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Quarterly Sales Report -Third Quarter 2004
Hsinchu, Taiwan, Oct. 29, 2004- Vanguard International Semiconductor Corporation, a leading specialty IC foundry service provider, today announced its financial results for the third quarter of 2004. Net sales of NT$4,362 million was 4.8% higher sequentially or a 61% growth on a year-over-year basis. Net income was NT$1,171 million and earnings per share were NT$0.8, representing a 27% increase from the second quarter of 2004. The first nine months net sales totaled NT$12,255 million, net income NT$3,191million and EPS NT$2.18. All figures exceed FY2004 financial forecast filed in April.

The wafer shipment in the third quarter of 2004 was 168 thousand wafers, higher than 163 thousand wafers shipped in the second quarter of 2004 and 115 thousand wafers shipped in the same period of 2003. The third quarter average utilization rate was105%, higher than 102% of the previous quarter.

Vanguard ended its DRAM production in July. The third quarter logic foundry wafer shipment grew to 154 thousands wafers from 125 thousands wafers in the second quarter. The third quarter logic foundry wafer shipment accounted for 92% of total wafer shipment in the same period. Because of higher wafer shipment, improved productivity and richer product mix, the growth margin for the third quarter jumped from 28.9% in the previous quarter to 37.6%.

Due to strong financial results for the first nine months of 2004, the 2004 financial forecast Vanguard filed in April 2004 is no longer deemed adequate. The Company now expects to raise net sales from estimated of NT$15,578 million to NT$16,111 million for the year, while updated income before tax and net income are estimated to be around NT$4,079 million and NT$5,393 million respectively. The updated earnings per share are raised to NT$2.87 from previous NT$2.18. The financial forecast for 2004 is being reviewed by the Company's auditors, and will be formally announced later.
Based on the current business forecast, the management's expectations for fourth quarter 2004 performance are:

1. Wafer shipment to decrease by about 12% q-o-q;
2. Fab utilization rate to drop to around 90%;
3. Wafer ASP to stay flat q-o-q;
4. Gross margin to improve to around 41%

Media Contacts:
Daniel Chen
General Counsel, Vice President of Administration
Vanguard International Semiconductor Corporation
Tel: 886-3-5770355 ext.2009
Fax: 886-3-5773504
E-mail: Vanguard_PR@vis.com.tw

Michelle Chang
Public Relations
Vanguard International Semiconductor Corporation
Tel: 886-3-5770355 ext.1900
Fax: 886-3-5773504
E-mail: ijchang@vis.com.tw