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1997 Fourth
Quarter Financial Reports |
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Taiwan Semiconductor Manufacturing Company
Ltd. Announces
Fourth Quarter and 12-month Results for
the Period Ended
December 31, 1997 |
| Hsin-Chu, Taiwan, R. O. C., March 4th, 1998:
Taiwan Semiconductor Manufacturing Company Ltd. (TAIEX: 2330,
NYSE: TSM), ("TSMC" or "the Company") the
world's largest dedicated semiconductor foundry company, announced
today the results of its operations for the fourth quarter and
12 months ended December 31st, 1997. All figures were prepared
in accordance with generally accepted accounting principles
in Taiwan. All figures are expressed in millions. |
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| 4Q 97 Financial Highlights |
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Net sales increased 86.4%
to NT$15,331 million. |
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Operating income and net income for
the period increased 99.9% to NT$6,124 million and 99.9%
to NT$6,756 million, respectively. |
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Earnings per share was NT$1.66 for
the fourth quarter in 1997, an increase of 30.0% compared
with NT$1.27 reported for the same period of 1996. |
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| FOURTH QUARTER RESULTS |
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Net Income: |
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Net income for the quarter ended December
31, 1997 increased 99.9% to NT$6,756, from NT$3,380 reported
for the same period of 1996. This significant increase
in net income was achieved by the strong sales activity,
efficient cost controls and a higher tax credit for the
quarter. On a per share basis, net income increased 30.0%
to NT$1.66 during the fourth quarter of 1997 from NT$1.27
reported for the same quarter of the previous year. Total
shares outstanding increased to 4,081,300,000 from 2,654,200,000
year over year due to a stock dividend of 1,327,100,000
shares (at the rate of NT$5 per share) and employee profit
sharing of 100,000,000 shares, both of which became effective
as of June 18, 1997. |
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Net Sales: |
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Unit sales of the 6" equivalent
wafer increased by 83.4% to 639.8K units during the fourth
quarter of 1997 from 348.4K units reported for the same
period of the previous year. This strong demand for foundry
was largely due to a recovery in the global semiconductor
industry, which began during the third quarter of 1997.
The industry had experienced a down cycle from the third
quarter of 1996 through the second quarter of 1997, which
helped the quarter-over-quarter comparison for the fourth
quarter of 1997. The ASP (average selling price) also
increased marginally. Both of these factors contributed
positively to the 86.4% growth in net sales for the period. |
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Cost of Goods Sold/Gross Profit: |
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Cost of goods sold for the quarter
increased 71%, less than the 86.4% growth in net sales,
contributing to the gross profit increase of 102.3% for
the fourth quarter of 1997. Gross profit was helped by
the higher capacity utilization. The capacity utilization
rate was 108% in the fourth quarter of 1997 compared with
85% during the fourth quarter of 1996. |
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Operating Expenses: |
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General and administrative expenses
declined 4% in the fourth quarter of 1997 as a result
of the Company's cost-control efforts. Selling expenses
increased due to the Company's strategy to strengthen
marketing by adding more sales personnel, reorganizing
the marketing department and enhancing the efficient flow
of sales information. Research and development expenses
increased by 118% in the fourth quarter of 1997, due to
the increased efforts in developing the 0.25 micron and
0.18 micron process technologies. TSMC is determined to
be a leader in the leading-edge 0.25 and 0.18 micron technologies.
Going forward, the Company expects to maintain a similar
level of research and development expenses. |
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Non-Recurring Items: |
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Interest income was lower for the fourth
quarter of 1997 due to the lower level of cash balance.
