
Payment Terms
Unit Price
Payment Terms
Ending Balance
55
2
-
34
13
21
Net 30 days after invoice date
Net 30 days after monthly closing
Net 30 days after monthly closing
Net 30 days after monthly closing
Net 30 days after monthly closing
Net 30 days after monthly closing
None
None
None
None
None
None
None
None
None
None
None
None
$ 15,526,964
581,487
56,436
(913,107)
(1,533,938)
(207,794)
% to
Total
47
2
-
9
16
2
137
TABLE 7
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD. AND INVESTEES
RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE
PAID-IN CAPITAL
DECEMBER 31, 2004
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
Company Name
Related Party
Nature of Relationship
Ending Balance
Turnover Rate
The Company
TSMC - North America
TSMC - Shanghai
Philips and its affiliates
Subsidiary
Subsidiary
Major shareholder
$ 15,526,964
1,473,365
581,487
38 days
(Note 1)
49 days
Note 1: The ending balance is generated mainly from the sales of machinery, so it is not applicable for the calculation of the turnover rate.
TABLE 8
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD. AND INVESTEES
NAMES, LOCATIONS, AND RELATED INFORMATION OF INVESTEES ON WHICH THE COMPANY EXERCISES
SIGNIFICANT INFLUENCE
DECEMBER 31, 2004
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
Investor Company
Investee Company
Location
Main Businesses and Products
The Company
TSMC - North America
San Jose, California, U.S.A.
Sales and marketing of integrated circuits and
TSMC - Europe
TSMC - Japan
TSMC - Shanghai
Amsterdam, the Netherlands
Yokohama, Japan
Shanghai, China
Marketing activities
Marketing activities
Manufacturing and marketing of integrated circuits and
semiconductor devices
VIS
Hsin-Chu, Taiwan
semiconductor devices
Research, design, development, manufacture, packaging,
testing and sale of memory integrated circuits, LSI, VLSI
and related parts
TSMC International
Tortola, British Virgin Islands
Providing investment in companies involved in the
Chi Cherng
Hsin Ruey
TSMC Partners
SSMC
Emerging Alliance
GUC
VisEra
VTAF II
design, manufacture, and other related business in the
semiconductor industry
Taipei, Taiwan
Taipei, Taiwan
Tortola, British Virgin Islands
Singapore
Cayman Islands
Hsin-Chu, Taiwan
Investment activities
Investment activities
Investment activities
Fabrication and supply of integrated circuits
Investing in new start-up technology companies
Researching, developing, manufacturing, testing and
Hsin-Chu, Taiwan
Manufacturing, material wholesaling and retailing of
marketing of integrated circuits
Cayman Islands
Investing in new start-up technology companies
electronic spare parts
Note 1: The treasury stock is deducted from the carrying value.
Note 2: The gains or losses on disposal of the stocks held by subsidiaries (treated as treasury stocks) and the paid-in capital from cash dividend distributed by parent
company are excluded.
138
Overdue
Amount
Action Taken
Amounts Received in
Subsequent Period
Allowance for Bad Debts
$
5,044,202
145,146
7,136
-
Accelerate demand on account receivables
-
$ 6,013,414
-
13,726
$
-
-
-
Original Investment Amount
Balance as of December 31, 2004
December 31,
2004
December 31,
2003
Shares
(in thousand)
Percentage of
Ownership
Carrying Value
(Note 1)
Net Income
(Loss) of the
Investee
Investment
Gain
(Loss)(Note 2)
Note
$ 333,178
$ 333,178
11,000
100
$ 502,242
$ 120,587
$ 112,543
Subsidiary
15,749
83,760
9,187,962
15,749
83,760
1,890,952
-
6
-
8,119,816
8,119,816
409,532
31,445,780
31,445,780
987,968
300,000
300,000
10,350
6,408,190
1,447,957
409,920
51,000
332,412
300,000
300,000
10,350
6,408,190
1,179,690
409,920
51,000
-
-
-
300
382
-
39,040
5,100
-
100
100
100
28
100
36
36
100
32
99
47
25
98
25,439
102,572
8,113,511
262
2,919
(727,036)
262
2,919
(727,036)
Subsidiary
Subsidiary
Subsidiary
5,401,982
4,706,668
1,329,555
Investee
23,778,997
2,598,162
2,598,162
Subsidiary
50,570
49,823
3,908,356
3,290,888
823,232
391,626
59,116
329,968
21,359
21,887
43,117
2,288,786
(97,767)
30,424
35,540
18,373
(664)
(491)
43,117
732,418
(97,278)
23,279
Investee
Investee
Subsidiary
Investee
Subsidiary
Investee
8,885
Investee
14,648
Subsidiary
139
TABLE 9
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD. AND INVESTEES
INFORMATION OF INVESTMENT IN MAINLAND CHINA
DECEMBER 31, 2004
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
Investee
Company
Main Businesses and
Products
Total Amount of
Paid-in Capital
(RMB in Thousand)
Investment
Type
Investment Flows
Accumulated Outflow
of Investment from
Taiwan as of January 1,
2004(US$ in Thousand)
Outflow
(US$ in Thousand)
Inflow
Accumulated Outflow
of Investment from
Taiwan as of December
31, 2004
(US$ in Thousand)
TSMC (Shanghai)
Company Limited
Manufacturing and
marketing of integrat-
ed circuits and semi-
conductor devices
$
9,187,962
(RMB 2,284,355)
(Note 1)
$
(US$
1,890,952
56,000)
$
(US$
7,297,010
220,000)
$ -
$
(US$
9,187,962
276,000)
Percentage of
Ownership in
Investment
Investment Gain
(Loss) (Note 2)
Carrying Value as of
December 31, 2004
Accumulated
Inward
Remittance
of Earnings
as of
December
31, 2004
Accumulated
Investment in
Mainland China as of
December 31, 2004
(US$ in Thousand)
Investment Amounts Authorized
by Investment Commission, MOEA
(US$ in Thousand)
Upper Limit on
Investment (US$ in
Thousand)
100%
$
(727,036)
$ 8,113,511
$ -
$
(US$
9,187,962
276,000)
$
11,841,207
(US$ 371,000)
$
(US$
11,841,207
371,000)
Note 1: Direct investment in TSMC (Shanghai) US$276,000 thousand.
Note 2: Amount was recognized based on the audited financial statements.
140
10. Consolidated Financial Statements and Independent Auditors' Report
INDEPENDENT AUDITORS' REPORT
The Board of Directors and the Shareholders
Taiwan Semiconductor Manufacturing Company, Ltd.
We have audited the accompanying consolidated balance sheets of Taiwan Semiconductor Manufacturing Company, Ltd. and sub-
sidiaries (the Company) as of December 31, 2004 and 2003, and the related consolidated statements of income, changes in
shareholders equity and cash flows for the years then ended. These consolidated financial statements are the responsibility of the
Company s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
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 account-
ing 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 consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial
position of Taiwan Semiconductor Manufacturing Company, Ltd. and subsidiaries as of December 31, 2004 and 2003, and the results of
their operations and their cash flows for the years then ended, in conformity with the Guidelines Governing the Preparation of Financial
Reports by Securities Issuers and generally accepted accounting principles in the Republic of China.
January 13, 2005 (January 30, 2005 as to Note 22m)
Notice to Readers
The accompanying consolidated financial statements are intended only to present the consolidated financial position, results of opera-
tions and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of
any other jurisdiction. The standards, procedures and practices to audit such consolidated financial statements are those generally
accepted and applied in the Republic of China.
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 origi-
nal Chinese version or any difference in the interpretation of the two versions, the Chinese-language auditors report and financial state-
ments shall prevail.
141
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2004 AND 2003
(In Thousands of New Taiwan Dollars, Except Par Value)
ASSETS
CURRENT ASSETS
Cash and cash equivalents (Notes 2, 3 and 4)
Short-term investments, net (Notes 2 and 4)
Receivables from related parties (Note 20)
Notes receivable
Accounts receivable
Allowance for doubtful receivables (Note 2)
Allowance for sales returns and others (Note 2)
Other receivables from related parties (Note 20)
Other financial assets (Notes 2 and 23)
Inventories, net (Notes 2 and 5)
Deferred income tax assets, net (Notes 2 and 14)
Prepaid expenses and other current assets
Total current assets
LONG-TERM INVESTMENTS (Notes 2, 6, 18 and 23)
Equity method
Cost method
Long-term bonds
Other investments
Total long-term investments
PROPERTY, PLANT AND EQUIPMENT (Notes 2, 7, 10 and 20)
Cost
Land and land improvements
Buildings
Machinery and equipment
Office equipment
Leased assets
Total cost
Accumulated depreciation
Advance payments and construction in progress
Net property, plant and equipment
GOODWILL (Note 2)
OTHER ASSETS
Deferred charges, net (Notes 2, 8 and 22)
Deferred income tax assets, net (Notes 2 and 14)
Refundable deposits (Note 20)
Others
Total other assets
$
2004
Amount
%
74,302,351
54,107,951
654,377
2,942
31,211,481
(982,843)
(3,342,450)
141,578
2,212,371
15,555,937
8,917,986
1,667,401
184,449,082
9,143,612
3,266,330
15,170,167
10,521,740
38,101,849
803,508
97,882,699
433,130,364
8,538,225
566,243
540,921,039
(331,253,866)
49,244,153
258,911,326
7,115,510
8,992,452
1,649,979
106,448
127,445
10,876,324
$
15
11
-
-
7
-
(1)
-
-
3
2
-
37
2
1
3
2
8
-
19
87
2
-
108
(66)
10
52
1
2
-
-
-
2
2003
Amount
102,988,896
13,611,536
920,444
9,893
28,495,269
(1,020,398)
(2,135,843)
131,731
1,373,705
12,135,324
8,398,205
1,632,908
166,541,670
7,255,239
3,492,775
-
-
10,748,014
855,394
79,778,533
371,315,729
7,457,538
726,585
460,133,779
(275,013,069)
26,733,553
211,854,263
8,720,917
7,992,016
1,111,367
199,522
232,762
9,535,667
%
26
3
-
-
7
-
-
-
-
3
2
-
41
2
1
-
-
3
-
20
91
2
-
113
(68)
7
52
2
2
-
-
-
2
TOTAL
$
499,454,091
100
$
407,400,531
100
The accompanying notes are an integral part of the consolidated financial statements.
142
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
2004
2003
Amount
%
Amount
%
Short-term bank loans (Note 9)
Payables to related parties (Note 20)
Accounts payable
Payable to contractors and equipment suppliers
Accrued expenses and other current liabilities (Notes 2, 12 and 22)
Current portion of bonds payable (Note 11)
$
383,004
2,217,815
7,264,419
33,427,702
10,126,368
10,500,000
$
-
1
2
6
2
2
407,736
3,248,289
6,438,604
7,232,103
8,094,191
5,000,000
63,919,308
13
30,420,923
-
1
2
2
2
1
8
2
7
1
-
-
8,800,302
30,000,000
3,300,829
-
726,585
42,827,716
10
2,601,450
763,889
1,483,245
4,848,584
88,999
1
-
-
1
-
1,915,020
19,500,000
7,964,975
2,317,972
566,243
32,264,210
3,101,707
412,881
714,949
4,229,537
75,737
-
4
2
-
-
6
1
-
-
1
-
Total current liabilities
LONG-TERM LIABILITIES
Long-term bank loans (Note 10)
Bonds payables (Note 11)
Other long-term payables (Note 12)
Other payables to related parties (Notes 20 and 22)
Liability under capital lease (Notes 2 and 7)
Total long-term liabilities
OTHER LIABILITIES
Accrued pension cost (Notes 2 and 13)
Guarantee deposits (Note 22)
Others
Total other liabilities
MINORITY INTEREST IN SUBSIDIARIES (Note 2)
Total liabilities
100,488,792
20
78,186,222
19
SHAREHOLDERS' EQUITY (Notes 2 and 16)
Capital stock - $10 par value
Authorized: 24,600,000 thousand shares
Issued: 23,251,964 thousand shares in 2004 and 20,266,619
thousands shares in 2003
Capital surplus
Retained earnings:
Appropriated as legal reserve
Appropriated as special reserve
Unappropriated earnings
Others:
Unrealized loss on long-term investments (Note 2)
Cumulative translation adjustments (Note 2)
Treasury stock (at cost) - 45,521 thousand shares in 2004 and 40,597
thousand shares in 2003 (Notes 2 and 18)
Total shareholders' equity
TOTAL
232,519,637
56,537,259
25,528,007
-
88,202,009
-
(2,226,427)
(1,595,186)
398,965,299
47
11
5
-
18
-
(1)
-
80
202,666,189
56,855,885
20,802,137
68,945
50,229,008
(35)
225,408
(1,633,228)
329,214,309
$
499,454,091
100
$
407,400,531
50
14
5
-
12
-
-
-
81
100
143
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
(In Thousands of New Taiwan Dollars, Except Consolidated Earnings Per Share)
GROSS SALES (Notes 2 and 20)
$
261,947,351
$
207,279,137
SALES RETURNS AND ALLOWANCES (Note 2)
(4,734,733)
(4,282,325)
2004
2003
Amount
%
Amount
%
257,212,618
100
202,996,812
100
NET SALES (Note 24)
COST OF SALES (Notes 15 and 20)
GROSS PROFIT
OPERATING EXPENSES (Notes 15, 20 and 24)
Research and development
General and administrative
Marketing
Total operating expenses
INCOME FROM OPERATIONS
NON-OPERATING INCOME AND GAINS (Note 24)
Investment income recognized by equity method, net (Notes 2 and 6)
Interest (Notes 2 and 23)
Gain on sales of investments, net (Note 2)
Technical service income (Notes 20 and 22)
Gain on disposal of property, plant and equipment (Note 2)
Other (Note 20)
Total non-operating income and gains
NON-OPERATING EXPENSES AND LOSSES (Note 24)
Interest (Notes 2, 7 and 23)
Foreign exchange loss, net (Notes 2 and 23)
Loss on impairment of long-term investments (Note 2)
Loss on disposal of property, plant and equipment (Note 2)
Unrealized valuation loss of short-term investments (Note 2)
Loss on impairment of property, plant and equipment and idle assets
(Note 2)
Investment loss recognized by equity method, net (Notes 2 and 6)
Other
Total non-operating expenses and losses
INCOME BEFORE INCOME TAX AND MINORITY INTEREST (Note 24)
INCOME TAX BENEFIT (EXPENSE) (Notes 2 and 14)
INCOME BEFORE MINORITY INTEREST
141,393,435
115,819,183
12,516,434
11,454,374
3,366,701
27,337,509
88,481,674
2,094,137
1,858,359
914,541
423,804
242,785
556,598
6,090,224
1,528,908
382,164
350,608
131,148
75,212
-
-
138,271
2,606,311
91,965,587
363,426
92,329,013
55
45
5
4
1
10
35
1
1
-
-
-
-
2
1
-
-
-
-
-
-
-
1
36
-
36
-
128,113,334
74,883,478
12,712,695
8,199,965
2,670,237
23,582,897
51,300,581
-
888,107
3,538,081
209,764
438,809
594,551
5,669,312
1,891,009
755,100
652,718
374,126
-
1,506,199
294,244
317,852
5,791,248
51,178,645
(3,922,957)
47,255,688
3,012
63
37
6
4
2
12
25
-
1
2
-
-
-
3
1
1
-
-
-
1
-
-
3
25
(2)
23
-
23
(Continued)
MINORITY INTEREST IN LOSS (INCOME) OF SUBSIDIARIES (Notes 2 and
(12,898)
24)
CONSOLIDATED NET INCOME
$
92,316,115
36
$
47,258,700
144
2004
2003
Income
Before
Income Tax
and
Minority
Interest
Consolidated
Net Income
Income
Before
Income Tax
and
Minority
Interest
Consolidated
Net Income
CONSOLIDATED EARNINGS PER SHARE (NT$, Note 19)
Basic earnings per share
Diluted earnings per share
$ 3.96
$ 3.95
$ 3.97
$ 3.97
$ 2.19
$ 2.19
$ 2.02
$ 2.02
The accompanying notes are an integral part of the consolidated financial statements.
(Concluded)
145
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
(In Thousands of New Taiwan Dollars)
Capital Stock Issued
Preferred Stock
Common Stock
Shares
(in thousand)
Amount
Shares
(in thousand)
Amount
BALANCE, JANUARY 1, 2003
1,300,000
$
13,000,000
18,622,887
$
186,228,867
Redemption and retirement of preferred stock
(1,300,000)
(13,000,000)
-
-
Appropriations of prior year's earnings
Legal reserve
Special reserve
Bonus to employees - stock
Cash dividends paid for preferred stock
Stock dividends - 8%
Remuneration to directors and supervisors
Net income in 2003
Adjustment arising from changes in ownership percentage in investees
Reversal of unrealized loss on long-term investment of investees
Translation adjustments
Treasury stock - sales of parent company stock held by subsidiaries
BALANCE, DECEMBER 31, 2003
Appropriations of prior year's earnings
Legal reserve
Reversal of special reserve
Bonus to employees - cash
Bonus to employees - stock
Cash dividends paid for preferred stock
Cash dividends - 6%
Stock dividends - 14%
Remuneration to directors and supervisors
Net income in 2004
Adjustment arising from changes in ownership percentage in investees
Reversal of unrealized loss on long-term investment of investees
Translation adjustments
Issuance of stock arising from exercising stock options
Cash dividends received by subsidiaries from parent company
Treasury stock - sales of the parent company stock held by subsidiaries
Treasury stock - repurchased by the Company
Retirement of treasury stock
BALANCE, DECEMBER 31, 2004
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
153,901
-
1,489,831
-
-
-
1,539,013
-
14,898,309
-
-
-
-
-
-
-
-
-
-
-
20,266,619
202,666,189
-
-
-
272,651
-
-
2,837,327
-
-
-
-
2,726,514
-
-
28,373,267
-
-
-
-
-
87
-
-
-
-
-
-
-
867
-
-
-
(124,720)
(1,247,200)
23,251,964
$
232,519,637
The accompanying notes are an integral part of the consolidated financial statements.
146
Retained Earnings
Capital
Surplus
Legal
Reserve
Special
Reserve
Unappropriated
Earnings
Total
Unrealized
Loss on
Long-term
Investments
Cumulative
Translation
Adjustments
Treasury
Stock
(Note 18)
Total
Shareholders'
Equity
$
57,004,789
$
18,641,108
$
-
-
-
-
-
-
-
-
(158,924)
-
-
10,020
-
2,161,029
-
-
-
-
-
-
-
-
-
-
-
-
-
68,945
-
-
-
-
-
-
-
-
-
$
22,151,089
$
40,792,197
$
(194,283)
$
945,129
$
(1,923,492)
$
295,853,207
-
-
(2,161,029)
(68,945)
(1,539,013)
(455,000)
(14,898,309)
(58,485)
-
-
(1,539,013)
(455,000)
(14,898,309)
(58,485)
47,258,700
47,258,700
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
194,248
-
-
-
-
-
-
-
-
-
-
-
-
(719,721)
-
-
-
-
-
-
-
-
-
-
-
-
290,264
(13,000,000)
-
-
-
(455,000)
-
(58,485)
47,258,700
(158,924)
194,248
(719,721)
300,284
56,855,885
20,802,137
68,945
50,229,008
71,100,090
(35)
225,408
(1,633,228)
329,214,309
-
-
-
-
-
-
-
-
-
34,059
-
-
2,757
22,781
1,864
-
(380,087)
4,725,870
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
56,537,259
$
25,528,007
$
-
(68,945)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(4,725,870)
68,945
(681,628)
(2,726,514)
(184,493)
(12,159,971)
(28,373,267)
(127,805)
-
-
(681,628)
(2,726,514)
(184,493)
(12,159,971)
(28,373,267)
(127,805)
92,316,115
92,316,115
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(5,432,511)
(5,432,511)
$
88,202,009
$ 113,730,016
$
-
-
-
-
-
-
-
-
-
-
35
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2,451,835)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
38,042
-
-
(681,628)
-
(184,493)
(12,159,971)
-
(127,805)
92,316,115
34,059
35
(2,451,835)
3,624
22,781
39,906
(7,059,798)
(7,059,798)
7,059,798
-
$
(2,226,427)
$
(1,595,186)
$ 398,965,299
147
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
(In Thousands of New Taiwan Dollars)
CASH FLOWS FROM OPERATING ACTIVITIES
Consolidated net income
Adjustments to reconcile consolidated net income to net cash
provided by operating activities:
Depreciation and amortization
Deferred income taxes
Investment loss (income) recognized by equity method, net
Amortization of premium/discount of long-term bond investments
Loss on impairment of property, plant and equipment, and idle
assets
Loss on impairment of long-term investments
Gain on sales of long-term investments, net
Gain on disposal of property, plant and equipment, net
Accrued pension cost
Minority interest in income (loss) of subsidiaries
Changes in operating assets and liabilities:
Decrease (increase) in:
Receivables from related parties
Notes receivable
Accounts receivable
Allowance for doubtful receivables
Allowance for sales returns and others
Inventories, net
Other receivables from related parties
Other financial assets
Prepaid expenses and other current assets
Increase (decrease) in:
Payables to related parties
Accounts payable
Accrued expenses and other current liabilities
2004
2003
$
92,316,115
$
47,258,700
69,818,457
(1,058,393)
(2,094,137)
28,673
-
350,608
(85,203)
(111,637)
500,257
12,898
266,067
6,951
(2,716,212)
(37,555)
1,206,607
(3,420,613)
(9,847)
(777,100)
(34,493)
(1,499,968)
825,815
(336,385)
69,161,317
3,665,383
294,244
-
1,506,199
652,718
(78,694)
(64,683)
389,890
(3,012)
(544,764)
50,347
(8,964,567)
87,405
(236,672)
(933,878)
(67,752)
(347,161)
605,001
1,472,140
1,300,012
834,941
Net cash provided by operating activities
153,150,905
116,037,114
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in short-term investments, net
Acquisitions of:
Long-term investments
Property, plant and equipment
Proceeds from disposal of:
Long-term investments
Property, plant, and equipment
Increase in deferred charges
Decrease in refundable deposits
Decrease in other assets
Decrease in minority interest in subsidiaries
(43,554,878)
(23,054,379)
(81,094,557)
165,243
1,812,633
(2,405,673)
93,074
51,604
(26,160)
(13,326,339)
(1,412,335)
(37,870,907)
505,702
177,312
(2,138,087)
357,744
4,610
(3,487)
Net cash used in investing activities
(148,013,093)
(53,705,787)
(Continued)
148
CASH FLOWS FROM FINANCING ACTIVITIES
Cash dividends paid for common stock
Repurchase of treasury stock
Repayments on:
Long-term bank loans
Bonds payable
Short-term bank loans
Cash bonus paid to employees
Decrease in guarantee deposits
Cash dividends paid for preferred stock
Remuneration paid to directors and supervisors
Proceeds from:
Disposal of treasury stock
Issuance of stock arising from exercising stock options
Redemption of preferred stock
Net cash used in financing activities
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH
EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF THE YEAR
CASH AND CASH EQUIVALENTS, END OF THE YEAR
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid (excluding the amount capitalized of NT$ 278,334 thou-
sand and NT$139,516 thousand in 2004 and 2003, respectively,
Note 7)
Income tax paid
NONCASH INVESTING AND FINANCING ACTIVITIES
Current portion of bonds payable
Current portion of other payables to related parties (under payables to
related parties)
Current portion of other long-term payables (under accrued expenses
and other current liabilities)
Reclassification of long-term investments to short-term investments
Reclassification of short-term investments to long-term investments
The accompanying notes are an integral part of the consolidated financial statements.
2004
$
(12,137,190)
(7,059,798)
$
(6,656,152)
(5,000,000)
-
(681,628)
(351,008)
(184,493)
(127,805)
39,906
3,624
-
(32,154,544)
(27,016,732)
(1,669,813)
102,988,896
2003
-
-
(8,915,557)
(4,000,000)
(309,807)
-
(631,177)
(455,000)
(58,485)
300,284
-
(13,000,000)
(27,069,742)
35,261,585
(62,893)
67,790,204
$
$
$
$
$
$
$
$
74,302,351
$
102,988,896
1,470,333
389,189
$
$
1,982,594
218,954
10,500,000
$ 5,000,000
492,022
1,505,345
343,950
3,402,413
$
$
$
$
-
1,591,972
140,984
-
(Concluded)
149
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)
1. General
Taiwan Semiconductor Manufacturing Company, Ltd. (TSMC), a Republic of China (R.O.C.) corporation, was incorporated as a venture
among the Government of the R.O.C., acting through the Development Fund of the Executive Yuan; Philips Electronics N.V. and certain of
its affiliates (Philips); and certain other private investors. On September 5, 1994, its shares were listed on the Taiwan Stock Exchange
(TSE). On October 8, 1997, TSMC listed some of its shares of stock on the New York Stock Exchange (NYSE) in the form of American
Depositary Shares (ADSs).
TSMC is engaged mainly in the manufacturing, selling, packaging, testing and computer-aided designing of integrated circuits and other
semiconductor devices, and the manufacturing of masks.
TSMC has six direct wholly-owned subsidiaries: TSMC International Investment Ltd. (TSMC International), TSMC North America (TSMC -
North America), Taiwan Semiconductor Manufacturing Company Europe B.V. (TSMC - Europe), TSMC Japan K. K. (TSMC - Japan), TSMC
(Shanghai) Company Limited (TSMC - Shanghai) and TSMC Partners, Ltd. (TSMC Partners). In addition, TSMC has the following consoli-
dating subsidiaries: a 99.5% owned subsidiary, Emerging Alliance Fund, L.P. (Emerging Alliance), a 98% owned subsidiary, VentureTech
Alliance Fund II, L.P. (VTAF II, a newly established entity in 2004) and two 36% owned affiliates - Chi Cherng Investment Co., Ltd. (Chi
Cherng, which is 36% owned by TSMC and 64% owned by Hsin Ruey Investment Co., Ltd.) and Hsin Ruey Investment Co., Ltd. (Hsin
Ruey, which is 36% owned by TSMC and 64% owned by Chi Cherng). TSMC International has two wholly-owned subsidiaries - TSMC
Development, Inc. (TSMC Development) and TSMC Technology, Inc. (TSMC Technology), and two 97% owned subsidiaries - InveStar
Semiconductor Development Fund, Inc. (InveStar) and InveStar Semiconductor Development Fund, Inc. (II) LDC (InveStar II). TSMC
Development has a 99.996% owned subsidiary, WaferTech, LLC (WaferTech).
The following diagram presents information regarding the relationship and ownership percentages among TSMC and its consolidated
subsidiaries as of December 31, 2004:
TSMC
100%
100%
100%
100%
100%
100%
36%
36%
99.5%
98%
TSMC-North
America
TSMC- Japan
TSMC
International
TSMC-Europe
TSMC Partners
TSMC
Shanghai
Chi Cherng
64%
64%
Hsin Ruey
Emerging
Alliance
VTAF II
100%
100%
97%
97%
TSMC
Technology
TSMC
Development
InveStar
InveStar II
99.996%
WaferTech
150
TSMC - North America is engaged in the sales and marketing of integrated circuits and semiconductor devices. TSMC - Europe and TSMC
- Japan are engaged mainly in marketing activities. TSMC Technology is engaged mainly in engineering support activities. TSMC -
Shanghai is engaged in the manufacturing and marketing of integrated circuits and other semiconductor devices. TSMC Partners, TSMC
Development, Chi Cherng and Hsin Ruey are engaged in investing activities. TSMC International is engaged in providing investment in
companies involved in the design, manufacture, and other related business in the semiconductor industry. Emerging Alliance, VTAF II,
InveStar and InveStar II are engaged in investing in new start-up technology companies. WaferTech is engaged in the manufacturing, sell-
ing, testing and computer-aided designing of integrated circuits and other semiconductor devices.
2. Significant Accounting Policies
The consolidated financial statements are presented in conformity with Guidelines Governing the Preparation of Financial Reports by
Securities Issuers and accounting principles generally accepted in the R.O.C.
For the convenience of readers, the accompanying financial statements have been translated into English from the original Chinese ver-
sion prepared and used in the R.O.C. If there is any conflict between the English version and the original Chinese version or any difference
in the interpretation of the two versions, the Chinese-language financial statements shall prevail.
Significant accounting policies are summarized as follows:
Consolidation
TSMC consolidates the accounts of all majority (directly and indirectly) owned subsidiaries. All significant intercompany balances and
transactions have been eliminated.
The consolidated financial statements include, as of and for the years ended December 31, 2004 and 2003, the accounts of TSMC, TSMC
- North America, TSMC - Europe, TSMC - Japan, TSMC - Shanghai, TSMC Partners, Emerging Alliance, VTAF II, Chi Cherng, Hsin Ruey and
TSMC International and its subsidiaries, InveStar, InveStar II, TSMC Development (including WaferTech) and TSMC Technology.
TSMC and the foregoing subsidiaries are hereinafter referred to collectively as the "Company".
Minority interests in WaferTech (0.004%), Emerging Alliance (0.5%), VTAF II (2%), InveStar (3%) and InveStar II (3%) are presented sepa-
rately in the consolidated financial statements.
Use of Estimates
The preparation of financial statements in conformity with the aforementioned guidelines and principles requires management to make
reasonable assumptions and estimates of matters that are inherently uncertain. The actual results may differ from management's estimates.
Classification of Current and Noncurrent Assets and Liabilities
Current assets are those expected to be converted to cash, sold or consumed within one year from the balance sheet date. Current liabili-
ties are obligations due on demand within one year from the balance sheet date. Assets and liabilities that are not classified as current
are noncurrent assets and liabilities, respectively.
151
Cash Equivalents
Government bonds under repurchase agreements and notes acquired with maturities less than three months from the date of purchase
are classified as cash equivalents.
Short-term Investments
Short-term investments primarily consist of corporate bonds, asset-backed securities, bond funds, agency bonds, government bonds
and others.
Short-term investments are recorded at historical cost and are carried at the lower of cost or market value as of the balance sheet date.
An allowance for decline in value is provided and is charged to current earnings when the aggregate carrying value of the investments
exceeds the aggregate market value. A reversal of the allowance is recorded for a subsequent recovery of the market value.
The cost of funds and listed stocks sold are counted for using the weighted-average method; whereas the other securities are accounted
for using the specific identification method.
The market value of funds is determined using the net asset value of the funds at the end of the year, and the market value of listed
stocks is determined using the average-closing price of the listed stocks for the last month of the year. The others are determined using
the average of bid and ask prices as of the balance sheet date.
Cash dividends are recorded as investment income in the current year.
Allowance for Doubtful Receivables
An allowance for doubtful receivable is provided based on a review of the collectibility of accounts receivables. The Company determines
the amount of allowance for doubtful accounts by examining the historical collection experience and current trends in the credit quality
of its customers as well as its internal credit policies.
Revenue Recognition and Allowance for Sales Returns and Others
The Company recognizes net sales when the earnings process is complete, as evidenced by an agreement with the customer, transfer of
title and acceptance have occurred, if applicable, a fixed or determinable price and the collectibility is reasonably assured. Allowance for
sales returns and pricing discounts is estimated based on historical experience and any known factors that would affect the allowance.
Such provisions are deducted from sales in the year the products are sold and the estimated related costs are deducted from cost of sales.
Sales are determined using the fair value taking into account related sales discounts agreed to by the Company and its customers. Sales
agreements typically provide that payment is due 30 days from invoice date for a majority of the customers and 30 to 45 days after the
end of the month in which the sales occur for some customers. Since the receivables from sales are collectible within one year and such
transactions are frequent, the fair value of receivables is equivalent to the nominal amount of cash received.
Inventories
Inventories are stated at the lower of cost or market value. Inventories are recorded at standard cost and adjusted to the approximate
weighted-average cost at the end of the year. Market value represents net replacement cost for raw materials, supplies and spare parts.
Market value represents net realizable value for finished goods and work in process. The Company assesses the impact of changing tech-
nology on its inventory on hand and writes off inventories that are considered obsolete. Ending inventories are evaluated for estimated
excess quantities and obsolescence based on demand forecast within a specific time horizon, generally 180 days or less, and the estimat-
ed losses on scrap and slow-moving items are recognized in the allowance for losses.
152
Long-term Investments
Investments in companies wherein the Company exercises significant influence on the operating and financial policy decisions are
accounted for using the equity method of accounting. The Company's proportionate share in the net income or net loss of investee com-
panies is recognized in the "investment income/loss recognized by equity method, net" account. When equity investments are made, the
difference, if any, between the cost of investment and the Company's proportionate share of investee's net equity is amortized using the
straight-line method over five years and is recorded in the "investment income/loss recognized by equity method, net" account.
When the Company subscribes to additional investee shares at a percentage different from its existing equity interest, the resulting carry-
ing amount of the investment in the investee differs from the amount of Company's proportionate share in the investee's net equity. The
Company records such difference as an adjustment to long-term investments with the corresponding amount charged or credited to cap-
ital surplus.
Investments in companies wherein the Company does not exercise significant influence are recorded at historical cost. Cash dividends are
recognized as investment income in the year received but are accounted for as reductions in the carrying amount of the long-term invest-
ments if the dividends are received in the same year that the related investments are acquired. Stock dividends are recorded as an
increase in the number of shares held and do not affect investment income or the carrying amount of the investment. An allowance is
recognized for any decline in the market value of investments with readily ascertainable fair market value with the corresponding amount
recorded as an unrealized loss, a component of shareholders' equity. A reversal of the allowance will result from a subsequent recovery of
the market value of such investments. The carrying amounts of investments whose fair market values are not readily ascertainable are
reduced to reflect an other-than-temporary decline in their values, with the related impairment loss charged to income.
Investments in foreign mutual funds are stated at the lower of aggregate cost or net asset value. An allowance is recognized when the
net assets value of the funds is lower than their cost, with the corresponding amount recorded as a reduction to shareholders' equity. A
reversal of the allowance will result from a subsequent recovery of the net asset value.
The costs of stocks and mutual funds sold are determined using the weighted-average method.
Investments in long-term bonds are stated at amortized cost. The discount or premium is amortized over the duration period using the
interest method, and recorded as an adjustment to interest income.
When investments in publicly-traded stocks are reclassified from short-term investments to long-term investments or from long-term
investments to short-term investments, the Company recognizes a loss to the extent, if any, that the market value of such investments is
lower than the carrying amount, and the market value becomes the new basis.
If an investee company recognizes an unrealized loss on its long-term investments using the lower-of-cost-or-market method, the
Company also recognizes a corresponding unrealized loss in proportion to its ownership percentage in the investee company and records
the amount as a component of its shareholders' equity.
Gains or losses on sales from the Company to investee companies accounted for using the equity method are deferred in proportion to
the Company's ownership percentage in the investee companies until realized through transactions with third parties. The entire amount
of the gains or losses on sales to majority-owned subsidiaries is deferred until such gains or losses are realized through the subsequent
sales of the related products to third parties.
Gains or losses on sales from investee companies to the Company are deferred in proportion to the Company's ownership percentages in
the investee companies until realized through transactions with third parties.
153
If an investee's functional currency is a foreign currency, translation adjustments will result from the process of translating the investee's
financial statements into the reporting currency of the Company. Such adjustments are accumulated and reported as a separate compo-
nent of shareholders' equity.
Property, Plant and Equipment, Assets Leased to Others, Leased Assets and Idle Assets
Property, plant and equipment and assets leased to others are stated at cost less accumulated depreciation. When impairment is deter-
mined, the related assets are stated at the lower of fair value or book value. Idle assets are stated at the lower of net realizable value or
book value. Significant additions, renewals and betterments incurred during the construction period are capitalized. Maintenance and
repairs are expensed in the year incurred. Interest expense incurred for the project during the purchase and construction period is also
capitalized. Properties covered by agreements qualifying as capital leases are carried at the lower of the leased equipment's market value
or the present value of the minimum lease payments at the inception date of the lease.
Depreciation is computed using the straight-line method over the following estimated service lives: land improvements - 20 years; build-
ings - 10 to 20 years; machinery and equipment - 5 to 10 years; office equipment - 3 to 15 years; and leased assets - 20 years.
Upon sale or disposal of property, plant and equipment, the related cost and accumulated depreciation are removed from the correspon-
ding accounts, with any gain or loss credited or charged to non-operating income or expenses in the year of sale or disposal.
Goodwill
Goodwill represents the excess of the consideration paid for acquisition over the fair market value of identifiable net assets acquired and
acquisition costs. Goodwill is amortized using the straight-line method over the estimated life of 10 years.
Deferred Charges
Deferred charges consist of technology license fees, software and system design costs and other charges. The amounts are amortized as
follows: technology license fees - the shorter of the estimated life of the technology or the term of the technology transfer contract, soft-
ware and system design costs and other charges - 3 or 5 years.
Pension Costs
TSMC records net periodic pension costs on the basis of actuarial calculations. Unrecognized net transition obligation and unrecognized
net gains or losses are amortized over 25 years.
Income Tax
The Company uses an inter-period tax allocation method for income tax. Deferred income tax assets and liabilities are recognized for the
tax effects of temporary differences, unused tax credits, and net operating loss carryforwards. Valuation allowances are provided to the
extent, if any, that it is more likely than not that deferred income tax assets will not be realized. A deferred tax asset or liability is classified
as current or non-current in accordance with the classification of its related asset or liability. However, if a deferred tax asset or liability
does not relate to an asset or liability in the financial statements, then it is classified as either current or noncurrent based on the expect-
ed length of time before it is realized or settled.
Any tax credits arising from the purchases of machinery, equipment and technology, research and development expenditures, personnel
training, and investments in important technology-based enterprises are recognized using the flow-through method.
Adjustments to prior years' tax liabilities are added to or deducted from the current year's tax provision.
Income taxes on unappropriated earnings (excluding earnings from foreign consolidating subsidiaries) of 10% are expensed in the year of
shareholder approval which is the year subsequent to the year the earnings are generated.
154
Stock-based Compensation
Employee stock option plans that are amended or have options granted on or after January 1, 2004 must be accounted for by the inter-
pretations issued by the Accounting Research and Development Foundation. The Company adopted the intrinsic value method and any
compensation cost determined using this method is charged to expense over the employee vesting period.
Treasury Stock
When the Company repurchases its outstanding common stock, the cost of the reacquired stock is recorded as treasury stock as a reduc-
tion to shareholders' equity. When the Company retires treasury stock, the treasury stock account is reduced and the common stock as
well as the capital surplus
additional paid-in capital are reversed in proportionate to the equity percentage of the retirement. When the
book value of the treasury stock exceeds the sum of the par value and additional paid-in capital, the difference is charged to capital sur-
plus - treasury stock and to retained earnings for any remaining amount. The Company's stock held by its subsidiaries is also treated as
treasury stock and reclassified from long-term investments to treasury stock. The cash dividends received by the subsidiaries from the
Company are recorded under capital surplus - treasury stock.
Foreign-Currency Transactions
Foreign currency transactions are recorded in New Taiwan dollars at the rates of exchange in effect when the transactions occur.
Exchange gains or losses derived from foreign currency transactions or monetary assets and liabilities denominated in foreign currencies
are recognized in current income. At the end of each year, assets and liabilities denominated in foreign currencies are revalued at the pre-
vailing exchange rates with the resulting gains or losses recognized in current income.
