2
LETTER TO
SHAREHOLDERS
Dear Shareholders,
TSMC continued to grow in 2005, a year that began at the low end of
capacity utilization but ended with another record for revenue and earnings.
Since the worst downturn in semiconductor history in 2001, TSMC has
steadily improved its performance year over year. Through cyclical upturns
and downturns, TSMC has drawn on its industry-leading technology, manu-
facturing excellence, and strong customer partnerships to deliver consistent
profitability and growth.
Financial Results
Revenue for 2005 totaled NT$264.6 billion, an increase of 3.4% compared
with NT$255.9 billion in 2004. Net income was NT$93.58 billion, an
increase of 1.4% compared with NT$92.32 billion in 2004. Earnings per
share were NT$3.79, an increase of 1.5% compared with fully diluted earn-
ings per share of NT$3.73 the previous year. In US dollars, revenue for 2005
was US$8.23 billion, an increase of 7.5%, while net income grew to
US$2.91 billion, an increase of 5.4%. Among other highlights in 2005,
TSMC achieved:
● Total average capacity utilization of 92%
● Average gross profit margin of 43.6%
● Average operating profit margin of 35.2%
During the year, TSMC provided 5.96 million 8-inch equivalent wafer capaci-
ty, representing approximately 7.4% of global IC wafer supply.
Cycle Management
Since our founding in 1987 through this year, TSMC has steadily expanded
our business and improved our ability to manage cycles and deliver profit
and positive cash flows. With the single exception of 1997, we have
achieved positive free cash flow every year since our Initial Public Offering in
1994, while trough utilization rates have improved with stronger gross mar-
gins since the industry's record downturn in 2001.
TSMC has painstakingly built internal long-range planning processes that
strategically expand capacity and allow the company to respond appropri-
ately to cyclical demand trends. In this way, the Company can optimize
ramp-up times at each new generation of chip process technologies, while
also increasing our reliability as a manufacturing partner, building sustain-
able market share and maximizing profitability. As a result of expanded
capacity and quality improvement, TSMC's share of the pure-play semicon-
ductor foundry segment expanded from 47% in 2000 to approximately 50%
in 2005, while simultaneously delivering substantially higher operating profit
than the rest of the sector competitors combined.
Core Strengths to Satisfy Customers
A solid foundation of technological innovation and the development and
deployment of proprietary process technologies for the most advanced inte-
grated devices drives TSMC's success. For example, since entering volume
production, our proprietary 0.13-micron process technology has consistently
captured substantial market share among all other major foundries. Through
our innovative NexsysSM process technology, the Company is well situated to
capture a leading share position at the 90-nanometer and 65-nanometer
nodes.
TSMC's manufacturing excellence is further enhanced by a company-wide
focus on operating efficiency. Together, these strengths have allowed TSMC
to leverage technology and capacity more effectively than other players in
the dedicated semiconductor foundry segment. The Company has consis-
tently achieved the foundry segment's highest utilization rates and won high
customer satisfaction throughout the cycle.
Customer partnership, TSMC's third core strength, is central to building cus-
tomer loyalty and sustainable, profitable market share. "Virtual Fab," the
Company's unique customer-first business model, includes cutting-edge
front-end and back-end services that help customers take full advantage of
TSMC's technology and manufacturing capabilities. As a true partnership,
each brings core strengths to a relationship that reflects the most efficient
use of invested capital, with TSMC providing the proprietary process tech-
nologies and the most efficient production facilities that enable IC develop-
ers to continually reduce their time to market, time to volume and maximize
their long-term profitability.
A New Stage of Continuity
As the Company continuously seeks to improve its strength and quality, we
are entering a new stage in TSMC's maturity as a public company. Dr. Morris
Chang, who founded TSMC in 1987, turned over the role of Chief Executive
Officer on July 1, 2005 to Dr. Rick Tsai, who has served the Company since
1989, most recently as President and Chief Operating Officer. Dr. Chang will
continue to dedicate his full time and efforts to the Company as Chairman
of the Board of Directors. At the same time, the Board of Directors has elect-
ed Dr. F. C. Tseng as Vice Chairman. In his new capacity, Dr. Tseng will assist
Dr. Chang and remain as Chairman of TSMC (Shanghai), and the TSMC
Education and Culture Foundation.
Rick Tsai
President and CEO
Morris Chang
Chairman
F. C. Tseng
Vice Chairman
3
With continuity in mind, all TSMC employees remain dedicated to bringing
innovative thinking and strategic planning to bear on whatever changes the
market presents in the decades to come. Core strengths - technology leader-
ship, manufacturing excellence, and customer partnership - ensure TSMC's
place as a pioneer in developing new ways of serving customers and share-
holders better.
Innovation
TSMC enjoyed another year of leadership in innovation, providing the mar-
ket with advanced process technology that represents a significant step-up
in performance.
The focal point of technology innovation in 2005 was the unveiling and suc-
cessful prototyping of the new 65nm NexsysSM Technology for SoC Design,
the company's third-generation semiconductor process employing both cop-
per interconnects and low-k dielectrics. The new process technology allows
customers to build logic devices with double the density of 90nm node and
leads the industry with a 50% gain in speed over the 90nm General Purpose
process and a 20% reduction in standby power.
The Company continues to invest in enlarging its position as the foundry
segment's technology leader. In 2005, TSMC spent approximately US$417
million, more than 5% of revenues, on Research and Development. It will
dedicate a similar percentage of revenue to R&D in 2006.
shareholders at a price of US$8.60 per ADS. Each TSMC ADS represents five
common shares of TSMC. After the offering, TSMC's outstanding ADSs rep-
resented approximately 17.5% of the total share capital.
Awards
In 2005, TSMC continued to receive recognition and awards from around
the world as a corporate role model. Among the numerous media surveys
conducted in 2005, Institutional Investors, FinanceAsia and Asiamoney have
chosen TSMC as the Best Managed Company, with the Best Corporate
Governance, Best Investor Relations, and Best CFO. IR Magazine has awarded
TSMC six out of seven possible performance awards - ranging from Grand
Prix for Best Overall Investor Relations in the region of Hong Kong and
Taiwan, to Best Corporate Governance, Best Annual Report and Other
Corporate Literature, and Best Web Site; and from Best Investor Relations by
a CEO or Chairman, to Best IR Officer. Globalviews elected TSMC to receive
the Award for Social Responsibility, while CommonWealth Magazine voted
us the Most Admired Company for the ninth consecutive time. TSMC also
received the Outstanding Nano-Tech Award from the Ministry of Economic
Affairs (MOEA) of the Republic of China with a unanimous vote of recogni-
tion from The Award Steering Committee of the Industrial Development
Bureau of MOEA.
Corporate Developments
In August, the Company successfully completed a secondary offering of
approximately 163 million American Depositary Shares (ADSs) by Koninklijke
Philips Electronics N.V., the Executive Yuan's Development Fund, and other
Outlook
With the inventory adjustment that began in mid 2004 and carried through
the first half of 2005, the IC industry was able to register another growth
year in 2005 at 8%, according to IC Insights' latest estimates. The outlook for
2006 is for the industry to grow another 8%, representing the fifth consecu-
tive year of expansion of the IC industry, as forecast by IC Insights. Although
the foundry segment grew at a lower rate than the industry in 2005, affected
by the need to digest excess inventory in the early part of the year, it is
expected to resume its momentum and outpace the IC industry in 2006.
With our leadership in technology, manufacturing excellence, and customer
partnership, as well as our focus on strategic planning and financial disci-
pline, we are confident that TSMC should be able to compete well and con-
tinue to deliver growth and profitability to maximize shareholder value in the
future.
Morris Chang,
Chairman
Rick Tsai,
President and CEO
4
A BRIEF
INTRODUCTION TO
TSMC
1. Company Profile
TSMC is the world's largest dedicated semiconductor foundry, offering
industry-leading fabrication process technologies, the largest manufacturing
capacity among the dedicated foundries, extensive library and IP portfolios,
and other advanced foundry services.
TSMC currently operates two 12-inch wafer fabs, five 8-inch wafer fabs and
one 6-inch wafer fab. The Company also has substantial capacity commit-
ments at two wholly owned subsidiaries, WaferTech in the U.S. and TSMC
(Shanghai) Company, Ltd. in China, as well as at a joint-venture fab, Systems
on Silicon Manufacturing Co. ("SSMC"), in Singapore.
TSMC was incorporated on February 21, 1987. TSMC's common shares are
listed on the Taiwan Stock Exchange. About 17.5% of our common shares
are also listed on the New York Stock Exchange (NYSE) in the form of
American Depositary Receipts under the symbol TSM.
As a responsible corporate citizen, the Company is committed to public serv-
ice and to maintaining strong relationships with our customers, investors,
employees, and the communities where TSMC does business.
Sound corporate governance is rooted in a strong Board of Directors com-
prised of experienced business leaders and distinguished scholars. The Board
reinforces the Company's commitment to financial integrity and manage-
ment soundness. There are three independent Board members among a
total of nine directors. The Audit Committee, which reports to the Board,
was established in 2002. It oversees the integrity of TSMC's financial and
audit systems. The Audit Committee is comprised solely of independent
members of the Board. The Compensation Committee was established in
June 2003 and is comprised of three voting members, who are independent
Board members, as well as two non-voting members. It reviews and makes
recommendations on issues related to employee and executive compensa-
tion.
1.1 Core Values
Integrity - a central value of the Company. TSMC's commitment to integrity
can be best illustrated by our strong corporate governance standards and by
the requirement that all TSMC employees act with honesty and uprightness,
as set forth in the Company's ethics policy and standard operating proce-
dures.
Customer Partnership - an essential component of the Company's competitive
strength. TSMC's dedication to customer partnership helps to optimize the
competitiveness of our customers and to maximize returns for our share-
holders.
Innovation - the wellspring of the Company's growth. TSMC encourages cre-
ativity among our employees and provides the stimulating work environment
necessary for their development. The spirit of innovation is applied to every
aspect of the Company's business, from strategic planning, marketing and
management, to technology and manufacturing.
Commitment - the driving force that makes things happen. TSMC asks of its
entire staff their personal commitment to their job and to the Company. In
turn, the Company is committed to uphold the welfare of its employees, its
customers and its shareholders.
1.2 Statement of Company Vision
Our vision is to be the most advanced and largest technology and foundry
services provider to fabless companies and IDMs, and in partnership with
them, to forge a powerful competitive force in the semiconductor industry.
To realize our vision, we must have a trinity of strengths:
● a technology leader, competitive with the leading IDM
● the lowest-cost manufacturer
● the most reputable, service-oriented and maximum-total-benefits silicon
foundry
1.3 Corporate Recognition
With innovative technologies and a commitment to corporate governance,
TSMC has been recognized with many awards of excellence. Awards honor-
ing TSMC in 2005 included:
● Most Admired Company in Taiwan (CommonWealth Magazine, October
2005 - for the ninth consecutive year)
5
● Best Managed Companies in Taiwan
Large Cap (Asiamoney, January
advanced process node. The Company also continued to generate many
2006)
times the 0.13-micron revenue of our nearest foundry competitor.
● Best Managed Company, Best Corporate Governance, Most Committed to
Strong Dividend Policy (2nd place), and Best Investor Relations in the
In line with its unwavering focus on customer partnership, TSMC offers inno-
Taiwan region (FinanceAsia, 2005)
vative service as well as advanced technologies. In 2005, TSMC introduced
● Grand Prix for Best Overall Investor Relations - Large Cap, Best Annual
the foundry industry's first comprehensive Design For Manufacturing (DFM)
Report and Other Corporate Literature, Best Investor Relations Officer -
toolkits, which improve product yield, increase device performance and
Large Cap, Best Corporate Governance, Best Web Site, and Best Investor
enhance semiconductor companies' return on design investment. These
Relations by a CEO or Chairman in Hong Kong and Taiwan (IR Magazine,
process-based toolkits, "Yield Plus" and "Yield Pro", allow designers to build
November 2005)
on their best efforts, thereby generating greater returns to the bottom line.
● Best Asia Investor Relations in Technology (Semiconductor) Sector - Buy-
By providing these two DFM tool kits, TSMC extends its foundry leadership.
Side View, Best Asia CFO in Technology (Semiconductor) Sector
Sell-Side
TSMC also enhanced its advanced process design reference flows to provide
View, Best Asia Investor Relations in Technology (Semiconductor) Sector -
state-of-the-art access to the Company's 65nm process technology. The new
Sell-Side View, Best Investor Relations in Taiwan - Buy-Side View
Reference Flow 6.0 provides innovative power management features within a
(Institutional Investor, November 2005)
comprehensive EDA methodology that is supported by TSMC's low-power
● Top 50 Management Teams in Asia
excluding Japan (CFO Asia, October
libraries, as well as new DFM capabilities for faster yield ramps and increased
2005)
return on investment. Reference Flow 6.0 lowers the initial learning-curve for
● First Outstanding Nano-Tech Award (Industrial Development Bureau of
designers wishing to create leading-edge products using advanced processes.
Ministry of Economic Affairs, ROC, September 2005)
● Corporate Social Responsibility Award (Globalviews Magazine, May 2005)
TSMC continued to advance the semiconductor roadmap in 2005. Examples
● Prize for Innovation in Human Resource Development (Council of Labor
of technologies the Company developed or rolled out this year include:
Affairs, September 2005)
● Extension of advanced technologies to 45nm
● Chairman, Dr. Morris Chang, received Nikkei Asia Prize for Regional Growth
● Extension of SiGe BiCMOS processes to 0.18µm
(Nikkei News, May 2005)
● Development of immersion lithography for 65nm geometries and below
● Chairman, Dr. Morris Chang, received Award for Outstanding Achievement
● Extension of mixed-signal and radio frequency (MS/RF) technologies to
among the Industrial Elites (Industrial Development Bureau of Ministry of
90nm
Economic Affairs, ROC, November 2005)
● Extension of high density embedded memory processes to 65nm
2. Market Overview
2.1 TSMC Achievements
● Proving of logic processes with nonvolatile memory at 0.13µm
● Extension of high voltage processes to 0.18µm
● Development of 80-volt, 1.0µm high voltage technology
In 2005, TSMC maintained its leading position in the dedicated foundry seg-
2.2 Market Analysis
ment of the semiconductor industry, with an estimated market share of
Global semiconductor revenues increased about 6.8% in 2005 to US$227.5
49%.
billion. Fabless company revenues grew about 10% to US$37 billion, com-
prising 16.3% of total semiconductor revenues in 2005, up from 15.8% in
A key factor in TSMC's strong position is our lead in advanced process tech-
2004. Dedicated semiconductor foundry revenues grew about 2% in 2005
nologies: in 2005, 45% of TSMC's wafer revenue came from manufacturing
to US$16.4 billion. The value of dedicated foundry output at the semicon-
processes with geometries of 0.13-micron and below. Working closely with
ductor market level is roughly two and a half times the foundry revenues
our customers, TSMC took the lead in volume production of many products
and accounted for about 18% of semiconductor revenues in 2005.
designed with our 90-nanometer technology. By the fourth quarter of 2005,
more than 17% of TSMC's wafer revenue came from 90-nanometer process-
es or below, placing TSMC at the top of the foundry segment at this
TSMC estimates that the largest geographic market for dedicated foundry
forecast that by 2010, 30% of global semiconductor revenue will come from
services is North America, which accounted for 62% of overall dedicated
dedicated foundries, as compared to 18% in 2005.
foundry revenue in 2005. The second largest geographic market is Asia
Pacific (excluding Japan), which accounted for 22% of total dedicated
Accordingly, TSMC plans to continue capacity expansion in the year 2006,
foundry revenue in 2005. Europe accounted for 11%, and Japan contributed
with capital investment of approximately US$2.6 billion to US$2.8 billion. In
5%.
addition to continued ramping up and expansion of Fab 12, TSMC's first 12-
inch production fab, the Company is also expanding capacity at Fab 14,
2.3 Semiconductor Industry Growth Forecast
another 12-inch fab in Taiwan, and at TSMC (Shanghai), an 8-inch fab in
Analysts' consensus forecast for semiconductor growth in 2006 is close to
China.
8%. The semiconductor market is forecasted to continue growing in 2007
with the consensus forecast close to 10%.
The threat of excess capacity due to demand fluctuation and wafer price
pressure from competition, however, may return in the next few years. To
2.4 Foundry Market Outlook: Opportunities and Threats
capitalize on opportunities, at the same time to win competition and to
TSMC believes foundry services will play an increasingly important role as the
reduce excess capacity risk, TSMC will continue focusing on creating values
6
semiconductor industry becomes more reliant on outsourced manufacturing
to better serve customers' requirements.
from IDM and growth of fabless semiconductor companies. Industry analysts
3. Organization
3.1 Organization Chart
Shareholders'
Meeting
Board of Directors
Chairman
President & CEO
Supervisors
TSMC
Shanghai
Research &
Development
Information
Technology
Exploratory
Research
Human
Resources
Quality &
Reliability
Corporate
Planning
Worldwide
Sales &
Service
Corporate
Development
Materials
Management
& Risk
Management
Operations I
Operations II
Finance &
Spokesperson
Legal
Internal
Audit
Brand
Management
Corporate
Pricing
Customer
Service
Asia / Pacific
Business
TSMC Europe
TSMC Japan
TSMC North
America
7
3.2 Roles and Responsibilities of Major Corporate Functions
Research & Development
● Advanced technology research and development, mask operations, and
design services
Information Technology
● Company-wide information infrastructure, e-Business strategy, and infor-
mation systems development and operation
Exploratory Research
● Exploratory technology development
Human Resources
● Human resources management and organizational development
Quality & Reliability
● Quality and reliability management
Corporate Planning
● Production planning & control, industrial engineering, and operational effi-
ciency
Worldwide Sales & Service
● Brand Management - corporate brand management
● Corporate Pricing - pricing management
● Customer Service - customer loyalty and solutions management
● Regional Operations - business development and account services for the
North American, European, Japanese, and Asian regions
Corporate Development
● Corporate strategy and business development
● Technology and services marketing
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 manu-
facturing technology integration
Finance & Spokesperson
● Finance and accounting services, including investor relations, public rela-
tions, treasury, tax, asset management, strategic investment, financial and
accounting management
● Corporate spokesperson
Legal
● Corporate legal affairs, contracts, patent and other intellectual property
management
Internal Audit
● Internal audit and process compliance
TSMC Shanghai
● Business strategy and development, manufacturing operations, and
account services in China
3.3 Directors and Supervisors
Information Regarding Directors and Supervisors
Title / Name
Chairman
Morris Chang
Koninklijke Philips Electronics N.V.
Representatives: (Note 1,3)
8
Director
J. C. Lobbezoo
Vice Chairman
F. C. Tseng
Director
Stan Shih
Development Fund, Executive Yuan
Representatives: (Note 3)
Director
Chintay Shih
Director
Sir Peter Leahy Bonfield
Director
Lester Carl Thurow
Director
Rick Tsai
Koninklijke Philips Electronics N.V.
Representatives: (Note 1, 3)
Supervisor
Michel Besseau (Note 2)
Date
Elected
Term
Expires
Date
First Elected
06/03/2003
06/02/2006
12/10/1986
Shareholding when Elected
Current Shareholding
Spouse and Minor Shareholding
Shares
91,669,112
%
0.49
Shares
112,677,772
%
0.46
Shares
117,308
%
0.00
06/03/2003
06/02/2006
12/10/1986
2,554,450,279
13.72
4,066,046,793
16.44
-
-
06/03/2003
06/02/2006
05/13/1997
30,356,889
0.16
39,120,891
0.16
127,068
0.00
06/03/2003
06/02/2006
04/14/2000
2,225,077
0.01
1,415,785
0.01
15,415
0.00
06/03/2003
06/02/2006
12/10/1986
1,793,522,406
9.63
1,581,649,966
6.40
-
-
06/03/2003
06/02/2006
05/07/2002
0
0.00
0
0.00
0
0.00
06/03/2003
06/02/2006
05/07/2002
0
0.00
0
0.00
06/03/2003
06/02/2006
06/03/2003
19,491,738
0.10
25,576,795
0.10
06/03/2003
06/02/2006
12/10/1986
2,554,450,279
13.72
4,066,046,793
16.44
0
0
-
0.00
0.00
-
TSMC Shareholding by
Nominee Arrangement
(Shares)
Education and Selected Past Positions
Selected Current Positions
As of 02/28/2006
Managers Are Spouse or Within Second-degree
Relative of Consanguinity to Each Other
Title
Name
Relation
Ph.D., Electrical Engineering, Stanford University, USA
Chairman, Industrial Technology Research Institute
President & COO, General Instrument Corporation
CEO, TSMC
Supervisor, Industrial Technology Research Institute
M.A., Business Economics, Erasmus University, Rotterdam, the Netherlands
CFO, Philips Semiconductors B.V.
Executive Vice President, Philips International B.V.
Chairman, Systems on Silicon Manufacturing Company Pte Ltd., Singapore
Director, FEI Company, Oregon, USA
0
0
0
Ph.D., Electrical Engineering, National Cheng-Kung University, Taiwan
President, Vanguard International Semiconductor Corp.
President, TSMC
Deputy CEO, TSMC
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 University,
Hong Kong
Honorary EE Ph.D., MSEE, BSEE, National Chiao Tung University, Taiwan
Co-Founder, Chairman Emeritus of the Acer Group
0
0
0
0
0
Ph.D., Electrical Engineering, Princeton University, USA
President, Industrial Technology Research Institute
Engineering, Loughborough University of Technology, UK
CEO and Chairman of the Executive Committee, British
Telecommunications Plc
Ph.D., Economics, Harvard University, USA
Dean, Sloan School of Management, M.I.T., USA
Ph.D., Material Science, Cornell University, USA
Executive Vice President, Worldwide Marketing and Sales, TSMC
President, Vanguard International Semiconductor Corp.
Chairman, TSMC (Shanghai) Company Ltd.
Chairman, Global Unichip Corp.
Director, Prosperity Venture Capital Corp.
Director, digimax, Inc.
Director, Allegro Manufacturing Pte Ltd.
Group Chairman, iD SoftCapital
Director, ABW (Acer, BenQ, Wistron) Family
Professor and Dean, College of Technology Management, National Tsing
Hua University
Managing Director and Special Advisor, Industrial Technology Research
Institute
Director, Industrial Technology Investment Corporation
Senior Non-Executive Director, AstraZeneca Group Plc, London
Director, L.M. Ericsson, Sweden
Director, Mentor Graphics Corporation Inc., Oregon, USA
Vice President, the British Quality Foundation
Member of the Citigroup International Advisory Board
Member of the Sony Corporation Advisory Board
Director, Sony Corporation, Japan
Non-Executive Director, Corporate Board of the Department for
Constitutional Affairs
Non-Executive Member of Actis LLP Supervisory Board
Non-Executive Director HMG, Department for Constitutional Affairs
Jerome and Dorothy Lemelson Professor of Management and Economics,
Sloan School of Management, M.I.T., USA
Director, Analog Devices Inc.
President & CEO, TSMC
Director of TSMC subsidiary companies
Master, Business Administration, Bowling Green State University, USA
Master, Business Administration, Audencia, France
CFO, Systems on Silicon Manufacturing Company Pte Ltd.
Regional controller, Product Division of Philips Semiconductors in Asia
Pacific
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9
-
-
-
-
-
-
-
-
-
-
-
-
(Continued)
Title / Name
Date
Elected
Term
Expires
Date
First Elected
Shareholding when Elected
Current Shareholding
Spouse and Minor Shareholding
06/03/2003
06/02/2006
12/10/1986
1,793,522,406
Shares
%
9.63
Shares
1,581,649,966
%
6.40
Shares
-
%
-
Development Fund, Executive Yuan
Representatives: (Note 3)
James C. Ho
Supervisor
Michael E. Porter
06/03/2003
06/02/2006
05/08/2002
0
0.00
0
0.00
0
0.00
Note 1: Effective January 2006, Mr. Mario Alberto Rivas, representative of Koninklijke Philips Electronics N.V., resigned as a director of TSMC.
10
Note 2: Mr. Michel Besseau replaced Mr. Robbert Brakel on June 1, 2005.
Note 3: Information on Directors and Supervisors that are Representatives of Juridical Person Shareholders
Directors / Supervisors that are Representatives of Juridical Person
Shareholders
Juridical Person Shareholders
Top Ten Shareholders of Juridical Person Shareholders, or Shareholders Owning
More than 10% of Juridical Person Shareholders
Director: J. C. Lobbezoo
Supervisor: Michel Besseau
Director: Chintay Shih
Supervisor: James C. Ho
Koninklijke Philips Electronics N.V.
Top Ten Shareholders: Not Available
Shareholders Owned More than 10% Shares : None
Development Fund, Executive Yuan
Not Applicable
TSMC Shareholding by
Nominee Arrangement
(Shares)
0
Education and Selected Past Positions
Selected Current Positions
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
0
BSE, Aerospace and Mechanical Engineering, Princeton University
Ph.D., Business Economics, Harvard University, USA
Bishop William Lawrence University Professor, Harvard University
Director, Parametric Technology Corporation
Director, Thermo-Electron Corporation
Managers Are Spouse or Within Second-degree
Relative of Consanguinity to Each Other
Title
Name
Relation
-
-
-
-
-
-
-
-
-
11
Remuneration Paid to Directors and Supervisors
Transportation Allowance
(NT$ thousands)
Compensation (NT$ thousands)
Compensation from Profit Distribution
(NT$ thousands)
TSMC
Consolidated
Subsidiaries
of TSMC
TSMC
Consolidated
Subsidiaries
of TSMC
TSMC
Consolidated
Subsidiaries
of TSMC
Cash
(NT$ thousands)
TSMC
Stock
Shares
Market Price Per
Share (NT$)
Market Value
(NT$ thousands)
1,440
1,440
24,017
24,017
257,410
257,410
0
0
0
0
Title / Name
Chairman
Morris Chang
Koninklijke Philips Electronics N.V.
Representatives:
Director
J. C. Lobbezoo
Mario Alberto Rivas (Note 1)
Supervisor
Michel Besseau (Note 2)
12
Vice Chairman
F. C. Tseng
Director
Stan Shih
Development Fund, Executive Yuan
Representatives:
Director
Chintay Shih
Supervisor
James C. Ho
Director
Sir Peter Leahy Bonfield
Director
Lester Carl Thurow
Director, President & CEO
Rick Tsai
Supervisor
Michael E. Porter
Note 1: Effective January 2006, Mr. Mario Alberto Rivas, representative of Koninkljke Philips Electronics N.V. resigned as a director of TSMC.
Note 2: Mr. Michael Besseau replaced Mr. Robbert Brakel on June 1, 2005.
Note 3: Total remuneration paid to TSMC's directors and supervisors in 2004 was NT$545,103 thousands (0.59% of 2004 net income). TSMC's consolidated subsidiaries did not pay any compensation to TSMC's directors and supervisors in 2004 and 2005.
Note 4: Other compensation related to the use of company cars.
Remuneration Paid to Directors and Supervisors
Number of Directors and Supervisors
2005
TSMC
Consolidated Subsidiaries of TSMC
1
0
0
11
0
12
1
0
0
11
0
12
Under NT$ 2,000,000
NT$2,000,000 ~ NT$5,000,000
NT$5,000,000 ~ NT$10,000,000
NT$10,000,000 ~ NT$50,000,000
Over NT$50,000,000
Total
According to the Company's Articles of Incorporation, starting from fiscal
year 2005, when allocating net profits for each fiscal year, the Company,
after setting aside regulatorily-reguired legal reserves, shall set aside not
more than 0.3 percent of the balance as bonus to directors and supervisors.
Bonuses to directors and supervisors are always paid in cash. Directors who
also serve as executive officers of the Company are not entitled to receive
compensation for duties as directors and supervisors.
Employee Profit Sharing
Consolidated Subsidiaries of TSMC
Stock
Cash (NT$
thousands)
Shares
Market Price Per
Share (NT$)
Market Value
(NT$ thousands)
Total Compensation
(NT$ thousands)(Note 3)
Total Compensation Paid to Directors &
Supervisors as % of 2005 Net Income
(Note 3)
Number of Employee Stock
Options Granted in 2005
Other Compensation
(NT$ thousands)
TSMC
Consolidated
Subsidiaries
of TSMC
TSMC
Consolidated
Subsidiaries
of TSMC
TSMC
Consolidated
Subsidiaries
of TSMC
TSMC (Note 4)
Consolidated
Subsidiaries
of TSMC
0
0
0
0
282,867
282,867
0.30
0.30
0
0
2,481
2,481
13
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
Name
Over five years of experience in business,
finance, legal or areas required by the
Company
Neither an employee of the Company nor a
director, supervisor or employee of affiliated
companies
Neither a natural person shareholder directly
or indirectly owning more than 1% of the
Company's outstanding shares nor one of
the Company's top ten natural person share-
holders
Neither a spouse nor first- or second-degree
relative to any person specified in columns 3
and 4
14
Chairman
Morris Chang
Director
Peter Leahy Bonfield
Director
Lester Carl Thurow
Director
Stan Shih
Director
J. C. Lobbezoo
Director
Chintay Shih
Director
F. C. Tseng
Director
Rick Tsai
Supervisor
Michel Besseau
Supervisor
James C. Ho
Supervisor
Michael E. Porter
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57) indicates meeting conditions specified above.
Board of Directors
Composition
Responsibilities
TSMC's Board of Directors consists of nine distinguished members. Their out-
The Board's primary duty is to oversee the overall business and corporate
standing careers and breadth of experience encompass high technology,
affairs of TSMC. Day-to-day operations, preparation of financial statements,
finance, business, and management. Three of the nine members are inde-
fund raising, and investments remain the legal responsibility of the Company's
pendent directors: Sir Peter L. Bonfield, former CEO of British Telecommuni-
management, and the activities of the Board do not supersede or alter those
cations, Professor Lester C. Thurow of M.I.T., and Mr. Stan Shih, former
responsibilities.
Chairman of Acer Group. A complete list of TSMC's directors, their qualifica-
tions and experience can be found on pages 8-11.
In conjunction with the Company's management, the Board also monitors
regulatory activities, such as amendments to Taiwan's laws, amendments to
SEC rules and regulations in the U.S., and changes to the New York Stock
Exchange and Taiwan Stock Exchange listing requirements.
Criteria
Not a director, supervisor, or employee of a juridical
person shareholder directly or indirectly owning
more than 5% of the Company's outstanding shares,
nor one of the Company's top five juridical person
shareholders.
Neither a director, supervisor, manager or sharehold-
er holding more than 5% of the outstanding shares
of certain companies nor institutions that have finan-
cial or business relationship with the Company
In the past year, the director/supervisor or his/her
spouse did not provide finance, commerce, legal con-
sultation and services to the company as an expert,
nor was an owner, partner, director, supervisor or
manager of any sole proprietorship, partnership, com-
pany or institution that provided such services.
Neither a juridical person nor its representative as
defined in Article 27 of Company Law
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
15
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
(cid:57)
3.4 Management Team
Information Regarding Management Team
Title / Name
President & Chief Executive Officer
Rick Tsai
Senior Vice President
Research & Development
Shang-Yi Chiang
Senior Vice President
Worldwide Sales & Service
Kenneth Kin
Senior Vice President & Chief Information Officer
Information Technology/Materials Management &
Risk Management
Stephen T. Tso
16
Shareholding
Spouse & Minor
TSMC Shareholding by Nominee
Arrangement (Shares)
Date
Effective
08/07/2001
11/07/2000
Shareholding
25,576,795
7,671,306
%
0.10
0.03
08/07/2001
3,259,860
0.01
11/02/2004
12,036,380
0.05
Shareholding
0
0
0
0
%
0.00
0.00
0.00
0.00
Senior Vice President
Operations I
C. C. Wei
Senior Vice President
Operations II
Mark Liu
Vice President
Operations I
M. C. Tzeng
Vice President & General Counsel
Richard Thurston
Vice President
Customer Partnership Development
Chiam Wu
Vice President,
Chief Financial Officer & Spokesperson
Lora Ho
Vice President
Human Resources
P. H. Chang
Vice President
Operations II
Wei-Jen Lo
Vice President
Corporate Development
Jason C. S. Chen
Senior Director
Internal Audit
Jan Kees van Vliet
Senior Director
Corporate Planning
L. C. Tu
03/03/1998
5,388,079
0.02
1,251
0.00
05/11/1999
9,897,792
0.04
0
0.00
08/07/2001
5,336,601
0.02
389,848
0.00
02/08/2002
2,244,211
0.01
05/07/2002
1,927,464
0.01
0
0
0.00
0.00
09/08/2003
3,692,392
0.01
184,480
0.00
02/17/2004
1,832,910
0.01
08/10/2004
502,552
0.00
0
0
0.00
0.00
03/31/2005
361,000
0.00
3,983
0.00
10/15/2003
804,639
0.00
0
0.00
01/01/2002
7,914,827
0.03
1,197,906
0.00
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Education & Selected Past Positions
Selected Current Positions
(see page 9)
(see page 9)
Ph.D., Electrical Engineering, Stanford University, USA
Vice President, Research and Development, TSMC
Department Manager, Device Research and Applications, Hewlett-Packard Company
Ph.D., Nuclear Engineering and Applied Physics, Columbia University, USA
Vice President, Worldwide Sales & Services, IBM Microelectronics Division
Ph.D., Materials Science & Engineering, University of California, Berkeley, USA
President, WaferTech, LLC
Senior Vice President, Operations, TSMC
Director of International Sematech
Director of TSMC subsidiary companies
Director of WaferTech, LLC
Ph.D., Electrical Engineering, Yale University, USA
Vice President, South Site Operation, TSMC
Senior Vice President, Chartered Semiconductor Manufacturing Ltd.
Director of TSMC (Shanghai) Company Ltd.
Director of VisEra Technologies Company, Ltd.
Ph.D., Electrical Engineering and Computer Science, University of California, Berkeley, USA
Vice President, South Site Operation, TSMC
President, Worldwide Semiconductor Manufacturing Corp.
Director of System on Silicon Manufacturing Company Pte
Ltd.
As of 02/28/2006
Managers are Spouse or Within Second-degree Relative of
Consanguinity to Each Other
Title
Name
Relation
17
Master, Applied Chemistry, Chung Yuan University, Taiwan
Senior Director, Fab 2 Operation, TSMC
Department Manager
M. J. Tzeng
Siblings
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
Director of TSMC subsidiary companies
Director of System on Silicon Manufacturing Company Pte
Ltd.
Director and/or Supervisor TSMC subsidiary companies
Supervisor of Global Unichip Corporation
Supervisor of VisEra Technologies Company, Ltd.
M.S., Materials Science and Engineering, Oregon State University, USA
Group Vice President, Applied Materials, Inc.
Vice Chairman, Applied Materials Taiwan, Ltd.
Master, Finance, National Taiwan University, Taiwan
Senior Director, Accounting, 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., Business Administration, University of Missouri-Columbia, USA
Vice President and Co-Director of Worldwide Sales and Marketing Group, 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
Compensation Paid to President and Vice Presidents
Title
Name
Salary (NT$ thousands)
Bonus (NT$ thousands)
TSMC
Consolidated
Subsidiaries
of TSMC
TSMC
Consolidated
Subsidiaries
of TSMC
Cash
(NT$ thousands)
Shares
Stock
Market Price Per
Share
(NT$)
Market Value
(NT$ thousands)
TSMC
President &
Chief Executive Officer
Senior Vice President
Research & Development
Senior Vice President
Worldwide Sales & Service
18
Senior Vice President & Chief
Information Officer
Information Technology/Materials
Management & Risk Management
Senior Vice President
Operations I
Senior Vice President
Operations II
Vice President
Operations I
Vice President &
General Counsel
Rick Tsai
Shang-Yi Chiang
Kenneth Kin
Stephen T. Tso
C. C. Wei
Mark Liu
M. C. Tzeng
47,372
47,372
11,453
11,453
176,117
17,588,305
62.15
1,093,113
Richard Thurston
Vice President
Customer Partnership Development
Chiam Wu
Vice President
Chief Financial Officer &
Spokesperson
Vice President
Human Resources
Vice President
Operations II
Lora Ho
P. H. Chang
Wei-Jen Lo
Vice President
Corporate Development
Jason C. S. Chen
(Note 2)
Note 1: Total compensation paid to TSMC's president and vice presidents in 2004 was NT$902,924 thousands (0.98% of 2004 net income). TSMC's consolidated subsidiaries did not pay any compensation to TSMC's president and vice presidents in 2004 and
2005.
Note 2: Mr. Jason C. S. Chen joined TSMC on March 31, 2005.
Note 3: Other compensation related to the use of company cars.
Compensation Paid to Individual President and Vice Presidents
Under NT$2,000,000
From NT$2,000,000 to NT$5,000,000
From NT$5,000,000 to NT$10,000,000
From NT$10,000,000 to NT$50,000,000
Over NT$50,000,000
Total
Number of President and Vice Presidents
2005
TSMC
Consolidated Subsidiaries of TSMC
0
0
0
1
12
13
0
0
0
1
12
13
Employee Profit Sharing
Total Compensation
(NT$ thousands) (Note 1)
Total Compensation to President and
VPs as % of 2005 Net Income (Note 1)
ESOP Shares Granted in 2005
Other Compensation
(NT$ thousands)
Consolidated Subsidiaries of TSMC
Cash (NT$
thousands)
Shares
Stock
Market Price Per
Share
(NT$)
Market Value
(NT$ thousands)
TSMC
Consolidated
Subsidiaries
of TSMC
TSMC
Consolidated
Subsidiaries
of TSMC
TSMC
Consolidated
Subsidiaries
of TSMC
TSMC (Note 3)
Consolidated
Subsidiaries
of TSMC
176,117
17,588,305
62.15
1,093,113
1,328,055
1,328,055
1.42
1.42
0
0
3,622
3,622
19
Employee Profit Sharing Granted to Management Team
Title
President &
Chief Executive Officer
Senior Vice President
Research & Development
Senior Vice President
Worldwide Sales & Service
Senior Vice President & Chief
Information Officer
Information Technology /Materials
Management & Risk Management
20
Senior Vice President
Operations I
Senior Vice President
Operations II
Vice President
Operations I
Vice President &
General Counsel
Profit Sharing Stock
Number of Shares
Market Price Per Share
(NT$)
Market Value
(NT$ thousands)
Profit Sharing Cash
(NT$ thousands)
Total Profit Sharing
Value (NT$ thousands)
Total Profit Sharing
Value to Management
Team as % of 2005 Net
Income
Name
Rick Tsai
Shang-Yi Chiang
Kenneth Kin
Stephen T. Tso
C. C. Wei
Mark Liu
M. C. Tzeng
Richard Thurston
18,612,751
62.15
1,156,782
186,375
1,343,158
1.44
Vice President
Customer Partnership Development
Chiam Wu
Vice President
Chief Financial Officer &
Spokesperson
Vice President
Human Resources
Vice President
Operations II
Vice President
Corporate Development
Senior Director
Internal Audit
Lora Ho
P. H. Chang
Wei-Jen Lo
Jason C. S. Chen (Note)
Jan Kees van Vliet
Senior Director
Corporate Planning Organization
L. C. Tu
Note: Mr. Jason C.S, Chen joined TSMC on March 31, 2005.
Information on Net Change in Shareholding and Net Change in Shares Pledged by Directors, Supervisors, Management and Shareholders of 10% Shareholdings or
More:
Unit: Share
Title / Name
Chairman
Morris Chang
Director & Supervisor
Koninklijke Philips Electronics N.V.
Representatives:
J. C. Lobbezoo
Michel Besseau
Vice Chairman
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 & CEO
Rick Tsai
Supervisor
Michael E. Porter
Senior Vice President
Shang-Yi Chiang
Senior Vice President
Kenneth Kin
Senior Vice President & CIO
Stephen T. Tso
Senior Vice President
C. C. Wei
Senior Vice President
Mark Liu
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
Vice President
Jason C. S. Chen
Senior Director
Jan Kees van Vliet
Senior Director
L. C. Tu
2005
01/01/2006~ 02/28/2006
Net Change in Shareholding
Net Change in Shares Pledged (Note 1)
Net Change in Shareholding
Net Change in Shares Pledged (Note 1)
(10,115,380)
1,489,049,475
(820,276)
67,414
(135,033,204)
0
0
1,109,522
0
0
0
0
0
0
0
0
0
0
(5,647,085)
(1,590,000)
378,604
32,891
431,377
600,161
553,080
682,117
654,555
761,905
729,561
222,552
370,000 (Note 2)
96,624
550,801
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
(200,000)
0
0
0
0
(270,000)
0
0
(100,000)
0
(162,000)
(130,000)
(9,000)
(10,000)
(9,000)
0
0
(20,000)
(9,000)
0
(71,000)
21
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
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 shares pledged from 03/31/2005 to 12/31/2005.
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.
22
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.
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
Note 1: Share interest held by Koninklijke Philips Electronics N.V.
Note 2: Include 26.9% 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.
Ownership by TSMC (1)
Shares
987,968,244
300,000
382,264
437,890,988
Not Applicable (Note 3)
Not Applicable (Note 3)
Not Applicable (Note 3)
11,000,000
40,146,953
6,000
Not Applicable (Note 3)
Not Applicable (Note 3)
200
16,782,937
10,500,000
8,391,608
4,000,000
5,000,000
Not Applicable (Note 3)
Not Applicable (Note 3)
%
100.0
100.0
32.0
27.2
100.0
99.5
98.0
100.0
45.7
100.0
35.7
35.7
100.0
10.1
7.0
10.5
1.9
1.5
12.1
1.0
Direct/Indirect Ownership by Directors, Supervisors, and Management (2)
Shares
0
0
630,261
433,590,490
0
0
0
0
2,210,627
0
0
0
0
Not Available (Note 4)
Not Available (Note 4)
Not Available (Note 4)
Not Available (Note 4)
Not Available (Note 4)
Not Applicable (Note 3)
Not Applicable (Note 3)
%
0
0
50.5 (Note 1)
26.9 (Note 2)
0
0
0
0
2.5
0
0
0
0
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
1,012,525
871,481,478
Not Applicable (Note 3)
Not Applicable (Note 3)
Not Applicable (Note 3)
11,000,000
42,357,580
6,000
Not Applicable (Note 3)
Not Applicable (Note 3)
200
16,782,937
10,500,000
8,391,608
4,000,000
5,000,000
Not Applicable (Note 3)
Not Applicable (Note 3)
23
As of 12/31/2005
%
100.0
100.0
82.5
54.1
100.0
99.5
98.0
100.0
48.2
100.0
35.7
35.7
100.0
10.1
7.0
10.5
1.9
1.5
12.1
1.0
4 Capital and Shares
4.1 History of Capitalization
24
Unit: Share/NT$
Month / Year
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
07/2004
09/2004
03/2005
06/2005
07/2005
09/2005
12/2005
Price
1,000
1,000
1,000
-
1,000
-
10
10
-
-
-
-
-
-
-
-
-
220
-
10
-
-
10
-
-
-
-
-
-
-
-
Par Value
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
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
780,000,000
780,000,000
3,000,000,000
3,000,000,000
8,500,000,000
8,500,000,000
9,100,000,000
9,100,000,000
17,800,000,000
17,800,000,000
17,800,000,000
17,800,000,000
24,600,000,000
24,600,000,000
24,600,000,000
24,600,000,000
24,600,000,000
24,600,000,000
24,600,000,000
24,600,000,000
27,050,000,000
27,050,000,000
27,050,000,000
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
7,800,000,000
7,800,000,000
30,000,000,000
30,000,000,000
85,000,000,000
85,000,000,000
91,000,000,000
91,000,000,000
178,000,000,000
178,000,000,000
178,000,000,000
178,000,000,000
246,000,000,000
246,000,000,000
246,000,000,000
246,000,000,000
246,000,000,000
246,000,000,000
246,000,000,000
246,000,000,000
270,500,000,000
270,500,000,000
270,500,000,000
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
608,304,000
780,000,000
1,439,000,000
2,654,200,000
4,081,300,000
6,047,175,967
7,548,483,035
7,670,881,717
9,990,849,423
10,105,849,423
11,689,364,587
12,989,364,587
18,132,553,051
19,922,886,745
18,622,886,745
20,266,618,984
23,376,597,005
23,251,877,005
23,252,048,432
23,252,863,457
24,724,087,405
24,726,128,803
24,727,347,637
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
6,083,040,000
7,800,000,000
14,390,000,000
26,542,000,000
40,813,000,000
60,471,759,670
75,484,830,350
76,708,817,170
99,908,494,230
101,058,494,230
116,893,645,870
129,893,645,870
181,325,530,510
199,228,867,450
186,228,867,450
202,666,189,840
233,765,970,050
232,518,770,050
232,520,484,320
232,528,634,570
247,240,874,050
247,261,288,030
247,273,476,370
Sources of Capital
Founding
Cash Offering
Cash Offering
Capitalization of Profits
Cash Offering
Par Value Change from NT$1000 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
Capitalization of Profits
Exercise of Employee Stock Options
Exercise of Employee Stock Options
25
Remark
Capital Increase by Assets other than Cash
Date of Approval & Approval Document No.
As of 02/28/2006
None
None
None
None
None
-
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
-
-
-
-
-
-
-
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
05/23/2005 Jin Guan Cheng 1 Tzu No. 0940120519
06/25/2002 Tai Tsai Cheng 1 Tzu No. 0910134577
06/25/2002 Tai Tsai Cheng 1 Tzu No. 0910134577
4.2 Capital and Shares
Unit: Share
Type of Stock
Common Stock
Shelf Registration: None
4.3 Status of Shareholders
Common Share
Authorized Capital
Issued Shares
Unissued Shares
Total
As of 02/28/2006
Listed
Non-Listed
Total
24,732,558,216
0
24,732,558,216
2,317,441,784
27,050,000,000
Type of Shareholders
Government Agencies
Financial Institutions
Other Juridical Persons
Foreign Institutions &
Natural Persons
Domestic Natural Persons
26
Number of Shareholders
Shareholding
Holding Percentage (%)
6
139
936
1,757
476,212
2,024,633,377
1,054,990,249
2,919,020,196
14,258,498,130
4,467,447,562
24,724,589,514
8.19
4.27
11.80
57.67
18.07
100.00
As of 06/19/2005 (last record date)
Total
479,050
4.4 Distribution Profile of Shareholder Ownership
Common Share
Shareholder Ownership (Unit: Share)
Number of Shareholders
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
Preferred Share: Not Applicable
138,876
208,760
61,418
24,493
11,254
12,611
5,414
3,373
6,194
2,994
1,543
531
259
176
1,154
479,050
Ownership
46,867,535
495,985,832
425,920,039
300,290,494
195,918,546
305,831,991
187,058,132
150,281,335
425,545,460
410,004,707
426,749,677
258,091,091
179,669,494
156,751,646
20,759,623,535
24,724,589,514
As of 06/19/2005 (last record date)
Ownership (%)
0.19
2.01
1.72
1.21
0.79
1.24
0.76
0.61
1.72
1.66
1.73
1.04
0.73
0.63
83.96
100.00
4.5 Major Shareholders
Common Share
Rank
Shareholders
1
2
3
4
5
6
7
8
9
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
10
GMO Emerging Markets Fund.
4.6 Other Share Information
Net Worth, Earnings, Dividends and Market Price Per Common Share
Unit: NTD, except for weighted average shares and return on investment ratios
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
Adjusted Earnings Per Share (Note 2)
Dividends Per Share
Cash Dividends
Stock Dividends
Dividends from Retained Earnings
Dividends from Capital Surplus
Accumulated Undistributed Dividend
Return on Investment
Price / Earnings Ratio (Note 3)
Price / Dividend Ratio (Note 4)
Cash Dividend Yield (Note 5)
Note 1: Pending shareholders' approval
Note 2: Retroactively adjusted for dividends and employee bonus
Note 3: Price / Earnings Ratio = Average Market Price / Adjusted Earnings Per Share
Note 4: Price / Dividend Ratio = Average Market Price / Cash Dividends Per Share
Note 5: Cash Dividend Yield = Cash Dividends Per Share / Average Market Price
Total Shares Owned
Ownership (%)
As of 06/19/2005 (last record date)
3,508,832,129
2,705,839,885
1,927,811,908
1,802,512,466
600,797,968
475,686,406
359,764,741
303,908,784
222,103,089
183,629,804
14.19
10.94
7.80
7.29
2.43
1.92
1.46
1.23
0.90
0.74
27
2004
2005
01/01/2006~02/28/2006
53.67 (Note 2)
36.52 (Note 2)
43.95 (Note 2)
17.16
15.02
23,255,086
3.97
3.73
2.00
0.50
-
-
11.78
21.98
4%
64.30 (Note 2)
41.69 (Note 2)
51.99 (Note 2)
18.02
(Note1)
24,693,112
3.79
(Note1)
2.50
0.15
0.15
-
(Note1)
(Note1)
(Note1)
68.40
60.00
63.21
-
-
-
-
-
-
-
-
-
-
-
-
4.7 Dividend Policy
According to the Company's Articles of Incorporation, when allocating net
Except under certain conditions specified in its Articles of Incorporation,
profits for each fiscal year, the Company, after setting aside regulatorily-
TSMC does not pay dividends when there is no profit for a particular fiscal
required legal reserves, shall set aside not more than 0.3% of the balance as
year. Profits may be distributed by way of cash dividend, stock dividend, or a
bonus to directors and supervisors, and not less than 1% as bonus to
combination of cash and stock. The preferred method of distributing profits
employees of the Company.
is by way of cash dividend. Under TSMC's Articles of Incorporation, stock div-
idend shall not exceed 50% of the total distribution in any given fiscal year.
2004 profit distribution set aside as Directors & Supervisors Compensation,
and Employee Profit Sharing:
4.8 Distribution of Profit
The Board adopted a proposal for 2005 profit distribution at its meeting on
Feb. 14, 2006. The proposed profit distribution will be effected upon the
approval of shareholders at the Annual Shareholder Meeting in May 2006.
Proposal to Distribute 2005 Profits
28
Unit: NT$
Bonus to Directors & Supervisors
Cash Dividends to Common Shareholders (NT$2.50 per share)
Stock Dividends to Common Shareholders (NT$0.15 per share at par
value, i.e., 15 shares for each 1,000 shares owned) (Note 1, 3)
Employees' Profit Sharing in Cash
Employees' Profit Sharing in Stock (Note 2)
Note 1: Equivalent to underlying number of shares: 370,950,370
Note 2: Equivalent to underlying number of shares: 343,212,868
Note 3: In addition, it is proposed to capitalize a portion of capital surplus in the amount of NT$3,709,503,700. Each com-
mon share holder will be entitled to receive 15 shares from such capitalization of capital surplus, and, together with
the 15 shares of stock dividend as mentioned above, 30 shares in total for each 1,000 shares owned.
Directors & Supervisors
Compensation (Cash)
Employee Profit Sharing
in Cash
Employee Profit Sharing
in Stock
257,409,650
61,825,061,618
Board Resolution
(02/22/2005)
Amount (NT$)
Amount (NT$)
231,466,144
231,466,144
3,086,215,246
3,086,215,246
Actual Result
Underlying
Number of Shares
-
-
3,086,215,260
3,086,215,260
308,621,526
Dilution (%)
-
-
1.25
-
3,709,503,700
Total
6,403,896,650
6,403,896,650
-
3,432,128,678
3,432,128,680
The EPS of 2004 and 2005 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)
2004 EPS
2005 EPS
NT$3.97
NT$3.70
NT$3.79
NT$3.50
4.9 Impact to 2006 Business Performance, EPS and ROE Resulting from
Stock Dividend Distribution: Not Applicable
4.10 Buyback of Treasury Stock: None
5. Issuance of Corporate Bonds
5.1 Corporate Bonds
Issuance
Issuing Date
Denomination
Offering Price
Total Amount
Coupon Rate
Tenure
Guarantor
Trustee
Underwriter
Legal Counsel
Auditor
Repayment
Outstanding
Redemption or Early
Repayment Clause
Covenants
Credit Rating
Domestic Unsecured Bond (IV)
12/04/2000 - 12/15/2000
NT$ 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
None
The International
Commercial Bank of China
Not Applicable
As of 02/28/2006
29
Domestic Unsecured Bond (V)
01/10/2002 - 01/24/2002
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
TC Bank
Not Applicable
Eluvzy International Law Office
Yan-an International Law Office
TN Soong & Co
Bullet
NT$4,500,000,000
None
TN Soong & Co
Bullet
NT$15,000,000,000
None
Customary Covenants
Customary Covenants
twAA (Taiwan Ratings Corporation, 11/08/2000)
twAA (Taiwan Ratings Corporation,12/03/2001)
Other Rights of Bondholders
Conversion Right
None
Amount of Converted or
Exchanged Common Shares, ADRs
or Other Securities as of 02/28/2006
Not Applicable
Dilution Effect and Other Adverse Effects on Existing Shareholders
Custodian
None
None
None
Not Applicable
None
None
5.2 Convertible Bond: None
5.3 Exchangeable Bond: None
5.4 Bond with Warrants: None
6. Preferred Shares
6.1 Preferred Share: None
6.2 Preferred Share with Warrant: None
7. Issuance of American Depositary Shares
Issuing Date
10/08/1997
11/20/1998
Issuance & Listing
Total Amount (US$)
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
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$)
24.78
15.26
Units Issued
24,000,000
12,094,000
17.75
2,000,000
24.516
12,094,000
28.964
5,486,000
57.79
6,560,000
56.16
4,000,000
Underlying Securities
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
Common Shares Represented
120,000,000
60,470,000
10,000,000
60,470,000
27,430,000
32,800,000
20,000,000
30
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
Depositary Bank
Custodian Bank
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Citibank, N.A. - New
York
Citibank, N.A. - New
York
Citibank, N.A. - New
York
Citibank, N.A. - New
York
Citibank, N.A. - New
York
Citibank, N.A. - New
York
Citibank, N.A. - New
York
Citibank, N.A. - Taipei
Branch
Citibank, N.A. - Taipei
Branch
Citibank, N.A. - Taipei
Branch
Citibank, N.A. - Taipei
Branch
Citibank, N.A. - Taipei
Branch
Citibank, N.A. - Taipei
Branch
Citibank, N.A. - Taipei
Branch
ADSs Outstanding (Note1)
24,000,000
46,222,650
48,222,650
71,407,859
76,893,859
83,453,859
87,453,859
Apportionment of expenses for the
issuance and maintenance
Terms and Conditions in the Deposit
Agreement and Custody Agreement
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
(Note 2)
Closing Price per ADS (US$)
2005
01/01/2006 -
02/28/2006
High
Low
Average
High
Low
Average
10.09
7.14
8.47
10.93
9.73
10.27
Note 1: TSMC has in aggregate issued 573,544,500 ADSs since 1997, which, if taking into consideration of stock dividend distributed over the period, would amount to 865,347,403 ADSs. As of February 28, 2006, total number of outstanding ADSs was
864,193,749 after 1,153,654 ADSs were redeemed. Stock dividend distributed in 1998, 1999, 2000, 2001, 2002, 2003, 2004 and 2005 was 45%, 23%, 28%, 40% , 10%, 8%, 14.08668% and 4.99971% 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.
