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Taiwan Semiconductor Manufacturing Company, Ltd. Announces Third-Quarter Earnings for the Period Ended September 30, 2001
HSIN-CHU, Taiwan, Oct. 26 /PRNewswire/ -- Taiwan Semiconductor Manufacturing Company, Ltd. (NYSE: TSM; TAIEX: 2330) (``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, 2001. All figures were prepared in accordance with generally accepted accounting principles in Taiwan.
Main Topics Discussed in This Release
-- 3Q01 Results: Year-Ago Comparison
-- 3Q01 Results: Sequential Comparison
-- 2001 Capital Expenditure and Capacity
-- Guidance and Outlook
-- Conference Call Information
3Q01 Results: Year-Ago Comparison Highlights
-- Net sales declined 43% to NT$26,940 million.
-- Quarterly sales(1) of 8-inch equivalent wafers decreased 52% to 448K
units.
-- Capacity utilization decreased to 41% from 107% due to softer business
conditions.
-- Operating income declined 90% to NT$1,942 million.
-- Net income declined 94% to NT$1,237 million.
-- Diluted earnings per common share (EPS) decreased to NT$0.06 from
NT$1.23, or US$0.008 per ADR versus US$0.20 per ADR.(2)
Net Sales:
Net sales in the third quarter of 2001 totaled NT$26,940 million (including NT$2,345 million contributed from affiliates), down 43% from NT$47,491 million (including NT$5,943 million contributed from affiliates) in the year-ago period, primarily reflecting lower unit sales offset in part by a higher average selling price (ASP). Unit shipments of 8-inch equivalent wafers, including sales by affiliates, declined 52% to 448K units in 3Q01 compared with 942K in 3Q00.
Table 1 summarizes TSMC's 3Q01 and 3Q00 sales by application, technology, customer type and geography.
Table 1: Sales Breakdown Based on Revenue (Including Affiliates)(3)
Segment: 3Q01 3Q00 Segment: 3Q01 3Q00
Application(3) (Revenue) (Unit) Customer Type (Revenue) (Revenue)
Computer 49% 35% Fabless 67% 65%
Communication 16% 33% IDM 32% 34%
Consumer 25% 17% System 1% 1%
Industrial/
Others 4% 3%
Memory 6% 12%
Technology(3) (Revenue) (Unit) Geography (Revenue) (Revenue)
X < or =
0.15 u 15% -% North America 69% 63%
0.15 u < 24% 5% Asia Pacific 16% 21%
X <
or = 0.18 u
0.18 u < 31% 29% Europe 3% 7%
X <
or = 0.25 u
0.25 u < 16% 38% Japan 12% 9%
X <
or = 0.35 u
X > or = 14% 28%
0.50 u
Gross Profit:
Gross profit declined 69% to NT$6,816 million in the third quarter from NT$22,345 million a year ago. The decrease versus the year-ago quarter is mainly due to the combined impact of several factors: reduced shipment volumes, lower average capacity utilization (41% in 3Q01 versus 107% in 3Q00), offset in part by a higher ASP. As a percentage of total sales, TSMC's gross margin declined to 25% in 3Q01 from 47% in 3Q00. Excluding the impact of affiliates on the Company's gross margin, however, the gross margin for TSMC's own production declined to 27% in 3Q01 from 53% in 3Q00.
Operating Expenses:
Operating expenses in 3Q01 increased 31% to NT$4,874 million compared with NT$3,730 million in 3Q00, principally due to higher R&D expenditures for advanced technology and start-up expenses associated with Fab 12. R&D expenditure in 3Q01 increased by NT$1.2 billion due to research efforts in 300mm, 0.15um, 0.13um, 0.10um and copper low-k process technology. As a percentage of total sales, operating expenses rose to 18% in 3Q01 from 8% in 3Q00.
Net Non-Operating Income/Expenses: Net non-operating items resulted in a loss of NT$216 million in 3Q01 compared with earnings of NT$328 million in 3Q00. The decrease versus the year-ago period mainly reflects a reduction in receipts of insurance claim proceeds, increased foreign exchange loss, lower interest income, and a loss on sale of stock investments.
Investment Income/Loss:
Investment losses of NT$1,926 million in 3Q01 compared with investment income of NT$572 million in the year-ago period. The variance between the two reporting periods is primarily due to losses from WaferTech (NT$1,527 million in 3Q01 versus a gain of NT$252 million in 3Q00) and Vanguard (NT$677 million in 3Q01 versus a gain of NT$379 million in 3Q00).