This increase in non-operating expense is mainly due to
an issuance of European Convertible Bond (ECB) with accrual
interest expense of approximately NT$200 million for the
quarter. Investment expenses associated with WaferTech
(57.23% ownership) and Vanguard International Semiconductor
(VIS, 27.11% ownership) was NT$143 million combined for
the period. Gains/losses on foreign exchange fluctuations
was insignificant. |
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Income Tax Credit: |
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Income tax credit was NT$790 million
in the fourth quarter of 1997 compared with NT$72 million
a year ago due to an NT$720 million tax credit provision
accrued in the fourth quarter of 1996. |
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Capacity Expansion: |
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Total fabrication capacity in 6"
equivalent wafer increased by 46.8% to 631.8K units in
the fourth quarter of 1997 compared to 430.3K units in
the same period of the previous year. 8" wafer production
in Fab 5 began in October 1997 in Hsin-Chu, Taiwan. |
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Initial Public Offering: |
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TSMC launched 24 million shares of
American Depositary Receipts (ADRs) on October 8th, 1997
under the symbol "TSM" and became the first
Taiwanese company to list on the NYSE. Philips Electronics
N. V. was a selling party, releasing 120 million of its
TSMC common shares. Philips's ownership in TSMC after
the offering is approximately 28.6%. The Chicago Board
of Exchange and the American Stock Exchange began trading
options on TSMC's ADRs on January 15, 1998. |
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| 12-month Financial Highlights |
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Net sales increased 11.5%
to NT$43,936 million. |
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Operating income decreased 15.1% to
NT$15,490 million. |
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Net income decreased 7.4% to NT$17,960
million. |
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Earnings per share were NT$4.40, a
7.5% decline from NT$4.75 a year ago in constant shares
outstanding. |
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| 12 MONTH RESULTS |
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Net Income: |
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Net income for the year decreased 7.4%
to NT$17,960 million in the fourth quarter 1997 from NT$19,401
million in the same period of 1996. This decline was largely
due to: (1) a decline in ASP during a down cycle in the
industry from the third quarter of 1996 through the second
quarter of 1997, (2) higher sales and marketing and research
and development expenses, and (3) higher interest expenses
from additional debt financing. |
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Net Sales: |
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Unit sales of the 6" equivalent
wafer increased by 40.2 % to 2,037K units in the year
1997 from 1,453K units in the year 1996. ASP, however,
decreased 22.4% in 1997 compared to a year ago due to
the slowdown in the industry. As a result, net sales in
1997 increased rather moderately by 11.5%. |
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Cost of Goods Sold/Gross Profit: |
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Cost of goods sold increased only by
31.1% while unit sales increased by 40.2%, mainly thanks
to higher capacity utilization rate, which was 102% for
the year 1997 compared with 96% in 1996. Gross profit,
however, decreased by 4.0% for the year 1997 as net sales
increased rather moderately by 11.5% for the reason mentioned
above. |
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Operating Expenses: |
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General and administrative expenses
were flat in 1997 compared with a year ago, due to the
Company's cost-control efforts. Selling expenses increased
132.3% due to the Company's strategy to strengthen marketing
by adding more sales personnel, reorganizing the marketing
department and enhancing the efficient flow of sales information.
Research and development expenses increased 67.7% to NT$2,505M,
at 5.7% of the net sales for 1997. In order to continue
its commitment to technological advancement, the Company
expects to maintain its R&D investment at around 4-5%
of net sales going forward. |
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Non-Recurring Items: |
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Interest income was lower during 1997
due to the lower level of cash balance. Investment expenses
for 1997 were approximately NT$28 million compared to
an investment income of approximately NT$136 million for
1996. Net foreign exchange loss was NT$188 million in
1997 compared to net foreign exchange gain of NT$107 million
in 1996. |
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Income Tax Credit: |
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Income tax credit was NT$2,443 million
in 1997 compared with NT$428 million a year ago. This
increase was due to: (1) a higher tax credit recognized
on a higher capital expenditure and investment, and (2)
a higher tax credit adjustment from the previous year. |
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Capacity Expansion: |
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Total fabrication capacity in 6"
equivalent wafer increased by 35.9% to 2,131K units in
1997 compared with 1,568K units in 1996. TSMC expects
to maintain its annual capacity expansion rate at approximately
27% CAGR for the next 5 years. The Company spent NT$28
billion (US$1 billion) in capacity expansion during 1997
and plans to spend NT$40 billion (US$1.3 billion) during
1998. |
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Company Description: |
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TSMC is the world's largest dedicated
integrated circuit ("IC") foundry and offers
a comprehensive set of IC fabrication processes, including
processes to manufacture CMOS logic, mixed-mode, volatile
and non-volatile memory and BiCMOS chips. Currently, TSMC
operates two 6" wafer fabs (Fab 1 and 2), and three
8" wafer fabs (Fab 3, 4 and 5), all located in Hsin-Chu,
Taiwan. In mid-1996, TSMC commenced construction on its
first U.S. foundry, WaferTech, in Camas, Washington, a
$1.2 billion joint venture with Altera, Analog Devices
and Integrated Silicon Solutions, Inc. Production at WaferTech
is scheduled to commence in 1998. |
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Corporate Headquarters: |
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Taiwan Semiconductor Manufacturing
Company Ltd.
Park Avenue III, Hsin-Chu Science-Based Industrial
Park
Hsin-Chu, Taiwan, R. O. C.
Tel: 886/3/578-0221
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