Derivative Financial Instruments
The Company enters into foreign currency forward contracts to manage currency exposures in cash flow and in foreign-currency-denomi-
nated assets and liabilities. The contracts are recorded in New Taiwan dollars at the current rate of exchange of the contract date. The dif-
ferences in the New Taiwan dollar amounts translated using the spot rates and the amounts translated using the contracted forward
rates on the contract date are amortized over the terms of the forward contracts using the straight-line method. At the end of each year,
the receivables or payables arising from forward contracts are restated using the prevailing spot rates at the balance sheet date with the
resulting differences charged to income. In addition, the receivables and payables related to the forward contracts of the same counter
party are netted with the resulting amount presented as either an asset or a liability. Any resulting gain or loss upon settlement is credited
or charged to income in the year of settlement.
The Company enters into cross-currency swap contracts to manage currencies exposures on foreign currency denominated assets and lia-
bilities. The principal amount is recorded using the spot rates at the contract date. The differences in the New Taiwan dollar amounts
translated using the spot rates and the amounts translated using the contracted rates on the contract date are amortized over the terms
of the contracts using the straight-line method. At the end of each year, the receivables or payables arising from cross-currency swap
contracts are restated using the prevailing spot rate with the resulting differences charged to income. In addition, the receivables and
payables related to the contracts are netted with the resulting amount presented as either an asset or a liability. The difference in interest
computed pursuant to the contracts on each settlement date or the balance sheet date is recorded as an adjustment to the interest
income or expense associated with the hedged items. Any resulting gain or loss upon settlement is credited or charged to income in the
year of settlement.
The Company enters into interest rate swap contracts to manage exposures to changes in interest rates on existing assets or liabilities.
These transactions are accounted for on an accrual basis, in which the cash settlement receivable or payable is recorded as an adjustment
to interest income or expense associated with the hedged items.
The premiums paid for the foreign currency option contracts entered into for hedging purposes are amortized and charged to income on
a straight-line basis over the term of the related contract. Any resulting gain upon exercise settlement is credited or charged to income in
the year of exercise.
155
Translation of Foreign-currency Financial Statements
ROC SFAS No. 14, "Accounting for Foreign-Currency Transactions," applies to foreign subsidiaries that use the local foreign currency as
their functional currency. The financial statements of foreign subsidiaries are translated into New Taiwan dollars at the following
exchange rates: Assets and liabilities - current rate on balance sheet date; shareholders' equity - historical rate; income and expenses -
average rate during the year. The resulting translation adjustment is recorded as a separate component of shareholders' equity.
Reclassifications
Certain accounts in the consolidated financial statements as of and for the year ended December 31, 2003 have been reclassified to con-
form to the consolidated financial statements as of and for the year ended December 31, 2004.
3. Cash and Cash Equivalents
Cash and bank deposits
Government bonds acquired under repurchase agreements
Corporate issued notes
4. Short-Term Investments
Corporate bonds
Corporate issued asset-backed securities
Bond funds
Agency bonds
Government bonds
Money market funds
Government bonds acquired under repurchase agreements
Listed stocks
Commercial papers
Corporate issued notes
Allowance for valuation losses
Market value
2004
54,608,985
19,215,153
478,213
74,302,351
2004
13,554,598
11,766,877
10,662,758
8,633,889
7,346,858
1,640,973
249,449
168,299
95,666
63,796
54,183,163
(75,212)
54,107,951
54,990,545
$
$
$
$
$
2003
97,041,537
5,947,359
-
102,988,896
2003
-
-
1,000,000
-
7,692,595
3,068,213
1,800,000
50,728
-
-
13,611,536
-
13,611,536
14,054,511
$
$
$
$
$
The Company entered into investment management agreements with three well-known financial institutions (fund managers) to manage
investment portfolios for the Company. In accordance with the investment guidelines and terms in these agreements, the securities
invested by the fund managers cannot be below a pre-defined credit rating. As of December 31, 2004, the Company had investment
portfolios with these fund managers that aggregated to an original amount of US$1,200,000 thousand. The investment portfolios
included securities such as corporate bonds, asset-backed securities, agency bonds, government bonds and others. Securities acquired
with maturities less than three months from the date of purchase were reclassified as cash equivalents.
156
5. Inventories, Net
Finished goods
Work in process
Raw materials
Supplies and spare parts
Allowance for losses
6. Long-Term Investments
Equity method
Vanguard International Semiconductor Corporation (VIS)
Systems on Silicon Manufacturing Company Pte Ltd. (SSMC)
Global UniChip Corporation (GUC)
VisEra Technologies Company Ltd. (VisEra)
$
Cost method
Common stocks
Publicly traded stocks
Non-publicly traded stocks
Preferred stocks
Funds
Long-term bonds
Government bonds
Corporate bonds
China Steel Corporation
Taiwan Power Company
Nan Ya Plastics Corporation
Formosa Plastics Corporation
Formosa Petrochemical Corporation
Other investments
2004
3,526,036
11,437,466
993,151
1,176,735
17,133,388
(1,577,451)
15,555,937
$
$
2003
2,881,499
9,100,199
465,745
1,052,075
13,499,518
(1,364,194)
12,135,324
$
$
2004
2003
Carrying
Amount
% of
Owner-ship
Carrying
Amount
% of
Owner-ship
5,401,982
3,290,888
391,626
59,116
9,143,612
71,832
1,226,499
1,677,865
290,134
3,266,330
10,260,481
2,978,804
915,276
407,526
405,485
202,595
15,170,167
10,521,740
$
28
32
47
25
-
-
-
-
-
-
-
-
-
-
-
4,077,198
2,759,376
368,434
50,231
7,255,239
26,728
1,156,769
2,038,662
270,616
3,492,775
-
-
-
-
-
-
-
-
28
32
47
25
-
-
-
-
-
-
-
-
-
-
-
$ 38,101,849
$
10,748,014
On January 8, 2003, TSMC's investee, VIS, issued 600,000 thousand shares of common stock at a price of NT$7 per share of which TSMC
purchased a total of 230,882 thousand shares. VIS reduced its capital on August 11, 2004 in order to decrease its accumulated deficit.
The number of shares of VIS held by TSMC after the capital reduction declined from 787,016 thousand shares to 409,532 thousand
shares. TSMC's ownership percentage remained the same.
For the years ended December 31, 2004 and 2003, net investment income and loss recognized from the equity method investees was
NT$2,094,137 thousand and NT$294,244 thousand, respectively. The carrying amounts of investments accounted for under the equity
method and the related investment income or losses were determined based on the audited financial statements of the investees as of
and for the same periods as the Company.
157
As of December 31, 2004, other investments consist of the following:
Nominal
Amount
Carrying
Amount
Range of
Interest Rates
Maturity Date
Step-up callable deposits
Domestic bank
Foreign bank
Callable range accrual deposits
$ 2,000,000
2,138,340
$ 2,007,681
2,152,394
2.05%-2.20%
1.44%-4.75%
July 2007 to August 2007
June 2007 to August 2007
Foreign bank
6,383,400
6,414,151
(See below)
September 2009 to December 2009
$ 10,521,740
$ 10,574,226
During the year ended December 31, 2004, the Company deposited funds into structured-time deposits with the following terms:
The interest rate of the step-up callable deposits is determined by the Company and the related banks.
The amount of interest earned by the Company for the callable range accrual deposits is based on a pre-defined range as determined by
the 3-month or 6-month LIBOR rate plus an agreed upon rate ranging between 2.1% and 3.45%. Based on the terms of the deposits, if
the 3-month or 6-month LIBOR rate moves outside of the pre-defined range, the interest paid to the Company is at a minimum rate of
1.5%. Under the term of the contracts, the bank has the right to cancel the contracts prior to the maturity date.
Deposits that reside in banks located in Hong Kong and Singapore amounted to NT$2,553,360 thousand and NT$638,340 thousand,
respectively.
7. Property, Plant and Equipment
Accumulated depreciation consisted of the following:
Land improvements
Buildings
Machinery and equipment
Office equipment
Leased assets
$
2004
172,484
38,160,322
287,204,368
5,683,577
33,115
$
331,253,866
2003
154,062
31,665,779
238,392,296
4,800,932
-
275,013,069
$
$
Information on the status of the expansion or construction plans of TSMC's manufacturing facilities as of December 31, 2004 is as follows:
Construction/Expansion Plan
Estimated
Total Cost
Accumulated
Expenditures
Expected Date of Commencement
Fab 12 expansion
$ 58,744,200
$ 41,870,300
January 2005
158
Interest expense for the years ended December 31, 2004 and 2003 was NT$1,807,242 thousand and NT$2,030,525 thousand, respec-
tively (before deducting capitalized amounts of NT$278,334 thousand in 2004 and NT$139,516 thousand in 2003, respectively). The
interest rates used for purposes of calculating the capitalized amounts were 1.89% to 2.89% and 1.77% to 5.283% in 2004 and 2003,
respectively.
The Company entered into agreements to lease certain buildings that qualify as capital leases. The term of the lease is from December
2003 to December 2013.
8. Deferred Charges, Net
Technology license fees
Software and system design costs
Other
9. Short-Term Bank Loans
2004
6,534,899
2,213,636
243,917
8,992,452
$
$
2003
5,084,684
2,719,199
188,133
7,992,016
$
$
Unsecured loan in U.S. dollars:
US$12,000 thousand, repayable by June 2006, annual interest at
2.80% and 1.52% in 2004 and 2003, respectively
$
383,004
$
407,736
2004
2003
10. Long-Term Bank Loans
Unsecured loan:
US$60,000 thousand, repayable by December 2006, annual
interest at 2.475% and 1.56% in 2004 and 2003, respectively
Secured loan:
US$199,000 thousand; annual interest at 1.8275% in 2003
2004
2003
$
$
1,915,020
-
1,915,020
$
$
2,038,680
6,761,622
8,800,302
As of December 31, 2004, all the assets of WaferTech with a carrying amount of approximately NT$15,955,936 thousand (US$499,920
thousand) were pledged for the secured loan. WaferTech is required to maintain compliance with certain financial covenants defined in
the agreement. As of December 31, 2004, WafterTech was in compliance with all such financial covenants. Under the unsecured loan
agreement, the Company is required maintain compliance with certain financial covenants which, if violated, could result in payment of
the obligation prior to the originally scheduled payment date. The Company was in compliance with the financial covenants as of
December 31, 2004.
159
11. Bonds Payable
Domestic unsecured bonds:
Issued in December 2000 and repayable in December 2005 and
2007 in two equal payments, 5.25% and 5.36% interest payable
annually, respectively
Issued in January 2002 and repayable in January 2007, 2009 and
2012 in three equal payments, 2.6%, 2.75% and 3.00% interest
payable annually, respectively
Issued in October 1999 and repayable in October 2004, 5.95%
interest payable annually
2004
2003
$
15,000,000
$
15,000,000
15,000,000
-
15,000,000
5,000,000
$
30,000,000
$
35,000,000
As of December 31, 2004, future principal repayments for the Company's bonds are as follows:
Year of Repayment
2005
2007
2009
2010 and thereafter
12. Other Long-Term Payables
Payables for acquisition of property, plant and equipment (Note 22k)
Payables for royalties
Less - current portion
2004
6,030,007
3,440,313
9,470,320
1,505,345
7,964,975
$
$
Amount
10,500,000
7,000,000
8,000,000
4,500,000
30,000,000
2003
-
4,892,801
4,892,801
1,591,972
3,300,829
$
$
$
$
TSMC entered into several license arrangements for certain semiconductor-related patents. Future minimum payments under the agree-
ments as of December 31, 2004 are as follows:
Year
2005
2006
2007
2008
2009 and thereafter
Amount
1,505,345
466,786
446,838
255,336
766,008
3,440,313
$
$
The current portion of other long-term payables is recorded in the "accrued expenses and other current liabilities" account.
160
13. Pension Plan
TSMC has a defined benefit pension plan for all regular employees that provides benefits based on the employee's length of service and
average monthly salary and wages for the six-month period prior to retirement. TSMC contributes an amount equal to 2% of salaries and
wages paid each month to a pension fund (the Fund). The Fund is administered by a pension fund monitoring committee (the
Committee) and deposited in the Committee's name in the Central Trust of China.
Information on the pension plan is summarized as follows:
a. Components of net periodic pension cost
Service cost
Interest cost
Projected return on plan assets
Amortization
Net periodic pension cost
b. Reconciliation of the funded status of the plan and accrued pension cost
Benefit obligation
Vested benefit obligation
Nonvested benefit obligation
Accumulated benefit obligation
Additional benefits based on future salaries
Projected benefit obligation
Fair value of plan assets
Funded status
Unrecognized net transitional obligation
Unrecognized net loss
Accrued pension cost
Vested benefit
c. Actuarial assumptions
Discount rated used in determining present values
Future salary increase rate
Expected rate of return on plan assets
d. Contributions to the Fund
$
$
$
$
$
2004
632,594
128,315
(41,925)
8,300
727,284
$
2003
502,116
109,671
(41,154)
2,409
$
573,042
2004
2003
67,104
2,704,251
2,771,355
2,132,721
4,904,076
(1,447,540)
3,456,536
(132,791)
(222,549)
3,101,196
76,003
2004
3.25%
3.00%
3.25%
$
$
$
21,895
2,184,593
2,206,488
1,752,208
3,958,696
(1,207,264)
2,751,432
(141,091)
(10,090)
2,600,251
22,261
2003
3.25%
3.00%
3.25%
2004
2003
$
226,339
$
181,106
161
e. Payments from the Fund
14. Income Tax
2004
1,446
$
2003
3,490
$
a. A reconciliation of income tax on income before income tax and minority interest at the statutory rate and income tax expense is as follows:
2004
2003
Income tax based on income before income tax and minority interest
at the statutory rate
Tax-exempt income
Temporary and permanent differences
Current income tax on income before income tax credits
b. Income tax benefit (expense) consists of:
Current income tax on income before income tax credits
Additional 10% income tax on unappropriated earnings
Income tax credits
Other income tax
Net change in deferred income tax assets and liabilities
Net operating loss carryforwards
Investment tax credits
Temporary differences
Net change in valuation allowance of deferred income tax assets
Adjustment of prior years taxes
Income tax benefit (expense)
c. Deferred income tax assets (liabilities) consist of the following:
Current
Investment tax credits
Temporary differences
Valuation allowance
Noncurrent
Net operating loss carryforwards
Investment tax credits
Temporary differences
Valuation allowance
$
$
$
$
$
$
$
$
(24,685,380)
14,712,500
186,719
(9,786,161)
2004
(9,786,161)
(823,932)
10,470,862
(555,588)
(1,652,983)
234,690
1,131,331
1,345,355
(148)
$
$
$
(12,881,547)
5,255,750
732,681
(6,893,116)
2003
(6,893,116)
(1,273,482)
7,917,070
(7,988)
535,725
(917,759)
(300,848)
(2,982,501)
(58)
363,426
$
(3,922,957)
2004
8,849,000
319,717
(250,731)
8,917,986
6,735,080
17,035,584
(7,760,152)
(14,360,533)
1,649,979
2003
8,322,000
385,221
(309,016)
8,398,205
8,388,063
17,327,894
(8,956,987)
(15,647,603)
1,111,367
$
$
$
$
162
d. Integrated income tax information:
The balances of the imputation credit account (ICA) of the TSMC as of December 31, 2004 and 2003 were zero and NT$2,832 thou-
sand, respectively.
The expected and actual creditable ratio of TSMC for distribution of earnings of 2004 and 2003 was zero and 0.03%, respectively.
The imputation credits allocated to the shareholders are based on the balance as of the date of dividend distribution. The expected
creditable ratio for distribution of earnings of 2004 may be adjusted when the allocation of the imputation credits is made.
e. TSMC's earnings generated prior to December 31, 1997 have been appropriated.
f. As of December 31, 2004, TSMC's investment tax credits consisted of the following:
Regulation
Items
Statute for Upgrading
Purchase of machinery and
Industries
equipment
Statute for Upgrading
Research and development
Industries
expenditures
Statute for Upgrading
Personnel training
Industries
Statute for Upgrading
Industries
Investments in important
technology-based enterprises
Total
Creditable
Amounts
4,448,442
3,819,937
4,886,439
4,140,462
6,309,182
23,604,462
2,270,013
3,147,071
3,342,952
1,976,913
1,843,800
12,580,749
48,659
29,448
27,312
26,780
132,199
38,036
$
$
$
$
$
$
$
Remaining
Creditable
Amounts
-
116,189
4,886,439
4,140,462
6,309,182
15,452,272
-
3,147,071
3,342,952
1,976,913
1,843,800
10,310,736
-
29,448
27,312
26,780
83,540
38,036
$
$
$
$
$
$
$
Expiry
Year
2004
2005
2006
2007
2008
2004
2005
2006
2007
2008
2004
2005
2006
2007
2005
g. As of December 31, 2004, the net operating loss carryforwards were generated from WaferTech, TSMC Development and TSMC
Technology and will expire at various dates through 2024.
h. The sales generated from the following expansion and construction of TSMC's manufacturing plants are exempt from income tax:
Construction of Fab 6
Construction of Fab 8 - module B
Expansion of Fab 2 - modules A and B, Fab 3, Fab 4, Fab 5 and Fab 6
Construction of Fab 12
Tax-Exemption Period
2001 to 2004
2002 to 2005
2003 to 2006
2004 to 2007
163
i. The tax authorities have examined income tax returns of TSMC through 2000. However, TSMC is contesting the assessment of the tax
authority for 1992 and 1998. TSMC believes that any additional assessment will not have a material adverse effect on TSMC.
15. Labor Cost, Depreciation and Amortization Expenses
Year Ended December 31, 2004
Year Ended December 31, 2003
Classified as
Cost of
Sales
Classified as
Operating
Expenses
Total
Classified as
Cost of Sales
Classified as
Operating
Expenses
Total
Labor cost
Salary
Labor and health insurance
Pension
Other
Depreciation
Amortization
$ 10,719,632
572,210
472,329
430,777
$ 12,194,948
$ 61,703,792
$ 2,496,827
$
$
$
$
5,886,769
320,785
271,186
531,876
$ 16,606,401
892,995
743,515
962,653
$
9,014,068
476,687
379,845
339,500
7,010,616
$ 19,205,564
$ 10,210,100
2,563,408
3,052,160
$ 64,267,200
5,548,987
$
$ 61,988,138
1,385,594
$
$
$
$
$
4,647,912
245,357
193,718
304,398
$ 13,661,980
722,044
573,563
643,898
5,391,385
$ 15,601,485
2,398,768
3,367,462
$ 64,386,906
$ 4,753,056
16. Shareholders' Equity
Common Stock, Capital Surplus and Earnings
TSMC has issued a total of 668,351 thousand ADSs which are traded on the NYSE as of December 31, 2004. The number of common
shares represented by the ADSs is 3,341,754 thousand shares (one ADS represents five common shares).
Capital surplus can only be used to offset a deficit under the Company Law of the R.O.C. However, the capital surplus generated from
donations and the excess of the issue price over the par value of capital stock (including the stock issued for new capital, mergers, con-
vertible bonds and the surplus arising from treasury stock transactions) may be appropriated as stock dividends restricted to a certain per-
centage based on shareholders' ownership.
As of December 31, 2004 and 2003, the capital surplus consisted of the following:
From merger
Additional paid-in capital
From long-term investments
From convertible bonds
Donations
Treasury stock
Total
2004
24,003,546
23,051,675
121,354
9,360,424
55
205
56,537,259
$
$
2003
24,132,297
23,172,550
87,295
9,410,632
55
53,056
56,855,885
$
$
164
TSMC's Articles of Incorporation, as revised on December 21, 2004, provide that the following shall be appropriated from annual earn-
ings to the extent that the annual earnings exceed any cumulative deficit:
a. 10% legal reserve; until the amount of total legal reserve equals the TSMC's paid-in capital;
b. Special reserve in accordance with relevant laws or regulations;
c. Remuneration to directors and supervisors and bonuses to employees at 0.3% and at least 1% of the remainder, respectively.
Individuals eligible for the employee bonuses may include employees of affiliated companies as approved by the board of directors or a
representative of the board of directors;
d. The appropriation of any remaining balance shall be approved by the shareholders.
Dividends may be distributed by way of cash dividend or stock dividend at the discretion of TSMC. As the operation of TSMC is at a
steady growth stage, distribution of profits shall be made preferably by way of cash dividend. Distribution of profits may also be made by
way of stock dividend; provided however, the ratio for stock dividend shall not exceed 50% of total distribution.
Any appropriations of net income are recorded in the financial statements in the year of shareholder approval.
An appropriation for legal reserve is required until the reserve equals the aggregate par value of TSMC's issued capital stock. The reserve
can only be used to offset a deficit or be distributed as a stock dividend up to 50% of the reserve balance when the reserve balance has
reached 50% of the aggregate par value of the issued capital stock of TSMC.
A special reserve equivalent to the net debit balance of the other components of shareholder's equity (for example, unrealized loss on
long-term investments and cumulative translation adjustments, but excluding treasury stock), shall be made from unappropriated earn-
ings pursuant to existing regulations promulgated by the R.O.C. Securities and Futures Bureau (SFB). Any special reserve appropriated
may be reversed to the extent that the net debit balance of the related account reverses.
The appropriations of the earnings of 2003 and 2002 were approved in the shareholders' meeting on May 11, 2004 and June 3, 2003,
respectively. The appropriations and dividend per share are as follows:
Legal reserve
Special reserve
Bonus paid to employees - in cash
Bonus paid to employees - in stock
Preferred stock dividend - in cash
Common stock dividend - in cash
Common stock dividend - in stock
Remuneration to directors and supervisors - in cash
Appropriation of Earnings
Dividend Per Share (NT$)
$
For Fiscal
Year 2003
4,725,870
(68,945)
681,628
2,726,514
184,493
12,159,971
28,373,267
127,805
For Fiscal
Year 2002
For Fiscal
Year 2003
For Fiscal
Year 2002
$ 2,161,029
68,945
-
1,539,013
455,000
-
14,898,309
58,485
$
$
0.35
0.60
1.41
0.35
-
0.80
$ 48,910,603
$ 19,180,781
165
The amount of the above appropriation of earnings for 2003 and 2002 is consistent with the resolution of the meetings of board of
directors on February 17, 2004 and March 4, 2003, respectively. However, the Company Law of the R.O.C. states TSMC, as a holder of
treasury stock shall not participate in the appropriations of earnings. Therefore, the actual cash dividend per share and stock dividend per
share are slightly more than those in the aforementioned resolution. If the above employee bonus paid in stock had been paid in cash
and all of the bonus to employees and remuneration to directors and supervisors had been charged against income for 2003 and 2002,
the after income tax basic earnings per share for the years ended December 31, 2003 and 2002 would have decreased from NT$2.33 to
NT$2.15 and NT$ 1.14 to NT$1.05, respectively. The shares distributed as a bonus to employees represented 1.35% and 0.83% of
TSMC's total outstanding common shares as of December 31, 2003 and 2002, respectively.
As of January 13, 2005, the board of directors of TSMC has not resolved the appropriation for earnings of 2004.
The above information about the appropriations of bonus to employees and remuneration to directors and supervisors is available at
Market Observation System website.
Under the Integrated Income Tax System that became effective on January 1, 1998, the R.O.C. resident shareholders are allowed a tax
credit for their proportionate share of the income tax paid by TSMC on earnings generated since January 1, 1998.
Preferred Stock
TSMC issued 1,300,000 thousand shares of unlisted Series A - preferred stock to certain investors on November 29, 2000. All of the pre-
ferred stock was redeemed at par value and retired on May 29, 2003. Under TSMC's Articles of Incorporation, TSMC is no longer author-
ized to issue preferred stock.
The preferred shareholders had the following rights and the related terms and conditions prior to redemption:
Preferred shareholders
a. Are entitled to receive cumulative cash dividends at an annual rate of 3.5%.
b. Are not entitled to receive any common stock dividends (whether declared out of unappropriated earnings or capital surplus).
c. Have priority over the holders of common shares to the assets of TSMC available for distribution to shareholders upon liquidation or
dissolution; however, the pre-emptive rights to the assets shall not exceed the issue price of the shares.
d. Have voting rights similar to that of the holders of common shares.
e. Have no right to convert their shares into common shares. The preferred shares are to be redeemed within thirty months from their
issuance. The preferred shareholders have the aforementioned rights and TSMC's related obligations remain the same until the pre-
ferred shares are redeemed by TSMC.
17. Stock-Based Compensation Plans
Stock Option Plans
TSMC's Employee Stock Option Plans, the 2003 Plan and the 2002 Plan, were approved on October 29, 2003 and June 25, 2002, respec-
tively. The maximum number of units authorized to be granted under 2003 Plan and the 2002 Plan is 120,000 thousand and 100,000
thousand, respectively, with each unit representing one common share of stock. The option rights may be granted to qualified employees
166
of TSMC or any of its domestic or foreign subsidiaries, in which TSMC's shareholding with voting rights, directly or indirectly, is more than
fifty percent (50%). The option rights of both plans are valid for ten years and exercisable at certain percentages subsequent to the second
anniversary of the grant date. Under the terms of the plans, stock option rights are granted at an exercise price equal to the closing price of
TSMC's common shares listed on the TSE on the date of grant. Under the 2003 Plan and the 2002 Plan, units that were never granted, or
had been granted and subsequently cancelled were expired as of December 31, 2004.
On November 2, 2004, the board of directors of TSMC approved the 2004 Plan, in which the maximum number of units authorized to
be granted is 11,000 thousand, with each unit representing one common share of stock. The option rights may be granted to qualified
employees of TSMC or any of its domestic or foreign subsidiaries, in which TSMC's shareholding with voting rights, directly or indirectly, is
more than fifty percent (50%). The option rights of the plans are valid for ten years and exercisable at certain percentages subsequent to
the second anniversary of the grant date. Under the terms of the plan, stock option rights are granted at an exercise price equal to the
closing price of TSMC's common shares listed on the TSE on the date of grant. The 2004 plan was approved by Bureau of Monetary
Affairs, Financial Supervisory Commission of the R.O.C. on January 6, 2005.
Information on outstanding stock options for the years ended December 31, 2004 and 2003 is as follows:
Year ended December 31, 2004
Beginning outstanding balance
Options granted
Options exercised
Options cancelled
Ending outstanding balance
Year ended December 31, 2003
Beginning outstanding balance
Options granted
Options cancelled
Ending outstanding balance
2003 Plan
2002 Plan
Number of
Outstanding
Stock Option
Rights (in
thousand)
Weighted-
Average
Exercise
Price
(NT$)
Number of
Outstanding
Stock Option
Rights (in
thousand)
Weighted-
Average
Exercise
Prices
(NT$)
842
13,199
-
(1,404)
12,637
-
843
(1)
842
57.8
49.9
-
50.9
-
66.5
66.5
48,515
7,201
(87)
(3,899)
51,730
19,369
32,031
(2,885)
48,515
42.7
42.6
41.8
44.2
48.6
50.3
48.7
The number of outstanding option rights and exercise prices have been adjusted to reflect the appropriations of dividends in accordance
with the plans.
As of December 31, 2004, information on outstanding and exercisable option rights is as follows:
Range of
Exercise
Price (NT$)
$43.8-$57.8
$32.8-$46.2
Options Outstanding
Options Exercisable
Number of
Outstanding
Options (in
thousand)
Weighted-
Average
Remaining
Contractual
Life (Years)
Weighted-
Average
Exercise
Price (NT$)
Number of
Exercisable
Options (in
thousand)
Weighted-
Average
Exercise
Price (NT$)
12,637
51,730
64,367
$
9.34
8.09
8.33
50.3
42.6
44.1
-
10,307
$
10,307
-
41.7
41.7
2003 plan
2002 plan
167
The compensation cost recognized for the year ended December 31, 2004 was zero. Had the Company used the fair value based method
to evaluate the options granted, the method, assumptions and pro forma results of the Company for the year ended December 31, 2004
would have been as follows:
Method:
Assumptions:
Expected dividend yield
Expected volatility
Risk free interest rate
Expected life
Net income:
Net income as reported
Pro forma net income
Earnings per share (EPS) - after income tax:
Basic EPS as reported
Pro forma basic EPS
Diluted EPS as reported
Pro forma diluted EPS
Black-Scholes Model
1.00%
43.77%-46.15%
3.07%-3.85%
5 years
$
92,316,115
92,257,355
NT$
3.97
3.97
3.97
3.97
The estimated weighted average fair value for the options granted during the year ended December 31, 2004 was NT$19.73 per option.
In 1996, WaferTech adopted an Executive Incentive Plan, which was amended in 1997. According to the 1997 amendment, the Board of
Directors of WaferTech approved the Senior Executive Incentive Plan and the Employee Incentive Plan (the WaferTech Plans) under which
officers, key employees and non-employee directors may be granted stock option rights. The WaferTech Plans provide for 15,150 thou-
sand option rights available for grant. For option rights granted to date, the option purchase price was equal to or exceeded the fair mar-
ket value at the date of grant. The options will expire if not exercised at specified dates ranging from May 2006 and June 2011. In
December 2000, WaferTech implemented a Stock Option Buyback Program (Buyback). The Buyback program provides employees with
the right to sell back to WaferTech all vested stock options and outstanding ownership interests granted under the WaferTech Plans. As of
December 31, 2004, the outstanding and exercisable stock options were 134 thousand and 133 thousand, respectively, and US$616
thousand was accrued in connection with the Buyback program.
Stock Appreciation Rights
In December 2000, WaferTech and TSMC - North America implemented a stock appreciation rights program (Appreciation). The
Appreciation plan is designed to provide employees with a long-term incentive plan that tracks the appreciation of TSMC common stock
through Stock Appreciation Rights (SARs). SARs provide each participant the right to receive, upon exercise, an amount in cash from
WaferTech and TSMC - North America that is the excess of the market price of TSMC common stock on TSE on the date of exercise over
the exercise price. As of December 31, 2004, WaferTech and TSMC - North America accrued US$381 thousand and US$1,360 thousand,
respectively, in connection with the Appreciation. During 2002, benefits under the Appreciation plan for TSMC - North America were
replaced by the stock option plans aforementioned.
168
18. Treasury Stock (Common Stock)
Year ended December 31, 2004
Reclassification of parent company stock held by
subsidiaries from long-term investments
Repurchase under share buyback plan
Year ended December 31, 2003
Reclassification of parent company stock held by
subsidiaries from long-term investments
Beginning
Shares
Increase/
Dividend
Decrease
Ending
Shares
(Shares in thousand)
40,597
-
40,597
5,676
124,720
752
124,720
130,396
125,472
45,521
-
45,521
42,001
3,357
4,761
40,597
Proceeds from the sale of treasury stock for the years ended December 31, 2004 and 2003 were NT$39,906 thousand and NT$331,945
thousand, respectively. TSMC's capital stock held by a subsidiary as an investment is recorded as treasury stock, with the holder having
the same rights as other common shareholders. As of December 31, 2004 and 2003, the book value of the treasury stock was
NT$1,595,186 thousand and NT$1,633,228 thousand, respectively; the market value was NT$2,241,009 thousand and NT$2,548,788
thousand, respectively.
TSMC held a special meeting of the board of directors and approved a share buyback plan to repurchase TSMC's common shares listed
on the TSE during the period from March 24, 2004 to May 23, 2004. TSMC repurchased 124,720 thousand common shares for a total
of NT$7,059,798 thousand. All the treasury stock repurchased under the buyback plan was retired on August 16, 2004.
19. Consolidated Earnings Per Share (EPS)
EPS is computed as follows:
Amounts (Numerator)
EPS (NT$)
Income
Before
Income Tax
and Minority
Interest
Number of
Shares
(Denominator)
(in thousand)
Consolidated
Net Income
Income
Before
Income Tax
and Minority
Interest
Consolidated
Net Income
Year ended December 31, 2004
Basic EPS
Income available to common shareholders
Effect of diluted securities - stock options
$ 91,965,587
-
$ 92,316,115
-
23,248,682
6,404
$
3.96
$
3.97
Diluted EPS
Income available to common shareholders
(including effect of diluted potential common
stock)
$ 91,965,587
$ 92,316,115
23,255,086
$
3.95
$
3.97
(Continued)
169
Amounts (Numerator)
EPS (NT$)
Number of
Shares
(Denominator)
(in thousand)
Consolidated
Net Income
Income
Before
Income Tax
and Minority
Interest
Income
Before
Income Tax
and Minority
Interest
Consolidated
Net Income
$ 51,178,645
(184,493)
$ 47,258,700
(184,493)
50,994,152
47,074,207
23,327,354
$
2.19
$
2.02
-
-
9,599
$ 50,994,152
$ 47,074,207
23,336,953
$
2.19
$
2.02
(Concluded)
Year ended December 31, 2003
Net income
Less - preferred stock dividends
Basic EPS
Income available to common shareholders
Effect of diluted potential common stock - stock
options
Diluted EPS
Income available to common shareholders
(including effect of diluted potential common
stock)
20. Related Party Transactions
The significant transactions with related parties in addition to those disclosed in other notes are summarized as follows:
a. Industrial Technology Research Institute (ITRI), the Chairman of TSMC is one it its directors
b. Philips, a major shareholder of TSMC
c. Investees of the TSMC
VIS
SSMC
GUC
VisEra
For the years
Sales
Philips and its affiliates
Others
Purchase
VIS
SSMC
170
2004
2003
Amount
%
Amount
%
$
$
$
$
5,463,565
458,999
5,922,564
9,169,602
5,869,123
15,038,725
2
-
2
21
13
34
$
$
$
$
3,577,054
610,534
4,187,588
4,910,810
5,519,805
10,430,615
2
-
2
15
17
32
(Continued)
Manufacturing expenses - technical assistance fee (Note 22a)
Philips
General and administrative expenses - rental expenses
GUC
Research and development expenses
GUC
Proceeds from disposal of property, plant and equipment
VIS
Non-operating income and gains
SSMC (primarily technical service income, see Note 22e)
VIS (primarily technical service income, see Note 22j)
VisEra
At December 31
Receivables
Philips and its affiliates
Others
Other receivables
SSMC
VIS
VisEra
Payables
VIS
Philips and its affiliates
SSMC
GUC
Other long-term payables
Philips and its affiliates
Refundable deposits
VIS
$
$
$
$
$
$
$
$
$
$
$
$
$
$
2004
2003
Amount
%
Amount
%
907,047
1
$
3,023,741
$
$
$
$
$
$
$
$
$
$
13,186
11,688
33,974
364,505
117,760
28,917
511,182
2
-
2
6
2
-
8
581,487
72,890
89
11
654,377
100
63,701
47,599
30,278
45
34
21
141,578
100
1,533,938
469,494
207,794
6,589
69
21
10
-
3
-
-
9
4
-
-
4
-
-
15,125
201,869
251
-
202,120
895,063
25,381
97
3
920,444
100
13,228
118,503
-
10
90
-
131,731
100
1,034,074
1,579,568
634,647
-
32
49
19
-
2,217,815
100
$
3,248,289
100
2,317,972
100
-
-
$
$
-
150,840
-
76
(Concluded)
The terms of sales to related parties are not significantly different from those to third parties. For other related parties transactions, since
there are no other similar transactions to follow, the prices are determined in accordance with the related contractual agreements.
171
21. Significant Long-Term Operating Leases
TSMC leases land from the Science-Based Industrial Park Administration. These agreements expire on various dates from March 2008 to
December 2020. The agreements can be renewed upon their expiration.
TSMC - North America leases its office premises and certain equipment under non-cancelable operating agreements. TSMC - Europe and
TSMC - Japan entered into lease agreements for their office premises. The leases will expire between 2005 and 2010. The agreements
can be renewed upon their expiration.
As of December 31, 2004, future remaining lease payments are as follows:
Year
2005
2006
2007
2008
2009
2010 and thereafter
Amount
354,259
352,988
340,748
325,563
322,534
1,513,025
3,209,117
$
$
22. Significant Commitments and Contingencies
The significant commitments and contingencies of the Company as of December 31, 2004 are as follows:
a. On June 20, 2004, TSMC and Philips revised the Technical Cooperation Agreement, which was originally signed on May 12, 1997, with
an effective date from January 1, 2004 for five years. Upon expiration, this amended Technical Cooperation Agreement will be termi-
nated at the expiration date and will not be automatically renewed. Under this amended Technical Cooperation Agreement, TSMC will
pay Philips royalties based on fixed amounts mutually agreed-on, rather than under certain percentage of TSMC's annual net sales.
TSMC and Philips also agree to cross license the patents owned by each party. TSMC also obtained through Philips a number of patent
cross licenses.
b. Under a technical cooperation agreement with ITRI, TSMC shall reserve and allocate up to 35% of certain of its production capacity for
use by the Ministry of Economic Affairs (MOEA) or any other party designated by the MOEA.
c. Under several foundry agreements, TSMC shall reserve a portion of its production capacity for certain major customers that have guar-
antee deposits with TSMC. As of December 31, 2004, TSMC had a total of US$12,802 thousand of guarantee deposits.
d. Under a Shareholders Agreement entered into with Philips and EDB Investments Pte Ltd. on March 30, 1999, the parties formed a joint
venture company, SSMC, for the purpose of constructing an integrated circuit foundry in Singapore. As of December 31, 2004, TSMC's
equity interest in SSMC was 32%. TSMC and Philips committed to buy specific percentages of the production capacity of SSMC. If any
party defaults on the commitment and the capacity utilization of SSMC falls below a specific percentage of its total capacity, the
defaulting party is required to compensate SSMC for all related unavoidable costs.
172
e. TSMC provides technical services to SSMC under a Technical Cooperation Agreement (the Agreement) entered into on May 12, 1999.
TSMC receives compensation for such services computed at a specific percentage of net selling price of certain products sold by SSMC.
The Agreement shall remain in force for ten years and may be automatically renewed for successive periods of five years each unless
pre-terminated by either party under certain conditions.
f. Under a Technology Transfer Agreement (TTA) with National Semiconductor Corporation (National) entered into on June 27, 2000,
TSMC shall receive payments for the licensing of certain technology to National. The agreement was to remain in force for ten years
and could be automatically renewed for successive periods of two years thereafter unless either party gives notice for early termination
under certain conditions. In January 2003, TSMC and National entered into a Termination Agreement whereby the TTA was terminated
for convenience. Under the Termination Agreement, TSMC will be relieved of any further obligation to transfer any additional technolo-
gy. In addition, TSMC granted National an option to request the transfer of certain technologies under the same terms and conditions
as the terminated TTA. The option will expire in January 2008.
g. Beginning in 2001, TSMC entered into several licensing arrangements for certain semiconductor patents. The terms of the contracts
range from five to ten years with payments to be made in the form of royalties over the term of the related contracts. TSMC has record-
ed the related amounts as a liability with the corresponding amounts recorded as deferred charges which are amortized and charged to
cost of sales on a straight-line basis over the estimated life of the technology or the term of the contract, whichever is shorter.
h. In November 2002, TSMC entered into an Amended and Restated Joint Technology Cooperation Agreement with Philips, Motorola,
Inc. and STMicroelectronics to jointly develop 90-nm to 65-nm advanced CMOS Logic and e-DRAM technologies. TSMC also agreed to
align 0.12 micron CMOS Logic technology to enhance its foundry business opportunities. TSMC will contribute process technologies
and share a portion of the costs associated with this joint development project.
i. In December 2003, TSMC entered into a Technology Development and License Agreement with Motorola, Inc. to jointly develop 65-nm
SOI (silicon on insulator) technology. TSMC will also license related 90-nm SOI technology from Motorola, Inc. Any intellectual proper-
ties arising out of the co-development project shall be jointly owned by the parties. In accordance with the agreement, TSMC will pay
royalties to Motorola, Inc. and will share a portion of the costs associated with the joint development project.
j. TSMC provides a technology transfer to VIS under a Manufacturing License and Technology Transfer Agreement entered into in August
2004. TSMC receives compensation for such technology transfer in the form of royalty payments from VIS computed at specific per-
centages of net selling price of certain products sold by VIS. VIS agreed to reserve its certain capacity to manufacture for TSMC certain
products at prior as agreed by the parties.
k. Under an agreement signed with a certain company, TSMC - Shanghai has the obligation to purchase certain assets within a specified
period at the price agreed upon by both parties. TSMC - Shanghai will compensate the other party in case of a breach of the agreement.