Net Income:
Net income decreased 94% to NT$1,237 million in the latest quarter from NT$20,058 million in the year-ago period. Diluted earnings per share declined to NT$0.06 in 3Q01 from NT$1.23 in 3Q00. Diluted earnings per ADR declined to US$0.008 from US$0.20 per ADR.
3Q01 Results: Sequential Comparison Highlights
-- Net sales increased 2%.
-- Wafer shipments remained flat.
-- Operating income increased 583%.
-- Net income increased 296%.
-- Diluted earnings per common share (EPS) of NT$0.06 compared with
diluted EPS of NT$0.01 in 2Q01, or US$0.008 per ADR versus US$0.002
per ADR.
Net Sales:
Net sales in 3Q01 totaled NT$26,940 million (including NT$2,345 million contributed from affiliates), up 2% from NT$26,298 million (including NT$1,828 million contributed from affiliates) in 2Q01, primarily reflecting a higher average selling price in NT dollars. Including contributions from affiliates, unit sales of 8-inch equivalent wafers totaled 448K units in 3Q01, essentially unchanged from 450K units in 2Q01.
Table 2 summarizes TSMC's 3Q01 and 2Q01 sales by application, technology, customer type and geography.
Table 2: Sales Breakdown Based on Revenue (Including Affiliates)(3)
Segment: 3Q01 2Q01 Segment: 3Q01 2Q01
Application(3) (Revenue)(Revenue) Customer Type (Revenue) (Revenue)
Computer 49% 41% Fabless 67% 63%
Communication 16% 24% IDM 32% 37%
Consumer 25% 17% System 1% 0%
Industrial/
Others 4% 6%
Memory 6% 12%
Technology(3) (Revenue) (Revenue) Geography (Revenue) (Revenue)
X < or = 15% 4% North America 69% 63%
0.15 u
0.15 u < 24% 22% Asia Pacific 16% 18%
X <
or = 0.18 u
0.18 u < 31% 39% Europe 3% 7%
X <
or = 0.25 u
0.25 u < 16% 20% Japan 12% 12%
X <
or = 0.35 u
X > or = 14% 15%
0.50 u
Gross Profit:
Gross profit increased 36% to NT$6,816 million in 3Q01 from NT$4,999 million in 2Q01, mainly due to more favorable product mix, less DRAM sales (licensed DRAM shipments were 1% of total wafers shipped in 3Q01, down from 8% in 2Q01), and the higher average selling price in NT dollars, offset in part by lower capacity utilization (41% versus 44% in the previous quarter). As a percentage of revenue, gross margin increased to 25% in 3Q01 from 19% in 2Q01. Excluding the impact of affiliates, TSMC's gross margin was 27% in 3Q01 versus 20% in 2Q01.
Operating Expenses:
Operating expenses rose 3% to NT$4,874 million in 3Q01 from NT$4,714 million in 2Q01 due to start-up expenses associated with Fab 12 and increased R&D expenditures for advanced technology. Start-up expenses associated with Fab 12 increased by NT$298 million. R&D expenditure in 2Q01 increased by NT$219 million due to research efforts in 300mm, 0.13um, 0.10um and copper low-k process technology. As a percentage of total sales, operating expenses of 18% in 3Q01 were unchanged from 18% in 2Q01.
Net Non-Operating Income/Expenses:
Net non-operating items resulted in a loss of NT$216 million in 3Q01 compared with a gain of NT$80 million in 2Q01. The decrease versus the prior period mainly reflects lower interest income, increased foreign exchange loss, and a loss on sale of stock investments offset in part by increased receipts of insurance claim proceeds.
Investment Income/Losses:
Investment losses of NT$1,926 million in 3Q01 compare with investment losses of NT$1,233 million in 2Q01. The variance between the two reporting periods is primarily due to increased losses in Vanguard (a loss of NT$677 million in 3Q01 versus a loss of NT$450 million in 2Q01) and WaferTech (a loss of NT$1,527 million in 3Q01 versus a loss of NT$1,051 million in 2Q01).
Net Income:
Net income increased 296% to NT$1,237 million in 3Q01 from NT$312 million in 2Q01. Diluted earnings per common share increased to NT$0.06 from NT$0.01 in the previous quarter. Diluted earnings per ADR, meanwhile, increased to US$0.008 from US$0.002.
