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1999 Third
Quarter Financial Reports |
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Taiwan Semiconductor Manufacturing Company
Ltd. Announces
Third Quarter Results
for the Period Ended
September 30, 1999 |
| Hsin-Chu, Taiwan, R. O. C., October 22nd,
1999: Taiwan Semiconductor Manufacturing Company Ltd. (TAIEX:
2330, NYSE: TSM), ("TSMC" or "the Company")
the world's largest dedicated semiconductor foundry company,
today announced the results of its operations for the third
quarter ended September 30, 1999. All figures were prepared
in accordance with generally accepted accounting principles
in Taiwan. |
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| 3Q99 Results: Year-over-Year Comparison
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Highlights |
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Quarterly unit sales
set a new record high at 465K. |
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Capacity utilization was at 96%
as a result of the earthquake. |
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Net sales increased 75% YoY to
NT$19,707 million. |
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Operating income increased 154%
YoY to NT$7,169 million. |
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Net income rose 190% YoY to NT$6,137
million. |
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Diluted earnings per share (EPS)
increased 190% to NT$0.81 from NT$0.28. |
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Currently, 100% of wafer process
equipment has been released for production. |
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Net Sales: |
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Despite a devastating earthquake,
which hit the central island of Taiwan on September
21st, TSMC recovered its production at a faster than
expected pace and reported strong 3Q99 results. Only
ten days after the earthquake, 95% of TSMC's wafer process
equipment were released for production, while wafer
moves have reached more than 90%. Currently, 100% of
wafer process equipment has been released for production.
TSMC would like to express its gratitude toward TSMC's
suppliers, customers, shareholders, and employees for
their assistance and support during the recovery.
Net sales in 3Q99 totaled NT$19,707 million, up 75%
year-over-year. The unit shipment of 8" equivalent
wafers, including those outsourced to joint ventures,
grew 77% to 465K units in 3Q99. Unit volume growth resulted
from new customers and strong demand for the foundry
service, particularly from IDMs and communication segments.
The average selling price (ASP) in the New Taiwan dollar
declined by 3.7% YoY to NT$38.0K in 3Q99, as a result
of unfavorable foreign exchange. In US dollar terms,
quarterly ASP rose 3.8% to US$1,183 per 8" equivalent
wafer due to improvement in technology mix. The New
Taiwan dollar appreciated from the weighted average
rate of NT$34.58 to NT$32.08 per US dollar during this
period.
Sales breakdown by application, technology, customer
types, and geography for 3Q99 and 3Q98 are summarized
in Table 1. For consistency, historical numbers are
changed to reflect current definition and methodology
during classification thus may vary from those released
earlier.
Table 1: Sales Breakdown
| Segment:
|
3Q99
|
2Q99
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Segment: |
3Q99 |
2Q99 |
| Application
(Unit) |
Customer Type
(Revenue) |
| Computer |
41% |
47% |
Fabless |
66% |
80% |
| Communication |
33% |
26% |
IDM |
31% |
18% |
| Consumer |
12% |
15% |
System |
3% |
2% |
| Industrial / Others |
3% |
4% |
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| Memory |
11% |
18% |
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| 2001 Technology
(Unit) |
Geography (Revenue)
|
| X £ 0.25
μm |
26% |
1% |
North America |
65% |
61% |
| 0.25μm
< X £ 0.35 μm |
30% |
39% |
Asia Pacific |
18% |
23% |
| 0.35μm
< X £ 0.80 μm |
37% |
44% |
Europe |
9% |
13% |
| 0.8��
< X |
7% |
16% |
Japan |
8% |
3% |
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Gross Margins: |
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Gross profit increased 135% year-over-year
to NT$8,768 million as unit sales and capacity utilization
improved. Gross margin improved to 44.5% in 3Q99 compared
with 33.2% in 3Q98. |
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Operating Expenses: |
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Operating expenses in 3Q99 increased
76% to NT$1,599 million due to higher SG&A expenses.
TSMC and its employees made a donation of NT$200 million
to earthquake victims. Operating expenses as a percent
of net sales was unchanged at 8.1% in 3Q99. |
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Non-Operating Income / Expenses: |
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Net non-operating expenses increased
161% to NT$751 million, including NT$381 million losses
incurred from July power outage and September earthquake.
