TWSE: 2330
NYSE: TSM
TSMC ANNUAL REPORT 2009 (I)
(cid:339) Taiwan Stock Exchange Market Observation Post System: http://newmops.tse.com.tw
(cid:339) TSMC annual report is available at http://www.tsmc.com/english/e_investor/e02_annual/e02_annual.htm
Printed on March 12, 2010
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TSMC VISION & CORE VALUES
TSMC’s Vision
Our vision is to be the most advanced and largest technology and foundry services provider to fabless companies and IDMs, and in
partnership with them, to forge a powerful competitive force in the semiconductor industry.
To realize our vision, we must have a trinity of strengths:
(1) be a technology leader, competitive with the leading IDMs
(2) be the manufacturing leader
(3) be the most reputable, service-oriented and maximum-total-benefits silicon foundry.
TSMC Core Values
Integrity – Integrity is our most basic and most important core value. We tell the truth. We believe the record of our
accomplishments is the best proof of our merit. Hence, we do not brag. We do not make commitments lightly. Once we make a
commitment, we devote ourselves completely to meeting that commitment. We compete to our fullest within the law, but we do
not slander our competitors and we respect the intellectual property rights of others. With vendors, we maintain an objective,
consistent, and impartial attitude. We do not tolerate any form of corrupt behavior or politicking. When selecting new employees,
we place emphasis on the candidates’ qualifications and character, not connections or access.
Commitment – TSMC is committed to the welfare of customers, suppliers, employees, shareholders, and society. These stakeholders
all contribute to TSMC’s success, and TSMC is dedicated to serving their best interests. In return, TSMC hopes all these stakeholders
will make a mutual commitment to the Company.
Innovation – Innovation is the wellspring of TSMC’s growth, and is a part of all aspects of our business, from strategic planning,
marketing and management, to technology and manufacturing. At TSMC, innovation means more than new ideas, it means putting
ideas into practice.
Customer Partnership – At TSMC, customers come first. Their success is our success, and we value their ability to compete as we
value our own. We strive to build deep and enduring relationships with our customers, who trust and rely on us to be part of their
success over the long term.
TABLE OF CONTENTS
1. LETTER TO SHAREHOLDERS
2. COMPANY PROFILE
3. CORPORATE GOVERNANCE
4. CAPITAL AND SHARES
5. OPERATIONAL HIGHLIGHTS
6. FINANCIAL HIGHLIGHTS
7. CORPORATE SOCIAL RESPONSIBILITY
8. AFFILIATE INFORMATION AND
OTHER SPECIAL NOTES
2.1 An Introduction to TSMC
2.2 Market/Business Summary
2.3 Organization
2.4 Board Members
2.5 Management Team
3.1 Board of Directors
3.2 Taiwan Corporate Governance Implementation as Required by
the Taiwan Financial Supervisory Commission
3.3 Major Resolutions of Shareholders’ Meeting and Board Meetings
3.4 Internal Control System Execution Status
3.5 Status of Personnel Responsible for Preparing Financial Reports
3.6 Information Regarding TSMC’s Independent Auditor
3.7 Material Information Management Procedure
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4.1 Capital and Shares
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4.2 Issuance of Corporate Bonds
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4.3 Preferred Shares
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4.4 Issuance of American Depositary Shares
4.5 Status of Employee Stock Option Plan
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4.6 Status of New Share Issuance in Connection with Mergers and Acquisitions 42
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4.7 Financing Plans and Implementation
5.1 Business Activities
5.2 Technology Leadership
5.3 Manufacturing Excellence
5.4 Customer Partnership
5.5 Employees
5.6 Material Contracts
6.1 Financial Status and Operating Results
6.2 Risk Management
7.1 Typhoon Morakot Disaster Relief Project
7.2 Environmental, Safety and Health (ESH) Management
7.3 TSMC Education and Culture Foundation
8.1 Affiliates
8.2 Status of TSMC Common Shares and ADRs Acquired, Disposed of,
and Held by Subsidiaries
8.3 Special Notes
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1. LETTER TO SHAREHOLDERS
Dear Shareholders,
At the start of 2009, we managed the sharp business downturn that gripped the global economy, and then enhanced our core strengths by
committing more resources into technology innovations, recruiting talents, and expanding our production capacity to meet customers’ needs.
Now the global economy is on its gradual recovery course and the outlook for semiconductor industry in 2010 appears robust, TSMC is in a
stronger position to compete.
The steep downturn in the global semiconductor industry in 4Q’08 and 1Q’09 was followed by a recovery the rate of which was unprecedented
in the history of the foundry segment. At the start of the slump, management moved with speed to minimize the negative financial impact. Later
on, when demand fast recovered, we demonstrated remarkable agility in quickly ramping up production capacity and capturing the pursuant
recovery. In the process, the Company lowered its breakeven utilization rate and maintained profitability throughout the downturn.
TSMC is now headed forward on a course to capture greater share within the dedicated foundry segment through continued development of the
leading-edge process technology nodes, while aggressively broadening the Company’s business portfolio into derivative technologies across all
legacy technology nodes.
Financial Results
Total consolidated revenue for 2009 was NT$295.74 billion, an 11.2 percent decrease compared with NT$333.16 billion in 2008. Net income
decreased 10.7 percent to NT$89.22 billion from NT$99.93 billion, while diluted earnings per share decreased 9.6 percent to NT$3.44 compared
with NT$3.81 a year earlier.
In US dollars, TSMC’s 2009 revenue was US$9 billion and net income was US$2.71 billion, compared with revenue of US$10.61 billion and net
income of US$3.18 billion in 2008.
Among other highlights in 2009, TSMC achieved:
● Gross profit margin of 43.7 percent; and
● Operating profit margin of 31.1 percent.
During the year, TSMC shipped 7.74 million eight-inch equivalent wafers, representing about 7.6 percent of global IC wafer shipments,
compared with 7.4 percent a year ago.
Morris Chang, Chairman and CEO
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Technology, Capacity and Customers
While the semiconductor industry will grow strongly in 2010, it is likely to grow at an average mid-single-digit rate in the 2011- 2016
period. On the one hand, it is vital for TSMC to maintain and augment its leadership position in the foundry segment by intensifying the
pace of semiconductor manufacturing innovation and by expanding its own capabilities to enlarge market opportunities. On the other
hand, TSMC also embarked on a vigorous program to expand the base of our business to encompass adjacent opportunities that fit our
strengths in engineering capabilities and the ability to manage massive scale operations. In addition, to start the development of new
businesses, Dr. Rick Tsai has been assigned to devote his full time to this task as President of New Businesses, starting June 12, 2009.
Meanwhile, I resumed CEO responsibility.
Today, TSMC serves more than four hundred customers and manufactures more than seven thousand products for them in a year. We
are proud to count every major player in each of the semiconductor logic applications as our customers. We build customer partnership
with our technology leadership and manufacturing excellence, both of which are executed under an overall corporate culture centered
on servicing customers’ needs. In order to better focus on strengthening our customer partnership, the Company has further
re-organized to form an Operations Organization to facilitate manufacturing operations excellence, and a Business Development
Organization to coordinate customer partnership.
We continue to focus resources on strengthening our leading position in our core business of outsourced manufacturing for advanced IC
producers. The Company has invested US$2.7 billion in 2009 to further expand its advanced technology capacity for 12-inch wafer fabs,
with 85% of the spending on capacities for 40/45nm and 65nm technologies, which are expected to contribute over 40% of our wafer
revenue in 2010.
Technology Innovation
TSMC continues to be a technology leader in the semiconductor industry with the development of the most advanced logic technologies
both with conventional (poly SiON) as well as high-K/metal gate (HKMG) stacks at the 28-nanometer (28nm) node. Early in 2009, we
became the first foundry to achieve 28nm functional 64Mb SRAM yield on our high performance (28HP) as well as low leakage (28HPL)
HKMG technologies. With our 28nm shuttle program, functional silicon was delivered in both conventional and HKMG platforms. We are
well on track for qualification and risk production in 2010 for our 28nm technology offerings.
Corporate Developments
In November, TSMC agreed to a settlement with SMIC. The litigation and settlement have resulted in the full protection of TSMC’s trade
secrets in the possession of SMIC. Under the new settlement agreement and the related stipulated judgment, SMIC has agreed to make
cash payments totaling US$200 million and other valuable considerations to TSMC. Both parties also agreed to terminate the patent
cross-licensing agreement signed in 2005.
TSMC also invested US$193 million for a 20% equity stake in Motech, the largest solar cell manufacturer in Taiwan. The Motech
investment allows TSMC to accelerate our time to market, to better evaluate opportunities along the solar value chain, and to further
formulate our overall solar strategy.
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Honors and Awards
TSMC continued to garner recognition and awards from around the world as a corporate role model. TSMC’s disclosure and transparency and its
focus on shareholder value have won top honors from AsiaMoney, The Asset Magazine, Corporate Governance Asia, FinanceAsia, GlobalView
Magazine, and the IR Magazine in the areas of Corporate Governance, Management, Investor Relations, and Corporate Social Responsibilities.
Both the Wall Street Journal and CommonWealth Magazine voted TSMC as Taiwan’s Overall Most Admired Company. As a leader in good
corporate citizenship, TSMC is included in the Dow Jones Sustainability Index.
Outlook
Improvement in the global macroeconomic environment is likely to continue into 2011. With the fast growing emerging economies consuming
an increasing amount of semiconductors, we expect the industry to grow at a rate in the teens and the foundry segment to outpace the overall
semiconductor industry at a growth rate exceeding 20 percent in 2010. TSMC has aggressive plans to gain market share in this upturn by further
strengthening our technology leadership and by providing sufficient capacity to meet the strong demand from our customers. Management
believes TSMC can surpass both the Company’s 2008 revenue record and its 2006 net income record, after adjusting for employee profit sharing,
in 2010.
Morris Chang
Chairman and Chief Executive Officer
Capacity Plan
Sales Breakdown by Technology
2008
13%
2009
6%
2010
13%
9.38
million
9.96
million
11.28
million
2008
2009
2010
0%
36%
33%
26%
64%
67%
74%
100%
Annual Growth Rate
Capacity: 8-inch equivalent wafers
≥ 0.15 μm
2010 wafer shipment is expected to be
≤ 0.13 μm
approximately 10.8 million 8-inch equivalent wafers.
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2. COMPANY PROFILE
2.1 An Introduction to TSMC
TSMC is the world’s largest pure-play semiconductor foundry. Founded on February 21, 1987 and headquartered in Hsinchu, Taiwan, TSMC
pioneered the business model of focusing solely on manufacturing customers’ semiconductor designs. As a pure-play semiconductor foundry, the
Company does not design, manufacture, or market semiconductor products under its own brand name, ensuring that TSMC does not compete
directly with its customers.
With a diverse global customer base, TSMC-manufactured microchips are used in a broad variety of applications that cover various segments of the
computer, communications and consumer electronics markets.
Total capacity of the manufacturing facilities managed by TSMC, including subsidiaries and joint ventures, totaled 9.96 million 8-inch equivalent
wafers in 2009. In Taiwan, TSMC operates two advanced 12-inch wafer fabs, four 8-inch wafer fabs, and one 6-inch wafer fab. TSMC also manages
two 8-inch fabs at wholly owned subsidiaries: WaferTech in the United States and TSMC China Company Limited. In addition, TSMC obtains 8-inch
wafer capacity from other companies in which the Company has an equity interest.
TSMC provides customer service through its account management and engineering services offices in North America, Europe, Japan, China, South
Korea, and India. The Company employed more than 24,000 people worldwide as of the end of 2009.
TSMC continued to lead the foundry segment of the semiconductor industry in advanced process technologies. Already the first foundry to provide
65nm and 40nm production capacity, TSMC also announced it will deliver 28nm as a full node technology, and, in 2009, reported the addition of
28HPL (High-k metal gate with low power) to enrich its 28nm offering. In addition to general-purpose logic process technology, TSMC supports
the wide-ranging needs of its customers with embedded non-volatile memory, embedded DRAM, mixed signal/RF, high voltage, CMOS image
sensor, color filter, MEMS, and silicon germanium technologies. In December 2009, TSMC also announced the automotive industry’s first process
qualification specification and service package for automotive-grade semiconductor manufacturing in the China market. TSMC Fab 10 in Shanghai,
along with multiple fabs in Taiwan, is capable of supporting the automotive service package.
In addition, in order to better manage TSMC’s long-term strategic growth opportunities, TSMC has decided to invest in LED lighting and solar
energy related-industries. With differentiated technology offerings and with unique value proposition to customers, TSMC will pursue new
opportunities in these fields.
The Company is listed on the Taiwan Stock Exchange (TWSE) under ticker number 2330, and its American Depositary Shares trade on the New York
Stock Exchange (NYSE) under the symbol “TSM”.
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2.2 Market/Business Summary
2.2.1 TSMC Achievements
In 2009, TSMC maintained its leading position in the pure-play
foundry segment of the global semiconductor industry, with an
estimated market segment share of 48%. TSMC achieved this result
amid fierce competition from both established players and relatively
new entrants to the business.
Leadership in advanced process technologies is a key factor in TSMC’s
strong market position. In 2009, 67% of TSMC’s wafer revenue came
from manufacturing processes with geometries of 0.13μm and
below. A critical milestone was reached in September 2009, when
TSMC shipped its one-millionth 65nm 12-inch wafer. Moreover,
TSMC also achieved volume production of the 45/40nm process as
well as development of the leading-edge 28nm process, both foundry
firsts. As of the fourth quarter of 2009, 39% of TSMC’s wafer revenue
came from 65nm processes and below.
In addition to advanced technologies, TSMC also offers innovative
services in line with its unwavering focus on customer partnership.
Among the many innovative services unveiled in 2009 was automotive
process qualification specification and automotive service package,
tapping the growth momentum of automotive electronics. TSMC also
launched foundry’s first integrated sign-off flow, mixed signal/radio
frequency (RF) reference design kit and interoperable process design
kit, which enriched the Open Innovation PlatformTM to facilitate timely
innovation among the semiconductor design community.
TSMC continued to advance the semiconductor roadmap in 2009.
Examples of technologies the Company developed or rolled out include:
● 28nm low power technology with functional static random access
memory (SRAM)
● 40nm technology for low power and radio frequency (RF)
● 55nm low power technology
● 65nm multi-time programmable non-volatile memory technology
● 0.11μm hybrid general performance technology
● 0.11μm high voltage process for small panel single chip drivers
● 0.13μm slim platform for analog and power management
System-on-Chip (SoC) applications
● 0.15μm high voltage process for large panel source drivers
In addition, TSMC further strengthened its comprehensive
development of specialty technologies in 2009, including 90/65nm
embedded flash, 90/65nm CMOS image sensor and 0.13μm analog
technologies. In 2009, TSMC also revealed foundry-first 3D
Micro-Electro-Mechanical Systems (MEMS) platform for the
integration of CMOS and motion sensors. These specialty
technologies are key differentiators from our competitors and
provide customers more value.
2.2.2 Market Overview
such as TSMC reached US$19 billion, or 8% of total semiconductor
industry revenue, and TSMC’s total revenue was US$9 billion. In 2009,
the largest geographic market (based on the location of customers’
corporation headquarters) for pure-play foundry services, North
America was accounting for 61% of overall pure-play foundry revenue.
The second largest geographic market was Asia Pacific (excluding
Japan), which accounted for 27% of pure-play foundry revenue in
2009. European-based customers accounted for 9%, and orders from
companies based in Japan contributed 3%.
2.2.3 Industry Outlook, Opportunities and Threats
Industry Demand and Supply Outlook
2009 was a challenging year for the semiconductor industry, which
experienced a decline of 9% year-over-year (YoY). After the sharp
market decline in the final quarter of 2008, foundry sales bottomed
out in the first quarter of 2009. Driven by better-than-expected
demand and supply chain inventory replenishment, foundry sales
recovered significantly throughout the rest of 2009. According to IC
Insights, pure-play foundry sales declined by 10% in 2009 compared
to 2008.
IC Insights forecasts pure-play foundry sales to grow at 24% YoY in
2010. As for the longer term, with improving global economic
outlook, increasing semiconductor content in electronics devices and
the increasing IDM outsourcing, pure-play foundry sales are expected
to display an 14% compound annual growth rate (CAGR) from 2009
through 2014, higher than the 11% CAGR for total IC industry.
As the upstream supplier in the semiconductor supply chain, the
foundry segment is tightly correlated with the market health of the
3Cs: computer, communications and consumer.
● Computer
The computer sector posted an impressive year despite the economic
downturn, with a positive unit shipment growth of 3%. The
consumer PC segment showed stronger momentum, offsetting the
weak corporate PC segment. Lower cost PCs (e.g., netbooks) and new
usage models, such as telecom carrier bundled promotion with
netbook, also helped to lift the PC market. Market momentum was
especially strong in China and the US.
Moving into 2010, it is expected the corporate PC refresh, together
with the launch of new Microsoft Windows 7 Operating System, will
help drive the market while consumer PC continues to maintain its
growth momentum. New applications and form factors such as
touch screen, thin-and-light PC, “smartbook”, and “virtualization”
will also help spur PC sales.
In terms of IC product design, the requirements of lower power and
higher performance for key components in computers, such as CPU,
GPU, Chipset, etc., will drive near-term demand for advanced process
technologies such as 40nm and 28nm.
It is estimated that the semiconductor market in 2009 reached
US$226 billion in revenue, a 9% decrease compared to 2008.
According to IC Insights, total foundry, a manufacturing sub-segment
of the semiconductor industry, generated total revenues of US$22
billion in 2009, -11% year-on-year. Revenues from pure-play foundries
● Communications
The communications sector, particularly the handsets segment, declined
by 4% in unit shipment for 2009 from 2008. However, the growing
number of new subscribers in emerging countries such as China and
India has helped to offset the sales drop in developed countries. In the
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meantime, high-end smartphone, which has much higher semiconductor
content, has been a bright spot in the overall handset market.
communications, 16% from consumer products, and 15% from other
categories, such as industrial products.
