Revenue Analysis:
Application-First quarter revenue was NT$39.50 billion, better than the revised guidance, primarily due to continued rush orders from customers especially from the mainland Chinese market. In 1Q09, demand continued to be weaker across all applications compared to 4Q08. On a sequential basis, revenues from computer, communication, and consumer applications decreased 53%, 36%, and 32%, respectively.
Technology-Revenue from 45/40nm reached 1% of total wafer sales in 1Q09. Meanwhile, revenue from 65nm and 90nm were 23% and 25% of total wafer sales, respectively. Overall, revenues from advanced technologies (0.13-micron and below) accounted for 65% of total wafer sales.
Customer-Revenues from IDM customers accounted for 23% of total wafer sales in 1Q09, lower than 28% in 4Q08, primarily due to increasing in-sourcing of those customers in the weak demand environment.
Geography-In 1Q09, revenues from customers based in North America accounted for 68% of total wafer sales, lower than 72% in 4Q08. Meanwhile, sales from customers in Asia Pacific, China, Europe, and Japan accounted for 14%, 3%, 12% and 3% of wafer sales, respectively.
II. Profit & Expense Analysis
II - 1. Gross Profit Analysis
(In NT billions) 1Q09 4Q08 1Q08
COGS 32.02 44.37 49.24
Depreciation 18.97 19.29 18.12
Other MFG Cost 13.05 25.08 31.12
Gross Profit 7.48 20.19 38.24
Gross Margin 18.9% 31.3% 43.7%
Gross Profit Analysis:
Gross margin in 1Q09 was 18.9%, down 12.4 percentage points from 4Q08, mainly driven by a sharp decline of production activities, partially balanced by cost improvement, a more favorable exchange rate, and less employee profit sharing expenses.
II - 2. Operating Expenses
(In NT billions) 1Q09 4Q08 1Q08
Total Operating Exp. 6.27 8.17 9.12
SG&A 2.54 3.34 3.85
Research & Development 3.73 4.83 5.27
Total Operating Exp. as a % of Sales 15.9% 12.7% 10.4%
Operating Expenses:
Total operating expenses for 1Q09 decreased to NT$6.27 billion, representing 15.9% of net sales, higher than 12.7% of net sales in 4Q08.
Research and development expenditures decreased by NT$1.10 billion sequentially, mainly due to lower level of employee profit sharing and less development expenses related to 40nm technologies.
SG&A expenses decreased by NT$0.80 billion from 4Q08 level. The decrease was mainly due to lower level of employee profit sharing and more stringent expense control.
II - 3. Non-Operating Items
(In NT billions) 1Q09 4Q08 1Q08
Non-Operating Inc./(Exp.) 0.35 1.41 1.87
Net Interest Income/(Exp.) 0.88 1.18 1.19
Other Non-Operating (0.53) 0.23 0.68
L-T Investments (0.81) (0.34) 0.58
SSMC (0.32) (0.07) 0.38
Others (0.49) (0.27) 0.20
Total Non-Operating Items (0.46) 1.07 2.45
Non-Operating Items:
For 1Q09, combined result from non-operating income and long-term investment losses was a net loss of NT$0.46 billion.
Non-operating income was NT$0.35 billion, lower than NT$1.41 billion in 4Q08, primarily due to less interest income, disposal and impairment losses of financial assets, and the absence of litigation compensation.
Net investment losses increased by NT$0.47 billion to NT$0.81 billion, mainly due to weaker business in VIS and SSMC.
III. Financial Condition Review
III - 1. Liquidity Analysis
(Selected Balance Sheet Items)
(In NT billions) 1Q09 4Q08 1Q08
Cash & Marketable Securities 229.79 211.45 210.31
Accounts Receivable - Trade 13.82 18.50 37.95
Inventory 14.78 14.88 21.89
Total Current Assets 268.56 252.62 281.46
Accounts Payable 10.97 14.04 22.59
Current Portion of Bonds Payable 0.00 8.00 8.00
Accrued Bonus to Employees,
Directors and Supervisors 15.64 15.37 4.37
Accrued Liabilities and Others 18.76 19.40 27.08
Total Current Liabilities 45.37 56.81 62.04
Current Ratio (x) 5.9 4.4 4.5
Net Working Capital 223.19 195.81 219.42
