1934 Act Registration No. 1-14700

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934

For the month of January 2007

Taiwan Semiconductor Manufacturing Company Ltd.

(Translation of Registrant’s Name Into English)

No. 8, Li-Hsin Rd. 6,
Hsinchu Science Park,
Taiwan
(Address of Principal Executive Offices)

     (Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)

Form 20-F þ     Form 40-F o

     (Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)

Yes o     No þ

(If “Yes” is marked, indicated below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82:                .)

 

 

FOR IMMEDIATE RELEASE

		4Q06		Quarterly Management Report January 25, 2007

CONTACT
Elizabeth Sun / Harrison Hsueh
Julie Wei
Investor Relations Division
TSMC
invest@tsmc.com
886-3-568-2085/ 2088/ 2086

Operating Results Review:

TSMC
January 25, 2007		Page 2

I. Consolidated Revenue Analysis

Consolidated Revenue Analysis:

Consolidated net sales were NT$74.96 billion in the fourth quarter of 2006, down 9.1% from NT$82.48 billion in the previous quarter. The decline in fourth quarter business was primarily due to weakness in consumer and communication sectors and to a lesser extent in the computer sector, as customers continued to digest inventories.

On a sequential basis, revenues from consumer, communication and computer applications declined by 31%, 17% and 2%, respectively.

Revenues from 65nm and 90nm accounted for 23% of total wafer sales, down one percentage point from third quarter 2006. Revenues from advanced technologies (0.13-micron and below) accounted for 48% of total wafer sales, down slightly from the previous quarter.

Revenues from IDM customers accounted for 28% of total wafer sales during the quarter, down slightly from 29% in the previous quarter.

Geographically, revenues from North America accounted for 78% of total wafer sales. Meanwhile, sales from Asia Pacific, Europe and Japan accounted for 11%, 7% and 4% of wafer sales, respectively.

TSMC
January 25, 2007		Page 3

II. Capacity

Capacity:

Total TSMC managed capacity was 1,912K 8-inch equivalent wafers in 4Q06, 6.3% higher than the 1,799K 8-inch equivalent wafers in 3Q06.

Total managed capacity for year 2006 was 7,062K 8-inch equivalent wafers, up 18.6% from 5,955K 8-inch equivalent wafers in year 2005.

TSMC managed capacity in 1Q07 will decrease by 1.7% sequentially to reach 1,880K 8-inch equivalent wafers.

III. Consolidated Profit & Expense Analysis

Consolidated Gross Profit Analysis:

Consolidated gross profit for the fourth quarter 2006 was NT$34.5 billion, or 46% of net sales, down from a gross profit of NT$41.1 billion, or 49.9% of net sales, in the previous quarter. The gross margin declined by 3.9 percentage points largely due to lower capacity utilization and an increase in depreciation expenses, offset in part by productivity improvement and lower provisions for sales returns.

TSMC
January 25, 2007		Page 4

Consolidated Operating Expenses:

Total operating expenses for 4Q06 were NT$7 billion, compared to NT$7.5 billion in third quarter 2006. Total operating expenses represented 9.4% of net sales, compared to 9.1% for the previous quarter.

Research and development expenditures decreased by NT$225 million sequentially, mainly due to a reduction in 65nm related expenditures as we entered into volume production for 65nm process node.

SG&A expenses decreased by NT$229 million compared to 3Q06, primarily due to the reduction of fab opening expenses for Fab 14 Phase II, which commenced commercial production in 4Q06.

Consolidated Non-Operating Items:

Combined result from non-operating income and long-term investments was a gain of NT$2.1 billion for 4Q06.

Non-operating income totaled NT$1,713 million during the fourth quarter of 2006, compared to an income of NT$322 million in the previous quarter. The increase in non-operating income was mainly due to the mark to market adjustment recorded as a result of the increase in the market value of certain marketable securities, a decrease in losses realized upon the settlement of certain hedging instruments, and the settlement payment from the lawsuit against SMIC, offset in part by an increase in foreign exchange losses.

Net investment income was NT$388 million in fourth quarter 2006, compared to an income of NT$709 million in 3Q06, mostly due to lower level of profits at SSMC.

TSMC
January 25, 2007		Page 5

IV. Financial Condition Review

Liquidity Analysis:

Total cash and marketable securities increased by NT$31 billion in the fourth quarter 2006, mainly due to the free cash flows generated during the quarter. As a result, TSMC ended the quarter with NT$260.3 billion in total current assets, compared to NT$212.3 billion at the end of 2005 and NT$228.3 billion at the end of the previous quarter.

