In 1997 TSMC celebrated its tenth anniversary. It was a fruitful year, filled with remarkable achievements. Sales climbed by 11.5% to hit NT$43.9 billion, a new company record. Profits were NT$17.9 billion. Two new 8-inch wafer fabs, Fab IV and Fab V entered volume production, together making a significant contribution to the company's total output capacity. As a result of our outstanding business performance and an excellent corporate image, our American Depository Shares (ADSs) representing TSMC's Common Shares were listed on the New York Stock Exchange (NYSE) in October. TSMC was the first and is still the only Taiwan company listed on the NYSE. While capping ten successful years of operation with these achievements,at the same time we were energetically preparing ourselves for the challenges of the next ten years. One of the plans we announced in 1997 was to invest more than NT$400 billion over the next ten years to build six advanced fabs in Tainan Science-Based Industrial Park.
Total output at TSMC expanded by a very strong 40% last year, from 844,000 8-inch equivalent wafers in 1996, to 1.19 million wafers in 1997. During 1997, Fab III and Fab IV registered steady growth in output capacity each month. Fab V began volume production in the fourth quarter, months ahead of schedule, and in July of 1997 we broke ground for Fab VI in Tainan Science-Based Industrial Park. Meanwhile, construction of our joint-venture fab in the United States, WaferTech, is also moving full steam ahead. We are on target to begin scheduled volume production at this plant in mid-1998.
From left to right:
Che-Chia Wei, VP
Yen-Chun Huang, VP
In 1997 TSMC manufactured for its customers many new products using 0.35um process technology, and volume production using 0.3um technology commenced near the end of the year. Meanwhile, TSMC also completed development of 0.25um process technology. Volume production of this is expected to begin early in 1998. Recognizing the potential market for various embedded technologies, we formed special project teams to develop embedded Flash memory, DRAM and SRAM.
As our industry moves into its next major evolutionary phase, 12-inch wafer technology, TSMC is the only Taiwan company that has joined SEMATECH to participate in the I300I project along with other world leaders in the semiconductor industry. All these efforts demonstrate our commitment to providing TSMC customers with the earliest possible access to the latest technology.
TSMC's customer base remained solid around the globe in 1997. U.S. companies purchased 42% of TSMC's total output. The domestic market accounted for 26%, Europe-based companies 8%, Japanese companies 11%, and other Asian companies 13%. To improve service for our Japanese customers and to further develop business in this fast-growing market, in October of 1997 we established TSMC--Japan.
Management Team Building
The IC industry has no national boundaries. Since TSMC was founded, we have always aimed at the world market. We have worked to build sustainable competitive advantages and have maintained our leading position in the IC foundry market. As a globalized company, we recruit talented professionals regardless of their nationality. They are experts in the semiconductor field as well as other management fields, and most importantly, they share a common vision with the company. In the past year, we have recruited several vice presidents, each with expertise and experience in specific areas. These senior officials further solidify our already strong management team to lead the company to the future.
From left to right:
Rick Tsai, EVP
Ping Yang, VP
Steve Tso, SVP
Jyan-Bang Chen, VP
Shang-Yi Chiang, VP
In 1996 we formulated the company's vision of the Virtual Fab and took action immediately. Our strategy is to develop long-term competitive advantages by strengthening the bond between TSMC and our customers. We will continue to advance in this direction through the coming years.
Although the overall IC industry is expected to register a growth of 10% or less in 1998, growth of the IC foundry market is predicted to surpass that of the industry as a whole. However, TSMC's success as the pioneer of the IC foundry industry has served as a model for many new entrants to the market, and as a result, competition has increased over the last few years. Facing another challenging year in 1998, we are confident that our Virtual Fab strategy will enable us to provide the best available service to our customers and to maintain our number one position in the IC foundry industry.
Finally I would like to express my deepest gratitude to all TSMC customers, shareholders, and employees for your continued support and dedication.