TSMC Reports Second Quarter EPS of NT$1.12

HSINCHU, Taiwan, July 31 /Xinhua-PRNewswire-FirstCall/ -- TSMC today announced consolidated revenue of NT$88.14 billion, net income of NT$28.77 billion, and diluted earnings per share of NT$1.12 (US$0.18 per ADS unit) for the second quarter ended June 30, 2008.

Year-over-year, second quarter revenue increased 17.6% while net income and diluted EPS increased 12.9% and 16.3%, respectively. On a sequential basis, second quarter results represent a 0.8% increase in revenue, an increase of 2.2% in net income, and an increase of 2.1% in diluted EPS. All figures were prepared in accordance with R.O.C. GAAP on a consolidated basis.

Second quarter business saw an improvement from the previous quarter, although revenue and margins continued to be negatively affected by the strength of the NT dollar. Despite the negative impact from the foreign exchange rate, our margins have exceeded guidance due to significant cost improvement and higher levels of wafer movements. Second quarter gross margin was 45.6%, operating margin was 34.5%, and net margin was 32.6%.

Advanced process technologies (0.13-micron and below) accounted for 63% of wafer revenues with 90-nanometer process technology accounting for 28% and 65- nanometer reaching 18% of total wafer sales.

"Even with a weakening macroeconomic environment, our second quarter results were either in line with or slightly higher than guidance announced at the end of April, thanks to our continual effort in driving cost reduction and increasing utilization rates," said Lora Ho, VP and Chief Financial Officer of TSMC. "Based on our current business outlook, management expects third quarter revenue growth to be below seasonality. Management further expects overall performance for third quarter 2008 to be as follows":

    -- Revenue is expected to be between NT$90 billion and NT$92 billion;
    -- Gross profit margin is expected to be between 45% and 47%;
    -- Operating profit margin is expected to be between 34% and 36%.

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, July 31, 2008. 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 1-617-614-3452 in the U.S., 852-3002-1672 in Hong Kong, 65-6823-2164 in Singapore, 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.


TSMC (NYSE: TSM) is the world's largest dedicated semiconductor foundry, providing the industry's leading manufacturing capacity, process technology, and the foundry industry's largest portfolio of process- proven libraries, IP, design tools and reference flows. TSMC currently operates two twelve-inch wafer fabs, four eight-inch fabs, and one six-inch fab. The Company also operates two eight-inch fabs at its wholly owned subsidiaries, WaferTech in the U.S. and TSMC (Shanghai) Company, Ltd. in China, and has substantial capacity commitments from a joint-venture fab, SSMC, in Singapore. Total managed capacity in 2007 exceeds eight million eight-inch equivalent wafers. TSMC is the first foundry to provide 65-nanometer production capabilities. TSMC's corporate headquarters are in Hsin-Chu, Taiwan. More information about TSMC is available at http://www.tsmc.com .

                  -- Management Report and Tables Follow --

    TSMC 2Q08 Quarterly Management Report July 31, 2008

    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:


    (Amounts are on consolidated basis
     and are in NT billions except
     otherwise noted)                2Q08   1Q08   2Q07     QoQ     YoY

    EPS (NT$ per common share)       1.12   1.10   0.96    2.1%   16.3%
        (US$ per ADR unit)           0.18   0.17   0.15      --      --

    Consolidated Net Sales          88.14  87.48  74.92    0.8%   17.6%
    Gross Profit                    40.22  38.24  32.18    5.2%   25.0%
    Gross Margin                    45.6%  43.7%  43.0%      --      --

    Operating Expense               (9.85) (9.12) (7.45)   8.0%   32.3%
    Operating Income                30.37  29.12  24.73    4.3%   22.8%
    Operating Margin                34.5%  33.3%  33.0%      --      --
    Non-Operating Items              2.00   2.45   3.29  (18.2%) (39.1%)

    Net Income                      28.77  28.14  25.48    2.2%   12.9%
    Net Profit Margin               32.6%  32.2%  34.0%      --      --

    Wafer Shipment
     (kpcs 8 inch-equiv.)           2,329  2,196  1,856    6.0%   25.5%


The diluted earnings per share in 2Q08 were NT$1.12, representing an increase of 16.3% over the same period last year and an increase of 2.1% from the previous quarter. The consolidated operating results of 2Q08 are summarized below:

Net sales in the second quarter were NT$88.1 billion, up 17.6% from NT$74.9 billion in 2Q07 and up 0.8% from NT$87.5 billion in 1Q08.

Gross profit for the quarter was NT$40.2 billion with gross margin of 45.6%, 1.9 percentage points higher than the 43.7% gross margin in 1Q08, mainly due to significant cost improvement and higher levels of wafer movements but partially offset by an unfavorable change of the exchange rate.

Operating expenses, including expenses accrued for employee profit sharing, were NT$9.8 billion or 11.1% of net sales. The combined result from non- operating income and long-term investments was a gain of NT$2.0 billion.

Consolidated net income attributable to shareholders of the parent company, including an accrual of employee profit sharing, was NT$28.8 billion, up 12.9% from a year ago level and up 2.2% from the previous quarter. Net profit margin was 32.6% for 2Q08.

I. Revenue Analysis:

In-line with our guidance, the second quarter 2008 revenue reached NT$88.1 billion. 2Q08 business saw a solid improvement but revenue was negatively impacted by a 3.7% appreciation in the NT dollar against the US dollar. Demand from consumer related applications grew but communication and computer applications declined during the quarter. On a sequential basis, revenue from consumer applications increased 24%, while revenues for communication and computer applications declined 2% and 8%, respectively.

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