Ladies and gentlemen, I would like to welcome you to TSMC's First Quarter 2008 Results Webcast Conference Call. Today's event is chaired by Ms. Lora Ho, Chief Financial Officer and Vice President… Dr. Rick Tsai, Chief Executive Officer and President. This conference call is being webcast live via the TSMC website, at www.tsmc.com, and only in audio mode. Your dial-in lines are also in listen-only mode. At the conclusion of the Management presentation, we will be opening the floor for questions. At that time, further instructions will be provided as to the procedure to follow if you would like to ask any questions. Please be advised, for those participants who do not yet have a copy of the press release, you may download it from TSMC's website, at www.tsmc.com. Please also download the summary slides in relation to today's quarterly review presentation. Once again, the URL is www.tsmc.com. I would now like to turn the conference over to Dr. Elizabeth Sun, TSMC's Head of Investor Relations, for the cautionary statement before the main presentation by Ms. Ho and Dr. Tsai. Please proceed.

Thank you, Alexis. Good morning and good evening to all participants. This is Elizabeth Sun, Head of Investor Relations for TSMC. Before we begin, I will like to state that Management's comments about TSMC's current expectations made during this conference call are forward-looking statements, subject to significant risks and uncertainties, and that actual results may differ materially from those contained in the forward-looking statements. Information as to those factors that could cause actual results to differ materially from TSMC's forward-looking statements may be found in TSMC's annual report on Form-20F filed with the United States Securities and Exchange Commission on April 15, 2008, and such other documents as TSMC may file with or submit to the SEC from time-to-time. Except as required by law, we undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. And now, I will like to turn the conference call over to Ms. Lora Ho, our Chief Financial Officer and Vice President.