173
l. Amounts available under unused letters of credit as of December 31, 2004 were NT$6,480 thousand, US$1,282 thousand and SG$85
thousand. Among the unused letters of credit, TSMC - North America has an outstanding irrevocable standby letter of credit for
US$1,078 thousand. The standby letter of credit was entered into as security to the landlord of TSMC - North America's office spaces
in San Jose, California. The standby letter of credit will expire in October, 2005.
m. The Company filed a series of lawsuits in late 2003 and 2004 in both state and federal courts in California and with the U.S.
International Trade Commission against Semiconductor Manufacturing International Corporation ("SMIC"), SMIC (Shanghai), and SMIC
Americas. The lawsuits alleged that SMIC companies infringed multiple patents of the Company and misappropriated the Company's
trade secrets. These suits have been settled out of court on January 30, 2005. As part of the agreement, SMIC will pay TSMC US$175
million over six years to resolve the Company's patent infringement and trade secret claims.
23. Additional Disclosures
Following are the additional disclosures required by the SFB for the Company and its investees:
a. Financing provided: Please see Table 1 attached;
b. Endorsement/guarantee provided: Please see Table 2 attached;
c. Marketable securities held: Please see Table 3 attached;
d. Marketable securities acquired and disposed of at costs or prices of at least NT$100 million or 20% of the paid-in capital: Please see
Table 4 attached;
e. Acquisition of individual real estate properties at costs of at least NT$100 million or 20% of the paid-in capital: Please see Table 5
attached;
f. Disposal of individual real estate properties at prices of at least NT$100 million or 20% of the paid-in capital: None;
g. Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the capital: Please see Table 6
attached;
h. Receivable from related parties amounting to at least NT$100 million or 20% of the paid-in capital: Please see Table 7 attached;
i. Names, locations, and related information of investees of which the Company exercises significant influence: Please see Table 8
attached;
174
j. Financial instrument transactions:
1) Derivative financial instruments
The Company entered into derivative financial instrument transactions for the years ended December 31, 2004 and 2003 to manage
exposures related to foreign exchange rate and interest rate fluctuations. Certain information on these contracts is as follows:
a) Outstanding forward exchange contracts as of December 31, 2004 and 2003 are as follows:
Financial Instruments
Currency
Maturity Date
2004
Sell
Sell
2003
Sell
Buy
Buy
US$/NT$
US$/EUR
January 2005 to March 2005
January 2005
US$/NT$
EUR/US$
JPY/US$
January 2004 to July 2004
January 2004
January 2004
Contract Amount
(in thousand)
US$
US$
US$
EUR
JPY
733,000
159,081
1,805,000
7,500
748,405
As of December 31, 2004 and 2003, receivables from forward exchange contracts (included in the "other financial assets"
account) aggregate to approximately NT$392,534 thousand, and NT$76,385 thousand, respectively; payables from forward
exchange contracts (included in the "other current liabilities" account) aggregate to approximately NT$559 thousand and
NT$174,018 thousand, respectively.
b) Cross currency swaps
Outstanding cross currency swap contracts as of December 31, 2004 are as follows:
Maturity Date
Contract Amount
(in thousand)
Range of Interest
Rate Paid
Range of Interest
Rate Received
January 2005 to June 2005
US$
1,420,000
1.28%-2.72%
0.49%-1.17%
As of December 31, 2004, receivables from the cross currency swap contracts (included in the "other financial assets" account)
were approximately NT$761,030 thousand.
Net exchange gain or loss arising from forward exchange contracts and cross currency swap contracts was recognized in the "for-
eign exchange loss, net" account and the difference in interest was recorded in interest income or expense.
175
c) Interest rate swaps
Outstanding contracts as of December 31, 2004 and 2003 were as follows:
Contract Date
Period
2004
September 2003
October 2003
October 2003
October 2003
October 2003
November 2003
2003
September 2003
October 2003
October 2003
October 2003
October 2003
November 2003
July 1999
d) Option contracts
September 2003 to December 2005
October 2003 to December 2005
October 2003 to December 2005
October 2003 to December 2005
October 2003 to December 2005
November 2003 to December 2005
September 2003 to December 2005
October 2003 to December 2005
October 2003 to December 2005
October 2003 to December 2005
October 2003 to December 2005
November 2003 to December 2005
July 1999 to June 2004
Contract Amount
(in thousand)
$
US$
500,000
500,000
500,000
500,000
500,000
500,000
500,000
500,000
500,000
500,000
500,000
500,000
2,857
During 2004, the Company did not enter into any foreign currency option contracts.
There were no outstanding option contracts as of December 31, 2003. The Company entered into foreign currency option con-
tracts for hedging purposes; therefore, the related premiums and the foreign exchange gain or loss are recognized in the "foreign
exchange loss, net" account.
e) Transaction risk
i) Credit risk. Credit risk represents the positive net settlement amount of those contracts with positive fair values at the balance
sheet date. The positive net settlement amount represents the loss incurred by the Company if the counter-parties breached the
contracts. The banks, which are the counter-parties to the foregoing derivative financial instruments, are reputable financial
institutions. Management believes its exposure related to the potential default by those counter-parties is low.
ii) Market price risk. All derivative financial instruments are intended as hedges for fluctuations in foreign exchange rates and inter-
est rates. Gains or losses from these hedging instruments are likely to be offset by gains or losses from the hedged items.
Interest rate risks are also controlled as the expected cost of capital is fixed. Thus, market price risks are believed to be low.
176
iii) Cash flow risk and the amount and period of future cash needs.
As of December 31, 2004, the Company's future cash needs for outstanding forward exchange contracts and cross currency
swap contracts are as follows:
Term
Within one year
Inflow
(in thousand)
$
EUR
69,761,484
118,500
Outflow
(in thousand)
US$
2,312,081
The Company has sufficient operating capital to meet the above cash needs. In addition, there will be corresponding cash inflow
for the cash outflow. Therefore, the cash flow risk is low.
2) Fair values of financial instruments were as follows:
2004
2003
Carrying
Amount
Fair Value
Carrying
Amount
Fair Value
Non-derivative financial instruments
Assets
Short-term investments, net
Long-term investments (securities with market price)
$ 54,107,951
31,165,721
$ 54,990,545
34,265,072
$ 13,611,536
4,103,926
$ 14,054,511
10,976,671
Liabilities
Bonds payable (including current portion)
30,000,000
30,607,341
35,000,000
35,850,377
Derivative financial instruments
Forward exchange contracts (buy)
Forward exchange contracts (sell)
Cross currency swap contracts
Interest rate swap contracts
-
391,975
761,030
4,361
-
317,090
760,012
(22,714)
2,351
(99,984)
-
-
3,037
40,638
-
2,093
The above financial instruments do not include cash and cash equivalents, receivables, other financial assets, payables, and payable
to contractors and equipment suppliers. The carrying amounts of the aforementioned instruments reported in the balance sheet
approximate their fair values.
The above financial instruments also exclude refundable deposits, guarantee deposits, long-term investments that do not have quot-
ed market prices as well as other long-term payables. The future cash inflow and outflow of the deposits approximate their fair val-
ues. Some of long-term investments do not have quoted market prices; therefore, fair values for those long-term investments are not
shown above. The fair value of other long-term payables is determined using the discounted value of expected cash flows, which
approximates the carrying value.
177
Fair values of financial instruments were determined as follows:
a) Fair value of short-term and publicly traded long-term investments is based on quoted market prices.
b) The fair value of bonds payable is the quoted market value.
c) Fair value of derivative financial instruments is the amount receivable from or payable to the counter-party if the contracts were
terminated on the balance sheet date.
k. Information on investment in Mainland China
1) The name of the investee company in mainland China, the main businesses and products, its issued capital, method of investment,
information on inflow or outflow of capital, ratio of ownership, equity in the net gain or net loss, ending balance, amount received
as earnings distributions from the investment, and the limitation on investment: Please see Table 9 attached.
2) Significant direct or indirect transactions with the investee company, its prices and terms of payment, unrealized gain or loss, and
other related information which is helpful to understand the impact of investment in mainland China on financial reports: Please
see Note 20.
24. Segment Financial Information
a. Geographic information:
2004
Sales to unaffiliated customers
Transfers between geographic areas
Overseas
Taiwan
Adjustments
and
Elimination
Consolidated
$ 143,801,130
15,657,797
$ 113,411,488
142,580,939
$
-
(158,238,736)
$ 257,212,618
-
Total sales
$ 159,458,927
$ 255,992,427
$(158,238,736)
$ 257,212,618
Gross profit
Operating expenses
Non-operating income and gains
Non-operating expenses and losses
Income before income tax and minority interest
Minority interest in income of subsidiaries
Identifiable assets
Long-term investments
Total assets
$
6,173,780
$ 110,160,584
$
(515,181)
$ 89,000,906
$ 416,076,665
$ (43,725,329)
$ 115,819,183
(27,337,509)
6,090,224
(2,606,311)
$ 91,965,587
$ 12,898
$ 461,352,242
38,101,849
$ 499,454,091
(Continued)
178
2003
Sales to unaffiliated customers
Transfers between geographic areas
Overseas
Taiwan
Adjustments
and
Elimination
Consolidated
$ 118,851,382
11,494,868
$ 84,145,430
117,758,911
$
-
(129,253,779)
$ 202,996,812
-
Total sales
$ 130,346,250
$ 201,904,341
$(129,253,779)
$ 202,996,812
Gross profit
Operating expenses
Non-operating income and gains
Non-operating expenses and losses
Income before income tax and minority interest
Minority interest in loss of subsidiaries
Identifiable assets
Long-term investments
Total assets
b. Gross export sales
$
2,392,944
$ 72,891,637
$ (401,103)
$ 52,276,269
$ 358,451,509
$ (14,075,261)
$ 74,883,478
(23,582,897)
5,669,312
(5,791,248)
$ 51,178,645
$
3,012
$ 396,652,517
10,748,014
$ 407,400,531
(Concluded)
The export sales information is determined based on billed regions. Gross export sales for the years ended December 31, 2004 and
2003 were NT$92,455,415 thousand and NT$59,868,104 thousand, respectively. There were no export sales to a region that account-
ed for more than 10% of the Company's total sales.
c. Major customer
In 2004, there is no customer accounted for at least 10% of the Company's total sales. The Company only has one customer that
accounts for at least 10% of its total sales in 2003. The sales to such customer amounted to $21,893,320 thousand and $31,220,104
thousand in 2004 and 2003, representing 8% and 15% of its total sales, respectively.
179
TABLE 1
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD. AND SUBSIDIARIES
FINANCING PROVIDED
FOR THE YEAR ENDED DECEMBER 31, 2004
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
No.
Financing Name
Counter-party
Financial Statement Account
1
TSMC International
TSMC Development
Other receivables
TSMC Technology
Other receivables
2
TSMC Partners
TSMC Development
Other receivables
Maximum Balance for
the Period
(US$ in thousand)
Ending Balance
(US$ in thousand)
$
(US$
(US$
(US$
1,915,020
60,000)
$
(US$
319,170
10,000)
1,915,020
60,000)
-
2,553,360
80,000)
(US$
2,553,360
80,000)
Note 1: The No. 2 represents necessary for short-term financing.
Note 2: Not exceeding the issued capital of the Company.
Note 3: Generally not exceeding the issued capital of the Company, unless approved by all members of the board.
TABLE 2
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD. AND SUBSIDIARIES
ENDORSEMENT/GUARANTEE PROVIDED
FOR THE YEAR ENDED DECEMBER 31, 2004
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
No.
Endorsement/
Guarantee Provider
Name
Nature of Relationship
(Note 2)
Limits on Each Counter-party's Endorsement/
Guarantee Amounts
Counter-party
0
The Company
TSMC Development
TSMC - North America
WaferTech
Not exceed 10% of the net worth of the Company, and also
limiting to the total capital issued of the endorsement /
guarantee company, unless otherwise approved by Board
of Directors.
3
2
3
Note 1: 25% of the net worth of the Company as of December 31, 2004.
Note 2: The No. 2 represents a subsidiary in which the Company holds directly over 50% of the equity interest.
The No. 3 represents an investee in which the Company holds directly and indirectly over 50% of the equity interest.
180
Interest Rate
Type of Financing
(Note 1)
Transaction
Amounts
Reasons for
Short-term
Financing
Allowance for
Bad Debt
1.50%
-
1.50%
$
2
-
2
-
-
-
Operating capital
$
-
Operating capital
-
-
-
Collateral
Item
Value
Financing Limit
for Each
Borrowing
Company
Financing
Company's
Financing Amount
Limits (US$ in
thousand)
$
-
-
-
-
-
-
N/A
$ 31,532,982
(US$ 987,968)
(Note 2)
N/A
(Note 3)
Maximum Balance for the Year
(US$ in thousand)
Ending Balance
(US$ in thousand)
Value of Collateral Property,
Plant and Equipment
Ratio of Accumulated Amount of
Collateral to Net Equity of the
Latest Financial Statement
Maximum Collateral/Guarantee
Amounts Allowable
(Note 1)
$
(US$
(US$
(US$
1,915,020
60,000)
1,276,680
40,000)
14,043,480
440,000)
$
$
(US$
(US$
1,915,020
60,000)
1,276,680
40,000)
-
-
-
-
$ 99,741,325
0.48%
0.32%
-
181
TABLE 3
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD. AND SUBSIDIARIES
MARKETABLE SECURITIES HELD
DECEMBER 31, 2004
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
Held Company Name
Marketable Securities Type and Name
Relationship with the
Company
Financial Statement
Account
The Company
Government bonds
2003 Government Bond Series A
United States Treas NTS
2003 Government Bond Series I
2004 Government Bond Series A
2004 Government Bond Series E
2004 Kaohsiung Municipal Bond Series A
Bonds under repurchase agreement
Bond funds
JF Taiwan Bond Fund
ABN AMRO Bond Fund
JF Taiwan First Bond Fund
INVESCO R.O.C. Bond A Fund
Dresdner Bond DAM Fund
Barits Bond Fund
Shinkong Chi Shin Bond Fund
ABN AMRO Select Bond Fund
NITC Bond Fund
HSBC NTD Money Management Fund
Stock
Taiwan Mask Corp.
TSMC International
VIS
TSMC Partners
SSMC
TSMC - North America
GUC
TSMC - Japan
VisEra
TSMC - Europe
United Industrial Gases Co., Ltd.
Shin-Etsu Handotai Taiwan Co., Ltd.
W.K. Technology Fund IV
Hontung Venture Capital Co., Ltd.
Globaltop Partner I Venture Capital Corp.
Corporate bonds
Taiwan Power Company
Abbott Labs
Abbott Labs
Ace Ltd
AIG Sunamerica Global Fing IX
Allstate Finl Global Fdg LLC
American Express Co.
American Gen Fin Corp.
American Gen Fin Corp. Mtn
American Gen Fin Corp. Mtn
American Honda Fin Corp. Mtn
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Subsidiary
Investee
Subsidiary
Investee
Subsidiary
Investee
Subsidiary
Investee
Subsidiary
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Short-term investment
Short-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
182
December 31, 2004
Shares/Units
(in thousand)
Carrying Value
(US$ in thousand)
Percentage of
Ownership
Market Value or
Net Asset Value
(US$ in thousand)
Note
-
-
-
-
-
-
-
78,698
134,906
84,886
76,705
80,833
76,640
151,594
18,235
3,764
41,568
1,787
987,968
409,532
300
382
11,000
39,040
6
5,100
-
16,783
10,500
5,000
8,392
5,000
-
-
-
-
-
-
-
-
-
-
-
$
US$
1,207,409
192,357
3,397,081
2,349,573
3,893,827
620,000
249,449
1,153,209
1,956,175
1,151,463
1,101,911
900,000
900,000
2,100,000
200,000
600,000
600,000
6,528
23,778,997
5,401,982
3,908,356
3,290,888
502,242
391,626
102,572
59,116
25,439
193,584
105,000
50,000
83,916
50,000
2,777,798
2,732
1,581
1,046
1,032
3,171
3,550
1,768
3,130
1,058
3,800
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
-
100
28
100
32
100
47
100
25
100
10
7
2
10
1
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
$
US$
1,202,028
191,824
3,393,982
2,352,973
3,892,025
620,000
251,593
1,169,406
1,978,785
1,162,632
1,111,932
910,904
907,765
2,115,554
201,183
602,703
601,958
27,552
23,778,997
8,493,692
3,908,356
3,290,888
1,179,352
418,272
102,572
59,116
25,439
284,036
170,940
55,146
53,571
49,909
2,749,413
2,709
1,587
1,042
1,028
3,096
3,503
1,765
3,087
1,042
3,803
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
Treasury stock of NT$677,110
thousand is deducted from the car-
rying value.
(Continued)
183
Held Company Name
Marketable Securities Type and Name
Relationship with the
Company
Financial Statement
Account
American Intl Group Inc. Mtnf
Amgen Inc.
Amsouth Bk Birmingham Ala
ANZ Cap Tr I
Bank New York Inc.
Bank New York Inc.
Bank Scotland Treas Svcs PLC
Bank Utd Houston TX Mtbn
Bear Stearns Cos Inc.
Bear Stearns Cos Inc. Medium Te
Berkshire Hathaway Fin Corp.
Bristol Myers Squibb Co.
British Telecommunications PLC
Cargill Inc.
Chase Manhattan Corp. New
Cit Group Hldgs Inc.
Citigroup Inc.
Citigroup Inc.
Citigroup Inc.
Colonial Pipeline Co.
Compaq Computer Corp.
Consolidated Edison Co. NY Inc.
Corestates Cap Corp.
Countrywide Fdg Corp. Mtn
Countrywide Home Lns Inc.
Credit Suisse Fb USA Inc.
Credit Suisse First Boston
Credit Suisse First Boston USA
Daimlerchrysler North Amer
Daimlerchrysler North Amer Hld
Dell Computer Corp.
Den Danske BK Aktieselskab
Deutsche Telkom Intl Fin BV
Diageo PLC
Dow Chem Co.
European Invt Bk
Fifth Third Bk Cincinnati OH
First Data Corp.
First Un Corp.
Fleet Finl Group Inc. New
Fleet Finl Corp Inc. New
Ford Mtr Cr Co.
FPL Group Cap Inc.
FPL Group Cap Inc.
General Elec Cap Corp. Mtn
General Elec Cap Corp. Mtn
General Elec Cap Corp. Mtn
Genworth Finl Inc.
Goldman Sachs Group Inc. Mtn
Goldman Sachs Group LP
Goldman Sachs Group LP
Greenpoint Finl Corp.
GTE Corp.
Hancock John Global Fdg Mtn
Hartford Finl Svcs Group Inc.
Hartford Finl Svcs Group Inc.
Heller Finl Inc.
Hershey Foods Corp.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
184
December 31, 2004
Shares/Units
(in thousand)
Carrying Value
(US$ in thousand)
Percentage of
Ownership
Market Value or
Net Asset Value
(US$ in thousand)
Note
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
3,795
3,005
1,972
1,012
1,525
3,945
2,715
580
3,518
3,105
1,498
3,819
2,104
2,120
1,628
3,203
2,000
1,033
3,583
1,625
3,719
3,687
1,062
2,158
5,210
2,645
786
2,249
997
749
3,054
2,192
1,852
3,459
921
8,315
2,419
3,013
970
494
975
1,542
1,001
860
3,467
1,040
3,886
3,412
3,505
1,637
1,100
974
2,134
1,003
765
296
1,171
1,627
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
3,795
2,991
1,978
1,001
1,509
3,943
2,717
574
3,493
3,105
1,494
3,788
2,091
2,079
1,613
3,195
2,002
1,033
3,523
1,612
3,593
3,618
1,060
2,151
5,157
2,599
779
2,240
999
755
3,025
2,166
1,838
3,477
911
8,236
2,466
2,986
965
493
962
1,535
990
846
3,455
1,040
3,878
3,408
3,494
1,599
1,075
972
2,109
986
758
296
1,163
1,606
(Continued)
185
Held Company Name
Marketable Securities Type and Name
Relationship with the
Company
Financial Statement
Account
Hewlett Packard Co.
Honeywell Inc.
Household Fin Corp.
Household Fin Corp.
Household Fin Corp. Mtn Bk Ent
HSBC USA Inc. New
Huntington Natl Bk
Huntington Natl Bk Columbus OH
ING Bank
ING Sec Life Ins Ingslf
Intl Bk For Recon + Dev
JP Morgan Chase + Co.
Jackson Natl Life Global Fdg
Jackson Natl Life Global Fdg S
JP Morgan Chase + Co.
Keycorp Mtn Book Entry
KFW Intl Fin Inc.
Kraft Foods Inc.
Kraft Foods Inc.
Lehman Brothers Hldgs Inc.
Lehman Brothers Hldgs Inc.
Lehman Brothers Hldgs Inc.
Lilly Eli + Co.
Lincoln Natl Corp. In
Merita Bk Ltd NY Brh
Merrill Lynch + Co. Inc.
Metropolitan Life Global Mtn
Monumental Global Fdg II
Monumental Global Fdg II
Monumental Global Fdg II 2002A
Morgan Stanley
Morgan Stanley Group Inc.
Morgan Stanley Group Inc.
National Westminster Bk PLC
Nationsbank Corp.
Nationwide Bldg Soc
Nationwide Life Global Mtn
Pepsico Inc. Mtn Book Entry
PNC Fdg Corp.
Popular North Amer Inc. Mtn
Premark Intl Inc.
Pricoa Global Fdg I Mtn
Pricoa Global Fdg I Mtn
Principal Life Global Fdg I Gl
Protective Life Secd Trs
Prudential Ins Co. Amer
Reinsurance Group Amer Inc.
Royal Bk Scotland Group PLC
Royal Bk Scotland Group PLC
Royal Bk Scotland Group PLC
Safeco Corp.
Salomon Smith Barney Hldgs Inc.
Sara Lee Corp.
SBC Communications Inc.
SBC Communications Inc.
Scotland Intl Fin B V 144A
Shell Finance (UK) PLC
SLM Corp.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
186
December 31, 2004
Shares/Units
(in thousand)
Carrying Value
(US$ in thousand)
Percentage of
Ownership
Market Value or
Net Asset Value
(US$ in thousand)
Note
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
3,373
3,284
529
2,993
3,542
1,154
3,003
2,954
2,114
3,012
5,232
1,043
1,036
2,998
3,663
3,500
5,104
773
1,037
1,163
3,705
2,171
3,750
519
538
3,486
1,907
2,500
1,534
1,045
2,136
3,638
1,050
1,433
3,644
3,457
1,463
3,818
1,080
3,042
2,954
3,507
3,050
3,168
2,920
2,648
2,091
1,563
564
369
765
3,160
1,596
3,681
2,251
1,533
3,604
500
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
3,305
3,218
522
2,985
3,510
1,134
3,000
2,961
2,113
3,007
5,102
1,039
1,032
2,988
3,629
3,502
5,027
765
1,036
1,162
3,634
2,154
3,749
518
533
3,481
1,910
2,501
1,516
1,034
2,128
3,628
1,048
1,422
3,549
3,477
1,469
3,817
1,075
3,022
2,914
3,503
3,047
3,102
2,969
2,610
2,089
1,547
558
364
763
3,100
1,601
3,617
2,245
1,532
3,553
501
(Continued)
187
Held Company Name
Marketable Securities Type and Name
Relationship with the
Company
Financial Statement
Account
SLM Corp. Medium Term Nts
SP Powerassets Ltd Global
Suntrust Bks Inc.
Swedbank Sparbanken Svenge AB
TIAA Global Mkts Inc.
Tribune Co. Med Trm Nts
Union Planters
Unitedhealth Group Inc.
US Bk Natl Assn Cincinnati OH
Virginia Elec + Pwr Co.
Vodafone Group PLC New
Wachovia Corp.
Wal Mart Cda Venture Corp.
Washington Mut Fin Corp.
Washington Mut Inc.
Washington Post Co.
Wells Fargo + Co. New
Westfield Cap Corp. Ltd
China Steel Corporation
Taiwan Power Company
Nan Ya Plastics Corporation
Formosa Plastics Corporation
Formosa Petrochemical Corporation
Agency bonds
Fed Hm Ln Pc
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Mtg Corp
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp. Mtn
Federal Home Loan Mtg Assn
Federal Home Loan Mtg Corp.
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn Mtn
Federal Natl Mtg Assn Mtn
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
188
December 31, 2004
Shares/Units
(in thousand)
Carrying Value
(US$ in thousand)
Percentage of
Ownership
Market Value or
Net Asset Value
(US$ in thousand)
Note
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
2,950
991
1,062
1,084
519
2,943
2,755
3,119
2,669
2,884
2,559
3,720
3,670
4,768
4,735
3,182
3,697
1,999
2,978,804
915,276
407,526
405,485
202,595
3,466
2,532
1,042
4,927
7,962
7,014
4,936
4,948
2,454
7,018
4,996
7,042
6,098
2,909
13,953
13,983
13,981
6,978
3,388
4,953
9,997
998
4,933
4,930
4,847
4,903
5,270
6,940
6,903
4,981
6,997
15,787
7,000
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
2,985
992
1,060
1,067
514
2,965
2,704
3,097
2,687
2,838
2,561
3,600
3,602
4,689
4,682
3,180
3,631
1,999
2,977,695
914,582
407,484
405,322
200,000
3,462
2,520
1,024
4,947
7,939
6,924
4,949
4,944
2,468
7,004
4,973
6,985
6,084
2,907
13,898
13,946
13,946
6,928
3,419
4,941
9,943
993
4,936
4,938
4,891
4,943
5,237
6,937
6,917
4,953
6,983
15,798
6,976
(Continued)
189
Held Company Name
Marketable Securities Type and Name
Relationship with the
Company
Financial Statement
Account
Freddie Mac
Fed Hm Ln Pc Pool E89857
Fed Hm Ln Pc Pool G11295
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn Gtd
FNMA Pool 685116
FNMA Pool 725095
FNMA Pool 790828
FNMA Pool 793932
FNMA Pool 794040
FNMA Pool 795548
FNMA Pool 806642
GNMA II Pool 081150
GNMA II Pool 081153
Government Natl Mtg Assn
Corporate issued asset-backed securities
Aegis Asset Backed Secs Tr
Aesop Fed II LLC
Aesop Fed II LLC
American Express Cr Account Ma
American Home Mtg Invt Tr
Americredit Automobile Receiv
Americredit Automobile Rec Tr
Americredit Automobile Rec Tr
Americredit Automobile Receivb
Atlantic City Elc Trns Fdg LLC
Banc Amer Coml Mtg Inc.
Banc Amer Mtg Secs Inc.
Bank of Amer Lease Equip Tr
Bear Stearns Alt A Tr
Bear Stearns Asset Backed Secs
BMW Veh Owner Tr
California Infr + Economic Dev
California Infras + Economic
California Infrastructure Dev
Capital Auto Receivables Asset
Capital One Auto Fin Tr
Capital One Auto Fin Tr
Capital One Auto Fin Tr
Capital One Multi Asset Execut
Caterpillar Finl Asset Tr
Centex Home Equity Ln Tr
Cit Equip Coll Tr
Citibank Cr Card Issuance Tr
Citicorp Mtg Secs
CNH Equip Tr
Comm 2004 Htl 1
Credit Suisse First Boston Mtg
CWABS Inc.
CWABS Inc.
CWABS Inc.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
190
December 31, 2004
Shares/Units
(in thousand)
Carrying Value
(US$ in thousand)
Percentage of
Ownership
Market Value or
Net Asset Value
(US$ in thousand)
Note
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
4,929
2,535
2,277
6,096
4,435
3,558
3,645
4,242
2,141
4,765
3,486
1,003
2,008
4,807
994
1,021
977
2,006
999
3,789
1,734
2,000
4,955
1,912
3,445
949
2,002
1,055
2,000
4,949
926
5,364
4,030
4,023
1,478
2,000
4,978
4,298
6,126
5,089
4,018
319
1,147
3,000
4,957
10,008
3,500
4,999
4,959
2,364
5,000
4,600
4,209
1,647
1,903
1,907
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
4,934
2,531
2,273
6,075
4,440
3,539
3,615
4,188
2,126
4,719
3,446
1,002
2,003
4,773
994
1,020
975
2,004
997
3,766
1,700
2,004
4,963
1,888
3,427
949
1,998
1,048
1,990
4,912
923
5,315
4,006
3,995
1,489
2,000
4,941
4,230
6,064
5,035
3,992
318
1,145
2,989
4,977
9,923
3,493
4,991
4,965
2,363
4,952
4,607
4,178
1,662
1,907
1,912
(Continued)
191
Held Company Name
Marketable Securities Type and Name
Relationship with the
Company
Financial Statement
Account
CWABS Inc.
CWABS Inc.
CWABS Inc.
CWALT Inc.
CWABS Inc.
CWABS Inc.
Daimlerchrysler Auto Tr
Daimlerchrysler Auto Tr
Daimlerchrysler Auto Tr
Detroit Edison Securitization
Fifth Third Auto Tr
Finance Amer Mtg Ln Tr
First Franklin Mtg Ln Tr
First Horizon Abs Tr
First Union Lehman Bros Mtg Tr
First USA Credit Cr Master Tr
Ford Cr Auto Owner Tr
Granite Mtgs PLC
GS Auto Ln Tr
GS Mtg Secs Corp.
Harley Davidson Motorcycle Tr
Harley Davidson Motorcycle Tr
Holmes Fing No 8 PLC
Honda Auto Receivables
Household Automotive Tr
Hyundai Auto Receivables Tr
IMPAC Cmb Tr
IMPAC Cmb Tr
IMPAC Secd Assets Corp.
Long Beach Accep Auto Receivab
Merrill Lynch Mtg Invs Inc.
Merrill Lynch Mtg Invs Inc.
Monumentl Global Fdg II
National City Auto Receivables
Navistar finl 2003 A Owner Tr
Nissan Auto Receivables
Nissan Auto Receivables Own Tr
Nissan Auto Receivables Owner
ONYX Accep Owner Tr
ONYX Accep Owner Tr
Providian Gateway Owner Tr
Providian Gateway Owner Tr
Reliant Energy Transition Bd
Residential Asset Mtg Prods
Residential Asset Mtg Prods
Residential Fdg Mtg Secs I Inc.
Sequoia Mtg Tr
Sequoia Mtg Tr
Sequoia Mtg Tr
Sequoia Mtg Tr
Sequoia Mtg Tr
Structured Adj Rate Mtg Ln Tr
Structured Asset Secs Corp.
Thoornburg Mtg Secs Tr
Toyota Auto Receivables 2003B
Triad Auto Receivables Tr
TXU Elec Delivery Transition
USAA Auto Owner Tr
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
192
December 31, 2004
Shares/Units
(in thousand)
Carrying Value
(US$ in thousand)
Percentage of
Ownership
Market Value or
Net Asset Value
(US$ in thousand)
Note
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
2,000
5,000
3,500
4,292
2,317
4,040
4,991
4,982
4,897
674
3,000
985
2,002
2,000
3,567
5,011
10,999
5,000
2,948
2,944
3,417
5,999
5,001
5,000
513
3,500
1,414
988
3,570
2,526
1,460
1,500
1,000
1,206
4,928
7,000
4,999
4,853
963
4,913
4,204
3,992
5,185
3,731
3,000
3,659
2,504
1,960
1,488
2,000
3,500
3,037
1,403
1,921
4,970
5,042
7,736
4,000
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
1,997
5,055
3,541
4,277
2,298
4,040
4,970
4,970
4,893
671
2,999
986
2,006
2,000
3,534
5,008
10,936
5,000
2,970
2,944
3,400
5,938
5,052
4,991
511
3,468
1,413
988
3,566
2,502
1,460
1,502
1,001
1,207
4,889
6,958
4,993
4,872
961
4,933
4,201
3,982
5,117
3,672
2,980
3,631
2,513
1,955
1,486
2,000
3,500
3,031
1,394
1,923
4,930
4,997
7,715
3,991
(Continued)
193
Held Company Name
Marketable Securities Type and Name
Relationship with the
Company
Financial Statement
Account
Wachovia Auto Owner Tr
Wachovia Auto Owner Tr
WFS Financial Owner Trust
WFS Finl 2004 2 Owner Tr
WFS Finl 2004 4 Owner Tr
Whole Auto Ln Tr
Whole Auto Ln Tr
Whole Auto Ln Tr
World Omni Auto Receivables Tr
Commercial papers
Corporate issued notes
Money market funds
Equity
Horizon Venture Fund I, L.P.
Crimson Asia Capital Ltd., L.P.
-
-
-
-
-
-
-
-
-
-
-
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Long-term investment
Long-term investment
TSMC - North America
TSMC stock
Parent company
Short-term investment
Chi Cherng
Hsin Ruey
TSMC International
TSMC stock
TSMC stock
Money market fund
BOA Fund
Stock
InveStar
InveStar II
TSMC Development
TSMC Technology
3DFX Interactive Inc.
TSMC Development
WaferTech stock
Parent company
Short-term investment
Parent company
Short-term investment
-
Short-term investment
Subsidiary
Subsidiary
Subsidiary
Subsidiary
-
Subsidiary
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
InveStar
Common stock
RichTek Technology Corp.
Advanced Power Electronics Corp.
Broadtek Electronics Corp.
Monolithic Power Systems, Inc.
SiRF Technology Holdings, Inc.
Broadtek Electronics Corp.
Programmable Microelectronics (Taiwan), Corp.
Global Testing Corp.
RichTek Technology Corp.
Signia Technologies, Inc.
Incentia Design Systems, Inc.
Advanced Power Electronics Corp.
Capella Microsystems (Taiwan), Inc.
Preferred stock
Integrated Memory Logic, Inc.
Sensory, Inc.
Sonics, Inc.
NanoAmp Solutions, Inc.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
194
December 31, 2004
Shares/Units
(in thousand)
Carrying Value
(US$ in thousand)
Percentage of
Ownership
Market Value or
Net Asset Value
(US$ in thousand)
Note
-
-
-
-
-
-
-
-
-
-
-
-
-
-
14,151
15,670
15,700
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
6,000
4,999
5,008
4,994
5,399
5,967
4,000
3,000
5,963
2,997
1,999
US$
21,114
246,485
43,649
677,110
458,564
459,512
30,300
US$
30,300
24,320
51,300
1
1
68
US$
US$
US$
US$
34,514
34,534
603,993
5,544
-
-
US$
484,060
682
1,108
869
1,975
90
145
575
13,268
842
701
365
1,123
530
1,831
1,404
2,686
541
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
67
502
275
1,567
393
46
208
5,670
83
202
92
508
154
1,221
125
3,530
853
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
-
-
-
N/A
97
97
100
100
-
99
-
-
-
-
-
-
1
9
1
3
1
2
4
12
6
4
2
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
5,991
4,995
4,989
4,992
5,342
5,966
3,969
2,964
5,906
2,997
1,999
US$
21,114
246,485
43,649
696,661
771,451
772,897
US$
30,300
US$
US$
US$
US$
34,514
34,534
603,993
5,544
-
US$
484,060
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
1,370
697
225
19,910
1,157
38
208
5,670
1,692
202
92
706
154
1,221
125
3,530
853
(Continued)
195
Held Company Name
Marketable Securities Type and Name
Relationship with the
Company
Financial Statement
Account
InveStar II
Emerging Alliance
Memsic, Inc.
Reflectivity, Inc.
IP Unity
Tropian, Inc.
Common stock
RichTek Technology Corp.
Monolithic Power Systems, Inc.
eChannel Option Holding, Inc.
eLCOS Microdisplay Technology, Ltd.
Signia Technologies, Inc.
Procoat Technology, Inc.
RichTek Technology Corp.
Programmable Microelectronics (Taiwan), Inc.
Auden Technology MFG. Co., Ltd.
GeoVision, Inc.
EoNex Technologies, Inc.
Conwise Technology Corporation, Ltd.
EON Technology, Corp.
Goyatek Technology, Corp.
Trendchip Technologies Corp.
Ralink Technology (Taiwan), Inc.
Silicon Data International Co., Inc.
Capella Microsystems (Taiwan), Inc.
Preferred stock
Memsic, Inc.
eLCOS Microdisplay Technology, Ltd.
NanoAmp Solutions, Inc.
Advanced Analogic Technology, Inc.
Sonics, Inc.
Reflectivity, Inc.
Tropian, Inc.
Kilopass Technologies, Inc.
FangTek, Inc.
Alchip Technologies Limited
Common stock
Global Investment Holding, Inc.
RichWave Technology Corp.
NetLogic Microsystems, Inc.
Preferred stock
Quake Technologies, Inc.
Pixim, Inc.
Newport Opticom, Inc.
Ikanos Communication, Inc.
Quicksilver Technology, Inc.
Mosaic Systems, Inc.
Zenesis Technologies, Inc.
Reflectivity, Inc.
Teknovus, Inc.
Miradia, Inc. (Formerly XHP Microsystems, Inc.)
Axiom Microdevices, Inc.
Optichron, Inc.
Audience, Inc.
Next IO, Inc.
NuCORE Technology Inc.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Short-term investment
Short-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
196
December 31, 2004
Shares/Units
(in thousand)
Carrying Value
(US$ in thousand)
Percentage of
Ownership
Market Value or
Net Asset Value
(US$ in thousand)
Note
2,727
1,064
1,008
1,758
321
864
358
270
351
5,123
395
177
953
471
55
2,800
3,276
2,088
2,000
1,833
2,000
419
2,289
2,667
375
948
1,582
4,255
1,464
3,887
6,806
2,579
10,000
2,600
113
601
1,721
962
7,446
1,049
2,481
1,204
4,848
5,556
3,040
1,000
714
1,654
800
2,254
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
1,500
741
494
471
184
2,081
251
27
101
1,940
226
50
738
127
3,048
490
1,175
545
861
791
204
122
1,560
3,500
1,500
1,261
3,082
2,205
393
2,000
3,250
2,950
100,000
867
1,388
450
2,382
250
3,125
-
12
699
2,479
1,000
1,000
1,000
1,000
250
500
1,455
10
2
2
3
-
-
4
1
1
10
1
-
4
1
5
14
8
7
5
3
3
3
8
15
1
2
5
5
2
19
34
18
6
13
1
1
3
6
3
4
6
4
4
3
4
5
6
2
2
2
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
1,500
741
494
471
645
8,716
251
27
101
1,940
794
50
738
127
3,048
490
1,175
545
861
791
204
122
1,560
3,500
1,500
1,261
3,082
2,205
393
2,000
3,250
2,950
100,000
867
1,388
450
2,382
250
3,125
-
12
699
2,479
1,000
1,000
1,000
1,000
250
500
1,455
(Continued)
197
Held Company Name
Marketable Securities Type and Name
Relationship with the
Company
Financial Statement
Account
VTAF II
GUC
Centrality Communications, Inc.