Liquidity and Capital Resources:
During 3Q01, TSMC generated NT$14.3 billion in cash from operating activities. Depreciation and amortization amounted to NT$12.3 billion. Cash used in investing activities totaled NT$22.3 billion for 3Q01, mainly for advanced technology. As of September 30, 2001, TSMC had NT$30.7 billion of cash and equivalents on hand, a decrease of NT$7.9 billion during the quarter. TSMC's debt-to-assets ratio was 18% at September 30, 2001, versus 20% on June 30, 2001.
Operations Highlights by TSMC:
Major announcements during 3Q01 and following included:
-- TSMC Fab 12 Announces Delivery of 0.13-Micron Devices on 300mm Wafers
with Production-Worthy Yields (10/22)
-- TSMC to Set Up Liaison Office in Shanghai, China (10/05)
-- TSMC and Compaq Japan Initiate the B2B service "TSMC-Direct" in Japan
(8/21)
-- TSMC Hosts International SEMATECH's Industry Executive Forum in Taiwan
(8/09)
-- TSMC Appoints Dr. F.C. Tseng Deputy Chief Executive Officer;
Dr. Rick Tsai Named President & Chief Operating Officer (08/07)
-- Payment Day of Stock Dividend for NYSE-Listed ADSs (July 27) and
Common Shares (July 23) (07/19)
-- TSMC Doubles CyberShuttles for 2001; Second-Half Launches Available
(07/10)
-- TSMC Appoints Dr. Kenneth Kin as Senior Vice President of Worldwide
Marketing and Sales (07/02)
Please visit TSMC's Web site (http://www.tsmc.com) for details about these and other announcements.
Capital Commitment and Capacity
Highlights
-- 2001 CAPEX: US$2.2 billion.
-- 2001 Capacity: 4.379 million 8-inch equivalent wafers.
Capital Commitment and Capacity in 2001:
TSMC 2001 capital expenditures remain unchanged at US$2.2 billion. More than 50% of this year's capital commitment will be for 12-inch wafer fabs, which will contribute towards capacity in 2002 and beyond.
Total installed capacity managed by TSMC is expected to reach approximately 4.379 million 8-inch equivalent wafers in 2001.
Details regarding TSMC's capacity plan for 2001 are summarized in Table 3.
Table 3: 2001 Capacity Managed by TSMC
Fab 2001 Estimate
Unit in K (wafer size) Annual (Monthly(4))
Fab 1 (6") 236 (20)
Fab 2 (6") 939 (78)
Fab 3 (8") 548 (45)
Fab 4 (8") 440 (35)
Fab 5 (8") 468 (39)
Fab 6 (8") 455 (40)
Fab 7 (8") 537 (45)
Fab 8 (8") 620 (53)
Fab12 (12") 3 (2)
WaferTech (8") 328 (27)
VIS (8") 272 (23)
SSMC (8") 40 (5)
Total Capacity (8" Equiv.)(5) 4,379 372
Annual Growth Rate 28% 5%
Guidance and Outlook
-- We reiterate our view that business bottomed out in 2Q01. We have
seen gradual recovery in 3Q01, and we expect the recovery
momentum to continue into 4Q01
-- Despite continuing weakness in economic and industry conditions, TSMC
has outperformed many companies in the semiconductor industry during
3Q01 and expects to outperform in 4Q01 as well.
-- We expect that our business in computer and communication applications
will stage a stronger recovery than that in consumer applications in
4Q01. As yet, there is no sign that the memory and industrial
applications are about to rebound.
-- Based upon the current business outlook, guidance for 4Q01 is as
follows:
-- We believe that the improvement in TSMC revenues and profitability
will continue into 4Q01.
-- We expect our 4Q01 revenues to grow by more than 15%.
-- During 4Q01, both operating and net income are likely to be more
than double that of 3Q01.
-- We expect our utilization rate in 4Q01 to be higher than that of
3Q01 by a few percentage points. This is driven primarily by
strong demand in our advanced process technologies. We expect the
demand for 0.18 / 0.15um to exceed 80% of customer-qualified
capacity in 4Q01.
-- We are closely reviewing our 2002 capital expenditure details. At
present, we expect capital expenditures next year would be
significantly lower than in 2001. |