Thank you, Elizabeth. Good morning and good evening to everyone. Welcome to our first quarter 2008 earnings conference call. Today I will first go over the highlights from our first quarter 2008 results, including the impact of employee profit sharing expensing. As you may be aware, we begin implementing a new ROC accounting rule, which requires the expensing of employee profit sharing. Starting from the first quarter we began the accrual of such expenses each quarter. I will give you a more detailed explanation of the impact from this accounting change in my presentation. Then I will give you the outlook for the second quarter 2008. Please refer the quarterly financial summary slide on our website. All dollar figures are NT dollars, unless otherwise stated. On page four, now let me go over some highlights for the quarter. Our first quarter business follow a normal seasonal pattern. We shift 2.2 million 8-inch equivalent wafers, which was about 7% less compared to the previous quarter. NT dollars appreciated 2.6% on average over the quarter, which was higher than our earlier forecast, but it had a negative impact to our reported revenue and margins. In spite of that we are still able to deliver the result that met the guidance. Our revenue was 87.5 billion NT dollars and gross and operating margins were 43.7% and 33.3% respectively. EPS was 1.1 NT dollars for a quarter, a sequential decline of 16.4%. Free cash flow generated during the first quarter totaled 42 billion NT dollars, up 5% and return on equity was 22.6%. Now let's take a closer look at our income statement. For sequential and year-over-year comparison, please let me remind you that the accounting numbers reported for 2007 do not reflect effect from the employee profiting sharing expensing. This is the major difference from 2008. That being said, our first quarter revenue declined 6.8% sequentially, but increased 34.8% year-over-year. Compared with the fourth quarter '07 gross margin rate declined 4.1 percentage points and operating margin rate declined 5.9 points, mainly due to the unfavorable change of the exchange rates and implementation of employee profit sharing expensing. Non-operating income was 1.8 billion NT dollars, and we booked 600 million NT dollars long term investment gain from the quarter. Net profit margin rate was 32.2%. On page six, now I would like to elaborate more on the impact of employee profit sharing expensing, and the impact from NT dollar appreciating against the US dollar. Our employee profit sharing, we accrued 15% of quarterly net income in accordance with the plan that we announced earlier. Quarterly, we accrued 4.22 billion NT dollars in first quarter, which reduced our gross margin rate by 2.5 percentage points, our operating margin rate by 4.8 percentage points, and net margin rate by 4 points. Now let me explain the impact of NT dollar exchange rate. Since almost all our revenue is denominated in US dollars, the 2.6% appreciating of the NT dollar against the US dollar, averaged over the first quarter, reduced our revenue, which is reported in NT dollar by 2.3 billion NT dollars. Meanwhile, its impact to our gross margin rate was roughly 1 percentage point, and impact to operating margin rate and net margin rate were 1.2 points and 0.9 point. In dollar terms the 2.6 appreciation of the local currency reduced our net income by $1.6 billion and EPS by 0.06 NT dollars. As, this slide shows, if we did not have the 2.6% NT dollars appreciation and if we also did not expense employee profit sharing, then our gross margin rate could have reached 47.2% and our EPS could have been 1.3 NT dollars. That being said, we are happy to point out that despite the negative impact from foreign exchange rate and expense… Employee profit sharing, we focused more on cost control, productivity improvements, so we were able to deliver the results inline with our previous guidance. On page seven, in order to help you model employee profit sharing better we have performed a simulation to 2007's profit, using the closing price of our common stock on December 31st, 2007, adjusted for dividend, as a basis to calculate a total volume of 2007's employee profit sharing. This has enabled the like-for-like comparison with our first quarter 2008 results. As, this slide shows, the impact of the employee profit sharing expensing in fourth quarter '07, gross margin rate and operating profit margin rate were 4.6 percentage points and 9 percentage points. This represent a much higher impact to profit compared to the first quarter '08. On like-for-like comparison first quarter's gross margin and operating margin rates, both improved sequentially, as well as year-over-year. Now, let's examine our revenue by applications. On quarter-over-quarter basis, revenue from consumer applications increased 3%, while revenue from communications and computer applications declined 9% and 12% respectively. Overall, revenue from computer, communications and consumer applications accounted for 34%, 42% and 17% of our wafer sales respectively. On page nine, in terms of revenue by technology, we continued our strong ramp with 65-nanometer during the quarter. Revenue from 65 accounted for 15% of our wafer revenue, up 5 percentage points sequentially. We expect to see continuing strength in the ramping of our 65-nanometer business for the whole year. Total revenue from advanced technologies accounted for 63% of wafer sales, up 4 percentage points from the pervious quarter. Now, let's turn to page 10. Let's move on to the balance sheet and cash flow statement. We ended the first quarter with 210 billion NT dollars in cash and short-term investments, up from 175 billion NT dollars in the last quarter. Average collection period for accounts receivable came down 1 day to 43 days, while days of inventory came down by 2 days to 46 days. Our net fixed assets turnover was 1.3 times. On page 11, total cash inflow generated from operating activities in the first quarter reached 57 billion NT dollars. Capital expenditure was 15.3 billion NT dollars, which was 4.5 billion NT dollars less than the previous quarter. Free cash flow went up to 42 billion NT dollars. There was a 3 billion NT dollars remaining settlement of share buyback completed on December 31st, 2007. We ended the quarter with 49.3 billion NT dollars more cash. Now, let's turn to capacity and CapEx. Total installed capacity for the first quarter was about 2.2 million 8-inch equivalent wafers. Due to fewer working days and scheduled annual plant maintenance, first quarter capacity was about 4% less, compared with fourth quarter '07. We expect the second quarter capacity to be 2.3 million wafers, up 6% sequentially, 2008 capacity is expected to reach 9.3 million wafers, up 13% year-over-year, with 25% growth for 12-inch wafer capacity. We spent US$484 million in CapEx during the first quarter. 2008 full year CapEx will remain around US$1.8 billion. With that, let me give you the outlook of the second quarter of 2008. Based on current business expectations and the forecasted exchange rate of 30.24, we expect our consolidated revenue to come in between 87 billion NT dollars to 89 billion NT dollars. In terms of margins, we expect our second quarter gross margins to be between 43% and 45%, including approximately 1.7 percentage point negative impact from the forecasted appreciation of NT dollar. Operating profit margins to be between 32% to 34%, reflecting approximately 1.9 percentage point negative impact from the same forecasted exchange rate. This concludes my remarks today. Now, I will turn the call over to Dr. Rick Tsai, our CEO, for his remarks.