06/07/2000 -
06/15/2000
NYSE
05/14/2001 -
06/11/2001
06/12/2001
11/27/2001
02/07/2002 -
02/08/2002
11/21/2002 -
12/19/2002
07/14/2003 -
07/21/2003
11/14/2003
NYSE
NYSE
NYSE
NYSE
NYSE
NYSE
NYSE
2005/8/10 -
09/08/2005
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
1,402,036,500
35.75
20.63
20.63
16.03
16.75
8.73
10.40
10.77
8.6
32,667,800
11,682,000
14,428,000
20,000,000
59,800,000
18,348,000
87,357,200
100,000,000
163,027,500
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
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
815,137,500
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
Same as those of
Common Share
Holders
31
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Citibank, N.A. - New
York
Citibank, N.A. - New
York
Citibank, N.A. - New
York
Citibank, N.A. - New
York
Citibank, N.A. - New
York
Citibank, N.A. - New
York
Citibank, N.A. - New
York
Citibank, N.A. - New
York
Citibank, N.A. - New
York
Citibank, N.A. - Taipei
Branch
Citibank, N.A. - Taipei
Branch
Citibank, N.A. - Taipei
Branch
Citibank, N.A. - Taipei
Branch
Citibank, N.A. - Taipei
Branch
Citibank, N.A. - Taipei
Branch
Citibank, N.A. - Taipei
Branch
Citibank, N.A. - Taipei
Branch
Citibank, N.A. - Taipei
Branch
144,608,739
156,290,739
170,718,739
259,006,235
318,806,235
369,019,413
485,898,166
585,898,166
864,210,597
(Note 3)
(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
See Deposit
Agreement and
Custody Agreement for
Details
See Deposit
Agreement and
Custody Agreement for
Details
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
Option Duration
Source of Option Shares
Vesting Schedule
32
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
First Grant
06/25/2002
08/22/2002
18,909,700
0.10154%
10 years
Second Grant
06/25/2002
11/08/2002
1,085,000
0.00583%
10 years
Third Grant
06/25/2002
03/07/2003
6,489,514
0.03485%
10 years
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%
3,935,300
153,616,575
16,056,479
53.0
38.0
0.06493%
148,883
5,687,207
1,206,346
51.0
36.7
0.00488%
441,533
14,228,866
6,727,000
41.6
29.9
0.02720%
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
Chairman
President & Chief Executive Officer
Senior Vice President
Senior Vice President
Senior Vice President
Senior Vice President
Name
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)
Number of Options Granted
(Note 2)
% of Shares Exercisable to
Outstanding Common Shares
3,346,972
0.01353%
Vice President & General Counsel
Richard Thurston (Note 1)
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 and 2005.
9. Status of Mergers and Acquisitions
No mergers or acquisitions were consummated in 2005.
10. Corporate Governance
During 2005, TSMC received a number of awards in recognition of our cor-
porate governance practices, including the Best Corporate Governance
award from IR Magazine for the Hong Kong and Taiwan regions and the
Best Corporate Governance award from FinanceAsia for the Taiwan region.
We hold ourselves to world-class standards of integrity and fairness, and we
benchmark our transparency and disclosures against some of the best com-
Maintaining the highest standards of corporate governance has been inte-
panies in the world.
gral to TSMC's core values since its founding. TSMC advocates and acts upon
the principles of operational transparency and respect for shareholder rights.
10.1 Audit Committee
We believe that the basis for successful corporate governance is a sound and
The Audit Committee assists the Board in carrying out its financial oversight
effective Board of Directors. In line with this principle, TSMC's Board of
responsibilities, which include reviewing the Company's financial reports, the
Directors established an Audit Committee in 2002 and a Compensation
Company's auditing and accounting policies and procedures, and the
Committee in 2003.
Company's internal control systems.
Fourth Grant
06/25/2002
06/06/2003
23,090,550
0.12399%
10 years
Fifth Grant
10/29/2003
12/03/2003
842,900
0.00416%
10 years
Sixth Grant
10/29/2003
02/19/2004
15,720
0.00008%
10 years
Seventh Grant
10/29/2003
05/11/2004
11,167,817
0.05510%
10 years
Eighth Grant
10/29/2003
08/11/2004
135,300
0.00058%
10 years
Ninth Grant
01/06/2005
05/17/2005
10,742,350
0.04620%
10 years
New Common Share
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%
2nd Year: up to 50%
3rd Year: up to 75%
4th Year: up to 100%
2,392,699
100,732,637
21,665,759
58.5
42.1
0.08761%
5,279
287,706
653,761
66.5
54.5
0.00264%
0
0
14,994
63.5
52.0
0.00006%
0
0
10,962,622
57.5
47.0
0.04433%
0
0
131,922
43.8
41.3
0.00053%
0
0
10,339,564
54.3
51.2
0.04181%
As of 12/31/2005
33
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
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$)
As of 12/31/2005
% of Shares Unexercised
to Outstanding Common
Shares
0
0
0
0%
3,346,972
29.9
100,074,463
0.01353%
TSMC's Audit Committee is empowered by its Charter to conduct any study
10.2 Compensation Committee
or investigation it deems appropriate to fulfill its responsibilities. It has direct
The Compensation Committee assists the Board in discharging its responsi-
access to TSMC's internal auditors, the Company's independent external
bilities related to the compensation and benefit policies, plans and programs
auditors, and all employees of the Company. The Committee is authorized to
of TSMC, and in the evaluation and compensation of TSMC's executives.
retain and oversee special legal, accounting or other consultants as it deems
appropriate to fulfill its mandate.
As of March 2006, the Compensation Committee was comprised of five
members: three independent directors serving as voting members of the
As of March 2006, the Audit Committee consisted of three members and a
Committee, and two non-voting directors. The Compensation Committee
consulting financial expert. The three Audit Committee members are all
convened four regular meetings in 2005.
independent directors. The Committee meets at least four times a year. The
Audit Committee convened four regular meetings and two special meetings
in 2005.
10.3 Taiwan Corporate Governance Implementation as Required by SFB
Item
Implementation Status
Reason for Non-Implementation
1.Shareholding Structure & Shareholders' Rights
(1) The way of handling shareholder suggestions or disputes
(2) The Company's possession of major shareholder's list and the list of ultimate owners of these
major shareholders
TSMC has designated relevant departments, such as Investor Relations, Public Relations, Legal,
etc., to handle shareholder's suggestions or disputes.
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 external auditors.
3. Composition and Responsibilities of Supervisors
34
(1) Independent Supervisor(s)
(2) Communication channel with employees or shareholders
Prof. Michael E. Porter is an independent supervisor of TSMC.
The employees and managers of relevant departments regularly report and present Company
information to the Independent Supervisor; all Supervisors have access to Company employees or
managers for information they need.
None
None
None
4. Communication channel with stakeholders
TSMC designates relevant departments to communicate with stakeholders on a case by case basis.
None
5. Information Disclosure
None
(1) Establishment of corporate website to disclose information regarding the Company's financials,
business and corporate governance status)
(2) Other information disclosure channels (e.g. English website, appointing responsible people to
handle information collection and disclosure, appointing spokesperson, webcasting investors
conference)
TSMC discloses information through its website www.tsmc.com.
Since TSMC is a foreign private issuer with American Depository Receipts listed on the New York
Stock Exchange ("NYSE"), TSMC is subject to various NYSE regulations, one of which requires TSMC
to disclose the significant ways in which its corporate governance practices differ from those fol-
lowed by US domestic companies under NYSE listing standards. You may find such disclosure infor-
mation at the following web address:
http://www.tsmc.com/download/english/e03_governance/NYSE_Section_303A.pdf
TSMC has designated relevant departments (e.g. Investor Relations, Public Relations, Legal, etc.) to
handle the collection and disclosure of information as required by relevant laws and regulations of
Taiwan and other jurisdictions.
TSMC has designated spokespersons as required by relevant regulations.
TSMC webcasts live investor conferences.
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 32-33 of this Annual Report for the details.
None
7. If the Company has established corporate governance policies based on TSE Corporate Governance Best Practice Principles, please describe discrepancy between the policies and their implementation.
For the status of TSMC's corporate governance, please refer to "Corporate Governance" section on page 32-34 of this Annual Report.
8. Other important information to facilitate better understanding of the Company's corporate governance practices (e.g. directors' and supervisors' training records, directors' and supervisors' attendance of the board of director's meetings, the
implementation of risk management policies and risk evaluation measures, the implementation of consumers/customers protection policies, the implementation of directors recusing themselves in case of conflicts of interests situations, pur-
chasing insurance for directors and supervisors, and social responsibilities.):
(1) From time to time, TSMC provides to directors and supervisors information concerning regulatory requirements and developments as related to director' and supervisors' activities. TSMC management also regularly present Company's business
and other information to directors and supervisors.
(2) The Board convened four regular meetings and one special meeting in 2005. Meeting attendance was as follows:
Name of Directors / Supervisors
Directors:
Morris Chang
Peter L. Bonfield
Lester C. Thurow
Stan Shih
Jan Lobbezoo
Mario Alberto Rivas
Chintay Shih
F. C. Tseng
Rick Tsai
Supervisors:
Michael E. Porter (Note)
Robbert Brakel
Michel Besseau (appointed in June 1, 2005 to replace Robbert Brakel)
James C. Ho
Number of Meetings of Board of Directors Attended in 2005
5
5
3
5
5
5
5
5
5
0 (Note)
2
2
4
(3) TSMC conducts risk management and risk evaluation pursuant to the internal policies established in accordance with relevant laws and regulations.
(4) TSMC's directors recuse themselves from voting on matters in which their interests would 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 make various societal contributions. Please refer to "Social Responsibility Information" section on page 35 of this Annual Report for the details.
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.
11. Social Responsibility Information
11.2 Other Social Issues
Health and Safety Performance
11.1 TSMC Education and Culture Foundation
TSMC is committed to achieving the highest standards of wellness and safe-
The TSMC Education and Culture Foundation was established to facilitate
ty for all employees. In the area of wellness, TSMC offers comprehensive
the Company's dedication to becoming Taiwan's leading corporate citizen.
wellness care and employee assistance programs at all of our operating sites.
We have been an active sponsor of various educational, cultural and com-
Employees have access to on-site clinics, 24-hour nursing service, annual
munity activities in Taiwan for seven years. Through sponsorship of and
physical exams, women's health services, cancer screening, on-site fitness
engagement in these public activities, the Foundation aims not only to make
facilities and programs, weight management services, and various health
a contribution to society, but also to share with the public the business
awareness programs. Employees also have access to stress management pro-
philosophies that led to the Company's success.
grams, counseling services, and other employee assistance programs.
Commitment to Education
Policies and Procedures Relating to Environmental, Safety and Health Regulations
TSMC is committed to supporting education and cultivating future leaders.
TSMC believes its environmental, safety and health (ESH) practices should
We work closely with leading universities on a wide-ranging program of
not only meet the relevant local legal requirements, but also benchmark rec-
scholarships, chair professor positions, academic activities and lecture series.
ognized international practices. The Company's goals are to prevent pollu-
In 2005, the Foundation donated NT$120 million to the prestigious National
tion, efficiently use all resources, prevent incidents, improve employees' safe-
Taiwan University to build a new research center for the chemistry depart-
ty and health, protect property, and establish a work environment that pro-
ment. The research center will be dedicated to cutting-edge chemistry and
motes the well-being of our employees and of the communities in which we
35
materials science research and to basic science education.
operate. In 2005, TSMC continued its efforts on projects involving
Environmental Accounting, Product Life Cycle Assessment, Green
TSMC is also committed to promote research and innovation through dona-
Procurement, Greenhouse Gas Inventory, Contractor Management,
tions to leading international educational institutions. In 2005, we complet-
Employees' Health and Avian Influenza Prevention Promotion.
ed a three-year US$1,000,000 sponsorship to Stanford University's
Nanocharacterization Laboratory. In addition, TSMC donated US$500,000 to
TSMC actively incorporates risk management concepts in the design and
MIT Sloan School of business for the project of a new building complex.
construction of new buildings, the evaluation of ESH requirements for new
Sponsorship of Art Events and Aesthetic Education
processes and for new chemicals in process development. In order to mini-
mize potential operational losses, the Company regularly evaluates and
In 2005, the Foundation sponsored various performances and art events,
enhances electrical and seismic protection during installation of tools and
ranging from concerts and drama to fine art exhibitions. Our sponsorship
equipment, thus reducing the risk of interruption of operations.
culminated with the TSMC Concert by the Berliner Philharmoniker, its first
performance in Taiwan. The event generated significant publicity and was
Equal Opportunity Employment
enjoyed by well over 30,000 people, including those who attended the out-
TSMC believes in equal opportunity employment and values the diversity our
door broadcast. The Foundation also made special arrangements to enable
staff contributes toward our corporate culture and our spirit of innovation.
over 300 schoolchildren from the Hsinchu area to sit in on the orchestra's
Recruitment is conducted via open selection and is based on the candidate's
rehearsal, introducing them to classical music at an early age.
ability to fulfill the needs of each position, regardless of race, gender, age,
religion, nationality, or political affiliation.
Contribution to Local Communities
The Foundation has long been an avid supporter of fine arts. In 2005, we
Supplier Selection Process and Criteria Regarding Social and Environmental Issues
considerably expanded the scope of the third annual "TSMC Art Festival". The
In 2005, TSMC continued to execute a green procurement procedure for
venue for the events was extended from Hsinchu to Tainan. The concert for
requesting raw material suppliers to officially declare that the raw materials
the opening night of the 2005 program was organized as a charity event and
they will supply to TSMC do not contain any prohibited substances, so as to
a total of NT$1.38 million was raised for the education of underprivileged
ensure that the products made by us fully comply with customers' require-
aboriginal children of the typhoon victims in Hsinchu County. TSMC also
ments and the legal requirements of the European Union's RoHS (Restriction
donated a new Steinway piano to Hsinchu City Concert Hall. During the two-
of Hazardous Substances).
month Art Festival, the Foundation arranged a total of 29 different activities,
including concerts, traditional operas, lectures, and family-oriented activities.
Social and Environmental Impacts of TSMC's Outsourced Operations and Contractors
The Festival attracted over 10,000 people from the local communities.
TSMC has promoted a "Responsible Care Program" to assist contractors to
Dedication to the Employee Volunteer Program
enhance their companies' Environmental, Safety and Health (ESH) manage-
ment systems. TSMC collects input from contractors and communicates our
The TSMC Education and Culture Foundation has encouraged over 200
expectations on ESH performance to our contractors annually.
employees and family members to join the volunteer program to make con-
tributions to society through personal participation. For three consecutive
Social and Environmental Impacts of TSMC's Suppliers
years, members of the group have served as volunteer weekend curators at
TSMC has conducted a "Product Life Cycle Assessment" (Product LCA) for all
the National Museum of Natural Science, Taichung. The TSMC volunteer
6-inch and 8-inch processes, as well as one 12-inch wafer process. The
group has served more than 200,000 visitors to date and has been recog-
Product LCA evaluated the environmental impact of these processes, collect-
nized as an "Outstanding Volunteer Team" by the National Museum. In addi-
ing and analyzing data from the entire chip manufacturing chain, from raw
tion, the Foundation established a "TSMC Book Reading Volunteer Program,"
materials suppliers to finished products, including statistics for such items as
now in its second consecutive year, where over 50 employees and their fami-
energy, raw materials consumption, and generation of pollutants. The
ly members read stories to elementary school children in remote Hsinchu
Product LCA study established an eco-profile and environmental loading val-
townships. This program hopes to open a window of knowledge for these
ues for chip manufacturing. These can be provided to TSMC's customers
resource-deprived children through the power of reading.
upon request.
36
OPERATIONAL
HIGHLIGHTS
1. Business Activities
1.1 Business Scope
TSMC excels in all aspects of its business. This excellence includes semicon-
ductor process technology research and development, wafer manufacturing,
logistics management, capacity utilization, customer service, as well as a
1.3 Net Sales over the Last Two Years
Unit: Shipments (8-inch equivalent wafers) / Amount (NT$ thousands)
Wafer
Package
Other
Total
Domestic
Export
Domestic
Export
Domestic
Export
Domestic
Export
2005
2004
Shipments
Amount
Shipments
Amount
991,870
26,895,512
1,012,161
33,226,052
4,356,434
204,286,181
3,781,577
192,108,136
137
10,808
110
12,135
273,546
14,366,355
213,568
12,749,599
14,601
40,128
2,103,030
16,926,478
13,497
39,298
1,891,630
16,004,875
1,006,608
29,009,350
1,025,768
35,129,817
4,670,108
235,579,014
4,034,443
220,862,610
wide range of support services including design services, mask manufactur-
1.4 Production over the Last Two Years
ing, wafer probing, in-house bumping and testing. The essence of our
Unit:Capacity / Output (8-inch equivalent wafers) / Amount (NT$ thousands)
foundry business is the success of our customers. TSMC continually strives to
provide the overall best value to its customers.
1.2 Customer Applications
Over the past 19 years, more than 500 customers worldwide have relied on
TSMC to manufacture chips used across the entire spectrum of electronic
Year
2005
2004
Wafers
Capacity
5,954,600
4,787,523
Output
5,451,384
4,799,657
Amount
138,182,812
127,840,620
applications. A far from exhaustive list of applications includes computers
2. Customers
and peripherals, information appliances, wired and wireless communications
systems, automotive and industrial equipment, as well as consumer electron-
We count among our customers many of the world's leading semiconductor
ics such as DVDs, digital TVs, game consoles, and digital still cameras (DSCs).
companies, ranging from fabless semiconductor companies such as Altera
The rapid evolution of end products drives our customers to utilize TSMC's
innovative technologies and services, while at the same time spurring TSMC's
own technology development. As always, success depends on leading rather
than following industry trends.
Corporation, ATI Technologies Inc., Broadcom Corporation, Marvell
Semiconductor Inc., nVIDIA Corporation, Qualcomm Inc., and VIA
Technologies Inc., to integrated device manufacturing companies such as
Analog Devices, Inc., Freescale Semiconductor Inc., and Philips, to systems
companies. Revenue from ATI Technologies Inc. amounted to over 10% of
our revenue in 2005. In comparison, no single customer accounted for more
than 10% of our revenue in 2004.
37
2.1 Customer Service
2.2 Customer Satisfaction
TSMC is committed to providing the best services to our customers and
TSMC conducts regular surveys and reviews to ensure that customers' needs
believes that customer service is critical to enhancing customer loyalty. In
and wants are being adequately addressed. Continual improvement plans
turn, customer loyalty leads to higher levels of customer retention and to
supplemented by customer feedback are an integral part of this business
expansion of business relationships. TSMC's goal is to maintain its position as
process.
the most advanced and largest provider of semiconductor manufacturing
technology and foundry services. TSMC believes that achieving this goal will
2.3 Market Expansion/Penetration
help retain existing customers, attract new customers, and strengthen exist-
TSMC continues to diversify its customer base while supporting the growth
ing partnership relationships.
of our existing customers. TSMC engaged more than 50 new customers in
2005. TSMC's customers also gained market share, notably in a number of
To facilitate customer interaction and information access on a real-time
end applications in computers, wired communications, wireless communica-
basis, TSMC has established a wide range of web-based services covering
tions and consumer electronics.
applications in design, engineering, and logistic collaborations. They are col-
lectively branded as eFoundry sm.
3. Raw Material Supply
Major Materials
Major Suppliers
Market Status
Procurement Strategy
These five suppliers provide over 85% of the world's wafer supply on a com-
bined basis.
TSMC's suppliers of silicon wafers are required to pass stringent quality certifi-
cation procedures.
Each supplier has multiple manufacturing sites in order to meet customer
demands, including plants in the North America, Asia, and Europe.
TSMC procures wafers from multiple sources to ensure adequate supplies for
volume manufacturing and to appropriately manage supply risk.
Raw Wafers
F.K.S.
MEMC
S.E.H.
Siltronic
SUMCO
Chemicals
BASF
These two companies are the major suppliers for bulk chemical.
Tai-Young High Tech (TYS)
TSMC maintains competitive price and service agreements with its wafer sup-
pliers, and when necessary enters into strategic and collaborative agreements
with key suppliers.
TSMC regularly reviews the quality, delivery, cost and service performance of its
wafer suppliers. The results of these reviews are incorporated in TSMC's subse-
quent purchasing decisions.
A periodic audit of each wafer supplier's quality assurance systems ensures that
TSMC can maintain the highest quality for its own products.
Both suppliers have relocated many of their operations closer to TSMC's major
manufacturing facilities, therefore improving the procurement logistics signifi-
cantly.
The suppliers' products are reviewed regularly to ensure that TSMC's specifica-
tions are met and product quality is satisfactory.
(Continued)
Major Materials
Major Suppliers
Market Status
Procurement Strategy
Photoresist
AZ
These four companies are the major suppliers for photoresist.
Gases
Shin-Etsu Chemical
Sumitomo
T.O.K.
Air Liquide
Air Products
BOC
Taiyo Toyo Sanso
These four companies are the major suppliers for specialty gas.
The products of these four suppliers are interchangeable.
TSMC works closely with its suppliers to ensure that they have adequate pro-
duction lead-time to supply the required products to TSMC.
TSMC conducts periodic audits of the suppliers' quality assurance systems to
ensure that they meet TSMC's standards.
Majority of the four suppliers are located in different geographic locations
therefore minimizing the supply risk to TSMC.
TSMC has long-term contracts with these suppliers to ensure supply stability
and service quality. In addition, the availability of other domestic suppliers also
enables TSMC to secure better purchase terms for the gases.
TSMC conducts periodic audits of the suppliers' quality assurance systems to
ensure that they meet TSMC's standards.
4. Employees
38
4.1 Human Capital
TSMC strives to create an environment that provides employees with favor-
Attracting and retaining the right talent is one of the key objectives of
able workplace conditions, personal challenges, and career development
TSMC's human resources strategy. TSMC's workforce totaled 19,642 at the
support. TSMC believes a positive work environment promotes innovation.
end of 2005, representing an increase of 5.6% versus the end of 2004.
TSMC also encourages the development of professional know-how, a posi-
TSMC recruited 92 managers, 1,250 professionals and 1,771 technicians
tive attitude, affirmative values, honest and ethical behavior and a genuine
during the year. By the end of February 2006, TSMC's total workforce
commitment on the part of employees to succeed as a member of the TSMC
reached 19,810.
team. Between January 1, 2005 and February 28, 2006, there were no labor
disputes that resulted in financial losses to the Company.
At the end of 2005, the Company employed a total of 2,012 managers and
7,145 professionals. Of the 2,012 managers, 12.3% were female. Non-
4.2 People Development
Taiwanese nationals made up 3.0% of TSMC's workforce at the managerial
Continuous learning is the cornerstone of TSMC's employee development
and professional levels. By the end of February 2006, there were 2,042 man-
strategy. TSMC provides employees with a wide range of technical, profes-
agers and 7,336 professionals.
sional and management training programs, and promotes "On-the-Job
Training" (OJT) initiatives for new employees. The Performance Management
Among TSMC's staff, 2.4% hold PhD's degrees, 27.8% hold Master's
and Development (PMD) system and the Individual Development Plan (IDP)
degrees, 18.3% hold university Bachelor's degrees, 23.0% hold other college
program are effective platforms to enhance organizational learning in the
degrees, and 28.4% have high school diplomas.
area of employees' personal development as well as serving the Company's
business needs. In 2005, TSMC's achievement in people development was
The following tables summarize TSMC's workforce structure.
once again recognized by the Council of Labor Affairs, ROC, which awarded
the Company the Prize for Innovation in Human Resource Development.
TSMC Workforce Structure by Job Title
Manager
Professional
Assistant Engineer/ Clerical
Technician
Total
12/31/2004
12/31/2005
02/28/2006
1,853
6,671
754
9,319
18,597
2,012
7,145
684
9,801
19,642
2,042
7,336
678
9,754
19,810
TSMC Workforce Structure by Gender, Age and Years Served
4.3 Employee Satisfaction
TSMC is committed to fostering a dynamic and fun work environment. In
line with this commitment, a number of ongoing programs have been
launched to enhance employee motivation, promote employee welfare, and
facilitate communication between the Company and its employees. These
programs include:
● Employee Welfare: TSMC offers employees a number of welfare-enhancing
programs and benefits, such as flexible work hours, paid holidays, and
activities, including TSMC Sports Day, Family Day, the Engineer Festival, and
TSMC Social Club activities.
Gender
Male
Female
Average Age
Average Years of Service
12/31/2004
12/31/2005
02/28/2006
45.4%
54.6%
30.3
4.6
45.7%
54.3%
31.0
5.1
46.2%
53.8%
31.1
5.1
● Talent Development: TSMC has designed and implemented a number of
people development initiatives. These initiatives include Manager Training
Roadmap (including New Manager Program, Experienced Management
Program, and Senior Manager Program), Talent Management Program,
Engineer Training Roadmap, and Personal Effectiveness Training.
● Recognition Culture: Various programs are in place to recognize employees'
5. Innovation
contributions in different functions. In addition to TSMC's own internal
Employee Role Model awards, employees are encouraged to participate in
5.1 R&D Organization and Investment
certain external award competitions, such as the Outstanding Young
TSMC increased its R&D investment and expanded its world-class R&D
Engineer award, the Top 10 National Outstanding Manager award and the
organization in 2005 to provide best-in-class semiconductor technology and
Labor Model award.
design solutions to our customers. R&D expenditure reached NT$13.4 bil-
● Open Communications: The Company conducts regular communication
lion, while R&D staff grew by 21.3% during the same period. TSMC also
meetings with employees. TSMC publishes a Manager Communications Kit
strengthened the capabilities and expanded the capacity of our 300mm R&D
and a bimonthly Silicon Garden Magazine as engagement media for
pilot line for advanced process development in 2005. This expansion served
employees and their families. Employees can also submit their suggestions
to accommodate our growing R&D development activities which support the
to the Company via various channels, such as the Employee Suggestion Box
business growth of TSMC's customers.
and Employee Voice Collection Network.
TSMC conducts an annual Employee Satisfaction Survey to measure the
ory, and interconnect technologies. We also expanded our external R&D
involvement and engagement of employees at various levels. As an indicator
partnership and alliance activities with tool and materials vendors, IMEC,
39
of employee satisfaction, TSMC received several prestigious awards in 2005.
and the ASIC/SoC technology alliance of Freescale, Philips, and
TSMC was ranked No. 1 among the Top 10 Taiwan Companies Most
STMicroelectronics. In 2005, TSMC and Freescale jointly developed cutting-
Concerned for Employee Welfare by Business Today Magazine. In addition,
edge 90nm SOI technology, and established the infrastructure of SOI design.
TSMC received an award for Corporate Social Responsibility from
TSMC and Freescale also continued to cooperate on 65nm SOI technology
In 2005, TSMC continued to accelerate the development of transistor, mem-
Globalviews Magazine.
4.4 Compensation
development. In addition, TSMC strengthened its collaborative research
effort with key partners for design-process co-optimization, which enables
the best technology and design solutions for product success in the complex
The Company's compensation program consists of cash compensation and
and challenging nanometer era. Since 2001, TSMC has been funding nano-
profit sharing. Cash compensation includes monthly salary, a quarterly vari-
technology researches at major universities worldwide to enable and pro-
able incentive bonus and an annual variable incentive bonus. The profit shar-
mote innovation and the advancement of technology.
ing program consists of cash and stocks. The Company appropriates a cer-
tain percentage of earnings available to common stockholders for distribu-
tion to employees under the profit sharing program. The purpose of this dis-
tribution is threefold: to reward employees' contributions appropriately; to
encourage employees to work consistently to ensure the success of the
Company; and to link employees' interests with those of TSMC's sharehold-
ers. The amount and form of the distribution are determined by the Board of
Directors based on the Compensation Committee's recommendation and are
subject to shareholders' approval at the Annual General Meeting. Individual
awards are based on each employee's job responsibility, contribution and
5.2 R&D Accomplishments in 2005
performance.
Demonstrating our commitment to innovation, TSMC was granted 437 US
patents and 331 ROC patents in 2005. TSMC has a rich and strong patent
In addition to providing employees of overseas subsidiaries with a locally
portfolio, as well as a significant base of other intellectual property thanks to
competitive base salary, the Company grants short-term and long-term
a growing number of key patent disclosures and patents granted in recent
bonuses as part of total compensation. The performance bonus is a short-
years. Our intellectual property is one key to maintaining our technology
term incentive and is granted in line with local regulations, market practices
leadership and technology independence, including generating royalty rev-
and the overall operating performance of each subsidiary. The long-term
enue, and providing advantage during technology joint development and
incentive bonus is paid based on overall TSMC financial performance and is
cross-licensing.
vested over the course of several years in order to encourage long-term
employee commitment and growth within the Company.
4.5 Retirement Policy
TSMC has pioneered the development of immersion lithography and worked
closely with tool partners to set up the infrastructure that enables the readi-
ness of prototyping and production of immersion tools. Immersion technol-
TSMC retirement policy is in accordance with the provisions in Labor
ogy should extend the resolution capability of conventional 193nm imaging
Standards Law and Labor Pension Act.
tools down to the 32nm technology node, without having to rely on expen-
sive and high-risk 157nm alternatives. In 2005, TSMC demonstrated the
manufacturing feasibility of 193nm immersion lithography using state-of-
the-art 65nm process, continuing our record of breakthroughs in immersion
technology.
TSMC continued to advance our platform technologies and large-diameter
Flash / Embedded Flash Technology
wafer manufacturing technologies. In 2005, TSMC continued to ramp up
TSMC is developing embedded Flash memory technologies for the automo-
the production of our 12-inch 90nm CMOS logic process, featuring
tive industry. Excellent endurance and high-temperature data retention were
advanced Cu/low-k interconnects, and achieved a record-breaking defect
demonstrated on an 8Mb IP. TSMC is also working with key customers on
density reduction rate. TSMC also developed the baseline process of a 65nm
0.13µm embedded Flash technology intended for wireless communication
CMOS logic platform featuring a gate length in the range of 35-45nm, and
products. Early reliability results are encouraging. The 90nm embedded Flash
provided prototyping services to a number of early 65nm customers. In addi-
technology is under development. TSMC is also developing programmable
tion, TSMC started the development of 45nm CMOS logic platform and
connectors intended for high voltage electronics.
entered the path-finding stage of 32nm technology development.
Mask Technology
TSMC continued to invest in long-term and high-payoff exploratory research
Mask technology is an integral part of advanced lithography. TSMC has pro-
activities such as strained-Si, ultra low-k dielectric, high-k gate dielectric,
prietary resolution-enhancement techniques that are closely optimized with
metal gate, nano device, SOI technology, MRAM, and advanced RFIC tech-
our in-house mask-making technology, including optical proximity correc-
nologies. In 2005, we demonstrated 5nm nanowire devices, functional 1Mb
tion, phase-shift, and other resolution-assist mask features. In 2005, we
40
MRAM devices, and innovative strained-Si techniques on both bulk silicon
established fast Lithography Process Check technology, which is a critical ele-
and SOI substrates. This exploratory work paves the way for semiconductor
ment of Design for Manufacturing. TSMC mask facilities feature state-of-the-
technology advancement, while at the same time strengthening TSMC's
art E-beam mask writers, etchers, and inspection and repair tools for both
intellectual property position.
R&D and production use. TSMC's strength in mask technology R&D and pro-
duction provides significant benefits to our customers in terms of technical
5.3 Spectrum of New Technologies
excellence, quality, fast cycle times, and one-stop service. In 2005, the
In addition to the highlights noted above, TSMC continues to introduce a
Company successfully developed high-quality, cost-effective 65nm mask-
rich mix of new technologies:
making technology for production, X-metal mask technology, as well as
mask technology for the 45nm generation. The Company also developed
Mixed-Signal / Radio Frequency Technology
metrology using e-beam, scatterometry, and electrical techniques to support
TSMC developed key elements of mixed signal/radio frequency (MS/RF) appli-
wafer lithography and mask making.
cations at the 90nm and 65nm device scale. These elements include a
2.0fF/µm2 high-density MIM (metal-insulator-metal) capacitor, a high-gain
Design Services
MOS for analog applications, and a K-MOM (kaleidoscopic metal-over-metal)
TSMC in June 2005 announced Reference Flow 6.0, which addresses several
featuring a much improved mismatch compared with traditional MOMs.
key issues for chip designs based on advanced process technology. With it,
TSMC continued to set foundry industry standards in providing solutions for
Silicon Germanium BiCMOS Technology
advanced design methodologies. Having launched the industry's first multi-
TSMC developed and entered into mass production a 0.18µm SiGe BiCMOS
ple-Vt library, TSMC added, during 2005, more advanced features such as
technology. This technology enables high performance power amplifier
back-bias and design-for-manufacturing (DFM) compliance layouts in order
applications and provides an integrated solution that is more cost effective
to address today's top design challenges, including power management and
compared to GaAs technology.
DFM. Two new process-based DFM toolkits, Yield Plus and Yield Pro, allow
designers to build on their best efforts, to generate even greater returns to
0.13µm CMOS Image Sensor Technology
the bottom line. Based on a wealth of accumulated process data, the new
Following the successful volume production of our 0.18µm 3T CMOS image
DFM Toolkits drive TSMC process-specific capabilities into electronic design
sensors, TSMC developed and qualified a high performance 0.13µm 4T
automation (EDA) tools from key suppliers, and include a number of unique
CMOS image sensor process. This new process aims at small pixel-size, high-
TSMC-provided services.
resolution (>3 Megapixel) and high-performance pixel arrays for high-end
imaging applications. This new process is fully compatible with TSMC's
0.13µm CMOS logic and embedded memory processes, enabling System-
On-Chip (SoC) platforms for consumer and industrial applications in mobile
phones, DSCs, security sensors and other image sensor markets.
Embedded High Density Memory Technology
TSMC saw strong demand for embedded high-density memory from cus-
tomers who need a SoC solution for handheld devices, games, DSCs, HDDs
and communication applications. In 2005, TSMC's 90nm 1T-MIM featuring a
0.21µm2 MIM capacitor with high-k dielectric demonstrated high yield in a
32Mb memory array and has been qualified. Its cell size is only one-fifth of
the most aggressive 6T-SRAM at the 90nm technology node. Volume pro-
duction will commence in the first half of 2006.
5.4 R&D Plans for 2006
6. Efficiency
Moving forward, TSMC intends to focus on qualification and production of
the Nexsyssm 65nm logic/mixed signal technology platforms as well as devel-
Yield Management
opment of a 45nm logic platform. In addition, intense effort will also be
Fast yield ramp for new products is a crucial element to TSMC's success. The
devoted to qualify the 65nm node with superior transistor performance fea-
Company has developed a comprehensive technology transfer methodology
turing a strong strained Si process, in both bulk and SOI.
extending from R&D to production in order to shorten the new technology
learning curve. In 2005, the Company delivered a significant breakthrough
Other development projects include but are not limited to: 65nm mixed sig-
on 90nm ramp-up by shortening 40% yield learning curve in comparison
nal/RF for communication applications; 0.13µm embedded Flash IP develop-
with that of last generation 0.13um.
ment; 0.11µm 4T CMOS image sensor technology; 0.18µm high-voltage
process modules; as well as low-power, low-cost, customized SiGe RF
Delivery Management
BiCMOS technologies.
TSMC also has a proven record of providing customers with consistent on-
time delivery. To become even more responsive to customers' need for flexi-
We plan to maintain our long-term technology lead over competitors in the
bility in delivery, TSMC has re-engineered its demand fulfillment system and
foundry industry through a strong exploratory technology research program.
has developed a state-of-the-art manufacturing scheduling system that will
41
The exploratory research team plans to focus on 32nm, 22nm nodes and
further enhance the accuracy of deliveries.
beyond. Exploratory work should continue on new transistors and process
technologies such as 3D structures, MRAM, strained-layer CMOS and novel
Cycle Time Management
SoC features. Study of the fundamental physics of nanometer CMOS transis-
One key to our customer's business success is TSMC's ability to deliver prod-
tors was initiated to improve the understanding and to guide the design of
ucts with short demand fulfillment cycle times. To achieve this for our cus-
the transistors at advanced nodes. The findings of this study will be evaluat-
tomers, TSMC has developed a sophisticated manufacturing scheduling and
ed and applied to 32nm and 22nm nodes. One of TSMC's goals is to extend
dispatching system, as well as employing effective lean manufacturing
Moore's law through innovative in-house work, as well as by collaborating
approaches.
with industry leaders and academia to push the envelope in finding cost-
effective technology and manufacturing solutions.
Flexible Manufacturing Management
TSMC plans to continue working closely with international consortia and
dictability of demand forecast. TSMC's ability to meet unanticipated cus-
photolithography equipment suppliers to ensure the timely development of
tomer demand surges is due, in large part, to our cluster Fab capability as
193nm high NA scanner technology, liquid immersion lithography, and mas-
well as extensive know-how in performance matching for both tools and
Flexible manufacturing is a crucial element that addresses the current unpre-
sively parallel E-Beam direct write and EUV scanner technologies. These tech-
Fabs.
nologies will support process development at the 45nm node and beyond.
TSMC will also continue to collaborate with mask inspection equipment sup-
Knowledge Management
pliers to develop aerial image inspection techniques. This should help to
TSMC has built the industry's leading, state-of-the-art knowledge manage-
ensure that we can maintain our leadership position in mask quality and
ment system, as well as the Best Known Method (BKM) system. TSMC main-
cycle time, and continue to meet aggressive R&D, prototyping and produc-
tains a vast repository system for key knowledge. This database also features
tion requirements.
a sophisticated expert system that embeds the captured knowledge into
TSMC will continue to invest heavily to expand its R&D capabilities. With a
highly competent and dedicated R&D team and unwavering commitment to
Inventory Management
TSMC's engineering system.
innovation, we are confident of our ability to deliver the best and most cost-
TSMC made continual improvements in materials and inventory manage-
effective SoC technologies for our customers and to support our business
ment in 2005. Demand and supply information from the Materials
growth.
Management division and other related departments was integrated using a
system of weekly updates and reports. The system is intended to improve the
Company's responsiveness to wafer demand forecasts. The speed and accu-
racy of TSMC's response has been improved through real-time demand infor-
mation sharing. This ensures that the Company can continue to appropriate-
ly respond to ever-changing industry conditions.
7. Quality
Waste Disposal and Land Contamination
Recycling is the first priority for TSMC in treating waste. Industrial waste that
TSMC is committed to providing customers with the best quality wafers for
cannot be reused or recycled is either incinerated or sent to designated land-
their products. Our Quality and Reliability (Q&R) services champion the part-
fills. TSMC's waste solvents and sludge (CaF 2) were reused by cement plants
nership between customers and the entire TSMC organization to achieve
as complementary fuel and raw material. Waste sulfuric acid, copper sulfate
"quality-on-demand". The goal of quality-on-demand is to fulfill customers'
and phosphoric acid were recycled for downgraded industrial use.
needs regarding time to market and market competition, over a broad range
Furthermore, based on the monitoring results of soil and groundwater, all
of products. In 2005, TSMC consistently delivered excellent wafer yields and
TSMC's fab sites are free from contamination, according to the standards set
defect density rates despite a dynamic increase in demand from customers.
by the Soil and Groundwater Pollution Remediation Act of the EPA.
In the design stage, Q&R technical services assist customers to design-in
Environmental Performance
their product reliability requirements. Q&R also works with R&D on process
Since 2001, the Dow Jones Sustainability Index (DJSI) has listed TSMC in
development in order to assure reliability performance, not only for a variety
annual recognition of its exceptional achievements in corporate sustainability
of circuit devices, but also for different types of IC packages. Systems have
every year.
42
been deployed by Q&R to ensure robust quality in managing production
dynamics as the Company meets customers' business requirements. To sus-
TSMC has also made significant efforts with its ESH improvement programs.
tain production quality and minimize risks to customers when deviations
Two national awards were received in 2005: the National Award for
occur, manufacturing quality monitoring and event management span all
Outstanding Achievements in Industrial Waste Disposal and Resources
critical stages, from raw material supply, mask making, and real-time in-
Reduction and Recycling from the EPA, and the Water Conservation
process monitoring, to wafer sort and assembly and customer field quality
Outstanding Performance Awards from the Water Resources Agency.
performance. Leading-edge, fast-turn-around failure analysis techniques are
also used in every instance, from process development to customer produc-
Environmental Compliance Record
tion issues.
There were no environmental penalties or fines in 2005.
TSMC Q&R is also responsible for leading the company towards the ultimate
9. Important Contracts
goal of zero defect production, using continuous improvement programs.
Periodic customer feedback indicates that products shipped from TSMC have
consistently met or exceeded their field quality requirements in the market-
Technology Cooperation Agreement
Term of Agreement: 1997 - 2008
place. Also, in 2005, TSMC's conformance to the ISO/TS 16949 requirements
Contracting Party:
Koninklijke Philips Electronics N.V. (Philips)
for the fourth consecutive year confirms that TSMC meets the automotive
Summary:
TSMC is obliged to pay to Philips fixed amounts of
industry's stringent quality requirements.
8. Environmental Protection
PFC Emissions and Air Quality Control
license fees for third party patent cross licenses
obtained through Philips. TSMC and Philips have
agreed to cross license the patents owned by each
party.
TSMC endorsed a Memorandum of Understanding (MOU) between the
Manufacturing Agreement
Taiwan Semiconductor Industrial Association (TSIA) and the ROC-
Term of Agreement: 02/16/1996 - 12/31/2005, automatically renewed for
Environmental Protection Administration (EPA), whereby TSMC is committed
to reducing perfluorinated compound (PFC) emissions to 10% below the
one year terms, unless terminated with a six-month
prior written notice by TSMC
average of 1997 and 1999 by 2010. To achieve this reduction target, TSMC
Contracting Party: WaferTech, LLC (WaferTech)
has begun evaluating and implementing project steps, including process
Summary:
TSMC has the right to purchase the entire installed
optimization, chemical replacement and abatement. Moreover, TSMC tightly
controls the emission of volatile organic compounds, acid gases, and alkali
capacity of WaferTech during the production period.
gases in compliance with regulations.
Shareholders Agreement
Water Consumption and Conservation
provided in the agreement
To improve our water recovery rate and reduce water consumption, TSMC
Contracting Parties: Koninklijke Philips Electronics N.V. (Philips) and EDB
has focused on developing reclamation technologies. In 2005, TSMC suc-
Investments Pte Ltd. (EDBI)
cessfully launched the copper CMP wastewater reclamation system to reduce
Summary:
TSMC, Philips and EDBI agreed to form a joint venture
Term of Agreement: Effective as of 03/30/1999 and may be terminated as
water consumption.
Energy Consumption and Conservation
TSMC continuously seeks to conserve energy in order to reduce the emission
of carbon dioxide. Major energy conservation accomplishments include
adopting inverters in air conditioning, exhaust, and process water systems,
which helps control power output to save energy.
"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 commit-
ted to purchasing a certain percentage of SSMC's
capacity.
Technology Cooperation Agreement
Amended and Restated Joint Technology Cooperation Agreement
Term of Agreement: 03/30/1999 - 03/29/2009
Term of Agreement: 07/16/2001 - 12/31/2005
Contracting Party:
Systems on Silicon Manufacturing Company Pte Ltd.
Contracting Parties: STMicroelectronics N.V., Philips Semiconductors
(SSMC)
International B.V., Freescale Semiconductor, Inc.
Summary:
TSMC agreed to transfer certain of its process technolo-
Summary:
The parties entered into a joint technology cooperation
gies to SSMC, and SSMC agreed to pay TSMC a certain
arrangement for the development of certain high-per-
percentage of the net selling prices of SSMC products.
formance and advanced semiconductor technologies.
Patent License Agreement
Term of Agreement: 10/26/2001 - 12/31/2006
Contracting Party:
A multinational company
Technology Development and License Agreement
Term of Agreement: 12/04/2003 - 12/03/2007
Contracting Party:
Freescale Semiconductor, Inc.
Summary:
The parties entered into cross license arrangements for
Summary:
The parties agreed jointly to develop certain advanced
certain semiconductor patents. TSMC pays license fees
SOI process technologies and to cross license related
to the said company.
intellectual property rights.
43
Foundry Related Agreements
Term of Agreement: 1995 - 2006
Settlement Agreement
Term of Agreement: 01/30/2005 - 12/31/2010
Contracting Parties: Several multinational companies
Contracting Party:
Semiconductor Manufacturing International Corp.
Summary:
TSMC guarantees a pre-determined capacity for a set
(SMIC) and certain of its subsidiaries
number of years to customers. In return, customers
Summary:
The parties settled their patent infringement and trade
deposit a certain amount of money with TSMC.
secret misappropriation disputes, wherein SMIC agreed
to pay TSMC US$175 million over six years.
Manufacturing Agreement
Term of Agreement: 04/01/2004 - 03/31/2006, automatically renewable for
Patent License Agreement
successive one year terms until both parties decide oth-
Term of Agreement: 2005 - End of patent terms
erwise by mutual consent in writing
Contracting Party:
Industrial Technology Research Institute (ITRI)
Contracting Party:
Vanguard International Semiconductor Corporation
Summary:
The parties entered into an exclusive license arrange-
(VIS)
ment for certain semiconductor related patents, where-
Summary:
VIS reserves its certain capacity to manufacture certain
in TSMC pays license fees to ITRI for such license rights.
TSMC products at terms as agreed by the parties. TSMC
agreed to transfer certain technology to VIS and to
receive compensation from VIS in the form of royalty
payments.
Patent License Agreement
Term of Agreement: 11/01/2002 - 10/31/2012
Contracting Party:
A multinational company
Summary:
The parties entered into cross license arrangements for
certain semiconductor patents. TSMC pays license fees
to the said company.
Patent License Agreement
Term of Agreement: 07/01/2002 - 6/30/2009
Contracting Party:
A multinational company
Summary:
The parties entered into cross license arrangements for
certain semiconductor patents. TSMC pays license fees
to the said company.
Patent License Agreement
Term of Agreement: 01/01/2001 - 12/31/2011
Contracting Party:
A multinational company
Summary:
The parties entered into cross license arrangements for
certain semiconductor patents. TSMC pays license fees
to the said company.
44
FINANCING PLANS
AND
IMPLEMENTATION
Corporate Bond
1. Financing Plans
Source of Fund
Issuance
Issue Date
Tenor
Coupon Rate
Outstanding
Corporate Bond
01/10/2002 -
01/24/2002
Tranche A: 5 years
Tranche B: 7 years
Tranche C: 10 years
Tranche A: 2.60% p.a.
Tranche B: 2.75% p.a.
Tranche C: 3.00% p.a.
Tranche A: NT$ 2.5 billion
Tranche B: NT$ 8.0 billion
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$77.63
billion.
Expansion Plan
Fund Used From 2002
To 2005
(NT$ thousands)
Future Fund Use
(NT$ thousands)
55,650,060
21,979,940
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 and Benefits
Project commenced in 2002 and monthly capacity was approximately
20,000 12-inch wafers at the end of 2005.
FINANCIAL STATUS,
OPERATING
RESULTS, AND RISK
MANAGEMENT
1. Financial Position
Unit: NT$ thousands
Item
2005
2004
Difference
Current Assets
197,562,416
173,667,311
23,895,105
Fixed Assets
Other Assets
Total Assets
214,145,633
227,976,400
(13,830,767)
15,172,165
12,616,636
2,555,529
507,539,815
487,553,210
19,986,605
Current Liabilities
32,184,415
60,638,852
(28,454,437)
Long-term Liabilities
29,725,051
27,949,059
1,775,992
Total Liabilities
Capital Stock
Capital Surplus
61,909,466
88,587,911
(26,678,445)
247,300,246
232,519,637
14,780,609
57,117,886
56,537,259
580,627
Retained Earnings
142,771,034
113,730,016
29,041,018
Total Shareholders' Equity
445,630,349
398,965,299
46,665,050
%
14
-6
20
4
-47
6
-30
6
1
26
12
1.1 Analysis of Deviation over 20%
● The increase in other assets was mainly due to an increase of deferred tax
assets for new equipment tax credits.
● The decrease in current liabilities was primarily due to a decrease in equip-
ment payables and a repayment of corporate bonds.
● The increase in retained earnings was due to the operating results in 2005,
partially offset by 2004 earnings distribution.
1.2 Major Impact on Financial Position
There was no significant impact on financial position.
1.3 Future Plan on Financial Position: Not Applicable
2. Operating Results
Unit: NT$ thousands
Item
Gross Sales
2005
2004
Difference
270,315,064
260,726,896
9,588,168
Sales Returns and Allowances
(5,726,700)
(4,734,469)
(992,231)
Net Sales
Cost of Sales
Gross Profit
264,588,364
255,992,427
8,595,937
149,344,315
145,831,843
3,512,472
115,244,049
110,160,584
5,083,465
Operating Expenses
22,230,225
23,337,806
(1,107,581)
Operating Income
93,013,824
86,822,778
6,191,046
Non-operating Income and
Gains
5,072,009
6,785,048
(1,713,039)
Non-operating Expenses and
4,266,410
1,829,242
2,437,168
Losses
Income before Tax
93,819,423
91,778,584
2,040,839
Income Tax Benefits (Expenses)
(244,388)
537,531
(781,919)
Income after Tax
93,575,035
92,316,115
1,258,920
45
%
4
21
3
2
5
-5
7
-25
133
2
-145
1
2.1 Analysis of Deviation over 20%
● Increase in sales returns and allowances: The sales returns and allowances
increased as a result of increase in sales and anticipated sales returns and
allowances.
● Decrease in non-operating income and gains: The decrease was primarily
due to a reduction in investment income, partially offset by a higher inter-
est income as a result of increased investment in bonds.
● Increase in non-operating expenses and losses: The increase was mainly
due to higher interest expenses and an increase in investment loss.
● Increase in income tax expenses: The increase was primarily due to a higher
taxable income.
2.2 Reasons for changing the Company's major business; explain the vari-
ance 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".
3. Cash Flow
Unit: NT$ thousands
Cash Balance
12/31/2004
Net Cash Provided by Operating
Activities in 2005
Net Cash used in Investing and
Financing Activities in 2005
Cash Balance
12/31/2005
Remedy for Cash Shortfall
Investment Plan
Financing Plan
65,531,818
150,479,795
(130,628,030)
85,383,583
-
-
3.1 Analysis of Cash Flow
● NT$150.5 billion net cash provided by operating activities: Mainly from net
income and depreciation/amortization.
● NT$73 billion net cash used in investing activities: Primarily for capital
expenditures.
● NT$57.6 billion net cash used in financial activities: Mostly for the payout
of cash dividends and repayment of corporate bonds.
3.2 Remedy for Cash Shortfall
As a result of positive cash flows and ample cash on-hand, remedial actions
are not required.
3.3 Cash Flow Projection for Next Year: Not applicable
46
4. Financial Impacts of Major Capital Expenditures
4.1 Major Capital Expenditure and Sources of Funding
Unit: NT$ thousands
Plan
Production Facilities and
Equipment
R&D Equipment
Actual or Planned Source of
Capital
Actual or Planned Completion
Date
Total Amount as of
12/31/2005
Status of Actual or Projected Use of Capital
2003
2004
2005
2006 (Note)
Cash flow generated from opera-
tions and Issuance of bonds
Completed
Cash flow generated from opera-
tions and Issuance of bonds
Completed
171,408,446
31,467,451
71,078,377
68,862,618
8,732,890
2,892,584
2,000,055
3,840,251
(Note)
(Note)
Note: 2006 capital expenditures will be in the range of US$2.6 billion to US$2.8 billion for TSMC and its subsidiaries, including production facilities and equipment, R&D equipment and other assets.
4.2 Expected Future Benefits
6.2 Management of Financial Operations
With the above-mentioned capital expenditures, it is estimated that TSMC
Existing internal policies and procedures with respect to high-risk/high-leveraged
annual production capacity will increase by approximately 1 million 8-inch
investment; lending, endorsements and guarantees for other parties; and finan-
equivalent wafers in 2006. In addition, 2007 and 2008 production capacity
cial derivatives transactions, and measures to be taken in response to the poten-
will also increase.
tial risks.
TSMC did not make high-risk or high-leveraged financial investments during
Other benefits, including technology advancements, efficiency and quality
2005 and up to the date of this report. To control various types of financial
improvements, and environmental protections, please refer to "Operational
transactions, the Company has established internal policies and procedures
Highlights".
based on sound financial and business practices, all in compliance with the
relevant rules and regulations issued by the Taiwan Securities and Futures
5. Investments Exceeding 5% of Company's Paid-in Capital in
Commission. TSMC policies and procedures include "Policies and Procedures
2005: None
6. Risk Management
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
6.1 Environmental, Safety and Health (ESH) Risk, Emergencies and Natural
and not for any trading or speculative purpose.
Disasters
TSMC is committed to maintaining a comprehensive risk management system
Covenants
dedicated to the conservation of natural resources, safety of people, and pro-
TSMC Development, Inc. and TSMC North America, TSMC's wholly owned
tection of property. In order to effectively handle emergencies and natural dis-
subsidiaries, have separately entered into loan facility agreements. As of
asters at each facility, management has developed comprehensive plans and
December 31, 2005, TSMC provided guarantees of up to US$100 million in
procedures that focus on loss prevention, emergency response, crisis manage-
aggregate in connection with those agreements. As of the date of this
ment, and business recovery. TSMC has adopted international standards for
Annual Report, only US$60 million related to TSMC Development, Inc.