Layer N Networks, Inc.
Common stock
Yobon Technologies, Inc.
Sentelic, Corp.
Ivyon Technology, Inc.
Preferred stock
Powerprecise Solutions, Inc.
Tzero Technologies, Inc.
Miradia, Inc.
Agelia Technologies, Inc.
Audience, Inc.
Axiom Microdevices, Inc.
Next IO, Inc.
Bond funds
Grand Cathay
TIIM
Polaris De Li
EnTrust Kirin
E. Sun New Era
Jih Sun
EnTrust Phoenix
Transcend Fortune
Stock funds
TIIM DaLi
UPAMC Global Select Fund of Funds
Sheng Hua 9966 Balance
Stock
Global Unichip Corporation - NA
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Subsidiary
Long-term investment
198
December 31, 2004
Shares/Units
(in thousand)
Carrying Value
(US$ in thousand)
Percentage of
Ownership
Market Value or
Net Asset Value
(US$ in thousand)
Note
809
1,905
1,675
600
200
258
244
1,809
1,149
531
686
216
3,608
703
1,550
2,106
1,920
772
2,081
1,936
296
336
300
100
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
1,000
1,000
787
1,022
775
250
500
1,600
1,000
102
700
182
45,543
9,698
22,800
22,697
20,313
10,262
30,563
22,947
5,000
3,364
3,000
3,375
2
2
17
15
10
3
2
2
2
1
5
-
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
100
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
1,000
1,000
787
1,022
775
250
500
1,600
1,000
102
700
182
45,544
9,698
22,800
22,698
20,314
10,262
30,564
22,948
4,474
3,378
3,011
3,375
(Concluded)
199
TABLE 4
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD. AND SUBSIDIARIES
MARKETABLE SECURITIES ACQUIRED AND DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$100 MILLION OR
20% OF THE PAID-IN CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 2004
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
Company Name
Marketable Securities Type and Name
Financial Statement Account
Counter-party
Nature of
Relationship
The Company
Money market funds
BOA Fund
Short-term investment
BOA
GS Fund
Short-term investment
Goldman Sachs
Bond funds
JF Taiwan Bond Fund
ABN AMRO Bond Fund
ABN AMRO Select Bond Fund
JF Taiwan First Bond Fund
INVESCO R.O.C Bond A Fund
Dresdner Bond DAM Fund
Barits Bond Fund
Shin Kong Chi Shin Bond Fund
NITC Bond Fund
HSBC NTD Money Management Fund
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
JF Asset Management (Taiwan) Ltd.
ABN AMRO
ABN AMRO
JF Asset Management (Taiwan) Ltd.
INVESCO Asset Management Taiwan
Allianz Dresdner Securities Investment Consulting
Co., Ltd.
Barits Securities Investment Trust Co., Ltd.
Shinkong Investment Trust Co., Ltd.
National Investment Trust Co., Ltd.
HSBC Asset Management (Taiwan) Ltd.
Bonds under repurchase agreement
Short-term investment
Chung Shing Bills Finance Corp. and several financial
institutions
Government bonds
1994 Government Bond Series C
2002 Government Bond Series A
2002 Government Bond Series E
2002 Government Bond Series J
2003 Government Bond Series A
United States Treas NTS
2003 Government Bond Series I
2004 Government Bond Series A
Short-term investment
Chung Shing Bills Finance Corp. and several financial
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Long-term investment
Long-term investment
institutions
BNP and several financial institutions
BNP and several financial institutions
BNP and several financial institutions
BNP and several financial institutions
-
FCB and several financial institutions
China Bills Finance Corp. and several financial institu-
tions
2004 Government Bond Series E
2004 Kaohsiung Municipal Bond Series A
Long-term investment
Long-term investment
BNP and several financial institutions
KGI Securities Co., Ltd. and several financial institu-
Corporate bonds
Taiwan Power Company
Allstate Finl Global Fdg LLC
American Express Co.
American Express Cr Corp. Mtn
American Gen Fin Corp. Mtn
American Gen Fin Corp. Mtn
American Honda Fin Corp. Mtn
American Honda Fin Corp. Mtn
American Honda Fin Corp. Mtn
American Intl Group Inc. Mtnf
Amgen Inc.
Bank New York Inc.
Bank One Corp.
Bear Stearns Cos Inc.
Bear Stearns Cos Inc.
Bear Stearns Cos Inc. Medium Te
Bristol Myers Squibb Co.
Brown Forman Corp.
Cardinal Health Inc.
Cit Group Hldgs Inc.
Citigroup Inc.
Compaq Computer Corp.
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
tions
KGI Securities Co., Ltd.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
200
Beginning Balance
Acquisition
Disposal
Ending Balance
Shares/Units
(in thousand)
Amount
(US$ in
thousand)
Shares/Units
(in thousand)
Amount
(US$ in
thousand)
Shares/Units
(thousand)
Amount
(US$ in
thousand)
Carrying Value
(US$ in
thousand)
Gain (Loss) on
Disposal (US$
in thousand)
Shares/Units
(in thousand)
Amount (US$
in thousand)
(Note 1)
40,000
20,000
34,343
34,794
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
(US$
(US$
1,359,120
40,000)
679,560
20,000)
$
-
-
-
-
500,000
500,000
-
-
-
-
-
-
-
-
1,800,000
1,422,197
3,157,331
3,113,066
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
68,021
165,257
18,235
110,580
93,975
80,833
76,640
151,594
3,764
41,568
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
1,000,000
2,400,000
200,000
1,500,000
1,350,000
900,000
900,000
2,100,000
600,000
600,000
2,577,163
-
-
-
2,023,206
1,207,409
699,398
3,402,213
2,349,573
3,890,925
620,000
2,777,798
3,171
3,550
3,503
3,130
3,702
3,509
3,750
3,800
3,795
3,005
3,945
3,693
3,805
3,518
3,105
3,819
3,277
3,837
3,203
3,583
3,719
40,000
20,000
23,666
65,145
-
25,694
17,270
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
(US$
(US$
1,359,120
40,000)
679,560
20,000)
$
(US$
US$
1,359,120
40,000)
679,560
20,000)
$
350,000
950,000
-
350,000
250,000
-
-
-
-
-
346,791
943,825
-
348,537
248,089
-
-
-
-
-
4,127,714
4,127,714
1,427,762
1,422,197
3,169,750
3,133,875
2,031,500
-
506,162
-
-
3,157,331
3,113,066
2,023,206
-
507,041
-
-
US$
-
-
-
-
-
3,504
-
-
3,509
3,755
-
-
-
-
3,695
3,816
-
-
-
3,280
3,795
-
-
-
US$
US$
US$
US$
US$
US$
US$
-
-
-
-
-
3,503
-
-
3,509
3,750
-
-
-
-
3,693
3,805
-
-
-
3,277
3,837
-
-
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
-
-
3,209
6,175
-
1,463
1,911
-
-
-
-
-
-
5,565
12,419
20,809
8,294
-
(879)
-
-
-
-
-
-
-
1
-
-
-
5
-
-
-
-
2
11
-
-
-
3
(42)
-
-
-
$
-
-
-
-
78,698
134,906
18,235
84,886
76,705
80,833
76,640
151,594
3,764
41,568
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,153,209
1,956,175
200,000
1,151,463
1,101,911
900,000
900,000
2,100,000
600,000
600,000
249,449
-
-
-
-
1,207,409
192,357
3,397,081
2,349,573
3,893,827
620,000
2,777,798
3,171
3,550
-
3,130
3,702
-
-
3,800
3,795
3,005
3,945
-
-
3,518
3,105
3,819
-
-
3,203
3,583
3,719
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
(Continued)
201
Company Name Marketable Securities Type and Name
Financial Statement Account
Counter-party
Nature of
Relationship
Consolidated Edison Co. NY Inc.
Countrywide Fdg Corp. Mtn
Countrywide Home Lns Inc.
Credit Suisse First Boston USA
Dell Computer Corp.
Diageo PLC
European Invt Bk
Federal Home Ln Mtg Corp
Federal Home Loan Mtg Assn
First Data Corp.
General Elec Cap Corp. Mtn
General Elec Cap Corp. Mtn
General Elec Cap Corp. Mtn
Genworth Finl Inc.
Goldman Sachs Group Inc Mtn
Goldman Sachs Group LP
Hewlett Packard Co.
Honeywell Inc.
Household Fin Corp.
Household Fin Corp. Mtn Bk Ent
Huntington Natl Bk
ING Sec Life Ins Ingslf
Intl Bk For Recon + Dev
JP Morgan Chase + Co.
JP Morgan Chase + Co.
JP Morgan Chase + Co.
Keycorp Mtn Book Entry
KFW Intl Fin Inc.
Lehman Brothers Hldgs Inc.
Lehman Brothers Hldgs Inc.
Lilly Eli + Co.
Merrill Lynch + Co Inc.
Merrill Lynch + Co Inc.
Monumental Global Fdg II 2002A
Morgan Stanley Group Inc.
Morgan Stanley Group Inc.
Nationsbank Corp.
Nationwide Bldg Soc
Nationwide Life Global Mtn
Pepsico Inc. Mtn Book Entry
Popular North Amer Inc Mtn
Pricoa Global Fdg I Mtn
Pricoa Global Fdg I Mtn
Principal Life Global Fdg I Gl
Salomon Smith Barney Hldgs Inc.
SBC Communications Inc.
Shell Finance (UK) PLC
TIAA Global Mkts Inc.
Unitedhealth Group Inc.
Viacom Inc.
Viacom Inc.
Wachovia Corp.
Walmart Cda Venture Corp.
Washington Mut Fin Corp.
Washington Mut Inc.
Washington Post Co.
Wells Fargo + Co. New
China Steel Corporation
Taiwan Power Company
Nan Ya Plastics Corporation
Formosa Plastics Corporation
Formosa Petrochemical Corporation
Agency bonds
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Chung Shing Bills Finance Corp.
BNP and several financial institutions
Chung Shing Bills Finance Corp.
Chung Shing Bills Finance Corp.
Chung Shing Bills Finance Corp.
Short-term investment
Short-term investment
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
202
Beginning Balance
Acquisition
Disposal
Ending Balance
Shares/Units
(in thousand)
Amount
(US$ in
thousand)
Shares/Units
(in thousand)
Amount
(US$ in
thousand)
Shares/Units
(in thousand)
Amount
(US$ in
thousand)
Carrying Value
(US$ in
thousand)
Gain (Loss) on
Disposal (US$
in thousand)
Shares/Units
(in thousand)
Amount (US$
in thousand)
(Note 1)
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
3,687
3,534
5,210
3,177
3,054
3,459
8,315
4,237
4,847
3,013
3,507
3,467
3,886
3,412
3,505
3,820
3,373
3,284
3,712
3,542
3,003
3,012
5,232
3,638
3,128
3,663
3,500
5,104
3,417
3,705
3,750
3,497
3,486
3,129
5,741
4,763
3,644
3,457
3,413
3,818
3,042
3,507
3,050
3,168
3,160
3,681
3,604
3,631
3,119
3,177
3,172
3,720
3,670
4,768
4,735
3,182
3,697
2,997,430
950,646
408,538
406,245
202,980
US$
US$
6,096
4,725
$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
-
3,540
-
3,188
-
-
-
-
-
-
3,498
-
-
-
-
-
-
-
3,633
-
-
-
-
3,601
-
-
-
-
3,381
-
-
3,498
-
-
-
3,713
-
-
-
-
-
-
-
-
-
-
-
3,131
-
3,135
3,175
-
-
-
-
-
-
-
-
-
-
-
-
-
$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
-
3,534
-
3,177
-
-
-
-
-
-
3,507
-
-
-
-
-
-
-
3,712
-
-
-
-
3,638
-
-
-
-
3,417
-
-
3,497
-
-
-
3,713
-
-
-
-
-
-
-
-
-
-
-
3,112
-
3,177
3,172
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6
-
11
-
-
-
-
-
-
(9)
-
-
-
-
-
-
-
(79)
-
-
-
-
(37)
-
-
-
-
(36)
-
-
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
19
-
(42)
3
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
3,687
-
5,210
-
3,054
3,459
8,315
4,237
4,847
3,013
-
3,467
3,886
3,412
3,505
3,820
3,373
3,284
-
3,542
3,003
3,012
5,232
-
3,128
3,663
3,500
5,104
-
3,705
3,750
-
3,486
3,129
5,741
1,050
3,644
3,457
3,413
3,818
3,042
3,507
3,050
3,168
3,160
3,681
3,604
519
3,119
-
-
3,720
3,670
4,768
4,735
3,182
3,697
2,978,804
915,276
407,526
405,485
202,595
US$
US$
6,096
4,725
(Continued)
203
Company Name Marketable Securities Type and Name
Financial Statement Account
Counter-party
Nature of
Relationship
Feferal Home Ln Mtg Corp.
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn Gtd
Federal Natl Mtg Assn Mtn
Fnma Pool 790828
Gnma II Pool 081153
Gnma II Pool Tba Nov 30 Arms
Government Natl Mtg Assn
Federal Hm Ln PC
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp. Mtn
Federal Home Loan Mtg Corp.
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn Disc Nts
Federal Natl Mtg Assn Mtn
Freddie Mac
Student Ln Marketing Assn
Corporate issued asset-backed securities
Aesop Fdg II LLC
American Express Cr Account MA
Americredit Automobile Receivb
Banc Amer Coml Mtg Inc.
Banc Amer Mtg Secs Inc.
Bank Of Amer Lease Equip Tr
BMW Veh Owner Tr
California Infr + Economic Dev
California Infras + Economic
California Infrastructure Dev
Capital Auto Receivables Asset
Capital One Master Tr
Capital One Multi Asset Execut
Capital One Secd Nt Tr
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
204
Beginning Balance
Acquisition
Disposal
Ending Balance
Shares/Units
(in thousand)
Amount
(US$ in
thousand)
Shares/Units
(in thousand)
Amount
(US$ in
thousand)
Shares/Units
(in thousand)
Amount
(US$ in
thousand)
Carrying Value
(US$ in
thousand)
Gain (Loss) on
Disposal (US$
in thousand)
Shares/Units
(in thousand)
Amount (US$ in
thousand)
(Note 1)
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
3,558
5,861
3,393
6,130
6,371
7,000
5,014
3,817
4,829
4,473
3,466
5,210
4,927
14,938
7,014
4,936
9,956
5,264
4,948
7,018
9,993
7,042
6,098
13,953
13,983
13,981
6,978
3,388
4,907
4,953
9,997
9,971
11,984
4,933
4,930
4,903
11,036
10,496
5,270
4,982
6,940
4,867
6,903
4,981
6,997
4,993
5,000
15,787
4,929
16,000
4,955
3,445
4,949
5,503
4,030
4,023
4,978
4,298
8,383
7,419
4,627
3,093
4,957
5,032
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
-
-
-
-
-
-
-
-
4,829
-
-
4,153
-
6,980
-
-
9,967
5,286
-
-
5,000
-
-
-
-
-
-
-
4,981
-
-
9,942
10,965
-
-
-
10,997
10,430
-
4,983
-
4,938
-
-
-
4,993
-
-
-
16,000
-
-
-
-
-
-
-
-
-
-
-
3,072
-
5,000
$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
-
-
-
-
-
-
-
-
4,829
-
-
4,168
-
6,976
-
-
9,956
5,264
-
-
4,997
-
-
-
-
-
-
-
4,907
-
-
9,971
10,986
-
-
-
11,036
10,496
-
4,982
4,867
-
-
-
4,993
-
-
-
16,000
-
-
-
-
-
-
-
-
-
-
-
3,093
-
5,032
$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
-
-
-
-
-
-
-
-
-
-
-
(15)
-
4
-
-
11
22
-
-
3
-
-
-
-
-
-
-
74
-
-
(29)
(21)
-
-
-
(39)
(66)
1
71
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(21)
-
(32)
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,558
5,861
3,393
6,130
6,371
7,000
5,014
3,817
-
4,473
3,466
1,042
4,927
7,962
7,014
4,936
-
-
4,948
7,018
4,996
7,042
6,098
13,953
13,983
13,981
6,978
3,388
-
4,953
9,997
-
998
4,933
4,930
4,903
-
-
5,270
-
6,940
-
6,903
4,981
6,997
-
5,000
15,787
4,929
-
4,955
3,445
4,949
5,503
4,030
4,023
4,978
4,298
8,383
7,419
4,627
-
4,957
-
(Continued)
205
Company Name
Marketable Securities Type and Name
Financial Statement Account
Counter-party
Nature of
Relationship
Caterpillar Finl Asset Tr
Centex Home Equity Ln Tr
Cit Equip Coll Tr
Citibank Cr Card Issuance Tr
CHN Equip Tr
Comm 2004 Htl 1
Credit Suisse First Boston Mtg
CWABS Inc.
CWABS Inc.
CWALT Inc.
CWABS Inc.
CWABS Inc.
Daimlerchrysler Auto Tr
Daimlerchrysler Auto Tr
Daimlerchrysler Auto Tr
First Union Lehman Bros Mtg Tr
First USA Credit Cr Master Tr
Ford Cr Auto Owner Tr
GE Cap Cr Card Master Nt Tr
Granite Mtgs PLC
GS Mtg Secs Corp.
Harley Davidson Motorcycle Tr
Harley Davidson Motorcycle Tr
Holmes Fing No 8 PLC
Honda Auto Receivables
Hyundai Auto Receivables Tr
Impac Secd Assets Corp.
Monumentl Global Fdg II
Navistar Finl 2003 A Owner Tr
Nissan Auto Receivables
Nissan Auto Receivables Owner Tr
Nissan Auto Receivables Owner
ONYX Accep Owner Tr
Permanent Fing No 1 PLC
Providian Gateway Owner Tr
Providian Gateway Owner Tr
Reliant Energy Transition Bd
Residential Asset Mtg Prods
Residential Fdg Mtg Secs I Inc
Sequoia Mtg Tr
Structured Adj Rate Mtg Ln Tr
Toyota Auto Receivables 2003 B
Triad Auto Receivables Tr
TXU Elec Delivery Transition
USAA Auto Owner Tr
Wachovia Auto Owner Tr
Wachovia Auto Owner Tr
WFS Financial Owner Trust
WFS Finl 2002 4 Owner Tr
WFS Finl 2004 2 Owner Tr
WFS Finl 2004 4 Owner Tr
Whole Auto Ln Tr
Whole Auto Ln Tr
World Omni Auto Receivables Tr
World Omni Auto Receivables Tr
Money market funds
Common stock
RichTek Technology Corp.
Atheros Communication, Inc.
Monolithic Power Systems, Inc.
InveStar
InveStar II
Common stock
RichTek Technology Corp.
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Note: The ending balance included the recognition of the investment income (loss) by the equity method, the cumulative translation adjustments and the bond premi-
um or discount amortization amount.
206
Beginning Balance
Acquisition
Disposal
Ending Balance
Shares/Units
(in thousand)
Amount
(US$ in
thousand)
Shares/Units
(in thousand)
Amount
(US$ in
thousand)
Shares/Units
(in thousand)
Amount
(US$ in
thousand)
Carrying Value
(US$ in
thousand)
Gain (Loss) on
Disposal (US$
in thousand)
Shares/Units
(in thousand)
Amount (US$ in
thousand)
(Note 1)
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
947
1,205
2,521
US$
US$
US$
121
3,593
2,000
465
US$
346
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10,008
3,500
4,999
4,959
5,000
4,600
5,000
5,000
3,500
4,718
3,129
4,040
4,991
4,982
4,897
4,177
5,011
10,999
4,000
5,000
4,000
4,000
5,999
5,001
5,000
3,500
4,000
3,500
4,928
7,000
4,999
4,853
4,913
5,102
4,204
3,992
5,185
3,766
3,947
3,500
3,058
4,970
5,042
8,009
4,000
6,000
4,999
5,008
3,904
4,994
5,399
5,967
4,000
5,963
5,000
21,114
-
-
-
-
$
US$
US$
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,595
1,205
546
US$
US$
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,003
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,036
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,986
-
6,783
8,972
4,318
$
US$
US$
US$
US$
US$
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,102
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,000
-
184
3,593
433
$
US$
US$
US$
US$
US$
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(66)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(14)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
10,008
3,500
4,999
4,959
5,000
4,600
5,000
5,000
3,500
4,718
3,129
4,040
4,991
4,982
4,897
4,177
5,011
10,999
-
5,000
4,000
4,000
5,999
5,001
5,000
3,500
4,000
3,500
4,928
7,000
4,999
4,853
4,913
-
4,204
3,992
5,185
3,766
3,947
3,500
3,058
4,970
5,042
8,009
4,000
6,000
4,999
5,008
3,904
4,994
5,399
5,967
4,000
5,963
-
US$
21,114
6,598
5,379
3,885
682
-
1,975
US$
US$
67
-
1,567
768
US$
3,394
US$
519
US$
2,875
321
US$
184
(Concluded)
207
TABLE 5
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD. AND SUBSIDIARIES
ACQUISITION OF INDIVIDUAL REAL ESTATE AT COSTS OF AT LEAST NT$100 MILLION OR 20% OF THE
PAID-IN CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 2004
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
Company
Name
Types of
Property
Transaction Date
Transaction
Amount
Payment Term
Counter-party
The Company
Fab. 12
April 21, 2004
$
1,484,370
By the construction progress
IDC Taiwan, Inc., Taiwan Branch
Fab. 12
Fab. 12
Fab. 12
Fab. 12
Fab. 12
Fab. 12
Fab. 12
Fab. 12
Fab. 12
Fab. 14
Fab. 12
Fab. 12
Fab. 12
Fab. 12
April 21, 2004
April 22, 2004
May 12, 2004
May 12, 2004
May 12, 2004
June 17, 2004
July 2, 2004
July 8, 2004
July 8, 2004
420,168
224,800
340,307
116,181
133,092
165,208
225,744
100,767
466,833
By the construction progress
By the construction progress
By the construction progress
By the construction progress
By the construction progress
By the construction progress
By the construction progress
By the construction progress
By the construction progress
(U.S.A.)
CHRIST AG
Allis Electric Co., Ltd.
United Industry gas Corp., Ltd.
United Industry gas Corp., Ltd.
BOC EDWARDS, CMS
Organo Corporation
Marketech International Corp.
Kanto Chemical Co., Inc.
United Integrated Services Co.,
Ltd.
August 3, 2004
300,000
By the construction progress
United Integrated Services Co.,
August 5, 2004
August 5, 2004
August 5, 2004
October 15, 2004
122,969
185,984
182,060
105,299
By the construction progress
By the construction progress
By the construction progress
By the construction progress
Ltd.
Marketech International Corp.
Marketech International Corp.
Marketech International Corp.
IDC Taiwan, Inc., Taiwan Branch
(U.S.A.)
TABLE 6
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD. AND SUBSIDIARIES
TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF
THE PAID-IN CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 2004
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
Company
Name
The Company
Related Party
Nature of Relationship
TSMC - North America
Philips and its affiliates
GUC
WaferTech
VIS
SSMC
Subsidiary
Major shareholder
Investee
Subsidiary
Investee
Investee
Transaction Details
Purchase/Sale
Amount
Sales
Sales
Sales
Purchases
Purchases
Purchases
$ 142,271,732
5,463,565
371,546
15,203,047
9,169,602
5,869,123
208
Nature of
Relationship
Prior Transaction of Related Counter-party
Owner
Relationship
Transfer Date
Amount
Price Reference
Purpose of Acquisition
Other Terms
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Public bidding
Manufacturing purpose
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Public bidding
Public bidding
Public bidding
Public bidding
Public bidding
Public bidding
Public bidding
Public bidding
Public bidding
Manufacturing purpose
Manufacturing purpose
Manufacturing purpose
Manufacturing purpose
Manufacturing purpose
Manufacturing purpose
Manufacturing purpose
Manufacturing purpose
Manufacturing purpose
N/A
Public bidding
Manufacturing purpose
N/A
N/A
N/A
N/A
Public bidding
Public bidding
Public bidding
Public bidding
Manufacturing purpose
Manufacturing purpose
Manufacturing purpose
Manufacturing purpose
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
Transaction Details
Abnormal Transaction
Notes/Accounts
Payable or Receivable
% to Total
Payment Terms
Unit Price
Payment Terms
Ending Balance
Note
% to
Total
55
2
-
34
13
21
Net 30 days after invoice date
Net 30 days after monthly closing
Net 30 days after monthly closing
Net 30 days after monthly closing
Net 30 days after monthly closing
Net 30 days after monthly closing
None
None
None
None
None
None
None
None
None
None
None
None
$
15,526,964
581,487
56,436
(913,107)
(1,533,938)
(207,794)
47
2
-
9
16
2
209
TABLE 7
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD. AND SUBSIDIARIES
RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE
PAID-IN CAPITAL
DECEMBER 31, 2004
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
Company Name
Related Party
Nature of Relationship
Ending Balance
Turnover Rate
The Company
TSMC - North America
TSMC - Shanghai
Philips and its affiliates
Subsidiary
Subsidiary
Major shareholder
$ 15,526,964
1,473,365
581,487
38 days
(Note)
49 days
Note: The ending balance is generated mainly from the sales of machinery, so it is not applicable for the calculation of the turnover rate.
TABLE 8
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD. AND SUBSIDIARIES
NAMES, LOCATIONS, AND RELATED INFORMATION OF INVESTEES ON WHICH THE COMPANY EXERCISES
SIGNIFICANT INFLUENCE
DECEMBER 31, 2004
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
Investor Company
Investee Company
Location
Main Businesses and Products
The Company
TSMC - North America
San Jose, California, U.S.A.
Sales and marketing of integrated circuits and
TSMC - Europe
TSMC - Japan
TSMC - Shanghai
Amsterdam, the Netherlands
Yokohama, Japan
Shanghai, China
Marketing activities
Marketing activities
Manufacturing and marketing of integrated
semiconductor devices
VIS
Hsin-Chu, Taiwan
circuits and semiconductor devices
Research, design, development, manufacture, packaging,
testing and sale of memory integrated circuits, LSI, VLSI
and related parts
TSMC International
Tortola, British Virgin Islands
Providing investment in companies involved in the
Chi Cherng
Hsin Ruey
TSMC Partners
SSMC
Emerging Alliance
GUC
VisEra
VTAF II
design, manufacture, and other related business in the
semiconductor industry
Taipei, Taiwan
Taipei, Taiwan
Tortola, British Virgin Islands
Singapore
Cayman Islands
Hsin-Chu, Taiwan
Investment activities
Investment activities
Investment activities
Fabrication and supply of integrated circuits
Investing in new start-up technology companies
Researching, developing, manufacturing, testing and
marketing of integrated circuits
Hsin-Chu, Taiwan
Manufacturing, material wholesaling and
retailing of electronic spare parts
Cayman Islands
Investing in new start-up technology companies
Note 1: The treasury stock is deducted from the carrying value.
Note 2: The gains or losses on disposal of the stocks held by subsidiaries (treated as treasury stocks) and the paid-in capital from cash dividend distributed by parent
company are excluded.
210
Overdue
Amount
Action Taken
Amounts Received in
Subsequent Period
Allowance for Bad Debts
$
5,044,202
145,146
7,136
-
Accelerate demand on account receivables
-
$ 6,013,414
-
13,726
$
-
-
-
Original Investment Amount
Balance as of December 31, 2004
December 31,
2004
December 31,
2003
Shares
(in thousand)
Percentage of
Ownership
Carrying Value
(Note 1)
Net Income
(Loss) of the
Investee
Investment
Gain
(Loss)(Note 2)
Note
$
333,178
$
333,178
11,000
100
$
502,242
$
120,587
$
112,543
Subsidiary
15,749
83,760
9,187,962
15,749
83,760
1,890,952
-
6
-
8,119,816
8,119,816
409,532
31,445,780
31,445,780
987,968
300,000
300,000
10,350
6,408,190
1,447,957
409,920
51,000
332,412
300,000
300,000
10,350
6,408,190
1,179,690
409,920
51,000
-
-
-
300
382
-
39,040
5,100
-
100
100
100
28
100
36
36
100
32
99
47
25
98
25,439
102,572
8,113,511
262
2,919
(727,036)
262
2,919
(727,036)
Subsidiary
Subsidiary
Subsidiary
5,401,982
4,706,668
1,329,555
Investee
23,778,997
2,598,162
2,598,162
Subsidiary
50,570
49,823
3,908,356
3,290,888
823,232
391,626
59,116
329,968
21,359
21,887
43,117
2,288,786
(97,767)
30,424
35,540
18,373
(664)
(491)
43,117
732,418
(97,278)
23,279
Investee
Investee
Subsidiary
Investee
Subsidiary
Investee
8,885
Investee
14,648
Subsidiary
211
TABLE 9
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD. AND SUBSIDIARIES
INFORMATION OF INVESTMENT IN MAINLAND CHINA
DECEMBER 31, 2004
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
Investee
Company
Main Businesses and
Products
Total Amount of
Paid-in Capital
(RMB in Thousand)
Investment
Type
Investment Flows
Accumulated Outflow
of Investment from
Taiwan as of January 1,
2004(US$ in Thousand)
Outflow
(US$ in Thousand)
Inflow
Accumulated Outflow
of Investment from
Taiwan as of December
31, 2004
(US$ in Thousand)
TSMC (Shanghai)
Company Limited
Manufacturing and
marketing of integrat-
ed circuits and semi-
conductor devices
$
9,187,962
(RMB 2,284,355)
(Note 1)
$
(US$
1,890,952
56,000)
$
(US$
7,297,010
220,000)
$ -
$
(US$
9,187,962
276,000)
Percentage of
Ownership in
Investment
Investment Gain
(Loss) (Note 2)
Carrying Value as of
December 31, 2004
Accumulated
Inward
Remittance
of Earnings
as of
December
31, 2004
Accumulated
Investment in
Mainland China as of
December 31, 2004
(US$ in Thousand)
Investment Amounts Authorized
by Investment Commission, MOEA
(US$ in Thousand)
Upper Limit on
Investment (US$ in
Thousand)
100%
$
(727,036)
$ 8,113,511
$ -
$
(US$
9,187,962
276,000)
$
11,841,207
(US$ 371,000)
$
(US$
11,841,207
371,000)
Note 1: Direct investment in TSMC (Shanghai) US$276,000 thousand.
Note 2: Amount was recognized based on the audited financial statements.
212
11. U.S. GAAP Financial Information
Please be advised that our 2004 full annual report that includes complete U.S. GAAP reconciled financial statements and footnotes will
be avaliable when we file From 20-F with the U.S. SEC. Our From 20-F, or our 2004 full annual report, can be found at the U.S. SEC and
on TSMC's website no later than June 30, 2005.
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD. AND SUBSIDIARIES
U.S. GAAP RECONCILIATIONS OF SHAREHOLDERS' EQUITY
December 31, 2003 and 2004
(In Thousand New Taiwan Dollars)
TOTAL SHAREHOLDERS' EQUITY UNDER R.O.C. GAAP
$ 329,214,309
$ 398,965,299
2003
2004
U.S. GAAP Adjustments
- Unrealized gain on trading marketable securities
- US GAAP adjustments on equity-method investees
- Unrealized gain on available-for-sale marketable securities
- TSMC
- Equity-method investees
- Reversal of R.O.C. GAAP unrealized loss on marketable securities
- Loss on impairment of assets
- Reversal of depreciation on assets impaired under U.S. GAAP
- Effect of US GAAP adjustments on deferred income tax
- Goodwill
- Carrying value difference for 68% purchase of TASMC
- Reversal of amortization
- Derivative financial instruments
- Bonuses to employees, directors and supervisors
- Accrued pension expense
- 10% tax on undistributed earnings
- Minority interest effect of U.S. GAAP adjustments
448,730
(1,403,846)
379,664
130,706
-
(11,108,126)
4,453,059
37,802
52,212,732
(13,647,022)
39,048
(3,530,225)
(40,263)
-
(13,447)
27,958,812
813,841
(463,097)
33,586
242,688
75,212
(10,335,675)
5,529,660
41,901
52,212,732
(12,544,979)
(102,977)
(6,403,897)
(37,706)
(878,074)
(23,704)
28,159,511
TOTAL SHAREHOLDERS' EQUITY UNDER U.S. GAAP
$ 357,173,121
$ 427,124,810
213
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD.
U.S. GAAP RECONCILIATIONS OF NET INCOME
For the Year Ended December 31, 2003 and 2004
(In Thousand New Taiwan Dollars)
NET INCOME UNDER R.O.C. GAAP
U.S. GAAP Adjustments
- Unrealized gain on trading marketable securities
- Reversal of R.O.C. GAAP unrealized loss on marketable securities
- U.S. GAAP adjustments on equity-method investees
- Reversal of depreciation on assets impaired under U.S. GAAP
- Reversal of additional write-off under R.O.C. GAAP
- Income tax effect of U.S. GAAP adjustments
- Reversal of amortization of goodwill
- Amortization of capital stock payment for technology transfer
- Adjustment to market value for derivative financial instruments
- Bonuses to employees, directors and supervisors
- Current year accrual
- Fair market value adjustment of prior year accrual
- Pension expense
- Stock-based compensation
- 10% tax on undistributed earnings
- Minority interest effect of U.S. GAAP adjustments
NET INCOME UNDER U.S GAAP.
Cumulative preferred dividends
2003
2004
$ 47,258,700
$ 92,316,115
(1,667,701)
-
(70,567)
1,483,526
104,614
42,409
1,281,730
59,609
555,326
(3,530,225)
(6,441,054)
(490)
(463,743)
-
49,241
(8,597,325)
38,661,375
(184,493)
365,111
75,212
952,185
1,514,707
-
6,986
1,255,321
-
(142,025)
(6,403,897)
(12,956,662)
2,557
156,167
(878,074)
(10,257)
(16,062,669)
76,253,446
-
INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS UNDER U.S. GAAP
$ 38,476,882
$ 76,253,446
214
SPECIAL NOTES
1. Affiliates Information
(1) TSMC Affiliated Companies Chart
Taiwan Semiconductor Manufacturing Company, Ltd.
TSMC North
America
Shareholding:
100%
TSMC Europe
B.V.
Shareholding:
100%
TSMC Japan
K.K.
Shareholding:
100%
TSMC International
Investment Ltd.
Shareholding:
100%
TSMC Partners,
Ltd.
Shareholding:
100%
Emerging
Alliance Fund, L.P.
Shareholding:
99.5%
Chi Cherng
Investment Co.,
Ltd. Shareholding:
TSMC: 35.71%
Hsin Ruey: 64.29%
TSMC (Shanghai)
Co., Limited
Shareholding:
100%
Global Unichip
Corp.
Shareholding:
47.32%
VisEra
Technologies Co.,
Ltd.
Shareholding: 25%
Venture Tech
Alliance Fund II,
L.P.
98%
TSMC
Development, Inc.
Shareholding:
100%
TSMC
Technology, Inc.
Shareholding:
100%
InveStar
Semiconductor
Development
Fund, Inc.
Shareholding:
97.09%
InveStar
Semiconductor
Development Fund,
Inc. (II) LDC.
Shareholding:
97.09%
Hsin Ruey
Investment Co.,
Ltd. Shareholding:
TSMC: 35.71%
Chi Cherng:
64.29%
Global Unichip
Corp.-NA
Shareholding:
100%
WaferTech, LLC
Shareholding:
99.996%
215
(2) TSMC Affiliated Companies
December 31, 2004
Unit : NT(US, EUR, JPY) $ thousands
Company
Date of
Incorporation
Place of Registration
Capital Stock
Business Activities
TSMC North America
Jan. 18, 1988
San Jose, California, USA
US$
11,000
Sales and marketing of integrated circuits and
semiconductor devices
Taiwan Semiconductor Manufacturing
Mar. 04, 1994
Amsterdam, The Netherlands
EUR 90.76
Marketing activities
Company Europe B.V.
TSMC Japan K.K.
TSMC (Shanghai) Company Limited
Sep. 10, 1997
Aug. 04, 2003
Yokohama, Japan
Shanghai, China
JPY 300,000
US$ 276,000
Marketing activities
Manufacturing and marketing of integrated circuits and
TSMC International Investment Ltd.
Apr. 09, 1996
Tortola, British Virgin Islands
US$ 987,968
Providing investment in companies involved in the
semiconductor devices
TSMC Technology, Inc.
InveStar Semiconductor Development
Feb. 20, 1996
Sep. 10, 1996
Delaware, USA
Cayman Islands
US$ 0.001
25,050
US$
Fund, Inc.
design, manufacture, and other related business in the
semiconductor industry
Engineering support activities
Investing in new start-up technology companies
InveStar Semiconductor Development
Aug. 25, 2000
Cayman Islands
US$ 52,839
Investing in new start-up technology companies
Fund, Inc.(II) LDC.
TSMC Development, Inc.
WaferTech, LLC
Feb. 16, 1996
Jun. 03, 1996
Delaware, USA
Washington, USA
US$ 0.001
US$ 892,795
Investment activities
Manufacturing, selling, testing and computer-aided designing of
TSMC Partners, Ltd.
Emerging Alliance Fund, L.P.
Hsin Ruey Investment Co., Ltd.
Chi Cherng Investment Co., Ltd.
Global Unichip Corporation
Mar. 26, 1998
Jan. 10, 2001
Jul. 13, 1998
Jul. 15, 1998
Jan. 22, 1998
Tortola, British Virgin Islands
Cayman Islands
Taipei, Taiwan
Taipei, Taiwan
Hsin-Chu, Taiwan
US$ 300
US$ 43,101
NT$ 840,000
NT$ 840,000
NT$ 825,000
integrated circuits and other semiconductor devices
Investment activities
Investing in new start-up technology companies
Investment activities
Investment activities
Researching, developing, manufacturing, testing and marketing of
integrated circuits
VisEra Technologies Company, Ltd.
Dec. 05, 2003
Hsin-Chu, Taiwan
NT$ 204,000
Manufacturing, material wholesaling and retailing of electronic
VentureTech Alliance Fund II, L.P.
Global Unichip Corporation-NA
Feb. 27, 2004
Feb. 02,2004
Cayman Islands
San Jose, California, USA
US$ 10,000
100
US$
Investing in new start-up technology companies
Providing consulting services for products in the North
America region
spare parts
(3) Business Scope of TSMC and its Affiliated Companies
TSMC and its affiliates work together to provide dedicated foundry services to our customers around the world. In addition, several of
TSMC's affiliate companies are focused on investing in companies involved in design, manufacture, and other related business in semi-
conductor industries. In general, TSMC and its affiliates provide cross support in technology, capacity, marketing and services with an aim
to maximize the synergy within the group, enabling TSMC to provide its customers with the best dedicated foundry services worldwide.