The growing popularity of 3G cellular phones will add positive
momentum to the market. Smartphones with increasing performance,
lower power and more intelligent applications will continue to propel
the buying momentum of new handsets in the coming 2010.
Low power IC design is a must-have feature in the handset segment.
The System on Chip (SoC) design and the hunger for higher
performance to run complicated software will also speed up the
migration to advanced process technologies in which TSMC is
already the leader.
● Consumer
Aggregated digital consumer electronics device unit shipments
resulted in 1% YoY growth in 2009, despite the economic downturn.
Government (e.g., China and Japan) incentive programs,
analog-to-digital TV transition in the US and EU, and “stay-at-home”
economics drove demand during the economic downturn. Sharp
average selling price (ASP) declines for consumer products, such as
LCD TV and Blu-ray DVD, have also spurred the buying sentiment.
Moving into 2010, new products with attractive features may
stimulate sales of consumer products. Continuing the trend toward
the transition of analog-to-digital broadcast in certain countries and
the unceasing drop of ASP will still be the catalysts to drive sales of
products like DTV, STB and Blu-ray DVD.
Increasing innovations in the digital consumer sector have
encouraged new usage models, such as motion recognition for game
consoles and internet-enabled home appliances. Besides the need for
advanced technologies, “More Than Moore” technologies such as CIS,
High-voltage drivers and MEMS are becoming prominent
requirements. With its comprehensive technology portfolio, TSMC will
be able to capitalize on these trends.
Supply Chain
The electronics industry comprises a long and complex supply chain,
the elements of which are highly dependent and correlated with each
other. At the upstream IC manufacturing stage, it is important for IC
vendors to have sufficient and flexible supply to support the dynamic
market situation. IC foundry vendors are playing an important role to
ensure the health of the supply chain. As a leader in the IC foundry
services segment, TSMC provides leading technologies and large scale
capacity to complement the innovations created along the
downstream chain.
2.2.4 TSMC Position, Differentiation and Strategy
Position
As the leader in the pure-play foundry segment of the semiconductor
manufacturing industry, TSMC commanded a 48% share of this
segment in 2009, with total consolidated revenue of US$9 billion. In
terms of geographic distribution of wafer revenue, 69% came from
companies headquartered in North America, 15% from the Asia Pacific
region, excluding China and Japan, 10% from Europe, 3% from China
and 3% from Japan. In terms of end product application, 28% of total
wafer revenue came from the computer sector, 41% from
Differentiation
TSMC’s leadership position is based on a trinity of key differentiating
strengths: technology leadership, manufacturing excellence, and
customer partnership. As a technology leader, TSMC has consistently
been the first pure-play foundry to develop the next generation of
leading-edge technologies. As a manufacturing leader, TSMC is
renowned for its yield management, and offers best-in-class support
services to expedite time-to-market and time-to-volume. And, in
customer partnership, TSMC works closely with its customers on
end-to-end collaboration to optimize design and manufacturing
efficiencies. Going forward, TSMC will continue building on this
trinity of strengths to provide the best overall value to its customers.
Strategy
TSMC is confident its differentiating strengths will enable it to
leverage the attractive growth opportunities in the foundry sector
going forward. TSMC works constantly to ensure that these strengths
are maintained and improved. For example, TSMC is intensively
working on the leading-edge 28nm and 20nm processes to maintain
its technology leadership position. Numerous efforts are also
underway to ensure manufacturing excellence, such as continuing
enhancement of Design-For-Manufacturing (DFM) support services to
increase yield and efficiency. TSMC also expanded its Open Innovation
PlatformTM initiative, a set of ecosystem interfaces and collaborative
components initiated and supported by TSMC that efficiently
empowers innovation throughout the supply chain to enhance timely
innovation. Finally, TSMC conducted throughout the year customer
reviews and surveys to better understand customer needs and wants,
and accordingly may adjust its offerings in response, thereby
strengthening its partnership with customers.
To address the challenges of falling wafer prices and fiercer
competition from other semiconductor manufacturing companies,
TSMC persists in strengthening its core competitiveness, and properly
deploys its short-term and long-term technology and business
development plans in order to hold ROI and growth.
● Short-term business development plan
1) To substantially ramp up the business and sustain market segment
share of advanced technologies with further investment in capacity.
2) To maintain market segment share of mainstream technology by
expanding business into new customers and market segments
with off-the-shelf technologies.
3) To grow business with IDMs by deepening the partnership on
technology development and business model arrangement.
● Long-term business development plan
1) To continue developing the leading edge technologies consistent
with Moore’s law.
2) To broaden “More-than-Moore” business contribution by further
developing derivative technologies.
3) To further expand TSMC’s business and service infrastructure into
emerging and developing markets.
4) To explore and establish new businesses to a significant level
within the next 5 years, such as solar energy and LED lighting.
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2.3 Organization
2.3.1 Organization Chart
Audit Committee
Compensation
Committee
Shareholders’
Meeting
Board of Directors
Chairman
Vice Chairman
CEO
New Businesses
Operations
Business
Development
Corporate Planning
Quality and
Reliability
Worldwide Sales and
Marketing
Research and
Development
2.3.2 Major Corporate Functions
New Businesses
● Develop and build new businesses for the Company’s long-term
Worldwide Sales and Marketing
● Brand management, market research, customer service, and
revenue and profitability growth
regional operations
Operations
● Manufacturing operations, new fab planning, manufacturing
Research and Development
● Advanced technology research and development, exploratory
technology integration, advanced product engineering, backend
research and development and design services and technology
technology and service, mask manufacturing
platform development
Business Development
● Solidify customer partnership, identify new applications and
Information Technology
● Technology and business system integration, Information
markets, build new partnership in computer business, consumer,
technology infrastructure, and IT development and operation
communication business, and industrial business
Corporate Planning
● Operation resources planning, production and demand planning,
and business process integration
Quality and Reliability
● Quality and reliability management
Note: To meet our long-term growth projection, a New Businesses organization was established on May 6, 2009.
Materials Management and Risk Management
● Purchasing, warehousing, import and export, logistics support,
industrial safety, and environmental protection
Human Resources
● Human resources management and organizational development
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Audit Committee
Compensation
Committee
Shareholders’
Meeting
Board of Directors
Chairman
Vice Chairman
CEO
New Businesses
Operations
Corporate Planning
Business
Development
Quality and
Reliability
Worldwide Sales and
Marketing
Research and
Development
Information
Technology
Materials
Management and
Risk Management
Human Resources
Finance &
Spokesperson
Legal
Internal
Audit
Finance & Spokesperson
● Corporate finance, accounting, investor relations, public relations,
tax, financial planning, investment management, and strategic
program
● Corporate spokesperson
Legal
● Corporate legal affairs, litigation, commercial transactions, patents
and other intellectual property management
Internal Audit
● Internal audit and process compliance
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2.4 Board Members
2.4.1 Information Regarding Board Members
Title/Name
Chairman
Morris Chang
Vice Chairman
F.C. Tseng
National Development Fund, Executive Yuan
Representatives: (Notes 1, 4, 5)
Director
Tain-Jy Chen
Director
Rick Tsai
Independent Director
Sir Peter Leahy Bonfield
Independent Director
Lester Carl Thurow
(Note 2)
Independent Director
Stan Shih
Independent Director
Carleton (Carly) S. Fiorina
(Note 3)
Date Elected
Term Expires
Date First Elected
06/10/2009
06/09/2012
12/10/1986
Shareholding When Elected
Current Shareholding
Spouse & Minor Shareholding
Shares
118,047,697
%
0.46%
Shares
118,587,914
%
0.46%
Shares
85,217
%
Selected Education, Past Positions & Current Positions at Non-profit Organizations
Selected Current Positions at TSMC and Other Companies
0.00%
B.S. and M.S. degrees in Mechanical Engineering, MIT
CEO, TSMC
06/10/2009
06/09/2012
05/13/1997
36,144,509
0.14%
35,002,675
0.14%
132,855
0.00%
Ph.D. in Electrical Engineering, National Chengkung University, Taiwan
06/10/2009
06/09/2012
12/10/1986
1,645,482,861
6.42%
1,653,709,980
6.38%
-
-
-
-
14,276
0.00%
Bachelor Degree in Electrical Engineering, National Taiwan University
06/10/2009
06/09/2012
06/03/2003
33,768,636
0.13%
33,654,505
0.13%
06/10/2009
06/09/2012
05/07/2002
05/16/2006
06/09/2009
05/07/2002
-
-
-
-
-
-
-
-
06/10/2009
06/09/2012
04/14/2000
1,472,922
0.01%
1,480,286
0.01%
16,116
0.00%
BSEE and MSEE in National Chiao Tung University, Taiwan
Group Chairman, iD SoftCapital
06/10/2009
(Note 3)
05/16/2006
-
-
-
-
-
Bachelor Degree in Medieval History and Philosophy, Stanford University
Chairman and CEO, Carly Fiorina Enterprises
Chairman of:
- TSMC China Company Limited
- Global Unichip Corp.
Director of:
- digimax, Inc.
- Allegro Manufacturing Pte, Ltd.
President, New Businesses, TSMC
Director, TSMC subsidiaries
Director of:
- Sony Corporation, Japan
- L.M. Ericsson, Sweden
- Actis Capital LLP, London
Member of:
- The Longreach Group Advisory Board
- The Sony Corporation Advisory Board
- New Venture Partners LLP Advisory Board
Advisor to Apax Partners LLP
Board Mentor, CMi
Senior Advisor to Rothschild, London
Ph.D. in Electrical Engineering, Stanford University
Former Group Senior Vice-President, Texas Instrument
Former President & COO, General Instrument Corporation
Former Chairman, Industrial Technology Research Institute
Life Member Emeritus of MIT Corporation
Member of National Academy of Engineering, USA
Former President, Vanguard International Semiconductor Corp.
Former President, TSMC
Former Deputy CEO, TSMC
-
-
-
Ph.D. in Economics, Pennsylvania State University, University Park, USA
Former President, Chung-Hua Institution for Economic Research
Former Minister of the Council for Economic Planning and Development, Executive Yuan
Professor, Dept. of Economics, National Taiwan University
Ph.D. in Material Science, Cornell University, USA
Former President, Vanguard International Semiconductor Corp.
Former Executive Vice President, Worldwide Marketing and Sales, TSMC
Former COO, TSMC
Former President & CEO, TSMC
Honours Degree in Engineering, Loughborough University
Chairman of the Supervisory Board, NXP
Fellow of the Royal Academy of Engineering
Former Chairman and CEO, ICL Plc
Former CEO and Chairman of the Executive Committee, British Telecommunications Plc
Vice President, the British Quality Foundation
- Mentor Graphics Corporation Inc., Oregon, USA
-
Ph.D., Economics, Harvard University
Former Dean, Sloan School of Management, MIT
Jerome and Dorothy Lemelson Professor of Management and Economics, Sloan School of
Management, MIT
Former Director, Analog Devices Inc.
Honorary EE Ph.D. in National Chiao Tung University, Taiwan
Honorary Doctor of Technology, The Hong Kong Polytechnic University
Honorary Fellowship, University of Wales, Cardiff, UK
Director of:
- Acer Incorporated
- Qisda Corporation
Ho norary Doctor of International Law, Thunderbird, American Graduate School of International
- Wistron Corporation
Management, USA
Former Chairman, CEO and Co-Founder, Acer Group
- Nan Shan Life Insurance Company, Ltd.
Ma ster Degree in Business Administration, Robert H. Smith School of Business, University of
Maryland at College Park, Md.
Master Degree in Science, MIT's Sloan School
Former Senior Management, AT&T and Lucent Technologies
Former President and CEO, Hewlett-Packard
Former Chairman of the Board, Hewlett-Packard
Member, MIT Corporation
Chairman, Technology Policy Institute, Washington, D.C.
Vice-Chairman, Initiative for Global Development
-
-
-
-
-
9
0
0
2
T
R
O
P
E
R
L
A
U
N
N
A
C
M
S
T
E
L
I
F
O
R
P
Y
N
A
P
M
O
C
12
Title/Name
Chairman
Morris Chang
Vice Chairman
F.C. Tseng
Representatives: (Notes 1, 4, 5)
Director
Tain-Jy Chen
Director
Rick Tsai
Independent Director
Sir Peter Leahy Bonfield
Independent Director
Lester Carl Thurow
(Note 2)
Independent Director
Stan Shih
Independent Director
Carleton (Carly) S. Fiorina
(Note 3)
National Development Fund, Executive Yuan
06/10/2009
06/09/2012
12/10/1986
1,645,482,861
6.42%
1,653,709,980
6.38%
06/10/2009
06/09/2012
06/03/2003
33,768,636
0.13%
33,654,505
0.13%
06/10/2009
06/09/2012
05/07/2002
05/16/2006
06/09/2009
05/07/2002
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Date Elected
Term Expires
Date First Elected
06/10/2009
06/09/2012
12/10/1986
Shares
118,047,697
%
0.46%
Shares
118,587,914
%
0.46%
Shareholding When Elected
Current Shareholding
Spouse & Minor Shareholding
Shares
85,217
%
0.00%
06/10/2009
06/09/2012
05/13/1997
36,144,509
0.14%
35,002,675
0.14%
132,855
0.00%
-
-
14,276
0.00%
-
-
-
-
-
-
06/10/2009
06/09/2012
04/14/2000
1,472,922
0.01%
1,480,286
0.01%
16,116
0.00%
Selected Education, Past Positions & Current Positions at Non-profit Organizations
Selected Current Positions at TSMC and Other Companies
As of 02/28/2010
B.S. and M.S. degrees in Mechanical Engineering, MIT
Ph.D. in Electrical Engineering, Stanford University
Former Group Senior Vice-President, Texas Instrument
Former President & COO, General Instrument Corporation
Former Chairman, Industrial Technology Research Institute
Life Member Emeritus of MIT Corporation
Member of National Academy of Engineering, USA
Ph.D. in Electrical Engineering, National Chengkung University, Taiwan
Former President, Vanguard International Semiconductor Corp.
Former President, TSMC
Former Deputy CEO, TSMC
CEO, TSMC
Chairman of:
- TSMC China Company Limited
- Global Unichip Corp.
Director of:
- digimax, Inc.
- Allegro Manufacturing Pte, Ltd.
Bachelor Degree in Electrical Engineering, National Taiwan University
Ph.D. in Economics, Pennsylvania State University, University Park, USA
Former President, Chung-Hua Institution for Economic Research
Former Minister of the Council for Economic Planning and Development, Executive Yuan
Professor, Dept. of Economics, National Taiwan University
Ph.D. in Material Science, Cornell University, USA
Former President, Vanguard International Semiconductor Corp.
Former Executive Vice President, Worldwide Marketing and Sales, TSMC
Former COO, TSMC
Former President & CEO, TSMC
Honours Degree in Engineering, Loughborough University
Fellow of the Royal Academy of Engineering
Former Chairman and CEO, ICL Plc
Former CEO and Chairman of the Executive Committee, British Telecommunications Plc
Vice President, the British Quality Foundation
President, New Businesses, TSMC
Director, TSMC subsidiaries
Chairman of the Supervisory Board, NXP
Director of:
- Sony Corporation, Japan
- L.M. Ericsson, Sweden
- Mentor Graphics Corporation Inc., Oregon, USA
- Actis Capital LLP, London
Member of:
- The Longreach Group Advisory Board
- The Sony Corporation Advisory Board
- New Venture Partners LLP Advisory Board
Advisor to Apax Partners LLP
Board Mentor, CMi
Senior Advisor to Rothschild, London
Ph.D., Economics, Harvard University
Former Dean, Sloan School of Management, MIT
Jerome and Dorothy Lemelson Professor of Management and Economics, Sloan School of
Management, MIT
Former Director, Analog Devices Inc.
BSEE and MSEE in National Chiao Tung University, Taiwan
Honorary EE Ph.D. in National Chiao Tung University, Taiwan
Honorary Doctor of Technology, The Hong Kong Polytechnic University
Honorary Fellowship, University of Wales, Cardiff, UK
Ho norary Doctor of International Law, Thunderbird, American Graduate School of International
Management, USA
Former Chairman, CEO and Co-Founder, Acer Group
Group Chairman, iD SoftCapital
Director of:
- Acer Incorporated
- Qisda Corporation
- Wistron Corporation
- Nan Shan Life Insurance Company, Ltd.
06/10/2009
(Note 3)
05/16/2006
-
-
Bachelor Degree in Medieval History and Philosophy, Stanford University
Ma ster Degree in Business Administration, Robert H. Smith School of Business, University of
Chairman and CEO, Carly Fiorina Enterprises
Maryland at College Park, Md.
Master Degree in Science, MIT's Sloan School
Former Senior Management, AT&T and Lucent Technologies
Former President and CEO, Hewlett-Packard
Former Chairman of the Board, Hewlett-Packard
Member, MIT Corporation
Chairman, Technology Policy Institute, Washington, D.C.
Vice-Chairman, Initiative for Global Development
(Continued)
13
Title/Name
Date Elected
Term Expires
Date First Elected
Independent Director
Thomas J. Engibous
06/10/2009
06/09/2012
06/10/2009
Shareholding When Elected
Current Shareholding
Spouse & Minor Shareholding
Shares
-
%
-
Shares
-
%
-
Shares
-
%
-
Selected Education, Past Positions & Current Positions at Non-profit Organizations
Selected Current Positions at TSMC and Other Companies
Lead Director, J. C. Penney Company Inc.
Former Executive Vice President and President of the Semiconductor Group, Texas Instruments Inc.
Bachelor Degree in Electrical Engineering, Purdue University
Master Degree in Electrical Engineering, Purdue University
Honorary Doctorate in Engineering, Purdue University
Member, National Academy of Engineering
Former President and CEO, Texas Instrument Inc.
Former Chairman of the Board, Texas Instrument Inc.
Former Chairman of the Board of Catalyst
Honorary Director of Catalyst
Trustee, Southwestern Medical Foundation
Member, The Business Council
Remarks:
1. No member of the Board of Directors held TSMC shares by nominee arrangement.
2. No member of the Board of Directors had a spouse or relative within two degrees of consanguinity serving as a manager or director at TSMC.