Total current liabilities were NT$46.9 billion at the end of the quarter, compared to NT$45.6 billion at the end of the previous quarter. The increase was mainly due to a reclassification of NT$4.5 billion in bonds payable from long-term liability to current liability, offset in part by a reduction in payables to contractors and equipment suppliers.

As a result, net working capital increased to NT$213.5 billion and current ratio improved to 5.6.

Consolidated Receivable/Inventory Days Trend:

Days of receivable were 43 days in 4Q06, flat from the previous quarter.

Days of inventory increased to 50 days from 48 days in the third quarter of 2006.

Consolidated Debt Service:

As a result of the free cash flows generated during the quarter, net cash reserves — defined as the excess of cash and short-term marketable securities over interest-bearing debt — increased by NT$31 billion to reach NT$167.5 billion in 4Q06.

TSMC
January 25, 2007		Page 6

V. Cash Flow & CapEx

Summary of Consolidated Cash Flow:

During fourth quarter 2006, TSMC generated NT$53 billion in cash from operating activities, mainly from net income of NT$27.9 billion and depreciation & amortization of NT$19.7 billion.

Net cash used in investment activities totaled NT$28.4 billion, mainly as a result of an NT$17.6 billion in capital expenditures and an NT$6.7 billion net increase in marketable financial instruments.

Net cash provided by financing activities was NT$0.8 billion during the quarter.

As a result, TSMC ended the quarter with a cash balance of NT$117.8 billion, NT$24.9 billion higher than in 3Q06.

Consolidated Operating and Free Cash Flows:

TSMC continues to generate strong operating cash flows and free cash flows. Cash flows generated from operating activities were NT$53 billion, NT$0.3 billion higher than 3Q06. Free cash flows, defined as the excess of operating cash flows over capital expenditures, totaled NT$35.4 billion in 4Q06, NT$11 billion higher than the NT$24.4 billion generated in the previous quarter, mainly due to lower level of capital expenditures in 4Q06.

Capital Expenditures:

Capital expenditures for TSMC consolidated group totaled US$571 million during the quarter. Most of the spending was for the purchase of 12-inch production equipment.

For year 2006, total capital expenditures for TSMC consolidated group were US$2.5 billion.

TSMC
January 25, 2007		Page 7

VI. Recap of Recent Important Events & Announcements

     

		TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED AND SUBSIDIARIES Consolidated Condensed Balance Sheets (Expressed in Millions of New Taiwan Dollars (“NTD”) and U.S. Dollars (“USD”)) (1)