The ultimate goal of this strategy is to ensure TSMC's leading position in the global foundry market.
(4) TSMC Shareholders Representing Both Holding Comapnies and Subordinates
December 31, 2004
Reasoning
Name
(Note 1)
Shareholding (Note 2 )
Shares
Holding %
Date of
Incorporation
Place of
Registration
Capital
Business
Activities
None
The presumed interested parties representing both holding companies and subordinates include the company's Director, the shareholders conducting business on
behavior of the company, and the shareholders holding more than 50% shares of the company.
Note 1: The same legal and natural persons apply a company name and a personal name, respectively.
Note 2: It shows the shareholdings to the holding company (excluding the holdings to the subordinates).
Unit: NT$ thousands, except shareholding
216
(5) Rosters of Directors, Supervisors, and Presidents of TSMC's Affiliated Companies
December 31, 2004
Company
Title
Name
Unit: NT$, except shareholding
Shareholding
TSMC North America
Taiwan Semiconductor
Manufacturing Company Europe
B.V.
TSMC Japan K.K.
TSMC (Shanghai) Company Limited
Director
Director
President
Director
Director
Director
Director
Director
President
Chairman
Director
Director
Director
Director
Director
Director
Supervisor
President
Chairman
Director
Director
Director
Supervisor
President
F.C.Tseng
Rick Tsai
Rick Cassidy
Morris Chang
Rick Tsai
Quincy Lin
Kenneth Kin
Kees den Otter
Kees den Otter
Sachiaki Nagae
Morris Chang
F.C.Tseng
Rick Tsai
Sachiaki Nagae
Makoto Onodera
Hisao Baba
Lora Ho
Hisao Baba
F.C.Tseng
F.C.Tseng
C.C.Wei
Y.C. Chao
Lora Ho
Y.C. Chao
TSMC International Investment Ltd.
Director
President
Morris Chang
F.C.Tseng
TSMC Technology, Inc.
Chairman
Director
President
Morris Chang
Morris Chang
Morris Chang
InveStar Semiconductor
Development Fund, Inc.
Director
Wendell Huang
InveStar Semiconductor
Development Fund, Inc.(II) LDC.
Director
Wendell Huang
TSMC Development, Inc.
Chairman
Director
President
Morris Chang
Morris Chang
Morris Chang
Amount
-
-
-
(TSMC holds 11,000,000 shares)
-
-
-
-
-
-
(TSMC holds 200 shares)
-
-
-
-
-
-
-
-
-
(TSMC holds 6,000 shares)
-
-
-
-
-
-
(TSMC's investment
US$276,000,000)
-
-
(TSMC holds 987,968,244 shares )
-
-
-
(TSMC International Investment
Ltd. holds 1,000 shares)
-
(TSMC International Investment
Ltd. holds 24,320,388 shares)
-
(TSMC International Investment
Ltd. holds 51,300,000 shares)
-
-
-
(TSMC International Investment
Ltd. holds 1,000 shares)
%
-
-
-
(100)
-
-
-
-
-
-
(100)
-
-
-
-
-
-
-
-
-
(100)
-
-
-
-
-
-
(100)
-
-
(100)
-
-
-
(100)
-
( 97.09)
-
( 97.09)
-
-
-
(100)
217
Company
Title
Name
WaferTech, LLC
TSMC Partners, Ltd.
Chairman
Director
Director
Director
President
Director
Director
Director
Director
Director
Director
Morris Chang
Morris Chang
Rick Tsai
Steve Tso
Kuo-Chin Hsu
F. C.Tseng
Rick Tsai
Quincy Lin
Steve Tso
Richard L. Thurston
Lora Ho
Emerging Alliance Fund, L.P.
NIL
NIL
Hsin Ruey Investment Co., Ltd.
Director
Rick Tsai (Representative of Chi
Cherng Investment Co., Ltd.)
Chi Cherng Investment Co., Ltd.
Director
F. C.Tseng (Representative of Hsin
Ruey Investment Co., Ltd.)
Global Unichip Corporation
VisEra Technologies Company, Ltd.
Chairman
Director
Director
Director
Supervisor
President
Director
Supervisor
President
F. C.Tseng
F. C.Tseng
Ping Yang
Jim Lai
Lora Ho
Jim Lai
C. C.Wei
Lora Ho
N. S. Tsai
Shareholding
Amount
-
-
-
-
-
(TSMC Development, Inc. holds
293,636,833 Preferred Shares)
-
-
-
-
-
-
(TSMC holds 300,000 shares)
(TSMC's investment US$
42,885,000)
(Chi Cherng's investment NT$
540,000,080)
(TSMC's investment
NT$299,999,880)
(Hsin Ruey's investment NT$
540,000,080)
(TSMC's investment
NT$299,999,880)
-
-
-
-
-
-
(TSMC holds 39,040,000 shares)
-
-
-
(TSMC holds 5,100,000 shares )
VentureTech Alliance Fund II, L.P.
NIL
NIL
(TSMC's investment US$ 9,850,000)
Global Unichip Corporation-NA
Director
Director
President
K. C. Shih
Jim Lai
Jim Lai
-
-
-
(GUC holds 100,000 shares)
%
-
-
-
-
-
( 99.996)
-
-
-
-
-
-
(100)
( 99.50)
( 64.29)
( 35.71)
( 64.29)
( 35.71 )
-
-
-
-
-
-
(47.32)
-
-
-
(25)
( 98)
-
-
-
(100)
218
(6) Operational Highlights for TSMC Affiliated Companies
December 31, 2004
Company
Capital
Stock
Assets
Liabilities
Net Worth
Net Sales
Unit: NT$ thousands, except EPS($)
Income
from
Operation
Net Income
(net of tax)
Basic EPS
(net of tax)
Note
TSMC North America
351,087
17,504,163
16,241,043
1,263,120
1,673,507
Taiwan Semiconductor
Manufacturing Company Europe
B.V.
3,954
51,007
25,568
25,439
203,491
168,655
23,408
106,725
9.70
262
1,311.07
TSMC Japan K.K.
93,390
124,160
21,588
102,572
255,715
12,177
2,919
486.49
TSMC (Shanghai) Company Limited
8,809,092
18,623,017
10,509,507
8,113,511
12,930
(826,109)
(727,036)
TSMC International Investment Ltd.
31,532,982
34,204,536
10,425,539
23,778,997
2,604,849
2,601,170
2,598,162
N/A
2.63
TSMC Technology, Inc.
InveStar Semiconductor
Development Fund, Inc.
InveStar Semiconductor
Development Fund, Inc.(II) LDC.
0.032
856,090
679,149
176,941
799,521
1,199,957
65,311
1,134,646
70,474
848,906
(2,687)
546,322
(27,419)
(27,419.21)
511,501
20.42
1,686,462
1,135,465
166
1,135,299
161,980
85,929
(67,387)
(1.28)
TSMC Development, Inc.
0.032
16,038,767
6,454,562
9,584,205
0
(19,945)
4,630,853
4,630,853.23
WaferTech, LLC
TSMC Partners, Ltd.
28,495,335
15,955,936
817,841
15,138,095
15,152,475
4,854,005
4,752,619
9,575
12,539,566
8,631,210
3,908,356
6,005
1,781
1,717
302,268
494,812
827,369
1,426,136
1,425,574
0
61,258
21,862
22,740
883,900
1,006,211
236,464
1,967,687
3,536
336,702
96
3,397
34,776
8,705
(71)
9,730
21,690
22,568
6,906
53,920
18,372
415
43,117
(97,767)
21,887
21,359
30,424
35,540
18,373
215
N/A
143.72
N/A
N/A
N/A
0.37
1.74
N/A
2.15
Emerging Alliance Fund, L.P.
1,375,639
833,374
Hsin Ruey Investment Co., Ltd.
Chi Cherng Investment Co., Ltd.
Global Unichip Corporation
VisEra Technologies Company, Ltd.
VentureTech Alliance Fund II, L.P.
Global Unichip Corporation-NA
* Base on US GAAP.
840,000
840,000
825,000
204,000
319,170
3,192
1,427,917
1,427,291
1,186,168
731,276
340,238
3,493
NOTE: Foreign exchange rate for balance sheet amounts are as follows:
$1 USD =$31.917 NT
$1 EUR =$43.57 NT
$1 JPY =$0.3113 NT
$1 RMB =$3.856 NT
Foreign exchange rate for income statement amounts are as follows:
$1 USD =$33.4483 NT
$1 EUR =$41.62 NT
$1 JPY =$0.31 NT
$1 RMB =$4.041 NT
*
*
*
*
*
219
2. Combined Financial Statements and Independent Accountants' Review Report
REPRESENTATION LETTER
The combined balance sheet as of December 31, 2004 and the combined statement of income for the year ended December 31, 2004 of
Taiwan Semiconductor Manufacturing Company, Ltd. and affiliates were prepared in conformity with the Criteria Governing Preparation
of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises, relevant regulations
and accounting principles generally accepted in the Republic of China.
No misrepresentations were made and no important matters were concealed in the preparation of the combined financial statements of
Taiwan Semiconductor Manufacturing Company, Ltd.
Very truly yours,
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD.
By
MORRIS CHANG
Chairman
January 13, 2005 (January 30, 2005 as to Note 23o)
220
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
The Board of Directors and Shareholders
Taiwan Semiconductor Manufacturing Company, Ltd.
We have reviewed the combined balance sheet as of December 31, 2004 and the related combined statement of income for the year
then ended of Taiwan Semiconductor Manufacturing Company, Ltd. and affiliates. Our review was made in accordance with the
Guidelines for the Review of Combined Financial Statements of Affiliates. It is substantially less in scope than an examination in accor-
dance with auditing standards generally accepted in the Republic of China (R.O.C.), the objective of which is the expression of an opinion
regarding the combined balance sheet and the combined statement of income taken as a whole. Accordingly, we do not express such an
opinion.
Based on our review, we are not aware of any material modifications that should be made to the combined balance sheet and the com-
bined statement of income referred to above in order for them to be in conformity with the "Criteria Governing Preparation of Affiliation
Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises" in the R.O.C., and the R.O.C. reg-
ulations governing the preparation of financial statements of public company and generally accepted accounting principles in the R.O.C.
January 13, 2005 (January 30, 2005 as to Note 23o)
Notice to Readers
The accompanying combined financial statements are intended only to present the combined financial position, results of operations and
cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other
jurisdiction. The standards, procedures and practices to audit such combined financial statements are those generally accepted and
applied in the Republic of China.
For the convenience of readers, the accountants' review report and the accompanying combined financial statements have been translat-
ed into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English
version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language accountants'
review report and combined financial statements shall prevail.
221
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD. AND AFFILIATES
COMBINED BALANCE SHEET
DECEMBER 31, 2004
(In Thousands of New Taiwan Dollars, Except Par Value)
(Reviewed, Not Audited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents (Notes 2, 4 and 5)
Short-term investments, net (Notes 2 and 5)
Receivables from related parties (Note 21)
Notes receivable
Accounts receivable
Allowance for doubtful receivables (Note 2)
Allowance for sales returns and others (Note 2)
Other receivables from related parties (Note 21)
Other financial assets (Notes 2 and 24)
Inventories, net (Notes 2 and 6)
Deferred income tax assets, net (Notes 2 and 15)
Prepaid expenses and other current assets (Note 2)
Total current assets
LONG-TERM INVESTMENTS (Notes 2, 7, 19 and 24)
Equity method
Cost method
Long-term bonds
Other investments
Total long-term investments
PROPERTY, PLANT AND EQUIPMENT (Notes 2, 8, 11 and 21)
Cost
Land and land improvements
Buildings
Machinery and equipment
Office equipment
Leased assets
Other equipment
Total cost
Accumulated depreciation
Advance payments and construction in progress
Net property, plant and equipment
GOODWILL (Note 2)
OTHER ASSETS
Deferred charges, net (Notes 2, 9 and 23)
Deferred income tax assets, net (Notes 2 and 15)
Refundable deposits
Others (Note 8)
Total other assets
TOTAL
The accompanying notes are an integral part of the combined financial statements.
222
$
Amount
74,531,410
54,303,642
1,077,818
14,746
31,274,596
(986,360)
(3,342,450)
111,300
2,229,551
15,649,596
8,917,986
1,751,699
185,533,534
8,692,870
3,266,330
15,170,167
10,521,740
37,651,107
803,508
98,086,317
433,168,964
8,551,372
566,243
152,133
541,328,537
(331,323,140)
49,247,068
259,252,465
7,088,864
9,218,900
1,649,979
106,952
175,830
11,151,661
%
15
11
-
-
6
-
(1)
-
1
3
2
-
37
2
1
3
2
8
-
20
86
2
-
-
108
(66)
10
52
1
2
-
-
-
2
$
500,677,631
100
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term bank loans (Note 10)
Payables to related parties (Note 21)
Accounts payable
Payables to contractors and equipment suppliers
Accrued expenses and other current liabilities (Notes 2, 13 and 23)
Current portion of long-term liabilities (Notes 11 and 12)
Total current liabilities
LONG-TERM LIABILITIES
Long-term bank loans (Note 11)
Bonds payables (Note 12)
Other long-term payables (Note 13)
Other payables to related parties (Notes 21 and 23)
Liability under capital lease (Notes 2 and 8)
Total long-term liabilities
OTHER LIABILITIES
Accrued pension cost (Notes 2 and 14)
Guarantee deposits (Note 23)
Others
Total other liabilities
MINORITY INTEREST IN AFFILIATES (Note 2)
Total liabilities
SHAREHOLDERS' EQUITY (Notes 2 and 17)
Capital stock - $10 par value
Authorized: 24,600,000 thousand shares
Issued: 23,251,964 thousand shares
Capital surplus
Retained earnings:
Appropriated as legal reserve
Unappropriated earnings
Cumulative translation adjustments (Note 2)
Treasury stock (at cost) - 45,521 thousand shares (Notes 2 and 19)
Total shareholders' equity
$
Amount
%
383,004
2,241,748
7,583,723
33,437,308
10,325,040
10,505,489
-
-
2
7
2
2
64,476,312
13
1,926,735
19,500,000
7,964,975
2,317,972
566,243
32,275,925
3,113,552
412,881
714,949
4,241,382
718,713
-
4
2
-
-
6
1
-
-
1
-
101,712,332
20
232,519,637
56,537,259
25,528,007
88,202,009
(2,226,427)
(1,595,186)
398,965,299
46
11
5
18
-
-
80
TOTAL
$
500,677,631
100
223
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD. AND AFFILIATES
COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2004
(In Thousands of New Taiwan Dollars, Except Combined Earnings Per Share)
(Reviewed, Not Audited)
GROSS SALES (Notes 2 and 21)
SALES RETURNS AND ALLOWANCES (Note 2)
NET SALES (Note 25)
COST OF SALES (Notes 16 and 21)
GROSS PROFIT
OPERATING EXPENSES (Notes 16, 21 and 25)
Research and development
General and administrative
Marketing
Total operating expenses
INCOME FROM OPERATIONS
NON-OPERATING INCOME AND GAINS (Note 25)
Investment income recognized by equity method, net (Notes 2 and 7)
Interest (Notes 2 and 24)
Gain on sales of investments, net (Note 2)
Technical service income (Notes 21 and 23)
Gain on disposal of property, plant and equipment (Note 2)
Other (Note 21)
Total non-operating income and gains
NON-OPERATING EXPENSES AND LOSSES (Note 25)
Interest (Notes 2, 8 and 24)
Foreign exchange loss, net (Notes 2 and 24)
Loss on impairment of long-term investments (Note 2)
Loss on disposal of property, plant and equipment (Note 2)
Unrealized valuation loss of short-term investments (Note 2)
Other
Total non-operating expenses and losses
Amount
%
$
264,348,362
(4,737,127)
259,611,235
100
143,375,116
116,236,119
12,703,145
11,542,135
3,403,503
27,648,783
88,587,336
2,061,973
1,860,614
922,650
423,804
247,021
527,952
6,044,014
1,528,908
390,858
350,608
131,779
75,708
134,247
2,612,108
55
45
5
5
1
11
34
1
1
-
-
-
-
2
1
-
-
-
-
-
1
(Continued)
224
INCOME BEFORE INCOME TAX AND MINORITY INTEREST (Note 25)
$
92,019,242
Amount
INCOME TAX BENEFIT (Notes 2 and 15)
INCOME BEFORE MINORITY INTEREST
MINORITY INTEREST IN INCOME OF AFFILIATES (Notes 2 and 25)
352,453
92,371,695
(55,580)
COMBINED NET INCOME
$
92,316,115
%
35
-
35
-
35
COMBINED EARNINGS PER SHARE (NT$, Note 20)
Basic earnings per share
Diluted earnings per share
Income
Before
Income
Tax and
Minority
Interest
Combined
Net
Income
$
$
3.96
3.96
$
$
3.97
3.97
The accompanying notes are an integral part of the combined financial statements.
(Concluded)
225
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD. AND AFFILIATES
NOTES TO COMBINED FINANCIAL STATEMENTS
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)
(Reviewed, Not Audited)
1. General
Taiwan Semiconductor Manufacturing Company, Ltd. (TSMC), a Republic of China (R.O.C.) corporation, was incorporated as a venture
among the Government of the R.O.C., acting through the Development Fund of the Executive Yuan; Philips Electronics N.V. and certain of
its affiliates (Philips); and certain other private investors. On September 5, 1994, its shares were listed on the Taiwan Stock Exchange
(TSE). On October 8, 1997, TSMC listed some of its shares of stock on the New York Stock Exchange (NYSE) in the form of American
Depositary Shares (ADSs).
TSMC is engaged mainly in the manufacturing, selling, packaging, testing and computer-aided designing of integrated circuits and other
semiconductor devices, and the manufacturing of masks.
TSMC has six direct wholly-owned subsidiaries: TSMC International Investment Ltd. (TSMC International), TSMC North America (TSMC -
North America), Taiwan Semiconductor Manufacturing Company Europe B.V. (TSMC - Europe), TSMC Japan K.K. (TSMC - Japan), TSMC
(Shanghai) Company Limited (TSMC - Shanghai) and TSMC Partners, Ltd. (TSMC Partners). In addition, TSMC has the following consoli-
dating subsidiaries: a 99.5% owned subsidiary, Emerging Alliance Fund, L.P. (Emerging Alliance), a 98% owned subsidiary, VentureTech
Alliance Fund II, L.P. (VTAF II) and two 36% owned affiliates - Chi Cherng Investment Co., Ltd. (Chi Cherng, which is 36% owned by TSMC
and 64% owned by Hsin Ruey Investment Co., Ltd.) and Hsin Ruey Investment Co., Ltd. (Hsin Ruey, which is 36% owned by TSMC and
64% owned by Chi Cherng). TSMC International has two wholly-owned subsidiaries - TSMC Development, Inc. (TSMC Development) and
TSMC Technology, Inc. (TSMC Technology), and two 97% owned subsidiaries - InveStar Semiconductor Development Fund, Inc. (InveStar)
and InveStar Semiconductor Development Fund, Inc. (II) LDC (InveStar II). TSMC Development has a 99.996% owned subsidiary,
WaferTech, LLC (WaferTech). TSMC has two affiliates over which TSMC exercises significant influence: a 47% owned affiliate, Global
UniChip Corporation (GUC), and a 25% owned affiliate, VisEra Technologies Co., Ltd. (VisEra). GUC has a wholly-owned subsidiary,
Global Unichip Corp. - NA (GUC - NA).
The following diagram presents information regarding the relationship and ownership percentages among TSMC and its affiliates as of
December 31, 2004:
TSMC
100%
100%
100%
100%
100%
100%
36%
36%
99.5%
47%
25%
98%
TSMC-
North America
TSMC- Japan
TSMC
International
TSMC-Europe
TSMC Partners
TSMC
Shanghai
Chi Cherng
64%
64%
Hsin Ruey
Emerging
Alliance
GUC
VisEra
VTAF II
100%
100%
97%
97%
TSMC
Technology
TSMC
Development
InveStar
InveStar II
99.996%
WaferTech
100%
GUC-NA
226
TSMC - North America is engaged in the sales and marketing of integrated circuits and semiconductor devices. TSMC - Europe and TSMC
- Japan are engaged mainly in marketing activities. TSMC Technology is engaged mainly in engineering support activities. TSMC -
Shanghai is engaged in the manufacturing and marketing of integrated circuits and other semiconductor devices. TSMC Partners, TSMC
Development, Chi Cherng and Hsin Ruey are engaged in investing activities. TSMC International is engaged in providing investment in
companies involved in the design, manufacture, and other related business in the semiconductor industry. Emerging Alliance, VTAF II,
InveStar and InveStar II are engaged in investing in new start-up technology companies. WaferTech is engaged in the manufacturing, sell-
ing, testing and computer-aided designing of integrated circuits and other semiconductor devices. GUC is engaged in the researching,
developing, manufacturing, testing and marketing of integrated circuits. VisEra is engaged in the manufacturing, material wholesaling
and retailing of electronic spare parts. GUC - NA is engaged in providing consulting services for products in the North America region.
2. Significant Accounting Policies
The combined financial statements are presented in conformity with Criteria Governing Preparation of Affiliation Reports, Consolidated
Business Reports and Consolidated Financial Statements of Affiliated Enterprises in the R.O.C. and regulations governing the preparation
of financial statements of public companies and generally accepted accounting principles in the R.O.C.
For the convenience of readers, the accompanying combined financial statements have been translated into English from the original
Chinese version prepared and used in the R.O.C. If there is any conflict between the English version and the original Chinese version or
any difference in the interpretation of the two versions, the Chinese-language financial statements shall prevail.
Significant accounting policies are summarized as follows:
Combination
All significant intercompany balances and transactions have been eliminated in the combined financial statements. The combined finan-
cial statements include, as of and for the year ended December 31, 2004, the accounts of all directly and indirectly majority owned sub-
sidiaries of TSMC, and the accounts of GUC, GUC - NA and VisEra that TSMC exercises significant influence on. TSMC and the foregoing
affiliates are hereinafter referred to collectively as the "Company".
Minority interests in the aforementioned affiliates are presented separately in the combined financial statements.
Use of Estimates
The preparation of financial statements in conformity with the aforementioned regulations and principles requires management to make
reasonable assumptions and estimates of matters that are inherently uncertain. The actual results may differ from management's estimates.
Classification of Current and Noncurrent Assets and Liabilities
Current assets are those expected to be converted to cash, sold or consumed within one year from the balance sheet date. Current liabili-
ties are obligations due on demand within one year from the balance sheet date. Assets and liabilities that are not classified as current
are noncurrent assets and liabilities, respectively.
227
Cash Equivalents
Government bonds under repurchase agreements and notes acquired with maturities less than three months from the date of purchase
are classified as cash equivalents.
Short-term Investments
Short-term investments primarily consist of corporate bonds, asset-backed securities, bond and stock funds, agency bonds, government
bonds and others.
Short-term investments are recorded at historical cost and are carried at the lower of cost or market value as of the balance sheet date.
An allowance for decline in value is provided and is charged to current earnings when the aggregate carrying value of the investments
exceeds the aggregate market value. A reversal of the allowance is recorded for a subsequent recovery of the market value.
The cost of funds and listed stocks sold are accounted for using the weighted-average method; whereas the other securities are account-
ed for using the specific identification method.
The market value of funds is determined using the net asset value of the funds at the end of the year, and the market value of listed
stocks is determined using the average-closing price of the listed stocks for the last month of the year. The others are determined using
the average of bid and ask prices as of the balance sheet date.
Cash dividends are recorded as investment income in the current year.
Allowance for Doubtful Receivables
Allowances for doubtful receivables are provided based on a review of the collectibility of accounts receivables. The Company determines
the amount of allowance for doubtful accounts by examining the historical collection experience and current trends in the credit quality
of its customers as well as its internal credit policies.
Revenue Recognition and Allowance for Sales Returns and Others
The Company recognizes net sales when the earnings process is complete, as evidenced by an agreement with the customer, transfer of
title and acceptance have occurred or services provided, if applicable, a fixed or determinable price and the collectibility is reasonably
assured. Allowance for sales returns and pricing discounts is estimated based on historical experience and any known factors that would
affect the allowance. Such provisions are deducted from sales in the year the products are sold and the estimated related costs are
deducted from cost of sales.
Sales are determined using the fair value taking into account related sales discounts agreed to by the Company and its customers. Sales
agreements typically provide that payment is due 30 days from invoice date for a majority of the customers and 30 to 45 days after the
end of the month in which the sales occur for some customers. Since the receivables from sales are collectible within one year and such
transactions are frequent, the fair value of receivables is equivalent to the nominal amount of cash received.
Inventories
Inventories are stated at the lower of cost or market value. Inventories are recorded using the weighted-average cost method, or record-
ed at standard cost and adjusted to the approximate weighted-average cost at the end of the year. Market value represents net replace-
ment cost for raw materials, supplies and spare parts. Market value represents net realizable value for finished goods and work in
process. The Company assesses the impact of changing technology on its inventory on hand and writes off inventories that are consid-
ered obsolete. Ending inventories are evaluated for estimated excess quantities and obsolescence based on demand forecast within a spe-
cific time horizon, generally 180 days or less, and the estimated losses on scrap and slow-moving items are recognized in the allowance
for losses.
228
Long-term Investments
Investments in companies wherein the Company exercises significant influence on the operating and financial policy decisions are
accounted for using the equity method of accounting. The Company's proportionate share in the net income or net loss of investee com-
panies is recognized in the "investment income/loss recognized by equity method, net" account. When equity investments are made, the
difference, if any, between the cost of investment and the Company's proportionate share of investee's net equity is amortized using the
straight-line method over five years and is recorded in the "investment income/loss recognized by equity method, net" account.
When the Company subscribes to additional investee shares at a percentage different from its existing equity interest, the resulting carry-
ing amount of the investment in the investee differs from the amount of Company's proportionate share in the investee's net equity. The
Company records such difference as an adjustment to long-term investments with the corresponding amount charged or credited to cap-
ital surplus.
Investments in companies wherein the Company does not exercise significant influence are recorded at historical cost. Cash dividends are
recognized as investment income in the year received but are accounted for as reductions in the carrying amount of the long-term invest-
ments if the dividends are received in the same year that the related investments are acquired. Stock dividends are recorded as an
increase in the number of shares held and do not affect investment income or the carrying amount of the investment. An allowance is
recognized for any decline in the market value of investments with readily ascertainable fair market value with the corresponding amount
recorded as an unrealized loss, a component of shareholders' equity. A reversal of the allowance will result from a subsequent recovery of
the market value of such investments. The carrying amounts of investments whose fair market values are not readily ascertainable are
reduced to reflect an other-than-temporary decline in their values, with the related impairment loss charged to income.
Investments in foreign mutual funds are stated at the lower of aggregate cost or net asset value. An allowance is recognized when the
net assets value of the funds is lower than their cost, with the corresponding amount recorded as a reduction to shareholders' equity. A
reversal of the allowance will result from a subsequent recovery of the net asset value.
The costs of stocks and mutual funds sold are determined using the weighted-average method.
Investments in long-term bonds are stated at amortized cost. The discount or premium is amortized over the duration period using the
interest method, and recorded as an adjustment to interest income.
When investments in publicly-traded stocks are reclassified from short-term investments to long-term investments or from long-term
investments to short-term investments, the Company recognizes a loss to the extent, if any, that the market value of such investments is
lower than the carrying amount, and the market value becomes the new basis.
If an investee company recognizes an unrealized loss on its long-term investments using the lower-of-cost-or-market method, the
Company also recognizes a corresponding unrealized loss in proportion to its ownership percentage in the investee company and records
the amount as a component of its shareholders' equity.
Gains or losses on sales from the Company to investee companies accounted for using the equity method are deferred in proportion to
the Company's ownership percentage in the investee companies until realized through transactions with third parties. The entire amount
of the gains or losses on sales to majority-owned subsidiaries is deferred until such gains or losses are realized through the subsequent
sales of the related products to third parties.
Gains or losses on sales from investee companies to the Company are deferred in proportion to the Company's ownership percentages in
the investee companies until realized through transactions with third parties.
If an investee's functional currency is a foreign currency, translation adjustments will result from the process of translating the investee's
financial statements into the reporting currency of the Company. Such adjustments are accumulated and reported as a separate compo-
nent of shareholders' equity.
229
Property, Plant and Equipment, Assets Leased to Others, Leased Assets and Idle Assets
Property, plant and equipment and assets leased to others are stated at cost less accumulated depreciation. When impairment is deter-
mined, the related assets are stated at the lower of fair value or book value. Idle assets are stated at the lower of net realizable value or
book value. Significant additions, renewals and betterments incurred during the construction period are capitalized. Maintenance and
repairs are expensed in the year incurred. Interest expense incurred for the project during the purchase and construction period is also
capitalized. Properties covered by agreements qualifying as capital leases are carried at the lower of the leased equipment's market value
or the present value of the minimum lease payments at the inception date of the lease.
Depreciation is computed using the straight-line method over the following estimated service lives: land improvements - 20 years; build-
ings - 10 to 50 years; machinery and equipment - 3 to 10 years; office equipment - 3 to 15 years; leased assets - 20 years and other
equipment - 3 to 10 years.
Upon sale or disposal of property, plant and equipment, the related cost and accumulated depreciation are removed from the correspon-
ding accounts, with any gain or loss credited or charged to non-operating income or expenses in the year of sale or disposal.
Goodwill
Goodwill represents the excess of the consideration paid for acquisition over the fair market value of identifiable net assets acquired and
acquisition costs. Goodwill is amortized using the straight-line method over the estimated life of 10 years.
Deferred Charges
Deferred charges consist of technology license fees, software and system design costs and other charges. The amounts are amortized as
follows: technology license fees - the shorter of the estimated life of the technology or the term of the technology transfer contract, soft-
ware and system design costs and other charges -2 or 5 years.
Pension Costs
Net periodic pension costs are recorded based on actuarial calculations. The unrecognized net gains or losses and unrecognized net tran-
sition obligation are amortized over 25 years or over the remaining service period of the employees.
Income Tax
The Company uses an inter-period tax allocation method for income tax. Deferred income tax assets and liabilities are recognized for the
tax effects of temporary differences, unused tax credits, and net operating loss carryforwards. Valuation allowances are provided to the
extent, if any, that it is more likely than not that deferred income tax assets will not be realized. A deferred tax asset or liability is classified
as current or non-current in accordance with the classification of its related asset or liability. However, if a deferred tax asset or liability
does not relate to an asset or liability in the financial statements, then it is classified as either current or noncurrent based on the expect-
ed length of time before it is realized or settled.
Any tax credits arising from the purchases of machinery, equipment and technology, research and development expenditures, personnel
training, and investments in important technology-based enterprises are recognized using the flow-through method.
Adjustments to prior years' tax liabilities are added to or deducted from the current year's tax provision.
Income taxes on unappropriated earnings (excluding earnings from foreign combined affiliates) of 10% are expensed in the year of share-
holder approval which is the year subsequent to the year the earnings are generated.
Stock-based Compensation
Employee stock option plans that are amended or have options granted on or after January 1, 2004 must be accounted for by the inter-
pretations issued by the Accounting Research and Development Foundation. The Company adopted the intrinsic value method and any
compensation cost determined using this method is charged to expense over the employee vesting period.
230
Treasury Stock
When the Company repurchases its outstanding common stock, the cost of the reacquired stock is recorded as treasury stock as a reduc-
tion to shareholders' equity. When the Company retires treasury stock, the treasury stock account is reduced and the common stock as
well as the capital surplus-additional paid-in capital are reversed in proportionate to the equity percentage of the retirement. When the
book value of the treasury stock exceeds the sum of the par value and additional paid-in capital, the difference is charged to capital sur-
plus - treasury stock and to retained earnings for any remaining amount. The Company's stock held by its subsidiaries is also treated as
treasury stock and reclassified from long-term investments to treasury stock. The cash dividends received by the subsidiaries from the
Company are recorded under capital surplus - treasury stock.
Foreign-currency Transactions
Foreign currency transactions are recorded in New Taiwan dollars at the rates of exchange in effect when the transactions occur.
Exchange gains or losses derived from foreign currency transactions or monetary assets and liabilities denominated in foreign currencies
are recognized in current income. At the end of each year, assets and liabilities denominated in foreign currencies are revalued at the pre-
vailing exchange rates with the resulting gains or losses recognized in current income.
Derivative Financial Instruments
The Company enters into foreign currency forward contracts to manage currency exposures in cash flow and in foreign-currency-denomi-
nated assets and liabilities. The contracts are recorded in New Taiwan dollars at the current rate of exchange of the contract date. The dif-
ferences in the New Taiwan dollar amounts translated using the spot rates and the amounts translated using the contracted forward
rates on the contract date are amortized over the terms of the forward contracts using the straight-line method. At the end of each year,
the receivables or payables arising from forward contracts are restated using the prevailing spot rates at the balance sheet date with the
resulting differences charged to income. In addition, the receivables and payables related to the forward contracts of the same counter
party are netted with the resulting amount presented as either an asset or a liability. Any resulting gain or loss upon settlement is credited
or charged to income in the year of settlement.
The Company enters into cross-currency swap contracts to manage currencies exposures on foreign currency denominated assets and lia-
bilities. The principal amount is recorded using the spot rates at the contract date. The differences in the New Taiwan dollar amounts
translated using the spot rates and the amounts translated using the contracted rates on the contract date are amortized over the terms
of the contracts using the straight-line method. At the end of each year, the receivables or payables arising from cross-currency swap
contracts are restated using the prevailing spot rate with the resulting differences charged to income. In addition, the receivables and
payables related to the contracts are netted with the resulting amount presented as either an asset or a liability. The difference in interest
computed pursuant to the contracts on each settlement date or the balance sheet date is recorded as an adjustment to the interest
income or expense associated with the hedged items. Any resulting gain or loss upon settlement is credited or charged to income in the
year of settlement.
The Company enters into interest rate swap contracts to manage exposures to changes in interest rates on existing assets or liabilities.
These transactions are accounted for on an accrual basis, in which the cash settlement receivable or payable is recorded as an adjustment
to interest income or expense associated with the hedged items.
Translation of Foreign-currency Financial Statements
R.O.C. SFAS No. 14, "Accounting for Foreign-currency Transactions," applies to foreign subsidiaries that use the local foreign currency as
their functional currency. The financial statements of foreign subsidiaries are translated into New Taiwan dollars at the following
exchange rates: Assets and liabilities - current rate on balance sheet date; shareholders' equity - historical rate; income and expenses -
average rate during the year. The resulting translation adjustment is recorded as a separate component of shareholders' equity.
231
3. Significant Elimination Entries
Significant transactions and balances with affiliates that have been eliminated upon combination are as follows:
Company
Account
Amount
Transaction Entity
TSMC
Payables to related parties
Deferred credits - gain on intercompany
Receivables from related parties
Other receivables from related parties
Sales
Purchases
Research and development expenses
General and administrative expenses - rent
Marketing expenses - commissions
Other non-operating income and gains
TSMC International
TSMC Partners
TSMC Technology
GUC
TSMC - North America
Other receivables
Interest receivable
Deferred revenue
Interest income
Interest income
Other receivables
Other receivables
Interest receivable
Deferred revenue
Interest income
Accounts receivable
Management service income
Accrued expenses
Operating expenses
Accounts receivable
Accounts receivable
$ 913,107
23,091
21,978
12,591
8,027
6,589
1,881
682,530
15,526,964
56,436
4,285
458
1,472,880
30,278
2,881
142,271,732
371,546
6,535
811
15,203,047
12,752
11,688
13,186
253,341
202,678
28,917
3,267
1,915,020
30,931
630,271
8,919
30,656
9,795,268
2,553,360
41,242
8,631,210
40,875
2,129
14,832
1,103
8,680
18,510
99,262
WaferTech
TSMC - Europe
TSMC - Japan
TSMC - Shanghai
TSMC Technology
GUC
TSMC - North America
TSMC - Shanghai
TSMC - North America
GUC
WaferTech
TSMC - Shanghai
TSMC - Shanghai
VisEra
TSMC Technology
TSMC - North America
GUC
WaferTech
TSMC - Shanghai
WaferTech
TSMC - Shanghai
GUC
GUC
TSMC - Japan
TSMC - Europe
VisEra
WaferTech
TSMC Development
TSMC Development
TSMC Technology
TSMC Technology
TSMC Development
TSMC International
TSMC Development
TSMC Development
TSMC International
TSMC Development
WaferTech
WaferTech
GUC - NA
GUC - NA
GUC
VisEra
232
4. Cash And Cash Equivalents
Cash and bank deposits
Government bonds acquired under repurchase agreements
Corporate issued notes
5. Short-Term Investments
Corporate bonds
Corporate issued asset-backed securities
Bond and stock funds
Agency bonds
Government bonds
Money market funds
Government bonds acquired under repurchase agreements
Listed stocks
Commercial papers
Corporate issued notes
Allowance for valuation losses
Market value
2004
54,838,044
19,215,153
478,213
74,531,410
2004
13,554,598
11,766,877
10,858,945
8,633,889
7,346,858
1,640,973
249,449
168,299
95,666
63,796
54,379,350
(75,708)
54,303,642
55,186,236
$
$
$
$
$
The Company entered into investment management agreements with three well-known financial institutions (fund managers) to manage
investment portfolios for the Company. In accordance with the investment guidelines and terms in these agreements, the securities
invested by the fund managers cannot be below a pre-defined credit rating. As of December 31, 2004, the Company had investment
portfolios with these fund managers that aggregated to an original amount of US$1,200,000 thousand. The investment portfolios
included securities such as corporate bonds, asset-backed securities, agency bonds, government bonds and others. Securities acquired
with maturities less than three months from the date of purchase were reclassified as cash equivalents.
6. Inventories, Net
Finished goods
Work in process
Raw materials
Supplies and spare parts
Allowance for losses
2004
3,547,705
11,509,775
993,151
1,176,735
17,227,366
(1,577,770)
15,649,596
$
$
233
7. Long-Term Investments
Equity method
Vanguard International Semiconductor Corporation (VIS)
Systems on Silicon Manufacturing Company Pte Ltd. (SSMC)
Cost method
Common stocks
Publicly traded stocks
Non-publicly traded stocks
Preferred stocks
Funds
Long-term bonds
Government bonds
Corporate bonds
China Steel Corporation
Taiwan Power Company
Nan Ya Plastics Corporation
Formosa Plastics Corporation
Formosa Petrochemical Corporation
Other investments
2004
Carrying
Amount
% of
Owner-Ship
$ 5,401,982
3,290,888
8,692,870
71,832
1,226,499
1,677,865
290,134
3,266,330
10,260,481
2,978,804
915,276
407,526
405,485
202,595
15,170,167
10,521,740
$ 37,651,107
28
32
-
-
-
-
-
-
-
-
-
-
-
VIS reduced its capital on August 11, 2004 in order to decrease its accumulated deficit. The number of shares of VIS held by TSMC after the
capital reduction declined from 787,016 thousand shares to 409,532 thousand shares. TSMC's ownership percentage remained the same.