Note 1: Effective on April 22, 2009, Mr. Tian-Jy Chen was appointed as the representative of National Development Fund, Executive Yuan.
Note 2: All directors had been re-elected at the 2009 Annual Shareholders’ Meeting. Professor Lester C. Thurow was not re-elected as an independent director of TSMC. Therefore, the tenure of Professor Lester C. Thurow expired on June 9,
2009.
Note 3: Ms. Carleton Fiorina resigned as an independent director of TSMC on November 30, 2009.
Note 4: Major Shareholder of TSMC’s Director that is an Institutional Shareholder.
Director that is an Institutional Shareholder of TSMC
National Development Fund, Executive Yuan
Note 5: Major institutional shareholders of National Development Fund: Not applicable.
Top 10 Shareholders
Not Applicable
2.4.2 Directors’ Professional Qualifications and Independence Analysis
According to the relevant requirements set by Taiwan’s Securities and Futures Bureau, the professional qualifications and independence status of
the Company’s Board members are listed in the table below.
Name/Criteria
Chairman
Morris Chang
Vice Chairman
F.C. Tseng
Director
Tian-Jy Chen
Director
Rick Tsai
Independent Director
Sir Peter Leahy Bonfield
Independent Director
Lester Carl Thurow (Note 2)
Independent Director
Stan Shih
Independent Director
Carleton (Carly) S. Fiorina (Note 3)
Independent Director
Thomas J. Engibous (Note 4)
Meet One of the Following Professional Qualification Requirements, Together with at Least Five Years Work Experience
Criteria (Note 1)
An Instructor or Higher Position in a Department
of Commerce, Law, Finance, Accounting, or
Other Academic Department Related to the
Business Needs of the Company in a Public or
Private Junior College, College or University
A Judge, Public Prosecutor, Attorney, Certified
Public Accountant, or Other Professional or
Technical Specialists Who Has Passed a National
Examination and Been Awarded a Certificate in
a Profession Necessary for the Business of the
Company
Have Work Experience in the Area of Commerce,
Law, Finance, or Accounting, or Otherwise
Necessary for the Business of the Company
1
2
3
4
5
6
7
8
9
10
Number of Other Taiwanese Public
Companies Concurrently Serving as an
Independent Director
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
0
0
0
0
0
0
0
0
0
Note 1: Directors, during the two years before being elected or during the term of office, meet any of the following situations, please tick the appropriate corresponding boxes:
1. Not an employee of the company or any of its affiliates;
2. Not a director or supervisor of the company or any of its affiliates. The same does not apply, however, in cases where the person is an independent director of the company, its parent company, or any subsidiary in which the
company holds, directly or indirectly, more than 50% of the voting shares;
3. Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of 1% or more of the total number of
outstanding shares of the company or ranking in the top 10 in holdings;
4. Not a spouse, relative within the second degree of kinship, or lineal relative within the fifth degree of kinship, of any of the persons in the preceding three subparagraphs;
5. Not a director, supervisor, or employee of a corporate/institutional shareholder that directly holds 5% or more of the total number of outstanding shares of the company or that holds shares ranking in the top five in holdings;
6. Not a director, supervisor, officer, or shareholder holding 5% or more of the shares of a specified company or institution that has a financial or business relationship with the company;
7. Not a professional individual who, or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that, provides commercial, legal, financial, accounting services or
consultation to the company or to any affiliate of the company, or a spouse thereof;
8. Not having a marital relationship, or a relative within the second degree of kinship to any other director of the company;
9. Not been a person of any conditions defined in Article 30 of the Company Law; and
10. Not a governmental, juridical person or its representative as defined in Article 27 of the Company Law.
Note 2: Professor Lester Thurow’s tenure expired on June 9, 2009 because he was not re-elected at the 2009 Annual Shareholders’ Meeting.
Note 3: Ms. Carleton Fiorina resigned as an independent director of TSMC on November 30, 2009.
Note 4: Mr. Thomas Engibous was elected as TSMC’s independent director at the 2009 Annual Shareholders’ Meeting on June 10, 2009.
9
0
0
2
T
R
O
P
E
R
L
A
U
N
N
A
C
M
S
T
E
L
I
F
O
R
P
Y
N
A
P
M
O
C
14
Title/Name
Date Elected
Term Expires
Date First Elected
Independent Director
Thomas J. Engibous
06/10/2009
06/09/2012
06/10/2009
Shareholding When Elected
Current Shareholding
Spouse & Minor Shareholding
Shares
-
%
-
Shares
-
%
-
Shares
-
%
-
Selected Education, Past Positions & Current Positions at Non-profit Organizations
Selected Current Positions at TSMC and Other Companies
Lead Director, J. C. Penney Company Inc.
Bachelor Degree in Electrical Engineering, Purdue University
Master Degree in Electrical Engineering, Purdue University
Honorary Doctorate in Engineering, Purdue University
Member, National Academy of Engineering
Former Executive Vice President and President of the Semiconductor Group, Texas Instruments Inc.
Former President and CEO, Texas Instrument Inc.
Former Chairman of the Board, Texas Instrument Inc.
Former Chairman of the Board of Catalyst
Honorary Director of Catalyst
Trustee, Southwestern Medical Foundation
Member, The Business Council
Remarks:
1. No member of the Board of Directors held TSMC shares by nominee arrangement.
2. No member of the Board of Directors had a spouse or relative within two degrees of consanguinity serving as a manager or director at TSMC.
Name/Criteria
Chairman
Morris Chang
Vice Chairman
F.C. Tseng
Director
Tian-Jy Chen
Director
Rick Tsai
Independent Director
Sir Peter Leahy Bonfield
Independent Director
Lester Carl Thurow (Note 2)
Independent Director
Stan Shih
Independent Director
Carleton (Carly) S. Fiorina (Note 3)
Independent Director
Thomas J. Engibous (Note 4)
ˇ
ˇ
Meet One of the Following Professional Qualification Requirements, Together with at Least Five Years Work Experience
Criteria (Note 1)
An Instructor or Higher Position in a Department
of Commerce, Law, Finance, Accounting, or
Other Academic Department Related to the
Business Needs of the Company in a Public or
Private Junior College, College or University
A Judge, Public Prosecutor, Attorney, Certified
Public Accountant, or Other Professional or
Technical Specialists Who Has Passed a National
Examination and Been Awarded a Certificate in
a Profession Necessary for the Business of the
Company
Have Work Experience in the Area of Commerce,
Law, Finance, or Accounting, or Otherwise
Necessary for the Business of the Company
1
2
3
4
5
6
7
8
9
10
Number of Other Taiwanese Public
Companies Concurrently Serving as an
Independent Director
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
ˇ
0
0
0
0
0
0
0
0
0
15
2.4.3 Remuneration Paid to Directors (Note 1)
Unit: NT$ thousands
Title/Name
Chairman & CEO
Morris Chang
Vice Chairman
F.C. Tseng
Director & President of New Businesses
Rick Tsai
Independent Director
Sir Peter Leahy Bonfield
Independent Director
Lester Carl Thurow (Note 2)
Independent Director
Stan Shih
Independent Director
Carleton (Carly) S. Fiorina (Note 3)
Independent Director
Thomas J. Engibous (Note 4)
National Development Fund, Executive Yuan
Representatives:
Director
Tain-Jy Chen
Base Compensation (A)
Severance Pay and Pensions
(B) (Note 5)
Bonus to Directors (C) (Note 6)
Allowances (D) (Note 7)
Remuneration
Total Remuneration
(A+B+C+D) as a % of 2009
Net Income
Base Compensation, Bonuses,
Severance Pay and Pensions
and Allowances (E) (Note 8)
(F) (Note 5)
Employee Profit Sharing (G) (Note 9)
Compensation Earned as Employees of TSMC or of TSMC’s Consolidated Entities
Exercisable Employee Stock
Options (H) (Note 10)
Total Compensation
(A+B+C+D+E+F+G) as a %
of 2009 Net Income (Note 11)
From TSMC
From All
Consolidated
Entities
From TSMC
From All
Consolidated
Entities
From TSMC
From All
Consolidated
Entities
From TSMC
From All
Consolidated
Entities
From TSMC
From All
Consolidated
Entities
From TSMC
Consolidated
From TSMC
Consolidated
From TSMC
Consolidated
From TSMC
Consolidated
From All
Entities
From All
Entities
From TSMC
From All Consolidated Entities
Cash
Stock (Fair
Market Value)
Cash
Stock (Fair
Market Value)
From All
Entities
Compensation
Paid to
Directors
from Non-
consolidated
Affiliates
From All
Entities
25,792
25,792
1,858
1,858
59,692
59,692
275
275
0.11%
0.11%
149,806
149,806
671
671
140,814
0
140,814
0
827
827
0.43%
0.43%
None
0
0
0
0
8,000
8,000
0
0
0
0
0
0
0
0
0
0
0
0
Note 1: Remuneration Policies: The base compensation for the Chairman, Vice-Chairman and directors are determined in accordance with the procedures set forth in TSMC’s Articles of Incorporation. The Articles of Incorporation also
provides that TSMC shall allocate no more than 0.3% of earnings available for distribution as bonus to directors. The distribution of compensation to directors shall be made in accordance with TSMC’s “Rules for Distribution of
Compensation to Directors“.
Note 2: Professor Lester Thurow’s tenure expired on June 9, 2009 because he was not re-elected at the 2009 Annual Shareholders’ Meeting.
Note 3: Ms. Carleton Fiorina resigned as an independent director of TSMC on November 30, 2009.
Note 4: Mr. Thomas Engibous was elected as TSMC’s independent director at the 2009 Annual Shareholders’ Meeting on June 10, 2009.
Note 5: Pensions funded according to applicable law.
Note 6: The Board adopted a proposal for 2009 bonus to TSMC’s directors in the amount of NT$67,692 thousand at its meeting on February 9, 2010. The proposed bonus will be effected upon the approval of shareholders at the
Annual Shareholders’ Meeting on June 15, 2010.
Note 7: Includes the expense for company cars and gasoline reimbursement. The cars were fully depreciated. Excludes compensation paid to company drivers totaled NT$4,110 thousand.
Note 8: Includes the employees’ cash bonus distributed on February 12, 2010.
Note 9: The Board adopted a proposal for 2009 employee profit sharing distribution in 2010 with respect to 2009 earnings at its meeting on February 9, 2010. The above-mentioned figures are preliminary and the proposed employee
profit sharing distribution will be processed after the approval of the same by shareholders at the Annual Shareholders’ Meeting on June 15, 2010.
Note 10: Represents the number of cumulative employee stock options exercisable as of the date of this Annual Report. (Unit: thousand shares)
Note 11: Total remuneration and compensation earned as employees paid to TSMC’s directors in 2008 was NT$303,403 thousand, accounting for 0.3% of 2008 net income.
Remuneration Paid to Directors
Under NT$2,000,000
NT$2,000,000 ~ NT$5,000,000
NT$5,000,000 ~ NT$10,000,000
NT$10,000,000 ~ NT$15,000,000
NT$15,000,000 ~ NT$30,000,000
NT$30,000,000 ~ NT$50,000,000
NT$50,000,000 ~ NT$100,000,000
Over NT$100,000,000
Total
Total Remuneration (A+B+C+D)
Total Compensation (A+B+C+D+E+F+G)
From All Consolidated Entities
From TSMC
From All Consolidated Entities
2009
From TSMC
Rick Tsai (Note)
National Development Fund, Executive Yuan
Lester Carl Thurow, Stan Shih, Thomas J. Engibous
National Development Fund, Executive Yuan
Lester Carl Thurow, Stan Shih, Thomas J. Engibous
Sir Peter Leahy Bonfield, Carleton (Carly) S. Fiorina
Sir Peter Leahy Bonfield, Carleton (Carly) S. Fiorina
Morris Chang (Note), F.C. Tseng
F.C. Tseng
9
Morris Chang (Note), Rick Tsai (Note)
9
Note: According to the Company’s Articles of Incorporation, directors who also serve as executive officers of this Corporation are not entitled to receive bonus to directors. As a result, no director bonus was paid to Dr. Rick Tsai. Effective
on June 12, 2009, Dr. Morris Chang was appointed as Chief Executive Officer of TSMC, no director bonus was paid to him afterwards.
9
0
0
2
T
R
O
P
E
R
L
A
U
N
N
A
C
M
S
T
E
L
I
F
O
R
P
Y
N
A
P
M
O
C
16
Title/Name
Chairman & CEO
Morris Chang
Vice Chairman
F.C. Tseng
Director & President of New Businesses
Rick Tsai
Independent Director
Sir Peter Leahy Bonfield
Independent Director
Lester Carl Thurow (Note 2)
Independent Director
Stan Shih
Independent Director
Carleton (Carly) S. Fiorina (Note 3)
Independent Director
Thomas J. Engibous (Note 4)
National Development Fund, Executive Yuan
Representatives:
Director
Tain-Jy Chen
Base Compensation (A)
Bonus to Directors (C) (Note 6)
Allowances (D) (Note 7)
Remuneration
Severance Pay and Pensions
(B) (Note 5)
Total Remuneration
(A+B+C+D) as a % of 2009
Net Income
Base Compensation, Bonuses,
and Allowances (E) (Note 8)
Severance Pay and Pensions
(F) (Note 5)
Employee Profit Sharing (G) (Note 9)
Compensation Earned as Employees of TSMC or of TSMC’s Consolidated Entities
Exercisable Employee Stock
Options (H) (Note 10)
Total Compensation
(A+B+C+D+E+F+G) as a %
of 2009 Net Income (Note 11)
From TSMC
Consolidated
From TSMC
Consolidated
From TSMC
Consolidated
From TSMC
Consolidated
From TSMC
Consolidated
From TSMC
From All
Entities
From All
Entities
From All
Entities
From All
Entities
From All
Entities
From All
Consolidated
Entities
From TSMC
From All
Consolidated
Entities
From TSMC
From All Consolidated Entities
Cash
Stock (Fair
Market Value)
Cash
Stock (Fair
Market Value)
From TSMC
From All
Consolidated
Entities
From TSMC
From All
Consolidated
Entities
Compensation
Paid to
Directors
from Non-
consolidated
Affiliates
25,792
25,792
1,858
1,858
59,692
59,692
275
275
0.11%
0.11%
149,806
149,806
671
671
140,814
0
140,814
0
827
827
0.43%
0.43%
None
0
0
0
0
8,000
8,000
0
0
0
0
0
0
0
0
0
0
0
0
17
2.5 Management Team
2.5.1 Information Regarding Management Team
Title/Name
On-board Date (Note 1)
Chairman & CEO
Morris Chang (Note 2)
01/01/1987
Shareholding
Spouse & Minor
Shareholding
118,587,914
%
0.46%
Shareholding
85,217
%
0.00%
President
New Businesses
Rick Tsai
Senior Vice President & Chief Information Officer
Information Technology & Materials Management
and Risk Management
Stephen T. Tso
Senior Vice President
Operations
Mark Liu
Senior Vice President
Business Development
C.C. Wei
Senior Vice President
Research & Development
Shang-yi Chiang
Vice President
Mainstream Fab Operations/Affiliates
M.C. Tzeng
Vice President & General Counsel
Legal
Richard Thurston
Vice President, Chief Financial Officer &
Spokesperson
Finance
Lora Ho
Vice President
Materials Management and Risk Management
P.H. Chang (Note 3)
Vice President
Operations
Wei-Jen Lo
Vice President
Worldwide Sales and Marketing
Jason C.S. Chen
Vice President & Chief Technology Officer
Research and Development
Jack Sun
Vice President
Deputy Head of Research and Development
Design and Technology Platform
Fu-Chieh Hsu
Vice President
Operations
Y.P. Chin
Vice President
Quality and Reliability
N.S. Tsai
Vice President
President of TSMC North America
Rick Cassidy
Vice President
Human Resources
L.C. Tu
12/18/1989
33,654,505
0.13%
12/16/1996
15,055,693
0.06%
11/15/1993
13,000,573
0.05%
-
-
-
-
-
-
02/01/1998
8,444,325
0.03%
261
0.00%
11/10/2009
2,412,481
0.01%
-
-
01/01/1987
7,699,595
0.03%
102,722
0.00%
01/02/2002
1,939,892
0.01%
-
-
06/01/1999
6,221,080
0.02%
110,268
0.00%
07/01/2000
5,098,778
0.02%
07/01/2004
2,881,127
0.01%
-
-
-
-
03/31/2005
2,488,320
0.01%
122
0.00%
06/02/1997
4,817,095
0.02%
03/31/2006
2,015,726
0.01%
-
-
-
-
01/01/1987
6,184,823
0.02%
140,808
0.00%
03/01/2000
2,051,180
0.01%
1,103,253
0.00%
11/14/1997
0
0.00%
-
-
01/01/1987
9,310,067
0.04%
1,252,481
0.00%
Note 1: On-board date means the offical date joining TSMC.
Note 2: Effective June 12, 2009, the Chairman of the Board, Dr. Morris Chang, was appointed as Chief Executive Officer of TSMC.
Note 3: Mr. P.H. Chang’s special retirement has been approved and will be effective starting from March 31, 2010.
9
0
0
2
T
R
O
P
E
R
L
A
U
N
N
A
C
M
S
T
E
L
I
F
O
R
P
Y
N
A
P
M
O
C
18
TSMC Shareholding by
Nominee Arrangement (Shares)
Education & Selected Past Positions
Selected Current Positions at Other Companies
Managers Who are Spouses or within Second-degree Relative
of Consanguinity to Each Other
Title
Name
Relation
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Department
Manager
M.J. Tzeng
Siblings
Ph.D., Materials Science & Engineering, University of California, Berkeley, USA
Director, TSMC subsidiaries
Ph.D., Electrical Engineering & Computer Science, University of California, Berkeley, USA
None
Ph.D., Electrical Engineering, Stanford University, USA
Chairman, Industrial Technology Research Institute
President & Chief Operation Officer, General Instrument Corporation
Group Senior Vice-President, Texas Instrument
Ph.D., Material Science, Cornell University, USA
Chief Executive Officer, TSMC
Chief Operating Officer, TSMC
Executive Vice President, Worldwide Marketing and Sales, TSMC
President, Vanguard International Semiconductor Corp.