An estimate of 23,000 wafers were scrapped because of
the earthquake. TSMC expects a claim payment from the
insurance companies in 4Q99. |
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Investment Income / Losses: |
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Investment losses decreased to NT$660
million in 3Q99 compared to NT$831 million in 3Q98, primarily
resulting from improvements in the Vanguard International
Semiconductor Company ("VISC"). VISC resulted
in NT$224 million investment loss vs. NT$656 million loss
in 3Q98. WaferTech resulted in NT$427 million investment
loss vs. NT$379 million loss in 3Q98. TSMC-Acer Semiconductor
Manufacturing Company ("TASMC") resulted in
NT$85 million investment loss. |
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Net Income: |
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Net income tax credit for 3Q99 was
NT$379 million (NT$322 million tax expenses and NT$701
million tax credit), down from NT$406 million in 3Q98.
Net margin rose to 31.1% in 3Q99 from 18.8% a year ago.
Net income increased 190% to NT$6,137 million in 3Q99.
Diluted EPS were NT$0.81 for 3Q99, up from NT$0.28 in
the same period of 1998. |
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Operations Highlights: |
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Average capacity utilization based
on wafers produced (or "out utilization"), excluding
joint ventures, increased to 96% in 3Q99 from 58% in 3Q98.
Installed capacity was up 3.9% YoY in 3Q99 to 447K 8"
equivalent wafers. Installed capacity managed by TSMC
including joint ventures was up 15.4% YoY to 503K 8"
equivalent wafers. As of October 1, 1999, TSMC has completed
100% of all Y2K compliance solutions.
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Major announcements during 3Q99
included: |
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TSMC fabricates MoSys
1T-SRAM core on standard logic process |
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Appointment of new Quality &
Reliability Vice President |
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TSMC decided early redemption
of US$350M Eurodollar Convertible Bonds |
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TSMC 2nd-round ADR Conversion
Sale Program |
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TSMC and BTA to deliver foundry
industry's first reliability simulation tool suite
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SiberCore Technology (Canada)
and TSMC sign fabrication agreement |
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Please visit the Company's website
for details of the announcements. |
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| 3Q99 Results: Sequential Comparison |
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Highlights |
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Sequential recovery
in order volume continued. Unit shipment rose 13%
QoQ. |
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Net sales rose 14% QoQ. |
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Operating income increased 16%
QoQ. |
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Net income increased 1.9% QoQ.
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Diluted EPS were NT$0.81, up
slightly from NT$0.80 in 2Q99. |
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Net Sales: |
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Net sales in 3Q99 totaled NT$19,707
million, up 14% compared with 2Q99, as a result of higher
unit sales of 8" equivalent wafers. Unit shipment
of 8" equivalent wafers, including those outsourced
to joint ventures, grew 13% to 465K units in 3Q99.
The ASP in the New Taiwan dollar and US dollar remained
fairly stable. In US dollar terms, the quarterly ASP
increased slightly to US$1,183 per 8" equivalent
wafer compared to US$1,150 in 2Q99. The New Taiwan dollar
appreciated slightly from the weighted average rate
of NT$32.81 to NT$32.08 per US dollar during the period.
Sales breakdown by application, technology, customer
type, and geography for 3Q99 and 2Q99 are summarized
in Table 3 on the following page. For consistency, historical
numbers are changed to reflect current definition and
methodology during classification thus may vary from
those released earlier.
Table 3: Sales Breakdow
| Segment:
|
3Q99
|
2Q99
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Segment: |
3Q99 |
2Q99 |
| Application
(Unit) |
Customer Type
(Revenue) |
| Computer
|
41% |
40% |
Fabless
|
66% |
76% |
| Communication
|
33% |
25% |
IDM |
31% |
23% |
| Consumer
|
12% |
15% |
System |
3% |
1% |
| Industrial
/ Others |
3% |
7% |
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| Memory
|
11% |
13% |
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| 2001 Technology
(Unit) |
Geography (Revenue)
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| X £ 0.25
μm |
26% |
21% |
North America
|
65% |
63% |
| 0.25μm
< X £ 0.35 μm |
30% |
30% |
Asia Pacific
|
18% |
21% |
| 0.35μm
< X £ 0.80 μm |
37% |
39% |
Europe |
9% |
10% |
| 0.8��
< X |
7% |
10% |
Japan |
8% |
6% |
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Gross Margins: |
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Gross profit increased 16% to NT$8,768
in 3Q99. Gross margin was flat at 44.5% in 3Q99 as the
combined result of higher unit sales, stable ASP and
lower capacity utilization. |
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Operating Expenses: |
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Operating expenses in 3Q99 were NT$1,599
million up 19% sequentially. Operating expenses as percent
of net sales increased to 8.1% in 3Q99 from 7.8% in 2Q99. |
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Non-Operating Income / Expenses: |
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Net non-operating item had a loss of
NT$751 million versus income of NT$138 million in 2Q99.