For the year ended December 31, 2004, net investment income recognized from the equity method investees was NT$2,061,973 thou-
sand. The carrying amounts of investments accounted for under the equity method and the related investment income or losses were
determined based on the audited financial statements of the investees as of and for the same periods as the Company.
As of December 31, 2004, other investments consist of the following:
Nominal
Amount
Carrying
Amount
Range of
Interest Rates
Maturity Date
Step-up callable deposits
Domestic bank
Foreign bank
Callable range accrual deposits
$
2,000,000
2,138,340
$ 2,007,681
2,152,394
2.05%-2.20%
1.44%-4.75%
July 2007 to August 2007
June 2007 to August 2007
Foreign bank
6,383,400
6,414,151
(See below)
September 2009 to December 2009
$ 10,521,740
$ 10,574,226
234
During the year ended December 31, 2004, the Company deposited funds into structured-time deposits with the following terms:
The interest rate of the step-up callable deposits is determined by the Company and the related banks.
The amount of interest earned by the Company for the callable range accrual deposits is based on a pre-defined range as determined by
the 3-month or 6-month LIBOR rate plus an agreed upon rate ranging between 2.1% and 3.45%. Based on the terms of the deposits, if
the 3-month or 6-month LIBOR rate moves outside of the pre-defined range, the interest paid to the Company is at a minimum rate of
1.5%. Under the term of the contracts, the bank has the right to cancel the contracts prior to the maturity date.
Deposits that reside in banks located in Hong Kong and Singapore amounted to NT$2,553,360 thousand and NT$638,340 thousand,
respectively.
8. Property, Plant And Equipment
Accumulated depreciation consisted of the following:
Land improvements
Buildings
Machinery and equipment
Office equipment
Leased assets
Other equipment
$
2004
172,484
38,161,926
287,229,318
5,685,185
33,115
41,112
$
331,323,140
Information on the status of the expansion or construction plans of TSMC's manufacturing facilities as of December 31, 2004 is as follows:
Construction / Expansion Plan
Estimated
Total Cost
Accumulated
Expenditures
Expected Date of Commencement
Fab 12 expansion
$ 58,744,200
$ 41,870,300
January 2005
Interest expense for the year ended December 31, 2004 was NT$1,807,242 thousand (before deducting capitalized amounts of
NT$278,334 thousand in 2004). The interest rates used for purposes of calculating the capitalized amounts were 1.89% to 2.89% in 2004.
The Company entered into agreements to lease certain buildings that qualify as capital leases. The term of the lease is from December
2003 to December 2013. Certain buildings that are leased to others are accounted for as operating leases. The related carrying amount is
recorded as in the "Other assets" account.
235
9. Deferred Charges, Net
Technology license fees
Software and system design costs
Others
10. Short-Term Bank Loans
$
$
2004
6,642,884
2,251,709
324,307
9,218,900
2004
Unsecured loan in U.S. dollars:
US$12,000 thousand, repayable by June 2006, annual interest at 2.80%
$
383,004
11. Long-Term Bank Loans
Unsecured loan:
US$60,000 thousand, repayable by December 2006, annual interest at 2.475%
Science Park Administration (SPA) SOC loan, repayable by October 2008 in 20 equal payments,
interest-free
SPA DSP loan, repayable by July 2007 in 20 equal payments, interest-free
Less - current portion
2004
1,915,020
10,443
6,761
1,932,224
5,489
1,926,735
$
$
As of December 31, 2004, all the assets of WaferTech with a carrying amount of approximately NT$15,955,936 thousand (US$499,920
thousand) were pledged for the credit line of the secured loan (no secured loan was outstanding as of December 31, 2004). WaferTech is
required to maintain compliance with certain financial covenants defined in the agreement. As of December 31, 2004, WaferTech was in
compliance with all such financial covenants. Under the unsecured loan agreement, the Company is required maintain compliance with
certain financial covenants which, if violated, could result in payment of the obligation prior to the originally scheduled payment date.
The Company was in compliance with the financial covenants as of December 31, 2004.
As of December 31, 2004, principal repayments under the Company's long-term bank loans are as follows:
Year of Repayment
2005
2006
2007
2008
Amount
5,489
1,920,509
4,137
2,089
1,932,224
$
$
236
12. Bonds Payable
Domestic unsecured bonds:
Issued in December 2000 and repayable in December 2005 and 2007 in two equal payments,
5.25% and 5.36% interest payable annually, respectively
Issued in January 2002 and repayable in January 2007, 2009 and 2012 in three equal payments,
2.6%, 2.75% and 3.00% interest, payable annually, respectively
As of December 31, 2004, future principal repayments for the Company's bonds are as follows:
Year of Repayment
2005
2007
2009
2010 and thereafter
13. Other Long-Term Payables
Payables for acquisition of property, plant and equipment (Note 23k)
Payables for royalties
Less - current portion
2004
15,000,000
15,000,000
30,000,000
Amount
10,500,000
7,000,000
8,000,000
4,500,000
30,000,000
2004
6,030,007
3,440,313
9,470,320
1,505,345
7,964,975
$
$
$
$
$
$
TSMC entered into several license arrangements for certain semiconductor-related patents. Future minimum payments under the agree-
ments as of December 31, 2004 are as follows:
Year
2005
2006
2007
2008
2009 and thereafter
Amount
1,505,345
466,786
446,838
255,336
766,008
3,440,313
$
$
The current portion of other long-term payables is recorded in the "accrued expenses and other current liabilities" account.
237
14. Pension Plan
TSMC and GUC have defined benefit plans for all regular employees that provide benefits based on the employee's length of service and
average monthly salary and wages for the six-month period prior to retirement and one-month period prior to retirement, respectively.
TSMC and GUC contribute at an amount equal to 2% of salaries and wages paid each month to their respective pension funds (the
Funds). The Funds are administered by their respective pension fund monitoring committees (the Committees) and deposited in the
Committees' name in the Central Trust of China.
Information on the pension plans is summarized as follows:
a. Components of net periodic pension cost
Service cost
Interest cost
Projected return on plan assets
Amortization
Net periodic pension cost
b. Reconciliation of the funded status of the plans and accrued pension cost
Benefit obligation
Vested benefit obligation
Nonvested benefit obligation
Accumulated benefit obligation
Additional benefits based on future salaries
Projected benefit obligation
Fair value of plan assets
Funded status
Unrecognized net transitional obligation
Unrecognized net loss
Accrued pension cost
Vested benefit
c. Actuarial assumptions
Discount rated used in determining present values
Future salary increase rate
Expected rate of return on plan assets
$
$
$
$
$
2004
638,652
129,039
(42,071)
8,829
734,449
2004
69,424
2,711,898
2,781,322
2,138,852
4,920,174
(1,455,148)
3,465,026
(135,516)
(216,469)
3,113,041
78,579
2004
3.25% -3.50%
3.00%
2.50% -3.25%
238
d. Contributions to the Funds
e. Payments from the Funds
15. Income Tax
2004
228,523
2004
1,446
$
$
a. A reconciliation of income tax on income before income tax and minority interest at the statutory rate and income tax expense is as follows:
Income tax based on income before income tax and minority interest at the statutory rate
Tax-exempt income
Temporary and permanent differences
Current income tax on income before income tax credits
b. Income tax benefit consists of:
Current income tax on income before income tax credits
Additional 10% income tax on unappropriated earnings
Net operating loss carryforwards
Income tax credits
Other income tax
Net change in deferred income tax assets and liabilities
Net operating loss carryforwards
Investment tax credits
Temporary differences
Net change in valuation allowance of deferred income tax assets
Adjustment of prior years' taxes
2004
$ (24,704,552)
14,712,500
187,005
$
(9,805,047)
$
2004
(9,805,047)
(823,932)
769
10,478,158
(555,794)
(1,656,944)
249,932
1,132,188
1,333,217
(94)
Income tax benefit
$
352,453
239
c. Deferred income tax assets (liabilities) consist of the following:
Current
Investment tax credits
Net operating loss carryforwards
Temporary differences
Valuation allowance
Noncurrent
Net operating loss carryforwards
Investment tax credits
Temporary differences
Valuation allowance
2004
8,867,307
12,134
321,478
(282,933)
8,917,986
6,773,516
17,136,517
(7,757,244)
(14,502,810)
1,649,979
$
$
$
$
d. Integrated income tax information:
The balance of the imputation credit account (ICA) of the TSMC as of December 31, 2004 was zero.
The expected creditable ratio of TSMC for distribution of earnings of 2004 was zero.
The imputation credits allocated to the shareholders are based on the balance as of the date of dividend distribution. The expected
creditable ratio for distribution of earnings of 2004 may be adjusted when the allocation of the imputation credits is made.
e. TSMC's earnings generated prior to December 31, 1997 have been appropriated.
f. As of December 31, 2004, the Company's investment tax credits consisted of the following:
Regulation
Items
Statute for Upgrading
Purchase of machinery and
Industries
equipment
Statute for Upgrading
Research and development
Industries
expenditures
Total
Creditable
Amounts
4,448,442
3,819,937
4,886,611
4,140,462
6,309,182
23,604,634
2,270,013
3,165,378
3,363,356
2,015,531
1,885,311
$
$
$
Remaining
Creditable
Amounts
-
116,189
4,886,611
4,140,462
6,309,182
15,452,444
-
3,165,378
3,363,356
2,015,531
1,885,311
12,699,589
$
10,429,576
$
$
$
$
Expiry
Year
2004
2005
2006
2007
2008
2004
2005
2006
2007
2008
(Continued)
240
Regulation
Items
Statute for Upgrading
Personnel training
Industries
Statute for Upgrading
Industries
Investments in important
technology-based enterprises
Total
Creditable
Amounts
Remaining
Creditable
Amounts
$
$
$
48,659
29,448
27,358
26,962
132,427
38,036
$
$
$
-
29,448
27,358
26,962
83,768
38,036
Expiry
Year
2004
2005
2006
2007
2005
As of December 31, 2004, the net operating loss carryforwards were generated from WaferTech, TSMC Development, TSMC
Technology and GUC and will expire at various dates through 2024.
g. The sales generated from the following expansion and construction of TSMC's manufacturing plants are exempt from income tax:
Construction of Fab 6
Construction of Fab 8 - module B
Expansion of Fab 2 - modules A and B, Fab 3 and Fab 4, Fab 5 and Fab 6
Construction of Fab 12
Tax-Exemption Periods
2001 to 2004
2002 to 2005
2003 to 2006
2004 to 2007
The tax authorities have examined income tax returns of TSMC through 2000. However, TSMC is contesting the assessment of the tax
authority for 1992 and 1998. TSMC believes that any additional assessment will not have a material adverse effect on TSMC.
16. Labor Cost, Depreciation And Amortization Expense
Labor cost
Salary
Labor and health insurance
Pension
Other
Depreciation
Amortization
For the Year Ended December 31, 2004
Classified as
Cost of Sales
Classified as
Operating
Expenses
Total
$ 10,730,104
572,829
472,918
431,082
$ 6,018,288
328,637
277,870
537,129
$ 16,748,392
901,466
750,788
968,211
$ 12,206,933
$ 7,161,924
$ 19,368,857
$ 61,705,023
2,496,897
$
$
2,598,009
$ 3,111,875
$ 64,303,032
5,608,772
$
241
17. Shareholders' Equity
TSMC has issued a total of 668,351 thousand ADSs which are traded on the NYSE as of December 31, 2004. The number of common
shares represented by the ADSs is 3,341,754 thousand shares (one ADS represents five common shares).
Capital surplus can only be used to offset a deficit under the Company Law of the R.O.C. However, the capital surplus generated from
donations and the excess of the issue price over the par value of capital stock (including the stock issued for new capital, mergers, con-
vertible bonds and the surplus arising from treasury stock transactions) may be appropriated as stock dividends restricted to a certain per-
centage based on shareholders' ownership.
As of December 31, 2004, the capital surplus consisted of the following:
From merger
Additional paid-in capital
From long-term investments
From convertible bonds
Donations
Treasury stock
Total
2004
24,003,546
23,051,675
121,354
9,360,424
55
205
56,537,259
$
$
TSMC's Articles of Incorporation, as revised on December 21, 2004, provide that the following shall be appropriated from annual earn-
ings to the extent that the annual earnings exceed any cumulative deficit:
a. 10% legal reserve; until the amount of total legal reserve equals the TSMC's paid-in capital;
b. Special reserve in accordance with relevant laws or regulations;
c. Remuneration to directors and supervisors and bonuses to employees at 0.3% and at least 1% of the remainder, respectively.
Individuals eligible for the employee bonuses may include employees of affiliated companies as approved by the board of directors or a
representative of the board of directors;
d. The appropriation of any remaining balance shall be approved by the shareholders.
Dividends may be distributed by way of cash dividend or stock dividend at the discretion of TSMC. As the operation of TSMC is at a
steady growth stage, distribution of profits shall be made preferably by way of cash dividend. Distribution of profits may also be made by
way of stock dividend; provided however, the ratio for stock dividend shall not exceed 50% of total distribution.
Any appropriations of net income are recorded in the financial statements in the year of shareholder approval.
An appropriation for legal reserve is required until the reserve equals the aggregate par value of TSMC's issued capital stock. The reserve
can only be used to offset a deficit or be distributed as a stock dividend up to 50% of the reserve balance when the reserve balance has
reached 50% of the aggregate par value of the issued capital stock of TSMC.
242
A special reserve equivalent to the net debit balance of the other components of shareholder's equity (for example, unrealized loss on
long-term investments and cumulative translation adjustments, but excluding treasury stock), shall be made from unappropriated earn-
ings pursuant to existing regulations promulgated by the R.O.C. Securities and Futures Bureau (SFB). Any special reserve appropriated
may be reversed to the extent that the net debit balance of the related account reverses.
The appropriation of the earnings of 2003 was approved in the shareholders' meeting on May 11, 2004. The appropriations and divi-
dend per share are as follows:
Legal reserve
Special reserve
Bonus paid to employees - in cash
Bonus paid to employees - in stock
Preferred stock dividend - in cash
Common stock dividend - in cash
Common stock dividend - in stock
Remuneration to directors and supervisors - in cash
Appropriation of Earnings
Dividend Per Share (NT$)
$
4,725,870
(68,945)
681,628
2,726,514
184,493
12,159,971
28,373,267
127,805
$
48,910,603
$
0.35
0.60
1.41
The amount of the above appropriation of earnings for 2003 is consistent with the resolution of the meeting of board of directors on
February 17, 2004. However, the Company Law of the R.O.C. states TSMC, as a holder of treasury stock shall not participate in the appro-
priations of earnings. Therefore, the actual cash dividend per share and stock dividend per share are slightly more than those in the
aforementioned resolution. If the above employee bonus paid in stock had been paid in cash and all of the bonus to employees and
remuneration to directors and supervisors had been charged against income for 2003, the after income tax basic earnings per share for
the year ended December 31, 2003 would have decreased from NT$2.33 to NT$2.15. The shares distributed as a bonus to employees
represented 1.35% of TSMC's total outstanding common shares as of December 31, 2003.
As of January 13, 2005, the board of directors of TSMC has not resolved the appropriation for earnings of 2004.
The above information about the appropriations of bonus to employees and remuneration to directors and supervisors is available at
Market Observation System website.
Under the Integrated Income Tax System that became effective on January 1, 1998, the R.O.C. resident shareholders are allowed a tax
credit for their proportionate share of the income tax paid by TSMC on earnings generated since January 1, 1998.
18. Stock-Based Compensation Plans
Stock Option Plans
TSMC's Employee Stock Option Plans, the TSMC 2003 Plan and the TSMC 2002 Plan, were approved on October 29, 2003 and June 25,
2002, respectively. The maximum number of units authorized to be granted under the TSMC 2003 Plan and the TSMC 2002 Plan is
120,000 thousand and 100,000 thousand, respectively, with each unit representing one common share of stock. The option rights may
be granted to qualified employees of TSMC or any of its domestic or foreign subsidiaries, in which TSMC's shareholding with voting
rights, directly or indirectly, is more than fifty percent (50%). The option rights of both plans are valid for ten years and exercisable at cer-
tain percentages subsequent to the second anniversary of the grant date. Under the terms of the plans, stock option rights are granted at
an exercise price equal to the closing price of TSMC's common shares listed on the TSE on the date of grant. Under the TSMC 2003 Plan
and the TSMC 2002 Plan, units that were never granted, or had been granted and subsequently cancelled were expired as of December
31, 2004.
243
GUC's Employee Stock Option Plans, the GUC 2003 Plan and the GUC 2002 Plan, were approved on January 23, 2003 and July 1, 2002,
respectively. The maximum number of units authorized to be granted under the GUC 2003 Plan and the GUC 2002 Plan is 7,535 units
and 5,000 units, respectively, with each unit representing one thousand common shares of stock. The option rights may be granted to
qualified employees of GUC. The option rights of both plans are valid for six years and exercisable at certain percentages subsequent to
the second anniversary of the grant date. Under the GUC 2002 Plan and the GUC 2003 Plan, units that were never granted, or had been
granted and subsequently cancelled were expired as of December 31, 2004.
On August 16, 2004, GUC's 2004 stock option plan (the GUC 2004 Plan) was approved by the Bureau of Monetary Affairs, Financial
Supervisory Commission of the R.O.C. The maximum number of units authorized to be granted is 2,500 units, with each unit represent-
ing one thousand common shares of stock. The option rights may be granted to qualified employees of GUC and its subsidiary. The
option rights of GUC 2004 plan are valid for six years and exercisable at certain percentages subsequent to the second anniversary of the
grant date. As of December 31, 2004, no option rights under the GUC 2004 Plan have been granted.
On November 2, 2004, the board of directors of TSMC approved the 2004 stock option plan ( the TSMC 2004 Plan), in which the maxi-
mum number of units authorized to be granted is 11,000 thousand, with each unit representing one common share of stock. The option
rights may be granted to qualified employees of TSMC or any of its domestic or foreign subsidiaries, in which TSMC's shareholding with
voting rights, directly or indirectly, is more than fifty percent (50%). The option rights of the plans are valid for ten years and exercisable
at certain percentages subsequent to the second anniversary of the grant date. Under the terms of the plan, stock option rights are
granted at an exercise price equal to the closing price of TSMC's common shares listed on the TSE on the date of grant. The TSMC 2004
plan was approved by the Bureau of Monetary Affairs, Financial Supervisory Commission of the R.O.C. on January 6, 2005.
Information on TSMC's outstanding stock options for the year ended December 31, 2004 is as follows:
TSMC 2003 Plan
TSMC 2002 Plan
Number of
Outstanding
Stock Option
Rights
(in Thousands)
Weighted-
Average
Exercise
Price
(NT$)
Number of
Outstanding
Stock Option
Rights
(in Thousands)
Weighted-
Average
Exercise
Prices
(NT$)
842
13,199
-
(1,404)
12,637
57.8
49.9
-
50.9
48,515
7,201
(87)
(3,899)
51,730
42.7
42.6
41.8
44.2
Beginning outstanding balance
Options granted
Options exercised
Options cancelled
Ending outstanding balance
The number of outstanding option rights and exercise prices have been adjusted to reflect the appropriations of dividends in accordance
with the above plans.
244
Information on GUC's outstanding stock options for the year ended December 31, 2004 is as follows:
Beginning outstanding balance
Options granted
Ending outstanding balance
GUC 2003 Plan
GUC 2002 Plan
Number of
Outstanding
Stock Option
Rights
2,058
831
2,889
Weighted-
Average
Exercise
Price
(NT$)
10.5
10.5
Number of
Outstanding
Stock Option
Rights
5,000
-
5,000
Weighted-
Average
Exercise
Prices
(NT$)
10.5
-
As of December 31, 2004, information on outstanding and exercisable option rights is as follows:
Range of
Exercise
Price (NT$)
$43.8-$57.8
$32.8-$46.2
Options Outstanding
Options Exercisable
Number of
Outstanding
Options (in
Thousands)
Weighted-
Average
Remaining
Contractual
Life (Years)
Weighted-
Average
Exercise
Price (NT$)
Number of
Exercisable
Options (in
Thousands)
Weighted-
Average
Exercise
Price (NT$)
12,637
51,730
64,367
$
9.34
8.09
8.33
50.3
42.6
44.1
-
10,307
$
10,307
-
41.7
41.7
TSMC 2003 Plan
TSMC 2002 Plan
Options Outstanding
Options Exercisable
Range of
Exercise
Price (NT$)
Number of
Outstanding
Options
Remaining
Contractual
Life (Years)
Weighted-
Average
Exercise
Price (NT$)
Number of
Exercisable
Options
Weighted-
Average
Exercise
Price (NT$)
GUC 2003 Plan
GUC 2002 Plan
10.5
10.5
2,889
5,000
7,889
4.17-5.42
3.58-4.17
3.58-5.42
10.5
10.5
10.5
-
4,238
4,238
-
10.5
10.5
The compensation cost recognized by the Company for the year ended December 31, 2004 was zero. Had the Company used the fair
value based method to evaluate the options granted, the method, assumptions and pro forma results of the Company for the year ended
December 31, 2004 would have been as follows:
Method:
Assumptions:
Expected dividend yield
Expected volatility
Risk free interest rate
Expected life
Net income:
Net income as reported
Pro forma net income
Black-Scholes Model
0%-1.00%
38.74%-46.15%
2.56%-3.85%
5-6 years
$
92,316,115
92,256,103
(Continued)
245
Earnings per share (EPS) - after income tax:
Basic EPS as reported
Pro forma basic EPS
Diluted EPS as reported
Pro forma diluted EPS
NT$
3.97
3.97
3.97
3.97
The estimated weighted average fair value for the options granted of TSMC and GUC during the year ended December 31, 2004 was
NT$19.73 and NT$4.42 per option, respectively.
In 1996, WaferTech adopted an Executive Incentive Plan, which was amended in 1997. According to the 1997 amendment, the Board of
Directors of WaferTech approved the Senior Executive Incentive Plan and the Employee Incentive Plan (the WaferTech Plans) under which
officers, key employees and non-employee directors may be granted stock option rights. The WaferTech Plans provide for 15,150 thou-
sand option rights available for grant. For option rights granted to date, the option purchase price was equal to or exceeded the fair mar-
ket value at the date of grant. The options will expire if not exercised at specified dates ranging from May 2006 and June 2011. In
December 2000, WaferTech implemented a Stock Option Buyback Program (Buyback). The Buyback program provides employees with
the right to sell back to WaferTech all vested stock options and outstanding ownership interests granted under the WaferTech Plans. As of
December 31, 2004, the outstanding and exercisable stock options were 134 thousand and 133 thousand, respectively, and US$616
thousand was accrued in connection with the Buyback program.
Stock Appreciation Rights
In December 2000, WaferTech and TSMC - North America implemented a stock appreciation rights program (Appreciation). The
Appreciation plan is designed to provide employees with a long-term incentive plan that tracks the appreciation of TSMC common stock
through Stock Appreciation Rights (SARs). SARs provide each participant the right to receive, upon exercise, an amount in cash from
WaferTech and TSMC - North America that is the excess of the market price of TSMC common stock on TSE on the date of exercise over
the exercise price. As of December 31, 2004, WaferTech and TSMC - North America accrued US$381 thousand and US$1,360 thousand,
respectively, in connection with the Appreciation. During 2002, benefits under the Appreciation plan for TSMC - North America were
replaced by the TSMC stock option plans aforementioned.
19. Treasury Stock (Common Stock)
Year ended December 31, 2004
Reclassification of parent company stock held by
subsidiaries from long-term investments
Repurchase under share buyback plan
Beginning
Shares
Increase /
Dividend
Decrease
Ending
Shares
(Shares in Thousand)
40,597
-
40,597
5,676
124,720
752
124,720
130,396
125,472
45,521
-
45,521
246
Proceeds from the sale of treasury stock for the year ended December 31, 2004 were NT$39,906 thousand. TSMC's capital stock held by
a subsidiary as an investment is recorded as treasury stock, with the holder having the same rights as other common shareholders. As of
December 31, 2004, the book value of the treasury stock was NT$1,595,186 thousand; the market value was NT$2,241,009 thousand.
TSMC held a special meeting of the board of directors and approved a share buyback plan to repurchase TSMC's common shares listed
on the TSE during the period from March 24, 2004 to May 23, 2004. TSMC repurchased 124,720 thousand common shares for a total
of NT$7,059,798 thousand. All the treasury stock repurchased under the buyback plan was retired on August 16, 2004.
20. Earnings Per Share
EPS for the year ended December 31, 2004 is computed as follows:
Amounts (Numerator)
EPS (NT$)
Income
Before
Income Tax
and Minority
Interest
Number of
Shares
(Denominator)
(Thousand)
Combined
Net Income
Income
Before
Income Tax
and Minority
Interest
Combined
Net Income
Basic EPS
Income available to common shareholders
Effect of diluted securities - stock options
$ 92,019,242
-
$ 92,316,115
-
23,248,682
6,404
$
3.96
$
3.97
Diluted earnings per share
Income available to common shareholders
$ 92,019,242
$ 92,316,115
23,255,086
$
3.96
$
3.97
21. Related Party Transactions
Except as disclosed elsewhere in the combined financial statements, the following is a summary of significant related party transactions:
a. Industrial Technology Research Institute (ITRI), the Chairman of TSMC is one of its directors
b. Philips, a major shareholder of TSMC
c. Investees of TSMC
VIS
SSMC
d. Omnivision International Holding, Ltd. (Omnivision), a shareholder holding a 25% ownership in VisEra
e. Huawei Semiconductor (Shanghai) Co., Ltd. (Huawei), the president of which is the president of VisEra
247
For the year ended
Sales
Philips and its affiliates
Omnivision
Other
Purchase
VIS
SSMC
Huawei
Manufacturing expenses - technical assistance fees
Philips (see Note 23a)
Proceeds from disposal of property, plant and equipment
VIS
Non-operating income and gains
SSMC (primarily technical service income; see Note 23e)
VIS (primarily technical service income; see Note 23j)
At end of the year
Receivables
Philips and its affiliates
Omnivision
ITRI
Other Receivables
SSMC
VIS
Payables
VIS
Philips and its affiliates
SSMC
Huawei
Other long-term payables
Philips and its affiliates
2004
Amount
%
5,463,565
1,969,396
87,453
7,520,414
9,169,602
5,869,123
195,965
15,234,690
907,047
33,974
364,505
117,760
482,265
581,487
479,877
16,454
2
1
-
3
21
13
-
34
1
2
6
2
8
54
44
2
1,077,818
100
63,701
47,599
57
43
111,300
100
1,533,938
469,494
207,794
30,522
69
21
9
1
2,241,748
100
2,317,972
100
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
The terms of sales to related parties are not significantly different from those to third parties. For other related parties transactions, since
there are no other similar transactions to follow, the prices are determined in accordance with the related contractual agreements.
248
22. Significant Long-Term Operating Leases
TSMC leases land from the SPA. These agreements expire on various dates from March 2008 to December 2020. The agreements can be
renewed upon their expiration.
TSMC -North America leases its office premises and certain equipment under non-cancelable operating agreements. TSMC-Europe and
TSMC - Japan entered into lease agreements for their office premises. The leases will expire between 2005 and 2010. The agreements
can be renewed upon their expiration.
GUC leases land from the SPA. The agreement will expire in December 2021. The agreement can be renewed upon their expiration.
As of December 31, 2004 future remaining lease payments are as follows:
Year
2005
2006
2007
2008
2009
2010 and thereafter
Amount
356,284
355,013
342,773
327,588
324,559
1,537,325
3,243,542
$
$
23. Significant Commitments and Contingencies
The significant commitments and contingencies of the Company as of December 31, 2004 are as follows:
a. On June 20, 2004, TSMC and Philips revised the Technical Cooperation Agreement, which was originally signed on May 12, 1997, with
an effective date from January 1, 2004 for five years. Upon expiration, this amended Technical Cooperation Agreement will be termi-
nated at the expiration date and will not be automatically renewed. Under this amended Technical Cooperation Agreement, TSMC will
pay Philips royalties based on fixed amounts mutually agreed-on, rather than under certain percentage of TSMC's annual net sales.
TSMC and Philips also agree to cross license the patents owned by each party. TSMC also obtained through Philips a number of patent
cross licenses.
b. Under a technical cooperation agreement with ITRI, TSMC shall reserve and allocate up to 35% of certain of its production capacity for
use by the Ministry of Economic Affairs (MOEA) or any other party designated by the MOEA.
c. Under several foundry agreements, TSMC shall reserve a portion of its production capacity for certain major customers that have guar-
antee deposits with TSMC. As of December 31, 2004, TSMC had a total of US$12,802 thousand of guarantee deposits.
d. Under a Shareholders Agreement entered into with Philips and EDB Investments Pte Ltd. on March 30, 1999, the parties formed a joint
venture company, SSMC, for the purpose of constructing an integrated circuit foundry in Singapore. As of December 31, 2004, TSMC's
equity interest in SSMC was 32%. TSMC and Philips committed to buy specific percentages of the production capacity of SSMC. If any
party defaults on the commitment and the capacity utilization of SSMC falls below a specific percentage of its total capacity, the
defaulting party is required to compensate SSMC for all related unavoidable costs.
249
e. TSMC provides technical services to SSMC under a Technical Cooperation Agreement (the Agreement) entered into on May 12, 1999.
TSMC receives compensation for such services computed at a specific percentage of net selling price of certain products sold by SSMC.
The Agreement shall remain in force for ten years and may be automatically renewed for successive periods of five years each unless
pre-terminated by either party under certain conditions.
f. Under a Technology Transfer Agreement (TTA) with National Semiconductor Corporation (National) entered into on June 27, 2000,
TSMC shall receive payments for the licensing of certain technology to National. The agreement was to remain in force for ten years
and could be automatically renewed for successive periods of two years thereafter unless either party gives notice for early termination
under certain conditions. In January 2003, TSMC and National entered into a Termination Agreement whereby the TTA was terminated
for convenience. Under the Termination Agreement, TSMC will be relieved of any further obligation to transfer any additional technolo-
gy. In addition, TSMC granted National an option to request the transfer of certain technologies under the same terms and conditions
as the terminated TTA. The option will expire in January 2008.
g. Beginning in 2001, TSMC entered into several licensing arrangements for certain semiconductor patents. The terms of the contracts
range from five to ten years with payments to be made in the form of royalties over the term of the related contracts. TSMC has
recorded the related amounts as a liability with the corresponding amounts recorded as deferred charges which are amortized and
charged to cost of sales on a straight-line basis over the estimated life of the technology or the term of the contract, whichever is
shorter.
h. In November 2002, TSMC entered into an Amended and Restated Joint Technology Cooperation Agreement with Philips, Motorola,
Inc. and STMicroelectronics to jointly develop 90-nm to 65-nm advanced CMOS Logic and e-DRAM technologies. TSMC also agreed to
align 0.12 micron CMOS Logic technology to enhance its foundry business opportunities. TSMC will contribute process technologies
and share a portion of the costs associated with this joint development project.
i. In December 2003, TSMC entered into a Technology Development and License Agreement with Motorola, Inc. to jointly develop 65-
nm SOI (silicon on insulator) technology. TSMC will also license related 90-nm SOI technology from Motorola, Inc. Any intellectual
properties arising out of the co-development project shall be jointly owned by the parties. In accordance with the agreement, TSMC
will pay royalties to Motorola, Inc. and will share a portion of the costs associated with the joint development project.
j. TSMC provides a technology transfer to VIS under a Manufacturing License and Technology Transfer Agreement entered into in August
2004. TSMC receives compensation for such technology transfer in the form of royalty payments from VIS computed at specific per-
centages of net selling price of certain products sold by VIS. VIS agreed to reserve its certain capacity to manufacture for TSMC certain
products at prior as agreed by the parties.
k. Under an agreement signed with a certain company, TSMC - Shanghai has the obligation to purchase certain assets within a specified
period at the price agreed upon by both parties. TSMC - Shanghai will compensate the other party in case of a breach of the agree-
ment.
l. GUC entered into a research and development project (DSP core) with the SPA. In accordance with the contract, the SPA provided a
NT$13,522 thousand grant (DSP grants) to GUC during the period of January 2000 to June 2001 for the development of new prod-
ucts. GUC should repay the loan after the accomplishment of the project. In addition, GUC should also pay the SPA a 2% royalty fee
based on the sales of the developed products every three months for the subsequent three years, starting from the first date of the
product sale. The total royalty should not exceed 60% of the DSP grants.
250
m. GUC entered into a research and development project (Platform Development for System-On-a-Chip Integration, Verification and
Testing) with the SPA. In accordance with the contract, the SPA provided a NT$13,923 thousand grant (SOC grants) to GUC during the
period of April 2001 to September 2002 for the development of new products. GUC should repay the loan after the accomplishment
of the project. In addition, GUC should also pay the SPA a 2% royalty fee based on the sales of the developed products every three
months for the subsequent three years, starting from the first date of the product sale. The total royalty should not exceed the 60% of
the SOC grants.
n. Amounts available under unused letters of credit as of December 31, 2004 were NT$6,480 thousand, US$1,282 thousand and SG$85
thousand. Among the unused letters of credit, TSMC - North America has an outstanding irrevocable standby letter of credit for
US$1,078 thousand. The standby letter of credit was entered into as security to the landlord of TSMC - North America's office spaces
in San Jose, California. The standby letter of credit will expire in October, 2005.
o. The Company filed a series of lawsuits in late 2003 and 2004 in both state and federal courts in California and with the U.S.
International Trade Commission against Semiconductor Manufacturing International Corporation ("SMIC"), SMIC (Shanghai), and SMIC
Americas. The lawsuits alleged that SMIC companies infringed multiple patents of the Company and misappropriated the Company's
trade secrets. These suits have been settled out of court on January 30, 2005. As part of the agreement, SMIC will pay TSMC US$175
million over six years to resolve the Company's patent infringement and trade secret claims.
24. Additional Disclosures
Following are the additional disclosures required by the SFB for the Company and its investees:
a. Financing provided: Please see Table 1 attached;
b. Endorsement/guarantee provided: Please see Table 2 attached;
c. Marketable securities held: Please see Table 3 attached;
d. Marketable securities acquired and disposed of at costs or prices of at least NT$100 million or 20% of the paid-in capital: Please see
Table 4 attached;
e. Acquisition of individual real estate properties at costs of at least NT$100 million or 20% of the paid-in capital: Please see Table 5
attached;
f. Disposal of individual real estate properties at prices of at least NT$100 million or 20% of the paid-in capital: None;
g. Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the capital: Please see Table 6
attached;
h. Receivable from related parties amounting to at least NT$100 million or 20% of the paid-in capital: Please see Table 7 attached;
i. Names, locations, and related information of investees of which the Company exercises significant influence: Please see Table 8
attached;
251
j. Financial instrument transactions:
1) Derivative financial instruments
The Company entered into derivative financial instrument transactions for the year ended December 31, 2004 to manage exposures
related to foreign exchange rate and interest rate fluctuations. Certain information on these contracts is as follows:
a) Outstanding forward exchange contracts as of December 31, 2004 are as follows:
Financial Instruments
Currency
Maturity Date
Sell
Sell
US$/NT$
US$/EUR
January 2005 to March 2005
January 2005
Contract Amount
(in Thousands)
US$
US$
733,000
159,081
As of December 31, 2004, receivables from forward exchange contracts (included in the "other financial assets" account) aggre-
gate to approximately NT$392,534 thousand; payables from forward exchange contracts (included in the "other current liabilities"
account) aggregate to approximately NT$559 thousand.
b) Cross currency swaps
Outstanding cross currency swap contracts as of December 31, 2004 are as follows:
Maturity Date
Contract Amount
(in Thousands)
Range of Interest
Rate Paid
Range of Interest
Rate Received
January 2005 to June 2005
US$
1,420,000
1.28%-2.72%
0.49%-1.17%
As of December 31, 2004, receivables from the cross currency swap contracts (included in the "other financial assets" account)
were approximately NT$761,030 thousand.
Net exchange gain or loss arising from forward exchange contracts and cross currency swap contracts was recognized in the "for-
eign exchange loss, net" account and the difference in interest was recorded in interest income or expense.
c) Interest rate swaps
Outstanding contracts as of December 31, 2004 were as follows:
Contract Date
Period
Contract Amount
September 2003
October 2003
October 2003
October 2003
October 2003
November 2003
September 2003 to December 2005
October 2003 to December 2005
October 2003 to December 2005
October 2003 to December 2005
October 2003 to December 2005
November 2003 to December 2005
$
500,000
500,000
500,000
500,000
500,000
500,000
252
d) Transaction risk
i) Credit risk. Credit risk represents the positive net settlement amount of those contracts with positive fair values at the balance
sheet date. The positive net settlement amount represents the loss incurred by the Company if the counter-parties breached the
contracts. The banks, which are the counter-parties to the foregoing derivative financial instruments, are reputable financial
institutions. Management believes its exposure related to the potential default by those counter-parties is low.
ii) Market price risk. All derivative financial instruments are intended as hedges for fluctuations in foreign exchange rates and inter-
est rates. Gains or losses from these hedging instruments are likely to be offset by gains or losses from the hedged items.
Interest rate risks are also controlled as the expected cost of capital is fixed. Thus, market price risks are believed to be low.
iii) Cash flow risk and the amount and period of future cash needs.
As of December 31, 2004, the Company's future cash needs for outstanding forward exchange contracts and cross currency
swap contracts are as follows:
Term
Within one year
Inflow
(In Thousands)
$
EUR
69,761,484
118,500
Outflow
(In Thousands)
US$
2,312,081
The Company has sufficient operating capital to meet the above cash needs. In addition, there will be corresponding cash
inflow for the cash outflow. Therefore, the cash flow risk is low.
2) Fair values of financial instruments were as follows:
Non-derivative financial instruments
Assets
Short-term investments, net
Long-term investments (securities with market price)
Liabilities
Bonds payable (including current portion)
Derivative financial instruments
Forward exchange contracts (sell)
Cross currency swap contracts
Interest rate swap contracts
2004
Carrying
Amount
Fair Value
$ 54,303,642
31,165,721
$ 55,186,236
34,265,072
30,000,000
30,607,341
391,975
761,030
4,361
317,090
760,012
(22,714)
253
The above financial instruments do not include cash and cash equivalents, receivables, other financial assets, payables, and payable
to contractors and equipment suppliers. The carrying amounts of the aforementioned instruments reported in the balance sheet
approximate their fair values.
The above financial instruments also exclude refundable deposits, guarantee deposits, long-term investments that do not have quot-
ed market prices as well as other long-term payables. The future cash inflow and outflow of the deposits approximate their fair val-
ues. Some of long-term investments do not have quoted market prices; therefore, fair values for those long-term investments are
not shown above. The fair value of other long-term payables is determined using the discounted value of expected cash flows,
which approximates the carrying value.
Fair values of financial instruments were determined as follows:
a) Fair value of short-term and publicly traded long-term investments is based on quoted market prices.
b) The fair value of bonds payable is the quoted market value.
c) Fair value of derivative financial instruments is the amount receivable from or payable to the counter-party if the contracts were
terminated on the balance sheet date.
k. Information on investment in Mainland China
1) The name of the investee company in mainland China, the main businesses and products, its issued capital, method of investment,
information on inflow or outflow of capital, ratio of ownership, equity in the net gain or net loss, ending balance, amount received
as earnings distributions from the investment, and the limitation on investment: Please see Table 9 attached.
