Year-over-year, fourth quarter revenue decreased 31.2% while net income and diluted EPS decreased 63.9% and 62.3%, respectively. Compared to third quarter of 2008, fourth quarter results represent a 30.6% decrease in revenue, a decrease of 59.3% in net income, and a decrease of 59% in diluted EPS. All figures were prepared in accordance with R.O.C. GAAP on a consolidated basis.
Triggered by a deepening economic recession worldwide and customers' inventory adjustment, fourth quarter saw a sharp decline in the demand for semiconductors across all applications. Gross margin for the quarter was 31.3%, operating margin was 18.6%, and net margin was 19.3%.
Advanced process technologies (0.13-micron and below) accounted for 65% of wafer revenues with 90-nanometer process technology accounting for 21% and 65- nanometer reaching 27% of total wafer sales.
"The global economic recession continues to worsen. Fourth quarter end- market sell-through was much below the already conservative expectations, and consumer demand remains very weak. This has led to a rising DOI for our customers, who continue to pare their inventories aggressively, resulting in a further significant cut back of wafer demand," said Lora Ho, VP and Chief Financial Officer of TSMC. "Based on our current business outlook, management expects overall performance for first quarter 2009 to be as follows":
-- Revenue is expected to be between NT$32 billion and NT$35 billion;
-- Gross profit margin is expected to be between 1% and 5%;
-- Operating profit margin is expected to be between -19% and -15%.
Conference Call & Webcast Notice:
TSMC's quarterly review conference call will be held at 8 a.m. Eastern Time (9 p.m. Taiwan Time) on Thursday, January 22, 2009. The conference call will also be webcast live on the Internet. Investors wishing to access the live webcast should visit TSMC's web site at http://www.tsmc.com at least 15 minutes prior to the broadcast. Instructions will be provided on the web site to facilitate the download and installation of necessary audio applications. Investors without Internet access may listen to the conference call, in listen-only mode, by dialing 1-617-801-9714 in the U.S., 852-3002-1672 in Hong Kong, and 44-207-365-8426 in the U.K. (Password: TSMC). An archived version of the webcast will be available on TSMC's web site for six months following the Company's quarterly review conference call and webcast.
Profile
TSMC is the world's largest dedicated semiconductor foundry, providing the industry's leading process technology and the foundry's largest portfolio of process-proven libraries, IP, design tools and reference flows. The Company's total managed capacity in 2008 is to exceed nine million (8-inch equivalent) wafers, including capacity from two advanced 12-inch Gigafabs, four eight-inch fabs, one six-inch fab, as well as TSMC's wholly owned subsidiaries, WaferTech and TSMC (Shanghai), and its joint venture fab, SSMC. TSMC is the first foundry to provide 40nm production capabilities. Its corporate headquarters are in Hsinchu, Taiwan. For more information about TSMC please see http://www.tsmc.com .
-- Management Report and Tables Follow --
TSMC 4Q08 Quarterly Management Report January 22, 2009
Topics in This Report
-- Revenue Analysis
-- Profit & Expense Analysis
-- Financial Condition Review
-- Cash Flow
-- CapEx & Capacity
-- Recap of Recent Important Events & Announcements
Operating Results Review:
Summary:
(Amounts are on consolidated basis
and are in NT billions except
otherwise noted) 4Q08 3Q08 4Q07 2008 2007
EPS (NT$ per common share) 0.48 1.18 1.29 3.83 4.06
(US$ per ADR unit) 0.07 0.19 0.20 0.61 0.62
Consolidated Net Sales 64.56 92.98 93.86 333.16 322.63
Gross Profit 20.19 43.09 44.84 141.75 142.35
Gross Margin 31.3% 46.3% 47.8% 42.5% 44.1%
Operating Expense (8.17) (10.18) (8.08) (37.31) (30.63)
Operating Income 12.02 32.92 36.76 104.44 111.72
Operating Margin 18.6% 35.4% 39.2% 31.4% 34.6%
Non-Operating Items 1.07 1.51 2.57 7.04 9.92
Net Income 12.45 30.57 34.48 99.93 109.18
Net Profit Margin 19.3% 32.9% 36.7% 30.0% 33.8%
Wafer Shipment (kpcs 8 inch-equiv.) 1,532 2,411 2,357 8,467 8,005
Note: Total outstanding shares were 25,625mn units at 12/31/08
Financial Highlights:
Fourth Quarter 2008
-- Consolidated net sales were NT$64.6 billion, declining 30.6% quarter-
over-quarter and declining 31.2% year-over-year;
-- Gross margin was 31.3%, a decrease by 15.0 percentage points from 3Q08.
Operating margin was 18.6%, declined by 16.8 percentage points from
3Q08. On a year-over-year basis, gross margin and operating margin
declined by 16.5 and 20.6 percentage points respectively, although 4Q07
results did not include the expensing of employee profit sharing;
-- EPS was NT$0.48, with net profit margin of 19.3%
Full Year 2008
-- Consolidated net sales were NT$333.2 billion, up 3.3% from 2007;
-- Gross margin and operating margin were 42.5% and 31.4%, declining 1.6
and 3.2 percentage points from 2007 respectively. Notice however, 2007
results did not include expensing of employee profit sharing;
-- Earnings per share was NT$3.83, with net profit margin of 30.0%
I. Revenue Analysis
I. Wafer Sales Analysis
By Application 4Q08 3Q08 4Q07
Computer 32% 33% 35%
Communication 43% 41% 42%
Consumer 19% 20% 15%
Industrial/Others 6% 6% 8%
By Technology 4Q08 3Q08 4Q07
65nm and below 27% 25% 10%
90nm 21% 26% 29%
0.11/0.13um 17% 15% 20%
0.15/0.18um 22% 22% 27%
0.25/0.35um 10% 9% 10%
0.50um+ 3% 3% 4%
By Customer Type 4Q08 3Q08 4Q07
Fabless/System 72% 70% 68%
IDM 28% 30% 32%
By Geography 4Q08 3Q08 4Q07
North America 73% 74% 79%
Asia Pacific 13% 13% 11%
Europe 11% 10% 8%
Japan 3% 3% 2%