ESH management. All TSMC Fabs (Fab 2, 3, 5, 6, 7, 8, 12 and 14) have been
remained outstanding. Customary Borrower and/or Guarantor covenants
ISO 14001 certified (Environment Management System) and OHSAS 18001
exist in those agreements.
certified (Occupational Health and Safety Management System).
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 business. In order to
limit its exposure to interest rate risks, TSMC finances its funding needs
through issuance of long-term, fixed-rate debt. On the asset side, the primary
objective of our investments in fixed income securities is to preserve principal
Other than the matters described above, we were not involved in any other
in highly liquid markets. In order to maintain our liquidity profile, majority of
material litigation in 2005 and are not currently involved in any material liti-
fixed income securities are at the short end of the yield curve.
gation.
Foreign Exchange Volatility
6.7 Potential Benefits and Risks Associated with Mergers and Acquisitions
Over half of our capital expenditures and manufacturing costs are denomi-
In 2005, and as of the date of this Annual Report, TSMC did not consum-
nated in currencies other than NT dollars, primarily U.S. dollars, Japanese
mate any merger and acquisition activities.
yen and Euros. A larger portion of our sales is denominated in U.S. dollars
and currencies other than NT dollars. Therefore, any significant fluctuation
6.8 Potential Benefits and Risks Associated with Capacity Expansion
to our disadvantage in such exchange rate may have an adverse effect on
To meet customer demand, TSMC increased its annual production capacity
our financial condition. TSMC hedged its foreign exchange exposure result-
by approximately 1.2 million 8-inch equivalent wafers in 2005. The average
ing from its assets and liabilities mainly through currency forward contracts.
utilization rates for each of the four quarters of 2005 were 78%, 85%, 96%,
Inflation
and 104%, respectively. As of the date of this Annual Report, the benefits
brought about by such capacity expansion have been in line with TSMC's
Inflation in Taiwan was approximately 2.2% in 2005. It did not have a signif-
expectations.
icant impact on our operations and profits.
47
6.4 Political and Regulatory Environment
TSMC procures raw materials from multiple sources whenever possible to
TSMC's management team closely monitors political and regulatory develop-
ensure adequate supplies for volume production and to mitigate purchase
ments that could have a material impact on TSMC's business and operations.
concentration risk. However, we procure some of our raw materials from
Political and regulatory developments did not have a material effect on
sole-source suppliers. TSMC continues to look for ways to multi-source those
TSMC during 2005.
raw materials.
6.9 Potential Risks Associated with Purchase or Sales Concentration
Since TSMC is also an NYSE-listed company, TSMC is required to comply with
In 2004 and 2005, our ten largest customers have accounted for 49% and
the provisions of the Sarbanes-Oxley Act and other regulations applicable to
52%, respectively, of our net sales. In particular, our largest customer in
non-US companies. TSMC has taken measures to monitor its compliance
2005 accounted for approximately 11% of our net sales in 2005. The fact
with applicable regulatory requirements, and will continue to update itself
that a relatively limited number of customers constitute a significant portion
on regulatory developments and implement changes in policies and proce-
of our revenue may remain as a business characteristic inherent to our exten-
dures as necessary with a view to maintain compliance.
sive presence in the dedicated foundry segment of the semiconductor mar-
6.5 Contingent Plans for Events That May Have a Significant Adverse Impact
ket.
on the Company's Business and Image
6.10 Potential Impact and Risks Associated with Sales of Significant
TSMC pays special attention to emergency preparedness for disasters such as
Numbers of Shares by TSMC's Directors, Supervisors and Major
typhoons, earthquakes, and environmental contamination. We have estab-
Shareholders Who Own 10 Percent or More of TSMC's Total
lished contingency plans, which include the establishment of emergency task
Outstanding Shares
forces when necessary, the preparation of a thorough analysis of the emer-
One or more of our existing shareholders may, from time to time, dispose of
gency, its impact, alternatives, and solutions for each possible scenario, and
significant numbers of common shares or ADSs. In October 2003, one of
appropriate precautionary and/or recovery measures. Each task force's
our two largest shareholders, Philips, announced its intention to gradually
responsibility would be to ensure TSMC's ability to conduct business while
and orderly reduce its equity interest in us and reiterated this intention in
minimizing personal injuries, business disruption, and financial impact under
May 2005. In August and September 2005, Philips sold an additional
the circumstances. For the year 2005 and up to the date of this Annual
113,521,000 ADSs. Moreover, our other major shareholder, the
Report, there are no reportable material events that have necessitated the
Development Fund, has sold ADSs in several transactions since 1997, includ-
activation of such contingency plans.
6.6 Legal Proceedings
ing 44,172,500 ADSs in August and September 2005. Both Philips and the
Development Fund agreed not to sell any more TSMC shares either in Taiwan
or on international markets until at least the end of 2006.
As is the case with many companies in the semiconductor industry, we have
received from time to time communications from third parties asserting that
6.11 Potential Impact and Risks Associated with Replacement of
our technologies, manufacturing processes, the design of the integrated cir-
Management
cuits made by us or the use by our customers of semiconductors made by us
On May 10, 2005, the TSMC Board of Directors approved the appointment
may infringe upon patents or other intellectual property rights of others. In
of Dr. Rick Tsai as TSMC's Chief Executive Officer, effective as of July 1, 2005.
some instances, these disputes have resulted in litigation by or against us
Dr. Morris Chang and Dr. F. C. Tseng continue to serve as Chairman and Vice
and certain settlement payments by us in some cases. Irrespective of the
Chairman of the Board respectively.
validity of these claims, we could incur significant costs in the defense there-
of or could suffer adverse effects on our operations.
6.12 Other Material Risks
To protect its intellectual capital, trade secrets and other assets, TSMC may
has not become aware of any other risk event with a material impact on the
initiate, as appropriate, litigation against third parties. In December 2003,
financial status of the Company.
During 2005 and up to the date of this Annual Report, TSMC's management
we commenced legal action in several forums against SMIC and certain of its
subsidiaries for several causes of action including but not limited to patent
infringement and trade secret misappropriation. These actions were settled
out of court on January 30, 2005. As part of the settlement agreement,
SMIC will pay TSMC US$175 million over six years to resolve TSMC's patent
infringement and trade secret claims.
48
SPECIAL NOTES
1. Affiliates Information
1.1 TSMC Affiliated Companies Chart
Taiwan Semiconductor Manufacturing Company, Ltd.
As of 12/31/2005
TSMC North
America
Shareholding:
100%
TSMC Japan
K.K.
Shareholding:
100%
TSMC International
Investment Ltd.
Shareholding:
100%
TSMC
Europe B.V.
Shareholding:
100%
TSMC
Partners, Ltd.
Shareholding:
100%
TSMC (Shanghai)
Company Ltd.
Shareholding:
100%
Chi Cherng
Investment Co.,
Ltd. Shareholding:
TSMC: 35.71%
Hsin Ruey: 64.29%
Hsin Ruey
Investment Co.,
Ltd. Shareholding:
TSMC: 35.71%
Chi Cherng: 64.29%
Emerging
Alliance Fund, L.P.
Shareholding:
99.5%
VentureTech
Alliance Fund II,
L.P. Shareholding:
98%
Global Unichip
Corp.
Shareholding:
45.68%
TSMC
Technology, Inc.
Shareholding:
100%
TSMC
Development, Inc.
Shareholding:
100%
InveStar
Semiconductor
Development
Fund, Inc.
Shareholding:
97.09%
InveStar
Semiconductor
Development
Fund, Inc. (II) LDC.
Shareholding:
97.09%
WaferTech, LLC.
Shareholding:
99.996%
Global Unichip
Corp.-NA
Shareholding:
100%
Global Unichip
Corp.-JP
Shareholding:
100%
1.2 TSMC Affiliated Companies
Unit: NT(US, EUR, JPY) $ thousands
Company
TSMC North America
TSMC Europe B.V.
TSMC Japan K.K.
Date of Incorporation
Address
Paid-in Capital
Business Activities
Jan. 18, 1988
San Jose, California, USA
US$ 11,000
Sales and marketing of integrated circuits and semiconductor devices
Mar. 04, 1994
Amsterdam, The Netherlands
EUR
90.76
Marketing activities
Sep. 10, 1997
Yokohama, Japan
JPY 300,000
Marketing activities
49
As of 12/31/2005
TSMC (Shanghai) Company Limited
Aug. 04, 2003
Shanghai, China
US$ 371,000
Manufacturing and marketing of integrated circuits and semiconductor devices
TSMC International Investment Ltd.
Apr. 09, 1996
Tortola, British Virgin Islands
US$ 987,968
Investing in companies involved in the design, manufacturing, and other related business
in the semiconductor industry
TSMC Technology, Inc.
Feb. 20, 1996
Delaware, USA
US$ 0.001
Engineering support activities
InveStar Semiconductor Development Fund, Inc.
Sep. 10, 1996
Cayman Islands
US$ 19,060
Investing in new start-up technology companies
InveStar Semiconductor Development Fund, Inc.(II) LDC.
Aug. 25, 2000
Cayman Islands
US$ 52,839
Investing in new start-up technology companies
TSMC Development, Inc.
Feb. 16, 1996
Delaware, USA
US$ 0.001
Investment activities
WaferTech, LLC
Jun. 03, 1996
Washington, USA
US$ 715,403
Manufacturing, selling, testing and computer-aided designing of integrated circuits and
other semiconductor devices
TSMC Partners, Ltd.
Mar. 26, 1998
Tortola, British Virgin Islands
US$ 300
Investment activities
Emerging Alliance Fund, L.P.
Jan. 10, 2001
Cayman Islands
US$ 45,601
Investing in new start-up technology companies
Hsin Ruey Investment Co., Ltd.
Jul. 13, 1998
Taipei, Taiwan
NT$ 840,000
Investment activities
Chi Cherng Investment Co., Ltd.
Jul. 15, 1998
Taipei, Taiwan
NT$ 840,000
Investment activities
Global Unichip Corporation
Jan. 22, 1998
Hsin-Chu, Taiwan
NT$ 878,791
Developing, manufacturing, testing and marketing integrated circuits
VentureTech Alliance Fund II, L.P.
Feb. 27, 2004
Cayman Islands
US$ 20,000
Investing in new start-up technology companies
Global Unichip Corporation-JP
Jun. 16, 2005
Yokohama, Japan
JPY 100,000
Marketing activities
Global Unichip Corporation-NA
Feb. 02, 2004
San Jose, California, USA
US$ 100
Providing consulting services for the North America region
1.3 Business Scope of TSMC and its Affiliated Companies
1.4 Common Shareholders of TSMC and Its Subsidiaries or Its Affiliates with
TSMC and its affiliates work together to provide dedicated foundry services
Actual or Deemed Control: None
to our customers around the world. In addition, several of TSMC's affiliate
companies are focused on investing in companies involved in design, manu-
facture, and other related business in the semiconductor industry. In general,
TSMC and its affiliates provide cross support in technology, capacity, market-
ing 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.
1.5 Rosters of Directors, Supervisors, and Presidents of TSMC's Affiliated Companies
Unit : NT$, except shareholding
Company
TSMC North America
TSMC Europe B.V.
TSMC Japan K.K.
50
TSMC (Shanghai) Company Limited
TSMC International Investment Ltd.
TSMC Technology, Inc.
Title
Director
Director
President
Director
Director
Director
President
Chairman
Director
Director
Director
Supervisor
President
Chairman
Director
Director
Supervisor
President
Director
Director
President
Chairman
Director
President
Name
Kenneth Kin
Rick Cassidy
Rick Cassidy
Wendell Huang
Kenneth Kin
Kees den Otter
Kees den Otter
Rick Tsai
Kenneth Kin
Makoto Onodera
Hisao Baba
Lora Ho
Hisao Baba
F. C. Tseng
C. C. Wei
Y. C. Chao
Lora Ho
Y. C. Chao
Lora Ho
Dick Thurston
Lora Ho
Lora Ho
Dick Thurston
Lora Ho
InveStar Semiconductor Development Fund, Inc.
Director
Wendell Huang
InveStar Semiconductor Development Fund, Inc.(II) LDC.
Director
Wendell Huang
TSMC Development, Inc.
WaferTech, LLC
TSMC Partners, Ltd.
VentureTech Alliance Fund II, L.P.
Emerging Alliance Fund, L.P.
Hsin Ruey Investment Co., Ltd.
Chi Cherng Investment Co., Ltd.
Chairman
Director
President
Chairman
Director
President
Director
Director
President
None
None
Director
Director
Lora Ho
Dick Thurston
Lora Ho
Rick Tsai
Steve Tso
Kuo-Chin Hsu
Lora Ho
Dick Thurston
Lora Ho
None
None
Wendell Huang (Representative of Chi Cherng
Investment Co., Ltd.)
James Chen (Representative of Hsin Ruey Investment
Co., Ltd.)
Shareholding
Amount
-
-
-
(TSMC holds 11,000,000 shares)
-
-
-
-
(TSMC holds 200 shares)
-
-
-
-
-
-
(TSMC holds 6,000 shares)
-
-
-
-
-
(TSMC's investment US$371,000,000)
-
-
-
(TSMC holds 987,968,244 shares)
-
-
-
(TSMC International Investment Ltd. holds 1,000 shares)
-
(TSMC International Investment Ltd. holds
18,504,854shares)
-
(TSMC International Investment Ltd. holds 51,300,000
shares)
-
-
-
(TSMC International Investment Ltd. holds 1,000 shares)
-
-
-
(TSMC Development, Inc. holds 293,636,833
Preferred Shares)
-
-
-
(TSMC holds 300,000 shares)
(TSMC's investment US$ 19,650,000)
(TSMC's investment US$ 45,600,503)
(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$299,999,880)
As of 12/31/2005
%
-
-
-
(100)
-
-
-
-
(100)
-
-
-
-
-
-
(100)
-
-
-
-
-
(100)
-
-
-
(100)
-
-
-
(100)
-
( 97.09)
-
( 97.09)
-
-
-
(100)
-
-
-
(99.996)
-
-
-
(100)
(98)
(99.50)
(64.29)
(35.71)
(64.29)
(35.71)
(Continued)
Company
Title
Name
Amount
Global Unichip Corporation
Global Unichip Corporation-NA
Global Unichip Corporation-JP
Chairman
Vice Chairman
Director
Director
Director
Director
Director
Director
Supervisor
Supervisor
Supervisor
President
Director
Director
Supervisor
President
Director
Director
Director
Supervisor
President
F. C. Tseng (Representative of TSMC)
K. C. Shih
C. C. Lu (Representative of Chin Yu Investment Ltd.)
Ping Yang (Representative of TSMC)
Jim Lai (Representative of TSMC)
C. T. Hsing
W. C. Liu
S. C. Li
Lora Ho (Representative of TSMC)
C. H. Kao
Yu Lin
Jim Lai
S. H. Cheng
Jim Lai
K. C. Shih
Jim Lai
Jim Lai
Chung-Lin Tsai
S. H. Cheng
K. C. Shih
Chung-Lin Tsai
Shareholding
(TSMC holds 40,146,953 shares)
3,159,878 shares
(Chin Yu holds 1,295,896 shares)
-
-
0
0
0
-
0
0
0
-
-
-
-
(GUC holds 100,000 shares)
-
-
-
-
-
(GUC holds 1,000,000 shares)
%
(45.68)
3.60
(1.47)
-
-
0
0
0
-
0
0
0
-
-
-
-
(100)
-
-
-
-
-
(100)
51
1.6 Operational Highlights for TSMC Affiliated Companies (Note)
Unit: NT$ thousands, except EPS($)
Company
Capital Stock
Assets
Liabilities
Net Worth
Net Sales
Income from
Operation
Net Income
(net of tax)
Basic EPS
(net of tax)
As of 12/31/2005
Remark
TSMC North America
TSMC Europe B.V.
TSMC Japan K.K.
361,350
25,146,587
23,160,659
1,985,928
154,555,174
273,253
564,201
3,554
84,210
56,491
115,309
33,404
20,360
23,087
94,949
221,103
241,876
25,484
10,639
295
2,572
TSMC (Shanghai) Company Limited
12,497,434
18,432,089
8,993,233
9,438,856
1,381,413
(2,418,311)
(2,242,213)
TSMC International Investment Ltd.
32,454,757
34,643,111
10,730,299
23,912,812
(416,752)
(416,752)
(549,454)
TSMC Technology, Inc.
0.033
1,866,398
1,680,892
626,121
756,398
18,062
185,506
738,336
75,164
157,190
(3,131)
137,513
3,321
110,251
InveStar Semiconductor Development
Fund, Inc.
InveStar Semiconductor Development
Fund, Inc.(II) LDC.
52
TSMC Development, Inc.
WaferTech, LLC
TSMC Partners, Ltd.
1,735,761
1,133,002
1,176
1,131,826
47,422
1,630
(35,887)
(0.66)
0.033
12,667,822
1,156,187
11,511,635
169,666
169,666
1,612,513
1,612,513.00
715,403
12,856,520
889,909
11,966,611
11,009,893
1,676,805
1,698,742
9,855
12,974,684
8,883,518
4,091,166
0
2,548
2,788
854,808
1,503,394
1,502,769
69,258
0
81,023
81,004
438,001
1,018,419
1,591,223
0
810
3,270
655,591
2,162
4,715
4,222
2,349
27,766
69,258
(32,232)
77,085
77,024
64,172
(20,531)
(694)
1,322
46,656
(77,208)
77,257
77,196
106,748
(19,044)
(675)
1,193
51.29
1,475.00
428.67
N/A
(0.56)
3,321.00
5.62
N/A
155.52
N/A
N/A
N/A
1.22
N/A
(0.67)
11.93
*
*
*
*
*
Emerging Alliance Fund, L.P.
1,497,993
854,808
Hsin Ruey Investment Co., Ltd.
Chi Cherng Investment Co., Ltd.
Global Unichip Corporation
VentureTech Alliance Fund II, L.P.
Global Unichip Corporation-JP
Global Unichip Corporation-NA
* Based on U.S. GAAP.
840,000
840,000
878,791
657,000
2,807
3,285
1,505,942
1,505,557
1,456,420
655,591
2,972
7,984
NOTE: Foreign exchange rates for balance sheet amounts are as follows:
$1 USD = $32.850 NT
$1 EUR = $ 39.050 NT
$1 JPY
= $ 0.2807 NT
$1 RMB = $ 4.070 NT
Foreign exchange rates for income statement amounts are as follows:
$1 USD = $32.157 NT
$1 EUR = $ 40.18 NT
$1 JPY
= $ 0.2936 NT
$1 RMB = $ 3.925 NT
2. Information Regarding the Company's Independent
Auditor
Fees Paid to the Company's Independent Auditor in 2005
Non-audit fees paid to the Company's independent audit firm and its affili-
ates did not exceed 25% of the audit fees paid in 2005. The 2005 audit fees
paid to the Company's independent auditor were not reduced by more than
15% compared to that in 2004.
The Company did not replace its independent auditor during 2004, 2005 and as
of February 28, 2006.
The Company's Chairman, CEO, CFO and managers in charge of its finance and
accounting operations have not held any positions within the Company's inde-
pendent audit firm or its affiliates during 2005.
3. Internal Control System Execution Status
3.1 Statement of Internal Control System
Date: February 14, 2006
Statement of Internal Control System
Based on the findings of a self-assessment, Taiwan Semiconductor
5. Based on the findings of the evaluation mentioned in the preceding
Manufacturing Company Limited (TSMC) states the following with regard
paragraph, TSMC believes that, during the year 2005, its internal control
to its internal control system during the period from January 1, 2005 to
system (including its supervision and management of subsidiaries), as
December 31, 2005:
well as its internal controls to monitor the achievement of its objectives
concerning operational effectiveness and efficiency, reliability of financial
1. TSMC is fully aware that establishing, operating, and maintaining an
reporting, and compliance with applicable laws and regulations, were
internal control system are the responsibility of its Board of Directors
effective in design and operation, and reasonably assured the achieve-
53
and management. TSMC has established such a system aimed at provid-
ment of the above-stated objectives.
ing reasonable assurance regarding the achievement of objectives in the
following categories: (1) effectiveness and efficiency of operations
6. This Statement will be an integral part of TSMC's Annual Report for the
(including profitability, performance, and safeguarding of assets), (2)
year 2005 and Prospectus, and will be made public. Any falsehood, con-
reliability of financial reporting, and (3) compliance with applicable laws
cealment, or other illegality in the content made public will entail legal
and regulations.
liability under Articles 20, 32, 171, and 174 of the Securities and
2. An internal control system has inherent limitations. No matter how per-
Exchange Law.
fectly designed, an effective internal control system can provide only rea-
7. This Statement has been passed by the Board of Directors in their meet-
sonable assurance of accomplishing the three objectives mentioned
ing held on February 14, 2006, with zero of the eight attending direc-
above. Moreover, the effectiveness of an internal control system may be
tors expressing dissenting opinions, and the remainder all affirming the
subject to changes of environment or circumstances. Nevertheless, the
content of this Statement.
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 (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 assess-
ment, (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 inter-
nal control system according to the aforesaid criteria.
3.2 The Securities and Futures Bureau May Request Companies to
Commission Independent Auditor to Audit the Said Internal Control
System. Disclosure of the Audit Report(s) is Mandatory: None
Taiwan Semiconductor Manufacturing Company Limited
Morris Chang,
Chairman
Rick Tsai,
President and CEO
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 During 2005 or the Period from January 1, 2006
to March 12, 2006: None
5. Private Placement Securities: None
6. Status of TSMC Common Shares/ADRs Acquired, Disposed
of and Held by Subsidiaries
(In thousands of NTD except for number of shares)
Paid-in
Capital
Source of
Funding
Percentage
Owned by
TSMC
Transaction
Date
Acquisition (Note 2)
Disposal
Number of
Shares
Amount
Number of
Shares
Amount
54
Name of
Subsidiary
(Note 1)
Chi Cherng
Investment
Co., Ltd.
Hsin Ruey
Investment
Co., Ltd.
TSMC
North
America
840,000
840,000
US$ 11,000
Retained
earnings
Retained
earnings
Retained
earnings
36%
36%
100%
Year 2005
Year 2006
(Note 1)
Year 2005
Year 2006
(Note 1)
Year 2005
Year 2006
(Note 1)
783,472
0
784,941
0
673,420
0
0
0
0
0
0
0
Investment
Income
(Loss)
0
0
0
0
Balance (Note 1)
Number of
Shares
16,453,816
16,453,816
Amount
458,564
458,564
16,484,658
16,484,658
459,511
459,511
0
0
0
0
0
0
0
0
14,824,571
0
899,489
0
222,378
0
0
0
0
0
Balance of
Pledged
Shares
Balance of
Guarantee
Provided by
TSMC
Balance of
Financing
Provided by
TSMC
0
0
0
0
0
0
0
0
0
0
US$ 40,000
0
0
0
0
0
0
0
Note 1: As of 02/28/2006
Note 2: Stock dividend distributed in 2005
7. Major Decisions of Shareholder Meetings and Board
8. Regulatory Authorities' Legal Penalties to the Company,
Meetings
Review of Shareholder Meeting
and the Company's Resulting Punishment on Its
Employees: None
TSMC's 2005 regular Shareholder Meeting was held at the Auditorium of the
9. Any Events in 2005 that had Significant Impacts on
Activity Center of the Hsinchu Science Park on May 10, 2005. At the meet-
ing, shareholders present in person or by proxy approved the following reso-
lutions: (1) Acceptance of the 2004 business report and financial statements;
(2) Distribution of 2004 profits; (3) Revisions to the Articles of Incorporation.
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
Review of Board Meetings
During the 2005 calendar year, and the period from January 1 to March 12,
2006, the Board held five regular meetings and one special meeting. Major
resolutions passed at these meetings are summarized below: (1) The 2004
business report and financial statements; (2) Distribution of 2004 profits; (3)
Convening the 2005 Annual Shareholder Meeting; (4) 2005 R&D projects
and sustaining capital appropriation; (5) The appointment of Mr. Jason Chen
as Vice President; (6) The appointment of Dr. Rick Tsai as Chief Executive
Officer; (7) Election of Dr. F. C. Tseng as Vice Chairman of the Board of
Directors; (8) TSMC's sponsoring of the issuance of ADRs by Koninklijke
Philips Electronics N.V., the Development Fund of the Executive Yuan, and
certain other shareholders; (9) The 2005 semi-annual financial statement;
(10) The investment to establish a new venture capital fund; (11) The pro-
motion of Dr. C. C. Wei as Senior Vice President; (12) The promotion Dr.
Mark Liu as Senior Vice President; (13) The appointment of Ms. Jessica Chou
as Controller; (14) The 2005 business report and financial statements; (15)
Distribution of 2005 profits and capitalization of capital surplus; (16)
Convening the 2006 Annual Shareholder Meeting; and (17) 2006 R&D proj-
ects and sustaining capital appropriation, etc.
1. Condensed Balance Sheet
2. Condensed Statement of Income
Financial analysis from 2001-2005
Financial analysis from 2001-2005
Unit: NT$ thousands
Unit: NT$ thousands (Except EPS:NT$)
Item
Current assets
2001
2002
2003
2004
2005
63,652,726
94,747,405
158,526,272
173,667,311
197,562,416
Item
Net sales
2001
2002
2003
2004
2005
125,888,003
160,961,329
201,904,341
255,992,427
264,588,364
Long-term investments
32,869,391
34,978,495
37,965,353
73,292,863
80,659,601
Gross profit
36,381,051
51,967,145
72,891,637
110,160,584
115,244,049
55
Fixed assets
Other assets
Current liabilities
Before distribution
After distribution
215,499,242
217,192,263
188,286,752
227,976,400
214,145,633
Income from operations
17,342,286
34,176,306
52,647,577
86,822,778
93,013,824
23,713,325
23,097,348
11,638,485
12,616,636
15,172,165
Non-operating Income and Gains
2,891,557
1,762,893
2,665,799
6,785,048
5,072,009
25,210,619
31,160,103
30,537,984
60,638,852
32,184,415
Interest revenue
1,365,919
1,008,147
819,377
1,687,681
2,769,978
25,799,467
31,673,588
43,691,881
110,460,630
*
Interest expense
1,951,830
2,119,935
1,576,343
1,278,072
2,429,568
Non-operating Expenses and Losses
9,575,128
8,826,744
4,285,101
1,829,242
4,266,410
Long-term liabilities
24,000,000
39,281,665
33,300,829
23,752,940
22,111,575
Income from operations of continued seg-
ments-before tax
10,658,715
27,112,455
51,028,275
91,778,584
93,819,423
Other liabilities
Capital stock
Capital surplus
Retained earnings
Before distribution
After distribution
9,333,990
3,720,536
3,363,740
4,196,119
7,613,476
181,325,531
199,228,867
202,666,189
232,519,637
247,300,246
57,128,433
57,004,789
56,855,885
56,537,259
57,117,886
37,507,410
40,792,197
71,100,090
113,730,016
142,771,034
19,015,226
23,841,390
26,846,412
49,195,999
Income from operations of continued seg-
ments-after tax
Net income
Earnings per share
Adjusted earnings per share
Unrealized loss on long-term investment
-
(194,283)
(35)
-
14,483,174
21,610,291
47,258,700
92,316,115
93,575,035
14,483,174
21,610,291
47,258,700
92,316,115
93,575,035
0.83*
0.58**
1.14*
0.87**
2.33*
1.90**
3.97*
3.73**
3.79*
-
-
*
-
Capitalized interest
207,297
165,857
138,668
262,109
*Based on weighted average shares outstanding in each year
Cumulative transaction adjustments
1,228,701
945,129
225,408
(2,226,427)
(640,742)
**Retroactive adjustment for capitalization of unappropriated earnings and bonus to employees
Total Assets
Total Liabilities
Before distribution
After distribution
Total Equity
Before distribution
After distribution
335,734,684
370,015,511
396,416,862
487,553,210
507,539,815
58,544,609
74,162,304
67,202,553
88,587,911
61,909,466
59,133,457
74,675,789
80,356,450
138,409,689
*
277,190,075
295,853,207
329,214,309
398,965,299
445,630,349
276,601,227
295,339,722
316,060,412
349,143,521
*
*Subject to change after shareholders' meeting resolution
3. Financial Analysis
3.1 Financial Analysis 2001-2005 (Unconsolidated)
Capital Structure Analysis
Debt ratio (%)
Liquidity Analysis
Long-term fund to fixed assets ratio (%)
Current ratio (%)
Quick ratio (%)
Times interest earned (times)
Operating Performance Analysis
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)
Profitability Analysis
Return on total assets (%)
Return on equity (%)
Operating income to paid in capital ratio (%)
Pre-tax income to paid in capital ratio (%)
Net Margin (%)
Earnings per share (NT$) (Note1)
Cash flow
Cash flow ratio (%)
Leverage
Cash flow adequacy ratio (%)
Cash flow reinvestment ratio (%)
Operating leverage
Financial leverage
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
11.50
0.58
284.27
105.73
16.00
6.14
1.13
2002
20.04
154.30
304.07
264.11
12.79
9.09
40.15
11.57
31.55
20.72
0.74
0.44
6.63
7.54
17.15
13.61
13.43
0.87
302.59
122.72
17.88
3.88
1.07
2003
16.95
192.53
519.11
478.38
30.67
9.19
39.74
12.14
30.06
14.41
1.07
0.51
12.67
15.12
25.98
25.18
23.41
1.90
355.85
145.42
17.71
3.21
1.03
2004
18.17
185.42
286.40
261.92
57.67
9.35
39.04
11.63
31.39
14.39
1.12
0.53
21.16
25.36
37.34
39.47
36.06
3.73
236.94
149.94
18.12
2.46
1.02
56
2005
12.2
218.42
613.84
560.93
39.62
8.08
45.18
9.82
37.19
14.24
1.24
0.52
19.23
22.16
37.61
37.94
35.37
3.79
467.55
150.84
12.48
2.30
1.03
Analysis of Deviation over 20% - 2005 vs. 2004:
1. The debt ratio decreased by 33% as a result of a decrease in current liabilities. The reduction in current liabilities was mainly due to decrease in payables
to equipment vendors and the repayment of corporate bonds.
3. The times interest earned decreased by 31% mainly due to an increase in interest expenses related to cross currency swap contracts.
4. The cash flow ratio increased by 97% mainly due to a decrease in current liabilities.
5. The cash flow reinvestment ratio decreased by 31%, mainly due to acquisition of new equipment and an increase of working capital and cash dividend.
2. The current ratio and the quick ratio both increased by 114%, primarily due to an increase in cash and cash equivalents and a decrease in current liabili-
ties.
Note1: Retroactively adjusted for capitalization of unappropriated earnings and bonuses to employees.
Note2: Certain accounts of prior years have been reclassified to conform to current year classifications.
*Glossary:
1. Capital Structure Analysis
(1) Debt ratio
(2) Long-term fund to fixed assets ratio
= Total Liabilities / Total Assets
= (Shareholders' Equity + Long-term Liabilities)/ Net Fixed Assets
(2) Days sales outstanding
(3) Average inventory turnover
(4) Average inventory turnover days
(5) Average payment turnover
(6) Fixed assets turnover
(7) Total assets turnover
= 365 / Average Collection Turnover
= Cost of Sales / Average Inventory
= 365 / Average Inventory Turnover rate
= Cost of Sales / Average Trade Payables
= Net Sales / Net Fixed Assets
= Net Sales / Total Assets
4. Profitability Analysis
2. Liquidity Analysis
(1) Current ratio
(2) Quick ratio
= Current Assets / Current Liabilities
= (Current Assets - Inventories - Prepaid Expenses) / Current
Liabilities
(2) Return on equity
(3) Operating income to paid-in capital
= Net Income / Average Shareholders' Equity
= Operating Income / Paid-in Capital
Average Total Assets
(1) Return on total assets
= (Net Income + Interest Expenses* (1 - Effective tax rate ) ) /
(3) Times interest earned
= Earnings before Interest and Taxes / Interest Expenses
ratio
3. Operating Performance Analysis
(1) Average collection turnover
= Net Sales / Average Trade Receivables
(4) Pre-tax income to paid-in capital ratio
(5) Net margin
= Income Before Tax / Paid-in Capital
= Net Income / Net Sales
(6) Earnings per share
= (Net Income - Preferred Stock Dividend) / Weighted
Average Number of Shares Outstanding
5. Cash flow
(1) Cash flow ratio
(2) Cash flow adequacy ratio
= Net Cash Provided by Operating Activities / Current Liabilities
= Five-year sum of cash from operations / Five-year sum of
capital expenditures, inventory additions, and cash dividend
(3) Cash flow reinvestment ratio
= (Cash Provided by Operating Activities - Cash Dividends) /
6. Leverage
(1) Operating leverage
(2) Financial leverage
(Gross Fixed Assets + Investments + Other Assets + Working
Capital)
= (Net Sales - Variable Cost) / Income from Operations
= Income from Operations / (Income from Operations - Interest
Expenses)
3.2 Financial Analysis 2001-2005 (Consolidated)
Capital Structure Analysis
Debt ratio(%)
Liquidity Analysis
Long-term fund to fixed assets ratio (%)
Current ratio (%)
Quick ratio (%)
Times interest earned (times)
Operating Performance Analysis
Average collection turnover (times)
57
Days sales outstanding
Average inventory turnover (times)
Average inventory turnover days
Average payment turnover (times)
Fixed assets turnover (times)
Total assets turnover (times)
Profitability Analysis
Return on total assets (%)
Return on equity (%)
Operating income to paid-in capital ratio (%)
Pre-tax income to paid-in capital ratio (%)
Net Margin (%)
Earnings per share (NT$) (Note1)
Cash flow
Cash flow ratio (%)
Leverage
Cash flow adequacy ratio (%)
Cash flow reinvestment ratio (%)
Operating leverage
Financial leverage
2001
24.34
128.82
212.43
174.78
3.82
5.60
65.17
8.16
44.75
13.60
0.50
0.34
4.54
5.39
7.05
5.95
11.54
0.58
227.48
88.10
15.86
8.18
1.33
2002
24.22
140.48
257.43
223.68
10.54
9.64
37.86
10.46
34.89
23.50
0.66
0.42
6.33
7.53
15.86
13.66
13.30
0.87
247.31
106.37
17.81
4.15
1.09
2003
19.17
175.65
547.46
502.20
26.14
9.44
38.65
10.98
33.24
15.43
0.96
0.50
12.30
15.12
25.31
25.25
23.28
1.90
381.44
132.59
17.97
3.23
1.04
2004
20.10
166.58
288.57
261.62
53.92
9.56
38.18
10.21
35.74
14.75
0.99
0.51
20.68
25.35
38.05
39.55
35.90
3.73
239.60
146.18
18.54
2.38
1.02
2005
14.10
194.69
604.33
549.58
36.40
8.08
45.20
8.91
40.94
14.37
1.09
0.51
18.89
22.15
36.78
38.12
35.13
3.79
447.05
154.48
12.62
2.31
1.03
Ananlysis of Deviation over 20% - 2005 vs. 2004:
1. The debt ratio decreased by 30% as a result of a decrease in current liabilities. The reduction in current liabilities was mainly due to a decrease in payables
to equipment vendors and the repayment of corporate bonds.
2. The current ratio and the quick ratio both increased by around 109%, primarily due to an increase in cash and cash equivalents and a decrease in current
liabilities.
3. The times interest earned decreased by 32%, mainly due to an increase in interest expenses related to cross currency swap contracts.
4. The cash flow ratio increased by 87% as a result of a decrease in current liabilities.
5. The cash flow reinvestment ratio decreased by 32%, mainly due to acquisition of new equipment and an increase of working capital and cash dividend.
Note1: Retroactively adjusted for capitalization of unappropriated earnings and bonuses to employees.
Note2: Certain accounts of prior years have been reclassified to conform to current year classifications.
*Glossary:
1. Capital Structure Analysis
(1) Debt ratio
(2) Long-term fund to fixed assets ratio
= Total Liabilities / Total Assets
= (Shareholders' Equity + Long-term Liabilities) / Net Fixed Assets
(2) Days sales outstanding
(3) Average inventory turnover
(4) Average inventory turnover days
(5) Average payment turnover
(6) Fixed assets turnover
(7) Total assets turnover
= 365 / Average Collection Turnover
= Cost of Sales / Average Inventory
= 365 / Average Inventory Turnover
= Cost of Sales / Average Trade Payables
= Net Sales / Net Fixed Assets
= Net Sales / Total Assets
2. Liquidity Analysis
(1) Current ratio
(2) Quick ratio
= Current Assets / Current Liabilities
= (Current Assets - Inventories - Prepaid Expenses) / Current
Liabilities
(2) Return on equity
(3) Operating income to paid-in capital
= Net Income / Average Shareholders' Equity
= Operating Income / Paid-in Capital
Average Total Assets
(3) Times interest earned
= Earnings before Interest and Taxes / Interest Expenses
ratio
3. Operating Performance Analysis
(1) Average collection turnover
= Net Sales / Average Trade Receivables
(4) Pre-tax income to paid-in capital ratio
(5) Net margin
= Income Before Tax / Paid-in Capital
= Net Income / Net Sales
(6) Earnings per share
= ( Net Income - Preferred Stock Dividend ) / Weighted
Average Number of Shares Outstanding
5. Cash flow
(1) Cash flow ratio
(2) Cash flow adequacy ratio
= Net Cash Provided by Operating Activities / Current Liabilities
= Five-year sum of cash from operations / Five-year sum of
6. Leverage
(1) Operating leverage
(2) Financial leverage
capital expenditures, inventory additions, and cash dividend
= ( Cash Provided by Operating Activities - Cash Dividends ) /
( Gross Fixed Assets + Investments + Other Assets + Working
Capital )
= ( Net Sales - Variable Cost ) / Income from Operations
= Income from Operations / ( Income from Operations - Interest
Expenses )
4. Profitability Analysis
(3) Cash flow reinvestment ratio
(1) Return on total assets
= ( Net Income + Interest Expenses * (1 - Effective tax rate ) ) /
4. Condensed Interim Balance Sheet by Quarter
ASSETS
Current assets
Long-term investments
Property, plant and equipment, net
Other assets
TOTAL ASSETS
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Current liabilities
Long-term liabilities
Other liabilities
TOTAL LIABILITIES
SHAREHOLDERS' EQUITY
Capital stock
Capital surplus
Retained earnings
Cumulative translation adjustments
Treasury stock (at cost)
Total SHAREHOLDERS' EQUITY
March 31, 2005
June 30, 2005
September 30, 2005
December 31, 2005
Amount
%
Amount
%
Amount
%
Amount
%
Unit: NT$ thousands
159,744,397
76,877,217
229,853,709
14,198,489
480,673,812
37,890,858
23,133,832
4,295,642
65,320,332
232,528,635
56,574,377
130,548,413
(2,725,918)
(1,572,027)
415,353,480
33
16
48
3
100
8
5
1
14
48
12
27
(1)
-
86
181,826,873
76,434,570
225,063,110
16,107,612
499,432,165
86,724,194
22,871,269
5,636,775
115,232,238
247,261,288
56,720,875
84,383,333
(2,612,996)
(1,552,573)
384,199,927
37
15
45
3
100
17
5
1
23
50
11
17
(1)
-
77
165,054,055
78,958,452
218,909,371
20,184,119
483,105,997
42,904,092
22,138,446
6,952,327
71,994,865
247,273,476
56,777,040
108,870,899
(260,171)
(1,550,112)
411,111,132
34
16
45
5
100
9
5
1
15
51
12
22
-
-
85
197,562,416
80,659,601
214,145,633
15,172,165
507,539,815
32,184,415
22,111,575
7,613,476
61,909,466
247,300,246
57,117,886
142,771,034
(640,742)
(918,075)
445,630,349
58
39
16
42
3
100
6
4
2
12
49
11
28
-
-
88
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
480,673,812
100
499,432,165
100
483,105,997
100
507,539,815
100
5. Condensed Interim Statement of Income by Quarter
GROSS SALES
SALES RETURNS AND ALLOWANCES
NET SALES
COST OF SALES
GROSS PROFIT
OPERATING EXPENSES
INCOME FROM OPERATIONS
59
NON-OPERATING INCOME AND GAINS
Interest
Settlement income
Technical service income
Gain on disposal of property, plant and equipment
Others
Total Non-Operating Income and Gains
NON-OPERATING EXPENSES AND LOSSES
Interest
Equity in losses (gains) of equity method investees, net
Unrealized valuation loss (gain) on short-term investments
Loss on sales of investments, net
Loss (gain) on disposal of property, plant, equipment and idle assets
Foreign exchange loss (gain), net
Others
Total Non-Operating Expenses and Losses
INCOME BEFORE INCOME TAX
INCOME TAX BENEFITS (EXPENSES)
NET INCOME
EARNINGS PER SHARE AFTER TAX
Q1, 2005
Amount
56,413,097
759,880
55,653,217
34,004,376
21,648,841
5,572,265
16,076,576
780,062
569,276
77,111
60,707
68,272
1,555,428
583,273
198,178
257,718
64,473
37,922
200,614
24,485
1,366,663
16,265,341
553,056
16,818,397
0.68
%
100
61
39
10
29
1
1
-
-
-
2
1
-
1
-
-
-
-
2
29
1
30
Q2, 2005
Amount
60,405,961
1,889,744
58,516,217
35,311,022
23,205,195
5,421,837
17,783,358
845,663
142,048
109,851
46,688
152,961
1,297,211
804,086
587,840
(216,251)
47,335
15,677
(2,930)
112,429
1,348,186
17,732,383
636,554
18,368,937
0.74
%
100
60
40
9
30
2
-
-
-
-
2
1
1
-
-
-
-
-
2
30
1
31
Q3, 2005
Amount
70,460,608
1,202,993
69,257,615
38,732,259
30,525,356
5,595,480
24,929,876
820,660
-
136,014
41,619
27,543
1,025,836
860,791
491,169
222,601
22,632
6,966
(80,383)
11,470
1,535,246
24,420,466
67,100
24,487,566
0.99
%
100
56
44
8
36
1
-
-
-
-
1
1
1
-
-
-
-
-
2
35
-
35
Q4, 2005
Amount
83,035,398
1,874,083
81,161,315
41,296,658
39,864,657
5,640,643
34,224,014
323,593
238,722
168,291
345,360
117,568
1,193,534
181,418
(225,142)
73,092
15,058
(573)
(82,922)
55,384
16,315
35,401,233
(1,501,098)
33,900,135
1.37
%
100
51
49
7
42
1
-
-
1
-
2
-
-
-
-
-
-
-
-
44
(2)
42
Unit: NT$ thousands (Except EPS:NT$)
2005
Amount
270,315,064
5,726,700
264,588,364
149,344,315
115,244,049
22,230,225
93,013,824
2,769,978
950,046
491,267
494,374
366,344
5,072,009
2,429,568
1,052,045
337,160
149,498
59,992
34,379
203,768
4,266,410
93,819,423
(244,388)
93,575,035
3.79
%
100
56
44
8
35
1
1
-
-
-
2
1
1
-
-
-
-
-
2
35
-
35
6. Auditors' Opinions from 2001 to 2005
Year
2001
2002
2003
2004
2005
CPA
Shu-Chieh Huang, Yung-Do Way
Shu-Chieh Huang, Yung-Do Way
Yu-Feng Huang, Yung-Do Way
Hung-Wen Huang, Ming-Cheng Chang
Hung-Wen Huang, Ming-Cheng Chang
Audit Opinion
An Unqualified Opinion
A Modified Unqualified Opinion
A Modified Unqualified Opinion
An 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
7. Supervisors' Report
8. Financial Difficulties
The Board of Directors has prepared and submitted to the Supervisors the Company's 2005 Business
The Company should disclose the financial impact to the Company if the Company and its affiliated
Report, Financial Statements, and proposal for allocation of profits. The CPA firm of Deloitte & Touche
companies have any financial or cash flow difficulties from January 1, 2005 through February 28,
was retained to audit TSMC's Financial Statements. The auditors have submitted to the Board a report
2006: None
relating to the Financial Statements. The Business Report, Financial Statements, and profit allocation
proposal 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.
60
Taiwan Semiconductor Manufacturing Company Limited
Supervisor Michel Besseau
Supervisor
James C. Ho
Supervisor Michael E. Porter
March 8, 2006
9. Financial Statements for the Years Ended December 31, 2005 and 2004 and Independent Auditors' Report
Notice to Readers
The accompanying financial statements are intended only to present the financial position, results of
operations and cash flows in accordance with accounting principles and practices generally accepted
in the Republic of China and not those of any other jurisdiction. The standards, procedures and prac-
tices to audit such financial statements are those generally accepted and applied in the Republic of
China.
For the convenience of readers, the auditors' report and the accompanying financial statements have
been translated into English from the original Chinese version prepared and used in the Republic of
China. If there is any conflict between the English version and the original Chinese version or any dif-
ference in the interpretation of the two versions, the Chinese-language auditors' report and financial
statements shall prevail.
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Taiwan Semiconductor Manufacturing Company Limited
We have audited the accompanying balance sheets of Taiwan Semiconductor Manufacturing
Company Limited as of December 31, 2005 and 2004, and the related statements of income,
changes in shareholders' equity and cash flows for the years then ended. These financial statements
61
are the responsibility of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with the Rules Governing the Audit of Financial Statements
by Certified Public Accountants, and auditing standards generally accepted in the Republic of China.
Those rules and standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An audit includes examin-
ing, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant estimates made by man-
agement, as well as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the
financial position of Taiwan Semiconductor Manufacturing Company Limited as of December 31,
2005 and 2004, and the results of its operations and its cash flows for the years then ended in con-
formity with Guidelines Governing the Preparation of Financial Reports by Securities Issuers and
accounting principles generally accepted in the Republic of China.
We have also audited the consolidated financial statements of Taiwan Semiconductor Manufacturing
Company Limited and subsidiaries as of and for the years ended December 31, 2005 and 2004, and
have expressed an unqualified opinion on such financial statements.
January 12, 2006
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED
BALANCE SHEETS
DECEMBER 31, 2005 AND 2004
(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 and 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 22)
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 22)
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
Property, plant and equipment, net
GOODWILL (Note 2)
OTHER ASSETS
Deferred charges, net (Notes 2, 8 and 21)
Deferred income tax assets (Notes 2 and 12)
Refundable deposits
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.
$
2005
Amount
85,383,583
47,055,347
21,050,604
20,591,818
(976,344)
(4,269,969)
1,797,714
2,403,929
16,257,955
7,013,000
1,254,779
197,562,416
51,076,803
807,490
18,548,308
10,227,000
80,659,601
90,769,622
459,850,773
7,850,035
558,470,430
(359,191,829)
14,867,032
214,145,633
1,567,756
6,681,144
6,759,955
83,642
72,879
6,789
13,604,409
$
2004
Amount
65,531,818
52,979,095
16,136,039
15,326,881
(980,461)
(3,327,914)
1,667,383
2,080,640
14,171,945
8,849,000
1,232,885
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
%
17
9
4
4
-
(1)
1
1
3
1
-
39
10
-
4
2
16
18
91
1
110
(71)
3
42
-
1
2
-
-
-
3
%
14
11
3
3
-
(1)
-
1
3
2
-
36
10
-
3
2
15
17
80
1
98
(61)
10
47
-
2
-
-
-
-
2
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable
Payables to related parties (Notes 18 and 21)
Income tax payable (Notes 2 and 12)
Accrued expenses and other current liabilities (Notes 2, 10, 21 and 22)
Payables to contractors and equipment suppliers
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 21)
Other payables to related parties (Notes 18 and 21)
Total long-term liabilities
OTHER LIABILITIES
Accrued pension cost (Notes 2 and 11)
Guarantee deposits (Note 21)
Deferred credits (Notes 2 and 18)
Total other liabilities
Total liabilities
2005
2004
Amount
%
Amount
%
8,052,106
3,242,197
3,815,888
8,214,994
8,859,230
-
32,184,415
19,500,000
1,511,100
1,100,475
22,111,575
3,461,392
2,892,945
1,259,139
7,613,476
1
1
1
1
2
-
6
4
-
-
4
1
1
-
2
62
$
6,488,617
3,198,490
379,903
8,917,533
31,154,309
10,500,000
1
1
-
2
6
2
60,638,852
12
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
61,909,466
12
88,587,911
18
SHAREHOLDERS' EQUITY (Notes 2, 14, 15 and 16)
Capital stock - $10 par value
Authorized: 27,050,000 thousand shares in 2005 and 24,600,000 thousand
shares in 2004
Issued: 24,730,025 thousand shares in 2005 and 23,251,964 thousand shares
in 2004
Capital surplus
Retained earnings
Appropriated as legal capital reserve
Appropriated as special capital reserve
Unappropriated earnings
Others
Cumulative translation adjustments
Treasury stock (at cost) - 32,938 thousand shares in 2005 and 45,521 thousand
shares in 2004
Total shareholders' equity
247,300,246
57,117,886
34,348,208
2,226,427
106,196,399
(640,742)
(918,075)
49
11
7
-
21
-
-
232,519,637
56,537,259
25,528,007
-
88,202,009
(2,226,427)
(1,595,186)
48
11
5
-
18
-
-
445,630,349
88
398,965,299
82
$
507,539,815
100
$
487,553,210
100
TOTAL
$
507,539,815
100
$
487,553,210
100
EARNINGS PER SHARE (NT$, Note 17)
Basic earnings per share
Diluted earnings per share
2005
2004
Before
Income Tax
After
Income Tax
Before
Income Tax
After
Income Tax
$
$
3.80
3.80
$
$
3.79
3.79
$
$
3.71
3.71
$
$
3.73
3.73
The pro forma net income and earnings per share (after income tax) are shown as follows, and are based on the assumption that the parent company
stock held by its subsidiaries is treated as an investment instead of as treasury stock (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.
2005
2004
$
$
$
93,881,698
3.80
3.79
$
$
$
92,340,760
3.73
3.73
(Concluded)
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)
GROSS SALES (Notes 2 and 18)
$
270,315,064
$
260,726,896
63
SALES RETURNS AND ALLOWANCES (Note 2)
5,726,700
4,734,469
NET SALES
264,588,364
100
255,992,427
100
2005
2004
Amount
%
Amount
%
COST OF SALES (Notes 13 and 18)
GROSS PROFIT
OPERATING EXPENSES (Notes 13 and 18)
Research and development
General and administrative
Sales and marketing
Total operating expenses
INCOME FROM OPERATIONS
NON-OPERATING INCOME AND GAINS
Interest (Notes 2 and 22)
Settlement income (Note 20)
Gain on disposal of property, plant and equipment (Notes 2 and 18)
Technical service income (Notes 18 and 21)
Equity in earnings of equity method investees, net (Notes 2 and 6)
Gain on sales of investments, net (Note 2)
Others (Note 18)
Total non-operating income and gains
NON-OPERATING EXPENSES AND LOSSES
Interest (Notes 2, 7, 9 and 22)
Equity in losses of equity method investees, net (Notes 2 and 6)
Unrealized valuation loss on short-term investments (Notes 2 and 4)
Loss on sales of investments, net (Note 2)
Loss on disposal of property, plant, equipment and idle assets (Note 2)
Foreign exchange loss, net (Notes 2 and 22)
Others (Note 2)
Total non-operating expenses and losses
INCOME BEFORE INCOME TAX
INCOME TAX BENEFITS (EXPENSES) (Notes 2 and 12)
149,344,315
115,244,049
13,395,801
7,485,011
1,349,413
22,230,225
56
44
5
3
1
9
145,831,843
110,160,584
12,516,434
9,367,010
1,454,362
23,337,806
57
43
5
3
1
9
93,013,824
35
86,822,778
34
2,769,978
950,046
494,374
491,267
-
-
366,344
5,072,009
2,429,568
1,052,045
337,160
149,498
59,992
34,379
203,768
4,266,410
1
1
-
-
-
-
-
2
1
1
-
-
-
-
-
2
1,687,681
-
164,147
423,804
4,040,319
90,319
378,778
6,785,048
1,278,072
-
75,212
-
107,722
323,080
45,156
1,829,242
93,819,423
(244,388)
35
-
91,778,584
537,531
1
-
-
-
2
-
-
3
1
-
-
-
-
-
-
1
36
-
36
(Continued)
NET INCOME
$
93,575,035
35
$
92,316,115
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004
(In Thousands of New Taiwan Dollars, Except Dividends Per Share)
BALANCE, JANUARY 1, 2004
20,266,619
$
202,666,189
$ 56,855,885
$ 20,802,137
$ 68,945
$ 50,229,008
$ 71,100,090
$ (35)
$ 225,408
$ (1,633,228)
$ 329,214,309
64
Capital Stock
Shares (in
Thousands)
Amount
Capital
Surplus
Retained Earnings
Legal Capital
Reserve
Special Capital
Reserve
Unappropriated
Earnings
Unrealized Loss on
Long-term
Investments
Total
Cumulative
Translation
Adjustments
Treasury
Stock
Total Shareholders'
Equity
Appropriations of prior year's earnings
Legal capital reserve
Reversal of special capital reserve
Employees' profit sharing - in cash
Employees' profit sharing - in stock
Cash dividends to preferred shareholders
Cash dividends to common shareholders - NT$0.60 per share
Stock dividends to common shareholders - NT$1.41 per share
Bonus to directors and supervisors
Net income in 2004
Adjustment arising from changes of percentage of ownership in
investees
Reversal of unrealized loss on long-term investment of investees
Translation adjustments
Issuance of stock from exercising stock options
Cash dividends received by subsidiaries from the Company
Treasury stock transactions - sales of the Company's stock held by
subsidiaries
Treasury stock repurchased by the Company
Retirement of treasury stock
-
-
-
272,651
-
-
2,837,327
-
-
-
-
-
87
-
-
-
-
2,726,514
-
-
28,373,267
-
-
-
-
-
867
-
-
-
(124,720)
-
-
(1,247,200)
-
-
-
-
-
-
-
-
-
34,059
-
-
2,757
22,781
1,864
-
(380,087)
4,725,870
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
BALANCE, DECEMBER 31, 2004
23,251,964
232,519,637
56,537,259
25,528,007
Appropriations of prior year's earnings
Legal capital reserve
Special capital reserve
Employees' profit sharing - in cash
Employees' profit sharing - in stock
Cash dividends to common shareholders - NT$2.00 per share
Stock dividends to common shareholders - NT$0.50 per share
Bonus to directors and supervisors
Net income in 2005
Adjustment arising from changes of percentage of ownership in
investees
Translation adjustments
Issuance of stock from exercising stock options
Cash dividends received by subsidiaries from the Company
Treasury stock transactions - sales of the Company's stock held by
subsidiaries
-
-
-
308,622
-
1,162,602
-
-
-
-
6,837
-
-
-
-
-
3,086,215
-
11,626,024
-
-
-
-
68,370
-
-
-
-
-
-
-
-
-
71,405
-
202,559
84,285
-
222,378
8,820,201
-
-
-
-
-
-
-
-
-
-
-
-
-
(68,945)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,226,427
-
-
-
-
-
-
-
-
-
-
-
(4,725,870)
68,945
(681,628)
(2,726,514)
(184,493)
(12,159,971)
(28,373,267)
(127,805)
92,316,115
-
-
-
-
-
-
-
(681,628)
(2,726,514)
(184,493)
(12,159,971)
(28,373,267)
(127,805)
92,316,115
-
-
-
-
-
-
-
(5,432,511)
-
-
(5,432,511)
88,202,009
113,730,016
(8,820,201)
(2,226,427)
(3,086,215)
(3,086,215)
(46,504,097)
(11,626,024)
(231,466)
93,575,035
-
-
(3,086,215)
(3,086,215)
(46,504,097)
(11,626,024)
(231,466)
93,575,035
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
35
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2,451,835)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
38,042
(7,059,798)
7,059,798
-
-
(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)
-
(2,226,427)
(1,595,186)
398,965,299
-
-
-
-
-
-
-
-
-
1,585,685
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(3,086,215)
-
(46,504,097)
-
(231,466)
93,575,035
71,405
1,585,685
270,929
84,285
-
677,111
899,489
BALANCE, DECEMBER 31, 2005
24,730,025
$
247,300,246
$ 57,117,886
$ 34,348,208
$
2,226,427
$ 106,196,399
$ 142,771,034
$ -
$ (640,742)
$ (918,075)
$ 445,630,349
The accompanying notes are an integral part of the financial statements.