Thank you, Lora. What I'd like to do in the following is to comment on few areas that many of you have questioned about, the first being the business outlook. Our guidance that Lora just gave showed pretty much of flat revenue for the second quarter, compared to first quarter in NT dollars. But if you consider the foreign exchange rate that we use, between second quarter and first quarter, you'll find that the revenues in the second quarter represent roughly between 4% to 6% increase, if you use US dollar. This is what we're seeing. We are seeing a steady increase in demand in our second quarter. We have talked to many customers just recently and what they are seeing, it is about the same. They are staying cautious, because of the… I would say a severe macro economic situation in the US. However, their business outlook for the next quarter in general looks positive… In general looks positive. In our business, in second quarter consumer related applications are expected to grow strongly. Communication applications will remain above flat, while our computer applications may see a small decline in the second quarter. For the whole year… For the whole year of 2008, we maintain our view that we have stated in last quarter, in January, that is for the semiconductor industry the growth in 2008 will remain at about… Between 4% to 6%. Actually, if you take out the memory part of the semiconductor business, the growth rate will be better than 4% to 6%. Foundry sector is expected to outperform the semiconductor by a few points. And TSMC will grow faster than the semiconductor industry. Next, I will like to comment on the pricing, CapEx, foreign exchange rate et cetera. As we have stated in the last two Investor Conferences, we have become firmer on pricing, and we will stay on the course even if the demand should weakens, however, we do not expect the demand to weaken in the next quarter also. We believe we must maintain our structured profitability. And we believe, through the values that we have created for our customers, that we can achieve such objectives in the future and now. The demand for advanced technology actually looks quite good. It looks sustainable, strong and it has been better than what we had forecasted before. As a result, we have taken steps to pull in equipments in order to meet such demand. We have been fairly successful in pulling equipment in the first quarter, so we can build some more capacity in order to fulfill our customers' requirements. In the mean time we continue to access our CapEx and capacity plans every month and sometimes every week. As to the foreign exchange rate, Lora has done a good job in explaining in details, I would just add that for each 1% of NT dollar appreciation against the US dollar, our gross margin will be reduced by 40 basis points. However, we will make it up by more cost reductions and firmer pricing. Many of you also ask about the technology, in some cases about the Open Innovation Platform, that Chairman has discussed last week. So, let me elaborate on these things a little bit more. Actually, we also have talked about this many times before. In order to manage the design complexity, especially in the leading edge technologies, foundry must provide our customers with many design related things, such as IPs, especially foundation IPs that is the library, the memory compilers etc. We need to be able also to facilitate our customers, so that they can have early access to such IPs. We also worked closely with third party EDA suppliers and a third party IP suppliers, so we can build a comprehensive designed infrastructure and designed ecosystem for all customers. We are also qualifying the third party design service providers, so they can provide a quality service to our customers. All those things we are doing in order to enable our customers in using the advanced technology, so we can provide to them. When we integrate our advanced and main stream process technologies as well as design infrastructure and design ecosystem, together with the wafer-level packaging technology that we are developing. These will form the Open Innovation Platform. We basically assessed TSMC as tender bearer [ph], and through this platform we can enable our customer's product differentiation, our customer's productive time-to-market, and cost improvement. Many of you also asked about the Moore's Law. I would say, the Moore's Law definitely still works. You can tell by our track record that we basically migrate our technology node roughly about every two years. However, it is also a fact that semiconductor industry, from revenue point of view, the growth has moderated. It has moderated, but it has been also steady in the last few years. TSMC continues to put our resources in R&D, both from process point of view, and from design infrastructure ecosystem point of view, so that we can lower the barriers for our customers to use our technologies. Of course, the investment for such technology continues to be very high, so with firmer pricing and tighter CapEx, we aim to improve our return-on-investment of such technologies. Lastly, many of you also asked about growth. Let me also talk about that, especially in the LED part. TSMC throughout the years has been working on, of course, growth, mostly in the growth of our core business. However, we also look at areas or applications that represent good growth potential, and that we can leverage our core competencies in creating differentiations in such areas. And LED or you can call that Solid State Lighting can be one area. TSMC is seriously evaluating such opportunities. However, we have not made a decision as to how we want to approach that yet. Next, on CPU. TSMC is very interested on CPUs and embedded CPUs, both from embedded and from standalone point of view. This is one area that we can still grow our market share quite a bit. What we have done in order to go into that arena is too hone our technology. Our technology at the 40-nanometer… Basically 40-nanometer, G or G-plug technology right now, its already quite effective as a technology for the embedded and a standalone CPUs. And, we are also investing our resources in our 32-nanometer technology using high-k/metal gate processors for our CPU version of the 32-nanometer technology. In addition, we're also aggressively recruiting talents in the CPU area, so that we can provide also a platform for our customers who want to do either standalone CPU or embedded CPUs. Lastly, I want to comment on the flash memory. The general business environment is quite difficult for such business and it is as a result quite difficult to have a win-win [ph] foundry model for TSMC than our pioneers in the flash memory. As a result we have decided to slow down or business in the flash memory from a standalone point of view. However, we will continue developing embedded flash technologies for our SoC applications, which we have done in the past and we will continue doing that going forward. And that is my comments today. Now, Elizabeth?