President, WaferTech, L.L.C.
Senior Vice President, Operations, TSMC
Senior Vice President, Advanced Technology Business, TSMC
Vice President, South Site Operation, TSMC
President, Worldwide Semiconductor Manufacturing Corp.
Ph.D., Electrical Engineering, Yale University, USA
Senior Vice President, Mainstream Technology Business, TSMC
Vice President, South Site Operation, TSMC
Senior Vice President, Chartered Semiconductor Manufacturing Ltd.
Ph.D., Electrical Engineering, Stanford University, USA
Senior Vice President, Research and Development, TSMC
Master, Applied Chemistry, Chungyuan University, Taiwan
Vice President, Mainstream Technology Business, TSMC
Senior Director, Fab 2 Operation, TSMC
J.D., Rutgers School of Law, State University of New Jersey, USA
Ph.D., History, University of Virginia, USA
Partner, Haynes Boone, LLP.
None
Director, TSMC subsidiaries
Director, TSMC subsidiaries
Director, TSMC affiliates
Director, TSMC subsidiaries
Director, TSMC affiliates
None
Director, TSMC subsidiaries
Director, TSMC affiliates
Vice President Corporate Staff, Assistant General Counsel, Texas Instruments Incorporated
Master, Business Administration, National Taiwan University, Taiwan
Director and/or Supervisor, TSMC subsidiaries
Director, Accounting, TSMC
Vice President & CFO, TI-Acer Semiconductor Manufacturing Corp.
Director, TSMC affiliates
Ph.D., Materials Science & Engineering, Purdue University, USA
None
Vice President, Human Resources, TSMC
Senior Director, Materials Management, TSMC
Vice President, Worldwide Semiconductor Manufacturing Corp.
Ph.D., Solid State Physics & Surface Chemistry, University of California, Berkeley, USA
None
Vice President, Advanced Technology Business, TSMC
Vice President, Research & Development, TSMC
Vice President, Operation II, TSMC
Director, Advanced Technology Development & CTM Plant Manager, Intel
Master, Business Administration, University of Missouri-Columbia, USA
Vice President & Co-Director of Worldwide Sales & Marketing Group, Intel
Ph.D., Electrical Engineering, University of Illinois at Urbana-Champaign, USA
None
Director, TSMC subsidiaries
Ph.D., Electrical Engineering and Computer Sciences, University of California, Berkeley, USA
Director, TSMC subsidiaries
Senior Director, Logic Technology Division, TSMC
R&D, International Business Machines
Chairman, Monolithic System Technology Inc.
Chairman, Myson Technology Inc.
Vice President, Integrated Device Technology Inc.
Master, Electrical Engineering, National Cheng Kung University, Taiwan
Vice President, Advanced Technology Business, TSMC
Senior Director, Product Engineering & Services, TSMC
Ph.D., Material Science, Massachusetts Institute of Technology, USA
Senior Director, Assembly Test Technology & Service, TSMC
Vice President, Operations, Vanguard International Semiconductor Corp.
Bachelor, Engineering Technology, United States Military Academy at West Point, USA
Director, TSMC North America
Vice President of TSMC North America Account Management
None
None
None
Master, Business Administration, Tulane University, USA
Senior Director, Corporate Planning Organization, TSMC
Senior Director, Fab 5 Operation, TSMC
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Shareholding
Spouse & Minor
Shareholding
118,587,914
%
0.46%
Shareholding
85,217
%
0.00%
TSMC Shareholding by
Nominee Arrangement (Shares)
Chairman & CEO
Morris Chang (Note 2)
01/01/1987
12/18/1989
33,654,505
0.13%
Senior Vice President & Chief Information Officer
12/16/1996
Information Technology & Materials Management
15,055,693
0.06%
11/15/1993
13,000,573
0.05%
02/01/1998
8,444,325
0.03%
261
0.00%
11/10/2009
2,412,481
0.01%
Mainstream Fab Operations/Affiliates
01/01/1987
7,699,595
0.03%
102,722
0.00%
Vice President & General Counsel
01/02/2002
1,939,892
0.01%
President
New Businesses
Rick Tsai
and Risk Management
Stephen T. Tso
Senior Vice President
Operations
Mark Liu
Senior Vice President
Business Development
C.C. Wei
Senior Vice President
Research & Development
Shang-yi Chiang
Vice President
M.C. Tzeng
Legal
Richard Thurston
Spokesperson
Finance
Lora Ho
Vice President
Vice President
Operations
Wei-Jen Lo
Materials Management and Risk Management
P.H. Chang (Note 3)
07/01/2000
5,098,778
0.02%
07/01/2004
2,881,127
0.01%
03/31/2005
2,488,320
0.01%
122
0.00%
Vice President & Chief Technology Officer
06/02/1997
4,817,095
0.02%
03/31/2006
2,015,726
0.01%
01/01/1987
6,184,823
0.02%
140,808
0.00%
03/01/2000
2,051,180
0.01%
1,103,253
0.00%
President of TSMC North America
11/14/1997
0
0.00%
01/01/1987
9,310,067
0.04%
1,252,481
0.00%
Vice President
Worldwide Sales and Marketing
Jason C.S. Chen
Research and Development
Deputy Head of Research and Development
Design and Technology Platform
Jack Sun
Vice President
Fu-Chieh Hsu
Vice President
Operations
Y.P. Chin
Vice President
Quality and Reliability
N.S. Tsai
Vice President
Rick Cassidy
Vice President
Human Resources
L.C. Tu
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Title/Name
On-board Date (Note 1)
Education & Selected Past Positions
Selected Current Positions at Other Companies
Ph.D., Electrical Engineering, Stanford University, USA
Chairman, Industrial Technology Research Institute
President & Chief Operation Officer, General Instrument Corporation
Group Senior Vice-President, Texas Instrument
Ph.D., Material Science, Cornell University, USA
Chief Executive Officer, TSMC
Chief Operating Officer, TSMC
Executive Vice President, Worldwide Marketing and Sales, TSMC
President, Vanguard International Semiconductor Corp.
None
Director, TSMC subsidiaries
Ph.D., Materials Science & Engineering, University of California, Berkeley, USA
President, WaferTech, L.L.C.
Senior Vice President, Operations, TSMC
Director, TSMC subsidiaries
Ph.D., Electrical Engineering & Computer Science, University of California, Berkeley, USA
Senior Vice President, Advanced Technology Business, TSMC
Vice President, South Site Operation, TSMC
President, Worldwide Semiconductor Manufacturing Corp.
None
Ph.D., Electrical Engineering, Yale University, USA
Senior Vice President, Mainstream Technology Business, TSMC
Vice President, South Site Operation, TSMC
Senior Vice President, Chartered Semiconductor Manufacturing Ltd.
Ph.D., Electrical Engineering, Stanford University, USA
Senior Vice President, Research and Development, TSMC
Master, Applied Chemistry, Chungyuan University, Taiwan
Vice President, Mainstream Technology Business, TSMC
Senior Director, Fab 2 Operation, TSMC
J.D., Rutgers School of Law, State University of New Jersey, USA
Ph.D., History, University of Virginia, USA
Partner, Haynes Boone, LLP.
Vice President Corporate Staff, Assistant General Counsel, Texas Instruments Incorporated
Director, TSMC subsidiaries
Director, TSMC affiliates
Director, TSMC subsidiaries
Director, TSMC affiliates
None
Director, TSMC subsidiaries
Director, TSMC affiliates
Vice President, Chief Financial Officer &
06/01/1999
6,221,080
0.02%
110,268
0.00%
Master, Business Administration, National Taiwan University, Taiwan
Director, Accounting, TSMC
Vice President & CFO, TI-Acer Semiconductor Manufacturing Corp.
Director and/or Supervisor, TSMC subsidiaries
Director, TSMC affiliates
Ph.D., Materials Science & Engineering, Purdue University, USA
Vice President, Human Resources, TSMC
Senior Director, Materials Management, TSMC
Vice President, Worldwide Semiconductor Manufacturing Corp.
Ph.D., Solid State Physics & Surface Chemistry, University of California, Berkeley, USA
Vice President, Advanced Technology Business, TSMC
Vice President, Research & Development, TSMC
Vice President, Operation II, TSMC
Director, Advanced Technology Development & CTM Plant Manager, Intel
None
None
Master, Business Administration, University of Missouri-Columbia, USA
Vice President & Co-Director of Worldwide Sales & Marketing Group, Intel
Director, TSMC subsidiaries
Ph.D., Electrical Engineering, University of Illinois at Urbana-Champaign, USA
Senior Director, Logic Technology Division, TSMC
R&D, International Business Machines
None
Ph.D., Electrical Engineering and Computer Sciences, University of California, Berkeley, USA
Chairman, Monolithic System Technology Inc.
Chairman, Myson Technology Inc.
Vice President, Integrated Device Technology Inc.
Director, TSMC subsidiaries
Master, Electrical Engineering, National Cheng Kung University, Taiwan
Vice President, Advanced Technology Business, TSMC
Senior Director, Product Engineering & Services, TSMC
Ph.D., Material Science, Massachusetts Institute of Technology, USA
Senior Director, Assembly Test Technology & Service, TSMC
Vice President, Operations, Vanguard International Semiconductor Corp.
None
None
Bachelor, Engineering Technology, United States Military Academy at West Point, USA
Vice President of TSMC North America Account Management
Director, TSMC North America
Master, Business Administration, Tulane University, USA
Senior Director, Corporate Planning Organization, TSMC
Senior Director, Fab 5 Operation, TSMC
None
As of 02/28/2010
Managers Who are Spouses or within Second-degree Relative
of Consanguinity to Each Other
Title
Name
Relation
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Department
Manager
M.J. Tzeng
Siblings
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
19
2.5.2 Compensation Paid to CEO, President and Vice Presidents (Note 1)
Unit: NT$ thousands
Title
Name
From TSMC
From All
Consoildated
Entities
From TSMC
From All
Consoildated
Entities
From TSMC
From All
Consoildated
Entities
From TSMC
From All Consoildated Entities
Cash
Stock
(Fair Market Value)
Cash
Stock
(Fair Market Value)
From TSMC
From TSMC
From All
Consoildated
Entities
Salary
Severance Pay and Pensions (Note 5)
Bonuses and Allowances (Note 6)
Employee Profit Sharing (Note 7)
Total Compensation as a % of 2009 Net
Exercisable Employee Stock Options
Income (Note 8)
(Note 9)
Compensation
Received from
Non-consoildated
Affiliates
From All
Consoildated
Entities
Chairman & Chief Executive Officer
Morris Chang (Note 2)
President
New Businesses
Senior Vice President & Chief Information Officer
Information Technology & Materials Management and
Risk Management
Senior Vice President
Operations
Senior Vice President
Business Development
Senior Vice President
Research and Development
Vice President
Mainstream Fab Operations/Affiliates
Vice President & General Counsel
Legal
Vice President, Chief Financial Officer & Spokesperson
Finance
Vice President
Materials Management and Risk Management
Vice President
Operations
Vice President
Worldwide Sales and Marketing
Vice President & Chief Technology Officer
Research and Development
Vice President
Deputy Head of Research and Development
Design and Technology Platform
Vice President
Operations
Vice President
Quality and Reliability
Vice President
President of TSMC North America
Vice President
Human Resources
Rick Tsai
Stephen T. Tso
Mark Liu
C.C. Wei
Shang-yi Chiang (Note 3)
M.C. Tzeng
Richard Thurston
Lora Ho
P.H. Chang
Wei-Jen Lo
Jason C.S. Chen
Jack Sun
Fu-Chieh Hsu
Y.P. Chin
N.S. Tsai
Rick Cassidy
L.C. Tu (Note 4)
54,570
65,621
5,575
13,008
420,989
487,275
395,314
0
395,314
0
0.98%
1.08%
2,626
3,597
None
Note 1: Compensation Policy: The cash compensation and profit sharing paid to CEO, the President and each vice president are also reviewed by the Compensation Committee individually based on their job responsibility, contribution,
performance and projected future risks facing the Company before the compensation and profit sharing proposals are submitted to the Board of Directors for approval.
Note 2: Effective June 12, 2009, the Chairman of the Board, Dr. Morris Chang, was appointed as Chief Executive Officer of TSMC.
Note 3: Mr. Shang-yi Chiang was appointed as Senior Vice President on November 10, 2009.
Note 4: Mr. L.C. Tu was promoted on August 11, 2009.
Note 5: Pensions funded according to applicable law.
Note 6: Includes the expense for company cars, gasoline reimbursement and employees’ cash bonus distributed on February 12, 2010. Excludes compensation paid to company drivers totaled NT$3,285 thousand.
Note 7: The Board adopted a proposal for 2009 employee profit sharing distribution in 2010 with respect to 2009 earnings at its meeting on February 9, 2010. The above-mentioned figures are preliminary and the proposed employee
profit sharing distribution will be processed after the approval of the same by shareholders at the Annual Shareholders’ Meeting on June 15, 2010.
Note 8: Total compensation paid to TSMC’s President and vice presidents in 2008 was NT$784,464 thousand, accounting for 0.78% of 2008 net income.
Note 9: Represents cumulative employee stock options exercisable as of the date of this Annual Report.
Compensation Paid to CEO, President and Vice Presidents
Under NT$2,000,000
From NT$2,000,000 ~ NT$5,000,000
From NT$5,000,000 ~ NT$10,000,000
From NT$10,000,000 ~ NT$15,000,000
From TSMC
-
-
-
-
2009
From All Consolidated Entities
-
-
-
-
From NT$15,000,000 ~ NT$30,000,000
Shang-yi Chiang, Y.P. Chin, N.S. Tsai, L.C. Tu
From NT$30,000,000 ~ NT$50,000,000
M.C. Tzeng, Richard Thurston, Lora Ho, P.H. Chang, Wei-Jen Lo, Jason C.S. Chen, Jack Sun, Fu-Chieh Hsu
From NT$50,000,000 ~ NT$100,000,000
Stephen T. Tso, Mark Liu, C.C. Wei, Rick Cassidy
Over NT$100,000,000
Total
Morris Chang, Rick Tsai
18
9
0
0
2
T
R
O
P
E
R
L
A
U
N
N
A
C
M
S
T
E
L
I
F
O
R
P
Y
N
A
P
M
O
C
20
Salary
Severance Pay and Pensions (Note 5)
Bonuses and Allowances (Note 6)
Employee Profit Sharing (Note 7)
Total Compensation as a % of 2009 Net
Income (Note 8)
Exercisable Employee Stock Options
(Note 9)
From TSMC
From TSMC
From TSMC
From All
Consoildated
Entities
From All
Consoildated
Entities
From All
Consoildated
Entities
From TSMC
From All Consoildated Entities
Cash
Stock
(Fair Market Value)
Cash
Stock
(Fair Market Value)
From TSMC
From All
Consoildated
Entities
From TSMC
From All
Consoildated
Entities
Compensation
Received from
Non-consoildated
Affiliates
54,570
65,621
5,575
13,008
420,989
487,275
395,314
0
395,314
0
0.98%
1.08%
2,626
3,597
None
Title
President
New Businesses
Risk Management
Senior Vice President
Operations
Senior Vice President
Business Development
Legal
Finance
Vice President
Vice President
Operations
Vice President
Chairman & Chief Executive Officer
Morris Chang (Note 2)
Senior Vice President & Chief Information Officer
Stephen T. Tso
Information Technology & Materials Management and
Senior Vice President
Research and Development
Vice President
Mainstream Fab Operations/Affiliates
Shang-yi Chiang (Note 3)
M.C. Tzeng
Vice President & General Counsel
Richard Thurston
Vice President, Chief Financial Officer & Spokesperson
Lora Ho
Vice President & Chief Technology Officer
Jack Sun
Materials Management and Risk Management
Worldwide Sales and Marketing
Research and Development
Vice President
Deputy Head of Research and Development
Design and Technology Platform
Vice President
Operations
Vice President
Quality and Reliability
Vice President
President of TSMC North America
Vice President
Human Resources
Name
Rick Tsai
Mark Liu
C.C. Wei
P.H. Chang
Wei-Jen Lo
Jason C.S. Chen
Fu-Chieh Hsu
Y.P. Chin
N.S. Tsai
Rick Cassidy
L.C. Tu (Note 4)
21
Stock
(Fair Market Value)
Cash
Total Employee Profit Sharing
Total Employee Profit Sharing Paid to
Management Team as a % of 2009 Net Income
0
421,097
421,097
0.47%
2.5.3 Employee Profit Sharing Granted to Management Team (Note 1)
Unit: NT$ thousands
Title
Chairman & Chief Executive Officer
President
New Businesses
Senior Vice President & Chief Information Officer
Information Technology & Materials Management and Risk Management
Senior Vice President
Operations
Senior Vice President
Business Development
Senior Vice President
Research and Development
Vice President
Mainstream Fab Operations/Affiliates
Vice President & General Counsel
Legal
Vice President, Chief Financial Officer & Spokesperson
Finance
Vice President
Materials Management and Risk Management
Vice President
Operations
Vice President
Worldwide Sales and Marketing
Vice President & Chief Technical Officer
Research and Development
Vice President
Deputy Head of Research and Development
Design and Technology Platform
Vice President
Operations
Vice President
Quality and Reliability
Vice President
Human Resources
Senior Director
Finance
Senior Director
New Businesses
Senior Director
Corporate Planning
Name
Morris Chang (Note 2)
Rick Tsai
Stephen T. Tso
Mark Liu
C.C. Wei
Shang-yi Chiang (Note 3)
M.C. Tzeng
Richard Thurston
Lora Ho
P.H. Chang
Wei-Jen Lo
Jason C.S. Chen
Jack Sun
Fu-Chieh Hsu
Y.P. Chin
N.S. Tsai
L.C. Tu (Note 4)
Jan Kees van Vliet
Y.C. Chao (Note 5)
Irene Sun (Note 6)
Note 1: The Board adopted a proposal for 2009 employee profit sharing distribution in 2010 with respect to 2009 earnings at its meeting on February 9, 2010. The above-mentioned figures are preliminary and the proposed employee
profit sharing distribution will be processed after the approval of the same by shareholders at the Annual Shareholders’ Meeting on June 15, 2010.