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004
(In Thousands of New Taiwan Dollars)
2005
2004
2005
2004
65
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
Equity in losses (earnings) of equity method investees, net
Gain on sales of long-term investments, net
Amortization of premium/discount from long-term bond investments, net
Gain on disposal of property, plant and equipment and idle assets, net
Loss on idle assets
Donation of idle assets
Provision for pension cost
Dividends received from equity method investees
Changes in operating assets and liabilities:
Decrease (increase) in:
Receivables from related parties
Notes and 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:
Accounts payable
Payables to related parties
Income tax payable
Accrued expenses and other liabilities
Deferred credits
$
93,575,035
$
92,316,115
67,991,423
(3,278,952)
1,052,045
(3,502)
120,872
(434,382)
131,849
7,207
360,196
668,464
(4,914,565)
(5,264,937)
(4,117)
942,055
(1,243,126)
(98,854)
(2,086,010)
(21,280)
1,563,489
(1,224,371)
3,435,985
(890,473)
95,744
63,072,140
(1,101,407)
(4,040,319)
(2,216)
28,673
(56,425)
-
-
500,945
-
(1,301,979)
(1,409,074)
(35,561)
1,201,889
(27,938)
(1,329,634)
(3,264,787)
751,383
404,741
(1,771,144)
252,800
(507,984)
-
Net cash provided by operating activities
150,479,795
143,680,218
CASH FLOWS FROM FINANCING ACTIVITIES
Cash dividends paid for common stock
Repayment of long-term bonds payable
Cash bonus paid to employees
Increase (decrease) in guarantee deposits
Proceeds from exercise of stock options
Bonus to directors and supervisors
Repurchase of treasury stock
Cash dividends paid for preferred stock
Net cash used in financing activities
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS, END OF YEAR
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for
Interest (excluding the amount capitalized of NT$262,109 thousand
in 2004, Note 7)
Income tax
Cash paid for acquisition of property, plant and equipment
Total acquisitions
Decrease (increase) of payables to contractors and equipment suppliers
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
CASH FLOWS FROM INVESTING ACTIVITIES
Decrease (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 and idle assets
Increase in deferred charges
Decrease in refundable deposits
5,923,748
(43,822,489)
and other current liabilities)
Reclassification of short-term investments to long-term investments
The accompanying notes are an integral part of the financial statements.
(17,037,788)
(73,659,014)
10,474,035
2,087,236
(847,721)
1,771
(30,290,982)
(76,171,356)
7,822
1,713,934
(2,404,130)
91,966
Net cash used in investing activities
(73,057,733)
(150,875,235)
(Continued)
$
$
$
$
$
$
$
$
$
(46,504,097)
(10,500,000)
(3,086,215)
2,480,552
270,929
(231,466)
-
-
(57,570,297)
19,851,765
65,531,818
85,383,583
2,269,666
87,351
$51,363,935
22,295,079
73,659,014
-
693,956
869,072
-
$
$
$
$
$
$
$
$
$
(12,159,971)
(5,000,000)
(681,628)
(351,096)
3,624
(127,805)
(7,059,798)
(184,493)
(25,561,167)
(32,756,184)
98,288,002
65,531,818
1,304,621
309,522
$100,207,781
(24,036,425)
76,171,356
10,500,000
469,494
1,505,345
3,402,413
(Concluded)
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED
months from the date of purchase are classified as cash equivalents.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
1. GENERAL
Taiwan Semiconductor Manufacturing Company Limited (the Company or TSMC), a Republic of China
(R.O.C.) corporation, was incorporated as a venture among the Government of the R.O.C., acting
through the Development Fund of the Executive Yuan; Philips Electronics N.V. and certain of its affili-
ates (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.
Short-term Investments
Short-term investments primarily consist of agency bonds, corporate bonds, asset-backed securities,
bond funds, 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 cur-
rent income when the aggregate carrying amount of the investments exceeds the aggregate market
value. A reversal of the allowance is recorded for a subsequent recovery of the aggregate market value.
66
The costs of funds and listed stocks sold are accounted for using the weighted-average method;
whereas the costs of other securities sold 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 prices of the listed
stocks for the last month of the year. The market value of other short-term investments is determined
using the average of bid and ask prices as of the balance sheet date.
As of December 31, 2005 and 2004, the Company had 19,460 and 18,562 employees, respectively.
Cash dividends are recorded as investment income in the current year.
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 version prepared and used in the R.O.C. If there is any conflict
between the English version and the original Chinese version or any difference in the interpretation of
the two versions, the Chinese-language financial statements shall prevail.
Significant accounting policies are summarized as follows:
Use of Estimates
The preparation of financial statements in conformity with the aforementioned guidelines and princi-
ples requires management to make reasonable assumptions and estimates of matters that are inher-
ently 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 liabilities 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
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 the allowance for doubtful receivables by exam-
ining the aging analysis of outstanding account receivables 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 revenue when evidence of an arrangement exists, shipment is made, price is
fixed or determinable, and collectibility is reasonably assured. Revenues from the design and manu-
facturing of photo masks, which are used as manufacturing tools in the fabrication process, are rec-
ognized when the photo masks are qualified by customers. The Company records a provision for esti-
mated future returns and other allowances in the period the related revenue is recorded. Provisions
for estimated sales returns and other allowances are generally made based on historical experience,
management's judgment, and any known factors that would significantly affect the allowance.
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
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 to be received.
Inventories
Government bonds under repurchase agreements and notes acquired with maturities less than three
Inventories are stated at the lower of cost or market value. Inventories are recorded at standard cost
and adjusted to the approximate weighted-average cost at the balance sheet date. Market value rep-
market method, the Company also recognizes a corresponding unrealized loss in proportion to its
resents replacement cost for raw materials, supplies and spare parts and net realizable value for fin-
ownership percentage in the investee and records the amount as a component of shareholders' equity.
ished goods and work in process. The Company assesses the impact of changing technology on its
inventories on hand and writes off inventories that are considered obsolete. Year-end inventories are
When an indication of impairment is identified in an investment, the carrying amount of the invest-
evaluated for estimated excess quantities and obsolescence based on a demand forecast within a spe-
ment is reduced to reflect other-than-temporary decline, with the related impairment loss charged to
cific time horizon, which is generally 180 days or less. Estimated losses on scrap and slow-moving
current income.
items are recognized and included in the allowance for losses.
Long-term Investments
Gains or losses on sales from the Company to investees accounted for using the equity method are
deferred in proportion to the Company's ownership percentages in the investees until realized
Investments in companies wherein the Company exercises significant influence on the operating and
through transactions with third parties. The entire amount of the gains or losses on sales to investees
67
financial policy decisions are accounted for using the equity method of accounting. The Company's
over which the Company has control is deferred until such gains or losses are realized through subse-
share of the net income or net loss of investee is recognized in the "equity in earnings/losses of equity
quent sales of the related products to third parties. Gains or losses on sales from investees to the
method investees, net" account. When equity investments are made, the difference, if any, between
Company are deferred in proportion to the Company's ownership percentages in the investees until
the cost of the investment and the Company's share of investee's net equity is amortized using the
realized through transactions with third parties. Gains or losses on sales between investees accounted
straight-line method over five years and is also recorded in the "equity in earnings/losses of equity
for using the equity method are deferred in proportion to the Company's weighted-average owner-
method investees, net" account.
ship percentages in the investees which record such gains or losses until realized through transactions
When the Company subscribes for additional investee shares at a percentage different from its exist-
with third parties.
ing ownership percentage of equity interest, the resulting carrying amount of the investment in the
If an investee's functional currency is a foreign currency, translation adjustments will result from the
investee differs from the amount of the Company's share of the investee's net equity. The Company
process of translating the investee's financial statements into the reporting currency of the Company.
records such difference as an adjustment to long-term investments with the corresponding amount
Such adjustments are accumulated and reported as a separate component of shareholders' equity.
charged or credited to capital surplus.
Investments in companies wherein the Company does not exercise significant influence are recorded
Property, plant and equipment and assets leased to others are stated at cost less accumulated depreci-
at historical cost. Cash dividends are recognized as investment income in the year received but are
ation. When an indication of impairment is identified, any excess of the carrying amount of an asset
accounted for as reductions to the carrying amount of the investments if the dividends are received in
over its recoverable amount is recognized as a loss. If the recoverable amount increases in a future
the year of acquisition. Stock dividends are recorded as an increase in the number of shares held and
period, the amount previously recognized as impairment would be reversed and recognized as a gain.
do not affect investment income or the carrying amount of the investment.
However, the adjusted amount may not exceed the carrying amount that would have been deter-
mined, net of depreciation, as if no impairment loss had been recognized. Idle assets are stated at the
Investments in mutual funds are stated at the lower of aggregate cost or net asset value. An
lower of net realizable value or book value. Significant additions, renewals and betterments incurred
allowance is recognized when the net asset value of the funds is lower than their cost, with the corre-
during the construction period are capitalized. Maintenance and repairs are expensed in the year
sponding amount recorded as a reduction to shareholders' equity. A reversal of the allowance will
incurred. Interest expense incurred during the purchase and construction period is also capitalized.
Property, Plant and Equipment, Assets Leased to Others and Idle Assets
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.
buildings - 10 to 20 years; machinery and equipment - 5 years; and office equipment - 3 to 5 years.
Depreciation is computed using the straight-line method over the following estimated service lives:
Investments in long-term bonds are stated at amortized cost. The discount or premium is amortized
Upon sale or disposal of property, plant and equipment, the related cost and accumulated deprecia-
over the duration period using the interest method, and recorded as an adjustment to interest income.
tion are removed from the corresponding accounts, with any gain or loss credited or charged to non-
operating gains or losses in the year of sale or disposal.
When investments in public-traded securities are reclassified from short-term investments to long-
term investments or from long-term investments to short-term investments, the Company recognizes
Goodwill
a loss to the extent, if any, that the market value of such investments is lower than the carrying
Goodwill represents the excess of the consideration paid for acquisition over the fair market value of
amount and the market value at the time of reclassification becomes the new basis.
identifiable net assets acquired and acquisition costs. Goodwill is amortized using the straight-line
If an investee recognizes an unrealized loss on its long-term investments using the lower-of-cost-or-
likely than not reduce the fair value of goodwill below its carrying amount, an impairment loss is
method over the estimated life of 10 years. If an event occurs or circumstances change that more
charged to current income. Subsequent recovery in the fair value of the goodwill may not be record-
treasury stock, the treasury stock account is reduced and the common stock as well as the capital sur-
ed such as to reverse the impairment loss previously recorded.
plus - additional paid-in capital are reversed on a pro rata basis. When the book value of the treasury
Deferred Charges
stock exceeds the sum of the par value and additional paid-in capital, the difference is charged to
capital surplus - treasury stock transactions and to retained earnings for any remaining amount. The
Deferred charges consist of technology license fees, software and system design costs and other
Company's stock held by its subsidiaries is also treated as treasury stock and reclassified from long-
charges. The amounts are amortized as follows: Technology license fees - the shorter of the estimated
term investments to treasury stock. The gains resulted from the disposal of the treasury stock held by
life of the technology or the term of the technology transfer contract; software and system design costs
the subsidiaries and cash dividends received by the subsidiaries from the Company are recorded under
and other charges - 3 years. When an indication of impairment is identified, any excess of the carrying
capital surplus - treasury stock transactions.
amount of an asset over its recoverable amount is recognized as a loss. If the recoverable amount
increases in a future period, the amount previously recognized as impairment would be reversed and
Foreign-currency Transactions
recognized as a gain. However, the adjusted amount may not exceed the carrying amount that would
Foreign currency transactions are recorded in New Taiwan dollars at the rates of exchange in effect
68
have been determined, net of amortization, as if no impairment loss had been recognized.
when the transactions occur. Exchange gains or losses derived from foreign currency transactions or
Pension Costs
monetary assets and liabilities denominated in foreign currencies are recognized in current income. At
the end of the year, assets and liabilities denominated in foreign currencies are revalued at the prevail-
For employees under defined contribution pension plans, pension costs are recorded based on the
ing exchange rates with the resulting gains or losses recognized in current income.
actual contributions made to employees' individual pension accounts. For employees under defined
benefit pension plans, pension costs are recorded based on actuarial calculations.
Derivative Financial Instruments
Income Tax
The Company enters into foreign currency forward contracts to manage foreign exchange exposures
on foreign-currency-denominated assets and liabilities. The contracts are recorded in New Taiwan dol-
The Company uses an inter-period tax allocation method for income tax. Deferred income tax assets
lars at the current rate of exchange at the contract date. The differences in the New Taiwan dollar
and liabilities are recognized for the tax effects of temporary differences and unused tax credits.
amounts translated using the current rates and the amounts translated using the contracted forward
Valuation allowances are provided to the extent, if any, that it is more likely than not that deferred
rates are amortized over the terms of the forward contracts using the straight-line method. At the
income tax assets will not be realized. A deferred tax asset or liability is classified as current or noncur-
end of the year, the receivables or payables arising from forward contracts are restated using the pre-
rent in accordance with the classification of its related asset or liability. However, if a deferred tax
vailing exchange rates with the resulting differences credited or charged to income. In addition, the
asset or liability does not relate to an asset or liability in the financial statements, then it is classified
receivables and payables related to the forward contracts are netted with the resulting amount pre-
as either current or noncurrent based on the expected length of time before it is realized or settled.
sented 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.
Any tax credits arising from purchases of machinery, equipment and technology, research and devel-
opment expenditures, personnel training, and investments in important technology-based enterprises
The Company enters into cross currency swap contracts to manage currency exposures on foreign-
are recognized using the flow-through method.
currency-denominated assets and liabilities. The principal amount is recorded using the current rate at
Adjustments of prior years' tax liabilities are added to or deducted from the current year's tax provision.
rates and the amounts translated using the contracted rates are amortized over the terms of the con-
Income tax on unappropriated earnings of 10% is expensed in the year of shareholder approval which
cross-currency swap contracts are restated using the prevailing exchange rate with the resulting dif-
is the year subsequent to the year the earnings are generated.
ferences credited or charged to income. In addition, the receivables and payables related to the con-
tracts using the straight-line method. At the end of the year, the receivables or payables arising from
the contract date. The differences in the New Taiwan dollar amounts translated using the current
Stock-based Compensation
tracts of the same counter party 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
Employee stock option plans that are amended or have options granted on or after January 1, 2004
the balance sheet date is recorded as an adjustment to the interest income or expense associated
must be accounted for by the interpretations issued by the Accounting Research and Development
with the hedged items. Any resulting gain or loss upon settlement is credited or charged to income in
Foundation. The Company adopted the intrinsic value method and any compensation cost deter-
the year of settlement.
mined using this method is charged to expense over the employee vesting period.
Treasury Stock
The contract amounts of foreign currency option contracts entered into for hedging purposes are not
recognized as an asset or liability on the contract dates. Any resulting gain or loss upon settlement is
When the Company repurchases its outstanding common stock, the cost of the reacquired such stock
credited or charged to income in the year of settlement.
is recorded as treasury stock and deducted from shareholders' equity. When the Company retires
The Company enters into interest rate swap contracts to manage exposures to changes in interest
5. INVENTORIES, NET
rates on existing assets or liabilities. The receivable or payable 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.
Reclassifications
Certain accounts in the financial statements as of and for the year ended December 31, 2004 have
been reclassified to conform to the financial statements as of and for the year ended December 31,
2005.
69
3. CASH AND CASH EQUIVALENTS
Finished goods
Work in process
Raw materials
Supplies and spare parts
Allowance for valuation
6. LONG-TERM INVESTMENTS
Government bonds acquired under repurchase agreements
Cash and deposits in bank
Corporate notes
4. SHORT-TERM INVESTMENTS, NET
Agency bonds
Corporate bonds
Corporate issued asset-backed securities
Bond funds
Government bonds
Corporate notes
Money market funds
Public-traded stocks
Government bonds acquired under repurchase agreements
Commercial papers
Allowance for valuation
Market value
2005
47,963,226
37,007,192
413,165
85,383,583
2005
14,607,694
12,463,688
11,724,149
6,055,578
2,087,418
263,249
260,686
5,257
-
-
47,467,719
(412,372)
47,055,347
47,055,347
$
$
$
$
$
2004
19,215,153
45,838,453
478,212
65,531,818
2004
8,633,889
13,554,598
11,766,877
10,662,758
7,346,858
63,796
673,888
6,528
249,449
95,666
53,054,307
(75,212)
52,979,095
52,979,095
$
$
$
$
$
The Company entered into investment management agreements with three well-known financial
institutions (fund managers) to manage its investment portfolios. In accordance with the investment
guidelines and terms specified in these agreements, the securities invested by the fund managers can-
not be below a pre-defined credit rating. As of December 31, 2005, the Company's investment port-
folios managed by these fund managers aggregated to an original amount of US$1,200,000 thou-
sand. The investment portfolios included securities such as agency bonds, corporate bonds, asset-
backed securities, government bonds and others. Securities acquired with maturities less than three
months from the date of purchase were reclassified as cash equivalents.
Equity method
TSMC International Investment Ltd. (TSMC International)
TSMC (Shanghai) Company Limited (TSMC-Shanghai)
Vanguard International Semiconductor Corporation (VIS)
Systems on Silicon Manufacturing Company Pte Ltd. (SSMC)
TSMC Partners, Ltd. (TSMC Partners)
TSMC North America (TSMC-North America)
Emerging Alliance Fund, L.P. (Emerging Alliance)
VentureTech Alliance Fund II, L.P. (VTAF II)
Global UniChip Corporation (GUC)
TSMC Japan K. K. (TSMC-Japan)
Chi Cherng Investment Co., Ltd. (Chi Cherng)
Hsin Ruey Investment Co., Ltd. (Hsin Ruey)
Taiwan Semiconductor Manufacturing Company Europe B.V. (TSMC-Europe)
VisEra Technologies Company Ltd. (VisEra)
Cost method
Unquoted stocks
Funds
Long-term bonds
Government bonds
Corporate bonds
Taiwan Power Company
Nan Ya Plastics Corporation
China Steel Corporation
Formosa Petrochemical Corporation
Chinese Petroleum Corporation
Far Eastone Telecommunication Co., Ltd.
Formosa Plastics Corporation
Formosa Chemical & Fiber Corporation
Other investments
$
2005
2,768,575
12,407,286
1,700,314
786,772
17,662,947
(1,404,992)
$
2004
3,229,417
10,713,178
808,722
779,368
15,530,685
(1,358,740)
$
16,257,955
$
14,171,945
2005
2004
Carrying
Amount
% of
Owner-ship
Carrying
Amount
% of
Owner-ship
100
100
28
32
100
100
99
98
47
100
36
36
100
25
-
-
$ 23,912,812
9,438,856
5,419,747
4,215,200
4,091,166
1,790,186
850,534
642,479
442,233
94,949
78,139
77,415
23,087
-
51,076,803
472,500
334,990
807,490
9,922,937
3,263,348
2,150,842
1,010,532
791,963
705,436
300,026
268,855
134,369
18,548,308
10,227,000
100
100
27
32
100
100
99
98
46
100
36
36
100
-
-
-
$ 23,778,997
8,113,511
5,401,982
3,290,888
3,908,356
502,242
823,232
329,968
391,626
102,572
50,570
49,823
25,439
59,116
46,828,322
482,500
290,134
772,634
10,260,481
915,276
407,526
2,978,804
-
-
-
405,485
202,595
15,170,167
10,521,740
$ 80,659,601
$ 73,292,863
For the years ended December 31, 2005 and 2004, net equity in losses and earnings recognized from
7. PROPERTY, PLANT AND EQUIPMENT
the equity method investees was NT$1,052,045 thousand and NT$4,040,319 thousand, respectively.
The carrying amounts of investments accounted for under the equity method and the related equity
Accumulated depreciation at December 31, 2005 and 2004 consisted of the following:
in losses or earnings of equity method investees were determined based on the audited financial
statements of the investees as of and for the same periods as the Company.
In November 2005, the Company transferred all of its shares in VisEra to VisEra Holding Company, an
investee of TSMC Partners accounted for using the equity method, due to an investment structuring.
Buildings
Machinery and equipment
Office equipment
Other investments consisted of the following structured time-deposits:
2005
42,902,526
310,626,317
5,662,986
359,191,829
$
$
2004
35,546,918
259,782,721
4,676,562
300,006,201
$
$
December 31, 2005
Step-up callable deposits
Foreign banks
Callable range accrual deposits
Foreign banks
December 31, 2004
Step-up callable deposits
Domestic banks
Foreign banks
Callable range accrual deposits
Foreign banks
$
$
$
Principal Amount
Interest Receivable
Range of
Interest Rates
Maturity Date
There was no capitalized interest for the year ended December 31, 2005. Interest expense for the
year ended December 31, 2004 was NT$1,614,847 thousand (before deducting the amount capital-
ized of NT$262,109 thousand); the rate used for calculating the capitalized interest was 2.80%.
70
3,000,000
$
8,145
1.40%-1.50%
Jun. 2007-Oct. 2007
8. DEFERRED CHARGES, NET
7,227,000
9,951
(see below)
Sep. 2009-Jan. 2010
Deferred charges, net at December 31, 2005 and 2004 consisted of the following:
10,227,000
$
18,096
2,000,000
2,138,340
$
6,383,400
7,681
14,054
30,751
2.05%-2.20%
1.44%-4.75%
Jul. 2007-Aug. 2007
Jun. 2007-Aug. 2007
(see below)
Sep. 2009-Dec.2009
Technology license fees
Software and system design costs
Other
2005
4,985,806
1,623,276
72,062
6,681,144
$
$
2004
6,534,899
2,160,636
149,609
8,845,144
$
$
$
10,521,740
$
52,486
9. BONDS PAYABLE
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 plus an agreed upon rate
ranging between 2.10% and 3.45%. Based on the terms of the deposits, if the 3-month or 6-month
LIBOR moves outside of the pre-defined range, the interest paid to the Company is at a fixed rate
between zero and 1.5%. Under the terms of the contracts, the bank has the right to cancel the con-
tracts prior to the maturity date.
As of December 31, 2005 and 2004, deposits that resided in banks located in Hong Kong amounted
to NT$2,628,000 thousand and NT$2,553,360 thousand, respectively; those that resided in banks
located in Singapore amounted to NT$657,000 thousand and NT$638,340 thousand, respectively.
Bonds payable at December 31, 2005 and 2004 consisted of the following:
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, 2.60%, 2.75% and 3.00% interest payable annually,
respectively
Current portion
2005
2004
$
4,500,000
$
15,000,000
15,000,000
19,500,000
-
15,000,000
30,000,000
(10,500,000)
$
19,500,000
$
19,500,000
As of December 31, 2005, future principal repayments for the Company's bonds were as follows:
Pension information on the defined benefit plan is summarized as follows:
Year of Repayment
2007
2009
2010 and thereafter
10. OTHER LONG-TERM PAYABLES
71
Amount
7,000,000
8,000,000
4,500,000
19,500,000
$
$
a. Components of net periodic pension cost for the year
Service costs
Interest costs
Projected return on plan assets
Amortization
Net periodic pension costs
2005
468,044
163,294
(49,627)
8,300
590,011
$
$
2004
632,594
128,315
(41,925)
8,300
727,284
$
$
Most of the payables resulted from license arrangements related to semiconductor-related patents.
Future payments for other long-term payables as of December 31, 2005 were as follows:
b. Reconciliation of the funded status of the plan and accrued pension cost at December 31, 2005
Year of Payment
2006
2007
2008
2009
2010
2011 and thereafter
Current portion (under accrued expenses and other current liabilities)
11. PENSION PLAN
$
Amount
869,072
459,900
262,800
262,800
262,800
262,800
2,380,172
(869,072)
$
1,511,100
and 2004
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 benefits
The Labor Pension Act (the "Act") became effective on July 1, 2005 and the pension mechanism under
the Act is deemed a defined contribution plan. 'The employees who were subject to the Labor
Standards Law prior to July 1, 2005 were allowed to choose to be subject to the pension mechanism
c. Actuarial assumptions
under the Act or continue to be subject to the pension mechanism under the Labor Standards Law.
For those employees who were subject to the Labor Standards Law prior to July 1, 2005 and still work
for the same company after July 1, 2005 and have chosen to be subject to the pension mechanism
under the Act, their seniority as of July 1, 2005 shall be maintained. The Act prescribes that the rate
of contribution by an employer to employees' pension accounts per month shall not be less than 6%
of each employee's monthly salary. Pursuant to the Act, the Company has made monthly contribu-
tions to employees' pension accounts starting from July 1, 2005, and recognized pension costs of
NT$261,096 thousand for the second half of 2005.
The Company has a defined benefit plan under the Labor Standards Law that provides benefits based
on an employee's length of service and average monthly salary for the six-month period prior to
retirement. The Company contributes an amount equal to 2% of salaries paid each month to a pen-
sion 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.
Discount rated used in determining present values
Future salary increase rate
Expected rate of return on plan assets
d. Contributions to the Fund for the year
e. Payments from the Fund for the year
2005
2004
$
$
$
$
$
62,302
3,356,213
3,418,515
2,546,186
5,964,701
(1,681,365)
4,283,336
(124,491)
(697,453)
3,461,392
67,752
2005
2.75%
3.00%
2.75%
2005
223,654
2005
8,419
$
$
$
$
$
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%
2004
226,339
2004
1,446
12. INCOME TAX
The imputation credit allocated to the shareholders is based on its balance as of the date of dividend
distribution. The expected creditable ratio may change when the actual allocation of the imputation
a. A reconciliation of income tax expense based on "income before income tax" at statutory rate and
credits is made.
current income tax expense before tax credits was as follows:
2005
2004
e. All earnings generated prior to December 31, 1997 have been appropriated.
f. As of December 31, 2005, investment tax credits consisted of the following:
Income tax expense based on "income before income tax" at statutory rate
(25%)
Tax-exempt income
Temporary and permanent differences
Current income tax expense before tax credits
b. Income tax expense (benefit) consisted of the following:
Current income tax expense before tax credits
Additional tax at 10% on unappropriated earnings
Income tax credits
Other income tax adjustments
Net change in deferred income tax assets
Investment tax credits
Temporary differences
Adjustment in valuation allowance
$
$
$
23,454,856
(12,243,435)
860,918
12,072,339
2005
12,072,339
1,489,709
(10,110,561)
71,853
2,018,813
(1,768,265)
(3,529,500)
$
$
$
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
Law
Item
Statute for Upgrading
Industries
Purchase of machinery and
equipment
Statute for Upgrading
Industries
Research and development
expenditures
Income tax expense (benefit)
$
244,388
$
(537,531)
Statute for Upgrading
Industries
Personnel training
c. Net deferred income tax assets consisted of the following:
Current deferred income tax assets
Investment tax credits
Non-current deferred income tax assets, net
Investment tax credits
Temporary differences
Valuation allowances
d. Integrated income tax information:
2005
2004
$
$
7,013,000
16,852,771
(682,270)
(9,410,546)
6,759,955
$
$
8,849,000
17,035,584
(2,450,535)
(12,940,046)
1,645,003
Statute for Upgrading
Industries
Investments in important
technology-based enterprises
g. The profits generated from the following expansion and construction projects are exempt from
income tax:
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
2002 to 2005
2003 to 2006
2004 to 2007
The balance of the imputation credit account as of December 31, 2005 and 2004 was NT$20,087
thousand and zero, respectively.
h. The tax authorities have examined income tax returns of the Company through 2001.
The expected and actual creditable ratios for distribution of earnings of 2005 and 2004 were 0.02%
and 0.11%, respectively.
Total
Creditable Amounts
Remaining
Creditable Amounts
Expiry Year
$
$
$
$
$
$
$
134,467
4,886,421
4,138,857
11,001,460
4,160,396
24,321,601
3,127,586
1,789,437
1,382,993
1,605,567
1,597,296
9,502,879
29,448
20,381
26,780
37,207
113,816
38,036
$
$
$
$
$
$
$
-
-
4,054,072
11,001,460
4,160,396
19,215,928
-
-
1,382,993
1,605,567
1,597,296
4,585,856
-
-
26,780
37,207
63,987
-
72
2005
2006
2007
2008
2009
2005
2006
2007
2008
2009
2005
2006
2007
2008
2005
13. LABOR COST, DEPRECIATION AND AMORTIZATION EXPENSES
The Company's Articles of Incorporation as revised on May 10, 2005 provide that, when allocating
Labor cost
Salary
Labor and health insurance
Pension
Meal
Welfare benefit
Other
73
Year Ended December 31, 2005
Year Ended December 31, 2004
Classified as
Cost of Sales
Classified as
Operating
Expenses
Total
Classified as
Cost of Sales
Classified as
Operating
Expenses
Total
$ 9,160,576
625,744
576,776
429,307
167,218
159,724
$ 3,682,390
297,483
274,280
141,259
95,208
44,783
$ 12,842,966
923,227
851,056
570,566
262,426
204,507
$ 8,546,255
571,853
471,646
391,834
150,754
141,909
$ 4,068,927
309,585
255,482
150,297
90,611
207,909
$ 12,615,182
881,438
727,128
542,131
241,365
349,818
$ 11,119,345
$ 4,535,403
$ 15,654,748
$ 10,274,251
$ 5,082,811
$ 15,357,062
Depreciation
Amortization
$ 61,576,001
$ 1,763,527
$ 3,031,796
$ 1,603,496
$ 64,607,797
$ 3,367,023
$ 56,001,719
$ 2,496,827
$ 2,429,967
$ 2,137,893
$ 58,431,686
$ 4,634,720
14. SHAREHOLDERS' EQUITY
The Company has issued a total of 864,194 thousand ADSs which are traded on the NYSE as of
December 31, 2005. The number of common shares represented by the ADSs is 4,320,969 thousand
(one ADS represents five common shares).
Capital surplus can only be used to offset a deficit under the Company Law. However, the capital sur-
plus 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, convertible bonds and the surplus from treasury
stock transactions) may be appropriated as stock dividends, which are restricted to a certain percent-
age of the paid-in capital of the Company.
As of December 31, 2005 and 2004, the capital surplus consisted of the following:
From merger
Additional paid-in capital
From convertible bonds
From treasury stock transactions
From long-term investments
Donations
$
2005
24,003,546
23,254,234
9,360,424
306,868
192,759
55
$
2004
24,003,546
23,051,675
9,360,424
205
121,354
55
the net profits for each fiscal year, the Company shall first offset its losses in previous years and then
set aside the following items accordingly:
a. Legal capital reserve at 10% of the net profits left over, until the accumulated legal capital reserve
has equaled the Company's paid-in capital;
b. Special capital reserve in accordance with relevant laws or regulations or as requested by the
authorities in charge;
c. Bonus to directors and supervisors and bonus to employees of the Company equal to not more
than 0.3% and not less than 1% of the remainder, respectively. Directors who also serve as execu-
tive officers of the Company are not entitled to receive the bonus to directors and supervisors. The
Company may issue stock bonuses to employees of an affiliated company meeting the conditions
set by the Board of Directors or, by the person duly authorized by the Board of Directors;
d. Any balance left over shall be allocated according to the resolution of the shareholders' meeting.
The Company's Articles of Incorporation also stipulate that profits of the Company may be distributed
by way of cash dividend and/or stock dividend. However, distribution of profits shall be made prefer-
ably by way of cash dividend. Distribution of profits may also be made by way of stock dividend; pro-
vided, however, the ratio for stock dividend shall not exceed 50% of total distribution.
Any appropriations of the net profits are recorded in the financial statement in the year of sharehold-
er approval.
The appropriation for legal capital reserve shall be made until the reserve equals the Company's paid-
in capital. The reserve can be used to offset a deficit, or be distributed as dividends and bonuses for
the portion in excess of 50% of the paid-in capital if the Company has no unappropriated earnings
and the reserve balance has exceeded 50% of the Company's paid-in capital. The Company Law also
prescribes that, when the reserve has reached 50% of the Company's paid-in capital, up to 50% of
the reserve may be transferred to capital.
A special capital reserve equivalent to the net debit balance of the other components of shareholder's
equity (for example, unrealized loss on long-term investments and cumulative translation adjust-
ments, but excluding treasury stock), shall be made from unappropriated earnings pursuant to exist-
ing regulations promulgated by the Securities and Futures Bureau (SFB). Any special reserve appropri-
$
57,117,886
$
56,537,259
ated may be reversed to the extent that the net debit balance reverses.
The appropriations of earnings for 2004 and 2003 had been approved in the shareholders' meetings
options of all the plans are valid for ten years and exercisable at certain percentages subsequent to
held on May 10, 2005 and May 11, 2004, respectively. The appropriations and dividends per share
the second anniversary of the grant date. Under the terms of the plans, the options are granted at an
were as follows:
exercise price equal to the closing price of the Company's common shares listed on the TSE on the
Appropriation of Earnings
Dividends Per Share (NT$)
For Fiscal Year 2004
For Fiscal Year 2003
For Fiscal Year 2004
For Fiscal Year 2003
grant date.
Options that had never been granted or had been granted and subsequently cancelled under the
2003 Plan and the 2002 Plan were expired as of December 31, 2005.
Information about outstanding stock options for the years ended December 31, 2005 and 2004 was
$
$
-
2.00
0.50
0.35
0.60
1.41
as follows:
Number of Options
(in Thousands)
Weighted-average
Exercise Price (NT$)
74
Legal capital reserve
Special capital reserve
Employees' profit sharing - in cash
Employees' profit sharing - in stock
Cash dividends to preferred shareholders
Cash dividends to common shareholders
Stock dividends to common shareholders
Bonus to directors and supervisors
$ 8,820,201
2,226,427
3,086,215
3,086,215
-
46,504,097
11,626,024
231,466
$ 4,725,870
(68,945)
681,628
2,726,514
184,493
12,159,971
28,373,267
127,805
$ 75,580,645
$ 48,910,603
The amounts of the above appropriations of earnings for 2004 and 2003 are consistent with the res-
olutions of the meetings of the Board of Directors held on February 22, 2005 and February 17, 2004,
respectively. However, the Company Law prescribes that TSMC, as a holder of treasury stock, shall not
participate in the appropriation of earnings. Therefore, the actual cash dividend per share and stock
dividend per share are slightly more than those in the aforementioned resolutions. If the above bonus
Year ended December 31, 2004
to employees, directors and supervisors had been paid entirely in cash and charged against earnings
for 2004 and 2003, the after income tax basic earnings per share for the years ended December 31,
2004 and 2003 would have decreased from NT$3.97 to NT$3.70 and NT$2.33 to NT$2.15, respec-
tively. The shares distributed as a bonus to employees represented 1.33% and 1.35% of the
Company's total outstanding common shares as of December 31, 2004 and 2003, respectively.
Balance, beginning of year
Options granted
Options exercised
Options cancelled
Balance, end of year
Year ended December 31, 2005
Balance, beginning of year
Options granted
Options exercised
Options cancelled
Balance, end of year
$
$
64,367
14,864
(6,837)
(4,636)
67,758
49,357
20,400
(87)
(5,303)
64,367
40.5
48.4
39.6
44.1
42.1
43.0
47.3
41.8
45.9
44.1
As of January 12, 2006, the board of directors have not resolved the appropriation for earnings of
2005.
The numbers of outstanding options and exercise prices have been adjusted to reflect the appropria-
tions of dividends in accordance with the plans.
The above information about the appropriations of bonus to employees, directors and supervisors is
available at Market Observation Post System website.
As of December 31, 2005, information about outstanding and exercisable options was as follows:
Under the Integrated Income Tax System that became effective on January 1, 1998, the R.O.C. resi-
dent 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.
15. STOCK-BASED COMPENSATION PLANS
The Company's Employee Stock Option Plans under the 2005 Plan, 2003 Plan and 2002 Plan were
approved by the SFB on January 6, 2005, October 29, 2003 and June 25, 2002, respectively. The
maximum number of options authorized to be granted under the 2005 Plan, the 2003 Plan and the
2002 Plan was 11,000 thousand, 120,000 thousand and 100,000 thousand, respectively, with each
option eligible to subscribe for one common share when exercisable. The options may be granted to
qualified employees of the Company or any of its domestic or foreign subsidiaries, in which the
Company's shareholding with voting rights, directly or indirectly, is more than fifty percent (50%). The
Range of Exercise
Price (NT$)
Number of Options
(in Thousands)
$29.9 - $42.1
47.0 - 54.5
45,787
21,971
67,758
Options Outstanding
Weighted-average
Remaining
Contractual
Life (Years)
Options Exercisable
Weighted-average
Exercise Price (NT$)
Number of Options
(in Thousands)
Weighted-average
Exercise Price (NT$)
$
7.10
8.82
38.73
49.20
$
38.59
54.50
27,143
327
27,470
No compensation cost was recognized under the intrinsic value method for the years ended
The Company held a special meeting of the Board of Directors and approved a share buyback plan to
December 31, 2005 and 2004. Had the Company used the fair value based method (based on the
repurchase the Company's common shares listed on the TSE during the period from March 24, 2004
Black-Scholes model) to evaluate the options granted after January 1, 2004, the assumptions and pro
to May 23, 2004. The Company repurchased 124,720 thousand common shares for a total cost of
forma results of the Company for the years ended December 31, 2005 and 2004 would have been as
NT$7,059,798 thousand. All the treasury stock repurchased under the buyback plan was retired on
follows:
Assumptions:
Expected dividend yield
Expected volatility
Risk free interest rate
Expected life
Net income:
Net income as reported
Pro forma net income
75
Earnings per share (EPS) - after income tax (NT$):
Basic EPS as reported
Pro forma basic EPS
Diluted EPS as reported
Pro forma diluted EPS
2005
2004
17. EARNINGS PER SHARE
August 16, 2004.
1.00%－3.44%
43.77%－46.15%
3.07%－3.85%
5 years
93,575,035
93,458,191
3.79
3.79
3.79
3.78
$
$
1.00%
43.77%－46.15%
3.07%－3.85%
5 years
92,316,115
92,257,355
3.73
3.73
3.73
3.73
$
$
EPS is computed as follows:
Year ended December 31, 2005
Basic EPS
Income available to common shareholders
Effect of dilutive potential common stock - stock options
Diluted EPS
Income available to common shareholders (including
Amounts (Numerator)
Before
Income Tax
After
Income Tax
Number of
Shares
(Denominator)
(in Thousands)
EPS (NT$)
Before
Income Tax
After
Income Tax
$ 93,819,423
-
$93,575,035
-
24,679,947
13,165
$
3.80
$
3.79
The estimated weighted average fair value per unit for the options granted during the years ended
December 31, 2005 and 2004 was NT$17.69and NT$19.73, respectively.
16. TREASURY STOCK (COMMON STOCK)
Beginning
Shares
Increase/Stock
Dividends
Disposal
Ending
Shares
(Shares in Thousands)
effect of dilutive potential common stock)
$ 93,819,423
$93,575,035
24,693,112
$
3.80
$
3.79
Year ended December 31, 2004
Basic EPS
Income available to common shareholders
Effect of dilutive potential common stock - stock options
Diluted EPS
Income available to common shareholders (including
effect of dilutive potential common stock)
$ 91,778,584
-
$92,316,115
-
24,717,531
6,484
$
3.71
$
3.73
$ 91,778,584
$92,316,115
24,724,015
$
3.71
$
3.73
Year ended December 31, 2005
Reclassification of parent company stock held by
subsidiaries from long-term investment
Year ended December 31, 2004
Reclassification of parent company stock held by
subsidiaries from long-term investment
Repurchase under share buyback plan
45,521
2,242
14,825
32,938
18. RELATED PARTY TRANSACTIONS
The Company engages in business transactions with the following related parties:
40,597
-
5,676
124,720
752
124,720
45,521
-
a. Industrial Technology Research Institute (ITRI); the chairman of the Company is one of its directors.
40,597
130,396
125,472
45,521
b. Philips, a major shareholder of the Company.
Proceeds from disposal of treasury stock for the years ended December 31, 2005 and 2004 were
NT$899,489 thousand and NT$39,906 thousand, respectively. As of December 31, 2005 and 2004,
the book value of the treasury stock was NT$918,075 thousand and NT$1,595,186 thousand, respec-
tively; the market value was NT$2,047,126 thousand and NT$2,241,009 thousand, respectively. The
Company's stocks held by its subsidiaries are treated as treasury stock and the holders are entitled to
the rights of shareholders, except that starting from June 24, 2005, pursuant to the revised Company
Law, the holders are no longer entitled to the right to vote.
c. Subsidiaries
TSMC-North America
TSMC-Europe
TSMC-Japan
TSMC-Shanghai
d. Investees
VIS (accounted for using equity method)
SSMC (accounted for using equity method)
GUC (with controlling financial interest)
e. Indirect subsidiaries
WaferTech, LLC (WaferTech)
TSMC Technology, Inc. (TSMC Technology)
f. Indirect investee
VisEra, originally an investee over which the Company has control; starting from November 2005,
VisEra became an indirect investee accounted for using the equity method after an investment
structuring.
Transactions with the aforementioned parties, excluding those disclosed in other notes, are summa-
Proceeds from sales of property, plant and equipment
VisEra
TSMC-Shanghai
VIS
Non-operating income and gains
SSMC (primarily for technical service income, Note 21e)
VisEra
VIS (primarily for technical service income, Note 21j)
TSMC-Shanghai
WaferTech
rized as follows:
For the year
Sales
TSMC-North America
Philips
Others
Purchases
WaferTech
SSMC
VIS
TSMC-Shanghai
2005
2004
Amount
%
Amount
%
$ 153,618,916
3,298,770
650,239
$ 157,567,925
$ 11,137,313
5,729,672
4,142,457
1,405,030
$ 22,414,472
57
1
-
58
28
15
10
4
57
$ 142,271,732
5,463,565
466,345
$ 148,201,642
$ 15,203,047
5,869,123
9,169,602
12,752
$ 30,254,524
At end of year
Receivables
TSMC-North America
Philips
Others
Other receivables
TSMC Technology
VisEra
TSMC-North America
SSMC
VIS
TSMC-Shanghai
Others
Payables
WaferTech
Philips
VIS
SSMC
TSMC-Shanghai
Others
Other long-term payables
Philips (Note 21a)
Deferred credits
TSMC-Shanghai
VisEra
55
2
-
57
34
13
21
-
68
1
17
14
31
-
-
(Continued)
Manufacturing expenses - technical assistance fee (Note 21a)
Philips
$ 581,059
-
$ 907,047
Marketing expenses - commission
TSMC-Japan
TSMC-Europe
General and administrative expense - rental expenses
GUC
Research and development expenses
GUC
$ 243,646
221,164
$ 464,810
$ 16,744
$ 19,467
18
16
34
-
-
$ 253,341
202,678
$ 456,019
$ 13,186
$ 11,688
76
2005
Amount
$ 534,279
125,381
-
$ 659,660
$ 316,243
308,071
210,720
180,234
-
2004
Amount
-
2,969,347
33,974
$
$
3,003,321
$
364,505
28,917
117,760
-
3,267
%
52
13
-
65
6
6
4
4
-
$ 1,015,268
20
$
514,449
$ 20,407,621
573,565
69,418
97
3
-
$
15,476,920
581,487
77,632
%
-
96
1
97
5
1
2
-
-
8
96
4
-
$ 21,050,604
100
$
16,136,039
100
$ 972,563
374,202
198,505
149,251
74,457
28,593
143
54
21
11
8
4
2
-
$
2,880
30,279
50,044
63,701
47,599
1,472,880
-
-
2
3
4
3
88
-
$ 1,797,714
100
$
1,667,383
100
$ 1,133,217
693,956
563,240
485,873
274,820
91,091
$
35
21
17
15
9
3
913,107
469,494
1,533,938
207,794
12,591
61,566
29
15
48
6
-
2
$ 3,242,197
100
$
3,198,490
100
$ 1,100,475
100
$ 2,317,972
100
$
641,762
186,525
$ 828,287
51
15
66
$ 682,530
-
$ 682,530
100
-
100
(Concluded)
The terms of sales to related parties were not significantly different from those to third parties. For
rather than under certain percentage of the Company's annual net sales. The Company and Philips
other related party transactions, prices were determined in accordance with related contractual
agreed to cross license the patents owned by each party. The Company also obtained through
agreements.
Philips a number of cross patent licenses.
The Company deferred the gains (classified under the deferred credits) derived from sales of property,
b. Under a technical cooperation agreement with ITRI, the Company shall reserve and allocate up to
plant and equipment to TSMC-Shanghai and VisEra, and then recognized such gains (classified under
35% of certain of its production capacity for use by the Ministry of Economic Affairs (MOEA) or
the non-operating income and gains) over the depreciable lives of the disposed assets.
any other party designated by the MOEA. The term of this agreement is for five years beginning
19. SIGNIFICANT LONG-TERM LEASES
from January 1, 1987 and is automatically renewed for successive periods of five years unless oth-
erwise terminated by either party with one year prior notice. The agreement was automatically
renewed in 1992 and 1997 and on January 1, 2002.
77
The Company leases land from the Science-Based Industrial Park Administration. These operating
lease agreements expire on various dates from March 2008 to December 2020 and can be renewed
c. Under several foundry agreements, the Company shall reserve a portion of its production capacity
upon their expiration.
As of December 31, 2005, future lease payments were as follows:
Year
2006
2007
2008
2009
2010
2011 and thereafter
20. SETTLEMENT INCOME
for certain major customers that have guarantee deposits with the Company. As of December 31,
2005, the Company had a total of US$87,660 thousand of guarantee deposits.
$
Amount
258,069
248,185
222,450
213,872
166,803
1,103,708
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. The Company's equity interest in SSMC was 32%. The
Company and Philips committed to buy specific percentages of the production capacity of SSMC.
The Company and Philips are required, in the aggregate, to purchase up to 70% of SSMC's full
capacity, but the Company alone is not required to purchase more than 28% of the annual
installed capacity. If any party defaults on the commitment and the capacity utilization of SSMC
$
2,213,087
falls below a specific percentage of its total capacity, the defaulting party is required to compen-
sate SSMC for all related unavoidable costs.
TSMC, TSMC-North America and WaferTech filed a series of lawsuits in late 2003 and 2004 against
Semiconductor Manufacturing International Corporation ("SMIC"), SMIC (Shanghai) and SMIC
Americas. The lawsuits alleged that SMIC companies infringed multiple TSMC patents and misappro-
priated TSMC's trade secrets. These suits were settled out of court on January 30, 2005. As part of the
settlement, SMIC shall pay TSMC US$175 million over six years to resolve TSMC's claims.
21. SIGNIFICANT COMMITMENTS AND CONTINGENCIES
The significant commitments and contingencies of the Company as of December 31, 2005 were as
follows:
a. On June 20, 2004, the Company and Philips amended the Technical Cooperation Agreement,
which was originally signed on May 12, 1997. The amended Technical Cooperation Agreement is
for five years beginning from January 1, 2004. Upon expiration, this amended Technical
Cooperation Agreement will be terminated and will not be automatically renewed; however, the
patent cross license arrangement between the Company and Philips will survive the expiration of
the amended Technical Cooperation Agreement. Under this amended Technical Cooperation
Agreement, the Company will pay Philips royalties based on a fixed amount mutually agreed-on,
e. The Company provides technical services to SSMC under a Technology Cooperation Agreement (the
Agreement) entered into on May 12, 1999. The Company receives compensation for such services
computed at a specific percentage of net selling price of all products sold by SSMC. The Agreement
shall remain in force for ten years and may be automatically renewed for successive periods of five
years each unless pre-terminated by either party under certain conditions.
f. Under a Technology Transfer Agreement (TTA) with National Semiconductor Corporation (National)
entered into on June 27, 2000, the Company shall receive payments for the licensing of certain
technology to National. The agreement was to remain in force for ten years and could be automati-
cally renewed for successive periods of two years thereafter unless either party gives notice for early
termination 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 tech-
nology. 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.
g. Beginning in 2001, the Company entered into several licensing arrangements for certain semicon-
e. Acquisition of real estate properties at costs of at least NT$100 million or 20% of the paid-in capi-
ductor patents. The terms of the contracts vary with payments to be made in the form of royalties.
tal: None;
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
f. Disposal of real estate properties at prices of at least NT$100 million or 20% of the paid-in capital:
basis over the estimated life of the technology or the term of the contract, whichever is shorter.
None;
g. Total purchases from or sales to related parties of at least NT$100 million or 20% of the paid-in
h. In November 2002, the Company entered into an Amended and Restated Joint Technology
capital: Please see Table 5 attached;
Cooperation Agreement with Philips, Freescale Semiconductor, Inc. and STMicroelectronics to joint-
ly develop 90-nm to 65-nm advanced CMOS Logic and e-DRAM technologies. The Company also
h. Receivable from related parties amounting to at least NT$100 million or 20% of the paid-in capital:
agreed to align 0.12 micron CMOS Logic technology to enhance its foundry business opportuni-
Please see Table 6 attached;
ties. The Company will contribute process technologies and share a portion of the costs associated
78
with this joint development project. This agreement expired on December 31, 2005.
i. Names, locations, and related information of investees on which the Company exercises significant
i. In December 2003, the Company entered into a Technology Development and License Agreement
with Freescale Semiconductor, Inc. to jointly develop 65-nm SOI (silicon on insulator) technology.
j. Financial instrument transactions:
The Company will also license related 90-nm SOI technology from Freescale Semiconductor, Inc.
Any intellectual properties arising out of the co-development project shall be jointly owned by the
1) Derivative financial instruments
parties. In accordance with the agreement, the Company will pay royalties to Freescale
influence: Please see Table 7 attached;
Semiconductor, Inc. and will share a portion of the costs associated with the joint development
The Company and TSMC-Shanghai entered into derivative financial instrument transactions during
project.
the years ended December 31, 2005 and 2004 to manage exposures related to foreign exchange rate
and interest rate fluctuations. Certain information on these contracts was as follows:
j. The Company provides a technology transfer to VIS under a Manufacturing License and Technology
Transfer Agreement entered into on April 1, 2004. The Company receives compensation for such
a) Outstanding forward exchange contracts as of December 31, 2005 and 2004:
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 manu-
i) The Company
facture for the Company certain products at prices as agreed by the parties.
k. Amounts available under unused letters of credit as of December 31, 2005 were NT$6,480 thou-
sand.
l. The Company provided guarantees on loans amounting to US$40,000 thousand for TSMC-North
America.
22. ADDITIONAL DISCLOSURES
Financial Instruments
Currency
December 31, 2005
Sell
December 31, 2004
Sell
Sell
US$/NT$
US$/NT$
US$/EUR
Maturity
Jan. 2006
Contract Amount (in Thousands)
US$
60,000
Jan. 2005 to Mar. 2005
Jan. 2005
US$
US$
733,000
159,081
As of December 31, 2005 and 2004, receivables resulted from forward exchange contracts (classified
under current assets) aggregated NT$26,720 thousand, and NT$392,534 thousand, respectively. As
Following are the additional disclosures required by the SFB for the Company and its investees:
of December 31, 2004, payables resulted from forward exchange contracts (classified under current
liabilities) aggregated NT$559 thousand.
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 or disposed of at costs or prices of at least NT$100 million or 20%
of the paid-in capital: Please see Table 4 attached;
ii) As of December 31, 2005, TSMC-Shanghai did not have any outstanding forward exchange con-
tract. TSMC-Shanghai did not enter into any derivative financial instrument transaction during the
year ended December 31, 2004.
b) Cross currency swaps
Management believes its exposure related to the potential default by those counter-parties is low.
Outstanding cross currency swap contracts as of December 31, 2005 and 2004 were as follows:
ii) Market price risk. All derivative financial instruments are intended as hedges for fluctuations in for-
Maturity Date
Contract Amount (in Thousands)
Range of Interest Rate Paid
Range of Interest Rate Received
eign exchange rates and interest rates. Gains or losses from these hedging instruments are likely to
be offset by gains or losses from the hedged items. Thus, market price risk is believed to be low.
December 31, 2005
Jan. 2006 to Mar. 2006
December 31, 2004
Jan. 2005 to Jun. 2005
US$
2,089,000
4.15%-4.54%
0.02%-2.12%
iii) Cash flow risk and the amount and period of future cash needs.