		December 31, 2006 (Audited)												September 30, 2006 (Unaudited)								December 31, 2005 (Audited) (2)								QoQ								YoY
ASSETS		USD				NTD				%				NTD				%				NTD				%				Amount				%				Amount				%
Current Assets
Cash and Cash Equivalents		$	3,615			$	117,837				20.1			$	92,903				16.5			$	96,484				18.6			$	24,934				26.8			$	21,353				22.1
Investments in Marketable Financial Instruments			2,370				77,242				13.1				71,192				12.6				48,826				9.4				6,050				8.5				28,416				58.2
Accounts Receivable — Trade			969				31,589				5.4				37,726				6.7				38,478				7.4				(6,137	)			-16.3				(6,889	)			-17.9
Inventories, Net			657				21,431				3.6				20,338				3.6				17,728				3.4				1,093				5.4				3,703				20.9
Other Current Assets			375				12,218				2.1				6,149				1.1				10,785				2.1				6,069				98.7				1,433				13.3
Total Current Assets			7,986				260,317				44.3				228,308				40.5				212,301				40.9				32,009				14.0				48,016				22.6
																																											-
Long-Term Investments			1,653				53,895				9.2				51,060				9.1				42,382				8.2				2,835				5.6				11,513				27.2
																																											-
Property, Plant and Equipment			22,001				717,132				122.1				706,191				125.4				642,948				123.8				10,941				1.5				74,184				11.5
Less: Accumulated Depreciation			(14,205	)			(463,038	)			-78.8				(445,525	)			-79.1				(398,125	)			-76.7				(17,513	)			3.9				(64,913	)			16.3
Property, Plant and Equipment, Net			7,796				254,094				43.3				260,666				46.3				244,823				47.1				(6,572	)			-2.5				9,271				3.8
																																											-
Other Assets			588				19,179				3.2				23,314				4.1				20,004				3.8				(4,135	)			-17.7				(825	)			-4.1
Total Assets		$	18,023			$	587,485				100.0			$	563,348				100.0			$	519,510				100.0			$	24,137				4.3			$	67,975				13.1
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Short-Term Bank Loans		$	—			$	—				—			$	—				—			$	328				0.1			$	—				—				($328	)			-100.0
Accounts Payables			301				9,802				1.7				10,669				1.9				11,165				2.1				(867	)			-8.1				(1,363	)			-12.2
Payables to Contractors and Equipment Suppliers			330				10,769				1.8				15,507				2.8				9,066				1.7				(4,738	)			-30.6				1,703				18.8
Accrued Expenses and Other Current Liabilities			592				19,286				3.3				16,885				3.0				14,558				2.8				2,401				14.2				4,728				32.5
Current Portion of Bonds Payable and Long-Term liabilities			215				7,004				1.2				2,505				0.4				5				—				4,499				179.6				6,999				127,503.2
Total Current Liabilities			1,438				46,861				8.0				45,566				8.1				35,122				6.7				1,295				2.8				11,739				33.4
Bonds Payable			383				12,500				2.1				17,000				3.0				19,500				3.8				(4,500	)			-26.5				(7,000	)			-35.9
Other Long-Term Liabilities			583				18,986				3.2				18,919				3.4				18,649				3.6				67				0.4				337				1.8
Total Liabilities			2,404				78,347				13.3				81,485				14.5				73,271				14.1				(3,138	)			-3.9				5,076				6.9
Shareholders’ Equity Attributable to Shareholders of the Parent
Capital Stock			7,924				258,297				44.0				258,258				45.8				247,300				47.6				39				0.0				10,997				4.4
Capital Surplus			1,660				54,107				9.2				53,858				9.6				57,118				11.0				249				0.5				(3,011	)			-5.3
Retained Earnings			6,048				197,125				33.6				169,213				30.0				142,771				27.5				27,912				16.5				54,354				38.1
Treasury Stock			(28	)			(918	)			-0.2				(918	)			-0.2				(918	)			-0.2				—				0.0				—				—
Others			(20	)			(630	)			-0.1				725				0.2				(640	)			-0.1				(1,355	)			—				10				-1.7
Total Equity Attributable to Shareholders of the Parent			15,584				507,981				86.5				481,136				85.4				445,631				85.8				26,845				5.6				62,350				14.0
Minority Interest			35				1,157				0.2				727				0.1				608				0.1				430				59.1				549				90.2
Total Shareholders’ Equity			15,619				509,138				86.7				481,863				85.5				446,239				85.9				27,275				5.7				62,899				14.1
Total Liabilities & Shareholders’ Equity		$	18,023			$	587,485				100.0			$	563,348				100.0			$	519,510				100.0			$	24,137				4.3			$	67,975				13.1

     

		TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED AND SUBSIDIARIES Unaudited Consolidated Condensed Income Statements For the Three Months Ended December 31, 2006, September 30, 2006, and December 31, 2005 (Expressed in Millions of New Taiwan Dollars (“NTD”) and U.S. Dollars (“USD”) (1) Except for Per Share Amounts and Shares Outstanding)