Note 2: Effective June 12, 2009, the Chairman of the Board, Dr. Morris Chang, was appointed as Chief Executive Officer of TSMC.
Note 3: Mr. Shang-yi Chiang was appointed as Senior Vice President on November 10, 2009.
Note 4: Mr. L.C. Tu was promoted on August 11, 2009.
Note 5: Mr. Y.C. Chao was promoted on May 6, 2009.
Note 6: Ms. Irene Sun was promoted on August 11, 2009.
9
0
0
2
T
R
O
P
E
R
L
A
U
N
N
A
C
M
S
T
E
L
I
F
O
R
P
Y
N
A
P
M
O
C
22
Chairman & Chief Executive Officer
Morris Chang (Note 2)
Title
President
New Businesses
Senior Vice President & Chief Information Officer
Information Technology & Materials Management and Risk Management
Stock
(Fair Market Value)
Cash
Total Employee Profit Sharing
Total Employee Profit Sharing Paid to
Management Team as a % of 2009 Net Income
0
421,097
421,097
0.47%
Senior Vice President
Operations
Senior Vice President
Business Development
Senior Vice President
Research and Development
Vice President
Mainstream Fab Operations/Affiliates
Vice President & General Counsel
Vice President, Chief Financial Officer & Spokesperson
Materials Management and Risk Management
Legal
Finance
Vice President
Vice President
Operations
Vice President
Worldwide Sales and Marketing
Vice President & Chief Technical Officer
Research and Development
Vice President
Deputy Head of Research and Development
Design and Technology Platform
Vice President
Operations
Vice President
Quality and Reliability
Vice President
Human Resources
Senior Director
Finance
Senior Director
New Businesses
Senior Director
Corporate Planning
Shang-yi Chiang (Note 3)
Name
Rick Tsai
Mark Liu
C.C. Wei
Stephen T. Tso
M.C. Tzeng
Richard Thurston
Lora Ho
P.H. Chang
Wei-Jen Lo
Jason C.S. Chen
Jack Sun
Fu-Chieh Hsu
Y.P. Chin
N.S. Tsai
L.C. Tu (Note 4)
Jan Kees van Vliet
Y.C. Chao (Note 5)
Irene Sun (Note 6)
23
9
0
0
2
T
R
O
P
E
R
L
A
U
N
N
A
C
M
S
T
E
C
N
A
N
R
E
V
O
G
E
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3. CORPORATE GOVERNANCE
TSMC advocates and acts upon the principles of operational transparency and respect for shareholder rights. We believe that the basis for
successful corporate governance is a sound and effective Board of Directors. In line with this principle, TSMC’s Board of Directors established an
Audit Committee in 2002 and a Compensation Committee in 2003.
TSMC’s corporate governance won international recognition in 2009: Corporate Governance Asia honored TSMC with its “Corporate Governance
Asia Recognition in Taiwan”. FinanceAsia Magazine ranked TSMC’s corporate governance as the best among all companies in Taiwan with its “Best
at Corporate Governance” for the Taiwan region.
3.1 Board of Directors
TSMC’s Board of Directors consists of seven (Note) distinguished members with a great breadth of experience as world-class business leaders or
scholars. Three of the seven members are independent directors: former British Telecommunications Chief Executive Officer, Sir Peter Bonfield;
former Acer Group Chairman, Mr. Stan Shih; and former Texas Instrument Inc. Chairman of the Board, Mr. Thomas J. Engibous. Under the
leadership of Chairman Morris Chang, TSMC’s Board of Directors takes a serious and forthright approach to its duties and is a serious, competent
and independent Board.
In the spirit of Chairman Chang’s approach to corporate governance, a board of directors’ primary duty is to supervise. The Board should supervise
the Company’s: compliance with relevant laws and regulations; financial transparency; timely disclosure of material information, and maintaining
of highest integrity within the Company. TSMC’s Board of Directors strives to perform through the Audit Committee and the Compensation
Committee, the hiring of a financial expert for the Audit Committee, coordination with the Internal Audit department, and through the
ombudsman reporting system.
The second duty of the board of directors is to provide guidance to the management team of the Company. Quarterly, TSMC’s management
reports to the TSMC Board on a variety of subjects. The management also reviews the Company’s business strategies with the Board. Furthermore,
the management often reviews with and updates TSMC’s Board on the progress of the strategies, obtaining Board guidance as appropriate.
The third duty of the Board of Directors is to evaluate the management’s performance and to dismiss officers of the Company when necessary.
TSMC’s management has maintained a healthy and functional communication with TSMC Board of Directors, has been devoted in executing
guidance of TSMC Board of Directors, and is dedicated in running the business operations, all to achieve the best interests for TSMC shareholders.
Note: Throughout most of 2009, TSMC’s Board of Directors consisted of eight directors. Ms. Carleton Fiorina resigned as an independent director
of TSMC on November 30, 2009, because she planned to devote her full time and energy to US senatorial campaign.
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Board of Directors Meeting Status
Dr. Morris Chang, the Chairman of the Board of Directors, convened four regular meetings and three special meetings in 2009. The directors’
attendance status is as follows:
Title
Chairman
Name
Morris Chang
Vice Chairman
F.C. Tseng
Director
National Development Fund,
Executive Yuan Representative:
Tian-Jy Chen
Director
Rick Tsai
Independent Director
Sir Peter Leahy Bonfield
Independent Director
Lester Carl Thurow
Independent Director
Stan Shih
Independent Director
Carleton (Carly) S. Fiorina
Independent Director
Thomas J. Engibous
Attendance
in Person
By Proxy
Attendance Rate
in Person (%)
Notes
7
7
2
7
4
0
7
1
3
0
0
5
0
3
2
0
5
0
100%
100%
29%
Renewal of office (Re-elected on June 10)
Renewal of office (Re-elected on June 10)
Renewal of office (Re-elected on June 10)
The former representative of the National Development Fund, Mr. Chintay Shih,
resigned on November 10, 2008. Mr. Tian-Jy Chen was appointed as the representative
on April 22, 2009.
100%
Renewal of office (Re-elected on June 10)
57%
Renewal of office (Re-elected on June 10)
Sir Peter Bonfield participated in the discussion through telephone at two Special
Meetings, represented by proxy.
0%
Term Expired (Professor Thurow’s tenure expired on June 9, 2009 because he was not
re-elected at the 2009 Annual Shareholders’ Meeting.)
100%
Renewal of office (Re-elected on June 10)
17%
Renewal of office (Re-elected on June 10)
Ms. Fiorina resigned as an independent director of TSMC on November 30, 2009.
Ms. Fiorina participated in the discussion through telephone at one special meeting,
represented by proxy.
75%
New office assumed (Elected on June 10)
Mr. Engibous attended via telephone at one special meeting.
Annotations:
1. In 2009, there were no written or otherwise recorded resolutions on which an independent director had a dissenting opinion or qualified opinion.
2. There were no recusals of Directors due to conflicts of interests in 2009.
3. Measures taken to strengthen the functionality of the Board: We believe that the basis for successful corporate governance is a sound and effective Board of Directors. In line with this principle, TSMC’s Board of
Directors has established an Audit Committee and a Compensation Committee to assist the Board in carrying out its various duties.
3.1.1 Audit Committee
The Audit Committee assists the Board in carrying out its financial oversight responsibilities and other duties as set forth in the Company Act, the
Securities and Exchange Act, and other applicable laws and regulations. Matters required to be reviewed by the Audit Committee include the
Company’s: financial reports; auditing and accounting policies and procedures; internal control systems; material asset or derivatives transactions;
offering or issuance of any equity-type securities; hiring or dismissal of an attesting CPA, or the compensation given thereto; and appointment or
discharge of financial, accounting, or internal auditing officers.
TSMC’s Audit Committee is empowered by its Charter to conduct any study or investigation it deems appropriate to fulfill its responsibilities. It has
direct access to TSMC’s internal auditors, the Company’s independent auditors, and all employees of the Company. The Committee is authorized
to retain and oversee special legal, accounting, or other consultants as it deems appropriate to fulfill its mandate.
As of February 2010, the Audit Committee was comprised of all three independent directors and had engaged a financial expert consultant. The
Audit Committee Charter is available on TSMC’s corporate website.
Audit Committee Meeting Status
Sir Peter Bonfield, Chairman of the Audit Committee, convened four regular meetings and three special meetings in 2009. The Committee
members’ attendance status is as follows:
Title
Chair
Member
Member
Member
Member
Name
Sir Peter Leahy Bonfield
Lester Carl Thurow
Stan Shih
Carleton (Carly) S. Fiorina
Thomas J. Engibous
Financial Expert
J.C. Lobbezoo
Attendance
in Person
By Proxy
Attendance Rate
in Person (%)
Notes
7
1
7
3
4
7
0
2
0
2
0
0
100%
Renewal of office (Note)
33%
Term Expired (After the re-election of the Board of Directors at the 2009 Annual
Shareholders’ Meeting on June 10, 2009, Professor Thurow did not become a member
of the Audit Committee.)
100%
Renewal of office (Note)
43%
100%
100%
Renewal of office (Note)
Ms. Fiorina resigned on November 30, 2009.
New office assumed (Note)
None
Annotations:
1. Resolution under Securities and Exchange Act §14-5 that was not submitted to the Audit Committee* but approved by all directors at the Board of Director’s special meeting held on December 9, 2009:
Resolution: To approve investment in an amount not exceeding NT$6,300 million in Motech Industries, Inc.
* The urgency of the matter required an immediate resolution. Since most of the Audit Committee members were overseas, the meeting could not be effectively convened. Therefore, the matter was not submitted
to the Audit Committee for approval, but it was approved by all the directors present at the Board of Director’s special meeting held on December 9, 2009.
2. There were no recusals of independent directors due to conflicts of interests in 2009.
3. Descriptions of the communications between the independent directors, the internal auditors, and the independent auditors in 2009 (e.g. the channels, items and/or results of the audits on the corporate finance
and/or operations, etc.):
1) The internal auditors have sent the audit reports to the members of the Audit Committee periodically, and presented the findings of all audit reports in the quarterly meetings of the Audit Committee. The head of
Internal Audit will immediately report to the members of the Audit Committee any material matters. During 2009, the head of Internal Audit did not report any irregularity. The communication channel between
the Audit Committee and the internal auditor functioned well.
2) The Company’s independent auditors have presented the findings of their quarterly audits on the company’s financial results. Under applicable laws and regulations, the independent auditors are also required to
immediately communicate to the Audit Committee any material matters that they have discovered. During 2009, the Company’s independent auditors did not report any irregularity. The communication channel
between the Audit Committee and the independent auditors functioned well.
Note: Sir Peter Leahy Bonfield, Mr. Stan Shih, Ms. Carleton Fiorina and Mr. Thomas J. Engibous were elected as TSMC’s independent directors and became members of the Audit Committee on June 10, 2009.
3.1.2 Compensation Committee
The Compensation Committee assists the Board in discharging its responsibilities related to TSMC’s compensation and benefits policies, plans and
programs, and in the evaluation and compensation of TSMC’s executives.
As of February 2010, the Compensation Committee was comprised of four members. All three independent directors served as voting members
of the Committee; the Chairman of the Board, Dr. Morris Chang, was a non-voting member. The Compensation Committee Charter is available
on TSMC’s corporate website.
Compensation Committee Meeting Status
Mr. Stan Shih, Chairman of the Compensation Committee, convened four regular meetings in 2009. The Committee members’ attendance status
is as follows:
Title
Chair
Member
Member
Member
Member
Member
Name
Stan Shih
Morris Chang
Sir Peter Leahy Bonfield
Lester Carl Thurow
Carleton (Carly) S. Fiorina
Thomas J. Engibous
Attendancein Person
Attendance Rate in
Person (%)
Notes
4
4
4
0
1
3
100%
100%
100%
0%
25%
Renewal of office (Note)
Renewal of office (Note)
Renewal of office (Note)
Term Expired (After the re-election of the Board of Directors
at the 2009 Annual Shareholders’ Meeting on June 10,
2009, Professor Thurow did not become a member of the
Compensation Committee.)
Renewal of office (Note)
Ms. Fiorina resigned on November 30, 2009.
100%
New office assumed (Note)
Note: Mr. Stan Shih, Sir Peter Leahy Bonfield, Ms. Carleton Fiorina and Mr. Thomas J. Engibous were elected as TSMC’s independent directors and became members of the Compensation Committee on June 10, 2009. The Chairman of
the Board, Dr. Morris Chang, was a non-voting member.
3.2 Taiwan Corporate Governance Implementation as Required by the Taiwan Financial
Supervisory Commission
Item
Implementation Status
1. Shareholding Structure & Shareholders’ Rights
(1) Method of handling shareholder suggestions or complaints
TSMC has designated appropriate departments, such as Investor Relations, Public
Relations, the SEC Compliance Department, Legal Department, etc., to handle
shareholder suggestions or complaints.
(2) The Company’s possession of a list of major shareholders and a list of ultimate
owners of these major shareholders
TSMC tracks the shareholdings of directors, officers, and shareholders holding more
than 10% of the outstanding shares of TSMC.
(3) Risk management mechanism and “firewall” between the Company and its affiliates
TSMC has established appropriate guidelines in its “Internal Control System” and “TSMC
Invested Entity Governance and Management Policy”.
2. Composition and Responsibilities of the Board of Directors
(1) Independent Directors
Sir Peter Leahy Bonfield, Prof. Lester Carl Thurow (Note 1), Mr. Stan Shih, Ms. Carleton
(Carly) S. Fiorina (Note 2) and Mr. Thomas J. Engibous (Note 3) are the independent
directors of TSMC.
(2) Regular evaluation of external auditors’ independence
The TSMC Audit Committee regularly evaluates the independence of external auditors.
3. Communication channel with stakeholders
4. Information Disclosure
(1) Establishment of a corporate website to disclose information regarding the
Company’s financials, business and corporate governance status
(2) Other information disclosure channels (e.g., maintaining an English-language
website, designating people to handle information collection and disclosure,
appointing spokespersons, webcasting investors conference etc.)
TSMC has designated appropriate departments, such as Investor Relations, Public
Relations, the SEC Compliance Department, etc., to communicate with stakeholders
on a case by case basis, as needed. Furthermore, the contact information providing
access to the Company’s spokesperson and relevant departments is available on TSMC’s
website.
TSMC discloses information through its website http://www.tsmc.com.
Since TSMC is a foreign private issuer with American Depository Receipts listed on the
New York Stock Exchange (NYSE), TSMC is subject to various NYSE regulations, one of
which requires TSMC to disclose the significant ways in which its corporate governance
practices differ from those followed by US domestic companies under NYSE listing
standards. Such disclosure information may be found at the following web address:
http://www.tsmc.com/download/english/e03_governance/NYSE_Section_303A.pdf
TSMC has designated appropriate departments (e.g. Investor Relations, Public Relations,
the SEC Compliance Department, etc.) to handle the collection and disclosure of
information as required by the relevant laws and regulations of Taiwan and other
jurisdictions.
TSMC has designated spokespersons as required by relevant regulations.
TSMC webcasts live investor conferences.
Non-implementation and Its
Reason(s)
None
None
None
None
5. Operations of the Company’s Nomination Committee, Compensation Committee, or
other committees of the Board of Directors
TSMC’s Board of Directors has established an Audit Committee and a Compensation
Committee. Please refer to the “Corporate Governance” section on pages 25-31 of this
Annual Report for details.
None
(Continued)
27
6. If the Company has established corporate governance policies based on TSE Corporate Governance Best Practice Principles, please describe any discrepancy between the policies and their implementation.
TSMC does not establish corporate governance policies. For the status of TSMC’s corporate governance, please refer to the “Corporate Governance” section on pages 25-31 of this Annual Report.
7. Other important information to facilitate better understanding of the Company’s corporate governance practices (e.g., employee rights, employee wellness, investor relations, supplier relations, rights of stakeholders,
directors’ training records, the implementation of risk management policies and risk evaluation measures, the implementation of customer relations policies, and purchasing insurance for directors):
(1) Status of employee rights and employee wellness: Please refer to the “Employees” section on pages 54-56 of this Annual Report.
(2) Status of investor relations, supplier relations and rights of stakeholders: Please refer to the “Corporate Social Responsibility” on pages 69-75 of this Annual Report.
(3) Status of Risk Management Policies and Risk Evaluation: Please refer to the “Risk Management” section on pages 62-67 of this Annual Report.
(4) Status of Customer Relations Policies: Please refer to the “Customer Partnership” section on pages 52-53 of this Annual Report.
(5) TSMC maintains D&O Insurance for its directors and officers.
8. If the Company has a self corporate governance evaluation or has authorized any other professional organization to conduct such an evaluation, the evaluation results, major deficiencies or suggestions, and
improvements are stated as follows: None
TSMC’s corporate governance won international recognition in 2009: Corporate Governance Asia honored TSMC with its “Corporate Governance Asia Recognition in Taiwan”. FinanceAsia Magazine ranked TSMC’s
corporate governance as the best among all companies in Taiwan with its “Best at Corporate Governance” for the Taiwan region.
Note 1: Professor Lester Thurow’s tenure expired on June 9, 2009 because he was not re-elected at the 2009 Annual Shareholders’ Meeting.
Note 2: Ms. Carleton Fiorina resigned as an independent director of TSMC on November 30, 2009.
Note 3: Mr. Thomas Engibous was elected as TSMC’s independent director at the 2009 Annual Shareholders' Meeting on June 10, 2009.
Continuing Education/Training of Directors in 2009
Date
11/20
08/13
02/19
11/23
06/11
Name
Morris Chang (Note)
F.C. Tseng
Sir Peter Leahy Bonfield
Morris Chang
F.C. Tseng
Sir Peter Leahy Bonfield
Stan Shih
Thomas J. Engibous
Rick Tsai
Host by
Training/Speech Title
Taiwan GreTai Securities Market
Corporate Social Responsibility in Taiwan
Taiwan Corporate Governance Association
Facing the global financial crisis, how do companies deal with and create sustaining
capabilities
Ericsson
Corporate Board Governance Programme
Mentor Graphics Corporation Inc.
