TSMC's average selling price in U.S. dollars declined 7% versus 4Q02, reflecting weaker pricing power amid general market softness, partly offset by a more favorable product mix.
(To view the ASP Trend, please go to http://www.tsmc.com.tw/chinese/tsmcinfo/invest_01.htm ) Gross Profit Analysis:
Gross profit declined NT$296 million to NT$10.386 billion. Gross margin of 26.4% in the quarter was essentially flat with 26% in 4Q02, as efficiencies associated with a higher level of wafer output helped to neutralize the negative impact of lower ASPs.
If wafers manufactured by TSMC affiliates were excluded, the gross margin from TSMC's manufacturing activities (on a stand-alone basis) would have been 29% compared with 28% in the previous quarter.
Gross Profit Analysis Comparisons (Amount: NT$ Bn) 1Q03 4Q02 1Q02 QoQ YoY COGS 28.9 30.5 23.8 (5%) 22% Depreciation 13.7 13.3 11.9 3% 15% Other MFG Cost 15.2 17.2 11.9 (12%) 28% Gross Profit 10.4 10.7 12.0 (3%) (14%) Gross Margin - TSMC+Aff 26% 26% 34% - TSMC alone 29% 28% 37% Utilization Rate:
TSMC revised its capacity utilization rate formula in the latest quarter to focus on the ratio of commercial wafer output to rated capacity in a given fiscal period. The revised formula excludes engineering wafer output in computing capacity utilization. The resulting utilization rate is a closer reflection of commercial activities in a given fiscal period. Based on the adjusted formula, capacity utilization of 67% in 1Q03 was 1% less than it would have been had the formula remained unchanged. The sequential improvement reflects a higher level of shipments in conjunction with a 4% reduction in overall capacity, almost entirely related to Vanguard. (See Table 2 on Page 6, "Capacity Managed by TSMC," and discussions below.)
(To view the Utilization Rate Trend, please go to http://www.tsmc.com.tw/chinese/tsmcinfo/invest_02.htm ) Operating Expenses:
Operating expenses declined 17% sequentially, largely due to lower R&D expenditures following the conclusion of various projects in the previous quarter. This was offset in part by higher SG&A expenses largely relating to adjustments in provisions for receivables.
Operating Expenses Analysis Comparisons (Amount: NT$ Bn) 1Q03 4Q02 1Q02 QoQ YoY Total Op. Exp. 4.2 5.0 3.8 (17%) 9% Gen'l & Admin. 1.4 1.1 1.0 26% 38% Selling & Mkting. 0.3 0.2 0.3 15% (5%) R & D 2.5 3.7 2.5 (32%) (1%) Non-Operating Items & Investment:
Net interest expense was little changed from the previous quarter. Other non-operating expense items were NT$0.1 billion worse than the preceding quarter due to the net unfavorable impact of several miscellaneous items, including fixed asset disposal gain/loss, capitalized interest, and royalties.
Investment losses decreased NT$646 million compared with the previous quarter, primarily reflecting better results by WaferTech and investment gains at InveStar.
Non-Operating Items & Investment Comparisons (Amount: NT$ Bn) 1Q03 4Q02 1Q02 QoQ YoY Net Int. Inc./(Exp.) (0.3) (0.3) (0.4) 4% (12%) Other Non-Ops. (0.2) (0.1) 0.1 (68%) n.m. Invest. Inc./(Loss) (1.5) (2.2) (0.9) (30%) 60% - Wafertech* (0.5) (1.0) 0.2 (52%) n.m. - SSMC (0.3) (0.2) (0.4) 74% (25%) - Vanguard (0.2) (0.2) (0.1) (16%) 89% - Others (0.6) (0.8) (0.6) (28%) (9%) * Operation results only; does not include amortization of goodwill resulting from minority interest acquisition. Liquidity Analysis: TSMC's financial liquidity continues to improve.