US$
1,420,000
1.28%-2.72%
0.49%-1.17%
As of December 31, 2005, the Company's future cash needs for outstanding forward exchange con-
tracts and cross currency swap contracts were as follows:
79
As of December 31, 2005 and 2004, receivables resulted from cross currency swap contracts (classi-
fied under current assets) were NT$1,119,905 thousand and NT$761,030 thousand, respectively.
Term
Within one year
Inflow (In Thousands)
Outflow (In Thousands)
NT$
71,820,892
US$
2,149,000
c) Option contracts
As of December 31, 2005, the Company did not have any outstanding foreign currency option con-
corresponding cash inflow for the cash outflow. Therefore, the cash flow risk is low.
tract. The Company did not enter into any foreign currency option contract for the year ended
December 31, 2004.
2) Fair values of financial instruments were as follows:
The Company has sufficient operating capital to meet the above cash needs. In addition, there will be
During the years ended December 31, 2005 and 2004, the net exchange gain or loss arising from for-
ward exchange contracts, cross currency swap contracts and foreign currency option contracts was
recognized in the "foreign exchange gain/loss, net" account and the difference in interest was record-
ed in interest income/expense.
d) Interest rate swap contracts
The Company rescinded all interest rate swap contracts in the first quarter of 2005 before their origi-
nal maturities. The rescission loss of NT$28,295 thousand was recognized in the "interest expense"
account. There was no outstanding contract as of December 31, 2005.
Outstanding contracts as of December 31, 2004 were as follows:
Contract Date
Period
Contract Amount (in Thousands)
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
Assets (liabilities)
Forward exchange contracts (sell)
Cross currency swap contracts
Interest rate swap contracts
2005
2004
Carrying
Amount
Fair Value
Carrying
Amount
Fair Value
$ 47,055,347
34,213,151
$ 47,055,347
39,470,482
$ 52,979,095
20,572,150
$ 52,979,095
23,657,754
19,500,000
19,924,923
30,000,000
30,607,341
$ 26,720
1,119,905
-
$ 28,474
789,903
-
$ 391,975
761,030
4,361
$ 317,090
760,012
(22,714)
Sep. 2003
Oct. 2003
Oct. 2003
Oct. 2003
Oct. 2003
Nov. 2003
e) Transaction risk
Sep. 2003 to Dec. 2005
Oct. 2003 to Dec. 2005
Oct. 2003 to Dec. 2005
Oct. 2003 to Dec. 2005
Oct. 2003 to Dec. 2005
Nov. 2003 to Dec. 2005
NT$ 500,000
500,000
500,000
500,000
500,000
500,000
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 financial 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 quoted market prices as well as other long-term payables. The future
cash inflow and outflow of the deposits approximate their fair values. Some of the long-term invest-
i) Credit risk. Credit risk represents the positive net settlement amount of those contracts with positive
ments do not have quoted market prices; therefore, fair values for those long-term investments are
fair values at the balance sheet date. The positive net settlement amount represents the loss to be
not shown above. The fair value of other long-term payables is determined using the discounted
incurred by the Company if the counter-parties breached the contracts. The banks, which are the
value of expected cash flows, which approximates their carrying amount.
counter-parties to the foregoing derivative financial instruments, are reputable financial institutions.
Fair values of financial instruments were determined as follows:
c. Major customers representing at least 10% of total net sales
a) Fair value of short-term and publicly traded long-term investments is based on quoted market
The Company only has one customer that accounts for at least 10% of its total net sales in the year
prices.
ended December 31, 2005. The net sales to such customer amounted to $29,258,338 thousand and
$25,299,856 thousand in the years ended December 31, 2005 and 2004, representing 11% and
b) Fair value of bonds payable is based on their quoted market price.
10% of its total net sales, respectively.
80
c) Fair value of derivative financial instruments is the amount receivable from or payable to the count-
er-party if the contracts were terminated on the balance sheet date.
The fair values of some financial and non-financial instruments were not included in the fair values
disclosed above. Accordingly, the sum of the fair values of the financial instruments listed above does
not represent the fair value of the Company as a whole.
k. Information on investment in Mainland China
1) The name of the investee in mainland China, the main businesses and products, its issued capital,
method of investment, information on inflow or outflow of capital, percentage of ownership, equi-
ty in the net gain or net loss, ending balance, amount received as dividends from the investee, and
the limitation on investment: Please see Table 8 attached.
2) Significant direct or indirect transactions with the investee, its prices and terms of payment, unreal-
ized gain or loss, and other related information which is helpful to understand the impact of
investment in mainland China on financial statements: Please see Note 18.
23. SEGMENT FINANCIAL INFORMATION
a. Industry financial information
The Company operates in one industry. Therefore, the disclosure of industry financial information is
not applicable to the Company.
b. Export sales
Area
Americas
Asia and others
Europe
2005
119,838,520
101,698,615
17,937,376
239,474,511
$
$
2004
113,948,320
91,057,215
19,084,530
224,090,065
$
$
The export sales information is based on amounts billed to customers within the areas.
TABLE 1
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED AND INVESTEES
FINANCING PROVIDED
FOR THE YEAR ENDED DECEMBER 31, 2005
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
81
1
2
Financing
Company's
Financing
Amount Limits
(US$ in
Thousands)
$ 32,454,757
(US$ 987,968)
(Note 2)
No.
Financing Name
Counter-party
Financial Statement
Account
Maximum
Balance for the
Period (US$ in
Thousands)
Ending Balance
(US$ in
Thousands)
Interest Rate
Type of
Financing
(Note 1)
Transaction
Amounts
Reasons for
Short-term
Financing
Allowance for
Bad Debt
Collateral
Item
Value
Financing Limit
for Each
Borrowing
Company
TSMC International
TSMC Development
Other receivables
TSMC Partners
TSMC Development
Other receivables
$ 1,971,000
(US$ 60,000)
$ 1,149,750
(US$ 35,000)
1.50%
2,628,000
(US$ 80,000)
-
1.50%
2
2
$ -
Operating capital
$ -
-
Operating capital
-
-
-
$ -
N/A
-
N/A
(Note 3)
Note 1: The type 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 LIMITED
ENDORSEMENT/GUARANTEE PROVIDED
FOR THE YEAR ENDED DECEMBER 31, 2005
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
No.
Endorsement /
Guarantee Provider
Name
Counter-party
Limits on Each Counter-
party's Endorsement /
Guarantee Amounts
Nature of
Relationship
(Note 2)
0
The Company
TSMC-North America
TSMC Development
2
3
Not exceed 10% of the net
worth of the Company,
and be also limited to the
paid-in capital of the
endorsement / guarantee
company, unless other-
wise approved by Board
of Directors.
Note 1: 25% of the net worth of the Company as of December 31, 2005.
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.
Maximum Balance for the Period
(US$ in Thousands)
Ending Balance (US$ in Thousands)
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$
1,314,000
40,000)
1,971,000
60,000)
$
(US$
1,314,000
40,000)
$
-
-
-
0.29%
$
111,407,587
-
TABLE 3
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED AND INVESTEES
MARKETABLE SECURITIES HELD
DECEMBER 31, 2005
(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
December 31, 2005
Shares/Units
(In Thousands)
Carrying Value
(US$ in Thousands)
Percentage of
Ownership
Market Value or Net
Asset Value (US$ in
Thousands)
Note
82
The Company
Government bonds
United States Treas Nts
Kreditanstal Fur Wiederaufbau
2004 Government Bond Series E
2002 Government Bond Series B
2002 Government Bond Series F
2004 Government Bond Series A
2004 Government Bond Series E
2004 Kaohsiung Municipal Bond Series A
2005 Government Bond Series A
Bond funds
JF Taiwan First Bond Fund
ABN AMRO Bond Fund
JF Taiwan Bond Fund
Dresdner Bond DAM Fund
Shinkong Chi Shin Bond Fund
NITC Bond Fund
ABN AMRO Select Bond Fund
Stock
Taiwan Mask Corp.
TSMC International
VIS
SSMC
TSMC Partners
TSMC-North America
GUC
TSMC-Japan
TSMC-Europe
United Industrial Gases Co., Ltd.
Shin-Etsu Handotai Taiwan Co., Ltd.
Hontung Venture Capital Co., Ltd.
Gobaltop Partner I Venture Capital Corp.
W.K. Technology Fund IV
Capital
TSMC-Shanghai
Emerging Alliance
VTAF II
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Subsidiary
Investee accounted for using
equity method
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
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
US$
US$
$
-
-
-
-
-
-
-
-
-
63,131
134,906
62,009
69,303
55,063
3,764
18,235
1,439
987,968
437,891
47,516
6,881
300,472
355,936
149,441
2,349,973
3,898,610
620,000
2,548,977
856,359
1,956,175
908,656
771,617
762,771
600,000
200,000
5,257
23,912,812
5,419,747
Investee accounted for using
Long-term investment
382
4,215,200
equity method
Subsidiary
Subsidiary
Investee with controlling financial
Long-term investment
Long-term investment
Long-term investment
interest
Subsidiary
Subsidiary
-
-
-
-
-
Subsidiary
Subsidiary
Subsidiary
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
300
11,000
40,147
6
-
16,783
10,500
8,392
5,000
4,000
-
-
-
$
4,091,166
1,790,186
442,233
94,949
23,087
193,584
105,000
83,916
50,000
40,000
9,438,856
850,534
642,479
N/A
N/A
N/A
N/A
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
27
32
100
100
46
100
100
10
7
10
1
2
100
99
98
US$
US$
$
$
47,233
6,839
300,563
354,832
149,256
2,349,857
3,896,739
618,160
2,544,964
875,416
2,004,862
933,430
792,068
778,482
610,864
203,860
21,280
23,912,812
10,991,064
4,215,200
4,091,166
1,790,186
465,258
94,949
23,087
295,606
186,387
46,801
49,947
43,645
9,438,856
850,534
642,479
(Continued)
83
Held Company Name
Marketable Securities Type and Name
Relationship with the Company
Financial Statement Account
December 31, 2005
Shares/Units
(In Thousands)
Carrying Value
(US$ in Thousands)
Percentage of
Ownership
Market Value or Net
Asset Value (US$ in
Thousands)
Note
Chi Cherng
Hsin Ruey
Corporate bonds
Abbott Labs
Abbott Labs
Ace Ltd.
AIG Sunamerica Global Fing Ix
Allstate Life Global Fdg Secd
Alltel Corp.
American Express Co.
American Gen Fin Corp.
American Gen Fin Corp. Mtn
American Gen Fin Corp. Mtn
American Honda Fin Corp. Mtn
Ameritech Capital Funding Co.
Amgen Inc.
Amsouth Bk Birmingham Ala
Anz Cap Tr I
Associates Corp. North Amer
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.
Beneficial Corp. Mtn Bk Entry
Berkshire Hathaway Fin Corp.
Cargill Inc.
Caterpillar Finl Svcs Mtn
Chase Manhattan Corp. New
Chase Manhattan Corp. New
Chubb Corp.
Cit Group Hldgs Inc.
Citicorp
Cogentrix Energy Inc.
Colonial Pipeline Co.
Corestates Cap Corp.
Countrywide Fdg Corp. Mtn
Countrywide Home Lns Inc.
Credit Suisse Fb USA Inc.
Credit Suisse Fincl Products
Credit Suisse First Boston
Credit Suisse First Boston USA
Daimlerchrysler North Amer
Daimlerchrysler North Amer Hld
Dayton Hudson Corp.
Deere John Cap Corp.
Dell Computer Corp.
Den Danske Bk Aktieselskab
Subsidiary
Long-term investment
Subsidiary
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
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
78,139
77,415
1,581
2,732
1,046
1,032
2,998
609
3,550
1,768
1,058
3,130
3,800
510
3,005
1,972
1,012
2,700
1,972
1,525
2,715
580
3,329
3,757
2,434
1,498
2,120
5,721
1,628
2,246
2,138
3,203
1,473
2,885
1,625
1,062
2,100
5,210
4,141
1,507
786
2,249
997
749
2,104
5,079
3,054
2,192
36
36
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
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$
536,703
Treasury stock of NT$458,564
thousand is deducted from the
carrying value
536,926
Treasury stock of NT$459,511
thousand is deducted from the
carrying value
1,526
2,595
1,011
1,001
2,948
598
3,435
1,670
1,011
2,998
3,808
491
2,907
1,967
968
2,582
1,984
1,485
2,729
544
3,337
3,662
2,340
1,472
2,012
5,724
1,546
2,155
2,125
3,068
1,407
2,739
1,536
1,018
2,066
5,020
4,029
1,508
748
2,175
972
751
2,056
5,020
2,874
2,067
(Continued)
Held Company Name
Marketable Securities Type and Name
Relationship with the Company
Financial Statement Account
December 31, 2005
Shares/Units
(In Thousands)
Carrying Value
(US$ in Thousands)
Percentage of
Ownership
Market Value or Net
Asset Value (US$ in
Thousands)
Note
Diageo Plc
Dow Chem Co.
European Invt Bk
European Invt Bk
Fifth Third Bk Cincinnati OH
First Data Corp.
Fleet Boston Corp.
Fleet Finl Group Inc. New
Fleet Finl Group Inc. New
Fpl Group Cap Inc.
Fpl Group Cap Inc.
Gannett Co Inc.
General Elec Cap Corp. Mtn
General Elec Cap Corp. Mtn
General Re Corp.
Genworth Finl Inc.
Goldman Sachs Group Inc.
Goldman Sachs Group Inc.
Goldman Sachs Group LP
Greenpoint Finl Corp.
Gte Corp.
Hancock John Global Fdg II Mtn
Hancock John Global Fdg Mtn
Hartford Finl Svcs Group Inc.
Hartford Finl Svcs Group Inc.
Hbos Plc Medium Term Sr Nts
Hbos Plc Meduim Term Sr Nts
Heller Finl Inc.
Hershey Foods Corp.
Hewlett Packard Co.
Honeywell Inc.
Household Fin Corp.
Household Fin Corp.
Household Intl Inc
HSBC Fin Corp Mtn
HSBC USA Inc. New
Huntington Natl Bk Columbus OH
ING Bank
ING Sec Life Instl Fdg
International Business Machs
International Lease Fin Corp.
Intl Lease Fin Corp. Mtn
Intl Lease Fin Corp. Mtn
JP Morgan Chase + Co.
Jackson Natl Life Global Fdg
Jackson Natl Life Global Fdg S
JP Morgan Chase + Co.
Key Bk Na Med Term Nts Bk Entr
Keycorp Mtn Book Entry
Kraft Foods Inc.
Kraft Foods Inc.
Lehman Brothers Hldgs 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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
3,459
921
3,918
8,315
2,419
3,013
2,850
975
494
1,001
860
2,999
3,989
8,862
3,500
3,412
4,981
3,477
1,637
974
2,134
3,566
1,003
296
1,435
3,201
2,977
2,071
1,627
3,373
3,284
2,993
532
2,878
5,097
1,154
2,954
2,114
2,544
2,249
2,031
3,028
2,471
3,406
1,036
1,999
3,663
4,450
3,500
773
1,037
1,668
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
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$
3,419
863
3,910
8,023
2,414
2,860
2,718
923
474
997
845
2,930
3,894
8,755
3,430
3,419
4,970
3,452
1,530
959
2,041
3,512
970
297
1,371
3,181
2,940
1,984
1,537
3,204
3,081
2,908
512
2,892
5,066
1,091
2,954
2,024
2,485
2,208
2,005
2,943
2,481
3,353
1,006
2,004
3,522
4,409
3,512
749
1,006
1,631
84
(Continued)
85
Held Company Name
Marketable Securities Type and Name
Relationship with the Company
Financial Statement Account
December 31, 2005
Shares/Units
(In Thousands)
Carrying Value
(US$ in Thousands)
Percentage of
Ownership
Market Value or Net
Asset Value (US$ in
Thousands)
Note
Lehman Brothers Hldgs Inc.
Lehman Brothers Hldgs Inc.
Lincoln Natl Corp. In
Merita Bk Ltd. Ny Brh
Merrill Lynch + Co. Inc.
Merrill Lynch + Co. Inc.
Merrill Lynch + Co. Inc.
Metropolitan Life Global Mtn
Monumental Global Fdg II
Monumental Global Fdg II 2002A
Morgan Stanley
Morgan Stanley Group Inc.
National City Corp.
National Westminster Bk Plc
Nationwide Bldg Soc
Nationwide Bldg Soc Mtn
Nationwide Life Global Mtn
Pepsico Inc. Mtn Book Entry
Pnc Fdg Corp.
Popular North Amer Inc. Mtn
Premark Intl Inc.
Pricoa Global Fdg 1 Mtn
Protective Life Secd Trs
Prudential Ins Co. Amer
Prudential Ins Co. Amer
Public Svc Elec Gas Co.
Regions Finl Corp. New
Reinsurance Group Amer Inc.
Royal Bk Scotland Group Plc
Safeco Corp.
Santander US Debt S A Uniperso
Sara Lee Corp.
Sbc Communications Inc.
Sbc Communications Inc.
Scotland Intl Fin B V 144a
Slm Corp.
Slm Corp. Medium Term Nts
Sp Powerassests Ltd. Global
St Paul Cos Inc. Mtn Bk Ent
Suntrust Bks Inc.
Swedbank Sparbanken Svenge Ab
Tiaa Global Mkts Inc.
Tribune Co. Med Trm Nts
Unitedhealth Group Inc.
US Bk Natl Assn Cincinnati Oh
Virginia Elec + Pwr Co.
Vodafone Group Plc New
Wal Mart Cda Venture Corp.
Washington Mut Fin Corp.
Washington Mut Inc.
Washington Post Co.
Wells Fargo + Co. New
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
499
1,163
519
538
3,486
1,992
4,900
1,907
1,534
1,045
2,144
4,507
3,426
1,433
3,457
3,000
1,463
3,818
1,080
3,042
2,954
3,500
2,920
2,648
2,774
3,225
2,397
2,091
1,563
765
4,998
1,596
1,776
3,681
1,533
500
2,950
991
2,661
1,062
1,084
519
2,943
3,119
2,669
2,884
2,559
3,670
1,043
4,735
3,182
3,697
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
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$
489
1,105
503
513
3,421
1,983
4,891
1,894
1,476
1,005
2,142
4,432
3,378
1,355
3,463
3,001
1,459
3,678
1,029
2,931
2,789
3,502
2,903
2,523
2,704
3,184
2,378
2,012
1,489
730
4,974
1,527
1,713
3,515
1,446
496
2,922
971
2,593
1,014
1,021
501
2,838
3,015
2,678
2,702
2,505
3,511
1,007
4,539
3,023
3,520
(Continued)
Held Company Name
Marketable Securities Type and Name
Relationship with the Company
Financial Statement Account
December 31, 2005
Shares/Units
(In Thousands)
Carrying Value
(US$ in Thousands)
Percentage of
Ownership
Market Value or Net
Asset Value (US$ in
Thousands)
Note
Westfield Cap Corp. Ltd.
Wps Resources Corp.
Formosa Petrochemical Corporation
Taiwan Power Company
Nan Ya Plastics Corporation
China Steel Corporation
Formosa Petrochemical Corporation
Chinese Petroleum Corporation
Far Eastone Telecommunications Co. Ltd.
Formosa Plastics Corporation
Formosa Chemicals & Fiber Corporation
Agency bonds
Fed Hm Ln Pc Pool 1H2520
Fed Hm Ln Pc Pool 1H2524
Fed Hm Ln Pc Pool 781959
Fed Hm Ln Pc Pool E89857
Fed Hm Ln Pc Pool G11295
Federal Home Ln Mtg
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.
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 Gtd
Federal Natl Mtg Assn Gtd
Fnma Pool 254507
Fnma Pool 254834
Fnma Pool 255883
Fnma Pool 685116
Fnma Pool 687863
Fnma Pool 696485
Fnma Pool 725095
Fnma Pool 730033
Fnma Pool 740934
Fnma Pool 790828
Fnma Pool 793025
Fnma Pool 793932
Fnma Pool 794040
Fnma Pool 795548
Fnma Pool 806642
Fnma Pool 815626
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
US$
$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
1,999
1,107
311,568
3,263,348
2,150,842
1,010,532
791,963
705,436
300,026
268,855
134,369
3,753
2,861
7,112
1,980
1,753
3,848
887
3,454
3,954
6,096
3,280
4,098
9,905
4,902
3,755
3,696
110
1,930
4,030
4,051
1,668
3,659
445
2,286
1,750
3,771
842
3,570
4,175
1,562
1,793
1,775
3,504
3,306
764
940
623
1,573
3,622
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
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$
2,007
1,074
301,946
3,263,232
2,152,156
1,010,657
791,771
704,878
300,001
270,086
137,529
3,743
2,838
7,123
1,923
1,703
3,834
882
3,406
3,945
5,977
3,185
4,102
9,898
4,843
3,735
3,668
109
1,887
3,992
4,000
1,626
3,655
432
2,240
1,729
3,762
817
3,565
4,167
1,516
1,771
1,753
3,407
3,245
742
912
610
1,544
3,625
86
(Continued)
87
Held Company Name
Marketable Securities Type and Name
Relationship with the Company
Financial Statement Account
December 31, 2005
Shares/Units
(In Thousands)
Carrying Value
(US$ in Thousands)
Percentage of
Ownership
Market Value or Net
Asset Value (US$ in
Thousands)
Note
Fnma Pool 816594
Fnma Pool 825395
Fnma Pool 825398
Fnma Pool 841069
Gnma II Pool 081150
Gnma II Pool 081153
Federal Farm Cr Bks
Federal Home Ln Bank
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 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. Mtn
Federal Home Loan Bank
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
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
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
2,657
3,265
4,949
3,673
813
2,956
3,985
3,962
6,110
2,454
2,990
3,932
4,997
2,962
4,927
3,976
4,136
4,939
7,886
2,233
8,672
4,965
4,808
7,558
8,594
3,024
3,972
7,887
19,846
6,908
6,098
9,134
3,379
1,042
2,532
3,388
9,997
6,980
5,929
4,930
3,475
4,847
4,903
4,921
7,892
4,943
8,971
4,430
17,888
5,928
7,926
9,758
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
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$
2,630
3,229
4,889
3,649
796
2,884
3,936
3,962
6,083
2,483
2,991
3,929
4,966
2,949
4,896
3,951
4,103
4,865
7,977
2,217
8,672
4,926
4,816
7,499
8,524
2,980
3,949
7,759
19,832
6,901
5,895
9,008
3,304
1,001
2,419
3,412
9,778
6,935
5,941
4,883
3,462
4,859
4,893
4,897
7,889
4,936
8,935
4,339
17,753
5,873
7,852
9,772
(Continued)
Held Company Name
Marketable Securities Type and Name
Relationship with the Company
Financial Statement Account
December 31, 2005
Shares/Units
(In Thousands)
Carrying Value
(US$ in Thousands)
Percentage of
Ownership
Market Value or Net
Asset Value (US$ in
Thousands)
Note
Federal Natl Mtg Assn Mtn
Federal Natl Mtg Assn Mtn
Federal Natl Mtg Assn Mtn
Federal Natl Mtg Assn Mtn
Federal Natl Mtg Assn Mtn
Corporate issued asset-backed securities
American Home Mtg Invt Tr
Americredit Automobile Rec Tr
Americredit Automobile Rec Tr
Americredit Automobile Receiva
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 Arm Tr
Bear Stearns Coml Mtg Secs Inc
California Infrastructure Dev
Capital Auto Receivables Asset
Capital One Auto Fin Tr
Capital One Auto Fin Tr
Capital One Multi Asset Execut
Capital One Multi Asset Execut
Capital One Multi Asset Execut
Capital One Prime Auto Receiv
Caterpillar Finl Asset Tr
Caterpillar Finl Asset Tr
Cendant Rent Car Fdg Aesop LLC
Centex Home Equity Ln Tr
Cit Equip Coll Tr
Citibank Cr Card Issuance Tr
Citicorp Mtg Secs
Cnh Equip Tr
Comm
Credit Suisse First Boston Mtg
Credit Suisse First Boston Mtg
Cwabs Inc.
Cwabs Inc.
Cwabs Inc.
Cwalt Inc.
Cwmbs Inc.
Daimlerchrysler Auto Tr
Daimlerchrysler Auto Tr
Deere John Owner Tr
Drive Auto Receivables Tr
Fifth Third Auto Tr
First Horizon Abs Tr
First Union Lehman Bros Mtg Tr
Ford Cr Auto Owner Tr
Granite Mtgs 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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
15,787
7,000
2,876
2,866
5,740
411
1,034
2,000
5,000
4,949
680
4,462
4,030
2,986
958
1,947
6,350
864
1,588
2,650
3,000
4,957
3,974
2,999
2,800
4,453
8,219
11,626
3,500
4,999
9,782
1,025
5,000
1,383
1,296
1,480
636
2,005
4,287
1,143
1,255
1,261
4,709
2,501
3,200
3,000
999
2,710
10,908
4,447
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
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$
15,791
6,919
2,888
2,870
5,643
411
1,014
1,977
4,971
4,894
668
4,362
3,990
2,932
958
1,952
6,350
839
1,566
2,612
2,999
4,863
3,941
2,974
2,781
4,390
8,142
11,400
3,476
4,941
9,753
1,017
4,922
1,384
1,282
1,470
636
2,007
4,289
1,133
1,230
1,260
4,658
2,460
3,214
2,976
1,001
2,580
10,789
4,447
88
(Continued)
89
Held Company Name
Marketable Securities Type and Name
Relationship with the Company
Financial Statement Account
December 31, 2005
Shares/Units
(In Thousands)
Carrying Value
(US$ in Thousands)
Percentage of
Ownership
Market Value or Net
Asset Value (US$ in
Thousands)
Note
Gs Auto Ln Tr
Harley Davidson Motorcycle Tr
Harley Davidson Motorcycle Tr
Hertz Vehicle Financing LLC
Holmes Fing No 8 Plc
Household Automotive Tr
Hsbc Automotive Tr
Hyundai Auto Receivables Tr
Hyundai Auto Receivables Tr
Hyundai Auto Receivables Tr
Impac Cmb Tr
Impac Cmb Tr
Impac Secd Assets Corp.
Lb Ubs Coml Mtg Tr
Long Beach Accep Auto Receivab
Massachusetts Rrb Spl Purp Tr
Mastr Asset Backed Secs Tr
Mastr Asset Backed Secs Tr
Mbna Master Cr Card Tr II
Monumentl Global Fdg II
National City Auto Receivables
Navistar Finl 2003 A Owner Tr
Nissan Auto Receivables
Onyx Accep Owner Tr
Pg+E Energy Recovery Fdg LLC
Providian Gateway Owner Tr
Providian Gateway Owner Tr
Reliant Energy Transition Bd
Residential Asset Mtg Prods
Residential Asset Sec Mtg Pass
Residential Asset Sec Mtg Pass
Residential Fdg Mtg Secs I Inc.
Residential Fdg Mtg Secs I Inc.
Revolving Home Equity Ln Tr
Sequoia Mtg Tr
Sequoia Mtg Tr
Sequoia Mtg Tr
Structured Adj Rate Mtg Ln Tr
Structured Adj Rate Mtg Ln Tr
Structured Asset Invt Ln Tr
Toyota Auto Receivables 2003 B
Triad Auto Receivables Tr
TW Hotel Fdg 2005 Lc
Txu Elec Delivery Transition
Usaa Auto Owner Tr
Wachovia Auto Owner Tr
Wachovia Auto Owner Tr
Washington Mut Mtg Secs Corp.
Wells Fargo Finl Auto Owner Tr
Wells Fargo Mtg Bkd Secs
WFS Financial Owner Trust
WFS Finl
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
1,899
1,533
5,999
5,350
5,001
5,872
2,999
6,442
3,250
3,999
638
534
880
4,001
2,526
3,900
206
3,499
8,108
1,000
914
4,928
7,000
4,913
4,749
2,202
3,992
4,973
2,967
3,000
3,780
2,550
4,817
3,234
1,209
1,450
1,070
2,059
746
856
4,970
3,339
8,197
3,103
3,718
38
4,999
4,067
5,299
3,661
4,133
1,311
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
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$
1,913
1,515
5,811
5,350
5,003
5,843
2,993
6,330
3,204
3,926
638
534
880
3,955
2,477
3,837
206
3,503
7,818
1,002
916
4,863
6,918
4,866
4,663
2,207
3,918
4,793
2,855
2,948
3,704
2,496
4,737
3,235
1,209
1,455
1,070
2,012
735
855
4,892
3,287
8,197
3,004
3,682
38
4,955
4,026
5,269
3,632
4,069
1,308
(Continued)
Held Company Name
Marketable Securities Type and Name
Relationship with the Company
Financial Statement Account
December 31, 2005
Shares/Units
(In Thousands)
Carrying Value
(US$ in Thousands)
Percentage of
Ownership
Market Value or Net
Asset Value (US$ in
Thousands)
Note
WFS Finl 2004 2 Owner Tr
WFS Finl 2004 4 Owner Tr
WFS Finl 2005 2 Oner Tr
Whole Auto Ln Tr
Whole Auto Ln Tr
Whole Auto Ln Tr
World Omni Auto Receivables Tr
Corporate issued notes
Canadian Imperial BK
Canadian Imperial BK
Washington Mutual
Money market funds
SSGA Cash Mgmt Global Offshore
Equity
Horizon Venture Fund I, L.P.
Crimson Asia Capital Ltd., L.P.
TSMC stock
TSMC stock
Stock
TSMC Development
TSMC Technology
InveStar
InveStar II
Chi Cherng
Hsin Ruey
TSMC International
TSMC Development
WaferTech stock
InveStar
Common stock
RichTek Technology Corp.
Advanced Power Electronics Corp.
SiRF Technology Holdings, Inc.
Broadtek Electronics Corp.
Monolithic Power Systems, Inc.
Global Testing Corp.
Capella Microsystems (Taiwan), Inc.
Signia Technologies, Inc.
Advanced Power Electronics Corp.
Broadtek Electronics Corp.
RichTek Technology Corp.
Preferred stock
Integrated Memory Logic, Inc.
Sensory, Inc.
IP Unity, Inc.
Sonics, Inc.
NanoAmp Solutions, Inc.
Memsic, 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
Long-term investment
Long-term investment
Parent company
Short-term investment
Parent company
Short-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
16,454
16,484
1
1
18,505
51,300
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
4,994
5,399
2,250
1,954
4,000
3,000
5,963
1,999
3,015
3,000
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$
4,905
5,320
2,229
1,968
3,941
2,927
5,839
1,999
3,015
3,000
US$
7,936
N/A
US$
7,936
90
$
US$
US$
US$
US$
280,179
54,811
458,564
459,511
588,685
5,647
21,833
33,451
$
N/A
N/A
-
-
100
100
97
97
280,179
54,811
1,022,605
1,024,521
US$
US$
US$
US$
588,685
5,647
21,833
33,451
Long-term investment
-
US$
368,886
99
US$
368,886
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
838
525
10
29
1,975
58,044
530
701
674
116
421
1,831
1,404
1,008
2,686
541
2,727
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
71
210
44
9
1,567
4,961
154
201
270
37
36
1,220
125
494
3,530
853
1,500
-
2
-
-
7
8
4
3
2
-
-
9
6
3
4
2
10
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
3,168
670
294
12
28,256
9,161
154
201
860
47
1,591
1,220
125
494
3,530
853
1,500
(Continued)
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Held Company Name
Marketable Securities Type and Name
Relationship with the Company
Financial Statement Account
December 31, 2005
Shares/Units
(In Thousands)
Carrying Value
(US$ in Thousands)
Percentage of
Ownership
Market Value or Net
Asset Value (US$ in
Thousands)
Note
InveStar II
91
Emerging Alliance
Reflectivity, Inc.
Common stock
Monolithic Power Systems, Inc.
GeoVision, Inc.
Advanced Analogic Technology, Inc.
RichTek Technology Corp.
Signia Technologies, Inc.
Ralink Technology (Taiwan), Inc.
Procoat Technology, Inc.
Capella Microsystems (Taiwan), Inc.
Auden Technology MFG. Co., Ltd.
EoNEX Technologies, Inc.
Conwise Technology Corporation, Ltd.
Goyatek Technology, Corp.
Trendchip Technologies Corp.
EON Technology, Corp.
eChannelOpen Holding, Inc.
eLCOS Microdisplay Technology, Ltd.
Epic Communications, Inc.
RichTek Technology Corp.
GeoVision, Inc.
Preferred stock
Memsic, Inc.
NanoAmp Solutions, Inc.
Sonics, Inc.
Reflectivity, Inc.
Kilopass Technologies, Inc.
FangTek, Inc.
eLCOS Microdisplay Technology, Ltd.
Alchip Technologies Limited
Common stock
Global Investment Holding, Inc.
RichWave Technology Corp.
NetLogic Microsystems, Inc.
Quake Technologies, Inc.
Pixim, Inc.
Preferred stock
Quake Technologies, Inc.
Pixim, Inc.
Ikanos Communication, Inc.
Quicksilver Technology, Inc.
Mosaic Systems, Inc.
Zenesis Technologies, Inc.
Reflectivity, Inc.
Miradia, Inc.
Axiom Microdevices, Inc.
Optichron, Inc.
NuCORE Technology Inc.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Long-term investment
1,064
US$
741
2
US$
741
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
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
864
336
484
386
351
1,833
5,123
419
953
55
2,800
2,088
2,000
3,264
358
270
302
198
15
2,289
375
3,082
4,255
3,887
6,806
2,667
2,597
10,800
3,380
113
46
1,924
555
2,193
7,446
1,049
2,481
1,204
4,848
3,040
1,000
714
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$
2,081
74
1,261
192
101
791
1,940
122
410
3,048
204
545
574
1,175
251
27
37
98
3
1,560
1,500
3,082
2,205
2,000
3,250
3,500
2,950
100,000
1,247
1,388
35
512
415
583
3,125
-
12
699
2,479
1,000
1,000
1,000
1,455
3
1
1
-
1
3
10
2
4
5
9
7
5
8
4
1
1
-
-
8
1
5
5
9
28
15
18
6
13
1
-
4
1
-
3
4
6
4
4
4
3
4
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$
12,370
1,023
6,969
1,458
101
791
1,940
122
410
3,048
204
545
574
1,175
251
27
37
872
50
1,560
1,500
3,082
2,205
2,000
3,250
3,500
2,950
100,000
1,247
3,051
35
512
415
583
3,125
-
12
699
2,479
1,000
1,000
1,000
1,455
(Continued)
Held Company Name
Marketable Securities Type and Name
Relationship with the Company
Financial Statement Account
Next IO, Inc.
Audience, Inc.
Centrality Communications, Inc.
Britestream Networks, Inc. (Layer N Networks, Inc.)
Teknovus, Inc.
Optimal Corporation
Mobilygen Corporation
Warrants
Pixim, Inc.
Common stock
VisEra Holding Company
Common stock
Yobon Technologies, Inc.
Sentelic, Corp.
Preferred stock
Powerprecise Solutions, Inc.
Tzero Technologies, Inc.
Miradia, Inc.
Axiom Microdevices, Inc.
Next IO, Inc.
Ageia Technologies, Inc.
Audience, Inc.
GemFire Corporation
Optichron, Inc.
Leadtrend Technology, Inc.
Aquantia Corporation
Xceive Corporation
5V Technologies,Inc
Power Analog Microelectronics
Impinj,Inc
Warrants
Aquantia Corporation
Stock
Global Unichip Corporation - NA
Global Unichip Japan
Partners
VTAF II
GUC
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
December 31, 2005
Shares/Units
(In Thousands)
Carrying Value
(US$ in Thousands)
Percentage of
Ownership
Market Value or Net
Asset Value (US$ in
Thousands)
Note
US$
US$
US$
US$
US$
US$
US$
800
1,654
1,325
2,444
6,977
485
1,415
242
500
250
1,800
1,172
1,327
500
750
-
US$
US$
US$
US$
US$
US$
US$
2
2
3
2
3
6
1
-
500
250
1,800
1,172
1,327
500
750
-
92
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
18,931
US$
19,862
50
US$
19,862
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
1,675
600
US$
US$
1,032
244
1,809
761
216
1,969
531
600
353
900
1,401
714
1,333
2,000
257
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
787
1,022
1,000
500
1,600
776
182
2,000
102
600
869
431
1,150
1,000
1,000
1,500
500
Long-term investment
46
$
-
17
15
US$
US$
8
2
2
2
-
2
1
1
2
5
5
2
-
7
-
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
$
787
1,022
1,000
500
1,600
776
182
2,000
102
600
869
431
1,150
1,000
1,000
1,500
500
-
4,715
2,153
(Concluded)
Subsidiary
Subsidiary
Long-term investment
Long-term investment
100
-
4,715
2,153
100
100
TABLE 4
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED 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 END DECEMBER 31, 2005
(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
93
The Company
Bond funds
JF Taiwan Bond Fund
JF Taiwan First Bond Fund
Invesco R.O.C. Bond Fund
Dresdner Bond DAM Fund
Short-term investment
Short-term investment
Short-term investment
Short-term investment
JF Asset Management (Taiwan) Ltd.-
JF Asset Management (Taiwan) Ltd.
INVESCO Asset Management Taiwan
Allianz Dresdner Securities Investment
Consulting Co., Ltd.
Barits Bond Fund
Short-term investment
Barits Securities Investment Trust Co.,
Shinkong Chi-Shin Fund
Short-term investment
Shinkong Investment Trust Co., Ltd.
Ltd.
Bonds under repurchase agreement
Short-term investment
Chung Shing Bills Finance Corp. and
several financial institutions
Government bonds
2003 Government Bond Series A
2004 Government Bond Series E
Short-term investment
Short-term investment
BNP and several financial institutions
Chung Shing Bills Finance Corp. and
several financial institutions
2002 Government Bond Series B
Long-term investment
China Bills Finance Corp. and several
financial institutions
2002 Government Bond Series F
Long-term investment
China Bills Finance Corp. and several
financial institutions
2005 Government Bond Series A
Long-term investment
China Bills Finance Corp. and several
financial institutions
Kreditanstalt Fur Wiederaufbau
United States Treas NTS
Short-term investment
Short-term investment
-
-
Corporate bonds
Taiwan Power Company
Formosa Petrochemical Corporation
Allstate Finl Global Fdg LLC
American Intl Group Inc. Mtnf
Bear Stearns Cos Inc.
Bear Stearns Cos Inc.
Bear Stearns Cos Inc.
Bear Stearns Cos Inc. Medium Te
Caterpillar Finl Svcs Mtn
Citigroup Inc.
Countrywide Fdg Corp. Mtn
Countrywide Finl Corp.
Credit Suisse Fb USA Inc.
Credit Suisse First Boston USA
Deere John Cap Corp.
European Invt BK
General Elec Cap 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
China Bills Finance Corp.
China Bills Finance Corp.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Beginning Balance
Acquisition
Disposal (Note 1)
Ending Balance
Shares / Units
(In Thousands)
Amount (US$
in Thousands)
Shares / Units
(In Thousands)
Amount (US$
in Thousands)
Shares / Units
(In Thousands)
Amount (US$
in Thousands)
Carrying Value
(US$ in
Thousands)
Gain (Loss) on
Disposal (US$
in Thousands)
Shares / Units
(In Thousands)
Amount (US$
in Thousands)
(Note 2)
78,698
84,886
76,705
80,833
$ 1,153,209
1,151,463
1,101,911
900,000
76,640
900,000
151,594
2,100,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
249,449
1,207,409
-
-
-
-
-
US$ 192,357
$ 2,777,798
-
US$ 3,171
US$ 3,795
-
US$ 3,518
-
US$ 3,105
-
US$ 3,583
-
-
US$ 2,645
-
-
-
US$ 3,467
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$ -
-
-
-
16,689
21,755
76,705
11,530
$ 250,000
300,000
1,121,779
130,000
$ 244,553
295,104
1,101,911
128,383
$ 5,447
4,896
19,868
1,617
62,009
63,131
-
69,303
$ 908,656
856,359
-
771,617
-
-
-
-
300,472
360,608
149,440
2,548,689
US$ 6,881
US$ 494,515
$ -
311,568
-
-
US$ 3,329
-
US$ 3,757
-
US$ 5,721
-
US$ 3,500
US$ 3,000
US$ 4,141
US$ 3,832
US$ 5,079
US$ 3,918
-
76,640
915,204
900,000
15,204
-
-
96,531
1,360,000
1,337,229
22,771
55,063
762,771
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
251,784
249,449
2,335
1,216,500
-
1,207,409
-
9,091
-
-
-
-
-
-
-
-
-
-
-
US$ 637,301
-
US$ 639,356
-
US$ (2,055)
$ 2,807,500
-
US$ 3,086
US$ 3,793
-
US$ 3,484
-
US$ 3,106
-
US$ 3,512
US$ 3,500
US$ 3,000
US$ 2,593
US$ 3,780
-
-
US$ 3,432
$ 2,777,798
-
US$ 3,171
US$ 3,795
-
US$ 3,518
-
US$ 3,105
-
US$ 3,583
US$ 3,500
US$ 3,000
US$ 2,645
US$ 3,832
-
-
US$ 3,467
$ 29,702
-
US$ (85)
US$ (2)
-
US$ (34)
-
US$ 1
-
US$ (71)
-
-
US$ (52)
US$ (52)
-
-
US$ (35)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
300,472
355,936
149,441
2,548,977
US$ 6,881
US$ 47,516
$ -
311,568
-
-
US$ 3,329
-
US$ 3,757
-
US$ 5,721
-
-
-
US$ 4,141
-
US$ 5,079
US$ 3,918
-
(Continued)
Company
Name
Marketable Securities
Type and Name
Financial Statement
Account
Counter-party
Nature of
Relationship
Beginning Balance
Acquisition
Disposal (Note 1)
Ending Balance
Shares / Units
(In Thousands)
Amount (US$
in Thousands)
Shares / Units
(In Thousands)
Amount (US$
in Thousands)
Shares / Units
(In Thousands)
Amount (US$
in Thousands)
Carrying Value
(US$ in
Thousands)
Gain (Loss) on
Disposal (US$
in Thousands)
Shares / Units
(In Thousands)
Amount (US$
in Thousands)
(Note 2)
94
General Elec Cap Corp. Mtn
General Elec Cap Corp. Mtn
General Elec Cap Corp. Mtn
General Re Corp.
Goldman Sachs Group Inc.
Goldman Sachs Group Inc.
Goldman Sachs Group Inc. Mtn
Hancock John Global Fdg II Mtn
Hbos Plc Medium Term Sr Nts
Household Fin Corp. Mtn Bk Ent
HSBC Fin Corp. Mtn
ING Sec Life Ins Ingslf
International Business Machs
Intl Lease Fin Corp. Mtn
JP Morgan Chase + Co.
Key Bk Na Med Term Nts Bk Entr
Lehman Brothers Hldgs Inc.
Merrill Lynch + Co. Inc.
Morgan Stanley Group Inc.
Morgan Stanley Group Inc.
National City Corp.
Nationsbank Corp.
Nationwide Bldg Soc Mtn
Ppg Inds Inc.
Pricoa Global Fdg 1 Mtn
Pricoa Global Fdg I Mtn
Pricoa Global Fdg I Mtn
Principal Life Global Fdg I Gl
Public Svc Elec Gas Co.
Salomon Smith Barney Hldgs Inc.
Santander Us Debt S A Uniperso
Wachovia Corp.
Washington Mut Fin Corp.
Taiwan Power Company
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
China Bills Finance Corp. and several
financial institutions
Nan Ya Plastics Corporation
Long-term investment
China Bills Finance Corp. and several
financial institutions
Agency bonds
Federal Farm Cr Bks
Federal Home Ln Bank
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ -
-
US$ 3,886
-
-
-
US$ 3,505
-
-
US$ 3,542
-
US$ 3,012
-
-
-
-
US$ 3,705
-
US$ 1,050
US$ 3,638
-
US$ 3,644
-
-
-
US$ 3,050
US$ 3,507
US$ 3,168
-
US$ 3,160
-
US$ 3,720
US$ 4,768
$ 915,276
407,526
-
-
-
US$ 4,948
US$ 7,962
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 3,989
US$ 8,862
US$ -
US$ 3,500
US$ 4,981
US$ 3,477
-
US$ 3,566
US$ 3,201
-
US$ 7,894
-
US$ 7,247
US$ 3,028
US$ 3,406
US$ 4,450
-
US$ 4,900
US$ 4,507
-
US$ 3,426
-
US$ 3,000
US$ 3,571
US$ 3,500
-
-
-
US$ 3,225
-
US$ 4,998
-
-
$ 2,967,681
1,883,901
US$ 3,985
US$ 3,962
US$ 6,110
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ -
-
US$ 3,823
-
-
-
US$ 3,506
-
-
US$ 3,488
US$ 2,780
US$ 3,008
US$ 4,994
-
-
-
US$ 3,511
-
US$ 1,022
US$ 3,571
-
US$ 3,522
-
-
-
US$ 3,052
US$ 3,510
US$ 3,049
-
US$ 3,046
-
US$ 3,568
US$ 3,591
$ 600,000
US$ -
-
US$ 3,886
-
-
-
US$ 3,505
-
-
US$ 3,542
US$ 2,797
US$ 3,012
US$ 4,998
-
-
-
US$ 3,705
-
US$ 1,050
US$ 3,638
-
US$ 3,644
-
-
-
US$ 3,050
US$ 3,507
US$ 3,168
-
US$ 3,160
-
US$ 3,720
US$ 3,725
$ 600,000
US$
US$ -
-
US$ (63)
-
-
-
1
-
$ -
US$ (54)
US$ (17)
US$ (4)
US$ (4)
-
-
-
US$ (194)
-
US$ (28)
US$ (67)
-
US$ (122)
-
-
-
2
US$
US$
3
US$ (119)
-
US$ (114)
-
US$ (152)
US$ (134)
$ -
132,000
132,000
-
-
-
-
US$ 4,947
US$ 4,954
-
-
-
US$ 4,948
US$ 4,972
-
-
-
US$ (1)
US$ (18)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 3,989
US$ 8,862
US$
-
US$ 3,500
US$ 4,981
US$ 3,477
-
US$ 3,566
US$ 3,201
-
US$ 5,097
-
US$ 2,249
US$ 3,028
US$ 3,406
US$ 4,450
-
US$ 4,900
US$ 4,507
-
US$ 3,426
-
US$ 3,000
-
US$ 3,500
-
-
-
US$ 3,225
-
US$ 4,998
-
US$ 1,043
$ 3,263,348
2,150,842
US$ 3,985
US$ 3,962
US$ 6,110
-
US$ 2,990
(Continued)
Company
Name
Marketable Securities
Type and Name
Financial Statement
Account
Counter-party
Nature of
Relationship
Beginning Balance
Acquisition
Disposal (Note 1)
Ending Balance
Shares / Units
(In Thousands)
Amount (US$
in Thousands)
Shares / Units
(In Thousands)
Amount (US$
in Thousands)
Shares / Units
(In Thousands)
Amount (US$
in Thousands)
Carrying Value
(US$ in
Thousands)
Gain (Loss) on
Disposal (US$
in Thousands)
Shares / Units
(In Thousands)
Amount (US$
in Thousands)
(Note 2)
95
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 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 Loan Bank
Federal Home Loan Corp.
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
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 1H2520
Fed Hm Ln Pc Pool 781959
Fed Hm Ln Pc Pool 847290
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 13,953
-
US$ 13,981
US$ 13,983
US$ 7,042
US$ 7,014
-
-
-
-
US$ 7,018
-
-
-
-
-
-
-
-
-
-
-
US$ 4,933
US$ 4,953
-
US$ 6,978
-
-
-
-
US$ 4,903
US$ 3,466
US$ 6,903
US$ 5,270
US$ 6,940
US$ 4,981
-
-
-
US$ 6,997
-
-
-
-
-
-
-
-
-
US$ 4,929
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 3,932
-
-
-
-
US$ 4,136
US$ 4,939
US$ 7,886
US$ 8,672
US$ 3,960
US$ 4,965
US$ 4,808
US$ 7,558
US$ 8,594
US$ 3,024
US$ 3,972
US$ 7,887
US$ 19,846
US$ 6,908
US$ 9,134
US$ 3,379
-
-
US$ 6,925
-
US$ 6,980
US$ 5,929
US$ 3,475
US$ 7,989
US$ 9,819
-
-
-
-
-
US$ 4,921
US$ 7,892
US$ 5,337
-
US$ 4,943
US$ 14,952
US$ 4,430
US$ 4,061
US$ 17,888
US$ 5,928
US$ 7,926
US$ 9,758
US$ 5,740
-
US$ 3,961
US$ 7,913
US$ 4,173
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 13,888
-
US$ 13,906
US$ 13,865
US$ 6,946
US$ 6,883
-
-
-
-
US$ 10,863
-
-
-
-
-
-
-
-
-
-
-
US$ 4,960
US$ 4,938
US$ 6,931
US$ 6,926
-
-
-
US$ 7,928
US$ 9,798
US$ 3,485
US$ 6,943
US$ 5,247
US$ 6,937
US$ 4,953
-
-
US$ 5,300
US$ 6,956
-
US$ 5,964
-
US$ 4,041
-
-
-
-
-
US$ 4,931
-
-
US$ 4,170
US$ 13,953
-
US$ 13,981
US$ 13,983
US$ 7,042
US$ 7,014
-
-
-
-
US$ 10,978
-
-
-
-
-
-
-
-
-
-
-
US$ 4,933
US$ 4,953
US$ 6,925
US$ 6,978
-
-
-
US$ 7,989
US$ 9,819
US$ 3,466
US$ 6,903
US$ 5,270
US$ 6,940
US$ 4,981
-
-
US$ 5,337
US$ 6,997
-
US$ 5,981
-
US$ 4,061
-
-
-
-
-
US$ 4,929
-
-
US$ 4,173
US$ (65)
-
US$ (75)
US$ (118)
US$ (96)
US$ (131)
-
-
-
-
US$ (115)
-
-
-
-
-
-
-
-
-
-
-
27
US$
US$ (15)
US$
6
US$ (52)
-
-
-
US$ (61)
US$ (21)
19
US$
US$
40
US$ (23)
US$ (3)
US$ (28)
-
-
US$ (37)
US$ (41)
-
US$ (17)
-
US$ (20)
-
-
-
-
-
2
-
-
US$ (3)
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 3,932
-
-
-
-
US$ 4,136
US$ 4,939
US$ 7,886
US$ 8,672
-
US$ 4,965
US$ 4,808
US$ 7,558
US$ 8,594
US$ 3,024
US$ 3,972
US$ 7,887
US$ 19,846
US$ 6,908
US$ 9,134
US$ 3,379
-
-
-
-
US$ 6,980
US$ 5,929
US$ 3,475
-
US$ 4,903
-
-
-
-
-
US$ 4,921
US$ 7,892
-
-
US$ 4,943
US$ 8,971
US$ 4,430
-
US$ 17,888
US$ 5,928
US$ 7,926
US$ 9,758
US$ 5,740
-
US$ 3,753
US$ 7,112
-
(Continued)
Company
Name
Marketable Securities
Type and Name
Financial Statement
Account
Counter-party
Nature of
Relationship
Beginning Balance
Acquisition
Disposal (Note 1)
Ending Balance
Shares / Units
(In Thousands)
Amount (US$
in Thousands)
Shares / Units
(In Thousands)
Amount (US$
in Thousands)
Shares / Units
(In Thousands)
Amount (US$
in Thousands)
Carrying Value
(US$ in
Thousands)
Gain (Loss) on
Disposal (US$
in Thousands)
Shares / Units
(In Thousands)
Amount (US$
in Thousands)
(Note 2)
Federal Home Ln Mtg
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 Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn Gtd
Fnma Pool 255883
Fnma Pool 687863
Fnma Pool 696485
Fnma Pool 793025
Fnma Pool 815626
Fnma Pool 825395
Fnma Pool 825398
Fnma Pool 841069
Corporate issued asset - backed
securities
Aesop Fdg II LLC
American Express Cr Account Ma
Americredit Automobile Receiv
Bear Stearns Coml Mtg Secs Inc.
BMW Ven Owner Tr
California Infr + Economic Dev
California Infras + Economic
Capital One Multi Asset Execut
Caterpillar Finl Asset Tr
Caterpillar Finl Asset Tr
Cendant Rent Car Fdg Aesop LLC
Citibank Cr Card Issuance Tr
Citibank Cr Card Issuance Tr
Cwabs Inc.
Cwmbs Inc.
Cwmbs Inc.