2) Significant direct or indirect transactions with the investee company, its prices and terms of payment, unrealized gain or loss, and
other related information which is helpful to understand the impact of investment in mainland China on financial reports: Please
see Note 21.
254
25. Segment Financial Information
a. Geographic information for the year ended December 31, 2004:
Overseas
Taiwan
Adjustments
and
Elimination
Combined
Sales to unaffiliated customers
Transfers between geographic areas
$ 142,650,532
16,808,395
$ 116,960,703
142,005,640
$
-
(158,814,035)
$ 259,611,235
-
Total sales
$ 159,458,927
$ 258,966,343
$(158,814,035)
$ 259,611,235
Gross profit
Operating expenses
Non-operating income and gains
Non-operating expenses and losses
Income before income tax and minority interest
Minority interest in income of affiliates
Identifiable assets
Long-term investments
Total assets
b. Gross export sales
$
6,173,780
$ 110,588,670
$
(526,331)
$ 89,451,648
$ 417,993,101
$ (44,418,225)
$ 116,236,119
(27,648,783)
6,044,014
(2,612,108)
$ 92,019,242
$
55,580
$ 463,026,524
37,651,107
$ 500,677,631
The export sales information is determined based on billed regions. Gross export sales for the year ended December 31, 2004 were
NT$95,066,154 thousand. There were no export sales to a region that accounted for more than 10% of the Company's total sales.
c. Major customer
The Company has no customer that accounts for more than 10% of its total sales in 2004.
255
TABLE 1
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD. AND AFFILIATES
FINANCING PROVIDED
FOR THE YEAR ENDED DECEMBER 31, 2004
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
No.
Financing Name
Counter-party
Financial Statement Account
1
TSMC International
TSMC Development
Other receivables
TSMC Technology
Other receivables
2
TSMC Partners
TSMC Development
Other receivables
Maximum Balance
for the Period (US$ in
Thousand)
Ending Balance
(US$ in Thousand)
$
(US$
(US$
(US$
1,915,020
60,000)
$
(US$
319,170
10,000)
1,915,020
60,000)
-
2,553,360
80,000)
(US$
2,553,360
80,000)
Note 1:The No. 2 represents necessary for short-term financing.
Note 2:Not exceeding the issued capital of the Company.
Note 3:Generally not exceeding the issued capital of the Company, unless approved by all members of the board.
TABLE 2
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD. AND AFFILIATES
ENDORSEMENT/GUARANTEE PROVIDED
FOR THE YEAR ENDED DECEMBER 31, 2004
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
No.
Endorsement/
Guarantee Provider
Name
Nature of Relationship
(Note 2)
Limits on Each Counter-party's Endorsement/
Guarantee Amounts
Counter-party
0
The Company
TSMC Development
TSMC - North America
WaferTech
Not exceed 10% of the net worth of the Company, and
also limiting to the total capital issued of the endorse-
ment/guarantee company, unless otherwise approved
by Board of Directors.
3
2
3
Note 1: 25% of the net worth of the Company as of December 31, 2004.
Note 2: The No. 2 represents a subsidiary in which the Company holds directly over 50% of the equity interest.
The No. 3 represents an investee in which the Company holds directly and indirectly over 50% of the equity interest.
256
Interest Rate
Type of Financing
(Note 1)
Transaction
Amounts
Reasons for
Short-term
Financing
Allowance for
Bad Debt
1.50%
-
1.50%
$
2
-
2
-
-
-
Operating capital
$
-
Operating capital
-
-
-
Collateral
Item
Value
Financing Limit
for Each
Borrowing
Company
Financing
Company's
Financing
Amount Limits
(US$ in Thousand)
$
-
-
-
-
-
-
N/A
$
(US$
31,532,982
987,968)
(Note 2)
N/A
(Note 3)
Maximum Balance for the Year
(US$ in Thousand)
Ending Balance
(US$ in Thousand)
Value of Collateral Property,
Plant and Equipment
Ratio of Accumulated Amount of
Collateral to Net Equity of the
Latest Financial Statement
Maximum Collateral/Guarantee
Amounts Allowable
(Note 1)
$
(US$
(US$
(US$
1,915,020
60,000)
1,276,680
40,000)
14,043,480
440,000)
$
$
(US$
(US$
1,915,020
60,000)
1,276,680
40,000)
-
-
-
-
$ 99,741,325
0.48%
0.32%
-
257
TABLE 3
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD. AND AFFILIATES
MARKETABLE SECURITIES HELD
DECEMBER 31, 2004
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
Held Company Name
Marketable Securities Type and Name
Relationship with the
Company
Financial Statement
Account
The Company
Government bonds
2003 Government Bond Series A
United States Treas NTS
2003 Government Bond Series I
2004 Government Bond Series A
2004 Government Bond Series E
2004 Kaohsiung Municipal Bond Series A
Bonds under repurchase agreement
Bond funds
JF Taiwan Bond Fund
ABN AMRO Bond Fund
JF Taiwan First Bond Fund
INVESCO R.O.C. Bond A Fund
Dresdner Bond DAM Fund
Barits Bond Fund
Shinkong Chi Shin Bond Fund
ABN AMRO Select Bond Fund
NITC Bond Fund
HSBC NTD Money Management Fund
Stock
Taiwan Mask Corp.
TSMC International
VIS
TSMC Partners
SSMC
TSMC - North America
GUC
TSMC - Japan
VisEra
TSMC - Europe
United Industrial Gases Co., Ltd.
Shin-Etsu Handotai Taiwan Co., Ltd.
W.K. Technology Fund IV
Hontung Venture Capital Co., Ltd.
Globaltop Partner I Venture Capital Corp.
Corporate bonds
Taiwan Power Company
Abbott Labs
Abbott Labs
Ace Ltd
AIG Sunamerica Global Fing IX
Allstate Finl Global Fdg LLC
American Express Co.
American Gen Fin Corp.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Subsidiary
Investee
Subsidiary
Investee
Subsidiary
Investee
Subsidiary
Investee
Subsidiary
-
-
-
-
-
-
-
-
-
-
-
-
-
Short-term investment
Short-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
258
December 31, 2004
Shares / Units
(In Thousands of)
Carrying Value
(US$ in Thousand)
Percentage of
Ownership
Market Value or
Net Asset Value
(US$ in Thousand)
Note
-
-
-
-
-
-
-
78,698
134,906
84,886
76,705
80,833
76,640
151,594
18,235
3,764
41,568
1,787
987,968
409,532
300
382
11,000
39,040
6
5,100
-
16,783
10,500
5,000
8,392
5,000
-
-
-
-
-
-
-
-
$ 1,207,409
US$ 192,357
3,397,081
2,349,573
3,893,827
620,000
249,449
1,153,209
1,956,175
1,151,463
1,101,911
900,000
900,000
2,100,000
200,000
600,000
600,000
6,528
23,778,997
5,401,982
3,908,356
3,290,888
502,242
391,626
102,572
59,116
25,439
193,584
105,000
50,000
83,916
50,000
2,777,798
US$ 2,732
1,581
US$
US$
1,046
US$ 1,032
US$ 3,171
US$ 3,550
US$ 1,768
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
-
100
28
100
32
100
47
100
25
100
10
7
2
10
1
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
$ 1,202,028
US$ 191,824
3,393,982
2,352,973
3,892,025
620,000
251,593
1,169,406
1,978,785
1,162,632
1,111,932
910,904
907,765
2,115,554
201,183
602,703
601,958
27,552
23,778,997
8,493,692
3,908,356
3,290,888
1,179,352
418,272
102,572
59,116
25,439
284,036
170,940
55,146
53,571
49,909
2,749,413
US$ 2,709
US$ 1,587
US$ 1,042
US$ 1,028
US$ 3,096
US$ 3,503
US$ 1,765
Treasury stock of NT$677,110 thou-
sand is deducted from the carrying
value.
(Continued)
259
Held Company Name
Marketable Securities Type and Name
Relationship with the
Company
Financial Statement
Account
American Gen Fin Corp. Mtn
American Gen Fin Corp. Mtn
American Honda Fin Corp. Mtn
American Intl Group Inc. Mtnf
Amgen Inc.
Amsouth Bk Birmingham Ala
ANZ Cap Tr I
Bank New York Inc.
Bank New York Inc.
Bank Scotland Treas Svcs PLC
Bank Utd Houston TX Mtbn
Bear Stearns Cos Inc.
Bear Stearns Cos Inc. Medium Te
Berkshire Hathaway Fin Corp.
Bristol Myers Squibb Co.
British Telecommunications PLC
Cargill Inc.
Chase Manhattan Corp. New
Cit Group Hldgs Inc.
Citigroup Inc.
Citigroup Inc.
Citigroup Inc.
Colonial Pipeline Co.
Compaq Computer Corp.
Consolidated Edison Co. NY Inc.
Corestates Cap Corp.
Countrywide Fdg Corp. Mtn
Countrywide Home Lns Inc.
Credit Suisse Fb USA Inc.
Credit Suisse First Boston
Credit Suisse First Boston USA
Daimlerchrysler North Amer
Daimlerchrysler North Amer Hld
Dell Computer Corp.
Den Danske BK Aktieselskab
Deutsche Telkom Intl Fin BV
Diageo PLC
Dow Chem Co.
European Invt Bk
Fifth Third Bk Cincinnati OH
First Data Corp.
First Un Corp.
Fleet Finl Group Inc. New
Fleet Finl Corp Inc. New
Ford Mtr Cr Co.
FPL Group Cap Inc.
FPL Group Cap Inc.
General Elec Cap Corp. Mtn
General Elec Cap Corp. Mtn
General Elec Cap Corp. Mtn
Genworth Finl Inc.
Goldman Sachs Group Inc. Mtn
Goldman Sachs Group LP
Goldman Sachs Group LP
Greenpoint Finl Corp.
GTE Corp.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
260
December 31, 2004
Shares / Units
(In Thousand)
Carrying Value
(US$ in Thousand)
Percentage of
Ownership
Market Value or
Net Asset Value
(US$ in Thousand)
Note
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 3,130
US$ 1,058
US$ 3,800
US$ 3,795
US$ 3,005
US$ 1,972
US$ 1,012
US$ 1,525
US$ 3,945
US$ 2,715
US$ 580
US$ 3,518
US$ 3,105
US$ 1,498
US$ 3,819
US$ 2,104
US$ 2,120
US$ 1,628
US$ 3,203
US$ 2,000
US$ 1,033
US$ 3,583
US$ 1,625
US$ 3,719
US$ 3,687
US$ 1,062
US$ 2,158
US$ 5,210
US$ 2,645
US$
786
US$ 2,249
US$ 997
US$ 749
US$ 3,054
US$ 2,192
US$ 1,852
US$ 3,459
US$ 921
US$ 8,315
US$ 2,419
US$ 3,013
US$ 970
US$ 494
US$ 975
US$ 1,542
US$ 1,001
US$ 860
US$ 3,467
US$ 1,040
US$ 3,886
US$ 3,412
US$ 3,505
US$ 1,637
US$ 1,100
US$ 974
US$ 2,134
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
US$ 3,087
US$ 1,042
US$ 3,803
US$ 3,795
US$ 2,991
US$ 1,978
US$ 1,001
US$ 1,509
US$ 3,943
US$ 2,717
US$ 574
US$ 3,493
US$ 3,105
US$ 1,494
US$ 3,788
US$ 2,091
US$ 2,079
US$ 1,613
US$ 3,195
US$ 2,002
US$ 1,033
US$ 3,523
US$ 1,612
US$ 3,593
US$ 3,618
US$ 1,060
US$ 2,151
US$ 5,157
US$ 2,599
US$ 779
US$ 2,240
US$ 999
US$ 755
US$ 3,025
US$ 2,166
US$ 1,838
US$ 3,477
US$ 911
US$ 8,236
US$ 2,466
US$ 2,986
US$ 965
US$ 493
US$ 962
US$ 1,535
US$ 990
US$ 846
US$ 3,455
US$ 1,040
US$ 3,878
US$ 3,408
US$ 3,494
US$ 1,599
US$ 1,075
US$ 972
US$ 2,109
(Continued)
261
Held Company Name
Marketable Securities Type and Name
Relationship with the
Company
Financial Statement
Account
Hancock John Global Fdg Mtn
Hartford Finl Svcs Group Inc.
Hartford Finl Svcs Group Inc.
Heller Finl Inc.
Hershey Foods Corp.
Hewlett Packard Co.
Honeywell Inc.
Household Fin Corp.
Household Fin Corp.
Household Fin Corp. Mtn Bk Ent
HSBC USA Inc. New
Huntington Natl Bk
Huntington Natl Bk Columbus OH
ING Bank
ING Sec Life Ins Ingslf
Intl Bk For Recon + Dev
JP Morgan Chase + Co.
Jackson Natl Life Global Fdg
Jackson Natl Life Global Fdg S
JP Morgan Chase + Co.
Keycorp Mtn Book Entry
KFW Intl Fin Inc.
Kraft Foods Inc.
Kraft Foods Inc.
Lehman Brothers Hldgs Inc.
Lehman Brothers Hldgs Inc.
Lehman Brothers Hldgs Inc.
Lilly Eli + Co.
Lincoln Natl Corp. In
Merita Bk Ltd NY Brh
Merrill Lynch + Co. Inc.
Metropolitan Life Global Mtn
Monumental Global Fdg II
Monumental Global Fdg II
Monumental Global Fdg II 2002A
Morgan Stanley
Morgan Stanley Group Inc.
Morgan Stanley Group Inc.
National Westminster Bk PLC
Nationsbank Corp.
Nationwide Bldg Soc
Nationwide Life Global Mtn
Pepsico Inc. Mtn Book Entry
PNC Fdg Corp.
Popular North Amer Inc. Mtn
Premark Intl Inc.
Pricoa Global Fdg I Mtn
Pricoa Global Fdg I Mtn
Principal Life Global Fdg I Gl
Protective Life Secd Trs
Prudential Ins Co. Amer
Reinsurance Group Amer Inc.
Royal Bk Scotland Group PLC
Royal Bk Scotland Group PLC
Royal Bk Scotland Group PLC
Safeco Corp.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
262
December 31, 2004
Shares / Units
(In Thousand)
Carrying Value
(US$ in Thousand)
Percentage of
Ownership
Market Value or
Net Asset Value
(US$ in Thousand)
Note
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 1,003
US$ 765
US$ 296
US$ 1,171
US$ 1,627
US$ 3,373
US$ 3,284
US$ 529
US$ 2,993
US$ 3,542
US$ 1,154
US$ 3,003
US$ 2,954
US$ 2,114
US$ 3,012
US$ 5,232
US$ 1,043
US$ 1,036
US$ 2,998
US$ 3,663
US$ 3,500
US$ 5,104
US$ 773
US$ 1,037
US$ 1,163
US$ 3,705
US$ 2,171
US$ 3,750
US$ 519
US$ 538
US$ 3,486
US$ 1,907
US$ 2,500
US$ 1,534
US$ 1,045
US$ 2,136
US$ 3,638
US$ 1,050
US$ 1,433
US$ 3,644
US$ 3,457
US$ 1,463
US$ 3,818
US$ 1,080
US$ 3,042
US$ 2,954
US$ 3,507
US$ 3,050
US$ 3,168
US$ 2,920
US$ 2,648
US$ 2,091
US$ 1,563
US$ 564
US$ 369
US$ 765
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
US$ 986
US$ 758
US$ 296
US$ 1,163
US$ 1,606
US$ 3,305
US$ 3,218
US$ 522
US$ 2,985
US$ 3,510
US$ 1,134
US$ 3,000
US$ 2,961
US$ 2,113
US$ 3,007
US$ 5,102
US$ 1,039
US$ 1,032
US$ 2,988
US$ 3,629
US$ 3,502
US$ 5,027
US$ 765
US$ 1,036
US$ 1,162
US$ 3,634
US$ 2,154
US$ 3,749
US$ 518
US$ 533
US$ 3,481
US$ 1,910
US$ 2,501
US$ 1,516
US$ 1,034
US$ 2,128
US$ 3,628
US$ 1,048
US$ 1,422
US$ 3,549
US$ 3,477
US$ 1,469
US$ 3,817
US$ 1,075
US$ 3,022
US$ 2,914
US$ 3,503
US$ 3,047
US$ 3,102
US$ 2,969
US$ 2,610
US$ 2,089
US$ 1,547
US$ 558
US$ 364
US$ 763
(Continued)
263
Held Company Name
Marketable Securities Type and Name
Relationship with the
Company
Financial Statement
Account
Salomon Smith Barney Hldgs Inc.
Sara Lee Corp.
SBC Communications Inc.
SBC Communications Inc.
Scotland Intl Fin B V 144A
Shell Finance (UK) PLC
SLM Corp.
SLM Corp. Medium Term Nts
SP Powerassets Ltd Global
Suntrust Bks Inc.
Swedbank Sparbanken Svenge AB
TIAA Global Mkts Inc.
Tribune Co. Med Trm Nts
Union Planters
Unitedhealth Group Inc.
US Bk Natl Assn Cincinnati OH
Virginia Elec + Pwr Co.
Vodafone Group PLC New
Wachovia Corp.
Wal Mart Cda Venture Corp.
Washington Mut Fin Corp.
Washington Mut Inc.
Washington Post Co.
Wells Fargo + Co. New
Westfield Cap Corp. Ltd
China Steel Corporation
Taiwan Power Company
Nan Ya Plastics Corporation
Formosa Plastics Corporation
Formosa Petrochemical Corporation
Agency bonds
Fed Hm Ln Pc
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Mtg Corp
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp. Mtn
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
264
December 31, 2004
Shares/Units
(In Thousand)
Carrying Value
(US$ in Thousand)
Percentage of
Ownership
Market Value or
Net Asset Value
(US$ in Thousand)
Note
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 3,160
US$ 1,596
US$ 3,681
US$ 2,251
US$ 1,533
US$ 3,604
US$ 500
US$ 2,950
US$ 991
US$ 1,062
US$ 1,084
US$ 519
US$ 2,943
US$ 2,755
US$ 3,119
US$ 2,669
US$ 2,884
US$ 2,559
US$ 3,720
US$ 3,670
US$ 4,768
US$ 4,735
US$ 3,182
US$ 3,697
US$ 1,999
2,978,804
915,276
407,526
405,485
202,595
US$ 3,466
US$ 2,532
US$ 1,042
US$ 4,927
US$ 7,962
US$ 7,014
US$ 4,936
US$ 4,948
US$ 2,454
US$ 7,018
US$ 4,996
US$ 7,042
US$ 6,098
US$ 2,909
US$ 13,953
US$ 13,983
US$ 13,981
US$ 6,978
US$ 3,388
US$ 4,953
US$ 9,997
US$ 998
US$ 4,933
US$ 4,930
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
US$ 3,100
US$ 1,601
US$ 3,617
US$ 2,245
US$ 1,532
US$ 3,553
US$ 501
US$ 2,985
US$
992
US$ 1,060
US$ 1,067
US$ 514
US$ 2,965
US$ 2,704
US$ 3,097
US$ 2,687
US$ 2,838
US$ 2,561
US$ 3,600
US$ 3,602
US$ 4,689
US$ 4,682
US$ 3,180
US$ 3,631
US$ 1,999
2,977,695
914,582
407,484
405,322
200,000
US$ 3,462
US$ 2,520
US$ 1,024
US$ 4,947
US$ 7,939
US$ 6,924
US$ 4,949
US$ 4,944
US$ 2,468
US$ 7,004
US$ 4,973
US$ 6,985
US$ 6,084
US$ 2,907
US$ 13,898
US$ 13,946
US$ 13,946
US$ 6,928
US$ 3,419
US$ 4,941
US$ 9,943
US$ 993
US$ 4,936
US$ 4,938
(Continued)
265
Held Company Name
Marketable Securities Type and Name
Relationship with the
Company
Financial Statement
Account
Federal Home Loan Mtg Assn
Federal Home Loan Mtg Corp.
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn Mtn
Federal Natl Mtg Assn Mtn
Freddie Mac
Fed Hm Ln Pc Pool E89857
Fed Hm Ln Pc Pool G11295
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn Gtd
FNMA Pool 685116
FNMA Pool 725095
FNMA Pool 790828
FNMA Pool 793932
FNMA Pool 794040
FNMA Pool 795548
FNMA Pool 806642
GNMA II Pool 081150
GNMA II Pool 081153
Government Natl Mtg Assn
Corporate issued asset-backed securities
Aegis Asset Backed Secs Tr
Aesop Fed II LLC
Aesop Fed II LLC
American Express Cr Account Ma
American Home Mtg Invt Tr
Americredit Automobile Receiv
Americredit Automobile Rec Tr
Americredit Automobile Rec Tr
Americredit Automobile Receivb
Atlantic City Elc Trns Fdg LLC
Banc Amer Coml Mtg Inc.
Banc Amer Mtg Secs Inc.
Bank of Amer Lease Equip Tr
Bear Stearns Alt A Tr
Bear Stearns Asset Backed Secs
BMW Veh Owner Tr
California Infr + Economic Dev
California Infras + Economic
California Infrastructure Dev
Capital Auto Receivables Asset
Capital One Auto Fin Tr
Capital One Auto Fin Tr
Capital One Auto Fin Tr
Capital One Multi Asset Execut
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
266
December 31, 2004
Shares/Units
(In Thousand)
Carrying Value
(US$ in Thousand)
Percentage of
Ownership
Market Value or
Net Asset Value
(US$ in Thousand)
Note
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 4,847
US$ 4,903
US$ 5,270
US$ 6,940
US$ 6,903
US$ 4,981
US$ 6,997
US$ 15,787
US$ 7,000
US$ 4,929
US$ 2,535
US$ 2,277
US$ 6,096
US$ 4,435
US$ 3,558
US$ 3,645
US$ 4,242
US$ 2,141
US$ 4,765
US$ 3,486
US$ 1,003
US$ 2,008
US$ 4,807
US$ 994
US$ 1,021
US$
977
US$ 2,006
US$
999
US$ 3,789
US$ 1,734
US$ 2,000
US$ 4,955
US$ 1,912
US$ 3,445
US$
949
US$ 2,002
US$ 1,055
US$ 2,000
US$ 4,949
US$ 926
US$ 5,364
US$ 4,030
US$ 4,023
US$ 1,478
US$ 2,000
US$ 4,978
US$ 4,298
US$ 6,126
US$ 5,089
US$ 4,018
US$ 319
US$ 1,147
US$ 3,000
US$ 4,957
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
US$ 4,891
US$ 4,943
US$ 5,237
US$ 6,937
US$ 6,917
US$ 4,953
US$ 6,983
US$ 15,798
US$ 6,976
US$ 4,934
US$ 2,531
US$ 2,273
US$ 6,075
US$ 4,440
US$ 3,539
US$ 3,615
US$ 4,188
US$ 2,126
US$ 4,719
US$ 3,446
US$ 1,002
US$ 2,003
US$ 4,773
US$
994
US$ 1,020
US$
975
US$ 2,004
US$ 997
US$ 3,766
US$ 1,700
US$ 2,004
US$ 4,963
US$ 1,888
US$ 3,427
US$ 949
US$ 1,998
US$ 1,048
US$ 1,990
US$ 4,912
US$
923
US$ 5,315
US$ 4,006
US$ 3,995
US$ 1,489
US$ 2,000
US$ 4,941
US$ 4,230
US$ 6,064
US$ 5,035
US$ 3,992
US$ 318
US$ 1,145
US$ 2,989
US$ 4,977
(Continued)
267
Held Company Name
Marketable Securities Type and Name
Relationship with the
Company
Financial Statement
Account
Caterpillar Finl Asset Tr
Centex Home Equity Ln Tr
Cit Equip Coll Tr
Citibank Cr Card Issuance Tr
Citicorp Mtg Secs
CNH Equip Tr
Comm 2004 Htl 1
Credit Suisse First Boston Mtg
CWABS Inc.
CWABS Inc.
CWABS Inc.
CWABS Inc.
CWABS Inc.
CWABS Inc.
CWALT Inc.
CWABS Inc.
CWABS Inc.
Daimlerchrysler Auto Tr
Daimlerchrysler Auto Tr
Daimlerchrysler Auto Tr
Detroit Edison Securitization
Fifth Third Auto Tr
Finance Amer Mtg Ln Tr
First Franklin Mtg Ln Tr
First Horizon Abs Tr
First Union Lehman Bros Mtg Tr
First USA Credit Cr Master Tr
Ford Cr Auto Owner Tr
Granite Mtgs PLC
GS Auto Ln Tr
GS Mtg Secs Corp.
Harley Davidson Motorcycle Tr
Harley Davidson Motorcycle Tr
Holmes Fing No 8 PLC
Honda Auto Receivables
Household Automotive Tr
Hyundai Auto Receivables Tr
IMPAC Cmb Tr
IMPAC Cmb Tr
IMPAC Secd Assets Corp.
Long Beach Accep Auto Receivab
Merrill Lynch Mtg Invs Inc.
Merrill Lynch Mtg Invs Inc.
Monumentl Global Fdg II
National City Auto Receivables
Navistar finl 2003 A Owner Tr
Nissan Auto Receivables
Nissan Auto Receivables Own Tr
Nissan Auto Receivables Owner
ONYX Accep Owner Tr
ONYX Accep Owner Tr
Providian Gateway Owner Tr
Providian Gateway Owner Tr
Reliant Energy Transition Bd
Residential Asset Mtg Prods
Residential Asset Mtg Prods
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
268
December 31, 2004
Shares/Units
(In Thousand)
Carrying Value
(US$ in Thousand)
Percentage of
Ownership
Market Value or
Net Asset Value
(US$ in Thousand)
Note
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 10,008
US$ 3,500
US$ 4,999
US$ 4,959
US$ 2,364
US$ 5,000
US$ 4,600
US$ 4,209
US$ 1,647
US$ 1,903
US$ 1,907
US$ 2,000
US$ 5,000
US$ 3,500
US$ 4,292
US$ 2,317
US$ 4,040
US$ 4,991
US$ 4,982
US$ 4,897
US$ 674
US$ 3,000
US$ 985
US$ 2,002
US$ 2,000
US$ 3,567
US$ 5,011
US$ 10,999
US$ 5,000
US$ 2,948
US$ 2,944
US$ 3,417
US$ 5,999
US$ 5,001
US$ 5,000
US$ 513
US$ 3,500
US$ 1,414
US$ 988
US$ 3,570
US$ 2,526
US$ 1,460
US$ 1,500
US$ 1,000
US$ 1,206
US$ 4,928
US$ 7,000
US$ 4,999
US$ 4,853
US$ 963
US$ 4,913
US$ 4,204
US$ 3,992
US$ 5,185
US$ 3,731
US$ 3,000
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
US$ 9,923
US$ 3,493
US$ 4,991
US$ 4,965
US$ 2,363
US$ 4,952
US$ 4,607
US$ 4,178
US$ 1,662
US$ 1,907
US$ 1,912
US$ 1,997
US$ 5,055
US$ 3,541
US$ 4,277
US$ 2,298
US$ 4,040
US$ 4,970
US$ 4,970
US$ 4,893
US$ 671
US$ 2,999
US$ 986
US$ 2,006
US$ 2,000
US$ 3,534
US$ 5,008
US$ 10,936
US$ 5,000
US$ 2,970
US$ 2,944
US$ 3,400
US$ 5,938
US$ 5,052
US$ 4,991
US$ 511
US$ 3,468
US$ 1,413
US$ 988
US$ 3,566
US$ 2,502
US$ 1,460
US$ 1,502
US$ 1,001
US$ 1,207
US$ 4,889
US$ 6,958
US$ 4,993
US$ 4,872
US$ 961
US$ 4,933
US$ 4,201
US$ 3,982
US$ 5,117
US$ 3,672
US$ 2,980
(Continued)
269
Held Company Name
Marketable Securities Type and Name
Relationship with the
Company
Financial Statement
Account
Residential Fdg Mtg Secs I Inc.
Sequoia Mtg Tr
Sequoia Mtg Tr
Sequoia Mtg Tr
Sequoia Mtg Tr
Sequoia Mtg Tr
Structured Adj Rate Mtg Ln Tr
Structured Asset Secs Corp.
Thoornburg Mtg Secs Tr
Toyota Auto Receivables 2003B
Triad Auto Receivables Tr
TXU Elec Delivery Transition
USAA Auto Owner Tr
Wachovia Auto Owner Tr
Wachovia Auto Owner Tr
WFS Financial Owner Trust
WFS Finl 2004 2 Owner Tr
WFS Finl 2004 4 Owner Tr
Whole Auto Ln Tr
Whole Auto Ln Tr
Whole Auto Ln Tr
World Omni Auto Receivables Tr
Commercial papers
Corporate issued notes
Money market funds
Equity
Horizon Venture Fund I, L.P.
Crimson Asia Capital Ltd., L.P.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Long-term investment
Long-term investment
TSMC - North America
TSMC stock
Parent company
Short-term investment
Chi Cherng
Hsin Ruey
TSMC International
TSMC stock
TSMC stock
Money market fund
BOA Fund
Stock
InveStar
InveStar II
TSMC Development
TSMC Technology
3DFX Interactive Inc.
TSMC Development
WaferTech stock
InveStar
Common stock
RichTek Technology Corp.
Advanced Power Electronics Corp.
Broadtek Electronics Corp.
Monolithic Power Systems, Inc.
Parent company
Short-term investment
Parent company
Short-term investment
-
Short-term investment
Subsidiary
Subsidiary
Subsidiary
Subsidiary
-
Subsidiary
-
-
-
-
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
270
December 31, 2004
Shares/Units
(In Thousand)
Carrying Value
(US$ in Thousand)
Percentage of
Ownership
Market Value or
Net Asset Value
(US$ in Thousand)
Note
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
14,151
15,670
15,700
US$ 3,659
US$ 2,504
US$ 1,960
US$ 1,488
US$ 2,000
US$ 3,500
US$ 3,037
US$ 1,403
US$ 1,921
US$ 4,970
US$ 5,042
US$ 7,736
US$ 4,000
US$ 6,000
US$ 4,999
US$ 5,008
US$ 4,994
US$ 5,399
US$ 5,967
US$ 4,000
US$ 3,000
US$ 5,963
US$ 2,997
US$ 1,999
US$ 21,114
246,485
43,649
677,110
458,564
459,512
30,300
US$ 30,300
24,320
51,300
1
1
68
US$ 34,514
US$ 34,534
US$ 603,993
US$ 5,544
-
-
US$ 484,060
682
1,108
869
1,975
US$ 67
US$ 502
US$ 275
US$ 1,567
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
-
-
-
N/A
97
97
100
100
-
99
-
-
-
-
US$ 3,631
US$ 2,513
US$ 1,955
US$ 1,486
US$ 2,000
US$ 3,500
US$ 3,031
US$ 1,394
US$ 1,923
US$ 4,930
US$ 4,997
US$ 7,715
US$ 3,991
US$ 5,991
US$ 4,995
US$ 4,989
US$ 4,992
US$ 5,342
US$ 5,966
US$ 3,969
US$ 2,964
US$ 5,906
US$ 2,997
US$ 1,999
US$ 21,114
246,485
43,649
696,661
771,451
772,897
US$ 30,300
US$ 34,514
US$ 34,534
US$ 603,993
US$ 5,544
-
US$ 484,060
US$ 1,370
US$ 697
US$ 225
US$ 19,910
(Continued)
271
Held Company Name
Marketable Securities Type and Name
Relationship with the
Company
Financial Statement
Account
SiRF Technology Holdings, Inc.
Broadtek Electronics Corp.
Programmable Microelectronics (Taiwan), Corp.
Global Testing Corp.
RichTek Technology Corp.
Signia Technologies, Inc.
Incentia Design Systems, Inc.
Advanced Power Electronics Corp.
Capella Microsystems (Taiwan), Inc.
Preferred stock
Integrated Memory Logic, Inc.
Sensory, Inc.
Sonics, Inc.
NanoAmp Solutions, Inc.
Memsic, Inc.
Reflectivity, Inc.
IP Unity
Tropian, Inc.
Common stock
RichTek Technology Corp.
Monolithic Power Systems, Inc.
eChannel Option Holding, Inc.
eLCOS Microdisplay Technology, Ltd.
Signia Technologies, Inc.
Procoat Technology, Inc.
RichTek Technology Corp.
Programmable Microelectronics (Taiwan), Inc.
Auden Technology MFG. Co., Ltd.
GeoVision, Inc.
EoNex Technologies, Inc.
Conwise Technology Corporation, Ltd.
EON Technology, Corp.
Goyatek Technology, Corp.
Trendchip Technologies Corp.
Ralink Technology (Taiwan), Inc.
Silicon Data International Co., Inc.
Capella Microsystems (Taiwan), Inc.
Preferred stock
Memsic, Inc.
eLCOS Microdisplay Technology, Ltd.
NanoAmp Solutions, Inc.
Advanced Analogic Technology, Inc.
Sonics, Inc.
Reflectivity, Inc.
Tropian, Inc.
Kilopass Technologies, Inc.
FangTek, Inc.
Alchip Technologies Limited
Common stock
Global Investment Holding, Inc.
RichWave Technology Corp.
NetLogic Microsystems, Inc.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
InveStar II
Emerging Alliance
Short-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Short-term investment
Short-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
272
December 31, 2004
Shares/Units
(In Thousand)
Carrying Value
(US$ in Thousand)
Percentage of
Ownership
Market Value or
Net Asset Value
(US$ in Thousand)
Note
90
145
575
13,268
842
701
365
1,123
530
1,831
1,404
2,686
541
2,727
1,064
1,008
1,758
321
864
358
270
351
5,123
395
177
953
471
55
2,800
3,276
2,088
2,000
1,833
2,000
419
2,289
2,667
375
948
1,582
4,255
1,464
3,887
6,806
2,579
10,000
2,600
113
US$ 393
US$ 46
US$ 208
US$ 5,670
US$ 83
US$ 202
US$ 92
US$ 508
US$ 154
US$ 1,221
US$ 125
US$ 3,530
US$ 853
US$ 1,500
US$ 741
US$ 494
US$ 471
US$ 184
US$ 2,081
US$ 251
US$ 27
US$ 101
US$ 1,940
US$ 226
US$ 50
US$ 738
US$ 127
US$ 3,048
US$ 490
US$ 1,175
US$ 545
US$ 861
US$ 791
US$ 204
US$ 122
US$ 1,560
US$ 3,500
US$ 1,500
US$ 1,261
US$ 3,082
US$ 2,205
US$ 393
US$ 2,000
US$ 3,250
US$ 2,950
100,000
US$ 867
US$ 1,388
-
-
1
9
1
3
1
2
4
12
6
4
2
10
2
2
3
-
-
4
1
1
10
1
-
4
1
5
14
8
7
5
3
3
3
8
15
1
2
5
5
2
19
34
18
6
13
1
US$ 1,157
US$ 38
US$ 208
US$ 5,670
US$ 1,692
US$ 202
US$ 92
US$ 706
US$ 154
US$ 1,221
US$ 125
US$ 3,530
US$ 853
US$ 1,500
US$ 741
US$ 494
US$ 471
US$ 645
US$ 8,716
US$ 251
US$ 27
US$ 101
US$ 1,940
US$ 794
US$ 50
US$ 738
US$ 127
US$ 3,048
US$ 490
US$ 1,175
US$ 545
US$ 861
US$ 791
US$ 204
US$ 122
US$ 1,560
US$ 3,500
US$ 1,500
US$ 1,261
US$ 3,082
US$ 2,205
US$ 393
US$ 2,000
US$ 3,250
US$ 2,950
100,000
US$ 867
US$ 1,388
(Continued)
273
Held Company Name
Marketable Securities Type and Name
Relationship with the
Company
Financial Statement
Account
VTAF II
GUC
Preferred stock
Quake Technologies, Inc.
Pixim, Inc.
Newport Opticom, Inc.
Ikanos Communication, Inc.
Quicksilver Technology, Inc.
Mosaic Systems, Inc.
Zenesis Technologies, Inc.
Reflectivity, Inc.
Teknovus, Inc.
Miradia, Inc. (Formerly XHP Microsystems, Inc.)
Axiom Microdevices, Inc.
Optichron, Inc.
Audience, Inc.
Next IO, Inc.
NuCORE Technology Inc.
Centrality Communications, Inc.
Layer N Networks, Inc.
Common stock
Yobon Technologies, Inc.
Sentelic, Corp.
Ivyon Technology, Inc.
Preferred stock
Powerprecise Solutions, Inc.
Tzero Technologies, Inc.
Miradia, Inc.
Agelia Technologies, Inc.
Audience, Inc.
Axiom Microdevices, Inc.
Next IO, Inc.
Bond funds
Grand Cathay
TIIM
Polaris De Li
EnTrust Kirin
E. Sun New Era
Jih Sun
EnTrust Phoenix
Transcend Fortune
Stock funds
TIIM DaLi
UPAMC Global Select Fund of Funds
Sheng Hua 9966 Balance
Stock
Global Unichip Corporation - NA
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Subsidiary
Long-term investment
274
December 31, 2004
Shares/Units
(In Thousand)
Carrying Value
(US$ in Thousand)
Percentage of
Ownership
Market Value or
Net Asset Value
(US$ in Thousand)
Note
601
1,721
962
7,446
1,049
2,481
1,204
4,848
5,556
3,040
1,000
714
1,654
800
2,254
809
1,905
1,675
600
200
258
244
1,809
1,149
531
686
216
3,608
703
1,550
2,106
1,920
772
2,081
1,936
296
336
300
100
US$ 450
US$ 2,382
US$ 250
US$ 3,125
US$
-
US$ 12
US$ 699
US$ 2,479
US$ 1,000
US$ 1,000
US$ 1,000
US$ 1,000
US$ 250
US$ 500
US$ 1,455
US$ 1,000
US$ 1,000
US$ 787
US$ 1,022
US$ 775
US$ 250
US$ 500
US$ 1,600
US$ 1,000
US$ 102
US$ 700
US$ 182
45,543
9,698
22,800
22,697
20,313
10,262
30,563
22,947
5,000
3,364
3,000
3,375
1
3
6
3
4
6
4
4
3
4
5
6
2
2
2
2
2
17
15
10
3
2
2
2
1
5
-
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
100
US$ 450
US$ 2,382
US$ 250
US$ 3,125
US$
-
US$ 12
US$ 699
US$ 2,479
US$ 1,000
US$ 1,000
US$ 1,000
US$ 1,000
US$ 250
US$ 500
US$ 1,455
US$ 1,000
US$ 1,000
US$ 787
US$ 1,022
US$ 775
US$ 250
US$ 500
US$ 1,600
US$ 1,000
US$ 102
US$ 700
US$ 182
45,544
9,698
22,800
22,698
20,314
10,262
30,564
22,948
4,474
3,378
3,011
3,375
(Concluded)
275
TABLE 4
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD. AND AFFILIATES
MARKETABLE SECURITIES ACQUIRED AND DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$100 MILLION OR
20% OF THE PAID-IN CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 2004
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
Company Name
Marketable Securities Type and Name
Financial Statement Account
Counter-party
Nature of
Relationship
The Company
Money market funds
BOA Fund
Short-term investment
BOA
GS Fund
Short-term investment
Goldman Sachs
Bond funds
JF Taiwan Bond Fund
ABN AMRO Bond Fund
ABN AMRO Select Bond Fund
JF Taiwan First Bond Fund
INVESCO R.O.C Bond A Fund
Dresdner Bond DAM Fund
Barits Bond Fund
Shin Kong Chi Shin Bond Fund
NITC Bond Fund
HSBC NTD Money Management Fund
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
JF Asset Management (Taiwan) Ltd.