Thank you, Rick. Before we begin the Q&A in the interest of time I would like to request that you limit your questions to no more than two each time. Should you have more questions beyond the two questions, you can always comeback to the queue. Thank you for your corporation. Operator, we can open the floor to questions now. Question and Answer

[Operator Instructions]. Your first question comes from the line of Bhavin Shah with JPMorgan. Please proceed

Yes. Hi, everyone. I have… Let me ask first question on the outlook for the industry growth and TSMC's growth. Rick you mentioned 4% to 6% for semiconductor industry and TSMC doing some what better than that. If I take your second quarter growth [ph] and assume that there is some growth in third quarter, which I believe there is, even if I assume flat fourth quarter, you end up with 13% revenue growth. So, is that a case for revising up your sort of rough outlook for the industry or more importantly for TSMC for 2008?

Yes. Bhavin I think, of course, your arithmetic is correct. Actually if you look out our first quarter and the second quarter guidance which represent already, I think, roughly 25% growth year-over-year compared to the first half of last year. For the whole year, I cannot really comment on your numbers, but I think it is not really that difficult to calculate for the second half. Basically, this year in 2008, I still want to… Although we see a steady increase in our demand in second quarter and we do not feel slowdown in such demand, but, considering the weather severity, I should say both the macro economic situation in the US and may be in the developed economies, we certainly want to exercise caution and we don't want to be too aggressive in projecting our whole year results, just yet, all right.

Okay. Second question is for Lora, in the first quarter currency ended up being stronger than your expectation and that probably contributed a little bit, perhaps, to the fact that revenue didn't go all the way to the high end of your guidance. But your gross margin was closer to the high end of the guidance, in spite of this currency surprise. So, what contributed to this stronger profitability in light of the change in currency?

I think it is basically a combination of better cost control, operating expense saving, eliminating waste, and from time-to-time, the productivity improvement that we have seen for [inaudible] people continue doing that. So it's no secret, just a lot of hardworking and the continued improvement.

Yes. I guess the only thing is that I would have thought those things you mentioned were already perhaps expected, at least in your planning at the beginning, at the time of giving guidance for the first quarter?

We have been doing that from… But with this condition, we just feel we needed to do more and more, and harder and harder.

Your next question comes from the line of Bill Lu with Morgan Stanley. Please proceed.

Yes. Hi, there. Good evening. I have two questions as well. The first one is on the 40 or 45 nanometers. You know, I guess, I had always assumed that for this year, that was going to be a pretty small revenue contributor, but last week, on Qualcomm's conference call, they basically said they're going to start ramping that in the June timeframe. You know, without commenting on any specific customer, I wonder if you could just help me with what 40 and 45 might be, as a percentage of the sales, by the fourth quarter?

I assume the revenue, as you just said, Bill that from 45 and 40 nanometer for this year will be insignificant. We will start the production this year. We are building capacity… Production capacity in the second half of the year. However, I think the volume production, we are already locked out until first quarter, next year. So, I would really hesitate to speculate the number, now, for this year. It will be pretty small.

Okay. Fair enough. Rick, the second question that I have is on pricing. Remember on the last conference call you had said that the pricing would take a while to work out, because most of what's falling through now was that negotiated few quarters ago. And now it seems like you got more confident, that pricing isn't de-firming up. And I'm just wondering if that's a comment on your current negotiations will that be reflected in your pricing for the second half of the year or second quarter or are you saying that pricing in the first quarter is already better than expected.

Bill, what we've said last quarter, was definitely a true statement. A lot of the pricing negotiation were conducted and completed last year. Of course, we basically, roughly starting of fourth quarter last year, let me put this way, put a break on the pricing. And we continued to extract as much value as we could during this period. So, what I guess, what we are saying is, we are seeing results of such efforts. We are seeing better pricing as result of such effort. However, we are not saying that the pricing negotiations conducted and completed last year were not effective anymore. They are still effective, so we are… It's just that we are… I think we are doing better than we would have if we didn't exercise all those efforts.

Your next question comes from the line of Suresh Balaraman with ThinkEquity. Please proceed.