Daimlerchrysler Auto Tr
Drive Auto Receivables Tr
First USA Credit Cr Master Tr
Hertz Vehicle Financing LLC
Honda Auto Receivables
Household Automotive Tr
Hyundai Auto Receivables Tr
Hyundai Auto Receivables Tr
Lb Ubs Coml Mtg Tr
Massachusetts Rrb Spl Purp Tr
Mastr Asset Backed Secs Tr
Mastr Asset Backed Secs Tr
Mbna Cr Card Master Nt Tr
Mbna Master Cr Card Tr II
Nissan Auto Receivables Own Tr
Nissan Auto Receivables Owner
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ -
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 4,955
US$ 3,445
-
-
US$ 4,978
US$ 4,298
US$ 6,126
-
US$ 10,008
-
-
US$ 4,959
-
US$ 1,903
US$ 4,040
-
US$ 4,897
-
US$ 5,011
-
US$ 5,000
-
-
-
-
-
-
-
-
-
US$ 4,999
US$ 4,853
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 3,958
US$ 3,954
US$ 4,154
US$ 9,955
US$ 5,389
US$ 3,930
US$ 3,918
US$ 4,030
US$ 4,051
US$ 3,892
US$ 3,827
US$ 3,848
US$ 4,345
US$ 3,915
US$ 3,663
US$ 3,417
US$ 5,246
US$ 3,966
-
-
US$ 5,000
US$ 6,350
-
-
-
US$ 3,974
-
US$ 8,219
US$ 11,626
-
US$ 9,782
US$ 1,865
-
US$ 4,040
-
US$ 3,200
-
US$ 5,350
-
US$ 8,352
US$ 3,250
US$ 3,999
US$ 4,243
US$ 3,900
US$ 3,825
US$ 3,499
US$ 5,018
US$ 8,108
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ -
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 4,958
US$ 3,428
-
-
US$ 4,874
US$ 4,153
US$ 5,103
-
US$ 4,943
-
-
US$ 4,948
-
US$ 3,440
US$ 3,479
US$ 3,842
US$ 4,873
-
US$ 5,007
-
US$ 4,984
-
-
-
-
-
-
-
US$ 5,015
-
US$ 4,989
US$ 4,880
US$ -
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 4,955
US$ 3,445
-
-
US$ 4,907
US$ 4,298
US$ 5,228
-
US$ 5,009
-
-
US$ 4,959
-
US$ 3,435
US$ 3,492
US$ 3,823
US$ 4,897
-
US$ 5,011
-
US$ 5,000
-
-
-
-
-
-
-
US$ 5,018
-
US$ 4,999
US$ 4,853
US$ -
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 3
US$ (17)
-
-
US$ (33)
US$ (145)
US$ (125)
-
US$ (66)
-
-
US$ (11)
-
US$
5
US$ (13)
US$ (19)
US$ (24)
-
US$ (4)
-
US$ (16)
-
-
-
-
-
-
-
US$ (3)
-
US$ (10)
27
US$
96
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 3,848
US$ 3,954
US$ 4,098
US$ 9,905
US$ 4,902
US$ 3,755
US$ 3,696
US$ 4,030
US$ 4,051
US$ 3,659
US$ 3,771
US$ 3,570
US$ 4,175
US$ 3,306
US$ 3,622
US$ 3,265
US$ 4,949
US$ 3,673
-
-
US$ 5,000
US$ 6,350
-
-
-
US$ 3,974
US$ 4,453
US$ 8,219
US$ 11,626
-
US$ 9,782
-
-
-
-
US$ 3,200
-
US$ 5,350
-
US$ 5,872
US$ 3,250
US$ 3,999
US$ 4,001
US$ 3,900
US$ 206
US$ 3,499
-
US$ 8,108
-
-
(Continued)
Company
Name
Marketable Securities
Type and Name
Financial Statement
Account
Counter-party
Nature of
Relationship
Beginning Balance
Acquisition
Disposal (Note 1)
Ending Balance
Shares / Units
(In Thousands)
Amount (US$
in Thousands)
Shares / Units
(In Thousands)
Amount (US$
in Thousands)
Shares / Units
(In Thousands)
Amount (US$
in Thousands)
Carrying Value
(US$ in
Thousands)
Gain (Loss) on
Disposal (US$
in Thousands)
Shares / Units
(In Thousands)
Amount (US$
in Thousands)
(Note 2)
97
Pg+E Energy Recovery Fdg LLC
Prime Cr Card Master Tr
Residential Asset Sec Mtg Pass
Residential Fdg Mtg Secs I Inc.
Revolving Home Equity Ln Tr
Sequoia Mtg Tr
Sequoia Mtg Tr
TW Hotel Fdg 2005 LLC
Txu Elec Delivery Transition
Usaa Auto Owner Tr
Usaa Auto Owner Tr
Washington Mut Mtg Secs Corp.
Wells Fargo Finl Auto Owner Tr
Wells Fargo Mtg Bkd Secs
Whole Auto Ln 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
Partners
VisEra Holding Company
Long-term investment
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Note1: The proceeds of bond investments matured are excluded.
Note2: The ending balance included the amortization of premium or discount on bond investments.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ -
-
-
-
-
-
-
-
US$ 7,736
-
US$ 4,000
-
-
-
US$ 5,967
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 4,749
US$ 4,080
US$ 3,780
US$ 5,589
US$ 5,000
US$ 4,560
US$ 3,500
US$ 8,197
-
US$ 3,718
-
US$ 4,365
US$ 5,299
US$ 4,014
-
-
18,931
US$ 18,931
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ -
-
-
-
-
US$ 4,026
US$ 2,813
-
US$ 3,470
-
US$ 3,995
-
-
-
US$ 5,973
US$ -
-
-
-
-
US$ 4,026
US$ 2,810
-
US$ 3,491
-
US$ 4,000
-
-
-
US$ 5,967
US$
US$
-
-
-
-
-
-
3
-
US$ (21)
-
US$ (5)
-
-
-
6
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 4,749
-
US$ 3,780
US$ 4,817
US$ 3,234
-
-
US$ 8,197
US$ 3,103
US$ 3,718
-
US$ 4,067
US$ 5,299
US$ 3,661
-
-
-
-
18,931
US$ 19,862
(Concluded)
TABLE 5
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED 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 YEARS ENDED DECEMBER 31, 2005
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
Company Name
Related Party
Nature of Relationship
Transaction Details
Abnormal Transaction
Notes / Accounts Payable or
Receivable
Note
Purchase / Sale
Amount
% to Total
Payment Terms
Unit Price
(Note)
Payment Terms
(Note)
Ending Balance
% to Total
98
The Company
TSMC-North America
Philips
GUC
SSMC
WaferTech
SSMC
VIS
TSMC-Shanghai
Subsidiary
Major shareholder
Investee with controlling financial interest
Investee accounted for using equity method
Subsidiary
Investee accounted for using equity method
Investee accounted for using equity method
Subsidiary
Sales
Sales
Sales
Sales
Purchases
Purchases
Purchases
Purchases
$153,618,916
3,298,770
347,456
195,253
11,137,313
5,729,672
4,142,457
1,405,030
GUC
TSMC-North America
The same Parent
Purchases
266,372
57
1
-
-
28
15
10
4
23
Net 30 days after invoice date
Net 30 days after monthly closing
Net 30 days after monthly closing
Net 45 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
Net 30 days after invoice date
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$ 20,407,621
573,565
49,046
-
(1,133,217)
(485,873)
(563,240)
(274,820)
(66,138)
49
1
-
-
10
4
5
2
37
Note: The terms of sales to related parties are not significantly different from those to third parties. For purchase transactions, prices are determined in accordance with the related contractual agreements and no other similar transaction could be compared with.
TABLE 6
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED
RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
DECEMBER 31, 2005
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
Company Name
Related Party
Nature of Relationship
Ending Balance
Turnover Rate
Amount
Action Taken
Overdue
The Company
TSMC-North America
TSMC Technology
Philips
VisEra
Subsidiary
Indirect subsidiaries
Major shareholder
Indirect investee accounted for using equity
$ 20,606,126
972,563
573,565
374,200
43 days
Note
64 days
Note
$ 5,735,388
-
45,909
1,750
Accelerate demand on account receivables
Accelerate demand on account receivables
Accelerate demand on account receivables
Accelerate demand on account receivables
SSMC
Investee accounted for using equity method
149,251
Note
-
Accelerate demand on account receivables
method
Note: The ending balance primarily consisted of other receivables, it is not applicable for the calculation of the turnover rate.
Amounts Received in
Subsequent Period
Allowance for Bad Debts
$
$
7,626,255
-
1,603
5,161
-
-
-
-
-
-
TABLE 7
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED
NAMES, LOCATIONS, AND RELATED INFORMATION OF INVESTEES ON WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCE
DECEMBER 31, 2005
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
Investor Company
Investee Company
Location
Main Businesses and Products
Original Investment Amount
Balance as of December 31, 2005
December 31,
2005
December 31,
2004
Shares (in
Thousands)
Percentage of
Ownership
Carrying Value
(Note 1)
Net Income
(Loss) of the
Investee
Investment
Gain (Loss)
(Note 2)
Note
99
The Company
TSMC International
Tortola, British Virgin Islands
Providing investment in companies involved in the
$ 31,445,780
$ 31,445,780
987,968
100
$ 23,912,812
$ (549,454)
$ (549,454)
Subsidiary
TSMC-Shanghai
Shanghai, China
12,180,367
9,187,962
-
100
9,438,856
(2,242,213)
(2,242,213)
Subsidiary
design, manufacture, and other related business in
the semiconductor industry
Manufacturing and sales of integrated circuits at the
order of and pursuant to product design specifica-
tions provided by customers
Research, design, development, manufacture, pack-
aging, testing and sale of memory integrated cir-
cuits, LSI, VLSI and related parts
VIS
SSMC
Hsin-Chu, Taiwan
8,119,816
8,119,816
437,891
Singapore
Fabrication and supply of integrated circuits
6,408,190
6,408,190
382
TSMC Partners
TSMC-North America
Tortola, British Virgin Islands
San Jose, California, U.S.A.
Investment activities
Sales and marketing of integrated circuits and semi-
Emerging Alliance
VTAF II
GUC
Cayman Islands
Cayman Islands
Hsin-Chu, Taiwan
conductor devices
Investing in new start-up technology companies
Investing in new start-up technology companies
Researching, developing, manufacturing, testing and
marketing of integrated circuits
TSMC-Japan
Chi Cherng
Hsin Ruey
TSMC-Europe
Yokohama, Japan
Taipei, Taiwan
Taipei, Taiwan
Amsterdam, the Netherlands
Marketing activities
Investment activities
Investment activities
Marketing activities
Note 1: The treasury stock is deducted from the carrying value.
Note 2: The gains on disposal of the stocks of the Company held by subsidiaries and cash dividends from the Company are excluded.
10,350
333,718
1,526,074
654,509
409,920
83,760
300,000
300,000
15,749
10,350
333,718
1,447,957
332,412
409,920
83,760
300,000
300,000
15,749
300
11,000
-
-
40,147
6
-
-
-
27
32
100
100
99
98
46
100
36
36
100
5,419,747
2,710,971
617,268
4,215,200
2,503,446
801,103
Investee accounted for
using equity method
Investee accounted for
using equity method
4,091,166
1,790,186
850,534
642,479
442,233
94,949
78,139
77,415
23,087
46,656
564,201
(77,208)
(19,044)
106,748
2,572
77,196
77,257
295
46,656
320,274
Subsidiary
Subsidiary
(76,822)
(21,916)
52,390
Subsidiary
Subsidiary
Investee over which the
Company has controlling
financial interest
2,572
(3,769)
(3,806)
295
Subsidiary
Subsidiary
Subsidiary
Subsidiary
TABLE 8
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED
INFORMATION OF INVESTMENT IN MAINLAND CHINA
DECEMBER 31, 2005
(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
Accumulated Outflow of
Investment from Taiwan as of
January 1, 2005
(US$ in Thousand)
Investment Flows
Outflow
(US$ in Thousand)
Inflow
Accumulated Outflow of
Investment from Taiwan as of
December 31, 2005
(US$ in Thousand)
Percentage of Ownership in
Investment
TSMC (Shanghai) Company Limited
Manufacturing and sales of integrated
circuits at the order of and pur-
suant to product design specifica-
tions provided by customers
$
12,180,367
(RMB3,070,623)
(Note 1)
$
9,187,962
(US$ 276,000)
$ 2,992,405
(US$ 95,000)
$ -
$
12,180,367
(US$ 371,000)
100%
100
Investment Gain (Loss) (Note 2)
Carrying Value as of
December 31, 2005
Accumulated Inward Remittance of
Earnings as of December 31, 2005
Accumulated Investment in Mainland China as of
December 31, 2005 (US$ in Thousand)
Investment Amounts Authorized by Investment
Commission, MOEA (US$ in Thousand)
Upper Limit on Investment
(US$ in Thousand)
$
(2,242,213)
$
9,438,856
$
-
$
(US$
12,180,367
371,000)
$
(US$
12,180,367
371,000)
$
(US$
12,180,367
371,000)
Note 1: Direct investments US$371,000 thousand in TSMC-Shanghai.
Note 2: Amount was recognized based on the audited financial statements.
10. Consolidated Financial Statements for the Years Ended December 31, 2005 and 2004 and Independent Auditors' Report
REPRESENTATION LETTER
The entities included in the combined financial statements of Taiwan Semiconductor Manufacturing
Company Limited as of and for the year ended December 31, 2005, which were prepared in conform-
ity with the Criteria Governing the Preparation of Affiliation Reports, Consolidated Business Reports
and Consolidated Financial Statements of Affiliated Enterprises, are the same as the entities included
in the consolidated financial statements prepared in conformity with the revised R.O.C. Statement of
101
Financial Accounting Standards No. 7 "Consolidated Financial Statements" In addition, the informa-
tion needed to be disclosed in the combined financial statements is included in the consolidated
financial statements. Thus, Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
did not prepare a separate set of combined financial statements.
Very truly yours,
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED
By
MORRIS CHANG
Chairman
January 12, 2006
INDEPENDENT AUDITORS' REPORT
Notice to Readers
The Board of Directors and Shareholders
Taiwan Semiconductor Manufacturing Company Limited
The accompanying consolidated financial statements are intended only to present the consolidated
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
We have audited the accompanying consolidated balance sheets of Taiwan Semiconductor
standards, procedures and practices to audit such consolidated financial statements are those gener-
Manufacturing Company Limited and subsidiaries (the Company) as of December 31, 2005 and
ally accepted and applied in the Republic of China.
2004, and the related consolidated statements of income, changes in shareholders' equity and cash
102
flows for the years then ended. These consolidated financial statements are the responsibility of the
For the convenience of readers, the auditors' report and the accompanying financial statements have
Company's management. Our responsibility is to express an opinion on these consolidated financial
been translated into English from the original Chinese version prepared and used in the Republic of
statements based on our audits.
China. If there is any conflict between the English version and the original Chinese version or any dif-
ference in the interpretation of the two versions, the Chinese-language auditors' report and financial
We conducted our audits in accordance with the Rules Governing the Audit of Financial Statements
statements shall prevail.
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 examin-
ing, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant estimates made by man-
agement, 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
Limited and subsidiaries as of December 31, 2005 and 2004, 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 accounting principles generally accepted in the Republic
of China.
January 12, 2006
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2005 AND 2004
(In Thousands of New Taiwan Dollars, Except Par Value)
103
ASSETS
CURRENT ASSETS
Cash and cash equivalents (Notes 2, 3 and 4)
Short-term investments, net (Notes 2 and 4)
Notes and accounts receivable
Receivables from related parties (Note 20)
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 24)
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 24)
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
Accumulated depreciation
Advance payments and construction in progress
Property, plant and equipment, net
GOODWILL (Note 2)
OTHER ASSETS
Deferred charges, net (Notes 2, 8 and 23)
Deferred income tax assets, net (Notes 2 and 14)
Refundable deposits
Assets leased to others, net (Note 2)
Others (Note 2)
Total other assets
$
2005
Amount
96,483,707
47,399,308
43,082,275
693,266
(980,594)
(4,317,413)
597,910
2,915,696
17,728,303
7,149,306
1,503,447
212,255,211
10,287,424
3,365,341
18,548,308
10,227,000
42,428,073
851,225
105,832,028
510,922,064
9,670,611
597,669
627,873,597
(398,124,607)
15,074,302
244,823,292
6,010,601
7,006,250
6,788,418
106,802
72,879
18,063
13,992,412
$
2004
Amount
74,302,351
54,107,951
31,214,423
654,377
(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
78,613
48,832
10,876,324
%
19
9
8
-
-
(1)
-
1
3
2
-
41
2
-
4
2
8
-
21
98
2
-
121
(77)
3
47
1
2
1
-
-
-
3
%
15
11
7
-
-
(1)
-
-
3
2
-
37
2
1
3
2
8
-
19
87
2
-
108
(66)
10
52
1
2
-
-
-
-
2
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term bank loans (Note 9)
Accounts payable
Payables to related parties (Note 20)
Income tax payable (Notes 2 and 14)
Accrued expenses and other current liabilities (Notes 2, 12, 23 and 24)
Payables to contractors and equipment suppliers
Current portion of long-term liabilities (Note 10)
$
Total current liabilities
LONG-TERM LIABILITIES
Bonds payable (Note 11)
Long-term bank loans (Note 10)
Other long-term payables (Note 12)
Other payables to related parties (Notes 20 and 23)
Liability under capital lease (Note 2)
Total long-term liabilities
OTHER LIABILITIES
Accrued pension cost (Notes 2 and 13)
Guarantee deposits (Note 23)
Deferred credits (Notes 2 and 20)
Others
Total other liabilities
2005
2004
Amount
%
Amount
%
328,500
9,421,452
1,743,069
4,015,451
10,542,230
9,066,036
5,489
35,122,227
19,500,000
663,140
8,548,887
1,100,475
597,669
30,410,171
3,474,384
2,896,430
1,343,959
23,710
7,738,483
-
2
-
1
2
2
-
7
4
-
2
-
-
6
1
-
-
-
1
$
383,004
7,264,419
2,217,815
403,955
9,722,413
33,427,702
10,500,000
-
2
1
-
2
6
2
63,919,308
13
19,500,000
1,915,020
7,964,975
2,317,972
566,243
32,264,210
3,101,707
412,881
704,991
9,958
4,229,537
4
-
2
-
-
6
1
-
-
-
1
Total liabilities
73,270,881
14
100,413,055
20
EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF PARENT (Notes 2, 16, 17 and 18)
Capital stock - $10 par value
Authorized: 27,050,000 thousand shares in 2005 and 24,600,000 thousand
shares in 2004
Issued: 24,730,025 thousand shares in 2005 and 23,251,964 thousand shares in
2004
Capital surplus
Retained earnings
Appropriated as legal capital reserve
Appropriated as special capital reserve
Unappropriated earnings
Others
Cumulative translation adjustments
Treasury stock (at cost) - 32,938 thousand shares in 2005 and 45,521 thousand
shares in 2004
Total equity attributable to shareholders of the parent
MINORITY INTEREST IN SUBSIDIARIES (Note 2)
Total shareholders' equity
247,300,246
57,117,886
34,348,208
2,226,427
106,196,399
(640,742)
(918,075)
445,630,349
608,359
446,238,708
48
11
7
-
20
-
-
86
-
86
232,519,637
56,537,259
25,528,007
-
88,202,009
(2,226,427)
(1,595,186)
398,965,299
75,737
399,041,036
47
11
5
-
18
(1)
-
80
-
80
TOTAL
$
519,509,589
100
$
499,454,091
100
TOTAL
$
519,509,589
100
$
499,454,091
100
The accompanying notes are an integral part of the consolidated financial statements.
2005
Amount
93,575,035
57,633
93,632,668
2005
%
35
-
35
$
$
2004
Amount
92,316,115
12,898
92,329,013
2004
%
36
-
36
104
Income Attributable to
Shareholders of the Parent
Income Attributable to
Shareholders of the Parent
Before Tax
After Tax
Before Tax
After Tax
3.82
3.82
$
$
3.79
3.79
$
$
3.72
3.72
$
$
3.73
3.73
$
$
$
$
CONSOLIDATED EARNINGS PER SHARE (Note 19)
Basic earnings per share
Diluted earnings per share
The accompanying notes are an integral part of the consolidated financial statements.
(Concluded)
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004
(In Thousands of New Taiwan Dollars, Except Consolidated Earnings Per Share)
2005
2004
Amount
%
Amount
%
GROSS SALES (Notes 2 and 20)
$
271,801,696
$
261,947,351
SALES RETURNS AND ALLOWANCES (Note 2)
5,236,626
4,734,733
ATTRIBUTABLE TO:
Shareholders of the parent
Minority interest
NET SALES
266,565,070
100
257,212,618
100
COST OF SALES (Notes 15 and 20)
GROSS PROFIT
OPERATING EXPENSES (Notes 15 and 20)
Research and development
General and administrative
Sales and marketing
Total operating expenses
INCOME FROM OPERATIONS
NON-OPERATING INCOME AND GAINS
Interest (Notes 2 and 24)
Equity in earnings of equity method investees, net (Notes 2 and 6)
Settlement income (Note 22)
Technical service income (Notes 20 and 23)
Gain on disposal of property, plant and equipment (Note 2)
Subsidy income
Gain on sales of investments, net (Note 2)
Others (Note 20)
Total non-operating income and gains
NON-OPERATING EXPENSES AND LOSSES
Interest (Notes 2, 7 and 24)
Unrealized valuation loss on short-term investments (Note 2)
Loss on idle assets (Note 2)
Loss on impairment of long-term investments (Note 2)
Loss on disposal of property, plant and equipment and idle assets (Note 2)
Others
Total non-operating expenses and losses
INCOME BEFORE INCOME TAX
INCOME TAX BENEFIT (EXPENSE) (Notes 2 and 14)
148,362,196
118,202,874
14,016,506
9,085,536
4,132,273
27,234,315
90,968,559
3,069,435
1,433,226
964,710
462,624
342,756
321,850
-
472,896
7,067,497
2,662,458
337,160
131,849
128,900
60,109
452,333
3,772,809
56
44
5
3
2
10
34
1
1
-
-
-
-
-
-
2
1
-
-
-
-
-
1
141,393,435
115,819,183
12,516,434
11,454,374
3,366,701
27,337,509
88,481,674
1,783,693
2,094,137
-
423,804
242,785
-
914,541
556,598
6,015,558
1,454,242
75,212
-
350,608
131,148
520,435
2,531,645
94,263,247
(630,579)
35
-
91,965,587
363,426
NET INCOME
$
93,632,668
35
$
92,329,013
55
45
5
4
1
10
35
1
1
-
-
-
-
-
-
2
1
-
-
-
-
-
1
36
-
36
(Continued)
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004
(In Thousands of New Taiwan Dollars, Except Dividends Per Share)
105
Capital Stock
Retained Earnings
Shares
(in Thousands)
Capital Surplus
Amount
Legal Capital
Reserve
Special Capital
Reserve
Unappropriated
Earnings
Unrealized Loss
on Long-term
Investments
Cumulative
Translation
Adjustments
Total
Treasury Stock
Total
Equity Attributable to Shareholders of the Parent (Notes 2, 16, 17 and 18)
Minority
Interest in
Subsidiaries
(Note 2)
Total
Shareholders'
Equity
BALANCE, JANUARY 1, 2004
20,266,619
$ 202,666,189
$ 56,855,885
$ 20,802,137
$ 68,945
$ 50,229,008
$ 71,100,090
$ (35)
$ 225,408
$ (1,633,228)
$ 329,214,309
$ 88,999
$ 329,303,308
Appropriations of prior year's earnings
Legal capital reserve
Reversal of special capital reserve
Employees' profit sharing - in cash
Employees' profit sharing - in stock
Cash dividends to preferred shareholders
Cash dividends to common shareholders - NT$0.60 per share
Stock dividends to common shareholders - NT$1.41 per share
Bonus to directors and supervisors
Net income in 2004
Adjustment arising from changes of percentage of ownership in
investees
Reversal of unrealized loss on long-term investment of investees
Translation adjustments
Issuance of stock from exercising stock options
Cash dividends received by subsidiaries from parent company
Treasury stock transactions - sales of parent company's stock held
by subsidiaries
Treasury stock repurchased by the parent company
Retirement of treasury stock
Decrease in minority interest
-
-
-
272,651
-
-
2,837,327
-
-
-
-
-
87
-
-
-
-
2,726,514
-
-
28,373,267
-
-
-
-
-
867
-
-
-
(124,720)
-
-
-
(1,247,200)
-
-
-
-
-
-
-
-
-
-
4,725,870
-
-
-
-
-
-
-
-
-
(68,945)
-
-
-
-
-
-
-
(4,725,870)
68,945
(681,628)
(2,726,514)
(184,493)
(12,159,971)
(28,373,267)
(127,805)
92,316,115
-
-
(681,628)
(2,726,514)
(184,493)
(12,159,971)
(28,373,267)
(127,805)
92,316,115
34,059
-
-
2,757
22,781
1,864
-
(380,087)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(5,432,511)
-
-
-
(5,432,511)
-
88,202,009
113,730,016
BALANCE, DECEMBER 31, 2004
23,251,964
232,519,637
56,537,259
25,528,007
Appropriations of prior year's earnings
Legal capital reserve
Special capital reserve
Employees' profit sharing - in cash
Employees' profit sharing - in stock
Cash dividends to common shareholders - NT$2.00 per share
Stock dividends to common shareholders - NT$0.50 per share
Bonus to directors and supervisors
Net income in 2005
Adjustment arising from changes of percentage of ownership in
investees
Translation adjustments
Issuance of stock from exercising stock options
Cash dividends received by subsidiaries from parent company
Treasury stock transactions - sales of parent company's stock held
by subsidiaries
Increase in minority interest
-
-
-
308,622
-
1,162,602
-
-
-
-
6,837
-
-
-
-
-
-
3,086,215
-
11,626,024
-
-
-
-
68,370
-
-
-
-
-
-
-
-
-
-
-
71,405
-
202,559
84,285
222,378
-
8,820,201
-
-
-
-
-
-
-
-
2,226,427
-
-
-
-
-
-
(8,820,201)
(2,226,427)
(3,086,215)
(3,086,215)
(46,504,097)
(11,626,024)
(231,466)
93,575,035
-
-
(3,086,215)
(3,086,215)
(46,504,097)
(11,626,024)
(231,466)
93,575,035
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
35
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2,451,835)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
38,042
(7,059,798)
7,059,798
-
-
-
(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)
-
-
-
-
-
-
-
-
-
-
12,898
-
-
-
-
-
-
-
-
(26,160)
-
-
(681,628)
-
(184,493)
(12,159,971)
-
(127,805)
92,329,013
34,059
35
(2,451,835)
3,624
22,781
39,906
(7,059,798)
-
(26,160)
(2,226,427)
(1,595,186)
398,965,299
75,737
399,041,036
-
-
-
-
-
-
-
-
-
1,585,685
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
677,111
-
-
-
(3,086,215)
-
(46,504,097)
-
(231,466)
93,575,035
71,405
1,585,685
270,929
84,285
899,489
-
-
-
-
-
-
-
-
57,633
-
(51,795)
-
-
-
526,784
-
-
(3,086,215)
-
(46,504,097)
-
(231,466)
93,632,668
71,405
1,533,890
270,929
84,285
899,489
526,784
BALANCE, DECEMBER 31, 2005
24,730,025
$ 247,300,246
$ 57,117,886
$ 34,348,208
$ 2,226,427
$ 106,196,399
$142,771,034
$ -
$
(640,742)
$ (918,075)
$ 445,630,349
$ 608,359
$ 446,238,708
The accompanying notes are an integral part of the consolidated financial statements.
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004
(In Thousands of New Taiwan Dollars)
2005
2004
2005
2004
CASH FLOWS FROM OPERATING ACTIVITIES
Net income attributable to shareholders of the parent
Net income attributable to minority interest
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization
Deferred income taxes
Equity in earnings of equity method investees, net
Amortization of premium/discount of long-term bond investments, net
Loss on impairment of long-term investments
Gain on sales of long-term investments, net
Gain on disposal of property, plant and equipment and idle assets, net
Loss on idle assets
Donation of idle assets
Provision for pension cost
Dividends received from equity method investees
Changes in operating assets and liabilities:
Decrease (increase) in:
Notes and accounts receivable
Receivables from related parties
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:
Accounts payable
Payables to related parties
Income tax payable
Accrued expenses and other current liabilities
Deferred credits
$
93,575,035
57,633
$
92,316,115
12,898
75,649,429
(3,353,013)
(1,433,226)
120,872
128,900
(15,304)
(282,647)
131,849
7,207
360,128
668,464
(11,572,809)
(101,915)
(3,145)
974,963
(87,979)
(469,023)
(2,006,165)
183,046
2,088,582
(1,629,217)
3,611,486
292,568
117,335
69,818,457
(1,058,393)
(2,094,137)
28,673
350,608
(85,203)
(111,637)
-
-
500,257
-
(2,709,261)
266,067
(37,555)
1,206,607
(9,847)
(777,100)
(3,420,613)
(34,493)
825,815
(1,499,968)
266,526
(602,911)
-
Net cash provided by operating activities
157,013,054
153,150,905
CASH FLOWS FROM INVESTING ACTIVITIES
Decrease (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 and idle assets
Increase in deferred charges
Decrease in refundable deposits
Decrease in other assets
6,954,230
(14,675,413)
(79,878,724)
10,533,622
480,707
(855,967)
771
741
(43,554,878)
(23,054,379)
(81,094,557)
165,243
1,812,633
(2,405,673)
93,074
51,604
Net cash used in investing activities
(77,440,033)
(147,986,933)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayments on:
Short-term bank loans
Bonds payable
Long-term bank loans
Increase (decrease) in guarantee deposits
Cash bonus paid to employees
Cash dividends paid for preferred stock
Cash dividends paid for common stock
Bonus to directors and supervisors
Repurchase of treasury stock
Proceeds from:
Exercise of employee stock options
Disposal of treasury stock
Increase (decrease) in minority interest in subsidiaries
Net cash used in financing activities
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
EFFECT OF FIRST INCLUSION FOR CONSOLIDATION OF CERTAIN SUBSIDIARIES
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS, END OF YEAR
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for
Interest (excluding the amount capitalized of NT$278,334 thousand in
2004, Note 7)
Income tax
Cash paid for acquisition of property, plant and equipment
Total acquisitions
Decrease (increase) in payables to contractors and equipment suppliers
Increase in other long-term payables
Decrease in liability under capital lease
NONCASH INVESTING AND FINANCING ACTIVITIES
Current portion of long-term liabilities
Current portion of other payables to related parties (classified under
payables to related parties)
Current portion of other long-term payables (classified 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
(54,504)
(10,500,000)
(1,337,489)
2,483,549
(3,086,215)
-
(46,419,812)
(231,466)
-
270,929
899,489
6,832
(57,968,687)
21,604,334
348,921
228,101
74,302,351
96,483,707
2,435,827
341,671
56,166,205
24,361,666
(649,147)
-
79,878,724
5,489
693,956
869,072
245,587
-
$
$
$
$
$
$
$
$
$
$
(Continued)
The accompanying notes are an integral part of the consolidated financial statements.
106
-
(5,000,000)
(6,656,152)
(351,008)
(681,628)
(184,493)
(12,137,190)
(127,805)
(7,059,798)
3,624
39,906
(26,160)
(32,180,704)
(27,016,732)
(1,669,813)
-
102,988,896
74,302,351
1,470,333
389,189
113,043,552
(26,195,599)
(5,913,737)
160,341
81,094,557
10,500,000
469,494
1,505,345
343,950
3,402,413
(Concluded)
$
$
$
$
$
$
$
$
$
$
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED AND
SUBSIDIARIES
changes in investment structure, the Company no longer had a coutrolling interest over VisEra in
November 2005; the consolidated statement of income for the year ended December 31, 2005
included the revenue and expenses of VisEra for the ten months ended October 31, 2005); moreover,
pursuant to the newly adopted standard, the Company did not retroactively restate its consolidated
financial statements as of and for the year ended December 31, 2004.
The consolidated entities were as follows:
Name of Investor
Name of Investee
Percentage of
Ownership at
December 31, 2005
Remark
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
1. GENERAL
107
Taiwan Semiconductor Manufacturing Company Limited (TSMC), a Republic of China (R.O.C.) corpo-
ration, was incorporated as a venture among the Government of the R.O.C., acting through the
TSMC
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.
As of December 31, 2005 and 2004, TSMC and its subsidiaries had 21,950 and 20,444 employees,
respectively.
2. SUMMARY OF 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 consolidated financial statements have been trans-
lated 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 interpre-
tation of the two versions, the Chinese-language consolidated financial statements shall prevail.
Significant accounting policies are summarized as follows:
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of all directly and indirectly
majority owned subsidiaries of TSMC, and the accounts of investees in which TSMC's ownership per-
centage is less than 50% but has a controlling interest. All significant intercompany balances and
transactions are eliminated upon consolidation.
In compliance with the revised R.O.C. Statement of Financial Accounting Standards ("SFAS") No. 7
"Consolidated Financial Statements", the consolidated financial statements included new consolidated
entities, including Global Unichip Corporation (GUC), Global Unichip Corp.-North America (GUC-NA),
Global Unichip Japan Co., Ltd (GUC-Japan) and VisEra Technology Company, Ltd. (VisEra; due to the
TSMC North America (TSMC-NA)
TSMC Japan K. K. (TSMC-Japan)
Taiwan Semiconductor
Manufacturing Company
Europe B.V. (TSMC-Europe)
TSMC (Shanghai) Company
Limited (TSMC-Shanghai)
TSMC Partners, Ltd. (TSMC
Partners)
TSMC International Investment
Ltd. (TSMC International)
Chi Cherng Investment Co., Ltd.
(Chi Cherng)
100%
100%
100%
100%
100%
100%
36%
Hsin Ruey Investment Co., Ltd.
36%
(Hsin Ruey)
-
-
-
-
-
-
TSMC and Hsin Ruey held in aggregate a 100%
ownership of Chi Cherng. As of December 31,
2005, Chi Cherng held 16,454 thousand com-
mon shares in TSMC (approximately 0.07% of
outstanding common shares).
TSMC and Chi Cherng held in aggregate a 100%
ownership of Hsin Ruey. As of December 31,
2005, Hsin Ruey held 16,484 thousand com-
mon shares in TSMC (approximately 0.07% of
outstanding common shares).
Emerging Alliance Fund, L.P.
(Emerging Alliance)
VentureTech Alliance Fund II, L.P.
(VTAF II)
GUC
99.5%
98%
-
-
46%
Starting from January 1, 2005, GUC became a
consolidated entity of TSMC as GUC's president
was assigned by TSMC and TSMC has control
over the financial, operating and personnel hir-
ing decisions of GUC. Please see Note 20 for sig-
nificant intercompany transactions between
TSMC and GUC during 2004.
VisEra
-
Starting from January 1, 2005, VisEra became a
consolidated entity of TSMC as VisEra's president
was assigned by TSMC and TSMC no longer had
a controlling interest over the financial, operat-
ing and personnel hiring decisions of VisEra.
However, due to the changes in investment
structure, TSMC no longer had a controlling
interest over VisEra beginning in November
2005. As a result, its revenue and expenses
after October 31, 2005 were excluded from the
consolidated statements of income for the year
ended December 31, 2005.
(Continued)
Percentage of
Ownership at
December 31, 2005
Remark
Name of Investor
Name of Investee
TSMC International
TSMC Technology, Inc. (TSMC
Technology)
TSMC Development, Inc. (TSMC
Development)
InveStar Semiconductor
Development Fund, Inc. (ISDF)
InveStar Semiconductor
Development Fund, Inc. (II) LDC
(ISDF II)
TSMC Development
WaferTech, LLC (WaferTech)
GUC
GUC-NA
GUC-Japan
100%
100%
100%
97%
97%
99.996%
100%
-
-
-
-
-
Starting from January 1, 2005, GUC-NA became a
consolidated entity of TSMC as TSMC has control
over GUC. TSMC did not enter into significant
transactions with GUC-NA in prior years.
Starting from January 1, 2005, GUC-Japan became
a consolidated entity of TSMC as TSMC has con-
trol over GUC. TSMC did not enter into signifi-
cant transactions with GUC-Japan in prior years.
(Concluded)
108
The following diagram presents information regarding the relationship and ownership percentages
between TSMC and its consolidated investees as of December 31, 2005:
TSMC
100%
100%
100%
100%
100%
100%
36%
36%
99.5%
46%
98%
TSMC-NA
TSMC-Japan
TSMC
International
TSMC-Europe
TSMC Partners
TSMC
Shanghai
Chi Cherng
64%
64%
Hsin Ruey
Emerging
Alliance
GUC
VTAF II
100%
100%
97%
97%
TSMC
Technology
TSMC
Development
ISDF
ISDF II
99.996%
WaferTech
100%
100%
GUC-Japan
GUC-NA
TSMC-NA is engaged in selling and marketing of integrated circuits and semiconductor devices.
method; whereas the costs of other securities sold are accounted for using the specific identification
TSMC-Japan and TSMC-Europe are engaged mainly in marketing activities. TSMC-Shanghai is
method.
engaged in the manufacturing and sales of integrated circuits at the order of and pursuant to prod-
uct design specifications provided by customers. TSMC Partners, TSMC Development, Chi Cherng and
The market value of funds is determined using the net asset value of the funds at the end of the year,
Hsin Ruey are engaged in investing activities. TSMC International is engaged in investment in compa-
and the market value of public-traded stocks is determined using the average-closing prices of the
nies involved in the design, manufacture, and other related business in the semiconductor industry.
listed stocks for the last month of the year. The market value of other short-term investments is deter-
TSMC Technology is engaged mainly in engineering support activities. Emerging Alliance, VTAF II,
mined using the average of bid and ask prices at the end of the year.
ISDF and ISDF II are engaged in investing in new start-up technology companies. WaferTech is
engaged in the manufacturing, selling, testing and computer-aided designing of integrated circuits
Cash dividends are recorded as investment income in the current year.
and other semiconductor devices. GUC is engaged in the researching, developing, manufacturing,
109
testing and marketing of integrated circuits. GUC-NA and GUC-Japan are engaged in providing prod-
Allowance for Doubtful Receivables
ucts consulting in North America and Japan.
An allowance for doubtful receivables is provided based on a review of the collectibility of accounts
receivables. The Company determines the amount of the allowance for doubtful receivables by exam-
TSMC together with its consolidated entities are hereinafter referred to collectively as the "Company".
ining the aging analysis of outstanding account receivables and current trends in the credit quality of
Minority interest in subsidiaries aforementioned is presented under minority interest in subsidiaries in
the consolidated balance sheets.
Revenue Recognition and Allowance for Sales Returns and Others
its customers as well as its internal credit policies.
Use of Estimates
The Company recognizes revenue when evidence of an arrangement exists, shipment is made, price is
fixed or determinable, and collectibility is reasonably assured. Revenues from the design and manu-
The preparation of consolidated financial statements in conformity with the Guidelines Governing the
facturing of photo masks, which are used as manufacturing tools in the fabrication process, are rec-
Preparation of Financial Reports by Securities Issuers and accounting principles generally accepted in
ognized when the photo masks are qualified by customers. The Company records a provision for esti-
the R.O.C. that require management to make reasonable assumptions and estimates of matters that
mated future returns and other allowances in the period the related revenue is recorded. Provisions
are inherently uncertain. The actual results may differ from management's estimates.
for estimated sales returns and other allowances are generally made based on historical experience,
management's judgment, and any known factors that would significantly affect the allowance.
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
Sales are determined using the fair value taking into account related sales discounts agreed to by the
the balance sheet date. Current liabilities are obligations due on demand within one year from the
Company and its customers. Sales agreements typically provide that payment is due 30 days from
balance sheet date. Assets and liabilities that are not classified as current are noncurrent assets and
invoice date for a majority of the customers and 30 to 45 days after the end of the month in which
liabilities, respectively.
Cash Equivalents
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 to be received.
Government bonds under repurchase agreements and notes acquired with maturities less than three
months from the date of purchase are classified as cash equivalents.
Inventories
Short-term Investments
Inventories are stated at the lower of cost or market value. Inventories are recorded at standard cost
and adjusted to the approximate weighted-average cost at the balance sheet date. Market value rep-
Short-term investments primarily consist of agency bonds, corporate bonds, asset-backed securities,
resents replacement cost for raw materials, supplies and spare parts, and net realizable value is used
bond funds, government bonds and others.
for finished goods and work in process. The Company assesses the impact of changing technology on
its inventories on hand and writes off inventories that are considered obsolete. Year-end inventories
Short-term investments are recorded at historical cost and are carried at the lower of cost or market
are evaluated for estimated excess quantities and obsolescence based on a demand forecast within a
value as of the balance sheet date. An allowance for decline in value is provided and is charged to
specific time horizon, which is generally 180 days or less. Estimated losses on scrap and slow-moving
current income when the aggregate carrying amount of the investments exceeds the aggregate mar-
items are recognized and included in the allowance for losses.
ket value. A reversal of the allowance is recorded for a subsequent recovery of the aggregate market
value.
Long-term Investments
The costs of funds and public-traded stocks sold are accounted for using the weighted-average
financial policy decisions are accounted for using the equity method of accounting. The Company's
Investments in companies wherein the Company exercises significant influence on the operating and
share of the net income or net loss of an investee is recognized in the "equity in earnings/losses of
Gains or losses on sales from the Company to investees accounted for using the equity method and
equity method investees, net" account. When equity investments are made, the difference, if any,
vice versa are deferred in proportion to the Company's ownership percentages in the investees until
between the cost of the investment and the Company's share of the investee's net equity is amortized
realized through transactions with third parties.
using the straight-line method over five years and is also recorded in the "equity in earnings/losses of
equity method investees, net" account.
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.
When the Company subscribes for additional investee shares at a percentage different from its exist-
Such adjustments are accumulated and reported as a separate component of shareholders' equity.
ing ownership percentage of equity interest, the resulting carrying amount of the investment in the
investee differs from the amount of the Company's share of the investee's net equity. The Company
Property, Plant and Equipment, Assets Leased to Others, Leased Assets and Idle Assets
records such difference as an adjustment to long-term investments with the corresponding amount
Property, plant and equipment and assets leased to others are stated at cost less accumulated depre-
charged or credited to capital surplus.
ciation. Properties covered by agreements qualifying as capital leases are carried at the lower of the
110
leased equipment's market value or the present value of the minimum lease payments at the incep-
Investments in companies wherein the Company does not exercise significant influence are recorded
tion date of the lease, with the corresponding amount recorded as a liability under capital lease.
at historical cost. Cash dividends are recognized as investment income in the year received but are
When an indication of impairment is identified, any excess of the carrying amount of an asset over its
accounted for as reductions to the carrying amount of the investments if the dividends are received in
recoverable amount is recognized as a loss. If the recoverable amount increases in a future period, the
the year of acquisition. Stock dividends are recorded as an increase in the number of shares held and
amount previously recognized as impairment would be reversed and recognized as a gain. However,
do not affect investment income or the carrying amount of the investment. An allowance is recog-
the adjusted amount may not exceed the carrying amount that would have been determined, net of
nized for any decline in the market value of investments in publicly traded stocks with readily ascer-
depreciation, as if no impairment loss had been recognized. Idle assets are stated at the lower of net
tainable fair market value, with the corresponding amount recorded as an unrealized loss, a compo-
realizable value or book value. Significant additions, renewals and betterments incurred during the
nent of shareholders' equity. A reversal of the allowance is recorded for a subsequent recovery of the
construction period are capitalized. Maintenance and repairs are expensed in the year incurred.
market value of such investment.
Interest expense incurred during the purchase and construction period is also capitalized.
Investments in mutual funds are stated at the lower of aggregate cost or net asset value. An
Depreciation is computed using the straight-line method over the following estimated service lives:
allowance is recognized when the net asset value of the funds is lower than their cost, with the corre-
land improvements - 20 years; buildings - 10 to 50 years; machinery and equipment - 3 to 10 years;
sponding amount recorded as a reduction to shareholders' equity. A reversal of the allowance will
office equipment - 3 to 15 years; and leased assets - 20 years.
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.
tion are removed from the corresponding accounts, with any gain or loss credited or charged to non-
Upon sale or disposal of property, plant and equipment, the related cost and accumulated deprecia-
operating gains or losses in the year of sale or disposal.
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 the amortization is recorded as an adjust-
Goodwill
ment to interest income.
Goodwill represents the excess of the consideration paid for acquisition over the fair market value of
identifiable net assets acquired. Goodwill is amortized using the straight-line method over the esti-
When investments in public-traded securities are reclassified from short-term investments to long-
mated life of 10 years. If an event occurs or circumstances change that more likely than not reduce
term investments or from long-term investments to short-term investments, the Company recognizes
the fair value of goodwill below its carrying amount, an impairment loss is charged to current
a loss to the extent, if any, that the market value of such investments is lower than the carrying
income. No recording of subsequent recovery in the fair value of the goodwill is allowed.
amount and the market value at the time of reclassification becomes the new basis.
Deferred Charges
If an investee recognizes an unrealized loss on its long-term investments using the lower-of-cost-or-
Deferred charges consist of technology license fees, software and system design costs and other
market method, the Company also recognizes a corresponding unrealized loss in proportion to its
charges. The amounts are amortized as follows: Technology license fees - the shorter of the estimated
ownership percentage in the investee and records the amount as a component of shareholders' equity.
life of the technology or the term of the technology transfer contract; software and system design
When an indication of impairment is identified in an investment, the carrying amount of the invest-
the carrying amount of an asset over its recoverable amount is recognized as a loss. If the recoverable
ment is reduced to reflect such other-than-temporary decline, with the related impairment loss
amount increases in a future period, the amount previously recognized as impairment would be
charged to current income.
reversed and recognized as a gain. However, the adjusted amount may not exceed the carrying
costs and other charges 2 to 5 years. When an indication of impairment is identified, any excess of
amount that would have been determined, net of amortization, as if no impairment loss had been
Foreign-currency Transactions
recognized.
Pension Costs
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
For employees under defined contribution pension plans, pension costs are recorded based on the
the end of the year, assets and liabilities denominated in foreign currencies are revalued at the prevail-
actual contributions made to employees' individual pension accounts. For employees under defined
ing exchange rates with the resulting gains or losses recognized in current income.
benefit pension plans, pension costs are recorded based on actuarial calculations.
Derivative Financial Instruments
Income Tax
The Company enters into foreign currency forward contracts to manage foreign exchange exposures
The Company uses an inter-period tax allocation method for income tax. Deferred income tax assets
on foreign-currency-denominated assets and liabilities. The contracts are recorded in New Taiwan dol-
111
and liabilities are recognized for the tax effects of temporary differences, net operating loss carryfor-
lars at the current rate of exchange at the contract date. The differences in the New Taiwan dollar
wards and unused tax credits. Valuation allowances are provided to the extent, if any, that it is more
amounts translated using the current rates and the amounts translated using the contracted forward
likely than not that deferred income tax assets will not be realized. A deferred tax asset or liability is
rates are amortized over the terms of the forward contracts using the straight-line method. At the
classified as current or noncurrent in accordance with the classification of its related asset or liability.
end of the year, the receivables or payables arising from forward contracts are restated using the pre-
However, if a deferred tax asset or liability does not relate to an asset or liability in the financial state-
vailing exchange rates with the resulting differences credited or charged to income. In addition, the
ments, then it is classified as either current or noncurrent based on the expected length of time
receivables and payables related to the same forward contracts are netted with the resulting amount
before it is realized or settled.
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.
Any tax credits arising from purchases of machinery, equipment and technology, research and devel-
opment expenditures, personnel training, and investments in important technology-based enterprises
The Company enters into cross currency swap contracts to manage currency exposures on foreign-
are recognized using the flow-through method.
currency-denominated assets and liabilities. The principal amount is recorded using the current rate at
the contract date. The differences in the New Taiwan dollar amounts translated using the current
Adjustments of prior years' tax liabilities are added to or deducted from the current year's tax provi-
rates and the amounts translated using the contracted rates are amortized over the terms of the con-
sion.
tracts using the straight-line method. At the end of the year, the receivables or payables arising from
cross-currency swap contracts are restated using the prevailing exchange rate with the resulting dif-
Income taxes on unappropriated earnings (excluding earnings from foreign consolidating subsidiaries)
ferences credited or charged to income. In addition, the receivables and payables related to the con-
of 10% are expensed in the year of shareholder approval which is the year subsequent to the year the
tracts of the same counter party are netted with the resulting amount presented as either an asset or
earnings are generated.
Stock-based Compensation
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
Employee stock option plans that are amended or have options granted on or after January 1, 2004
the year of settlement.
must be accounted for by the interpretations issued by the Accounting Research and Development
Foundation. The Company adopted the intrinsic value method and any compensation cost deter-
The contract amounts of foreign currency option contracts entered into for hedging purposes are not
mined using this method is charged to expense over the employee vesting period.
recognized as an asset or liability on the contract dates. Any resulting gain or loss upon settlement is
credited or charged to income in the year of settlement.
Treasury Stock
When TSMC repurchases its outstanding common stock, the cost of the reacquired stock is recorded
The Company enters into interest rate swap contracts to manage exposures to changes in interest
as treasury stock, a reduction to shareholders' equity. When TSMC retires treasury stock, the treasury
rates on existing assets or liabilities. The receivable or payable computed pursuant to the contracts on
stock account is reduced and the common stock as well as the capital surplus - additional paid-in
each settlement date or the balance sheet date is recorded as an adjustment to the interest income or
capital are reversed on a pro rata basis. When the book value of the treasury stock exceeds the sum
expense associated with the hedged items.
of the par value and additional paid-in capital, the difference is charged to capital surplus - treasury
stock transactions and to retained earnings for any remaining amount. TSMC's stock held by its sub-
Translation of Foreign-currency Financial Statements
sidiaries is treated as treasury stock and reclassified from long-term investments to treasury stock. The
R.O.C. SFAS No. 14, "Accounting for Foreign-currency Translation", applies to foreign subsidiaries that
gains resulted from the disposal of treasury stock held by the subsidiaries and cash dividends received
use the local currency as their functional currency. The financial statements of foreign subsidiaries are
by the subsidiaries from TSMC are recorded under capital surplus - treasury stock transactions.
translated into New Taiwan dollars at the following exchange rates: Assets and liabilities - current rate
at year-end; shareholders' equity - historical rate; income and expenses - average rate during the year.
5. INVENTORIES, NET
The resulting translation adjustments are 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,
2004 have been reclassified to conform to the consolidated financial statements as of and for the
year ended December 31, 2005.
3. CASH AND CASH EQUIVALENTS
Cash and deposits in bank
Government bonds acquired under repurchase agreements
Corporate notes
4. SHORT-TERM INVESTMENTS, NET
Agency bonds
Corporate bonds
Corporate issued asset-backed securities
Bond funds
Government bonds
Public-traded stocks
Corporate notes
Money market funds
Government bonds acquired under repurchase agreements
Commercial papers
Allowance for valuation
Market value
2005
48,107,316
47,963,226
413,165
96,483,707
2005
14,607,694
12,463,688
11,724,149
6,055,578
2,087,418
349,218
263,249
260,686
-
-
47,811,680
(412,372)
47,399,308
49,137,413
$
$
$
$
$
2004
54,608,986
19,215,153
478,212
74,302,351
2004
8,633,889
13,554,598
11,766,877
10,662,758
7,346,858
168,299
63,796
1,640,973
249,449
95,666
54,183,163
(75,212)
54,107,951
54,990,545
$
$
$
$
$
TSMC entered into investment management agreements with three well-known financial institutions
(fund managers) to manage its investment portfolios. In accordance with the investment guidelines
Finished goods
Work in process
Raw materials
Supplies and spare parts
Allowance for valuation
6. LONG-TERM INVESTMENTS
Equity method
Vanguard International Semiconductor Corporation (VIS)
Systems on Silicon Manufacturing Company Pte Ltd. (SSMC)
VisEra Holding Company (VisEra Holding)
GUC (Note 2)
VisEra
Cost method
Common stocks
Publicly traded stocks
Non-publicly traded stocks
Preferred stocks
Funds
Long-term bonds
Government bonds
Corporate bonds
Taiwan Power Company
Nan Ya Plastics Corporation
China Steel Corporation
Formosa Petrochemical Corporation
Chinese Petroleum Corporation
Far Eastone Telecommunication Co., Ltd.
Formosa Plastics Corporation
Formosa Chemical & Fiber Corporation
and terms specified in these agreements, the securities invested by the fund managers cannot be
below a pre-defined credit rating. As of December 31, 2005, TSMC's investment portfolios managed
Other investments
by these fund managers aggregated to an original amount of US$1,200,000 thousand. The invest-
ment portfolios included securities such as agency bonds, corporate bonds, asset-backed securities,
government bonds and others. Securities acquired with maturities less than three months from the
date of purchase were reclassified as cash equivalents.
$
2005
2,963,989
13,359,209
1,765,369
1,325,582
19,414,149
(1,685,846)
$
2004
3,526,036
11,437,466
993,151
1,176,735
17,133,388
(1,577,451)
$
17,728,303
$
15,555,937
112
2005
2004
Carrying
Amount
% of
Ownership
Carrying
Amount
% of
Ownership
28
32
-
47
25
-
-
-
-
$ 5,419,747
4,215,200
652,477
-
-
10,287,424
60,177
1,006,203
1,963,971
334,990
3,365,341
9,922,937
3,263,348
2,150,842
1,010,532
791,963
705,436
300,026
268,855
134,369
18,548,308
10,227,000
27
32
50
-
-
-
-
-
-
$ 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
915,276
407,526
2,978,804
202,595
-
-
405,485
-
15,170,167
10,521,740
$ 42,428,073
$ 38,101,849
For the years ended December 31, 2005 and 2004, net equity in earnings recognized from the equity
7. PROPERTY, PLANT AND EQUIPMENT
method investees was NT$1,433,226 thousand and NT$2,094,137 thousand, respectively. The carry-
ing amounts of the investments accounted for under the equity method and the related equity in
Accumulated depreciation at December 31, 2005 and 2004 consisted of the following:
earnings of equity method investees were determined based on the audited financial statements of
the investees as of and for the same periods as the Company.
In November 2005, the Company transferred all of its shares in VisEra to VisEra Holding Company, an
investee accounted for using the equity method of TSMC Partners, due to the changes in investment
structure.
Land improvements
Buildings
Machinery and equipment
Office equipment
Leased assets
113
Other investments consisted of the following structured time-deposits:
$
2005
206,408
46,560,127
344,431,001
6,862,502
64,569
$
2004
172,484
38,160,322
287,204,368
5,683,577
33,115
$
398,124,607
$
331,253,866
December 31, 2005
Step-up callable deposits
Foreign banks
Callable range accrual deposits
Foreign banks
December 31, 2004
Step-up callable deposits
Domestic banks
Foreign banks
Callable range accrual deposits
Foreign banks
$
$
$
Principal Amount
Interest Receivable
Range of
Interest Rates
Maturity Date
There was no capitalized interest for the year ended December 31, 2005. Interest expense for the year
ended December 31, 2004 was NT$1,732,576 thousand (before deducting the amount capitalized of
NT$278,334 thousand); the rates used for calculating the capitalized interest ranged from 1.89% to
3,000,000
$
8,145
1.40%-1.50%
Jun. 2007-Oct. 2007
2.89%.