The loss was primarily due to extraordinary loss of NT$381
million caused by July power outage and September earthquake. |
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Investment Income / Losses: |
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Investment losses increased to NT$660
million in 3Q99 compared to NT$417 million in 2Q99, primarily
as combined results of investment losses at VISC (NT$224
million in 3Q99 versus NT$99 million in 2Q99), WaferTech
(NT$427 million in 3Q99 versus NT$343 million in 2Q99),
and TASMC (NT$85 million in 3Q99). |
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Net Income: |
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Net income tax credit for 3Q99 was
NT$379 million compared to NT$108 million credit for 2Q99.
Net margin declined to 31.1% in 3Q99 from 34.9% in 2Q99
due to extraordinary items as well as increased outsource
in production. Net income increased 1.9% to NT$6,137 million
in 3Q99 from NT$6,022 million in 2Q99 and diluted EPS
grew to NT$0.81 from NT$0.80 in 2Q99. |
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Operations Highlights |
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Due to the impact of the September
earthquake, average capacity utilization rate of TSMC
based on wafer produced (or "out utilization")
slightly declined to 96% compared with 105% in the 2Q99. |
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Liquidity and Capital Resource |
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During 3Q99, TSMC generated NT$11.2
billion in net cash from operating activities. Depreciation
and amortization were NT$4.8 billion. Net cash used for
investing activities totaled NT$16.8 billion, up significantly
from NT$5.5 billion in the previous quarter. The increase
was primarily devoted for Fab 5 and 6 and investment in
TASMC. Net cash generated from financing activities was
NT$4.8 billion, mainly from increase in bank loans and
short-term credit instruments.
As of September 30, 1999, TSMC had NT$15.8 billion
of cash equivalent on hand. Liability to assets ratio
declined to 28.2% from 30.3%. Management believes that
available bank credit line and cash flows from operating
activities will be sufficient to finance current operations,
investment, and capital expenditures through at least
the next six months. Cash requirements for periods beyond
the next six months depend upon the Company's profitability,
its ability to manage working capital requirements and
its rate of growth. |
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Company Description: |
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Founded in 1987, TSMC is the first
and largest semiconductor foundry company in the world.
The Company is based in Taiwan's "Silicon Valley",
the Hsin-Chu Science-Based Industrial Park, and is dedicated
to manufacturing advanced integrated circuits, and related
services, for fabless design houses and integrated device
manufacturers (IDM). The Company operates two 6"
wafer fabs and three 8" wafer fabs offering a comprehensive
set of IC fabrication processes, including processes to
manufacture CMOS logic, mixed mode, volatile and non-volatile
memory and BiCMOS chips. In mid-1996, TSMC began construction
on the first-ever, pure-play foundry in the US, WaferTech,
in Camas, Washington, - a $1.2 billion joint venture.
Fab 6 and 7 will be located in the new Tainan Science-Based
Industrial Park in Taiwan. In 1998, TSMC has entered a
join venture agreement with Phillips to construct a foundry
operation in Singapore called SSMC. In 1999, TSMC has
acquired 30% of Acer Semiconductor Manufacturing Incorporation
and formed the TSMC-Acer foundry fab. |
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Corporate Headquarters: |
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Taiwan Semiconductor Manufacturing
Company Ltd.
No. 121, Park Avenue III, Hsin-Chu Science-Based Industrial
Park
Hsin-Chu, Taiwan, R. O. C.
Tel: 886/3/578-0221 |
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