Yes. Just a follow-up on the pricing issue, when we look at the utilization rates for other foundries that derive most of their revenues from older technology nodes, some of them have seem to at multi-year highs in terms of utilization rates. And I am wondering are you seeing… Is there a scope for pricing to improve at 130-nanometers and 180-nanometers, sometime later this year, like you guys did in 2004, when actually pricing went up pretty meaningfully after when we came off a downturn?

You are talking about the mainstream, the 0.18 micron and 0.13 micron pricing?

Essentially, yes the nodes that took the biggest hit in the last couple of years?

I think the efforts; I just talked about in the pricing, covers the whole range of our technologies. All the way from 40-nanometer down to 0.5 micron and 0.8 micron. Whether, we are seeing… Actually some of the questions we got in the afternoon, actually was on some what lower utilization for 0.18 micron and about technologies and whether that would have adverse impact on pricing, somewhat different from yours. But in response to either observation, we believe our pricing position in that 0.18 micron and 0.13 micron is firmer, is in better position than we would be in without such efforts.

Also, on 65-nanometers, are you on a per wafer pricing with all your customers or there are still some, on a per die... Are still people paying on a per die basis?

It's a combination of both, and I would say more wafer pricing than die pricing, but it's a combination of both.

Your next question comes from the line of Dan Hyler with Merrill Lynch. Please proceed.

Hi, good evening. I had a question on technology Rick, as you have ramped 65-nanometer fairly aggressively here now, 15% of sales in the first quarter, how does that look as the year progresses and what are the implications for 90? How will you go about… Will 90 continue to grow or will fall as a percentage of sales, as a function of 65 ramping?

We certainly will continue with 65-nanometer. As you just said, we will continue ramping….the potential sales will continue to decline. 90-nanometer business is still very good, of course, I believe we had said the last time that the capacity in 90-nanometer… Increase is not as much compared to 65-nanometer. So, from percentage point of view, I think 90-nanometer revenue will not decline, but it's probably not going to increase much either. The business is good, for 90 also. We do not have really a problem in having the demand for such technology, even with many customers migrating to 65-nanometer and 55-nanometers.

Okay, great. Thanks. My second question was on capital spending, it looks like it was about I believe 15 billion NT dollars in the first quarter, US$500 million or so. You're budgeting 1.8 billion NT dollars for the year. My understanding is that your CapEx was more front-end loaded this year. Does that imply some significant spending in the second quarter? And what's the linearity in the second half of CapEx?

Dan, you're right. Out of that 1.8 billion NT dollars, I would say more than 60% will be spend in the first half. You know the first quarter number, and the second quarter number will go up. And second half of course will go down.

Your next question comes from the line of Pranab Samar with Daiwa Institute. Please proceed.

Thank you. Rick, congratulations on getting your cost down so nicely, and I have two questions. And the first one is basically; could you give little bit of idea about how many percentage of capacity would be at 45-nanometer or 40-nanometer by year end?

Very small.

More than 5000 or less than 5000?

Probably less, but we will build in production capacity in second half and we will be quite aggressive in the first half next year.

Okay. The second one. Could you elaborate a bit how the Global UniChip is helping you getting order from customer and is there any way to track down how many percentages of their revenue really come through, because of the presence of Global UniChip?

Let me comment on that. I think the most important part of the relationship between TSMC and Global UniChip, of course is strategic in nature. I think GUC is very instrumental, very critical in enabling some of our smaller customers and some of the system customers in helping them do the turnkey, in designing their chips and providing the turnkey services. I checked the revenue and they've been providing good revenue to TSMC. Again I don't want to speculate on what percentage, it's a good percentage, of course the higher, the better. But the, but I think, even more importantly, that the role that GUC play in, shall we say, cultivating the future customers and the future innovations.

Your next question comes from the line of David Wu with Global Crown Capital. Please proceed.

Yes. My two questions are; first, can you explain why in the first calendar quarter, the seasonally week quarter of the year, the consumer business actually increased quarter-on-quarter, and where is the strength that you saw, regarding to Q2 is coming from? Second question I have is on the CPU business, I guess it's hardly a secret that one of the Silicon Valley companies is looking for outsourcing at least part of their CMOS, that's possible business. When would it become a meaningful number for TSMC in terms of revenues in the CPU business?

