TSMC Property

TSMCTSMCTSMCTSMC

2010 Fourth Quarter2010 Fourth QuarterInvestor ConferenceInvestor ConferenceInvestor ConferenceInvestor Conference

January 27, 2011January 27, 2011

© 2011 TSMC, Ltd

TSMC PropertyAgendag

Welcome Elizabeth Sun

4Q10 Financial Results and 1Q11 Outlook Lora Ho4Q10 Financial Results and 1Q11 Outlook Lora Ho

CEO Comments Morris Chang

Q&A Morris Chang /

Lora Ho

© 2011 TSMC, Ltd

TSMC PropertySafe Harbor Notice

TSMC’s statements of its current expectations are forward-TSMC s statements of its current expectations are forward-looking statements subject to significant risks and uncertainties and actual results may differ materially from those contained in the forward-looking statementsthe forward looking statements.

Information as to those factors that could cause actual results to vary can be found in TSMC’s Annual Report on Form 20-F filedvary can be found in TSMC s Annual Report on Form 20 F filed with the United States Securities and Exchange Commission (the “SEC”) on April 15, 2010 and such other documents as TSMC may file with, or submit to, the SEC from time to time. y , ,

Except as required by law, we undertake no obligation to update any forward-looking statement, whether as a result of p y g ,new information, future events, or otherwise.

© 2011 TSMC, Ltd

TSMC Property4Q10 Financial HighlightsQ g g

4Q07 4Q07 QoQ YoY 4Q10 3Q10 4Q09 YoY4Q10 QoQ(In NT billions except otherwise noted) Results Guidance

Net Sales 93.86 92 - 94 5.5% 25.2%Gross Margin 47 8% 46% 48% +2 ppt +1 8 ppt

QoQ YoY(In NT billions except otherwise noted) Guidance Actual Actual

Net Sales 110.14 107 - 109 112.25 92.09 -1.9% 19.6%Gross Margin 49.8% 48% - 50% 50.0% 48.5% -0.2 ppt +1.3 ppts

YoY4Q10 QoQ

Gross Margin 47.8% 46% - 48% +2 ppt +1.8 pptOperating Margin 39.2% 37% - 39% +2.8 ppt +2.6 ppt

EPS - Diluted (NT$) 1.31 14.3% 24.3%

Operating Margin 37.7% 35.5% - 37.5% 38.4% 36.5% -0.7 ppt +1.2 ppts

EPS - Diluted (NT$) 1.57 1.81 1.26 -13.3% 24.6%

12 9% 27 6%

Free Cash Flow 39.98 51.9% 12.9%

(1)

Free Cash Flow 24.62 21.80 19.29 12.9% 27.6%

ROE (%) 29.3% 36.5% 27.3% -7.2 ppts +2.0 ppts

ROE (%) (1) 27.9% +2.9 ppt +5.3 ppt

Shipment (Kpcs, 8"-equiv. Wafer) 2,357 5.9% 37.2%

Shipment (Kpcs, 8"-equiv.Wafer) 3,195 3,191 2,430 0.1% 31.5%

Average Exchange Rate--30 40 31 94 32 32 4 8% 6 0%( )

NTD/USD 30.40 31.94 32.32 -4.8% -6.0%

* Total outstanding shares were 25,910mn units at 12/31/10

© 2011 TSMC, Ltd

** ROE figures are annualized based on average equity attributable to shareholders of the parent.

TSMC PropertyIncome StatementsIncome Statements

(In NT billions except otherwise noted) 4Q10 3Q10 4Q09 QoQ YoY

Net Sales 110 14 112 25 92 09 -1 9% 19 6%Net Sales 110.14 112.25 92.09 1.9% 19.6%

Gross Margin 49.8% 50.0% 48.5% -0.2 ppt +1.3 ppts

Operating Expenses (13.31) (13.06) (11.05) 1.9% 20.4%

Operating Margin 37.7% 38.4% 36.5% -0.7 ppt +1.2 ppts

Non-Operating Items 0.68 5.71 1.43 -88.1% -52.4%

Long-Term Investment Gains 0.69 0.90 0.30 -23.5% 130.5%

Taxes (2.02) (2.55) (2.51) -21.0% -19.6%

Net Income 40.72 46.94 32.67 -13.2% 24.7%

Net Margin 37.0% 41.8% 35.5% -4.8 ppts +1.5 pptsEPS (NT Dollar) 1.57 1.81 1.26 -13.3% 24.6%