Corporate Governance
TSMC
Speech: “Outlook of Taiwan Economy”
by Minister Chen Tain-Jy, Council for Economic Planning and Development, the
Executive Yuan
Duration
0.5 hour
3 hours
1 day
0.5 day
0.5 hour
1. From time to time, TSMC provides directors with information concerning regulatory requirements and developments as related to directors’ activities. TSMC management also regularly presents updates on the
Company’s business and other information to directors.
2. Regular regulatory update reports are provided by TSMC’s General Counsel and by the Company’s independent auditors at the Audit Committee meetings.
Note: Selected speeches on corporate governance and related topics.
Continuing Education/Training of Management in 2009
Host by
Training
Duration
Accounting Research and Development
Foundation
Summary on the latest industrial developments and key points to financial analysis
3 hours
Discussion on the advantages and action plans from directors, supervisors and
executives in response to the implementation of IFRS (International Financial
Reporting Standard)
Notice on the adoption of XBRL (Extensible Business Reporting Language) – Practice
and best implementation actions
The legal responsibility, action plans and case study of “insider transactions” for
insider in publicly-held companies
Institute of Internal Audit – ROC (IIA)
Control Self-assessment: Facilitation Skills for Financial Reporting
03/06 - 03/07
11/19
06/11
TSMC
2009 IIA Conference: IA Value Creation & Corporate Governance
The Second Annual Chief Audit Executive Forum
Speech: “Outlook of Taiwan Economy”
by Minister Chen Tain-Jy, Council for Economic Planning and Development, the
Executive Yuan
3 hours
3 hours
3 hours
6 hours
12 hours
8 hours
0.5 hour
Date
09/24
11/11
11/11
12/10
12/21
Title/Name
Director
Accounting Division
Jessica Chou
Director
Internal Audit
John Liang
Vice Presidents:
Stephen T. Tso
Mark Liu
C.C. Wei
Richard Thurston
Lora Ho
P.H. Chang
Wei-Jen Lo
Jason Chen
Jack Sun
Fu-Chieh Hsu
Y.P. Chin
N.S. Tsai
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3.3 Major Resolutions of Shareholders’
Meeting and Board Meetings
● appointment of Dr. Rick Tsai as President of New Businesses,
effective June 12, 2009
● approving capital appropriation of US$130 million
3.3.1 Major Resolutions of Shareholders’ Meeting
(4) Regular Board Meeting of August 11, 2009:
and Implementation Status
● approving capital appropriations of US$1,166.8 million
● approving 2009 semi-annual financial statements
TSMC’s 2009 regular Shareholders’ Meeting was held in Hsinchu,
● appointment of L.C. Tu as Vice President of TSMC
Taiwan on June 10, 2009. At the meeting, shareholders present in
(5) Regular Board Meeting of November 10, 2009:
person or by proxy approved the following resolutions:
(1) The 2008 Business Report and Financial Statements
(2) The distribution of 2008 profits
● approving capital appropriations of US$2,541.4 million
● appointment of Dr. Shang-yi Chiang as Senior Vice President of
TSMC
(3) The capitalization of 2008 dividends, 2008 employee profit
● appointment of Dr. Jack Sun as Chief Technology Officer of TSMC
sharing, and capital surplus
●approving acquisition of shares of Semiconductor
(4) The amendments to internal policies and rules as follows:
Manufacturing International Corporation (SMIC) in accordance
● Procedures for Lending Funds to Other Parties
● Procedures for Endorsement and Guarantee
with relevant agreements executed between TSMC and SMIC.
The actual acquisition of the SMIC shares shall be subject to the
(5) Election of eight directors (including four independent directors)
approval of the relevant regulatory authorities in charge.
Implementation Status: All the resolutions of the Shareholders’
Meeting have been fully implemented in accordance with the
● approving investment in an amount not exceeding
NT$6,300 million in Motech Industries, Inc.
(6) Special Board Meeting of December 9, 2009
resolutions.
(7) Regular Board Meeting of February 8 & 9, 2010:
● approving 2009 business report and financial statements
The eight newly elected directors: Morris Chang, F.C. Tseng, Peter
Leahy Bonfield (Independent Director), Stan Shih (Independent
● approving distribution of 2009 profits, and cash dividends and
employee profit sharing
Director), Carleton Sneed Fiorina (Independent Director), Thomas
J. Engibous (Independent Director), Tain-Jy Chen (representative
● approving 2010 R&D and sustaining capital appropriations of
US$534.6 million
of National Development Fund, Executive Yuan) and Rick Tsai
● approving capital appropriations of US$2,272.4 million
3.3.2 Major Resolutions of Board Meetings
● approving amendments to TSMC’s Articles of Incorporation
expanding the Company’s business scope to encompass LED
lighting and solar energy
During the 2009 calendar year, and through the period of January 1
● convening the 2010 Annual Shareholders’ Meeting
3.3.3 Major Issues of Record or Written
Statements Made by Any Director
Dissenting to Important Resolutions Passed
by the Board of Directors from January 1,
2009 to February 28, 2010: None.
to February 28, 2010, five regular board meetings and three special
board meetings were convened. Major resolutions approved at these
meetings are summarized below:
(1) Regular Board Meeting of February 10, 2009:
● approving 2008 business report and financial statements
● approving distribution of 2008 profits, and the capitalization of
dividends, employee profit sharing and capital surplus
● convening the 2009 Annual Shareholders’ Meeting
● appointment of Dr. L. John Liang as the head of Internal Audit
of TSMC
(2) Special Board Meeting of April 17, 2009:
● listing four qualified candidates for independent directors to
stand for election at TSMC’s 2009 regular Shareholders’
Meeting
(3) Regular Board Meeting of June 11, 2009:
● election of Dr. Morris Chang as the Chairman and Dr. F.C.
Tseng as the Vice Chairman of the Board of Directors
● appointment of Dr. Morris Chang as Chief Executive Officer
concurrent with his position as Chairman of the Board, effective
June 12, 2009
29
3.4 Internal Control System Execution Status
Taiwan Semiconductor Manufacturing Company Limited
Statement of Internal Control System
Date: February 9, 2010
Based on the findings of a self-assessment, Taiwan Semiconductor Manufacturing Company Limited (TSMC) states the following with
regard to its internal control system during the period from January 1, 2009 to December 31, 2009:
1. TSMC is fully aware that establishing, operating, and maintaining an internal control system are the responsibility of its Board of
Directors and management. TSMC has established such a system aimed at providing reasonable assurance regarding the achievement of
objectives in the following categories: (1) effectiveness and efficiency of operations (including profitability, performance, and
safeguarding of assets), (2) reliability of financial reporting, and (3) compliance with applicable laws and regulations.
2. An internal control system has inherent limitations. No matter how perfectly designed, an effective internal control system can provide
only reasonable assurance of accomplishing the three objectives mentioned above. Moreover, the effectiveness of an internal control
system may be subject to changes of environment or circumstances. Nevertheless, the internal control system of TSMC contains
self-monitoring mechanisms, and TSMC takes corrective actions whenever a deficiency is identified.
3. TSMC evaluates the design and operating effectiveness of its internal control system based on the criteria provided in the Regulations
Governing the Establishment of Internal Control Systems by Public Companies (herein below, the “Regulations”). The criteria adopted by
the Regulations identify five components of internal control based on the process of management control: (1) control environment, (2)
risk assessment and response, (3) control activities, (4) information and communication, and (5) monitoring. Each component further
contains several items. Please refer to the Regulations for details.
4. TSMC has evaluated the design and operating effectiveness of its internal control system according to the aforesaid criteria.
5. Based on the findings of the evaluation mentioned in the preceding paragraph, TSMC believes that, during the year 2009, its internal
control system (including its supervision and management of subsidiaries), as well as its internal controls to monitor the achievement of
its objectives concerning operational effectiveness and efficiency, reliability of financial reporting, and compliance with applicable laws
and regulations, were effective in design and operation, and reasonably assured the achievement of the above-stated objectives.
6. This Statement will be an integral part of TSMC’s Annual Report for the year 2009 and Prospectus, and will be made public. Any
falsehood, concealment, or other illegality in the content made public will entail legal liability under Articles 20, 32, 171, and 174 of the
Securities and Exchange Law.
7. This Statement has been passed by the Board of Directors in their meeting held on February 9, 2010, with zero of the seven attending
directors expressing dissenting opinions, and the remainder all affirming the content of this Statement.
Taiwan Semiconductor Manufacturing Company Limited
Morris Chang,
Chairman & Chief Executive Officer
The disclosure of the external auditors’ opinion on TSMC’s internal control is not applicable.
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3.5 Status of Personnel Responsible for Preparing Financial Reports
3.5.1 Resignation or Dismissal of Personnel Responsible for Financial Report
Title
President & CEO
Senior Director
Internal Audit
Name
Rick Tsai
Date Effective
07/01/2005
06/11/2009
Date Resigned/Dismissed
Reasons for Resignation or Dismissal
Jan Kees van Vliet
12/02/2003
02/10/2009
Dr. Tsai was assigned as President of
New Businesses, effective on June 12,
2009.
Mr. van Vliet was transferred to other
department.
3.5.2 Certification Details of Employees Whose Jobs are Related to the Release of the Company’s
Financial Information
Certification
Certified Public Accountants (CPA)
US Certified Public Accountants (US CPA)
Certified Internal Auditor (CIA)
Chartered Financial Analyst (CFA)
Certified Management Accountant (CMA)
Financial Risk Manager (FRM)
Cerficate in Financial Management (CFM)
Certification in Control Self-Assessment (CCSA)
Certified Information Systems Auditor (CISA)
BS7799/ISO 27001 Lead Auditor
Number of Employees
Internal Audit
1
1
4
0
0
0
0
2
2
1
Finance
16
6
4
3
1
2
1
0
0
0
3.6 Information Regarding TSMC’s Independent Auditor
3.6.1 Audit Fees
Unit: NT$ thousands
Accounting Firm
Name of CPA
Audit Fee
Non-audit Fee
Whether the CPA’s Audit Period Covers an
Entire Fiscal Year
Note
System
Design
Company
Registration
Human
Resource
Others
Subtotal
No
Audit
Period
Yes
ˇ
Deloitte & Touche
Hung-Peng Lin,
Shu-Chieh Huang,
and others
74,166
-
285
-
600
885
Note: Article 10-4 of Regulation Governing Information to be published in Annual Report of Public Companies was not applicable to TSMC.
3.6.2 TSMC did not replace its independent auditor during 2008, 2009, and as of February 28, 2010.
3.6.3 TSMC’s Chairman, Chief Executive Officer, Chief Financial Officer, and managers in charge of its
finance and accounting operations did not hold any positions within TSMC’s independent audit
firm or its affiliates during 2009.
3.7 Material Information Management Procedure
TSMC has established relevant procedures for material information management and disclosure. All relevant departments and employees are
required to comply with the procedures and other applicable regulations when they become aware of any potential material information and the
disclosure thereof.
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4. CAPITAL AND SHARES
4.1 Capital and Shares
4.1.1 Capitalization
Unit: Share/NT$
Month/
Year
Issue Price
(Per Share)
Authorized Share Capital
Capital Stock
Shares
Amount
Shares
Amount
Sources of Capital
Remark
Capital Increase
by Assets Other
than Cash
03/2009
08/2009
08/2009
09/2009
12/2009
10
10
10
10
10
28,050,000,000
280,500,000,000
25,625,437,256
256,254,372,560
28,050,000,000
280,500,000,000
25,626,012,160
256,260,121,600
28,050,000,000
280,500,000,000
25,896,009,261
258,960,092,610
28,050,000,000
280,500,000,000
25,896,353,344
258,963,533,440
28,050,000,000
280,500,000,000
25,900,662,339
259,006,623,390
Exercise of Employee Stock Options:
NT$1,462,990
Exercise of Employee Stock Options:
NT$5,749,040
Capitalization of Profits:
NT$1,931,207,890
Capitalization of Surplus:
NT$768,763,120
Exercise of Employee Stock Options:
NT$3,440,830
Exercise of Employee Stock Options:
NT$43,089,950
None
None
None
None
None
As of 02/28/2010
Date of Approval & Approval
Document No.
03/09/2009 Yuan Shang Tzu
No. 0980005952
08/17/2009 Yuan Shang Tzu
No. 0980023001
08/18/2009 Yuan Shang Tzu
No. 0980023041
09/16/2009 Yuan Shang Tzu
No. 0980026364
12/02/2009 Yuan Shang Tzu
No. 0980034205
33
4.1.2 Capital and Shares
Unit: Share
Type of Stock
Common Stock
Shelf Registration: None.
4.1.3 Composition of Shareholders
Authorized Share Capital
Issued Shares
Listed
Non-listed
Total
Unissued Shares
As of 02/28/2010
Total
25,903,538,310
0
25,903,538,310
2,146,461,690
28,050,000,000
Common Share
Type of Shareholders
Number of Shareholders
Shareholding
Holding Percentage (%)
Government
Agencies
13
Financial
Institutions
198
Other Juridical
Persons
Foreign Institutions
& Natural Persons
Domestic Natural
Persons
963
2,880
479,073
Total
483,127
1,745,950,910
731,601,487
902,372,727
18,686,656,654
3,829,771,566
25,896,353,344
6.74%
2.83%
3.48%
72.16%
14.79%
100.00%
As of 07/21/2009 (last record date)
Distribution Profile of Share Ownership
Common Share
Shareholder Ownership (Unit: Share)
Number of Shareholders
1 ~ 999
1,000 ~ 5,000
5,001 ~ 10,000
10,001 ~ 15,000
15,001 ~ 20,000
20,001 ~ 30,000
30,001 ~ 40,000
40,001 ~ 50,000
50,001 ~ 100,000
100,001 ~ 200,000
200,001 ~ 400,000
400,001 ~ 600,000
600,001 ~ 800,000
800,001 ~ 1,000,000
Over 1,000,001
Total
161,754
203,203
54,267
24,470
8,878
10,742
4,792
2,966
5,553
2,622
1,463
537
268
214
1,398
483,127
Preferred Share: None.
4.1.4 Major Shareholders
Common Share
Shareholders
ADR-Taiwan Semiconductor Manufacturing Company, Ltd.
National Development Fund, Executive Yuan
JPMorgan Chase Bank N.A. Taipei Branch in custody for Saudi Arabian Monetary Agency
JPMorgan Chase Bank N.A. Taipei Branch in custody for Capital Income Builder Inc.
JPMorgan Chase Bank N.A. Taipei Branch in custody for Capital World Growth and Income Fund Inc.
JPMorgan Chase Bank N.A. Taipei Branch in custody for EuroPacific Growth Fund
Ivy Funds Inc. Asset Strategy Fund
Government of Singapore
JPMorgan Chase Bank N.A. Taipei Branch in custody for The Investment Company of America
Cathay Life Insurance Co.,Ltd.
Ownership
41,589,053
440,595,717
361,987,632
284,492,762
150,909,308
252,998,244
162,454,549
131,266,958
377,524,893
356,520,042
407,436,198
260,109,519
185,295,595
192,123,200
22,291,049,674
25,896,353,344
Total Shares Owned
5,487,565,383
1,653,709,980
607,363,770
384,615,272
382,385,094
358,983,677
341,009,504
293,755,207
287,648,007
274,917,909
As of 07/21/2009 (last record date)
Ownership (%)
0.16%
1.70%
1.40%
1.10%
0.58%
0.98%
0.63%
0.51%
1.46%
1.38%
1.57%
1.00%
0.72%
0.74%
86.07%
100.00%
As of 07/21/2009 (last record date)
Ownership (%)
21.19%
6.39%
2.35%
1.49%
1.48%
1.39%
1.32%
1.13%
1.11%
1.06%
9
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4.1.5 Net Change in Shareholding and Net Change in Shares Pledged by Directors, Management and
Shareholders with 10% Shareholdings or More
Unit: Share
Title
Name
Chairman & Chief Executive Officer
Morris Chang
Vice Chairman
F.C. Tseng
Director
National Development Fund, Executive Yuan
Representative:
Tain-Jy Chen
Director & President of New Businesses
Rick Tsai
Independent Director
Sir Peter Leahy Bonfield
Independent Director
Lester Carl Thurow (Note 2)
Independent Director
Stan Shih
Independent Director
Carleton (Carly) S. Fiorina (Note 3)
Independent Director
Thomas J. Engibous (Note 4)
Senior Vice President & Chief Information Officer
Information Technology & Materials Management and
Risk Management
Stephen T. Tso
Senior Vice President
Operations
Mark Liu
Senior Vice President
Business Development
C.C. Wei
Senior Vice President
Research and Development
Shang-yi Chiang (Note 5)
Vice President
Mainstream Fab Operations/Affiliates
M.C. Tzeng
Vice President & General Counsel
Richard Thurston
Vice President, Chief Financial Officer & Spokesperson
Lora Ho
Vice President
Materials Management & Risk Management
P.H. Chang
Vice President
Operations
Wei-Jen Lo
Vice President
Worldwide Sales and Marketing
Jason C.S. Chen
Vice President & Chief Technology Officer
Research and Development
Jack Sun
Vice President
Deputy Head of Research and Development
Design and Technology Platform
Fu-Chieh Hsu
Vice President
Operations
Y.P. Chin
Vice President
Quality and Reliability
N.S. Tsai
Vice President
President of TSMC North America
Rick Cassidy
2009
01/01/2010 ~ 02/28/2010
Net Change in Shareholding
Net Change in Shares Pledged
(Note 1)
Net Change in Shareholding
Net Change in Shares Pledged
(Note 1)
540,217
(1,131,834)
-
-
8,227,119
1,653,044,208
-
(100,000)
-
(304,131)
1,700,000
(60,000)
-
-
7,364
-
-
(359,202)
(441,778)
(637,108)
-
-
-
-
-
-
-
-
-
-
118,557
(800,000)
-
-
-
-
-
(30,000)
(20,000)
-
-
-
(458,323)
(163,080)
364,387
(95,210)
178,350
(826,121)
(64,001)
(785,253)
(577,908)
-
(700,000)
(300,000)
-
-
-
-
-
-
-
-
-
-
-
(24,000)
-
-
-
(5,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(Continued)
35
Title
Name
Vice President
Human Resources
L.C. Tu
Senior Director
Finance
Jan Kees van Vliet
Senior Director
New Businesses
Y.C. Chao (Note 6)
Senior Director
Corporate Planning
Irene Sun (Note 7)
2009
01/01/2010 ~ 02/28/2010
Net Change in Shareholding
Net Change in Shares Pledged
(Note 1)
Net Change in Shareholding
Net Change in Shares Pledged
(Note 1)
113,987
(68,745)
149,729
-
-
-
-
-
-
-
-
-
-
-
-
-
Note 1: This refers to the creation of security interest over TSMC shares in favor of creditors, usually in connection with a shareholder’s own financing activities.