Well to answer your first question on the consumer applications, I think you are right. Usually, when the first quarter is not a strong quarter, but however, obviously people are still flocking to buy a TVs. Our digital TV and high definition TV chips have enjoyed a very good business. Probably some of our customers have taken shares from others. In addition, I think the game console, also is doing better than we had expected. On your CPU question, I commented earlier, we are actually working with more than a couple of customers on standalone CPU's, and not to mention the embedded CPUs. However, I think for the standalone CPUs, this business will take sometime to develop into high volume. I would expect some revenues to happen in 2009. But I really would like… Would expect to see that blossom probably after that.

Thank you very much.

Thank you.

[Operator Instructions]. Your next question is a follow-up from the line of Bhavin Shah with JPMorgan. Please proceed.

Yes. Rick, I wanted to ask a question regarding, you mentioned about hardening of ARM core, if you could just elaborate little more on that, I would imagine that's an ongoing activity, but there is some who emphasis there, so if you can just elaborate a bit more on that, thanks?

Yes. I did mention in the afternoon about us licensing ARM core. I think I do not remember the exact model number. We definitely have licensed both, one 900 core and one 1100 core. I think, we have two purposes, one, of course, is to hardening those cores in our most advanced technologies, so that our customers can use that whenever they want to. It is basically to enable them and also to enable our business. And secondly, certainly equally important, that is we can develop our capability in implementing CPU core using TSMC technologies and TSMC IPs. Well, of course, CPU is a very difficult business. Again, we do not of course intend to diverse our own products whatsoever, but in order to… Again to develop some business in this area. It is critical. It is very important that we have some capability in house. That's why.

Your next question comes from the line of Pranab Samar with Daiwa Institute. Please proceed.

I have a follow up questions on any plan for capital reductions in 2008 or 2009, Lora? Anything you're looking at how to use your cash?

Pranab, the single answer to that is there's no plan at this moment for capital reduction.

Okay. What was the percentage of your revenue came from, only wafer revenue last quarter? Only wafer revenue out of total revenue?

Pranab, we do not disclose separately, wafer revenues from other revenues. We only disclose net, net sales.

Your next question is a follow up from the line of Dan Hyler with Merrill Lynch. Please proceed.

Yeah, hi Rick. I had a couple of questions, follow up. On the CPU strategy, which is something you've been talking about for some time. You know, the foundry business model is built-to-order yet, and you've done well at mainstream and the leading edge foundry. As you invest a lot of R&D resources in this business, clearly your competitor there, Intel, has put a lot of marketing dollars behind pushing products out into the market place. What's the risk if you invest lots of money here, but the actual customers themselves don't necessarily succeed? Obviously, that's a risk. You know, we've seen this [inaudible] AMD, they executed okay for AMD, in fact quite well, and AMD then faced problems and it created a $150 million hole in their business. So what can TSMC do to prevent something like that from happening?

Well, Dan, first by having a broader base of customers, a broader portfolio, I am not saying, this is easy at all, since as you said we have been talking about this for quite sometime. And certainly I would also say that before our technology or process technology, we are not really ready to be a true CPU technology. But now we are confident that our technology overall may not be as good as the Intel's, from transistor point of view, yet at least, but I think our technology certainly is now good enough to serve certain segment of the CPU market. Addition with TSMC's manufacturing capability and our process control competencies, we believe we can of course, with our design service capability we will provide a much stronger technology platform for our customers. I believe compared to our competitors who can't. Dan in addition, I think it is that's why I've mentioned time and time again you in my comments today, that is, we also are looking at embedded CPU applications. We firmly believe that the CPU with the process technology capability that is available today and will be available in the next couple of years. Embedded CPU will be very powerful, very efficient and it will play a much greater role in many, many different applications, in consumers or other segments. And TSMC will definitely give a leading edge required for such capability to our customers. So I really believe Dan this is almost a must for TSMC to continue for our leadership position in the future.

[Operator Instructions]. Your next question comes from the line of Mike McConnell with Pacific Crest Security. Please proceed.

Thank you. Rick interesting comments on the PC side for Q2 that they are actually going to be … That segment is going to be slightly down, if I remember historically usually that segment is up in Q2 for the seasonal built. Can you just talk a little more in depth about what you are seeing in the PC market right now?

I think PC markets itself is all right. Its quite all right. I think we have been forecasting that we believe the revenue growth for the PC this year will be above 12%. We continue to hold that view. And I believe if you look at Intel's forecast they also believe that the PC market is quite healthy. So, I mean, all the forecast for us in the PC area is… As I said a small downward trend, I am not really… I don't have really a major concern from that point of view. I think it is just the combination of our customers… In their product, in their specific applications which caused this situation.