ABN AMRO
ABN AMRO
JF Asset Management (Taiwan) Ltd.
INVESCO Asset Management Taiwan
Allianz Dresdner Securities Investment Consulting Co.,
Ltd.
Barits Securities Investment Trust Co., Ltd.
Shinkong Investment Trust Co., Ltd.
National Investment Trust Co., Ltd.
HSBC Asset Management (Taiwan) Ltd.
Bonds under repurchase agreement
Short-term investment
Chung Shing Bills Finance Corp. and several financial
institutions
Government bonds
1994 Government Bond Series C
2002 Government Bond Series A
2002 Government Bond Series E
2002 Government Bond Series J
2003 Government Bond Series A
United States Treas NTS
2003 Government Bond Series I
2004 Government Bond Series A
Short-term investment
Chung Shing Bills Finance Corp. and several financial
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Long-term investment
Long-term investment
institutions
BNP and several financial institutions
BNP and several financial institutions
BNP and several financial institutions
BNP and several financial institutions
-
FCB and several financial institutions
China Bills Finance Corp. and several financial institu-
tions
2004 Government Bond Series E
2004 Kaohsiung Municipal Bond Series A
Long-term investment
Long-term investment
BNP and several financial institutions
KGI Securities Co., Ltd. and several financial institu-
Corporate bonds
Taiwan Power Company
Allstate Finl Global Fdg LLC
American Express Co.
American Express Cr Corp. Mtn
American Gen Fin Corp. Mtn
American Gen Fin Corp. Mtn
American Honda Fin Corp. Mtn
American Honda Fin Corp. Mtn
American Honda Fin Corp. Mtn
American Intl Group Inc. Mtnf
Amgen Inc.
Bank New York Inc.
Bank One Corp.
Bear Stearns Cos Inc.
Bear Stearns Cos Inc.
Bear Stearns Cos Inc. Medium Te
Bristol Myers Squibb Co.
Brown Forman Corp.
Cardinal Health Inc.
Cit Group Hldgs Inc.
Citigroup Inc.
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
tions
KGI Securities Co., Ltd.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
276
Beginning Balance
Acquisition
Disposal
Ending Balance
Shares/Units
(Thousand)
Amount
(US$ in Thousand)
Shares/Units
(Thousand)
Amount
(US$ in Thousand)
Shares/Units
(Thousand)
Amount
(US$ in Thousand)
Carrying Value
(US$ in Thousand)
Gain (Loss) on
Disposal
(US$ in Thousand)
Shares/Units
(Thousand)
Amount
(US$ in Thousand)
(Note 1)
40,000
20,000
34,343
34,794
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$ 1,359,120
(US$ 40,000)
679,560
(US$ 20,000)
$
-
-
-
-
500,000
500,000
-
-
-
-
-
-
-
-
1,800,000
1,422,197
3,157,331
3,113,066
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
68,021
165,257
18,235
110,580
93,975
80,833
76,640
151,594
3,764
41,568
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,000,000
2,400,000
200,000
1,500,000
1,350,000
900,000
900,000
2,100,000
600,000
600,000
2,577,163
-
-
-
2,023,206
1,207,409
US$ 699,398
3,402,213
2,349,573
3,890,925
620,000
2,777,798
US$ 3,171
US$ 3,550
US$ 3,503
US$ 3,130
US$ 3,702
US$ 3,509
US$ 3,750
US$ 3,800
US$ 3,795
US$ 3,005
US$ 3,945
US$ 3,693
US$ 3,805
US$ 3,518
US$ 3,105
US$ 3,819
US$ 3,277
US$ 3,837
US$ 3,203
US$ 3,583
40,000
20,000
23,666
65,145
-
25,694
17,270
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$ 1,359,120
(US$ 40,000)
679,560
(US$ 20,000)
$ 1,359,120
(US$ 40,000)
679,560
(US$ 20,000)
$
350,000
950,000
-
350,000
250,000
-
-
-
-
-
346,791
943,825
-
348,537
248,089
-
-
-
-
-
4,127,714
4,127,714
1,427,762
1,422,197
3,169,750
3,133,875
2,031,500
-
US$ 506,162
-
-
3,157,331
3,113,066
2,023,206
-
US$ 507,041
-
-
-
-
-
-
US$
-
-
-
US$ 3,504
-
-
US$ 3,509
US$ 3,755
-
-
-
-
US$ 3,695
US$ 3,816
-
-
-
US$ 3,280
US$ 3,795
-
-
-
-
-
US$ 3,503
-
-
US$ 3,509
US$ 3,750
-
-
-
-
US$ 3,693
US$ 3,805
-
-
-
US$ 3,277
US$ 3,837
-
-
US$
US$
US$
US$
US$
US$
-
-
3,209
6,175
-
1,463
1,911
-
-
-
-
-
-
5,565
12,419
20,809
8,294
-
(879)
-
-
-
-
-
-
-
1
-
-
-
5
-
-
-
-
2
11
-
-
-
3
(42)
-
-
$
-
-
-
-
78,698
134,906
18,235
84,886
76,705
80,833
76,640
151,594
3,764
41,568
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,153,209
1,956,175
200,000
1,151,463
1,101,911
900,000
900,000
2,100,000
600,000
600,000
249,449
-
-
-
-
1,207,409
US$ 192,357
3,397,081
2,349,573
3,893,827
620,000
2,777,798
US$ 3,171
US$ 3,550
-
US$ 3,130
US$ 3,702
-
-
US$ 3,800
US$ 3,795
US$ 3,005
US$ 3,945
-
-
US$ 3,518
US$ 3,105
US$ 3,819
-
-
US$ 3,203
US$ 3,583
(Continued)
277
Company Name Marketable Securities Type and Name
Financial Statement Account
Counter-party
Nature of
Relationship
Compaq Computer Corp.
Consolidated Edison Co. NY Inc.
Countrywide Fdg Corp. Mtn
Countrywide Home Lns Inc.
Credit Suisse First Boston USA
Dell Computer Corp.
Diageo PLC
European Invt Bk
Federal Home Ln Mtg Corp
Federal Home Loan Mtg Assn
First Data Corp.
General Elec Cap Corp. Mtn
General Elec Cap Corp. Mtn
General Elec Cap Corp. Mtn
Genworth Finl Inc.
Goldman Sachs Group Inc Mtn
Goldman Sachs Group LP
Hewlett Packard Co.
Honeywell Inc.
Household Fin Corp.
Household Fin Corp. Mtn Bk Ent
Huntington Natl Bk
ING Sec Life Ins Ingslf
Intl Bk For Recon + Dev
JP Morgan Chase + Co.
JP Morgan Chase + Co.
JP Morgan Chase + Co.
Keycorp Mtn Book Entry
KFW Intl Fin Inc.
Lehman Brothers Hldgs Inc.
Lehman Brothers Hldgs Inc.
Lilly Eli + Co.
Merrill Lynch + Co Inc.
Merrill Lynch + Co Inc.
Monumental Global Fdg II 2002A
Morgan Stanley Group Inc.
Morgan Stanley Group Inc.
Nationsbank Corp.
Nationwide Bldg Soc
Nationwide Life Global Mtn
Pepsico Inc. Mtn Book Entry
Popular North Amer Inc Mtn
Pricoa Global Fdg I Mtn
Pricoa Global Fdg I Mtn
Principal Life Global Fdg I Gl
Salomon Smith Barney Hldgs Inc.
SBC Communications Inc.
Shell Finance (UK) PLC
TIAA Global Mkts Inc.
Unitedhealth Group Inc.
Viacom Inc.
Viacom Inc.
Wachovia Corp.
Walmart Cda Venture Corp.
Washington Mut Fin Corp.
Washington Mut Inc.
Washington Post Co.
Wells Fargo + Co. New
China Steel Corporation
Taiwan Power Company
Nan Ya Plastics Corporation
Formosa Plastics Corporation
Formosa Petrochemical Corporation
Agency bonds
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Chung Shing Bills Finance Corp.
BNP and several financial institutions
Chung Shing Bills Finance Corp.
Chung Shing Bills Finance Corp.
Chung Shing Bills Finance Corp.
Short-term investment
Short-term investment
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
278
Beginning Balance
Acquisition
Disposal
Ending Balance
Shares/Units
(Thousand)
Amount
(US$ in Thousand)
Shares/Units
(Thousand)
Amount
(US$ in Thousand)
Shares/Units
(Thousand)
Amount
(US$ in Thousand)
Carrying Value
(US$ in Thousand)
Gain (Loss) on
Disposal
(US$ in Thousand)
Shares/Units
(Thousand)
Amount
(US$ in Thousand)
(Note 1)
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 3,719
US$ 3,687
US$ 3,534
US$ 5,210
US$ 3,177
US$ 3,054
US$ 3,459
US$ 8,315
US$ 4,237
US$ 4,847
US$ 3,013
US$ 3,507
US$ 3,467
US$ 3,886
US$ 3,412
US$ 3,505
US$ 3,820
US$ 3,373
US$ 3,284
US$ 3,712
US$ 3,542
US$ 3,003
US$ 3,012
US$ 5,232
US$ 3,638
US$ 3,128
US$ 3,663
US$ 3,500
US$ 5,104
US$ 3,417
US$ 3,705
US$ 3,750
US$ 3,497
US$ 3,486
US$ 3,129
US$ 5,741
US$ 4,763
US$ 3,644
US$ 3,457
US$ 3,413
US$ 3,818
US$ 3,042
US$ 3,507
US$ 3,050
US$ 3,168
US$ 3,160
US$ 3,681
US$ 3,604
US$ 3,631
US$ 3,119
US$ 3,177
US$ 3,172
US$ 3,720
US$ 3,670
US$ 4,768
US$ 4,735
US$ 3,182
US$ 3,697
2,997,430
950,646
408,538
406,245
202,980
US$ 6,096
US$ 4,725
$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
-
-
US$ 3,540
-
US$ 3,188
-
-
-
-
-
-
US$ 3,498
-
-
-
-
-
-
-
US$ 3,633
-
-
-
-
US$ 3,601
-
-
-
-
US$ 3,381
-
-
US$ 3,498
-
-
-
US$ 3,713
-
-
-
-
-
-
-
-
-
-
-
US$ 3,131
-
US$ 3,135
US$ 3,175
-
-
-
-
-
-
-
-
-
-
-
$
-
-
US$ 3,534
-
US$ 3,177
-
-
-
-
-
-
US$ 3,507
-
-
-
-
-
-
-
US$ 3,712
-
-
-
-
US$ 3,638
-
-
-
-
US$ 3,417
-
-
US$ 3,497
-
-
-
US$ 3,713
-
-
-
-
-
-
-
-
-
-
-
US$ 3,112
-
US$ 3,177
US$ 3,172
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6
-
11
-
-
-
-
-
-
(9)
-
-
-
-
-
-
-
(79)
-
-
-
-
(37)
-
-
-
-
(36)
-
-
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
19
-
(42)
3
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 3,719
US$ 3,687
-
US$ 5,210
-
US$ 3,054
US$ 3,459
US$ 8,315
US$ 4,237
US$ 4,847
US$ 3,013
-
US$ 3,467
US$ 3,886
US$ 3,412
US$ 3,505
US$ 3,820
US$ 3,373
US$ 3,284
-
US$ 3,542
US$ 3,003
US$ 3,012
US$ 5,232
-
US$ 3,128
US$ 3,663
US$ 3,500
US$ 5,104
-
US$ 3,705
US$ 3,750
-
US$ 3,486
US$ 3,129
US$ 5,741
US$ 1,050
US$ 3,644
US$ 3,457
US$ 3,413
US$ 3,818
US$ 3,042
US$ 3,507
US$ 3,050
US$ 3,168
US$ 3,160
US$ 3,681
US$ 3,604
US$ 519
US$ 3,119
-
-
US$ 3,720
US$ 3,670
US$ 4,768
US$ 4,735
US$ 3,182
US$ 3,697
2,978,804
915,276
407,526
405,485
202,595
US$ 6,096
US$ 4,725
(Continued)
279
Company Name Marketable Securities Type and Name
Financial Statement Account
Counter-party
Nature of
Relationship
Feferal Home Ln Mtg Corp.
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn Gtd
Federal Natl Mtg Assn Mtn
Fnma Pool 790828
Gnma II Pool 081153
Gnma II Pool Tba Nov 30 Arms
Government Natl Mtg Assn
Federal Hm Ln PC
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp. Mtn
Federal Home Loan Mtg Corp.
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn Disc Nts
Federal Natl Mtg Assn Mtn
Freddie Mac
Student Ln Marketing Assn
Corporate issued asset-backed securities
Aesop Fdg II LLC
American Express Cr Account MA
Americredit Automobile Receivb
Banc Amer Coml Mtg Inc.
Banc Amer Mtg Secs Inc.
Bank Of Amer Lease Equip Tr
BMW Veh Owner Tr
California Infr + Economic Dev
California Infras + Economic
California Infrastructure Dev
Capital Auto Receivables Asset
Capital One Master Tr
Capital One Multi Asset Execut
Capital One Secd Nt Tr
Caterpillar Finl Asset Tr
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
280
Beginning Balance
Acquisition
Disposal
Ending Balance
Shares/Units
(Thousand)
Amount
(US$ in Thousand)
Shares/Units
(Thousand)
Amount
(US$ in Thousand)
Shares/Units
(Thousand)
Amount
(US$ in Thousand)
Carrying Value
(US$ in Thousand)
Gain (Loss) on
Disposal
(US$ in Thousand)
Shares/Units
(Thousand)
Amount
(US$ in Thousand)
(Note 1)
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 3,558
US$ 5,861
US$ 3,393
US$ 6,130
US$ 6,371
US$ 7,000
US$ 5,014
US$ 3,817
US$ 4,829
US$ 4,473
US$ 3,466
US$ 5,210
US$ 4,927
US$ 14,938
US$ 7,014
US$ 4,936
US$ 9,956
US$ 5,264
US$ 4,948
US$ 7,018
US$ 9,993
US$ 7,042
US$ 6,098
US$ 13,953
US$ 13,983
US$ 13,981
US$ 6,978
US$ 3,388
US$ 4,907
US$ 4,953
US$ 9,997
US$ 9,971
US$ 11,984
US$ 4,933
US$ 4,930
US$ 4,903
US$ 11,036
US$ 10,496
US$ 5,270
US$ 4,982
US$ 6,940
US$ 4,867
US$ 6,903
US$ 4,981
US$ 6,997
US$ 4,993
US$ 5,000
US$ 15,787
US$ 4,929
US$ 16,000
US$ 4,955
US$ 3,445
US$ 4,949
US$ 5,503
US$ 4,030
US$ 4,023
US$ 4,978
US$ 4,298
US$ 8,383
US$ 7,419
US$ 4,627
US$ 3,093
US$ 4,957
US$ 5,032
US$ 10,008
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
US$ 4,829
-
-
US$ 4,153
-
US$ 6,980
-
-
US$ 9,967
US$ 5,286
-
-
US$ 5,000
-
-
-
-
-
-
-
US$ 4,981
-
-
US$ 9,942
US$ 10,965
-
-
-
US$ 10,997
US$ 10,430
-
US$ 4,983
-
US$ 4,938
-
-
-
US$ 4,993
-
-
-
US$ 16,000
-
-
-
-
-
-
-
-
-
-
-
US$ 3,072
-
US$ 5,000
-
$
-
-
-
-
-
-
-
-
US$ 4,829
-
-
US$ 4,168
-
US$ 6,976
-
-
US$ 9,956
US$ 5,264
-
-
US$ 4,997
-
-
-
-
-
-
-
US$ 4,907
-
-
US$ 9,971
US$ 10,986
-
-
-
US$ 11,036
US$ 10,496
-
US$ 4,982
US$ 4,867
-
-
-
US$ 4,993
-
-
-
US$ 16,000
-
-
-
-
-
-
-
-
-
-
-
US$ 3,093
-
US$ 5,032
-
$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
-
-
-
-
-
-
-
-
-
-
-
(15)
-
4
-
-
11
22
-
-
3
-
-
-
-
-
-
-
74
-
-
(29)
(21)
-
-
-
(39)
(66)
1
71
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(21)
-
(32)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 3,558
US$ 5,861
US$ 3,393
US$ 6,130
US$ 6,371
US$ 7,000
US$ 5,014
US$ 3,817
-
US$ 4,473
US$ 3,466
US$ 1,042
US$ 4,927
US$ 7,962
US$ 7,014
US$ 4,936
-
-
US$ 4,948
US$ 7,018
US$ 4,996
US$ 7,042
US$ 6,098
US$ 13,953
US$ 13,983
US$ 13,981
US$ 6,978
US$ 3,388
-
US$ 4,953
US$ 9,997
-
US$ 998
US$ 4,933
US$ 4,930
US$ 4,903
-
-
US$ 5,270
-
US$ 6,940
-
US$ 6,903
US$ 4,981
US$ 6,997
-
US$ 5,000
US$ 15,787
US$ 4,929
-
US$ 4,955
US$ 3,445
US$ 4,949
US$ 5,503
US$ 4,030
US$ 4,023
US$ 4,978
US$ 4,298
US$ 8,383
US$ 7,419
US$ 4,627
-
US$ 4,957
-
US$ 10,008
(Continued)
281
Company Name
Marketable Securities Type and Name
Financial Statement Account
Counter-party
Nature of
Relationship
Centex Home Equity Ln Tr
Cit Equip Coll Tr
Citibank Cr Card Issuance Tr
CHN Equip Tr
Comm 2004 Htl 1
Credit Suisse First Boston Mtg
CWABS Inc.
CWABS Inc.
CWALT Inc.
CWABS Inc.
CWABS Inc.
Daimlerchrysler Auto Tr
Daimlerchrysler Auto Tr
Daimlerchrysler Auto Tr
First Union Lehman Bros Mtg Tr
First USA Credit Cr Master Tr
Ford Cr Auto Owner Tr
GE Cap Cr Card Master Nt Tr
Granite Mtgs PLC
GS Mtg Secs Corp.
Harley Davidson Motorcycle Tr
Harley Davidson Motorcycle Tr
Holmes Fing No 8 PLC
Honda Auto Receivables
Hyundai Auto Receivables Tr
Impac Secd Assets Corp.
Monumentl Global Fdg II
Navistar Finl 2003 A Owner Tr
Nissan Auto Receivables
Nissan Auto Receivables Owner Tr
Nissan Auto Receivables Owner
ONYX Accep Owner Tr
Permanent Fing No 1 PLC
Providian Gateway Owner Tr
Providian Gateway Owner Tr
Reliant Energy Transition Bd
Residential Asset Mtg Prods
Residential Fdg Mtg Secs I Inc
Sequoia Mtg Tr
Structured Adj Rate Mtg Ln Tr
Toyota Auto Receivables 2003 B
Triad Auto Receivables Tr
TXU Elec Delivery Transition
USAA Auto Owner Tr
Wachovia Auto Owner Tr
Wachovia Auto Owner Tr
WFS Financial Owner Trust
WFS Finl 2002 4 Owner Tr
WFS Finl 2004 2 Owner Tr
WFS Finl 2004 4 Owner Tr
Whole Auto Ln Tr
Whole Auto Ln Tr
World Omni Auto Receivables Tr
World Omni Auto Receivables Tr
Money market funds
Common stock
RichTek Technology Corp.
Atheros Communication, Inc.
Monolithic Power Systems, Inc.
InveStar
InveStar II
Common stock
RichTek Technology Corp.
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Note: The ending balance included the recognition of the investment income (loss) by the equity method, the cumulative translation adjustments and the bond premi-
um or discount amortization amount.
282
Beginning Balance
Acquisition
Disposal
Ending Balance
Shares/Units
(Thousand)
Amount
(US$ in Thousand)
Shares/Units
(Thousand)
Amount
(US$ in Thousand)
Shares/Units
(Thousand)
Amount
(US$ in Thousand)
Carrying Value
(US$ in Thousand)
Gain (Loss) on
Disposal
(US$ in Thousand)
Shares/Units
(Thousand)
Amount
(US$ in Thousand)
(Note 1)
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
947
1,205
2,521
US$
121
US$ 3,593
US$ 2,000
465
US$ 346
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 3,500
US$ 4,999
US$ 4,959
US$ 5,000
US$ 4,600
US$ 5,000
US$ 5,000
US$ 3,500
US$ 4,718
US$ 3,129
US$ 4,040
US$ 4,991
US$ 4,982
US$ 4,897
US$ 4,177
US$ 5,011
US$ 10,999
US$ 4,000
US$ 5,000
US$ 4,000
US$ 4,000
US$ 5,999
US$ 5,001
US$ 5,000
US$ 3,500
US$ 4,000
US$ 3,500
US$ 4,928
US$ 7,000
US$ 4,999
US$ 4,853
US$ 4,913
US$ 5,102
US$ 4,204
US$ 3,992
US$ 5,185
US$ 3,766
US$ 3,947
US$ 3,500
US$ 3,058
US$ 4,970
US$ 5,042
US$ 8,009
US$ 4,000
US$ 6,000
US$ 4,999
US$ 5,008
US$ 3,904
US$ 4,994
US$ 5,399
US$ 5,967
US$ 4,000
US$ 5,963
US$ 5,000
US$
21,114
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 4,003
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 5,036
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 4,986
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 4,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 5,102
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 5,000
$
US$
US$
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(66)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(14)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 3,500
US$ 4,999
US$ 4,959
US$ 5,000
US$ 4,600
US$ 5,000
US$ 5,000
US$ 3,500
US$ 4,718
US$ 3,129
US$ 4,040
US$ 4,991
US$ 4,982
US$ 4,897
US$ 4,177
US$ 5,011
US$ 10,999
-
US$ 5,000
US$ 4,000
US$ 4,000
US$ 5,999
US$ 5,001
US$ 5,000
US$ 3,500
US$ 4,000
US$ 3,500
US$ 4,928
US$ 7,000
US$ 4,999
US$ 4,853
US$ 4,913
-
US$ 4,204
US$ 3,992
US$ 5,185
US$ 3,766
US$ 3,947
US$ 3,500
US$ 3,058
US$ 4,970
US$ 5,042
US$ 8,009
US$ 4,000
US$ 6,000
US$ 4,999
US$ 5,008
US$ 3,904
US$ 4,994
US$ 5,399
US$ 5,967
US$ 4,000
US$ 5,963
-
US$ 21,114
1,595
1,205
546
US$ 6,783
US$ 8,972
US$ 4,318
US$ 184
US$ 3,593
US$ 433
US$ 6,598
US$ 5,379
US$ 3,885
682
-
1,975
US$ 67
-
US$ 1,567
768
US$ 3,394
US$ 519
US$ 2,875
321
US$ 184
(Concluded)
283
TABLE 5
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD. AND AFFILIATES
ACQUISITION OF INDIVIDUAL REAL ESTATE AT COSTS OF AT LEAST NT$100 MILLION OR 20% OF THE
PAID-IN CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 2004
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
Company
Name
Types of
Property
Transaction Date
Transaction
Amount
Payment Term
Counter-party
The Company
Fab. 12
April 21, 2004
$
1,484,370
By the construction progress
IDC Taiwan, Inc., Taiwan Branch
Fab. 12
Fab. 12
Fab. 12
Fab. 12
Fab. 12
Fab. 12
Fab. 12
Fab. 12
Fab. 12
Fab. 14
Fab. 12
Fab. 12
Fab. 12
Fab. 12
April 21, 2004
April 22, 2004
May 12, 2004
May 12, 2004
May 12, 2004
June 17, 2004
July 2, 2004
July 8, 2004
July 8, 2004
420,168
224,800
340,307
116,181
133,092
165,208
225,744
100,767
466,833
By the construction progress
By the construction progress
By the construction progress
By the construction progress
By the construction progress
By the construction progress
By the construction progress
By the construction progress
By the construction progress
(U.S.A.)
CHRIST AG
Allis Electric Co., Ltd.
United Industry gas Corp., Ltd.
United Industry gas Corp., Ltd.
BOC EDWARDS, CMS
Organo Corporation
Marketech International Corp.
Kanto Chemical Co., Inc.
United Integrated Services Co.,
Ltd.
August 3, 2004
300,000
By the construction progress
United Integrated Services Co.,
August 5, 2004
August 5, 2004
August 5, 2004
October 15, 2004
122,969
185,984
182,060
105,299
By the construction progress
By the construction progress
By the construction progress
By the construction progress
Ltd.
Marketech International Corp.
Marketech International Corp.
Marketech International Corp.
IDC Taiwan, Inc., Taiwan Branch
(U.S.A.)
TABLE 6
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD. AND AFFILIATES
TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF
THE PAID-IN CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 2004
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
Company
Name
Related Party
Nature of Relationship
The Company
TSMC - North America
Philips and its affiliates
GUC
WaferTech
VIS
SSMC
Subsidiary
Major shareholder
Investee
Subsidiary
Investee
Investee
Transaction Details
Purchase/Sale
Amount
Sales
Sales
Sales
Purchases
Purchases
Purchases
$ 142,271,732
5,463,565
371,546
15,203,047
9,169,602
5,869,123
284
Nature of
Relationship
Prior Transaction of Related Counter-party
Owner
Relationship
Transfer Date
Amount
Price Reference
Purpose of Acquisition
Other Terms
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Public bidding
Manufacturing purpose
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Public bidding
Public bidding
Public bidding
Public bidding
Public bidding
Public bidding
Public bidding
Public bidding
Public bidding
Manufacturing purpose
Manufacturing purpose
Manufacturing purpose
Manufacturing purpose
Manufacturing purpose
Manufacturing purpose
Manufacturing purpose
Manufacturing purpose
Manufacturing purpose
N/A
Public bidding
Manufacturing purpose
N/A
N/A
N/A
N/A
Public bidding
Public bidding
Public bidding
Public bidding
Manufacturing purpose
Manufacturing purpose
Manufacturing purpose
Manufacturing purpose
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
Transaction Details
Abnormal Transaction
Notes/Accounts
Payable or Receivable
% to Total
Payment Terms
Unit Price
Payment Terms
Ending Balance
Note
% to
Total
55
2
-
34
13
21
Net 30 days after invoice date
Net 30 days after monthly closing
Net 30 days after monthly closing
Net 30 days after monthly closing
Net 30 days after monthly closing
Net 30 days after monthly closing
None
None
None
None
None
None
None
None
None
None
None
None
$ 15,526,964
581,487
56,436
(913,107)
(1,533,938)
(207,794)
47
2
-
9
16
2
285
TABLE 7
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD. AND AFFILIATES
RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE
PAID-IN CAPITAL
DECEMBER 31, 2004
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
Company Name
Related Party
Nature of Relationship
Ending Balance
Turnover Rate
The Company
TSMC - North America
TSMC - Shanghai
Philips and its affiliates
Subsidiary
Subsidiary
Major shareholder
$ 15,526,964
1,473,365
581,487
38 days
(Note)
49 days
Note: The ending balance is generated mainly from the sales of machinery, so it is not applicable for the calculation of the turnover rate.
TABLE 8
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD. AND AFFILIATES
NAMES, LOCATIONS, AND RELATED INFORMATION OF INVESTEES ON WHICH THE COMPANY EXERCISES
SIGNIFICANT INFLUENCE
DECEMBER 31, 2004
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
Investor Company
Investee Company
Location
Main Businesses and Products
The Company
TSMC - North America
San Jose, California, U.S.A.
Sales and marketing of integrated circuits and semicon-
TSMC - Europe
TSMC - Japan
TSMC - Shanghai
Amsterdam, the Netherlands
Yokohama, Japan
Shanghai, China
VIS
Hsin-Chu, Taiwan
ductor devices
Marketing activities
Marketing activities
Manufacturing and marketing of integrated circuits and
semiconductor devices
Research, design, development, manufacture, packaging,
testing and sale of memory integrated circuits, LSI,
VLSI and related parts
TSMC International
Tortola, British Virgin Islands
Providing investment in companies involved in the
Chi Cherng
Hsin Ruey
TSMC Partners
SSMC
Emerging Alliance
GUC
VisEra
VTAF II
design, manufacture, and other related business in the
semiconductor industry
Taipei, Taiwan
Taipei, Taiwan
Tortola, British Virgin Islands
Singapore
Cayman Islands
Hsin-Chu, Taiwan
Investment activities
Investment activities
Investment activities
Fabrication and supply of integrated circuits
Investing in new start-up technology companies
Researching, developing, manufacturing, testing and
Hsin-Chu, Taiwan
Manufacturing, material wholesaling and retailing of
marketing of integrated circuits
Cayman Islands
Investing in new start-up technology companies
electronic spare parts
Note 1: The treasury stock is deducted from the carrying value.
Note 2: The gains or losses on disposal of the stocks held by subsidiaries (treated as treasury stocks) and the paid-in capital from cash dividend distributed by parent
company are excluded.
286
Overdue
Amount
Action Taken
Amounts Received in
Subsequent Period
Allowance for Bad Debts
$
5,044,202
145,146
7,136
-
Accelerate demand on account receivables
-
$ 6,013,414
-
13,726
$
-
-
-
Original Investment Amount
Balance as of December 31, 2004
December 31,
2004
December 31,
2003
Shares
(Thousand)
Percentage of
Ownership
Carrying Value
(Note 1)
Net Income
(Loss) of the
Investee
Investment
Gain
(Loss)(Note 2)
Note
$ 333,178
$
333,178
11,000
100
$
502,242
$ 120,587
$
112,543
Subsidiary
15,749
83,760
9,187,962
15,749
83,760
1,890,952
-
6
-
8,119,816
8,119,816
409,532
31,445,780
31,445,780
987,968
300,000
300,000
10,350
6,408,190
1,447,957
409,920
51,000
332,412
300,000
300,000
10,350
6,408,190
1,179,690
409,920
51,000
-
-
-
300
382
-
39,040
5,100
-
100
100
100
28
100
36
36
100
32
99
47
25
98
25,439
102,572
8,113,511
262
2,919
(727,036)
262
2,919
(727,036)
Subsidiary
Subsidiary
Subsidiary
5,401,982
4,706,668
1,329,555
Investee
23,778,997
2,598,162
2,598,162
Subsidiary
50,570
49,823
3,908,356
3,290,888
823,232
391,626
59,116
329,968
21,359
21,887
43,117
2,288,786
(97,767)
30,424
35,540
18,373
(664)
(491)
43,117
732,418
(97,278)
23,279
Investee
Investee
Subsidiary
Investee
Subsidiary
Investee
8,885
Investee
14,648
Subsidiary
287
TABLE 9
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY, LTD. AND AFFILIATES
INFORMATION OF INVESTMENT IN MAINLAND CHINA
DECEMBER 31, 2004
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
Investee
Company
Main Businesses and
Products
Total Amount of
Paid-in Capital
(RMB in Thousand)
Investment
Type
Investment Flows
Accumulated Outflow
of Investment from
Taiwan as of January 1,
2004(US$ in Thousand)
Outflow
(US$ in Thousand)
Inflow
Accumulated Outflow
of Investment from
Taiwan as of December
31, 2004
(US$ in Thousand)
TSMC (Shanghai)
Company Limited
Manufacturing and
marketing of integrat-
ed circuits and semi-
conductor devices
$
9,187,962
(RMB 2,284,355)
(Note 1)
$
(US$
1,890,952
56,000)
$
(US$
7,297,010
220,000)
$ -
$
(US$
9,187,962
276,000)
Percentage of
Ownership in
Investment
Investment Gain
(Loss) (Note 2)
Carrying Value as of
December 31, 2004
Accumulated
Inward
Remittance
of Earnings
as of
December
31, 2004
Accumulated
Investment in
Mainland China as of
December 31, 2004
(US$ in Thousand)
Investment Amounts Authorized
by Investment Commission, MOEA
(US$ in Thousand)
Upper Limit on
Investment (US$ in
Thousand)
100%
$
(727,036)
$ 8,113,511
$ -
$
(US$
9,187,962
276,000)
$
11,841,207
(US$ 371,000)
$
(US$
11,841,207
371,000)
Note 1: Direct investment in TSMC (Shanghai) US$276,000 thousand.
Note 2: Amount was recognized based on the audited financial statements.
288
3. Internal Control System Execution Status
3.1 Taiwan Semiconductor Manufacturing Company Limited
Statement of Internal Control System (Translation)
Date: February 22, 2005
Based on the findings of a self-assessment, Taiwan Semiconductor Manufacturing Company Limited (TSMC) states the following with
regard to its internal control system during the period from January 1, 2004 to December 31, 2004:
1. TSMC is fully aware that establishing, operating, and maintaining an internal control system are the responsibility of its Board of
Directors and management. TSMC has established such a system aimed at providing reasonable assurance regarding the achievement
of objectives in the following categories: (1) effectiveness and efficiency of operations (including profitability, performance, and safe-
guarding of assets), (2) reliability of financial reporting, and (3) compliance with applicable laws and regulations.
2. An internal control system has inherent limitations. No matter how perfectly designed, an effective internal control system can provide
only reasonable assurance of accomplishing the three objectives mentioned above. Moreover, the effectiveness of an internal control
system may be subject to changes of environment or circumstances. Nevertheless, the internal control system of TSMC contains self-
monitoring mechanisms, and TSMC takes corrective actions whenever a deficiency is identified.
3. TSMC evaluates the design and operating effectiveness of its internal control system based on the criteria provided in the Regulations
Governing the Establishment of Internal Control Systems by Public Companies promulgated by the Securities and Futures Bureau of the
Financial Supervisory Commission (hereinbelow, the Regulations ). The criteria adopted by the Regulations identify five components
of internal control based on the process of management control: (1) control environment, (2) risk assessment, (3) control activities, (4)
information and communication, and (5) monitoring. Each component further contains several items. Please refer to the Regulations
for details.
4. TSMC has evaluated the design and operating effectiveness of its internal control system according to the aforesaid criteria.
5. Based on the findings of the evaluation mentioned in the preceding paragraph, TSMC believes that, during the year 2004, its internal
control system (including its supervision of subsidiaries), as well as its internal controls to monitor the achievement of its objectives
concerning operational effectiveness and efficiency, reliability of financial reporting, and compliance with applicable laws and regula-
tions, were effective in design and operation, and reasonably assured the achievement of the above-stated objectives.
6. This Statement will be an integral part of TSMC's Annual Report for the year 2004 and Prospectus, and will be made public. Any false-
hood, concealment, or other illegality in the content made public will entail legal liability under Articles 20, 32, 171, and 174 of the
Securities and Exchange Law.
7. This Statement has been passed by the Board of Directors in their meeting held on Feburary 22, 2005, with none of the eight attend-
ing directors expressing dissenting opinions, and the remainder all affirming the content of this Statement.
Taiwan Semiconductor Manufacturing Company Limited
Morris Chang,
Chairman of the Board of Directors
Rick Tsai,
President
289
3.2 The Securities and Futures Bureau may request companies to commission CPAs to audit the said internal
control system. Disclosure of the audit report(s) is mandatory: Not Applicable
4. Major issues of record or written statements made by any director or supervisor which
specified his/her dissent to important resolutions passed by the Board of Directors dur-
ing 2004 or the period from January 1, 2005 to March 10, 2005: None
5. Private Placement Securities: None
6. Balance of TSMC Common Shares/ADR Acquired, Disposed of and Held by Subsidiaries
Unit: NT$ thousands / US$ thousands
Name of
Subsidiary
(Note 1)
Chi Cherng
Investment
Co., Ltd.
Hsin Ruey
Investment
Co., Ltd.
TSMC
North
America
Paid-in
Capital
Fund
Source
Percentage
of
Ownership
Transaction
Date
Acquisition (Note 2)
Disposal
Shares
Amount
Shares
Amount
Investment
Income
(Loss)
Balance as of Period End
Shares
Amount
Balance of
Pledged
Shares
Balance of
Guarantee
Provided
by TSMC
Balance of
Financing
Provided
by TSMC
840,000
Retained
earnings
840,000
Retained
earnings
US$11,000
Retained
earnings
36%
36%
100%
Year 2004
Year 2005
(Note 1)
Year 2004
Year 2005
(Note 1)
Year 2004
Year 2005
(Note 1)
1,934,873
-
1,938,499
-
1,802,731
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15,670,344
15,670,344
458,564
458,564
15,699,717
15,699,717
459,512
459,512
752,328
59,000
39,906
3,134
1,864
311
14,151,151
14,092,151
677,110
674,287
-
-
-
-
-
-
-
-
-
-
US$40,000
US$40,000
-
-
-
-
-
-
Note 1: As of 02/28/2005
Note 2: Stock dividend distributed in 2004
7. Major decisions of Shareholder Meetings and Board Meetings
Review of Shareholder Meetings
TSMC's 2004 Annual Shareholder Meeting was held at the Auditorium of the Activity Center of the Hsinchu Science Park on May 11,
2004. At the meeting, shareholders present in person or by proxy approved the following resolutions: (1) Acceptance of the 2003 busi-
ness report and financial statements; (2) Distribution of 2003 profits; (3) Capitalization of 2003 profits.
TSMC held a Special Shareholder Meeting at No.8 Li-Hsin Rd.6, Hsinchun Science Park on December 21, 2004. At the meeting, share-
holders present in person or by proxy approved the revision to the dividend policy as specified in Article 35 of TSMC's Articles of
Incorporation.
Review of Board Meetings
During the 2004 calendar year, and the period from January 1, 2005 to March 10, 2005, the Board held five regular meetings and one
special meeting. Major resolutions passed at these meetings are summarized below:
(1) The 2003 business report and financial statements; (2) Distribution of 2003 profits; (3) Convening the 2004 Annual Shareholder
Meeting; (4) 2004 R&D project and sustaining capital appropriation; (5) The promotion of Mr. P. H. Chang as Vice President; (6) A share
buyback plan to repurchase TSMC's common shares traded on the Taiwan Stock Exchange; (7) The 2004 semi-annual financial statement;
(8) The cancellation of 124,720,000 shares of treasury stocks and the capital reduction of NT$1,247,200,000; (9) The appointment of Dr.
Wei-Jen Lo as Vice President; (10) Revision to the dividend policy as specified in Article 35 of Articles of Incorporation; (11) Convening the
Special Shareholder Meeting; and (12) TSMC's 2004 Employee Stock Options Plan; (13) The 2004 business report and financial state-
ments; (14) Distribution of 2004 profits; (15) Convening the 2005 Annual Shareholder Meeting; (16) 2005 R&D project and sustaining
capital appropriation; (17) The appointment of Mr. Jason Chen as Vice President.
290
8. Legal Penalties
Regulatory authorities' legal penalties to the Company, and the Company's resulting punishment on its employees: None
9. Any events in 2004 that had significant impacts on shareholders' right or security prices
as stated in Item 2 Paragraph 2 of Article 36 of Securities and Exchange Law of Taiwan:
None
10. Other Necessary Supplement: None
291