Note 2: Professor Lester Thurow’s tenure expired on June 9, 2009 because he was not re-elected at the 2009 Annual Shareholders’ Meeting.
Note 3: Ms. Carleton Fiorina resigned as an independent director of TSMC on November 30, 2009.
Note 4: Mr. Thomas Engibous was elected as TSMC’s independent director at the 2009 Annual Shareholders’ Meeting on June 10, 2009.
Note 5: Mr. Shang-yi Chiang was appointed on November 10, 2009. Net change in his shareholding or shares pledged was from November 10, 2009 to February 28, 2010.
Note 6: Mr. Y.C. Chao was promoted on May 6, 2009. Net change in his shareholding or shares pledged was from May 6, 2009 to February 28, 2010.
Note 7: Ms. Irene Sun was promoted on August 11, 2009. Net change in her shareholding or shares pledged was from August 11, 2009 to February 28, 2010.
4.1.6 Stock Trade with Related Party: None.
4.1.7 Stock Pledge with Related Party: None.
4.1.8 Information on Our 10 Largest Shareholders Who are Related Parties to Each Other: None of TSMC’s 10
largest shareholders are related parties to each other.
4.1.9 Long-term Investment Ownership
TSMC China Company Limited
Not Applicable (Note 1)
Long-term Investment
Equity Method:
TSMC Partners, Ltd.
TSMC Global, Ltd.
TSMC North America
TSMC Europe B.V.
TSMC Japan Limited
TSMC Korea Limited
Systems on Silicon Manufacturing Co. Pte Ltd.
Vanguard International Semiconductor Corp.
Xintec Inc.
Global Unichip Corporation
Emerging Alliance Fund, L.P.
VentureTech Alliance Fund II, L.P.
VentureTech Alliance Fund III, L.P.
Cost Method:
Non-publicly Traded
United Industrial Gases Co. Ltd.
Shin-Etsu Handotai Taiwan Co. Ltd.
W.K. Technology Fund IV
Funds
Horizon Ventures Fund I, L.P.
Crimson Asia Capital Ltd., L.P.
Ownership by TSMC (1)
Direct/Indirect Ownership by Directors and
Management (2)
Total Ownership (1) + (2)
As of 12/31/2009
Shares
%
Shares
Shares
%
988,268,244
1,284
11,000,000
200
6,000
80,000
313,603
628,223,493
93,081,225
46,687,859
Not Applicable (Note 1)
Not Applicable (Note 1)
Not Applicable (Note 1)
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
38.8%
37.4%
41.1%
35.4%
99.5%
98.0%
98.0%
%
0%
0%
0%
0%
0%
0%
988,268,244
1,284
11,000,000
200
6,000
80,000
0
0
0
0
0
0
0
0
0% Not Applicable (Note 1)
0%
313,603
274,029,592
16.3% (Note 2)
902,253,085
0
0
0
0
0
0%
0%
93,081,225
46,687,859
0% Not Applicable (Note 1)
0% Not Applicable (Note 1)
0% Not Applicable (Note 1)
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
38.8%
53.7%
41.1%
35.4%
99.5%
98.0%
98.0%
16,782,937
10,500,000
4,000,000
9.8% Not Available (Note 3) Not Available (Note 3) Not Available (Note 3) Not Available (Note 3)
7.0% Not Available (Note 3) Not Available (Note 3) Not Available (Note 3) Not Available (Note 3)
1.9% Not Available (Note 3) Not Available (Note 3) Not Available (Note 3) Not Available (Note 3)
Not Applicable (Note 1)
12.1% Not Applicable (Note 1)
Not Available (Note 3) Not Applicable (Note 1) Not Available (Note 3)
Not Applicable (Note 1)
1.0% Not Applicable (Note 1)
Not Available (Note 3) Not Applicable (Note 1) Not Available (Note 3)
Note 1: Not applicable. These firms do not issue shares. TSMC’s investment is measured as a percentage of ownership.
Note 2: 16.3% represents the shareholding owned by National Development Fund, Executive Yuan
Note 3: Not available. Not all information is available to TSMC as of the report date.
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4.1.10 Share Information
TSMC’s earnings per share decreased 9.6% in 2009 to NT$3.44 per share. The following table details TSMC’s net worth, earnings, dividends and
market price per common share in 2009, as well as other data regarding return on investment.
Net Worth, Earnings, Dividends, and Market Price Per Common Share
Unit: NT$, except for weighted average shares and return on investment ratios
Item
Market Price Per Share
Highest Market Price
Lowest Market Price
Average Market Price
Net Worth Per Share
Before Distribution
After Distribution
Earnings Per Share
Weighted Average Shares (thousand shares)
Diluted Earnings Per Share (Note 1)
Adjusted Diluted Earnings Per Share (Note 2)
Dividends Per Share
Cash Dividends
Stock Dividends
Dividends from Retained Earnings
Dividends from Capital Surplus
Accumulated Undistributed Dividend
Return on Investment
Price/Earnings Ratio (Note 3)
Price/Dividend Ratio (Note 4)
Cash Dividend Yield (Note 5)
2008
2009
01/01/2010 ~ 02/28/2010
61.60 (Note 2)
34.65 (Note 2)
51.36 (Note 2)
18.59
15.59
26,106,676
3.83
3.81
3.00
0.02
0.03
-
13.48
17.12
6%
65.00 (Note 2)
37.28 (Note 2)
53.94 (Note 2)
19.11
(Note 6)
25,913,603
3.44 (Note 6)
(Note 6)
3.00 (Note 6)
- (Note 6)
- (Note 6)
-
(Note 6)
(Note 6)
(Note 6)
64.90
57.20
61.04
-
-
-
-
-
-
-
-
-
-
-
-
Note 1: Since 2008, the calculation of diluted earning per share is after consideration of expensing estimated profit sharing to employees and bonus to directors based on the regulation.
Note 2: Retroactively adjusted for stock dividends and profit sharing to employees in stock
Note 3: Price/Earnings Ratio = Average Market Price/Adjusted Diluted Earnings Per Share
Note 4: Price/Dividend Ratio = Average Market Price/Cash Dividends Per Share
Note 5: Cash Dividend Yield = Cash Dividends Per Share/Average Market Price
Note 6: Pending for shareholders’ approval
4.1.11 Dividend Policy
TSMC’s profits may be distributed by way of cash dividend and/or stock dividend. The preferred method of distributing profits is by way of an
annual cash dividend. Under TSMC’s Articles of Incorporation, stock dividend shall not exceed 50% of the total dividend distribution in any given
fiscal year. Except under certain conditions specified in the Company’s Articles of Incorporation, TSMC does not pay dividends when there is no
profit or retained earnings.
37
4.1.12 Distribution of Profit
The Board adopted a proposal for 2009 profit distribution at its Meeting on February 9, 2010. The proposal will be effected according to the
relevant regulations, upon the approval of shareholders at the Annual Shareholders’ Meeting on June 15, 2010.
In addition, according to the Company’s Articles of Incorporation, TSMC shall allocate no more than 0.3% of earnings available for distribution
(net income after a regulatory required deduction for prior years’ losses and contributions to legal and special reserves) as a bonus to directors,
and not less than 1% as a bonus to employees. Profit sharing to employees to be distributed after 2010 Annual Shareholders’ Meeting was
recorded as a charge to earnings of approximately 7.5% of net income in year 2009; bonuses to directors were accrued with an estimate based
on historical experience. The proposal will be effected according to the relevant regulations, upon the approval of shareholders at the Annual
Shareholders’ Meeting on June 15, 2010. If the actual amounts subsequently resolved by the shareholders differ from the above estimated
amounts, the differences will be recorded in the year of shareholders’ resolution as a change in accounting estimate.
Proposal to Distribute 2009 Profits
Unit: NT$
Cash Dividends to Common Shareholders (NT$3.0 per share)
Note: Employees’ cash bonus and profit sharing and bonus to directors for the year 2009 which have been expensed under the Company’s income statements are listed below:
－NT$6,691,337,704 distributed employees’ cash bonus
－NT$6,691,337,704 employees’ cash profit sharing to be distributed after 2010 Annual Shareholders’ Meeting
－NT$67,692,222 directors’ bonus to be paid after 2010 Annual Shareholders’ Meeting
2008 Directors’ Bonus and Employee Profit Sharing
Board Resolution (02/10/2009)
Actual Result (Note 1)
77,708,119,866
Directors’ Bonus (Cash)
Employee Profit Sharing in Cash
Employee Profit Sharing in Stock
Total
Amount (NT$)
Underlying Number of Shares
Dilution (%)
Amount (NT$)
158,080,488
7,494,987,577
7,494,987,578
158,080,488
7,494,987,577
7,494,987,578
-
-
141,869,914 (Note 2)
15,148,055,643
15,148,055,643
-
-
-
0.55%
-
Note 1: Each of the above three items, being approved by the Board, has been expensed at the same amount under the company’s 2008 income statements.
Note 2: The number of shares was calculated based on the closing price one day prior to the 2009 Annual Shareholders’ Meeting on an ex-dividend basis, i.e., NT$52.83 per share. The fractional share, being less than one full share, was
distributed in cash.
4.1.13 Impact to 2010 Business Performance and EPS Resulting from Stock Dividend Distribution: Not
applicable.
4.1.14 Buyback of Common Stock: Not applicable.
9
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4.2 Issuance of Corporate Bonds
4.2.1 Corporate Bonds
As of 02/28/2010
Domestic Unsecured Bond (V)
01/10/2002 - 01/24/2002
NT$1,000,000
NT$5,000,000
Par
NT$15,000,000,000
Tranche A: 2.60% p.a.
Tranche B: 2.75% p.a.
Tranche C: 3.00% p.a.
Tranche A: 5 years
Maturity: 01/10/2007 - 01/22/2007
Tranche B: 7 years
Maturity: 01/10/2009 - 01/24/2009
Tranche C: 10 years
Maturity: 01/10/2012 - 01/24/2012
None
TC Bank
Not Applicable
Yan-an International Law Office
TN Soong & Co (now Deloitte & Touche)
Bullet
NT$4,500,000,000
None
Customary Covenants
twAAA (Taiwan Ratings Corporation, 09/21/2009)
None
Not Applicable
None
None
Issuance
Issuing Date
Denomination
Offering Price
Total Amount
Coupon Rate
Tenure
Guarantor
Trustee
Underwriter
Legal Counsel
Auditor
Repayment
Outstanding
Redemption or Early Repayment Clause
Covenants
Credit Rating
Other Rights of Bondholders
Conversion Right
Amount of Converted or Exchanged Common Shares, ADRs
or Other Securities
Dilution Effect and Other Adverse Effects on Existing Shareholders
Custodian
4.2.2 Convertible Bond: None.
4.2.3 Exchangeable Bond: None.
4.2.4 Shelf Registration: None.
4.2.5 Bond with Warrants: None.
4.3 Preferred Shares
4.3.1 Preferred Share: None.
4.3.2 Preferred Share with Warrants: None.
39
4.4 Issuance of American Depositary Shares
Issuing Date
10/08/1997
11/20/1998
01/12/1999 -
01/14/1999
07/15/1999
08/23/1999 -
09/09/1999
02/22/2000 -
03/08/2000
04/17/2000
06/07/2000 -
06/15/2000
06/12/2001
11/27/2001
02/07/2002 -
02/08/2002
11/21/2002 -
12/19/2002
07/14/2003 -
07/21/2003
11/14/2003
05/23/2007
08/10/2005 -
09/08/2005
Issuance & Listing
NYSE
NYSE
NYSE
NYSE
NYSE
NYSE
NYSE
NYSE
Total Amount (US$)
594,720,000
184,554,440
35,500,000
296,499,641
158,897,089
379,134,599
224,640,000
1,167,873,850
240,999,660
297,649,640
320,600,000
1,001,650,000
160,097,914
908,514,880
1,077,000,000
1,402,036,500
2,563,200,000
Offering Price Per ADS
(US$)
24.78
15.26
17.75
24.516
28.964
57.79
56.16
35.75
NYSE
20.63
NYSE
16.03
NYSE
16.75
NYSE
8.73
NYSE
10.40
NYSE
10.77
NYSE
8.60
NYSE
10.68
Units Issued
24,000,000
12,094,000
2,000,000
12,094,000
5,486,000
6,560,000
4,000,000
32,667,800
11,682,000
14,428,000
20,000,000
59,800,000
18,348,000
87,357,200
100,000,000
163,027,500
240,000,000
Underlying Securities
TSMC Common
Shares from Selling
Shareholders
TSMC Common
Shares from Selling
Shareholders
TSMC Common
Shares from Selling
Shareholders
TSMC Common
Shares from Selling
Shareholders
TSMC Common
Shares from Selling
Shareholders
(Pursuant to ADR
Conversion Sale
Program)
TSMC Common
Shares from Selling
Shareholders
(Pursuant to ADR
Conversion Sale
Program)
TSMC Common
Shares from Selling
Shareholders
Cash Offering and
TSMC Common
Shares from Selling
Shareholders
TSMC Common
TSMC Common
TSMC Common
TSMC Common
TSMC Common
TSMC Common
TSMC Common
TSMC Common
TSMC Common
Shares from Selling
Shares from Selling
Shares from Selling
Shares from Selling
Shares from Selling
Shares from Selling
Shares from Selling
Shares from Selling
Shares from Selling
Shareholders
Shareholders
Shareholders
Shareholders
Shareholders
Shareholders
Shareholders
Shareholders
(Pursuant to ADR
Conversion Sale
Program)
Common Shares
Represented
Rights & Obligations of
ADS Holders
120,000,000
60,470,000
10,000,000
60,470,000
27,430,000
32,800,000
20,000,000
163,339,000
58,410,000
72,140,000
100,000,000
299,000,000
91,740,000
436,786,000
500,000,000
815,137,500
1,200,000,000
Same as those of
Common Share
Holders
Same as those of
Common Share
Holders
Same as those of
Common Share
Holders
Same as those of
Common Share
Holders
Same as those of
Common Share
Holders
Same as those of
Common Share
Holders
Same as those of
Common Share
Holders
Same as those of
Common Share
Holders
Same as those of
Common Share
Holders
Same as those of
Common Share
Holders
Same as those of
Common Share
Holders
Same as those of
Common Share
Holders
Same as those of
Common Share
Holders
Same as those of
Common Share
Holders
Same as those of
Common Share
Holders
Same as those of
Common Share
Holders
Same as those of
Common Share
Holders
Trustee
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
05/14/2001 -
06/11/2001
NYSE
20.63
Shareholders
(Pursuant to ADR
Conversion Sale
Program)
Depositary Bank
Custodian Bank
(Note 1)
ADSs Outstanding
(Note 2)
Apportionment of
Expenses for Issuance &
Maintenance
Terms and Conditions in
the Deposit Agreement &
Custody Agreement
Citibank, N.A. –
New York
Citibank, N.A. –
New York
Citibank, N.A. –
New York
Citibank, N.A. –
New York
Citibank, N.A. –
New York
Citibank, N.A. –
New York
Citibank, N.A. –
New York
Citibank, N.A. –
New York
Citibank, N.A. –
Citibank, N.A. –
Citibank, N.A. –
Citibank, N.A. –
Citibank, N.A. –
Citibank, N.A. –
Citibank, N.A. –
Citibank, N.A. –
Citibank, N.A. –
New York
New York
New York
New York
New York
New York
New York
New York
New York
Citibank, N.A. –
Taipei Branch
Citibank, N.A. –
Taipei Branch
Citibank, N.A. –
Taipei Branch
Citibank, N.A. –
Taipei Branch
Citibank, N.A. –
Taipei Branch
Citibank, N.A. –
Taipei Branch
Citibank, N.A. –
Taipei Branch
Citibank, N.A. –
Taipei Branch
Citibank, N.A. –
Citibank, N.A. –
Citibank, N.A. –
Citibank, N.A. –
Citibank, N.A. –
Citibank, N.A. –
Citibank, N.A. –
Citibank, N.A. –
Citibank, N.A. –
Taipei Branch
Taipei Branch
Taipei Branch
Taipei Branch
Taipei Branch
Taipei Branch
Taipei Branch
Taipei Branch
Taipei Branch
24,000,000
46,222,650
48,222,650
71,407,859
76,893,859
83,453,859
87,453,859
144,608,739
156,290,739
170,718,739
259,006,235
318,806,235
369,019,413
485,898,166
585,898,166
864,210,597
1,128,739,639
(Note 3)
(Note 4)
(Note 3)
See Deposit
Agreement and
Custody Agreement
for Details
See Deposit
Agreement and
Custody Agreement
for Details
See Deposit
Agreement and
Custody Agreement
for Details
See Deposit
Agreement and
Custody Agreement
for Details
See Deposit
Agreement and
Custody Agreement
for Details
See Deposit
Agreement and
Custody Agreement
for Details
See Deposit
Agreement and
Custody Agreement
for Details
See Deposit
Agreement and
Custody Agreement
for Details
See Deposit
Agreement and
See Deposit
Agreement and
See Deposit
Agreement and
See Deposit
Agreement and
See Deposit
Agreement and
See Deposit
Agreement and
See Deposit
Agreement and
See Deposit
Agreement and
See Deposit
Agreement and
Custody Agreement
Custody Agreement
Custody Agreement
Custody Agreement
Custody Agreement
Custody Agreement
Custody Agreement
Custody Agreement
Custody Agreement
for Details
for Details
for Details
for Details
for Details
for Details
for Details
for Details
for Details
Closing Price Per ADS
(US$)
2009
01/01/2010 -
02/28/2010
High
Low
Average
High
Low
Average
11.44
6.70
9.55
11.58
9.56
10.28
Note 1: Citibank, N.A., Taipei Branch has changed its name to “Citibank Taiwan Limited” on August 1, 2009.
