Taiwan Semiconductor Reports 20% Increase in Sequential EPS

/PRNewswire/ -- HSIN-CHU, Taiwan, Oct. 26 /Xinhua-PRNewswire-FirstCall/ -- Taiwan Semiconductor Manufacturing Company, Ltd. today announced revenue and net income for the quarter ended September 30, 2004. Third quarter revenue reached NT$69.74 billion while net income and fully diluted earnings per share came to NT$27.93 billion and NT$1.20 per share (US$0.18 per ADS unit), respectively.

On a sequential basis, third quarter results represent a 7.5% increase in revenue, a 19.3% increase in net income and a 19.5% increase in fully diluted EPS. Year-over-year comparison shows the increases in revenue, net income, and fully diluted EPS to be 27%, 84%, and 85%, respectively. All figures were prepared in accordance with R.O.C. GAAP on an unconsolidated basis.

The 7.5% increase in third quarter revenue mainly resulted from a 4.0% increase in wafer shipments and a 1.4% increase in wafer average selling price (ASP), further helped by a 1.8% weaker local currency to US dollar exchange rate. Gross margin for the third quarter rose to 46.1%, another significant increase sequentially from the previous quarter's 43.4%, due to higher levels of wafer output, continuing improvement on 12-inch wafer yield, and a better product mix. Revenues from advanced process technologies (0.13-micron and below) reached 30 percent of total wafer sales. Net margin for the quarter rose to 40.1% from 36.1% in the previous quarter.

"Building upon five consecutive quarters of strong financial performance, TSMC has delivered another set of record-breaking financial results for both the top-line and the bottom-line," said Lora Ho, VP and Chief Financial Officer of TSMC. "However, there has been some near-term softening in customer demand," noted Ho, "and based on the current business outlook, management's expectations for fourth quarter 2004 performance are the following":

  -- Wafer shipments to decrease by a single digit percentage point
     sequentially;
  -- Overall utilization rate to be at mid-80s percentage level;
  -- Gross profit margin to be in the range of 42% to 44%;
  -- ASP to remain at about the same level sequentially.

  Conference Call & Webcast Notice:

TSMC's quarterly review conference call will be held at 8 a.m. Eastern Time (8 p.m. Taiwan Time) on Thursday, October 26, 2004. 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 1-303-262-2190 in the U.S. and 852-3009-3050 in other locations (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 (TAIEX: 2330, NYSE: TSM) is the world's largest dedicated semiconductor foundry, providing the industry's leading manufacturing capacity, process technology, library and IP options, and other leading-edge foundry services. TSMC currently operates two twelve-inch wafer fabs, five eight-inch wafer fabs and one six-inch fab. The Company also has substantial capacity commitments at two wholly owned subsidiaries, WaferTech in the U.S. and TSMC (Shanghai) Company, Ltd. in China, and at a joint-venture fab, SSMC, in Singapore. TSMC's first 300mm wafer fab (Fab 12), the first of its kind in Taiwan, commenced commercial production in January 2002. TSMC's corporate headquarters are in Hsin-Chu, Taiwan. More information about TSMC is available through the World Wide Web at http://www.tsmc.com/ .

Safe Harbor Notice

The statements included in this press release that are not historical in nature are "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. TSMC cautions readers that forward-looking statements are subject to significant risks and uncertainties and are based on TSMC's current expectations. Actual results may differ materially from those contained in such forward-looking statements for a variety of reasons including, among others, risks associated with cyclicality and market conditions in the semiconductor industry; demand and supply for TSMC's foundry manufacturing capacity in particular and for foundry manufacturing capacity in general; intense competition; the failure of one or more significant customers to continue to place the same level of orders with us; TSMC's ability to remain a technological leader in the semiconductor industry; TSMC's ability to manage its capacity; TSMC's ability to obtain, preserve and defend its intellectual property rights; natural disasters and other unexpected events which may disrupt production; and exchange rate fluctuations. Additional information as to these and other risk factors that may cause TSMC's actual results to differ materially from TSMC's forward-looking statements may be found in TSMC's Annual Report on Form 20-F, filed with the United States Securities and Exchange Commission (the "SEC") on May 28, 2004 and such other documents as TSMC may file with, or submit to, the SEC from time to time. Except as required by law, we undertake no obligation to update any forward-looking statement, whether as a result of new information, future events, or otherwise.

  Operating Results Review:

  Summary:

  (Amount in NT$ billion
   except noted otherwise)           3Q04    2Q04   3Q03      QoQ      YoY

  EPS (NT$ per com. shr.)            1.20    1.00   0.65    19.5 %   84.6 %
         (US$ per ADR unit)          0.18    0.15   0.09

  Net Sales                         69.74   64.87  54.88     7.5 %   27.1 %
  Gross Profit                      32.14   28.14  21.45    14.2 %   49.9 %
  Operating Expense                 (6.02)  (6.01) (4.96)    0.2 %   21.4 %
  Non-Operating Items                2.01    0.99   0.22   103.5 %  808.7 %
  Net Income                        27.93   23.41  15.17    19.3 %   84.1 %

  Wafers Shipped (kpcs 8
  inch-equiv.)                      1,333   1,282    992     4.0 %   34.4 %
  Capacity Utilization                103 %   106 %   98 %  -2.2 %    5.6 %

  Net Profit Margin                  40.1 %  36.1 % 27.6 %


  Remarks:

The third quarter EPS of NT$1.20 represents a 19.5% increase compared with 2Q04. The unconsolidated operating results of 3Q04 are summarized below:

Net sales increased 7.5% to NT$69.7 billion compared with NT$64.9 billion in the second quarter due mainly to a 4.0% increase in wafer shipments and a 1.4% increase in wafer average selling price (ASP), further helped by a 1.8% weaker local currency to US dollar exchange rate.

Gross profit improved to NT$32.1 billion, representing a 14.2% increase from the previous quarter. Gross margin increased to 46.1% from 43.4% in 2Q04 driven by higher levels of wafer output, continuing improvement on 12-inch wafer yield, and a better product mix.

Operating expenses remained relatively flat at NT$6.0 billion.

Combined non-operating income and long-term investments' gains more than doubled to NT$2.0 billion over the previous quarter. This quarter's significant gain was due mainly to higher returns earned from short-term money market investments, a gain from foreign currency translation, higher royalty income received, and an improved operating performance by TSMC subsidiary/affiliates.

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