But, historically, usually in that PC segment, will that be normal or up for you in Q2, if look at recent historical?

May be, [inaudible] somewhat in the second quarter, if you recall, however, for the whole year, we remained quite confident.

Okay. Thank you.

Thank you.

Your next question comes from the line of [inaudible], please proceed.

Hello. And good evening. I have got a couple of questions. My first question relates to your capacity? What is your maximum capacity for Fabs 12 &14, and when would you have a… When is the earliest you would have a new 12-inch fab, ready for ramp up? And my second question relates to 65-nanometers. I just wanted to get some clarification on that. I think that was quoted in afternoon call that you mentioned that 65-nanometer are going to contribute 20% plus of your sales in 2008. I just wanted to get some clarification whether that you meant for the year as a whole or by 4Q '08?

Let me first comment on the capacity for Fab-12 and Fab-14. It's actually rather difficult question to answer, because we continue to add modules to those two fabs. Let me put it this way. We just broke ground last month. Our latest 12-inch fab, or you can call that module in Hsinchu, which is dubbed as Phase 4 of our Fab-12. In the mean time, our latest 12-inch fab in Thailand [ph], will be receiving equipment in the second half this year. That one is dubbed Phase 3, of our Fab-14. The thing I can assure you is that each phase will in general have at least the same amount of capacity as any other phases before them. I think usually each phase will have roughly 50. Each phase has roughly 30000 to 35000 per month. Actually, I think that it's bigger than that

If I can make some comment on that. I think our Fab-12, will at least be bigger than was 70,000 per capacity. And Fab-14 eventually will get to that level too. Now it is smaller the Fab-12. So this two Fab are the 12 inch, now we have invented the Giga Fab concept. So the Fab can be much bigger than the traditional Fab that we have been building in the past. Your second question about 65-nanometer revenue, my comment on the afternoon session is, I really meant for the whole year, the revenue contribution is going to exceed 20% for 65-nanometer. So, while we are already 15% in the first quarter and that number is continue to grow, so that, it will give more than 20% for the whole year.

Okay. Thank you very much.

Your next question is the follow-up from the line of Dan Hyler with Merrill Lynch. Please proceed.

Sorry, it just gets cut-off. On your Open Innovations Platform, Rick, as you guys have said of big rush on US, I believe in Tennessee and Boston. What are some of the takeaways from that big conference in terms of the customer feedback and positives and potential concerns that some industry people may have with regard to potential competition or competitor's et cetera?

Dan, well, I don't think I can give you a… We actually, as you know we've been talking about platform, at least its components for quite sometime. I think all the design ecosystem and design infrastructure have been taken for granted by many of our customers. They come to rely on many of our offerings, not all of our offerings for each case, for their design needs. And they use them also to lower their R&D expenses, in addition to try to achieve the time-to-market. I did not really ask many people specifically what they think of the Open Innovation Platform, by services, because it still rather is a new term for them, but my feeling there is for customers, they in general will come back. As I said, not everyone will use them or at least not all of them. But in general I think we believe TSMC is doing things to help them not to compete against them.

Great. Thank you.

Thank you.

Your next question is a follow up from the line of Bhavin Shah with JPMorgan. Please proceed.

Yes I wanted to go back to on one of the comments you made about the capital and density of about 20% in future or in about next year basis. I look at the CapEx this year and obviously revenue will get maybe anywhere between at least I guess based on your general comments, as well as, based on first half what you are achieving, at least 10% maybe 13%, 14% revenue growth this year. So I sort of look at what needs to happen, I mean, that would lead to capital intensity of about only 15 %. And so, are you suggesting a big, so steep jump in CapEx in 2009 or something, just trying to reconcile this 20% growth?

Well, Bhavin, I think we said 20% plus-minus, in some years it can be higher than 20, in some years it will be slower than 20. But I will not give you the whole year revenue, but I think 15% is probably on the lower side. Without… Generally speaking, I think a 20% CapEx certainly is roughly right, if we are talking about a longer time instead of talking about one or two years.

Okay. Thank you.

Operator, I think in the interest of time we would end our conference call at this point.

Before we conclude TSMC's first quarter 2008 results webcast conference call today, please be advised that the replay of the conference will only be accessible through a TSMC's website at www.TSMC.com. Thank you all and have a great day.