		Q4 2006												Q3 2006								Q4 2005								QoQ								YoY
		USD				NTD				%				NTD				%				NTD				%				Amount				%				Amount				%
Net Sales		$	2,283			$	74,963				100.0			$	82,476				100.0			$	79,228				100.0				($7,513	)			-9.1				($4,265	)			-5.4
Cost of Sales			(1,234	)			(40,510	)			-54.0				(41,344	)			-50.1				(37,915	)			-47.9				834				-2.0				(2,595	)			6.8
Gross Profit			1,049				34,453				46.0				41,132				49.9				41,313				52.1				(6,679	)			-16.2				(6,860	)			-16.6
Operating Expenses
Research and Development Expenses			(122	)			(4,006	)			-5.3				(4,231	)			-5.1				(3,570	)			-4.5				225				-5.3				(436	)			12.2
General and Administrative Expenses			(68	)			(2,246	)			-3.0				(2,424	)			-2.9				(1,910	)			-2.4				178				-7.4				(336	)			17.6
Sales and Marketing Expenses			(24	)			(794	)			-1.1				(845	)			-1.1				(1,424	)			-1.8				51				-5.9				630				-44.2
Total Operating Expenses			(214	)			(7,046	)			-9.4				(7,500	)			-9.1				(6,904	)			-8.7				454				-6.1				(142	)			2.1
Income from Operations			835				27,407				36.6				33,632				40.8				34,409				43.4				(6,225	)			-18.5				(7,002	)			-20.3
Non-Operating Income, Net			52				1,713				2.3				322				0.3				640				0.8				1,391				431.5				1,073				167.9
Investment Gains			12				388				0.5				709				0.9				540				0.7				(321	)			-45.3				(152	)			-28.0
Income before Income Tax			899				29,508				39.4				34,663				42.0				35,589				44.9				(5,155	)			-14.9				(6,081	)			-17.1
Income Tax (Expenses) Benefits			(46	)			(1,494	)			-2.0				(2,144	)			-2.6				(1,692	)			-2.1				650				-30.3				198				-11.7
Net Income			853				28,014				37.4				32,519				39.4				33,897				42.8				(4,505	)			-13.9				(5,883	)			-17.4
Minority Interest			(3	)			(102	)			-0.2				(30	)			0.0				3				0.0				(72	)			246.7				(105	)			—
Net Income Attributable to Shareholders of the Parent			850				27,912				37.2				32,489				39.4				33,900				42.8				(4,577	)			-14.1				(5,988	)			-17.7
Earnings per Share — Diluted		$	0.03			$	1.08							$	1.26							$	1.31								-$0.18				-14.1				-$0.23				-17.8
Earnings per ADR — Diluted (2)		$	0.16			$	5.41							$	6.29							$	6.57								-$0.89				-14.1				-$1.17				-17.8
Weighted Average Outstanding Shares — Diluted (‘M) (3)							25,815								25,809								25,787

     

	TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED AND SUBSIDIARIES Audited Consolidated Condensed Income Statements For the Year End December 31, 2006 and 2005 (Expressed in Millions of New Taiwan Dollars (“NTD”) and U.S. Dollars (“USD”) (1) Except for Per Share Amounts and Shares Outstanding)

		For The Year Ended December 31
		2006												2005								YoY
		USD				NTD				%				NTD				%				Amount				%
Net Sales		$	9,759			$	317,407				100.0			$	266,565				100.0			$	50,842				19.1
Cost of Sales			(4,969	)			(161,597	)			-50.9				(148,362	)			-55.7				(13,235	)			8.9
Gross Profit			4,790				155,810				49.1				118,203				44.3				37,607				31.8
Operating Expenses
Research and Development Expenses			(494	)			(16,076	)			-5.1				(14,017	)			-5.3				(2,059	)			14.7
General and Administrative Expenses			(268	)			(8,717	)			-2.7				(9,086	)			-3.4				369				-4.1
Sales and Marketing Expenses			(115	)			(3,752	)			-1.2				(4,132	)			-1.5				380				-9.2
Total Operating Expenses			(877	)			(28,545	)			-9.0				(27,235	)			-10.2				(1,310	)			4.8
Income from Operations			3,913				127,265				40.1				90,968				34.1				36,297				39.9
Non-Operating Income, Net			115				3,750				1.2				1,862				0.7				1,888				101.5
Investment Gains			72				2,347				0.7				1,434				0.6				913				63.8
Income before Income Tax			4,100				133,362				42.0				94,264				35.4				39,098				41.5
Income Tax (Expenses) Benefits			(239	)			(7,774	)			-2.4				(631	)			-0.3				(7,143	)			1,132.8
Net Income before Cumulative Effect of Changes in Accounting Principles			3,861				125,588				39.6				93,633				35.1				31,955				34.1
Cumulative Effect of Changes in Accounting Principles (Net of Tax)			49				1,607				0.5				—				—				1,607				—
Net Income			3,910				127,195				40.1				93,633				35.1				33,562				35.8
Minority Interest			(5	)			(185	)			-0.1				(58	)			0.0				(127	)			221.9
Net Income Attributable to Shareholders of the Parent			3,905				127,010				40.0				93,575				35.1				33,435				35.7
Earnings per Share — Diluted		$	0.15			$	4.92							$	3.63							$	1.29				35.5
Earnings per ADR — Diluted (2)		$	0.76			$	24.60							$	18.15							$	6.45				35.5
Weighted Average Outstanding Shares — Diluted (‘M) (3)							25,813								25,776