© 2011 TSMC, Ltd

TSMC Property4Q10 Revenue by ApplicationsQ y pp

ConsumerIndustrial/Others

18%

Communications

11%Computer

24%

47%

QoQ +3%ComputerCommunications Consumer

QoQ -6%

QoQ -26%

© 2011 TSMC, Ltd

TSMC Property4Q10 Revenue by Technology4Q10 Revenue by Technology

0.5um+

3%

0.25/0.35um

7%

65nm/40nm Revenue

0 11/0 13um

0.15/0.18um

17% 40nm0.11/0.13um

10%

90nm

11%65nm

31%

21%

11% 31%

© 2011 TSMC, Ltd

TSMC PropertyBalance Sheets & Key Indices

Selected Items from Balance Sheets(In NT billions excepted otherwise noted) Amount % Amount % Amount %

4Q10 3Q10 4Q09( p ) Amount % Amount % Amount %

Cash & Marketable Securities 181.57 25.3% 167.21 25.0% 195.80 32.9%Accounts Receivable - Trade 42.98 6.0% 47.38 7.1% 35.38 5.9%Inventory 28.41 4.0% 26.66 4.0% 20.91 3.5%

Long-Term Investment 39.78 5.5% 39.78 6.0% 37.85 6.4%

Net PP&E 388.44 54.0% 349.18 52.3% 273.68 46.0%

Total Assets 718.93 100.0% 667.55 100.0% 594.70 100.0%

Current Liabilities 123 19 17 1% 109 24 16 4% 79 13 13 3%Current Liabilities 123.19 17.1% 109.24 16.4% 79.13 13.3%

Long-Term Interest-bearing Debt 11.99 1.7% 12.18 1.8% 10.96 1.8%

Total Liabilities 140.22 19.5% 126.65 19.0% 95.65 16.1%

Total Shareholders' Equity 578 71 80 5% 540 90 81 0% 499 05 83 9%Total Shareholders' Equity 578.71 80.5% 540.90 81.0% 499.05 83.9%

Key IndicesA/R Turnover Days 38 39 36

(1)

Inventory Turnover DaysCurrent Ratio (x)Asset Productivity (x) 1.2 1.3 1.4

50 47 422.1 2.3 3.3

© 2011 TSMC, Ltd

(1) Asset productivity = Annualized net sales / Average net fixed assets.

TSMC PropertyCash Flows

(In NT billions except otherwise noted) 4Q10 3Q10 4Q09

Beginning Balance 132.27 172.49 156.94

Cash from operating activities 70.56 63.95 62.00

Capital expenditures (45.94) (42.15) (42.71)

Cash dividends 0.00 (77.71) 0.00( )

Short-term loans (6.70) 19.83 0.00

Investments and others (2.30) (4.14) (4.95)

Ending Balance 147 89 132 27 171 28

(1)

Ending Balance 147.89 132.27 171.28

Free Cash Flow 24.62 21.80 19.29

(1) Free cash flow = Cash from operating activities – Capital expenditures.

© 2011 TSMC, Ltd

TSMC Property

Installed Capacity2010 Overall Capacity +14%; Advanced Capacity +37%2010 Overall Capacity +14%; Advanced Capacity +37%

1Q11(F) FAB / (Wafer size) 1Q10

(A)2Q10

(A)3Q10

(A)4Q10

(A)2010(A)

Fab-2 ( 6") (1) 254 236 255 255 1,000 238Fab-3 ( 8") 267 282 300 300 1,149 275Fab-5 ( 8") 139 144 141 141 564 137( )Fab-6 ( 8") 269 280 282 282 1,113 274Fab-8 ( 8") 247 253 254 255 1,009 241Fab-12 ( 12") (2) 269 300 309 315 1,194 322

(2)Fab-14 ( 12") (2) 261 299 360 406 1,326 423WaferTech ( 8") 106 107 108 108 429 106TSMC China ( 8") 132 134 145 147 557 148

TSMC & Subsidiaries 2,497 2,680 2,879 2,997 11,053 2,993 (8" Equivalent Kpcs)

SSMC ( 8") 69 69 69 69 276 64SSMC ( 8") 69 69 69 69 276 64

Total TSMC-managed 2,566 2,749 2,948 3,066 11,329 3,057 (8" Equivalent Kpcs)

© 2011 TSMC, Ltd

(1) Figures represent number of 6” wafers. Conversion to 8”-equivalent wafers is obtained by dividing this number by 1.78.(2) Figures represent number of 12” wafers. Conversion to 8”-equivalent wafers is obtained by multiplying this number by 2.25.