7,227,000
9,951
(See below)
Sep. 2009-Jan. 2010
8. DEFERRED CHARGES, NET
10,227,000
$
18,096
Deferred charges, net at December 31, 2005 and 2004 consisted of the following:
2,000,000
2,138,340
$
6,383,400
7,681
14,054
30,751
2.05%-2.20%
1.44%-4.75%
Jul. 2007-Aug. 2007
Jun. 2007-Aug. 2007
(See below)
Sep. 2009-Dec. 2009
Technology license fees
Software and system design costs
Other
2005
5,099,227
1,737,384
169,639
7,006,250
$
$
2004
6,534,899
2,213,636
243,917
8,992,452
$
$
$
10,521,740
$
52,486
9. SHORT-TERM BANK LOANS
The interest rate of the step-up callable deposits is determined by the Company and the related
Short-term bank loans at December 31, 2005 and 2004 consisted of the following:
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 plus an agreed upon rate
ranging between 2.10% and 3.45%. Based on the terms of the deposits, if the 3-month or 6-month
LIBOR moves outside of the pre-defined range, the interest paid to the Company is at a fixed rate
between zero and 1.5%. Under the terms of the contracts, the bank has the right to cancel the con-
tracts prior to the maturity date.
As of December 31, 2005 and 2004, deposits that reside in banks located in Hong Kong amounted
to NT$2,628,000 thousand and NT$2,553,360 thousand, respectively; those that reside in banks
located in Singapore amounted to NT$657,000 thousand and NT$638,340 thousand, respectively.
Unsecured loans:
US$10,000 thousand and US$12,000 thousand in 2005 and 2004,
respectively, repayable by June 2006, annual interest at 4.77% and
2.80% in 2005 and 2004, respectively
2005
2004
$
328,500
$
383,004
10. LONG-TERM BANK LOANS
11. BONDS PAYABLE
Long-term bank loans at December 31, 2005 and 2004 consisted of the following:
Bonds payable at December 31, 2005 and 2004 consisted of the following:
Unsecured loan:
US$60,000 thousand, repaid before original maturities, annual interest at
Domestic unsecured bonds:
Issued in December 2000 and repayable in December 2005 and 2007 in
2.475% in 2004
$
-
$
1,915,020
two installments, 5.25% and 5.36% interest payable annually, respectively
$
4,500,000
$
15,000,000
2005
2004
2005
2004
Secured loan:
US$20,000 thousand, repayable by November 2010 in 5 payments, annual
interest at 5.01%
Science Park Administration (SPA) SOC loan (GUC, Note 2), repayable by July
2008 in 20 payments, interest-free
SPA DSP loan (GUC, Note 2), repayable by April 2007 in 20 payments, inter-
est-free
Current portion
656,914
7,658
4,057
668,629
(5,489)
-
-
-
1,915,020
-
Issued in January 2002 and repayable in January 2007, 2009 and 2012 in
three installments, 2.60%, 2.75% and 3.00% interest payable annually,
respectively
Current portion
15,000,000
19,500,000
-
15,000,000
30,000,000
(10,500,000)
114
$
19,500,000
$
19,500,000
$
663,140
$
1,915,020
As of December 31, 2005, future principal repayments for the Company's bonds were as follows:
As of December 31, 2005, assets of TSMC-Shanghai with a carrying amount aggregating
NT$5,511,456 thousand (RMB1,354,166 thousand) were provided as collateral for the aforemen-
tioned secured loan. Pursuant to the loan agreement, the annual audited financial statements of
TSMC-Shanghai must maintain certain financial covenants. As of December 31, 2005, TSMC-
Shanghai did not violate those financial covenants.
Year of Repayment
2007
2009
2010 and thereafter
As of December 31, 2005, future principal repayments for the Company's long-term bank loans were
12. OTHER LONG-TERM PAYABLES
Amount
7,000,000
8,000,000
4,500,000
19,500,000
$
$
as follows:
Year of Repayment
2006
2007
2008
2009
2010
Amount
5,489
4,137
133,471
262,766
262,766
668,629
$
$
Other long-term payables at December 31, 2005 and 2004 consisted of the following:
Payables for acquisition of property, plant and equipment (Note 23k)
Payables for royalties
Current portion (classified under accrued expenses and other current liabilities)
2005
7,037,787
2,380,172
9,417,959
(869,072)
8,548,887
$
$
2004
6,030,007
3,440,313
9,470,320
(1,505,345)
7,964,975
$
$
The payables for royalties were primarily attributable to several license arrangements that the
Company entered into for certain semiconductor-related patents.
As of December 31, 2005, future payments for the Company's other long-term payables were as fol-
b. Reconciliation of funded status of the plans and accrued pension cost at December 31, 2005 and
lows:
Year of Payment
2006
2007
2008
2009
2010
2011 and thereafter
115
13. PENSION PLAN
$
Amount
869,072
459,900
262,800
262,800
262,800
7,300,587
$
9,417,959
2004
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
The Labor Pension Act (the "Act") became effective on July 1, 2005 and the pension mechanism under
Vested benefit
the Act is deemed a defined contribution plan. The employees who were subject to the Labor
Standards Law prior to July 1, 2005 were allowed to choose to be subject to the pension mechanism
under the Act or continue to be subject to the pension mechanism under the Labor Standards Law.
For those employees who were subject to the Labor Standards Law prior to July 1, 2005 and still work
for the same company after July 1, 2005 and have chosen to be subject to the pension mechanism
under the Act, their seniority as of July 1, 2005 shall be maintained. The Act prescribes that the rate
of contribution by an employer to employees' pension accounts per month shall not be less than 6%
of each employee's monthly salary. Furthermore, TSMC-Shanghai is required to make contributions to
c. Actuarial assumptions
Discount rated used in determining present values
Future salary increase rate
Expected rate of return on plan assets
a state-managed retirement plan at a certain ratio of the monthly basic salary of its local employees.
d. Contributions to the Funds for the year
Pursuant to the aforementioned Act and regulation, the Company made monthly contributions and
recognized pension costs of NT$280,317 thousand and NT$7,503 thousand for the years ended
December 31, 2005 and 2004, respectively.
TSMC and GUC have defined benefit plans under the Labor Standards Law that provide benefits
based on an employee's length of service and average monthly salary prior to retirement. TSMC and
GUC contribute an amount equal to 2% of salaries paid each month to their respective pension fund
(the Funds). The Funds are administered by pension fund monitoring committees and deposited in
the committees' name in the Central Trust of China.
e. Payments from the Funds for the year
2005
2004
$
$
$
$
$
62,302
3,364,333
3,426,635
2,550,307
5,976,942
(1,691,603)
4,285,339
(126,969)
(684,429)
3,473,941
67,752
2005
2.75%-3.50%
2.00%-3.00%
2.50%-2.75%
2005
226,181
2005
8,419
$
$
$
$
$
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%
2004
226,339
2004
1,446
Pension information on the defined benefit plans is summarized as follows:
14. INCOME TAX
a. Components of net periodic pension cost for the year
Service cost
Interest cost
Projected return on plan assets
Amortization
Net periodic pension cost
2005
470,886
163,854
(49,843)
8,345
593,242
$
$
2004
632,594
128,315
(41,925)
8,300
727,284
$
$
a. A reconciliation of income tax expense based on income before income tax at the statutory rate
and current income tax expense before tax credits is as follows:
Income tax expense based on income before income tax at statutory rate
Tax-exempt income
Temporary and permanent differences
Current income tax expense before income tax credits
2005
23,658,498
(12,243,435)
1,123,735
12,538,798
$
$
2004
23,840,497
(14,712,500)
658,164
9,786,161
$
$
b. Income tax expense (benefit) consisted of the following:
e. TSMC's earnings generated prior to December 31, 1997 have been fully appropriated.
Current income tax expense before income tax credits
Additional tax at 10% on unappropriated earnings
Income tax credits
Other income tax adjustment
Net change in deferred income tax assets
Net operating loss carryforwards
Investment tax credits
Temporary differences
Adjustment in valuation allowance
$
2005
12,538,798
1,494,811
(10,133,848)
117,314
690,615
1,965,878
(2,402,406)
(3,640,583)
$
2004
9,786,161
823,932
(10,470,862)
555,736
1,652,983
(234,690)
(1,131,331)
(1,345,355)
f. As of December 31, 2005, investment tax credits of TSMC and GUC consisted of the following:
Law
Item
Statute for Upgrading Industries
Purchase of machinery and
equipment
Income tax expense (benefit)
$
630,579
$
(363,426)
c. Net deferred income tax assets at December 31, 2005 and 2004 consisted of the following:
Statute for Upgrading Industries
Research and development
expenditures
Current deferred income tax assets, net
Investment tax credits
Temporary differences
Net operating loss carryforwards
Valuation allowance
Non-current deferred income tax assets, net
Investment tax credits
Net operating loss carryforwards
Temporary differences
Valuation allowance
2005
7,033,621
454,052
15,825
(354,192)
7,149,306
17,004,324
6,261,469
(5,640,477)
(10,836,898)
6,788,418
$
$
$
$
2004
8,849,000
319,717
-
(250,731)
8,917,986
17,035,584
6,735,080
(7,760,152)
(14,360,533)
1,649,979
$
$
$
$
Statute for Upgrading Industries
Personnel training
Statute for Upgrading Industries
Investments in important
technology-based enterprises
As of December 31, 2005, the net operating loss carryforwards pertained to WaferTech, TSMC
Development, TSMC Technology and GUC would expire at various dates through 2024.
d. Integrated income tax information:
g. The profits generated from the following expansion and construction projects of TSMC's manufac-
turing plants are exempt from income tax:
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
2002 to 2005
2003 to 2006
2004 to 2007
The balance of the imputation credit account of TSMC as of December 31, 2005 and 2004 was
NT$20,087 thousand and zero, respectively.
h. The tax authorities have examined income tax returns of TSMC through 2001.
The expected and actual creditable ratio of TSMC for distribution of earnings of 2005 and 2004 was
0.02% and 0.11%, respectively.
The imputation credit allocated to the shareholders is based on its balance as of the date of dividend
distribution. The expected creditable ratio may change when the actual distribution of the imputation
credits is made.
Total
Creditable Amounts
Remaining
Creditable Amounts
Expiry Year
$
$
$
$
$
$
$
134,467
4,886,592
4,138,857
11,001,974
4,160,396
24,322,286
3,145,894
1,809,841
1,421,611
1,647,252
1,667,788
9,692,386
29,448
20,427
26,962
37,250
19
114,106
38,036
$
$
$
$
$
$
$
-
171
4,054,072
11,001,974
4,160,396
19,216,613
-
20,404
1,421,611
1,647,252
1,667,788
4,757,055
-
46
26,962
37,250
19
64,277
116
2005
2006
2007
2008
2009
2005
2006
2007
2008
2009
2005
2006
2007
2008
2009
-
2005
15. LABOR COST, DEPRECIATION AND AMORTIZATION EXPENSES
b. Special capital reserve in accordance with relevant laws or regulations or as requested by the
authorities in charge;
Labor cost
Salary
Labor and health insurance
Pension
Other
117
Year Ended December 31, 2005
Year Ended December 31, 2004
Classified as
Cost of Sales
Classified as
Operating
Expenses
Total
Classified as
Cost of Sales
Classified as
Operating
Expenses
Total
$ 11,031,464
633,790
589,342
770,906
$ 6,703,584
343,937
295,653
551,924
$ 17,735,048
977,727
884,995
1,322,830
$ 10,719,632
572,210
472,329
430,777
$ 5,886,769
320,785
271,186
531,876
$ 16,606,401
892,995
743,515
962,653
$ 13,025,502
$ 7,895,098
$ 20,920,600
$ 12,194,948
$ 7,010,616
$ 19,205,564
Depreciation
Amortization
$ 68,135,117
$ 1,766,702
$ 3,250,651
$ 2,574,566
$ 71,385,768
$ 4,341,268
$ 61,703,792
$ 2,496,827
$ 2,563,408
$ 3,052,160
$ 64,267,200
$ 5,548,987
16. SHAREHOLDERS' EQUITY
TSMC has issued a total of 864,194 thousand ADSs which are traded on the NYSE as of December
31, 2005. The number of common shares represented by the ADSs is 4,320,969 thousand (one ADS
represents five common shares).
Capital surplus can only be used to offset a deficit under the Company Law. However, the capital sur-
plus 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, convertible bonds and the surplus from treasury
stock transactions) may be appropriated as stock dividends, which are restricted to a certain percent-
age of the paid-in capital of TSMC.
As of December 31, 2005 and 2004, the capital surplus consisted of the following:
From merger
Additional paid-in capital
From convertible bonds
From treasury stock transactions
From long-term investments
Donations
$
2005
24,003,546
23,254,234
9,360,424
306,868
192,759
55
$
2004
24,003,546
23,051,675
9,360,424
205
121,354
55
c. Bonus to directors and supervisors and bonus to employees of TSMC equal to not more than 0.3%
and not less than 1% of the remainder, respectively. Directors who also serve as executive officers of
TSMC are not entitled to receive the bonus to directors and supervisors. TSMC may issue stock
bonuses to employees of an affiliated company meeting the conditions set by the Board of
Directors or, by the person duly authorized by the Board of Directors;
d. Any balance left over shall be allocated according to the resolution of the shareholders' meeting.
TSMC's Articles of Incorporation also stipulate that profits of TSMC may be distributed by way of cash
dividend and/or stock dividend. However, distribution of profits shall be made preferably by way of
cash dividend. Distribution of profits may also be made by way of stock dividend; provided however,
the ratio for stock dividend shall not exceed 50% of total distribution.
Any appropriations of the net profits are recorded in the financial statement in the year of sharehold-
er approval.
The appropriation for legal capital reserve shall be made until the reserve equals TSMC's paid-in capi-
tal. The reserve can be used to offset a deficit, or be distributed as dividends and bonuses for the por-
tion in excess of 50% of the paid-in capital, if TSMC has no unappropriated earnings and the reserve
balance has exceeded 50% of the paid-in capital. The Company Law also prescribes that, when the
reserve has reached 50% of the paid-in capital, up to 50% of the reserve may be transferred to capital.
A special capital reserve equivalent to the net debit balance of the other components of shareholder's
equity (for example, unrealized loss on long-term investments and cumulative translation adjust-
ments, but excluding treasury stock), shall be made from unappropriated earnings pursuant to exist-
ing regulations promulgated by the Securities and Futures Bureau (SFB). Any special capital reserve
appropriated may be reversed to the extent that the net debit balance reverses.
TSMC's appropriations of earnings for 2004 and 2003 had been approved in the shareholders' meet-
ings held on May 10, 2005 and May 11, 2004, respectively. The appropriations and dividend per
share were as follows:
Appropriation of Earnings
Dividends Per Share (NT$)
$
57,117,886
$
56,537,259
For Fiscal Year 2004
For Fiscal Year 2003
For Fiscal Year 2004
For Fiscal Year 2003
TSMC's Articles of Incorporation as revised on May 10, 2005 provide that, when allocating the net
profits for each fiscal year, TSMC shall first offset its losses in previous years and then set aside the fol-
lowing items accordingly:
a. Legal capital reserve at 10% of the profits left over, until the accumulated legal capital reserve has
equaled TSMC's total capital;
Legal capital reserve
Special capital reserve
Employees' profit sharing - in cash
Employees' profit sharing - in stock
Cash dividends to preferred shareholders
Cash dividends to common shareholders
Stock dividends to common shareholders
Bonus to directors and supervisors
$ 8,820,201
2,226,427
3,086,215
3,086,215
-
46,504,097
11,626,024
231,466
$ 4,725,870
(68,945)
681,628
2,726,514
184,493
12,159,971
28,373,267
127,805
$ 75,580,645
$ 48,910,603
$
$
-
2.00
0.50
0.35
0.60
1.41
The amounts of the above appropriations of earnings for 2004 and 2003 are consistent with the res-
Information about TSMC's outstanding stock options for the years ended December 31, 2005 and
olutions of the meetings of the Board of Directors held on February 22, 2005 and February 17, 2004,
2004 was as follows:
respectively. However, the Company Law prescribes that 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 resolutions. If the above bonus
to employee, directors and supervisors had been paid entirely in cash and charged against earnings
for 2004 and 2003, the after tax basic earnings per share for the years ended December 31, 2004
and 2003 would have decreased from NT$3.97 to NT$3.70 and NT$2.33 to NT$2.15, respectively.
The shares distributed as a bonus to employees represented 1.33% and 1.35% of TSMC's total out-
standing common shares as of December 31, 2004 and 2003, respectively.
As of January 12, 2006, the Board of Directors of TSMC has not resolved the appropriation for earn-
ings of 2005.
The above information about the appropriations of bonus to employees, directors and supervisors is
available at Market Observation System website.
Under the Integrated Income Tax System that became effective on January 1, 1998, the R.O.C. resi-
dent shareholders are allowed a tax credit for their proportionate share of the income tax paid by
TSMC on earnings generated since January 1, 1998.
17. STOCK-BASED COMPENSATION PLANS
Year ended December 31, 2005
Balance, beginning of year
Options granted
Options exercised
Options cancelled
Balance, end of year
Year ended December 31, 2004
Balance, beginning of year
Options granted
Options exercised
Options cancelled
Balance, end of year
Number of Options
(in Thousands)
Weighted-Average
Exercise Price (NT$)
$
64,367
14,864
(6,837)
(4,636)
67,758
49,357
20,400
(87)
(5,303)
64,367
118
40.5
48.4
39.6
44.1
42.1
43.0
47.3
41.8
45.9
44.1
The numbers of outstanding options and exercise prices have been adjusted to reflect the appropria-
tions of dividends in accordance with the plans.
As of December 31, 2005, information about TSMC's outstanding and exercisable options was as fol-
TSMC's Employee Stock Option Plans, consisting of TSMC 2005 Plan, TSMC 2003 Plan and TSMC
2002 Plan, were approved by the SFB on January 6, 2005, October 29, 2003 and June 25, 2002,
lows:
respectively. The maximum number of options authorized to be granted under the TSMC 2005 Plan,
TSMC 2003 Plan and TSMC 2002 Plan was 11,000 thousand, 120,000 thousand and 100,000 thou-
sand, respectively, with each option eligible to subscribe for one common share when exercisable. The
options 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 options of all the plans are valid for ten years and exercisable at certain percentages sub-
sequent to the second anniversary of the grant date. Under the terms of the plans, the options are
granted at an exercise price equal to the closing price of TSMC's common shares listed on the TSE on
the grant date.
Options that had never been granted or had been granted and subsequently cancelled under the
TSMC 2003 Plan and TSMC 2002 Plan were expired as of December 31, 2005.
Range of Exercise
Price (NT$)
Number of Options
(in Thousands)
$29.9-$42.1
$47.0-$54.5
45,787
21,971
67,758
Options Outstanding
Weighted-average
Remaining
Contractual
Life (Years)
Options Exercisable
Weighted-average
Exercise Price (NT$)
Number of Options
(in Thousands)
Weighted-average
Exercise Price (NT$)
$
7.10
8.82
38.73
49.20
$
38.59
54.50
27,143
327
27,470
GUC's Employee Stock Option Plans, consisting of GUC 2003 Plan and GUC 2002 Plan, were
approved by its Board of Directors on January 23, 2003 and July 1, 2002, respectively. The maximum
number of options authorized to be granted under the GUC 2003 Plan and GUC 2002 Plan was
7,535 and 5,000, respectively, with each option eligible to subscribe for one thousand common
shares when exercisable. The options may be granted to qualified employees of GUC. The options of
all the plans are valid for six years and exercisable in accordance with the plans subsequent to the sec-
ond anniversary of the grant date. As of December 31, 2005, all of the options under the aforemen-
tioned plans had been granted or were expired.
Moreover, GUC 2004 Plan was approved by the SFB on August 16, 2004 to grant a maximum of
No compensation cost was recognized under the intrinsic value method for the years ended
2,500 options, with each option eligible to subscribe for one thousand common shares when exercis-
December 31, 2005 and 2004 for TSMC and GUC. Had the Company used the fair value based
able. The options may be granted to qualified employees of GUC or any of its subsidiaries. The
method (based on the Black-Scholes model) to evaluate the options granted after January 1, 2004,
options of GUC 2004 Plan are valid for six years and exercisable in accordance with the plan subse-
the assumptions and pro forma results of the Company for the years ended December 31, 2005 and
quent to the second anniversary of the grant date.
2004 would have been as follows:
Information about GUC's outstanding stock options for the years ended December 31, 2005 and
2004 was as follows:
119
Year ended December 31, 2005
Balance, beginning of year
Options granted
Options exercised
Options cancelled
Balance, end of year
Year ended December 31, 2004
Balance, beginning of year
Options granted
Balance, end of year
Number of Options
Weighted-Average
Exercise Price (NT$)
$
7,889
2,499
(2,641)
(615)
7,132
7,058
831
7,889
10.50
10.96
10.50
10.57
10.66
10.50
10.50
10.50
Assumptions:
TSMC
GUC
Expected dividend yield
Expected volatility
Risk free interest rate
Expected life
Expected dividend yield
Expected volatility
Risk free interest rate
Expected life
Net income attributable to shareholders of the parent:
As reported
Pro forma
Consolidated earnings per share (EPS) - after income tax (NT$):
Basic EPS as reported
Pro forma basic EPS
Diluted EPS as reported
Pro forma diluted EPS
2005
2004
1.00%-3.44%
43.77%-46.15%
3.07%-3.85%
5 years
-
22.65%-28.02%
2.56%
6 years
93,575,035
93,456,533
3.79
3.79
3.79
3.78
$
$
1.00%
43.77%-46.15%
3.07%-3.85%
5 years
-
38.74%-41.74%
2.56%
6 years
92,316,115
92,257,355
3.73
3.73
3.73
3.73
$
$
As of December 31, 2005, information about GUC's outstanding and exercisable options was as fol-
The estimated weighted average fair value per unit of option granted during the years ended
lows:
Range of Exercise
Price (NT$)
Number of Options
Options Outstanding
Weighted-average
Remaining
Contractual
Life (Years)
Options Exercisable
Weighted-average
Exercise Price (NT$)
Number of Options
Weighted-average
Exercise Price (NT$)
$10.50-$10.96
7,132
2.58-5.75
$
10.66
3,890
$
10.50
December 31, 2005 and 2004 under the TSMC plans was NT$17.69 and NT$19.73, respectively. The
estimated weighted average fair value per unit of option (eligible to subscribe for one thousand com-
mon shares) granted during the years ended December 31, 2005 and 2004 under the GUC plans was
NT$3.32 thousand and NT$3.86 thousand respectively.
18. TREASURY STOCK (COMMON STOCK)
Beginning
Shares
Increase/Stock
Dividend
Disposal
Ending
Shares
(Shares in Thousands)
Year ended December 31, 2005
Reclassification of parent company stock held by subsidiaries from long-term
investments
45,521
2,242
14,825
32,938
Year ended December 31, 2004
Reclassification of parent company stock held by subsidiaries from long-term
investments
Repurchase under share buyback plan
40,597
-
5,676
124,720
752
124,720
45,521
-
40,597
130,396
125,472
45,521
Proceeds from disposal of treasury stock for the years ended December 31, 2005 and 2004 were
c. Investees of the TSMC
NT$899,489 thousand and NT$39,906 thousand, respectively. As of December 31, 2005 and 2004,
VIS (accounted for using equity method)
the book value of the treasury stock was NT$918,075 thousand and NT$1,595,186 thousand, respec-
SSMC (accounted for using equity method)
tively; the market value was NT$2,047,126 thousand and NT$2,241,009 thousand, respectively.
GUC (with controlling financial interest and was consolidated with significant transactions eliminat-
TSMC's stocks held by its subsidiaries are treated as treasury stock and the holders are entitled to the
ed in 2005)
rights of shareholders, except that starting from June 24, 2005, pursuant to the revised Company
Law, the holders are no longer entitled to the right to vote.
d. Indirect investee
TSMC held a special meeting of the Board of Directors and approved a share buyback plan to repur-
became an indirect investee accounted for using the equity method due to the changes in invest-
VisEra, originally an investee over which TSMC had control; starting from November 2005, VisEra
chase its common shares listed on the TSE during the period from March 24, 2004 to May 23, 2004.
ment structure.
TSMC repurchased 124,720 thousand common shares for a total cost of NT$7,059,798 thousand.
120
All the treasury stock repurchased under the buyback plan was retired on August 16, 2004.
Transactions with the aforementioned parties, excluding those disclosed in other notes, are summa-
19. CONSOLIDATED EARNINGS PER SHARE
Consolidated EPS is computed as follows:
Amounts (Numerator)
Before Tax
After Tax
Number of
Shares
(Denominator)
(in Thousands)
Consolidated EPS (NT$)
Before Tax
After Tax
$ 94,205,614
-
$ 93,575,035
-
24,679,947
13,165
$
3.82
$
3.79
$ 94,205,614
$ 93,575,035
24,693,112
$
3.82
$
3.79
$ 91,952,689
-
$ 92,316,115
-
24,717,531
6,484
$
3.72
$
3.73
$ 91,952,689
$ 92,316,115
24,724,015
$
3.72
$
3.73
Year ended December 31, 2005
Consolidated basic EPS
Income available to shareholders of the parent
Effect of dilutive potential common stock - stock options
Consolidated diluted EPS
Income available to shareholders of the parent (includ-
ing the effect of dilutive potential common stock)
Year ended December 31, 2004
Consolidated basic EPS
Income available to shareholders of the parent
Effect of dilutive potential common stock- stock options
Consolidated diluted EPS
Income available to shareholders of the parent (includ-
ing the effect of dilutive potential common stock)
20. RELATED PARTY TRANSACTIONS
The Company engages in business transactions with the following related parties:
a. Industrial Technology Research Institute (ITRI), the Chairman of TSMC is one of its directors
rized as follows:
For the year
Sales
Philips
GUC
Others
Purchase
SSMC
VIS
Manufacturing expenses - technical assistance fee (Note 23a)
Philips
General and administrative expenses - rental expenses
GUC
Research and development expenses
GUC
Proceeds from disposal of property, plant and equipment
VisEra
VIS
Non-operating income and gains
SSMC (primarily for technical service income, see Note 23e)
VisEra
VIS (primarily for technical service income, see Note 23j)
2005
2004
Amount
%
Amount
%
$
3,298,770
-
492,683
$ 3,791,453
$ 5,729,672
4,142,457
$ 9,872,129
$ 581,059
$
$
-
-
$ 534,279
-
$ 534,279
$ 316,243
308,071
210,720
1
-
-
1
4
3
7
-
-
-
60
-
60
4
4
3
$
5,463,565
371,546
440,736
$ 6,275,847
5,869,123
9,169,602
2
-
-
2
4
7
$ 15,038,725
11
$ 907,047
$ 13,186
$ 11,688
$
-
33,974
$ 33,974
$ 364,505
28,917
117,760
1
-
-
-
2
2
6
-
2
8
(Continued)
b. Philips, a major shareholder of TSMC
$ 835,034
11
$ 511,182
At end of year
Receivables
Philips
VisEra
ITRI
GUC
121
Other receivables
VisEra
SSMC
VIS
Payables
Philips
VIS
SSMC
GUC
Other long-term payables
Philips
Deferred credits
VisEra
2005
2004
As of December 31, 2005, future lease payments were as follows:
Amount
%
Amount
%
Year
$
Amount
371,165
361,511
338,995
333,727
267,089
1,129,301
$
2,801,788
2006
2007
2008
2009
2010
2011 and thereafter
22. SETTLEMENT INCOME
$
573,565
99,401
20,300
-
83
14
3
-
$
$581,487
-
16,453
56,437
89
-
2
9
$ 693,266
100
$ 654,377
100
$ 374,202
149,251
74,457
63
25
12
$ 30,278
63,701
47,599
21
45
34
$ 597,910
100
$ 141,578
100
$ 693,956
563,240
485,873
-
40
32
28
-
$ 469,494
1,533,938
207,794
6,589
21
69
10
-
$ 1,743,069
100
$ 2,217,815
100
TSMC, TSMC-NA and WaferTech filed a series of lawsuits in late 2003 and 2004 against
Semiconductor Manufacturing International Corporation ("SMIC"), SMIC (Shanghai) and SMIC
Americas. The lawsuits alleged that SMIC companies infringed multiple TSMC patents and misappro-
priated TSMC's trade secrets. These suits were settled out of court on January 30, 2005. As part of the
settlement, SMIC shall pay TSMC US$175 million over six years to resolve TSMC's claims.
23. SIGNIFICANT COMMITMENTS AND CONTINGENCIES
The significant commitments and contingencies of the Company as of December 31, 2005 were as
$ 1,100,475
100
$ 2,317,972
100
follows:
$ 186,525
14
$
-
-
originally signed on May 12, 1997. The amended Technical Cooperation Agreement is for five years
(Concluded)
beginning from January 1, 2004. Upon expiration, this amended Technical Cooperation Agreement
a. On June 20, 2004, TSMC and Philips amended the Technical Cooperation Agreement, which was
The terms of sales to related parties were not significantly different from those to third parties. For
other related party transactions, prices were determined in accordance with related contractual
agreements.
The Company deferred the gains (classified under deferred credits) derived from sales of property,
plant and equipment to VisEra, and then recognized such gains (classified under non-operating
income and gains) over the depreciable lives of the disposed assets.
21. SIGNIFICANT LONG-TERM LEASES
TSMC and GUC lease parcels of land from the SPA. These operating leases expire on various dates
from March 2008 to December 2021 and can be renewed upon expiration.
will be terminated and will not be automatically renewed; however, the patent cross license
arrangement between TSMC and Philips will survive the expiration of the amended Technical
Cooperation Agreement. Under this amended Technical Cooperation Agreement, TSMC will pay
Philips royalties based on a fixed amount mutually agreed-on, rather than under certain percentage
of TSMC's annual net sales. TSMC and Philips agreed to cross license the patents owned by each
party. TSMC also obtained through Philips a number of cross patent 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. The term of this agreement is for five years beginning from January
1, 1987 and is automatically renewed for successive periods of five years unless otherwise termi-
nated by either party with one year prior notice. The agreement was automatically renewed in
1992 and 1997 and on January 1, 2002.
TSMC-NA leases its office premises and certain equipment under non-cancelable operating leases.
TSMC-Japan has also entered into lease agreements for its office premises. These operating leases
expire between 2010 and 2011 and can be renewed upon expiration.
c. Under several foundry agreements, TSMC shall reserve a portion of its production capacity for cer-
tain major customers that have guarantee deposits with TSMC. As of December 31, 2005, TSMC
had a total of US$87,660 thousand of guarantee deposits.
d. Under a Shareholders Agreement entered into with Philips and EDB Investments Pte Ltd. on March
j. TSMC provides a technology transfer to VIS under a Manufacturing License and Technology Transfer
30, 1999, the parties formed a joint venture company, SSMC, for the purpose of constructing an
Agreement entered into on April 1, 2004. TSMC receives compensation for such technology trans-
integrated circuit foundry in Singapore. TSMC's equity interest in SSMC was 32%. TSMC and Philips
fer in the form of royalty payments from VIS computed at specific percentages of net selling price of
committed to buy specific percentages of the production capacity of SSMC. TSMC and Philips are
certain products sold by VIS. VIS agreed to reserve its certain capacity to manufacture for TSMC cer-
required, in the aggregate, to purchase up to 70% of SSMC's full capacity, but TSMC alone is not
tain products at prices as agreed by the parties.
required to purchase more than 28% of the annual installed capacity. If any party defaults on the
commitment and the capacity utilization of SSMC falls below a specific percentage of its total
k. TSMC-Shanghai entered into an agreement with a certain foreign company. In accordance with the
capacity, the defaulting party is required to compensate SSMC for all related unavoidable costs.
agreement, TSMC-Shanghai is obligated to purchase certain property, plant and equipment at the
agreed-upon price within the contract period. If the purchase is not completed, TSMC-Shanghai is
e. TSMC provides technical services to SSMC under a Technology Cooperation Agreement (the
obligated to compensate counterparty.
Agreement) entered into on May 12, 1999. TSMC receives compensation for such services comput-
122
ed at a specific percentage of net selling price of all products sold by SSMC. The Agreement shall
l. Amounts available under unused letters of credit as of December 31, 2005 were NT$6,480 thou-
remain in force for ten years and may be automatically renewed for successive periods of five years
sand.
each unless pre-terminated by either party under certain conditions.
24. ADDITIONAL DISCLOSURES
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
Following are the additional disclosures required by the SFB for the Company and its investees:
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 ter-
a. Financing provided: Please see Table 1 attached;
mination 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,
b. Endorsement/guarantee provided: Please see Table 2 attached;
TSMC will be relieved of any further obligation to transfer any additional technology. In addition,
TSMC granted National an option to request the transfer of certain technologies under the same
c. Marketable securities held: Please see Table 3 attached;
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
of the paid-in capital: Please see Table 4 attached;
patents. The terms of the contracts vary with payments to be made in the form of royalties. TSMC
has recorded the related amounts as a liability with the corresponding amounts recorded as
e. Acquisition of real estate properties at costs of at least NT$100 million or 20% of the paid-in capi-
d. Marketable securities acquired or disposed of at costs or prices of at least NT$100 million or 20%
deferred charges which are amortized and charged to cost of sales on a straight-line basis over the
tal: None;
estimated life of the technology or the term of the contract, whichever is shorter.
f. Disposal of real estate properties at prices of at least NT$100 million or 20% of the paid-in capital:
h. In November 2002, TSMC entered into an Amended and Restated Joint Technology Cooperation
None;
Agreement with Philips, Freescale Semiconductor, Inc. and STMicroelectronics to jointly develop
90-nm to 65-nm advanced CMOS Logic and e-DRAM technologies. TSMC also agreed to align
g. Total purchases from or sales to related parties of at least NT$100 million or 20% of the paid-in
0.12 micron CMOS Logic technology to enhance its foundry business opportunities. TSMC will con-
capital: Please see Table 5 attached;
tribute process technologies and share a portion of the costs associated with this joint develop-
ment project. This agreement expired on December 31, 2005.
h. Receivable from related parties amounting to at least NT$100 million or 20% of the paid-in capital:
Please see Table 6 attached;
i. In December 2003, TSMC entered into a Technology Development and License Agreement with
Freescale Semiconductor, Inc. to jointly develop 65-nm SOI (silicon on insulator) technology. TSMC
i. Names, locations, and related information of investees on which the Company exercises significant
will also license related 90-nm SOI technology from Freescale Semiconductor, Inc. Any intellectual
influence: Please see Table 7 attached;
properties arising out of the co-development project shall be jointly owned by the parties. In accor-
dance with the agreement, TSMC will pay royalties to Freescale Semiconductor, Inc. and will share a
j. Financial instrument transactions:
portion of the costs associated with the joint development project.
1) Derivative financial instruments
The Company entered into derivative financial instrument transactions in the years ended December
d) Interest rate swap contracts
31, 2005 and 2004 to manage exposures related to foreign exchange rate and interest rate fluctua-
tions. Certain information on these contracts was as follows:
The Company rescinded all interest rate swap contracts in the first quarter of 2005 before their origi-
nal maturities. The rescission loss of NT$28,295 thousand was recognized in the "interest expense"
a) Outstanding forward exchange contracts as of December 31, 2005 and 2004:
account. There was no outstanding contract as of December 31, 2005.
Financial Instruments
Currency
December 31, 2005
Sell
December 31, 2004
Sell
Sell
123
US$/NT$
US$/NT$
US$/EUR
Maturity
Jan. 2006
Contract Amount (in Thousands)
Outstanding contracts as of December 31, 2004 were as follows:
US$
60,000
Contract Date
Period
Notional Amount (in Thousands)
Jan. 2005 to Mar. 2005
Jan. 2005
US$
US$
733,000
159,081
Sep. 2003
Oct. 2003
Oct. 2003
Oct. 2003
Oct. 2003
Nov. 2003
Sep. 2003 to Dec. 2005
Oct. 2003 to Dec. 2005
Oct. 2003 to Dec. 2005
Oct. 2003 to Dec. 2005
Oct. 2003 to Dec. 2005
Nov. 2003 to Dec. 2005
NT$ 500,000
500,000
500,000
500,000
500,000
500,000
As of December 31, 2005 and 2004, receivables resulted from forward exchange contracts (classified
under current assets) aggregated NT$26,720 thousand and NT$392,534 thousand, respectively. As of
December 31, 2004, payables resulted from forward exchange contracts (classified under current lia-
e) Transaction risk
bilities) aggregated NT$559 thousand.
b) Cross currency swap contracts
i) Credit risk. Credit risk represents the positive net settlement amount of those contracts with positive
fair values at the balance sheet date. The positive net settlement amount represents the loss to be
incurred by the Company if the counter-parties breached the contracts. The banks, which are the
Outstanding cross currency swap contracts as of December 31, 2005 and 2004 were as follows:
counter-parties to the foregoing derivative financial instruments, are reputable financial institutions.
Maturity Date
Contract Amount (in Thousands)
Range of Interest Rate Paid
Range of Interest Rate Received
Management believes its exposure related to the potential default by those counter-parties is low.
December 31, 2005
Jan. 2006 to Mar. 2006
December 31, 2004
January 2005 to June 2005
US$
2,089,000
4.15%－4.54%
0.02%－2.12%
US$
1,420,000
1.28%－2.72%
0.49%－1.17%
ii) Market price risk. All derivative financial instruments are intended as hedges for fluctuations in for-
eign exchange rates and interest rates. Gains or losses from these hedging instruments are likely to
be offset by gains or losses from the hedged items. Thus, market price risk is believed to be low.
As of December 31, 2005 and 2004, receivables resulted from cross currency swap contracts (classi-
fied under current assets) were NT$1,119,905 thousand and NT$761,030 thousand, respectively.
As of December 31, 2005, the Company's future cash needs for outstanding forward exchange con-
iii) Cash flow risk and the amount and period of future cash needs.
c) Option contracts
As of December 31, 2005, the Company did not have any outstanding foreign currency option con-
tract. The Company did not enter into any foreign currency option contract in the year ended
December 31, 2004.
During the years ended December 31, 2005 and 2004, the net exchange gain or loss arising from for-
ward exchange contracts, cross currency swap contracts and foreign currency option contracts was
recognized in the "foreign exchange gain/loss, net" account and the difference in interest was record-
ed in interest income/expense.
tracts and cross currency swap contracts were as follows:
Term
Within one year
Inflow (In Thousands)
Outflow (In Thousands)
NT$
71,820,892
US$
2,149,000
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:
k. Information on investment in Mainland China
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
Assets (liabilities)
Forward exchange contracts (sell)
Cross currency swap contracts
Interest rate swap contracts
2005
2004
Carrying
Amount
Fair Value
Carrying
Amount
1) The name of the investee company in Mainland China, main businesses and products, its issued
Fair Value
capital, method of investment, information on inflow or outflow of capital, percentage of owner-
ship, equity in the net earnings or loss, ending balance, earnings distributed by the investee, and
the limitation on investment: Please see Table 8 attached.
$ 47,399,308
34,273,328
$ 49,137,413
39,678,791
$ 54,107,951
31,165,721
$ 54,990,545
34,265,072
2) Significant direct or indirect transactions with the investee company, their prices and terms of pay-
ment, unrealized gain or loss, and other related information which is helpful to understand the
19,500,000
19,924,923
30,000,000
30,607,341
impact of investment in Mainland China on financial statements: Please see Table 9 attached.
l. Intercompany relationships and significant intercompany transactions: Please see Table 9 attached.
124
26,720
1,119,905
-
28,474
789,903
-
391,975
761,030
4,361
317,090
760,012
(22,714)
25. SEGMENT FINANCIAL INFORMATION
a. Industry financial information
The above financial instruments do not include cash and cash equivalents, receivables, other financial
The Company is engaged mainly in the manufacturing, selling, packaging and testing of integrated
assets, short-term bank loans, payables, and payable to contractors and equipment suppliers. The
circuits. Therefore, the disclosure of industry financial information is not applicable to the Company.
carrying amounts of the aforementioned financial instruments reported in the balance sheet approxi-
mate their fair values.
b. Geographic information:
The above financial instruments also exclude refundable deposits, guarantee deposits, long-term
investments that do not have quoted market prices, long-term bank loans as well as other long-term
payables. The future cash inflow and outflow of the deposits approximate their fair values. Some of
the 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 long-term bank loans with floating interest
rates is their carrying amount. The fair value of long-term bank loans with fixed interest rates is the
present value of expected cash flows discounted using the interest rate the Company may obtain for
similar long-term bank loans. The fair value of other long-term payables is determined using the dis-
counted value of expected cash flows, which approximates their carrying amount.
Fair values of financial instruments were determined as follows:
b) Fair value of bonds payable is based on their quoted market price.
c) Fair value of derivative financial instruments is the amount receivable from or payable to the count-
er-party if the contracts were terminated on the balance sheet date.
The fair values of some financial and non-financial instruments were not included in the fair values
disclosed above. Accordingly, the sum of the fair values of the financial instruments listed above does
not represent the fair value of the Company as a whole.
North America
and Others
Taiwan
Adjustments and
Elimination
Consolidated
2005
Sales to other than consolidated entities
Sales among consolidated entities
$ 152,517,793
13,513,219
$ 114,047,277
152,132,512
$
-
(165,645,731)
$ 266,565,070
-
Total sales
$ 166,031,012
$ 266,179,789
$(165,645,731)
$ 266,565,070
Gross profit
Operating expenses
Non-operating income and gains
Non-operating expenses and losses
Income before income tax
Identifiable assets
Long-term investments
Total assets
2004
$ 2,858,063
$ 115,722,187
$
(377,376)
$ 92,904,411
$ 430,038,385
$ (45,861,280)
$ 118,202,874
(27,234,315)
7,067,497
(3,772,809)
$ 94,263,247
$ 57,633
$ 477,081,516
42,428,073
$ 519,509,589
Sales to other than consolidated entities
Sales among consolidated entities
$ 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
(Continued)
a) Fair value of short-term and publicly traded long-term investments is based on quoted market
Net income attributable to minority interest
prices.
Gross profit
Operating expenses
Non-operating income and gains
Non-operating expenses and losses
Income before income tax
Net income attributable to minority interest
Identifiable assets
Long-term investments
125
Total assets
c. Export sales
North America
and Others
Taiwan
Adjustments and
Elimination
$ 6,173,780
$ 110,160,584
$ (515,181)
$ 89,000,906
$ 416,076,665
$ (43,725,329)
Consolidated
$ 115,819,183
(27,337,509)
6,015,558
(2,531,645)
$ 91,965,587
$ 12,898
$ 461,352,242
38,101,849
$ 499,454,091
(Concluded)
The export sales for the years ended December 31, 2005 and 2004 were as follows:
Area
Asia
Europe and others
2005
64,942,647
15,932,575
80,875,222
$
$
2004
57,321,557
26,067,317
83,388,874
$
$
The export sales information is based on amounts billed to customers within the areas.
d. Major customer
The Company only had one customer to which the net sales accounts for at least 10% of its total net
sales in the year ended December 31, 2005 and 2004. The net sales to such customer amounted to
NT$29,258,338 thousand and NT$25,299,856 thousand in the years ended December 31, 2005 and
2004, representing 11% and 10% of its total net sales, respectively.
TABLE 1
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED AND SUBSIDIARIES
FINANCING PROVIDED
FOR THE YEAR ENDED DECEMBER 31, 2005
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
No.
Financing Name
Counter-party
Financial Statement
Account
Maximum
Balance for the
Period (US$ in
Thousands)
Ending Balance
(US$ in
Thousands)
Interest Rate
Type of
Financing
(Note 1)
Transaction
Amounts
Reasons for
Short-term
Financing
Allowance for
Bad Debt
Collateral
Item
Value
Financing Limit
for Each
Borrowing
Company
1
2
TSMC International
TSMC Development
Other receivables
TSMC Partners
TSMC Development
Other receivables
$ 1,971,000
(US$ 60,000)
$ 1,149,750
(US$ 35,000)
1.50%
2,628,000
(US$ 80,000)
-
1.50%
2
2
$ -
Operating capital
$ -
-
Operating capital
-
-
-
Note 1: The type 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 LIMITED AND SUBSIDIARIES
Financing
Company's
Financing
Amount Limits
(US$ in
Thousands)
$ 32,454,757
(US$ 987,968)
(Note 2)
126
$ -
N/A
-
N/A
(Note 3)
ENDORSEMENT/GUARANTEE PROVIDED
FOR THE YEAR ENDED DECEMBER 31, 2005
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
No.
Endorsement /
Guarantee Provider
Name
Counter-party
Limits on Each Counter-
party's Endorsement /
Guarantee Amounts
Nature of
Relationship
(Note 2)
0
The Company
TSMC-North America
TSMC Development
2
3
Not exceed 10% of the net
worth of the Company,
and be also limited to the
paid-in capital of the
endorsement / guarantee
company, unless other-
wise approved by Board
of Directors.
Note 1: 25% of the net worth of the Company as of December 31, 2005.
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.
Maximum Balance for the Period
(US$ in Thousands)
Ending Balance
(US$ in Thousands)
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$
1,314,000
40,000)
1,971,000
60,000)
$
(US$
1,314,000
40,000)
$
-
-
-
0.29%
$
111,407,587
-
TABLE 3
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED AND SUBSIDIARIES
MARKETABLE SECURITIES HELD
DECEMBER 31, 2005
(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
December 31, 2005
Shares/Units
(in Thousands)
Carrying Value
(US$ in Thousands)
Percentage of
Ownership
Market Value or Net
Asset Value
(US$ in Thousands)
Note
127
The Company
Government bonds
United States Treas Nts
Kreditanstal Fur Wiederaufbau
2004 Government Bond Series E
2002 Government Bond Series B
2002 Government Bond Series F
2004 Government Bond Series A
2004 Government Bond Series E
2004 Kaohsiung Municipal Bond Series A
2005 Government Bond Series A
Bond funds
JF Taiwan First Bond Fund
ABN AMRO Bond Fund
JF Taiwan Bond Fund
Dresdner Bond DAM Fund
Shinkong Chi Shin Bond Fund
NITC Bond Fund
ABN AMRO Select Bond Fund
Stock
Taiwan Mask Corp.
TSMC International
VIS
SSMC
TSMC Partners
TSMC-North America
GUC
TSMC-Japan
TSMC-Europe
United Industrial Gases Co., Ltd.
Shin-Etsu Handotai Taiwan Co., Ltd.
Hontung Venture Capital Co., Ltd.
Gobaltop Partner I Venture Capital Corp.
W.K. Technology Fund IV
Capital
TSMC-Shanghai
Emerging Alliance
VTAF II
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Subsidiary
Investee accounted for using
equity method
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
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
US$
US$
$
-
-
-
-
-
-
-
-
-
63,131
134,906
62,009
69,303
55,063
3,764
18,235
1,439
987,968
437,891
47,516
6,881
300,472
355,936
149,441
2,349,973
3,898,610
620,000
2,548,977
856,359
1,956,175
908,656
771,617
762,771
600,000
200,000
5,257
23,912,812
5,419,747
Investee accounted for using
Long-term investment
382
4,215,200
equity method
Subsidiary
Subsidiary
Investee with controlling financial
Long-term investment
Long-term investment
Long-term investment
interest
Subsidiary
Subsidiary
-
-
-
-
-
Subsidiary
Subsidiary
Subsidiary
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
300
11,000
40,147
6
-
16,783
10,500
8,392
5,000
4,000
-
-
-
4,091,166
1,790,186
442,233
94,949
23,087
193,584
105,000
83,916
50,000
40,000
9,438,856
850,534
642,479
N/A
N/A
N/A
N/A
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
27
32
100
100
46
100
100
10
7
10
1
2
100
99
98
US$
US$
$
47,233
6,839
300,563
354,832
149,256
2,349,857
3,896,739
618,160
2,544,964
875,416
2,004,862
933,430
792,068
778,482
610,864
203,860
21,280
23,912,812
10,991,064
4,215,200
4,091,166
1,790,186
465,258
94,949
23,087
295,606
186,387
46,801
49,947
43,645
9,438,856
850,534
642,479
(Continued)
Held Company Name
Marketable Securities Type and Name
Relationship with the Company
Financial Statement Account
December 31, 2005
Shares/Units
(in Thousands)
Carrying Value
(US$ in Thousands)
Percentage of
Ownership
Market Value or Net
Asset Value
(US$ in Thousands)
Note
Chi Cherng
Hsin Ruey
Corporate bonds
Abbott Labs
Abbott Labs
Ace Ltd.
AIG Sunamerica Global Fing Ix
Allstate Life Global Fdg Secd
Alltel Corp.
American Express Co.
American Gen Fin Corp.
American Gen Fin Corp. Mtn
American Gen Fin Corp. Mtn
American Honda Fin Corp. Mtn
Ameritech Capital Funding Co.
Amgen Inc.
Amsouth Bk Birmingham Ala
Anz Cap Tr I
Associates Corp. North Amer
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.
Beneficial Corp. Mtn Bk Entry
Berkshire Hathaway Fin Corp.
Cargill Inc.
Caterpillar Finl Svcs Mtn
Chase Manhattan Corp. New
Chase Manhattan Corp. New
Chubb Corp.
Cit Group Hldgs Inc.
Citicorp
Cogentrix Energy Inc.
Colonial Pipeline Co.
Corestates Cap Corp.
Countrywide Fdg Corp. Mtn
Countrywide Home Lns Inc.
Credit Suisse Fb USA Inc.
Credit Suisse Fincl Products
Credit Suisse First Boston
Credit Suisse First Boston USA
Daimlerchrysler North Amer
Daimlerchrysler North Amer Hld
Dayton Hudson Corp.
Deere John Cap Corp.
Dell Computer Corp.
Den Danske Bk Aktieselskab
Subsidiary
Long-term investment
Subsidiary
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
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
78,139
36
$
536,703
Treasury stock of NT$458,564
77,415
1,581
2,732
1,046
1,032
2,998
609
3,550
1,768
1,058
3,130
3,800
510
3,005
1,972
1,012
2,700
1,972
1,525
2,715
580
3,329
3,757
2,434
1,498
2,120
5,721
1,628
2,246
2,138
3,203
1,473
2,885
1,625
1,062
2,100
5,210
4,141
1,507
786
2,249
997
749
2,104
5,079
3,054
2,192
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
36
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
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$
thousand is deducted from the
carrying value
536,926
Treasury stock of NT$459,511
thousand is deducted from the
carrying value
1,526
2,595
1,011
1,001
2,948
598
3,435
1,670
1,011
2,998
3,808
491
2,907
1,967
968
2,582
1,984
1,485
2,729
544
3,337
3,662
2,340
1,472
2,012
5,724
1,546
2,155
2,125
3,068
1,407
2,739
1,536
1,018
2,066
5,020
4,029
1,508
748
2,175
972
751
2,056
5,020
2,874
2,067
128
(Continued)
129
Held Company Name
Marketable Securities Type and Name
Relationship with the Company
Financial Statement Account
December 31, 2005
Shares/Units
(in Thousands)
Carrying Value
(US$ in Thousands)
Percentage of
Ownership
Market Value or Net
Asset Value
(US$ in Thousands)
Note
Diageo Plc
Dow Chem Co.
European Invt Bk
European Invt Bk
Fifth Third Bk Cincinnati OH
First Data Corp.
Fleet Boston Corp.
Fleet Finl Group Inc. New
Fleet Finl Group Inc. New
Fpl Group Cap Inc.
Fpl Group Cap Inc.
Gannett Co Inc.
General Elec Cap Corp. Mtn
General Elec Cap Corp. Mtn
General Re Corp.
Genworth Finl Inc.
Goldman Sachs Group Inc.
Goldman Sachs Group Inc.
Goldman Sachs Group LP
Greenpoint Finl Corp.
Gte Corp.
Hancock John Global Fdg II Mtn
Hancock John Global Fdg Mtn
Hartford Finl Svcs Group Inc.
Hartford Finl Svcs Group Inc.
Hbos Plc Medium Term Sr Nts
Hbos Plc Meduim Term Sr Nts
Heller Finl Inc.
Hershey Foods Corp.
Hewlett Packard Co.
Honeywell Inc.
Household Fin Corp.
Household Fin Corp.
Household Intl Inc.
HSBC Fin Corp Mtn
HSBC USA Inc. New
Huntington Natl Bk Columbus OH
ING Bank
ING Sec Life Instl Fdg
International Business Machs
International Lease Fin Corp.
Intl Lease Fin Corp. Mtn
Intl Lease Fin Corp. Mtn
JP Morgan Chase + Co.
Jackson Natl Life Global Fdg
Jackson Natl Life Global Fdg S
JP Morgan Chase + Co.
Key Bk Na Med Term Nts Bk Entr
Keycorp Mtn Book Entry
Kraft Foods Inc.
Kraft Foods Inc.
Lehman Brothers Hldgs 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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
3,459
921
3,918
8,315
2,419
3,013
2,850
975
494
1,001
860
2,999
3,989
8,862
3,500
3,412
4,981
3,477
1,637
974
2,134
3,566
1,003
296
1,435
3,201
2,977
2,071
1,627
3,373
3,284
2,993
532
2,878
5,097
1,154
2,954
2,114
2,544
2,249
2,031
3,028
2,471
3,406
1,036
1,999
3,663
4,450
3,500
773
1,037
1,668
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
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$
3,419
863
3,910
8,023
2,414
2,860
2,718
923
474
997
845
2,930
3,894
8,755
3,430
3,419
4,970
3,452
1,530
959
2,041
3,512
970
297
1,371
3,181
2,940
1,984
1,537
3,204
3,081
2,908
512
2,892
5,066
1,091
2,954
2,024
2,485
2,208
2,005
2,943
2,481
3,353
1,006
2,004
3,522
4,409
3,512
749
1,006
1,631
(Continued)
Held Company Name
Marketable Securities Type and Name
Relationship with the Company
Financial Statement Account
December 31, 2005
Shares/Units
(in Thousands)
Carrying Value
(US$ in Thousands)
Percentage of
Ownership
Market Value or Net
Asset Value
(US$ in Thousands)
Note
Lehman Brothers Hldgs Inc.
Lehman Brothers Hldgs Inc.
Lincoln Natl Corp. In
Merita Bk Ltd. Ny Brh
Merrill Lynch + Co. Inc.
Merrill Lynch + Co. Inc.
Merrill Lynch + Co. Inc.
Metropolitan Life Global Mtn
Monumental Global Fdg II
Monumental Global Fdg II 2002A
Morgan Stanley
Morgan Stanley Group Inc.
National City Corp.
National Westminster Bk Plc
Nationwide Bldg Soc
Nationwide Bldg Soc Mtn
Nationwide Life Global Mtn
Pepsico Inc. Mtn Book Entry
Pnc Fdg Corp.
Popular North Amer Inc. Mtn
Premark Intl Inc.
