Total TSMC managed capacity was 1,967K 8-inch equivalent wafers in 2Q07, 4% higher than 1Q07. TSMC managed capacity in 3Q07 will increase by 10% sequentially to reach 2,169K 8-inch equivalent wafers.
Total managed capacity for year 2007 is expected to be 8,325K 8-inch equivalent wafers, up 18% from 7,062K 8-inch equivalent wafers in year 2006.
III. Profit & Expense Analysis
III - 1. Gross Profit Analysis
(In NT billions) 2Q07 1Q07 2Q06
COGS 42.7 40.3 39.6
Depreciation 17.9 18.5 16.5
Other MFG Cost 24.8 21.8 23.1
Gross Profit 32.2 24.6 42.5
Gross Margin 43.0% 37.9% 51.8%
Gross Profit Analysis:
Consolidated gross profit for the second quarter 2007 was NT$32 billion, or 43% of net sales, up from a gross profit of NT$25 billion, or 37.9% of net sales, in the previous quarter. Second quarter gross margin improved by 5.1 percentage points primarily due to higher capacity utilization and lower depreciation expenses, offset slightly by a lower average selling price.
III - 2. Operating Expenses *
(In NT billions) 2Q07 1Q07 2Q06
Total Operating Exp. 7.45 6.73 7.18
SG&A 3.15 2.79 3.08
Research &
Development 4.30 3.94 4.10
* Certain prior period amounts have been reclassified to conform with
current period presentation.
Operating Expenses:
Total operating expenses for 2Q07 were NT$7.4 billion, compared to NT$6.7 billion in the prior quarter. Total operating expenses represented 10% of net sales, down slightly from 10.4% in first quarter of 2007.
Research and development expenditures increased by NT$359 million sequentially, largely due to increased R&D spending on 45nm and 32nm related projects.
SG&A expenses were NT$3.1 billion for the quarter, an increase of NT$354 million quarter-over-quarter, mainly due to higher level of business activities.
III - 3. Non-Operating Items
(In NT millions) 2Q07 1Q07 2Q06
Non-Operating Income/(Exp.) 2,802 1,830 299
Net Interest Income/(Exp.) 1,338 1,162 924
Other Non-Operating 1,464 668 (625)
L-T Investments 488 361 650
SSMC 233 70 471
Others 255 291 179
Total Non-Operating Items 3,290 2,191 949
Non-Operating Items:
Combined result from non-operating income and long-term investments was a gain of NT$3.3 billion for second quarter of 2007.
Compared to 1Q07, higher non-operating income was mainly due to higher interest income, an increase in mark-to-market adjustment on certain marketable securities, and lawsuit settlement received from SMIC.
Net investment income increased slightly to reach NT$488 million in the quarter, reflecting improved operating performance at SSMC.
IV. Financial Condition Review
IV - 1. Liquidity Analysis
(Selected Balance Sheet Items)
(In NT billions) 2Q07 1Q07 2Q06
Cash & Marketable Securities 233.1 217.4 211.6
Accounts Receivable - Trade 37.1 33.1 38.0
Inventory 24.0 22.3 20.1
Total Current Assets 304.6 286.1 279.7
Accounts Payable 28.2 19.2 27.5
Current Portion of Bonds Payable 4.5 4.5 2.5
Accrued Cash Dividend & Profit
Sharing 82.1 0.0 65.2
Accrued Liabilities and Others 17.6 21.4 15.1
Total Current Liabilities 132.4 45.1 110.3
Current Ratio (x) 2.3 6.3 2.5
Net Working Capital 172.2 241.0 169.4
Liquidity Analysis:
Total cash and marketable securities increased by NT$16 billion in the second quarter of 2007, mainly due to free cash flows generated during the quarter. As a result, TSMC ended the quarter with NT$305 billion in total current assets, compared to NT$286 billion at the end of the previous quarter.