TSMC PropertyCapital ExpendituresCapital Expenditures

(In US millions) 1Q10 2Q10 3Q10 4Q10 2010

TSMC 1,433 1,645 1,275 1,435 5,788TSMC 1,433 1,645 1,275 1,435 5,788

XinTec and GUC 2 4 10 10 26

TSMC China & WaferTech 8 7 34 69 118TSMC China & WaferTech 8 7 34 69 118

Other TSMC Subsidiaries 1 1 0 2 4

TSMC Consolidated 1,444 1,657 1,319 1,516 5,936

Note: 2010 CapEx was based on the weighted average exchange rate of NT$31.491 per US dollar.

© 2011 TSMC, Ltd

TSMC PropertyCash Flow & Dividend

Increased Capex to fuel growthIncreased Capex to fuel growth Cash Dividend will continueCash Dividend will continue

77B 77B 77B 78B

90 3.5205

221229

250

62B

77B 77B 77B 78B

60

70

80

2.5

3.0

Total Dare

(NT$

)

144152

184

161

187

150

200

46B

40

50

1.5

2.0

Dividend P

aid vide

nd p

er S

h

76 74 79 84 88100

(NT$

B)

12B

10

20

30

0.5

1.0

(NT$B

)

Cas

h D

iv

59

50

0 0.02004 2005 2006 2007 2008 2009 2010 Year Paid

Dividend Per Share (LHS) Total Paid (RHS)

02004 2005 2006 2007 2008 2009 2010

Operating cash flow Capex

© 2011 TSMC, Ltd

de d e S a e ( S) ota a d ( S)

TSMC Property2010 Financial Highlightsg g

Record sales and profitability (In NT billions except otherwise noted)

N t S l 419 54 295 74 41 9%

YoY2010 2009

Fully utilized capacity throughout the year

Net Sales 419.54 295.74 41.9%Gross Margin 49.4% 43.7% +5.7 pptsOperating Margin 37.9% 31.1% +6.8 ppts

EPS - Diluted (NT$) 6.23 3.44 81.1%

Continued cash return to shareholders

Free Cash Flow (FCF) 42.53 72.19 -41.1%Cash Dividends 77.71 76.88 1.1%

C h & M k t bl

Balance sheet strength to invest for future growth

Cash & MarketableSecurities 181.57 195.80 -7.3%

ROE 30.2% 18.4% +11.8 ppts

for future growth

© 2011 TSMC, Ltd

TSMC Property1Q11 GuidanceQBased on our current business outlook and exchange rate assumption, management expects:

Revenue to be between NT$105 billion and NT$107 billion, ata forecast exchange rate of 29.26 NT dollars to 1 US dollar

g p

g

Gross profit margin to be between 47% and 49%

Operating profit margin to be between 35% and 37%

© 2011 TSMC, Ltd

TSMC PropertyRecap of Recent Major Events

NVIDIA and TSMC Ship One-Billionth GeForce Graphics Processor ( 2011/01/13 )

TSMC Board of Directors approved to acquire from Powerchip Technology Corporation theTSMC Board of Directors approved to acquire from Powerchip Technology Corporation the substructure of the building under construction ( 2011/01/12 )

TSMC and CENTROSOLAR Sign Solar Module Manufacturing Agreement ( 2011/01/11 )

Beijing Tsinghua University and TSMC join hands to reach 65nm R&D Milestone ( 2010/12/16 )

TSMC Awards Outstanding Suppliers at Supply Chain Management Forum ( 2010/12/03 )

TSMC Wins Taiwan CSR Awards’ “Gold Award” for manufacturing, the highest honor granted by the Taiwan Institute for Sustainable Energy ( 2010/11/19 )

TSMC Obtains Termination of ITC Investigation into 37nm and Smaller Products ( 2010/11/16 )TSMC Obtains Termination of ITC Investigation into 37nm and Smaller Products ( 2010/11/16 )

TSMC Announces Mixed Signal/RF University Design Award ( 2010/10/20 )

TSMC Expands IP Alliance to Include Soft IP ( 2010/10/05 )TSMC Expands IP Alliance to Include Soft IP ( 2010/10/05 )

• Please visit TSMC's Web site (http://www.tsmc.com) and

© 2011 TSMC, Ltd

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TSMC Property

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