Pricoa Global Fdg 1 Mtn
Protective Life Secd Trs
Prudential Ins Co. Amer
Prudential Ins Co. Amer
Public Svc Elec Gas Co.
Regions Finl Corp. New
Reinsurance Group Amer Inc.
Royal Bk Scotland Group Plc
Safeco Corp.
Santander US Debt S A Uniperso
Sara Lee Corp.
Sbc Communications Inc.
Sbc Communications Inc.
Scotland Intl Fin B V 144a
Slm Corp.
Slm Corp. Medium Term Nts
Sp Powerassests Ltd. Global
St Paul Cos Inc. Mtn Bk Ent
Suntrust Bks Inc.
Swedbank Sparbanken Svenge Ab
Tiaa Global Mkts Inc.
Tribune Co. Med Trm Nts
Unitedhealth Group Inc.
US Bk Natl Assn Cincinnati Oh
Virginia Elec + Pwr Co.
Vodafone Group Plc New
Wal Mart Cda Venture Corp.
Washington Mut Fin Corp.
Washington Mut Inc.
Washington Post Co.
Wells Fargo + Co. New
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
499
1,163
519
538
3,486
1,992
4,900
1,907
1,534
1,045
2,144
4,507
3,426
1,433
3,457
3,000
1,463
3,818
1,080
3,042
2,954
3,500
2,920
2,648
2,774
3,225
2,397
2,091
1,563
765
4,998
1,596
1,776
3,681
1,533
500
2,950
991
2,661
1,062
1,084
519
2,943
3,119
2,669
2,884
2,559
3,670
1,043
4,735
3,182
3,697
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
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$
489
1,105
503
513
3,421
1,983
4,891
1,894
1,476
1,005
2,142
4,432
3,378
1,355
3,463
3,001
1,459
3,678
1,029
2,931
2,789
3,502
2,903
2,523
2,704
3,184
2,378
2,012
1,489
730
4,974
1,527
1,713
3,515
1,446
496
2,922
971
2,593
1,014
1,021
501
2,838
3,015
2,678
2,702
2,505
3,511
1,007
4,539
3,023
3,520
130
(Continued)
Held Company Name
Marketable Securities Type and Name
Relationship with the Company
Financial Statement Account
December 31, 2005
Shares/Units
(in Thousands)
Carrying Value
(US$ in Thousands)
Percentage of
Ownership
Market Value or Net
Asset Value
(US$ in Thousands)
Note
Westfield Cap Corp. Ltd.
Wps Resources Corp.
Formosa Petrochemical Corporation
Taiwan Power Company
Nan Ya Plastics Corporation
China Steel Corporation
Formosa Petrochemical Corporation
Chinese Petroleum Corporation
Far Eastone Telecommunications Co. Ltd.
Formosa Plastics Corporation
Formosa Chemicals & Fiber Corporation
131
Agency bonds
Fed Hm Ln Pc Pool 1H2520
Fed Hm Ln Pc Pool 1H2524
Fed Hm Ln Pc Pool 781959
Fed Hm Ln Pc Pool E89857
Fed Hm Ln Pc Pool G11295
Federal Home Ln Mtg
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.
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 Gtd
Federal Natl Mtg Assn Gtd
Fnma Pool 254507
Fnma Pool 254834
Fnma Pool 255883
Fnma Pool 685116
Fnma Pool 687863
Fnma Pool 696485
Fnma Pool 725095
Fnma Pool 730033
Fnma Pool 740934
Fnma Pool 790828
Fnma Pool 793025
Fnma Pool 793932
Fnma Pool 794040
Fnma Pool 795548
Fnma Pool 806642
Fnma Pool 815626
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
US$
$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
1,999
1,107
311,568
3,263,348
2,150,842
1,010,532
791,963
705,436
300,026
268,855
134,369
3,753
2,861
7,112
1,980
1,753
3,848
887
3,454
3,954
6,096
3,280
4,098
9,905
4,902
3,755
3,696
110
1,930
4,030
4,051
1,668
3,659
445
2,286
1,750
3,771
842
3,570
4,175
1,562
1,793
1,775
3,504
3,306
764
940
623
1,573
3,622
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
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$
2,007
1,074
301,946
3,263,232
2,152,156
1,010,657
791,771
704,878
300,001
270,086
137,529
3,743
2,838
7,123
1,923
1,703
3,834
882
3,406
3,945
5,977
3,185
4,102
9,898
4,843
3,735
3,668
109
1,887
3,992
4,000
1,626
3,655
432
2,240
1,729
3,762
817
3,565
4,167
1,516
1,771
1,753
3,407
3,245
742
912
610
1,544
3,625
(Continued)
Held Company Name
Marketable Securities Type and Name
Relationship with the Company
Financial Statement Account
December 31, 2005
Shares/Units
(in Thousands)
Carrying Value
(US$ in Thousands)
Percentage of
Ownership
Market Value or Net
Asset Value
(US$ in Thousands)
Note
Fnma Pool 816594
Fnma Pool 825395
Fnma Pool 825398
Fnma Pool 841069
Gnma II Pool 081150
Gnma II Pool 081153
Federal Farm Cr Bks
Federal Home Ln Bank
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 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. Mtn
Federal Home Loan Bank
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
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
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
2,657
3,265
4,949
3,673
813
2,956
3,985
3,962
6,110
2,454
2,990
3,932
4,997
2,962
4,927
3,976
4,136
4,939
7,886
2,233
8,672
4,965
4,808
7,558
8,594
3,024
3,972
7,887
19,846
6,908
6,098
9,134
3,379
1,042
2,532
3,388
9,997
6,980
5,929
4,930
3,475
4,847
4,903
4,921
7,892
4,943
8,971
4,430
17,888
5,928
7,926
9,758
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
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$
2,630
3,229
4,889
3,649
796
2,884
3,936
3,962
6,083
2,483
2,991
3,929
4,966
2,949
4,896
3,951
4,103
4,865
7,977
2,217
8,672
4,926
4,816
7,499
8,524
2,980
3,949
7,759
19,832
6,901
5,895
9,008
3,304
1,001
2,419
3,412
9,778
6,935
5,941
4,883
3,462
4,859
4,893
4,897
7,889
4,936
8,935
4,339
17,753
5,873
7,852
9,772
132
(Continued)
133
Held Company Name
Marketable Securities Type and Name
Relationship with the Company
Financial Statement Account
December 31, 2005
Shares/Units
(in Thousands)
Carrying Value
(US$ in Thousands)
Percentage of
Ownership
Market Value or Net
Asset Value
(US$ in Thousands)
Note
Federal Natl Mtg Assn Mtn
Federal Natl Mtg Assn Mtn
Federal Natl Mtg Assn Mtn
Federal Natl Mtg Assn Mtn
Federal Natl Mtg Assn Mtn
Corporate issued asset-backed securities
American Home Mtg Invt Tr
Americredit Automobile Rec Tr
Americredit Automobile Rec Tr
Americredit Automobile Receiva
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 Arm Tr
Bear Stearns Coml Mtg Secs Inc
California Infrastructure Dev
Capital Auto Receivables Asset
Capital One Auto Fin Tr
Capital One Auto Fin Tr
Capital One Multi Asset Execut
Capital One Multi Asset Execut
Capital One Multi Asset Execut
Capital One Prime Auto Receiv
Caterpillar Finl Asset Tr
Caterpillar Finl Asset Tr
Cendant Rent Car Fdg Aesop LLC
Centex Home Equity Ln Tr
Cit Equip Coll Tr
Citibank Cr Card Issuance Tr
Citicorp Mtg Secs
Cnh Equip Tr
Comm
Credit Suisse First Boston Mtg
Credit Suisse First Boston Mtg
Cwabs Inc.
Cwabs Inc.
Cwabs Inc.
Cwalt Inc.
Cwmbs Inc.
Daimlerchrysler Auto Tr
Daimlerchrysler Auto Tr
Deere John Owner Tr
Drive Auto Receivables Tr
Fifth Third Auto Tr
First Horizon Abs Tr
First Union Lehman Bros Mtg Tr
Ford Cr Auto Owner Tr
Granite Mtgs 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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
15,787
7,000
2,876
2,866
5,740
411
1,034
2,000
5,000
4,949
680
4,462
4,030
2,986
958
1,947
6,350
864
1,588
2,650
3,000
4,957
3,974
2,999
2,800
4,453
8,219
11,626
3,500
4,999
9,782
1,025
5,000
1,383
1,296
1,480
636
2,005
4,287
1,143
1,255
1,261
4,709
2,501
3,200
3,000
999
2,710
10,908
4,447
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
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$
15,791
6,919
2,888
2,870
5,643
411
1,014
1,977
4,971
4,894
668
4,362
3,990
2,932
958
1,952
6,350
839
1,566
2,612
2,999
4,863
3,941
2,974
2,781
4,390
8,142
11,400
3,476
4,941
9,753
1,017
4,922
1,384
1,282
1,470
636
2,007
4,289
1,133
1,230
1,260
4,658
2,460
3,214
2,976
1,001
2,580
10,789
4,447
(Continued)
Held Company Name
Marketable Securities Type and Name
Relationship with the Company
Financial Statement Account
December 31, 2005
Shares/Units
(in Thousands)
Carrying Value
(US$ in Thousands)
Percentage of
Ownership
Market Value or Net
Asset Value
(US$ in Thousands)
Note
Gs Auto Ln Tr
Harley Davidson Motorcycle Tr
Harley Davidson Motorcycle Tr
Hertz Vehicle Financing LLC
Holmes Fing No 8 Plc
Household Automotive Tr
Hsbc Automotive Tr
Hyundai Auto Receivables Tr
Hyundai Auto Receivables Tr
Hyundai Auto Receivables Tr
Impac Cmb Tr
Impac Cmb Tr
Impac Secd Assets Corp.
Lb Ubs Coml Mtg Tr
Long Beach Accep Auto Receivab
Massachusetts Rrb Spl Purp Tr
Mastr Asset Backed Secs Tr
Mastr Asset Backed Secs Tr
Mbna Master Cr Card Tr II
Monumentl Global Fdg II
National City Auto Receivables
Navistar Finl 2003 A Owner Tr
Nissan Auto Receivables
Onyx Accep Owner Tr
Pg+E Energy Recovery Fdg LLC
Providian Gateway Owner Tr
Providian Gateway Owner Tr
Reliant Energy Transition Bd
Residential Asset Mtg Prods
Residential Asset Sec Mtg Pass
Residential Asset Sec Mtg Pass
Residential Fdg Mtg Secs I Inc.
Residential Fdg Mtg Secs I Inc.
Revolving Home Equity Ln Tr
Sequoia Mtg Tr
Sequoia Mtg Tr
Sequoia Mtg Tr
Structured Adj Rate Mtg Ln Tr
Structured Adj Rate Mtg Ln Tr
Structured Asset Invt Ln Tr
Toyota Auto Receivables 2003 B
Triad Auto Receivables Tr
TW Hotel Fdg 2005 Lc
Txu Elec Delivery Transition
Usaa Auto Owner Tr
Wachovia Auto Owner Tr
Wachovia Auto Owner Tr
Washington Mut Mtg Secs Corp.
Wells Fargo Finl Auto Owner Tr
Wells Fargo Mtg Bkd Secs
WFS Financial Owner Trust
WFS Finl
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
1,899
1,533
5,999
5,350
5,001
5,872
2,999
6,442
3,250
3,999
638
534
880
4,001
2,526
3,900
206
3,499
8,108
1,000
914
4,928
7,000
4,913
4,749
2,202
3,992
4,973
2,967
3,000
3,780
2,550
4,817
3,234
1,209
1,450
1,070
2,059
746
856
4,970
3,339
8,197
3,103
3,718
38
4,999
4,067
5,299
3,661
4,133
1,311
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
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$
1,913
1,515
5,811
5,350
5,003
5,843
2,993
6,330
3,204
3,926
638
534
880
3,955
2,477
3,837
206
3,503
7,818
1,002
916
4,863
6,918
4,866
4,663
2,207
3,918
4,793
2,855
2,948
3,704
2,496
4,737
3,235
1,209
1,455
1,070
2,012
735
855
4,892
3,287
8,197
3,004
3,682
38
4,955
4,026
5,269
3,632
4,069
1,308
134
(Continued)
Held Company Name
Marketable Securities Type and Name
Relationship with the Company
Financial Statement Account
December 31, 2005
Shares/Units
(in Thousands)
Carrying Value
(US$ in Thousands)
Percentage of
Ownership
Market Value or Net
Asset Value
(US$ in Thousands)
Note
135
Chi Cherng
Hsin Ruey
TSMC International
WFS Finl 2004 2 Owner Tr
WFS Finl 2004 4 Owner Tr
WFS Finl 2005 2 Oner Tr
Whole Auto Ln Tr
Whole Auto Ln Tr
Whole Auto Ln Tr
World Omni Auto Receivables Tr
Corporate issued notes
Canadian Imperial BK
Canadian Imperial BK
Washington Mutual
Money market funds
SSGA Cash Mgmt Global Offshore
Equity
Horizon Venture Fund I, L.P.
Crimson Asia Capital Ltd., L.P.
TSMC stock
TSMC stock
Stock
TSMC Development
TSMC Technology
InveStar
InveStar II
TSMC Development
WaferTech stock
InveStar
Common stock
RichTek Technology Corp.
Advanced Power Electronics Corp.
SiRF Technology Holdings, Inc.
Broadtek Electronics Corp.
Monolithic Power Systems, Inc.
Global Testing Corp.
Capella Microsystems (Taiwan), Inc.
Signia Technologies, Inc.
Advanced Power Electronics Corp.
Broadtek Electronics Corp.
RichTek Technology Corp.
Preferred stock
Integrated Memory Logic, Inc.
Sensory, Inc.
IP Unity, Inc.
Sonics, Inc.
NanoAmp Solutions, Inc.
Memsic, 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
Long-term investment
Long-term investment
Parent company
Short-term investment
Parent company
Short-term investment
Long-term investment
Long-term investment
Long-term investment
Long-term investment
-
-
-
-
-
-
-
-
-
-
-
-
-
16,454
16,484
1
1
18,505
51,300
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
4,994
5,399
2,250
1,954
4,000
3,000
5,963
1,999
3,015
3,000
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$
4,905
5,320
2,229
1,968
3,941
2,927
5,839
1,999
3,015
3,000
US$
7,936
N/A
US$
7,936
$
US$
US$
US$
US$
280,179
54,811
458,564
459,511
588,685
5,647
21,833
33,451
$
N/A
N/A
-
-
100
100
97
97
280,179
54,811
1,022,605
1,024,521
US$
US$
US$
US$
588,685
5,647
21,833
33,451
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Long-term investment
-
US$
368,886
99
US$
368,886
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
838
525
10
29
1,975
58,044
530
701
674
116
421
1,831
1,404
1,008
2,686
541
2,727
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
71
210
44
9
1,567
4,961
154
201
270
37
36
1,220
125
494
3,530
853
1,500
-
2
-
-
7
8
4
3
2
-
-
9
6
3
4
2
10
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
3,168
670
294
12
28,256
9,161
154
201
860
47
1,591
1,220
125
494
3,530
853
1,500
(Continued)
Held Company Name
Marketable Securities Type and Name
Relationship with the Company
Financial Statement Account
December 31, 2005
Shares/Units
(in Thousands)
Carrying Value
(US$ in Thousands)
Percentage of
Ownership
Market Value or Net
Asset Value
(US$ in Thousands)
Note
InveStar II
Emerging Alliance
Reflectivity, Inc.
Common stock
Monolithic Power Systems, Inc.
GeoVision, Inc.
Advanced Analogic Technology, Inc.
RichTek Technology Corp.
Signia Technologies, Inc.
Ralink Technology (Taiwan), Inc.
Procoat Technology, Inc.
Capella Microsystems (Taiwan), Inc.
Auden Technology MFG. Co., Ltd.
EoNEX Technologies, Inc.
Conwise Technology Corporation, Ltd.
Goyatek Technology, Corp.
Trendchip Technologies Corp.
EON Technology, Corp.
eChannelOpen Holding, Inc.
eLCOS Microdisplay Technology, Ltd.
Epic Communications, Inc.
RichTek Technology Corp.
GeoVision, Inc.
Preferred stock
Memsic, Inc.
NanoAmp Solutions, Inc.
Sonics, Inc.
Reflectivity, Inc.
Kilopass Technologies, Inc.
FangTek, Inc.
eLCOS Microdisplay Technology, Ltd.
Alchip Technologies Limited
Common stock
Global Investment Holding, Inc.
RichWave Technology Corp.
NetLogic Microsystems, Inc.
Quake Technologies, Inc.
Pixim, Inc.
Preferred stock
Quake Technologies, Inc.
Pixim, Inc.
Ikanos Communication, Inc.
Quicksilver Technology, Inc.
Mosaic Systems, Inc.
Zenesis Technologies, Inc.
Reflectivity, Inc.
Miradia, Inc.
Axiom Microdevices, Inc.
Optichron, Inc.
NuCORE Technology Inc.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Long-term investment
1,064
US$
741
2
US$
741
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
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
864
336
484
386
351
1,833
5,123
419
953
55
2,800
2,088
2,000
3,264
358
270
302
198
15
2,289
375
3,082
4,255
3,887
6,806
2,667
2,597
10,800
3,380
113
46
1,924
555
2,193
7,446
1,049
2,481
1,204
4,848
3,040
1,000
714
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$
2,081
74
1,261
192
101
791
1,940
122
410
3,048
204
545
574
1,175
251
27
37
98
3
1,560
1,500
3,082
2,205
2,000
3,250
3,500
2,950
100,000
1,247
1,388
35
512
415
583
3,125
-
12
699
2,479
1,000
1,000
1,000
1,455
3
1
1
-
1
3
10
2
4
5
9
7
5
8
4
1
1
-
-
8
1
5
5
18
34
15
18
6
13
1
-
4
1
-
3
4
6
4
4
4
3
4
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$
12,370
1,023
6,969
1,458
101
791
1,940
122
410
3,048
204
545
574
1,175
251
27
37
872
50
1,560
1,500
3,082
2,205
2,000
3,250
3,500
2,950
100,000
1,247
3,051
35
512
415
583
3,125
-
12
699
2,479
1,000
1,000
1,000
1,455
136
(Continued)
Held Company Name
Marketable Securities Type and Name
Relationship with the Company
Financial Statement Account
Next IO, Inc.
Audience, Inc.
Centrality Communications, Inc.
Britestream Networks, Inc. (Layer N Networks, Inc.)
Teknovus, Inc.
Optimal Corporation
Mobilygen Corporation
Warrants
Pixim, Inc.
Common stock
VisEra Holding Company
Common stock
Yobon Technologies, Inc.
Sentelic, Corp.
Preferred stock
Powerprecise Solutions, Inc.
Tzero Technologies, Inc.
Miradia, Inc.
Axiom Microdevices, Inc.
Next IO, Inc.
Ageia Technologies, Inc.
Audience, Inc.
GemFire Corporation
Optichron, Inc.
Leadtrend Technology, Inc.
Aquantia Corporation
Xceive Corporation
5V Technologies,Inc
Power Analog Microelectronics
Impinj,Inc
Warrants
Aquantia Corporation
Stock
Global Unichip Corporation - NA
Global Unichip Japan
137
Partners
VTAF II
GUC
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
December 31, 2005
Shares/Units
(in Thousands)
Carrying Value
(US$ in Thousands)
Percentage of
Ownership
Market Value or Net
Asset Value
(US$ in Thousands)
Note
US$
US$
US$
US$
US$
US$
US$
800
1,654
1,325
2,444
6,977
485
1,415
242
500
250
1,800
1,172
1,327
500
750
-
US$
US$
US$
US$
US$
US$
US$
2
2
3
2
3
6
1
-
500
250
1,800
1,172
1,327
500
750
-
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
18,931
US$
19,862
50
US$
19,862
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
1,675
600
US$
US$
1,032
244
1,809
761
216
1,969
531
600
353
900
1,401
714
1,333
2,000
257
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
787
1,022
1,000
500
1,600
776
182
2,000
102
600
869
431
1,150
1,000
1,000
1,500
500
Long-term investment
46
$
-
17
15
US$
US$
8
2
2
2
-
2
1
1
2
5
5
2
-
7
-
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
$
787
1,022
1,000
500
1,600
776
182
2,000
102
600
869
431
1,150
1,000
1,000
1,500
500
-
4,715
2,153
(Concluded)
Subsidiary
Subsidiary
Long-term investment
Long-term investment
100
-
4,715
2,153
100
100
TABLE 4
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED AND SUBSIDIARIES
MARKETABLE SECURITIES ACQUIRED AND DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
FOR THE YEAR END DECEMBER 31, 2005
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
Company
Name
Marketable Securities
Type and Name
Financial Statement
Account
Counter-party
Nature of
Relationship
Beginning Balance
Acquisition
Disposal (Note 1)
Ending Balance
Shares / Units
(in Thousands)
Amount (US$
in Thousands)
Shares / Units
(in Thousands)
Amount (US$
in Thousands)
Shares / Units
(in Thousands)
Amount (US$
in Thousands)
Carrying Value
(US$ in
Thousands)
Gain (Loss) on
Disposal (US$
in Thousands)
Shares / Units
(in Thousands)
Amount (US$
in Thousands)
(Note 2)
138
The Company
Bond funds
JF Taiwan Bond Fund
JF Taiwan First Bond Fund
Invesco R.O.C. Bond Fund
Dresdner Bond DAM Fund
Short-term investment
Short-term investment
Short-term investment
Short-term investment
JF Asset Management (Taiwan) Ltd.
JF Asset Management (Taiwan) Ltd.
INVESCO Asset Management Taiwan
Allianz Dresdner Securities Investment
Consulting Co., Ltd.
Barits Bond Fund
Short-term investment
Barits Securities Investment Trust Co.,
Shinkong Chi-Shin Fund
Short-term investment
Shinkong Investment Trust Co., Ltd.
Ltd.
Bonds under repurchase agreement
Short-term investment
Chung Shing Bills Finance Corp. and
several financial institutions
Government bonds
2003 Government Bond Series A
2004 Government Bond Series E
Short-term investment
Short-term investment
BNP and several financial institutions
Chung Shing Bills Finance Corp. and
several financial institutions
2002 Government Bond Series B
Long-term investment
China Bills Finance Corp. and several
financial institutions
2002 Government Bond Series F
Long-term investment
China Bills Finance Corp. and several
financial institutions
2005 Government Bond Series A
Long-term investment
China Bills Finance Corp. and several
financial institutions
Kreditanstalt Fur Wiederaufbau
United States Treas NTS
Short-term investment
Short-term investment
-
-
Corporate bonds
Taiwan Power Company
Formosa Petrochemical Corporation
Allstate Finl Global Fdg LLC
American Intl Group Inc. Mtnf
Bear Stearns Cos Inc.
Bear Stearns Cos Inc.
Bear Stearns Cos Inc.
Bear Stearns Cos Inc. Medium Te
Caterpillar Finl Svcs Mtn
Citigroup Inc.
Countrywide Fdg Corp. Mtn
Countrywide Finl Corp.
Credit Suisse Fb USA Inc.
Credit Suisse First Boston USA
Deere John Cap Corp.
European Invt BK
General Elec Cap 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
China Bills Finance Corp.
China Bills Finance Corp.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
78,698
84,886
76,705
80,833
$ 1,153,209
1,151,463
1,101,911
900,000
76,640
900,000
151,594
2,100,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
249,449
1,207,409
-
-
-
-
-
US$ 192,357
$ 2,777,798
-
US$ 3,171
US$ 3,795
-
US$ 3,518
-
US$ 3,105
-
US$ 3,583
-
-
US$ 2,645
-
-
-
US$ 3,467
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$ -
-
-
-
16,689
21,755
76,705
11,530
$ 250,000
300,000
1,121,779
130,000
$ 244,553
295,104
1,101,911
128,383
$ 5,447
4,896
19,868
1,617
62,009
63,131
-
69,303
$ 908,656
856,359
-
771,617
-
-
-
-
300,472
360,608
149,440
2,548,689
US$ 6,881
US$ 494,515
$ -
311,568
-
-
US$ 3,329
-
US$ 3,757
-
US$ 5,721
-
US$ 3,500
US$ 3,000
US$ 4,141
US$ 3,832
US$ 5,079
US$ 3,918
-
76,640
915,204
900,000
15,204
-
-
96,531
1,360,000
1,337,229
22,771
55,063
762,771
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
251,784
249,449
2,335
1,216,500
-
1,207,409
-
9,091
-
-
-
-
-
-
-
-
-
-
-
US$ 637,301
-
US$ 639,356
-
US$ (2,055)
$ 2,807,500
-
US$ 3,086
US$ 3,793
-
US$ 3,484
-
US$ 3,106
-
US$ 3,512
US$ 3,500
US$ 3,000
US$ 2,593
US$ 3,780
-
-
US$ 3,432
$ 2,777,798
-
US$ 3,171
US$ 3,795
-
US$ 3,518
-
US$ 3,105
-
US$ 3,583
US$ 3,500
US$ 3,000
US$ 2,645
US$ 3,832
-
-
US$ 3,467
US$
US$
US$
US$
$ 29,702
-
(85)
(2)
-
(34)
-
1
-
(71)
-
-
(52)
(52)
-
-
(35)
US$
US$
US$
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
300,472
355,936
149,441
2,548,977
US$ 6,881
US$ 47,516
$ -
311,568
-
-
US$ 3,329
-
US$ 3,757
-
US$ 5,721
-
-
-
US$ 4,141
-
US$ 5,079
US$ 3,918
-
(Continued)
Company
Name
Marketable Securities
Type and Name
Financial Statement
Account
Counter-party
Nature of
Relationship
Beginning Balance
Acquisition
Disposal (Note 1)
Ending Balance
Shares / Units
(in Thousands)
Amount (US$
in Thousands)
Shares / Units
(in Thousands)
Amount (US$
in Thousands)
Shares / Units
(in Thousands)
Amount (US$
in Thousands)
Carrying Value
(US$ in
Thousands)
Gain (Loss) on
Disposal (US$
in Thousands)
Shares / Units
(in Thousands)
Amount (US$
in Thousands)
(Note 2)
139
General Elec Cap Corp. Mtn
General Elec Cap Corp. Mtn
General Elec Cap Corp. Mtn
General Re Corp.
Goldman Sachs Group Inc.
Goldman Sachs Group Inc.
Goldman Sachs Group Inc. Mtn
Hancock John Global Fdg II Mtn
Hbos Plc Medium Term Sr Nts
Household Fin Corp. Mtn Bk Ent
HSBC Fin Corp. Mtn
ING Sec Life Ins Ingslf
International Business Machs
Intl Lease Fin Corp. Mtn
JP Morgan Chase + Co.
Key Bk Na Med Term Nts Bk Entr
Lehman Brothers Hldgs Inc.
Merrill Lynch + Co. Inc.
Morgan Stanley Group Inc.
Morgan Stanley Group Inc.
National City Corp.
Nationsbank Corp.
Nationwide Bldg Soc Mtn
Ppg Inds Inc.
Pricoa Global Fdg 1 Mtn
Pricoa Global Fdg I Mtn
Pricoa Global Fdg I Mtn
Principal Life Global Fdg I Gl
Public Svc Elec Gas Co.
Salomon Smith Barney Hldgs Inc.
Santander Us Debt S A Uniperso
Wachovia Corp.
Washington Mut Fin Corp.
Taiwan Power Company
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
China Bills Finance Corp. and several
financial institutions
Nan Ya Plastics Corporation
Long-term investment
China Bills Finance Corp. and several
financial institutions
Agency bonds
Federal Farm Cr Bks
Federal Home Ln Bank
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
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 3,886
-
-
-
US$ 3,505
-
-
US$ 3,542
-
US$ 3,012
-
-
-
-
US$ 3,705
-
US$ 1,050
US$ 3,638
-
US$ 3,644
-
-
-
US$ 3,050
US$ 3,507
US$ 3,168
-
US$ 3,160
-
US$ 3,720
US$ 4,768
$ 915,276
407,526
-
-
-
US$ 4,948
US$ 7,962
US$ 13,953
-
US$ 13,981
US$ 13,983
US$ 7,042
US$ 7,014
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 3,989
US$ 8,862
US$
-
US$ 3,500
US$ 4,981
US$ 3,477
-
US$ 3,566
US$ 3,201
-
US$ 7,894
-
US$ 7,247
US$ 3,028
US$ 3,406
US$ 4,450
-
US$ 4,900
US$ 4,507
-
US$ 3,426
-
US$ 3,000
US$ 3,571
US$ 3,500
-
-
-
US$ 3,225
-
US$ 4,998
-
-
$ 2,967,681
1,883,901
US$ 3,985
US$ 3,962
US$ 6,110
-
-
-
US$ 3,932
-
-
-
-
US$ 4,136
US$ 4,939
US$ 7,886
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 3,823
-
-
-
US$ 3,506
-
-
US$ 3,488
US$ 2,780
US$ 3,008
US$ 4,994
-
-
-
US$ 3,511
-
US$ 1,022
US$ 3,571
-
US$ 3,522
-
-
-
US$ 3,052
US$ 3,510
US$ 3,049
-
US$ 3,046
-
US$ 3,568
US$ 3,591
$ 600,000
-
-
US$ 3,886
-
-
-
US$ 3,505
-
-
US$ 3,542
US$ 2,797
US$ 3,012
US$ 4,998
-
-
-
US$ 3,705
-
US$ 1,050
US$ 3,638
-
US$ 3,644
-
-
-
US$ 3,050
US$ 3,507
US$ 3,168
-
US$ 3,160
-
US$ 3,720
US$ 3,725
$ 600,000
US$
US$
-
-
(63)
-
-
-
US$ 1
-
$ -
(54)
US$
(17)
US$
(4)
US$
(4)
US$
-
-
-
(194)
-
(28)
(67)
-
(122)
-
-
-
US$ 2
US$ 3
(119)
US$
-
(114)
-
US$ (152)
US$
(134)
$ -
US$
US$
US$
US$
132,000
132,000
-
-
-
-
US$ 4,947
US$ 4,954
US$ 13,888
-
US$ 13,906
US$ 13,865
US$ 6,946
US$ 6,883
-
-
-
-
-
-
US$ 4,948
US$ 4,972
US$ 13,953
-
US$ 13,981
US$ 13,983
US$ 7,042
US$ 7,014
-
-
-
US$
US$
US$
US$
US$
US$
US$
-
-
-
(1)
(18)
(65)
-
(75)
(118)
(96)
(131)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 3,989
US$ 8,862
US$ -
US$ 3,500
US$ 4,981
US$ 3,477
-
US$ 3,566
US$ 3,201
-
US$ 5,097
-
US$ 2,249
US$ 3,028
US$ 3,406
US$ 4,450
-
US$ 4,900
US$ 4,507
-
US$ 3,426
-
US$ 3,000
-
US$ 3,500
-
-
-
US$ 3,225
-
US$ 4,998
-
US$ 1,043
$ 3,263,348
2,150,842
US$ 3,985
US$ 3,962
US$ 6,110
-
US$ 2,990
-
US$ 3,932
-
-
-
-
US$ 4,136
US$ 4,939
US$ 7,886
(Continued)
Company
Name
Marketable Securities
Type and Name
Financial Statement
Account
Counter-party
Nature of
Relationship
Beginning Balance
Acquisition
Disposal (Note 1)
Ending Balance
Shares / Units
(in Thousands)
Amount (US$
in Thousands)
Shares / Units
(in Thousands)
Amount (US$
in Thousands)
Shares / Units
(in Thousands)
Amount (US$
in Thousands)
Carrying Value
(US$ in
Thousands)
Gain (Loss) on
Disposal (US$
in Thousands)
Shares / Units
(in Thousands)
Amount (US$
in Thousands)
(Note 2)
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 Loan Bank
Federal Home Loan Corp.
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
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 1H2520
Fed Hm Ln Pc Pool 781959
Fed Hm Ln Pc Pool 847290
Federal Home Ln Mtg
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 Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$7,018
-
US$-
-
-
-
-
-
-
-
-
-
US$4,933
US$4,953
-
US$6,978
-
-
-
-
US$4,903
US$3,466
US$6,903
US$5,270
US$6,940
US$4,981
-
-
-
US$6,997
-
-
-
-
-
-
-
-
-
US$4,929
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 8,672
US$ 3,960
US$ 4,965
US$ 4,808
US$ 7,558
US$ 8,594
US$ 3,024
US$ 3,972
US$ 7,887
US$ 19,846
US$ 6,908
US$ 9,134
US$ 3,379
-
-
US$ 6,925
-
US$ 6,980
US$ 5,929
US$ 3,475
US$ 7,989
US$ 9,819
-
-
-
-
-
US$ 4,921
US$ 7,892
US$ 5,337
-
US$ 4,943
US$ 14,952
US$ 4,430
US$ 4,061
US$ 17,888
US$ 5,928
US$ 7,926
US$ 9,758
US$ 5,740
-
US$ 3,961
US$ 7,913
US$ 4,173
US$ 3,958
US$ 3,954
US$ 4,154
US$ 9,955
US$ 5,389
US$ 3,930
US$ 3,918
US$ 4,030
US$ 4,051
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
-
US$ 10,863
-
-
-
-
-
-
-
-
-
-
-
US$ 4,960
US$ 4,938
US$ 6,931
US$ 6,926
-
-
-
US$ 7,928
US$ 9,798
US$ 3,485
US$ 6,943
US$ 5,247
US$ 6,937
US$ 4,953
-
-
US$ 5,300
US$ 6,956
-
US$ 5,964
-
US$ 4,041
-
-
-
-
-
US$ 4,931
-
-
US$ 4,170
-
-
-
-
-
-
-
-
-
-
US$ 10,978
-
US$ -
-
-
-
-
-
-
-
-
-
US$ 4,933
US$ 4,953
US$ 6,925
US$ 6,978
-
-
-
US$ 7,989
US$ 9,819
US$ 3,466
US$ 6,903
US$ 5,270
US$ 6,940
US$ 4,981
-
-
US$ 5,337
US$ 6,997
-
US$ 5,981
-
US$ 4,061
-
-
-
-
-
US$ 4,929
-
-
US$ 4,173
-
-
-
-
-
-
-
-
-
-
US$ (115)
-
US$ -
-
-
-
-
-
-
-
-
-
US$ 27
US$
(15)
US$ 6
(52)
US$
-
-
-
(61)
US$
(21)
US$
19
US$
US$ 40
(23)
US$
(3)
US$
(28)
US$
-
-
(37)
(41)
-
US$ (17)
-
(20)
-
-
-
-
-
US$ 2
-
-
(3)
-
-
-
-
-
-
-
-
-
US$
US$
US$
US$
140
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 8,672
-
US$ 4,965
US$ 4,808
US$ 7,558
US$ 8,594
US$ 3,024
US$ 3,972
US$ 7,887
US$ 19,846
US$ 6,908
US$ 9,134
US$ 3,379
-
-
-
-
US$ 6,980
US$ 5,929
US$ 3,475
-
US$ 4,903
-
-
-
-
-
US$ 4,921
US$ 7,892
-
-
US$ 4,943
US$ 8,971
US$ 4,430
-
US$ 17,888
US$ 5,928
US$ 7,926
US$ 9,758
US$ 5,740
-
US$ 3,753
US$ 7,112
-
US$ 3,848
US$ 3,954
US$ 4,098
US$ 9,905
US$ 4,902
US$ 3,755
US$ 3,696
US$ 4,030
US$ 4,051
(Continued)
Company
Name
Marketable Securities
Type and Name
Financial Statement
Account
Counter-party
Nature of
Relationship
Beginning Balance
Acquisition
Disposal (Note 1)
Ending Balance
Shares / Units
(in Thousands)
Amount (US$
in Thousands)
Shares / Units
(in Thousands)
Amount (US$
in Thousands)
Shares / Units
(in Thousands)
Amount (US$
in Thousands)
Carrying Value
(US$ in
Thousands)
Gain (Loss) on
Disposal (US$
in Thousands)
Shares / Units
(in Thousands)
Amount (US$
in Thousands)
(Note 2)
141
Federal Natl Mtg Assn Gtd
Fnma Pool 255883
Fnma Pool 687863
Fnma Pool 696485
Fnma Pool 793025
Fnma Pool 815626
Fnma Pool 825395
Fnma Pool 825398
Fnma Pool 841069
Corporate issued asset - backed
securities
Aesop Fdg II LLC
American Express Cr Account Ma
Americredit Automobile Receiv
Bear Stearns Coml Mtg Secs Inc.
BMW Ven Owner Tr
California Infr + Economic Dev
California Infras + Economic
Capital One Multi Asset Execut
Caterpillar Finl Asset Tr
Caterpillar Finl Asset Tr
Cendant Rent Car Fdg Aesop LLC
Citibank Cr Card Issuance Tr
Citibank Cr Card Issuance Tr
Cwabs Inc.
Cwmbs Inc.
Cwmbs Inc.
Daimlerchrysler Auto Tr
Drive Auto Receivables Tr
First USA Credit Cr Master Tr
Hertz Vehicle Financing LLC
Honda Auto Receivables
Household Automotive Tr
Hyundai Auto Receivables Tr
Hyundai Auto Receivables Tr
Lb Ubs Coml Mtg Tr
Massachusetts Rrb Spl Purp Tr
Mastr Asset Backed Secs Tr
Mastr Asset Backed Secs Tr
Mbna Cr Card Master Nt Tr
Mbna Master Cr Card Tr II
Nissan Auto Receivables Own Tr
Nissan Auto Receivables Owner
Pg+E Energy Recovery Fdg LLC
Prime Cr Card Master Tr
Residential Asset Sec Mtg Pass
Residential Fdg Mtg Secs I Inc.
Revolving Home Equity Ln Tr
Sequoia Mtg Tr
Sequoia Mtg Tr
TW Hotel Fdg 2005 LLC
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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 4,955
US$ 3,445
-
-
US$ 4,978
US$ 4,298
US$ 6,126
-
US$ 10,008
-
-
US$ 4,959
-
US$ 1,903
US$ 4,040
-
US$ 4,897
-
US$ 5,011
-
US$ 5,000
-
-
-
-
-
-
-
-
-
US$ 4,999
US$ 4,853
-
-
-
-
-
-
-
-
US$ 7,736
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 3,892
US$ 3,827
US$ 3,848
US$ 4,345
US$ 3,915
US$ 3,663
US$ 3,417
US$ 5,246
US$ 3,966
-
-
US$ 5,000
US$ 6,350
-
-
-
US$ 3,974
-
US$ 8,219
US$ 11,626
-
US$ 9,782
US$ 1,865
-
US$ 4,040
-
US$ 3,200
-
US$ 5,350
-
US$ 8,352
US$ 3,250
US$ 3,999
US$ 4,243
US$ 3,900
US$ 3,825
US$ 3,499
US$ 5,018
US$ 8,108
-
-
US$ 4,749
US$ 4,080
US$ 3,780
US$ 5,589
US$ 5,000
US$ 4,560
US$ 3,500
US$ 8,197
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 4,958
US$ 3,428
-
-
US$ 4,874
US$ 4,153
US$ 5,103
-
US$ 4,943
-
-
US$ 4,948
-
US$ 3,440
US$ 3,479
US$ 3,842
US$ 4,873
-
US$ 5,007
-
US$ 4,984
-
-
-
-
-
-
-
US$ 5,015
-
US$ 4,989
US$ 4,880
-
-
-
-
-
US$ 4,026
US$ 2,813
-
US$ 3,470
-
-
-
-
-
-
-
-
-
US$ 4,955
US$ 3,445
-
-
US$ 4,907
US$ 4,298
US$ 5,228
-
US$ 5,009
-
-
US$ 4,959
-
US$ 3,435
US$ 3,492
US$ 3,823
US$ 4,897
-
US$ 5,011
-
US$ 5,000
-
-
-
-
-
-
-
US$ 5,018
-
US$ 4,999
US$ 4,853
-
-
-
-
-
US$ 4,026
US$ 2,810
-
US$ 3,491
-
-
-
-
-
-
-
-
-
US$
US$
US$
US$
US$
US$
US$ 3
(17)
US$
-
-
(33)
(145)
(125)
-
(66)
-
-
(11)
-
US$ 5
(13)
US$
(19)
US$
(24)
US$
-
(4)
-
(16)
-
-
-
-
-
-
-
(3)
-
US$
(10)
US$ 27
-
-
-
-
-
-
US$ 3
-
(21)
US$
US$
US$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 3,659
US$ 3,771
US$ 3,570
US$ 4,175
US$ 3,306
US$ 3,622
US$ 3,265
US$ 4,949
US$ 3,673
-
-
US$ 5,000
US$ 6,350
-
-
-
US$ 3,974
US$ 4,453
US$ 8,219
US$ 11,626
-
US$ 9,782
-
-
-
-
US$ 3,200
-
US$ 5,350
-
US$ 5,872
US$ 3,250
US$ 3,999
US$ 4,001
US$ 3,900
US$ 206
US$ 3,499
-
US$ 8,108
-
-
US$ 4,749
-
US$ 3,780
US$ 4,817
US$ 3,234
-
-
US$ 8,197
US$ 3,103
(Continued)
Company
Name
Marketable Securities
Type and Name
Financial Statement
Account
Counter-party
Nature of
Relationship
Shares / Units
(in Thousands)
Amount (US$
in Thousands)
Shares / Units
(in Thousands)
Amount (US$
in Thousands)
Shares / Units
(in Thousands)
Amount (US$
in Thousands)
Carrying Value
(US$ in
Thousands)
Gain (Loss) on
Disposal (US$
in Thousands)
Shares / Units
(in Thousands)
Beginning Balance
Acquisition
Disposal (Note 1)
Ending Balance
Usaa Auto Owner Tr
Usaa Auto Owner Tr
Washington Mut Mtg Secs Corp.
Wells Fargo Finl Auto Owner Tr
Wells Fargo Mtg Bkd Secs
Whole Auto Ln Tr
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Short-term investment
Partners
VisEra Holding Company
Long-term investment
-
-
-
-
-
-
-
Note1: The proceeds of bond investments matured are excluded.
Note2: The ending balance included the amortization of premium or discount on bond investments.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 4,000
US$ -
-
-
US$ 5,967
-
-
-
-
-
-
US$ 3,718
-
US$ 4,365
US$ 5,299
US$ 4,014
-
-
18,931
US$ 18,931
-
-
-
-
-
-
-
-
US$ 3,995
-
US$
-
-
US$ 5,973
-
US$ 4,000
-
US$
-
-
US$ 5,967
US$
US$
-
(5)
-
-
-
US$ 6
-
-
-
-
-
-
Amount (US$
in Thousands)
(Note 2)
US$ 3,718
-
US$ 4,067
US$ 5,299
US$ 3,661
-
-
-
-
18,931
US$ 19,862
142
(Concluded)
TABLE 5
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED 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 YEARS ENDED DECEMBER 31, 2005
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
Company Name
Related Party
Nature of Relationship
Transaction Details
Abnormal Transaction
Notes / Accounts Payable or
Receivable
Note
Purchase / Sale
Amount
% to Total
Payment Terms
Unit Price
(Note)
Payment Terms
(Note)
Ending Balance
% to Total
143
The Company
TSMC-North America
Philips
GUC
SSMC
WaferTech
SSMC
VIS
TSMC-Shanghai
Subsidiary
Major shareholder
Investee with controlling financial interest
Investee accounted for using equity method
Subsidiary
Investee accounted for using equity method
Investee accounted for using equity method
Subsidiary
Sales
Sales
Sales
Sales
Purchases
Purchases
Purchases
Purchases
$153,618,916
3,298,770
347,456
195,253
11,137,313
5,729,672
4,142,457
1,405,030
GUC
TSMC-North America
The same Parent
Purchases
266,372
57
1
-
-
28
15
10
4
23
Net 30 days after invoice date
Net 30 days after monthly closing
Net 30 days after monthly closing
Net 45 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
Net 30 days after invoice date
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$ 20,407,621
573,565
49,046
-
(1,133,217)
(485,873)
(563,240)
(274,820)
(66,138)
49
1
-
-
10
4
5
2
37
Note: The terms of sales to related parties are not significantly different from those to third parties. For purchase transactions, prices are determined in accordance with the related contractual agreements and no other similar transaction could be compared with.
TABLE 6
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED AND SUBSIDIARIES
RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
DECEMBER 31, 2005
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
Company Name
Related Party
Nature of Relationship
Ending Balance
Turnover Rate
Amount
Action Taken
Overdue
The Company
TSMC-North America
TSMC Technology
Philips
VisEra
Subsidiary
Indirect subsidiaries
Major shareholder
Indirect investee accounted for using equity
$ 20,606,126
972,563
573,565
374,200
43 days
Note
64 days
Note
$ 5,735,388
-
45,909
1,750
Accelerate demand on account receivables
Accelerate demand on account receivables
Accelerate demand on account receivables
Accelerate demand on account receivables
SSMC
Investee accounted for using equity method
149,251
Note
-
Accelerate demand on account receivables
method
Note: The ending balance primarily consisted of other receivables, it is not applicable for the calculation of the turnover rate.
Amounts Received in
Subsequent Period
Allowance for Bad Debts
$
$
7,626,255
-
1,603
5,161
-
-
-
-
-
-
TABLE 7
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED AND SUBSIDIARIES
NAMES, LOCATIONS, AND RELATED INFORMATION OF INVESTEES ON WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCE
DECEMBER 31, 2005
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
Investor Company
Investee Company
Location
Main Businesses and Products
Original Investment Amount
Balance as of December 31, 2005
December 31,
2005
December 31,
2004
Shares
(in Thousands)
Percentage of
Ownership
Carrying Value
(Note 1)
Net Income
(Loss) of the
Investee
Investment
Gain (Loss)
(Note 2)
Note
The Company
TSMC International
Tortola, British Virgin Islands
Providing investment in companies involved in the
$ 31,445,780
$ 31,445,780
987,968
100
$ 23,912,812
$ (549,454)
$(549,454)
Subsidiary
144
design, manufacture, and other related business in
the semiconductor industry
Manufacturing and sales of integrated circuits at the
order of and pursuant to product design specifi-
cations provided by customers
Research, design, development, manufacture, pack-
aging, testing and sale of memory integrated cir-
cuits, LSI, VLSI and related parts
TSMC-Shanghai
Shanghai, China
12,180,367
9,187,962
-
100
9,438,856
(2,242,213)
(2,242,213)
Subsidiary
VIS
SSMC
Hsin-Chu, Taiwan
8,119,816
8,119,816
437,891
Singapore
Fabrication and supply of integrated circuits
6,408,190
6,408,190
382
TSMC Partners
TSMC-North America
Tortola, British Virgin Islands
San Jose, California, U.S.A.
Investment activities
Sales and marketing of integrated circuits and semi-
10,350
333,718
10,350
333,718
conductor devices
Emerging Alliance
VTAF II
GUC
Cayman Islands
Cayman Islands
Hsin-Chu, Taiwan
Investing in new start-up technology companies
Investing in new start-up technology companies
Researching, developing, manufacturing, testing and
1,526,074
654,509
409,920
1,447,957
332,412
409,920
marketing of integrated circuits
TSMC-Japan
Chi Cherng
Hsin Ruey
TSMC-Europe
Yokohama, Japan
Taipei, Taiwan
Taipei, Taiwan
Amsterdam, the Netherlands
Marketing activities
Investment activities
Investment activities
Marketing activities
83,760
300,000
300,000
15,749
83,760
300,000
300,000
15,749
300
11,000
-
-
40,147
6
-
-
-
Note 1: The treasury stock is deducted from the carrying value.
Note 2: The gains on disposal of the stocks of the Company held by subsidiaries and cash dividends from the Company are excluded.
27
32
100
100
99
98
46
100
36
36
100
5,419,747
2,710,971
617,268
4,215,200
2,503,446
801,103
Investee accounted for
using equity method
Investee accounted for
using equity method
4,091,166
1,790,186
46,656
564,201
46,656
320,274
Subsidiary
Subsidiary
850,534
642,479
442,233
94,949
78,139
77,415
23,087
(77,208)
(19,044)
106,748
2,572
77,196
77,257
295
(76,822)
(21,916)
52,390
Subsidiary
Subsidiary
Investee over which the
Company has controlling
financial interest
2,572
(3,769)
(3,806)
295
Subsidiary
Subsidiary
Subsidiary
Subsidiary
TABLE 8
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED AND SUBSIDIARIES
INFORMATION OF INVESTMENT IN MAINLAND CHINA
DECEMBER 31, 2005
(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)
Method of Investment
Accumulated Outflow of
Investment from Taiwan as of
January 1, 2005
(US$ in Thousand)
Investment Flows
Outflow
(US$ in Thousand)
Inflow
Accumulated Outflow of
Investment from Taiwan as of
December 31, 2005
(US$ in Thousand)
Percentage of Ownership in
Investment
145
TSMC (Shanghai) Company Limited
Manufacturing and sales of integrated
circuits at the order of and pur-
suant to product design specifica-
tions provided by customers
$
12,180,367
(RMB3,070,623)
(Note 1)
$
9,187,962
(US$ 276,000)
$ 2,992,405
(US$ 95,000)
$ -
$
12,180,367
(US$ 371,000)
100%
Equity in the Net Earnings
(Loss) (Note 2)
Carrying Value as of
December 31, 2005
Accumulated Inward Remittance of
Earnings as of December 31, 2005
Accumulated Investment in Mainland China as of
December 31, 2005 (US$ in Thousand)
Investment Amounts Authorized by Investment
Commission, MOEA (US$ in Thousand)
Upper Limit on Investment
(US$ in Thousand)
$
(2,242,213)
$
9,438,856
$
-
$
(US$
12,180,367
371,000)
$
(US$
12,180,367
371,000)
$
(US$
12,180,367
371,000)
Note 1: Direct investments US$371,000 thousand in TSMC-Shanghai.
Note 2: Amount was recognized based on the audited financial statements.
TABLE 9
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED AND SUBSIDIARIES
INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 2005
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
No.
Company Name
Counter Party
0
TSMC
TSMC-NA
TSMC-Shanghai
TSMC-Japan
TSMC-Europe
GUC
TSMC Technology
WaferTech
1
2
3
4
5
TSMC-NA
VisEra
TSMC International
TSMC Development
TSMC Partners
TSMC Technology
GUC
TSMC Technology
TSMC Development
TSMC International
WaferTech
TSMC-NA
GUC-NA
Nature of
Relationship
(Note 1)
1
1
1
1
1
1
1
3
3
3
3
3
3
3
3
3
Financial Statements Item
Sales
Receivables from related parties
Other receivables from related parties
Payables to related parties
Sales
Purchases
Gain on disposal of property, plant and equipment
Technical service income
Proceeds from disposal of property, plant and equipment
Other receivables from related parties
Payables to related parties
Deferred credits
Sales and marketing expenses - commission
Payables to related parties
Sales and marketing expenses - commission
Payables to related parties
Sales
Research and development expenses
General and administrative expenses - rental expense
Receivables from related parties
Payables to related parties
Other receivables from related parties
Payables to related parties
Purchases
Payables to related parties
Sales
Interest income
Other receivables
Deferred technology income
Interest income
Other receivables
Deferred revenue
Management service income
Purchase
Manufacturing expenses
Payables to related parties
Operating expenses
Note 1: No. 1 represents the transactions from parent company to subsidiary.
No. 3 represents the transactions between subsidiaries.
Note 2: The terms of intercompany sales are not significantly different from those to third parties. For other intercompany transactions, prices are determined in accordance with the related contractual agreements.
Intercompany Transactions
Amount
Terms (Note 2)
Percentage of Consolidated Total
Gross Sales or Total Assets
$
153,618,916
20,407,621
198,505
21,391
5,591
1,405,030
151,591
28,643
125,381
28,593
274,820
641,762
243,646
29,892
221,164
22,963
347,456
19,467
16,744
49,046
6,173
972,563
10,672
11,137,313
1,133,217
661,949
28,352
1,151,238
648,695
25,513
10,081,604
8,883,518
12,625
266,372
348,397
66,138
27,871
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
146
58%
4%
-
-
-
1%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4%
-
-
-
-
-
-
2%
2%
-
-
-
-
-
11. U.S. GAAP Financial Information
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED AND
SUBSIDIARIES
Please be advised that our 2005 full annual report that includes complete U.S. GAAP reconciled finan-
cial statements and footnotes will be available when we file From 20-F with the U.S. SEC. Our From
20-F, or our 2005 full annual report, can be found at the U.S. SEC and on TSMC's website no later
than June 30, 2006.
U.S. GAAP RECONCILIATIONS OF NET INCOME
For the Years Ended December 31, 2005 and 2004
(In Thousand New Taiwan Dollars)
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED AND
SUBSIDIARIES
147
U.S. GAAP RECONCILIATIONS OF SHAREHOLDERS' EQUITY
December 31, 2005 and 2004
(In Thousand New Taiwan Dollars)
Equity attributable to shareholders of the parent based on R.O.C. GAAP
$
445,630,349
$
398,965,299
2005
2004
Adjustments
- Adjustment of unrealized gain on trading securities
- U.S. 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
1,682,555
(463,808)
(99,733)
21,291
412,372
(10,740,666)
7,223,040
194,184
52,212,732
(11,229,979)
(328,248)
(7,121,667)
(47,654)
-
(47,550)
31,666,869
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
Equity attributable to shareholders of the parent based on U.S. GAAP
$
477,297,218
$
427,124,810
Net income attributable to shareholders of the parent based on R.O.C.
GAAP
Adjustments
- Adjustment of unrealized gain on trading securities
- Reversal of unrealized loss on marketable securities under R.O.C. GAAP
- U.S. GAAP adjustments on equity-method investees
- Reversal of depreciation on assets impaired under U.S. GAAP
- Income tax effect of U.S. GAAP adjustments
- Reversal of amortization of goodwill
- 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 attributable to shareholders of the parent based on U.S. GAAP
Cumulative preferred dividends
2005
2004
$
93,575,036
$
92,316,115
868,714
337,160
(161,871)
1,398,736
147,802
1,220,316
(225,271)
(7,121,667)
(13,795,382)
(9,948)
(791,425)
-
(23,846)
(18,156,682)
75,418,354
-
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 of the parent
$
75,418,354
$
76,253,446