Note 2: TSMC has in aggregate issued 813,544,500 ADSs since 1997, which, if taking into consideration stock dividend distributed over the period, would amount to 1,147,835,206 ADSs. As of February 28, 2010, total number of
outstanding ADSs was 1,097,513,073 after 50,322,133 ADSs were redeemed. Stock dividends distributed in 1998, 1999, 2000, 2001, 2002, 2003, 2004, 2005, 2006, 2007, 2008 and 2009 was 45%, 23%, 28%, 40%, 10%, 8%,
14.08668%, 4.99971%, 2.99903%, 0.49991%, 0.50417% and 0.49998% respectively.
Note 3: All fees and expenses such as underwriting fees, legal fees, listing fees and other expenses related to issuance of ADSs were borne by the selling shareholders, while maintenance expenses such as annual listing fees and
accountant fees were borne by TSMC.
Note 4: All fees and expenses such as underwriting fees, legal fees, listing fees and other expenses related to issuance of ADSs were borne by TSMC and the selling shareholders, while maintenance expenses such as annual listing fees
and accountant fees were borne by TSMC.
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Issuing Date
10/08/1997
11/20/1998
07/15/1999
08/23/1999 -
09/09/1999
02/22/2000 -
03/08/2000
04/17/2000
06/07/2000 -
06/15/2000
05/14/2001 -
06/11/2001
06/12/2001
11/27/2001
02/07/2002 -
02/08/2002
11/21/2002 -
12/19/2002
07/14/2003 -
07/21/2003
11/14/2003
08/10/2005 -
09/08/2005
05/23/2007
Issuance & Listing
NYSE
NYSE
NYSE
NYSE
NYSE
NYSE
NYSE
NYSE
NYSE
NYSE
NYSE
NYSE
NYSE
Total Amount (US$)
594,720,000
184,554,440
35,500,000
296,499,641
158,897,089
379,134,599
224,640,000
1,167,873,850
240,999,660
297,649,640
320,600,000
1,001,650,000
160,097,914
908,514,880
1,077,000,000
1,402,036,500
2,563,200,000
24.516
28.964
57.79
20.63
20.63
16.03
16.75
8.73
10.40
10.77
8.60
10.68
01/12/1999 -
01/14/1999
NYSE
17.75
NYSE
15.26
Offering Price Per ADS
24.78
(US$)
NYSE
56.16
NYSE
35.75
Units Issued
24,000,000
12,094,000
2,000,000
12,094,000
5,486,000
6,560,000
4,000,000
32,667,800
11,682,000
14,428,000
20,000,000
59,800,000
18,348,000
87,357,200
100,000,000
163,027,500
240,000,000
Underlying Securities
TSMC Common
TSMC Common
TSMC Common
TSMC Common
TSMC Common
TSMC Common
TSMC Common
Cash Offering and
Shares from Selling
Shares from Selling
Shares from Selling
Shares from Selling
Shares from Selling
Shares from Selling
Shares from Selling
TSMC Common
Shareholders
Shareholders
Shareholders
Shareholders
Shareholders
(Pursuant to ADR
Conversion Sale
Program)
Shareholders
(Pursuant to ADR
Conversion Sale
Program)
Shareholders
Shares from Selling
Shareholders
TSMC Common
Shares from Selling
Shareholders
TSMC Common
Shares from Selling
Shareholders
TSMC Common
Shares from Selling
Shareholders
TSMC Common
Shares from Selling
Shareholders
(Pursuant to ADR
Conversion Sale
Program)
TSMC Common
Shares from Selling
Shareholders
(Pursuant to ADR
Conversion Sale
Program)
TSMC Common
Shares from Selling
Shareholders
TSMC Common
Shares from Selling
Shareholders
TSMC Common
Shares from Selling
Shareholders
TSMC Common
Shares from Selling
Shareholders
120,000,000
60,470,000
10,000,000
60,470,000
27,430,000
32,800,000
20,000,000
163,339,000
58,410,000
72,140,000
100,000,000
299,000,000
91,740,000
436,786,000
500,000,000
815,137,500
1,200,000,000
Rights & Obligations of
Same as those of
Common Share
Holders
Same as those of
Common Share
Same as those of
Common Share
Same as those of
Common Share
Same as those of
Common Share
Same as those of
Common Share
Same as those of
Common Share
Same as those of
Common Share
Holders
Holders
Holders
Holders
Holders
Holders
Holders
Same as those of
Common Share
Holders
Same as those of
Common Share
Holders
Same as those of
Common Share
Holders
Same as those of
Common Share
Holders
Same as those of
Common Share
Holders
Same as those of
Common Share
Holders
Same as those of
Common Share
Holders
Same as those of
Common Share
Holders
Same as those of
Common Share
Holders
Trustee
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Depositary Bank
Citibank, N.A. –
Citibank, N.A. –
Citibank, N.A. –
Citibank, N.A. –
Citibank, N.A. –
Citibank, N.A. –
Citibank, N.A. –
Citibank, N.A. –
New York
New York
New York
New York
New York
New York
New York
New York
Citibank, N.A. –
New York
Citibank, N.A. –
New York
Citibank, N.A. –
New York
Citibank, N.A. –
New York
Citibank, N.A. –
New York
Citibank, N.A. –
New York
Citibank, N.A. –
New York
Citibank, N.A. –
New York
Citibank, N.A. –
New York
Custodian Bank
(Note 1)
Citibank, N.A. –
Citibank, N.A. –
Citibank, N.A. –
Citibank, N.A. –
Citibank, N.A. –
Citibank, N.A. –
Citibank, N.A. –
Citibank, N.A. –
Taipei Branch
Taipei Branch
Taipei Branch
Taipei Branch
Taipei Branch
Taipei Branch
Taipei Branch
Taipei Branch
Citibank, N.A. –
Taipei Branch
Citibank, N.A. –
Taipei Branch
Citibank, N.A. –
Taipei Branch
Citibank, N.A. –
Taipei Branch
Citibank, N.A. –
Taipei Branch
Citibank, N.A. –
Taipei Branch
Citibank, N.A. –
Taipei Branch
Citibank, N.A. –
Taipei Branch
Citibank, N.A. –
Taipei Branch
ADSs Outstanding
24,000,000
46,222,650
48,222,650
71,407,859
76,893,859
83,453,859
87,453,859
144,608,739
156,290,739
170,718,739
259,006,235
318,806,235
369,019,413
485,898,166
585,898,166
864,210,597
1,128,739,639
(Note 3)
(Note 4)
(Note 3)
Common Shares
Represented
ADS Holders
(Note 2)
Apportionment of
Expenses for Issuance &
Maintenance
Terms and Conditions in
See Deposit
See Deposit
See Deposit
See Deposit
See Deposit
See Deposit
See Deposit
See Deposit
the Deposit Agreement &
Agreement and
Agreement and
Agreement and
Agreement and
Agreement and
Agreement and
Agreement and
Agreement and
Custody Agreement
Custody Agreement
Custody Agreement
Custody Agreement
Custody Agreement
Custody Agreement
Custody Agreement
Custody Agreement
Custody Agreement
for Details
for Details
for Details
for Details
for Details
for Details
for Details
for Details
See Deposit
Agreement and
Custody Agreement
for Details
See Deposit
Agreement and
Custody Agreement
for Details
See Deposit
Agreement and
Custody Agreement
for Details
See Deposit
Agreement and
Custody Agreement
for Details
See Deposit
Agreement and
Custody Agreement
for Details
See Deposit
Agreement and
Custody Agreement
for Details
See Deposit
Agreement and
Custody Agreement
for Details
See Deposit
Agreement and
Custody Agreement
for Details
See Deposit
Agreement and
Custody Agreement
for Details
Closing Price Per ADS
2009
(US$)
High
Low
High
Low
Average
Average
11.44
6.70
9.55
11.58
9.56
10.28
01/01/2010 -
02/28/2010
41
4.5 Status of Employee Stock Option Plan
4.5.1 Issuance of Employee Stock Options
ESOP Granted
Approval Date by The Securities & Futures Bureau
Issue (Grant) Date
Number of Options Granted
Percentage of Shares Exercisable to Outstanding Common Shares
Option Duration
Source of Option Shares
Vesting Schedule
Shares Exercised
Value of Shares Exercised (NT$)
Shares Unexercised
Original Grant Price Per Share (NT$)
Adjusted Exercise Price Per Share (NT$)
Percentage of Shares Unexercised to Outstanding Common Shares
Impact to Shareholders’ Equity
First Grant
06/25/2002
08/22/2002
18,909,700
0.10154%
10 years
Second Grant
06/25/2002
11/08/2002
1,085,000
0.00583%
10 years
Third Grant
06/25/2002
03/07/2003
6,489,514
0.03485%
10 years
New Common Share
New Common Share
New Common Share
New Common Share
New Common Share
New Common Share
New Common Share
New Common Share
New Common Share
2nd Year: up to 50%
3rd Year: up to 75%
4th Year: up to 100%
2nd Year: up to 50%
3rd Year: up to 75%
4th Year: up to 100%
2nd Year: up to 50%
3rd Year: up to 75%
4th Year: up to 100%
2nd Year: up to 50%
3rd Year: up to 75%
4th Year: up to 100%
2nd Year: up to 50%
3rd Year: up to 75%
4th Year: up to 100%
2nd Year: up to 50%
3rd Year: up to 75%
4th Year: up to 100%
2nd Year: up to 50%
3rd Year: up to 75%
4th Year: up to 100%
2nd Year: up to 50%
3rd Year: up to 75%
4th Year: up to 100%
2nd Year: up to 50%
3rd Year: up to 75%
4th Year: up to 100%
2,027,605
59,047,051
4,894,232
NT$53.0
NT$29.0
0.01889%
0
0
390,445
NT$51.0
NT$27.9
0.00151%
497,904
11,911,017
4,869,254
NT$41.6
NT$22.8
0.01880%
Dilution to Shareholders’
Equity is limited
Dilution to Shareholders’
Equity is limited
Dilution to Shareholders’
Equity is limited
Dilution to Shareholders’
Dilution to Shareholders’
Dilution to Shareholders’
Dilution to Shareholders’
Dilution to Shareholders’
Dilution to Shareholders’
Equity is limited
Equity is limited
Equity is limited
Equity is limited
Equity is limited
Equity is limited
Fourth Grant
06/25/2002
06/06/2003
23,090,550
0.12399%
10 years
2,041,274
65,671,305
11,025,557
NT$58.5
NT$32.0
0.04257%
Fifth Grant
10/29/2003
12/03/2003
842,900
0.00416%
10 years
111,535
5,587,907
219,002
NT$66.5
NT$50.1
0.00085%
Sixth Grant
10/29/2003
02/19/2004
15,720
0.00008%
10 years
0
0
9,941
NT$63.5
NT$47.8
0.00004%
Seventh Grant
Eighth Grant
10/29/2003
05/11/2004
11,167,817
0.05510%
10 years
1,024,198
44,268,630
3,343,695
NT$57.5
NT$43.2
0.01291%
10/29/2003
08/11/2004
135,300
0.00058%
10 years
6,482
247,614
31,711
NT$43.8
NT$38.0
0.00012%
Ninth Grant
01/06/2005
05/17/2005
10,742,350
0.04620%
10 years
1,563,267
73,799,714
4,026,307
NT$54.3
NT$47.2
0.01554%
4.5.2 Employee Stock Options Granted to Management Team and to Top 10 Employees with an
Individual Grant Value over NT$30,000,000
Title
Name
Number of Options Granted
(Note 2)
% of Shares Exercisable to
Outstanding Common Shares
Exercised
Unexercised
Shares Exercised
Exercise Price
Per Share
Value of Shares
Exercised (NT$)
Shares Unexercised
Adjusted Grant Price
Per Share
Value of Shares
Unexercised (NT$)
% of Shares Exercised
to Outstanding
Common Shares
% of Shares
Unexercised to
Outstanding
Common Shares
Chairman & Chief Executive Officer
President
Senior Vice President
Senior Vice President
Senior Vice President
Morris Chang (Note 1)
Rick Tsai (Note 1)
Stephen T. Tso (Note 1)
Mark Liu (Note 1)
C.C. Wei (Note 1)
Vice President & General Counsel
Richard Thurston (Note 1)
Vice President
Vice President
Vice President
Jack Sun (Note 1)
Rick Cassidy
L.C. Tu (Note 1)
5,261,152
0.02031%
1,664,091
28.0
46,575,976
0.00642%
3,597,061
25.2
90,819,287
0.01389%
Note 1: TSMC granted options to certain of its officers (as listed above) as a result of their voluntary selection to exchange part of their profit sharing for stock options in 2003. This includes a voluntary exchange by Chairman Morris
Chang in his capacity as Chief Executive Officer.
Note 2: Number of options granted includes the additional shares due to stock dividend distributed in 2004, 2005, 2006, 2007, 2008 and 2009.
4.6 Status of New Share Issuance in Connection with Mergers and Acquisitions
TSMC did not issue new shares in connection with mergers or acquisitions in 2009, and as of the date of this Annual Report.
4.7 Financing Plans and Implementation: Not applicable.
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Percentage of Shares Exercisable to Outstanding Common Shares
ESOP Granted
Approval Date by The Securities & Futures Bureau
Issue (Grant) Date
Number of Options Granted
Option Duration
Source of Option Shares
Vesting Schedule
Shares Exercised
Value of Shares Exercised (NT$)
Shares Unexercised
Original Grant Price Per Share (NT$)
Adjusted Exercise Price Per Share (NT$)
Percentage of Shares Unexercised to Outstanding Common Shares
Impact to Shareholders’ Equity
First Grant
06/25/2002
08/22/2002
18,909,700
0.10154%
10 years
2,027,605
59,047,051
4,894,232
NT$53.0
NT$29.0
0.01889%
Second Grant
06/25/2002
11/08/2002
1,085,000
0.00583%
10 years
0
0
390,445
NT$51.0
NT$27.9
0.00151%
Third Grant
06/25/2002
03/07/2003
6,489,514
0.03485%
10 years
497,904
11,911,017
4,869,254
NT$41.6
NT$22.8
0.01880%
Fourth Grant
06/25/2002
06/06/2003
23,090,550
0.12399%
10 years
Fifth Grant
10/29/2003
12/03/2003
842,900
0.00416%
10 years
Sixth Grant
10/29/2003
02/19/2004
15,720
0.00008%
10 years
Seventh Grant
Eighth Grant
10/29/2003
05/11/2004
11,167,817
0.05510%
10 years
10/29/2003
08/11/2004
135,300
0.00058%
10 years
Ninth Grant
01/06/2005
05/17/2005
10,742,350
0.04620%
10 years
As of 12/31/2009
New Common Share
New Common Share
New Common Share
New Common Share
New Common Share
New Common Share
New Common Share
New Common Share
New Common Share
2nd Year: up to 50%
3rd Year: up to 75%
4th Year: up to 100%
2nd Year: up to 50%
3rd Year: up to 75%
4th Year: up to 100%
2nd Year: up to 50%
3rd Year: up to 75%
4th Year: up to 100%
2nd Year: up to 50%
3rd Year: up to 75%
4th Year: up to 100%
2nd Year: up to 50%
3rd Year: up to 75%
4th Year: up to 100%
2nd Year: up to 50%
3rd Year: up to 75%
4th Year: up to 100%
2nd Year: up to 50%
3rd Year: up to 75%
4th Year: up to 100%
2nd Year: up to 50%
3rd Year: up to 75%
4th Year: up to 100%
2nd Year: up to 50%
3rd Year: up to 75%
4th Year: up to 100%
2,041,274
65,671,305
11,025,557
NT$58.5
NT$32.0
0.04257%
111,535
5,587,907
219,002
NT$66.5
NT$50.1
0.00085%
0
0
9,941
NT$63.5
NT$47.8
0.00004%
1,024,198
44,268,630
3,343,695
NT$57.5
NT$43.2
0.01291%
6,482
247,614
31,711
NT$43.8
NT$38.0
0.00012%
1,563,267
73,799,714
4,026,307
NT$54.3
NT$47.2
0.01554%
Dilution to Shareholders’
Dilution to Shareholders’
Dilution to Shareholders’
Equity is limited
Equity is limited
Equity is limited
Dilution to Shareholders’
Equity is limited
Dilution to Shareholders’
Equity is limited
Dilution to Shareholders’
Equity is limited
Dilution to Shareholders’
Equity is limited
Dilution to Shareholders’
Equity is limited
Dilution to Shareholders’
Equity is limited
Title
Name
Number of Options Granted
% of Shares Exercisable to
(Note 2)
Outstanding Common Shares
Exercised
Unexercised
Shares Exercised
Exercise Price
Per Share
Value of Shares
Exercised (NT$)
% of Shares Exercised
to Outstanding
Common Shares
Shares Unexercised
Adjusted Grant Price
Per Share
Value of Shares
Unexercised (NT$)
As of 12/31/2009
% of Shares
Unexercised to
Outstanding
Common Shares
5,261,152
0.02031%
1,664,091
28.0
46,575,976
0.00642%
3,597,061
25.2
90,819,287
0.01389%
Chairman & Chief Executive Officer
President
Senior Vice President
Senior Vice President
Senior Vice President
Vice President
Vice President
Vice President
Morris Chang (Note 1)
Rick Tsai (Note 1)
Stephen T. Tso (Note 1)
Mark Liu (Note 1)
C.C. Wei (Note 1)
Jack Sun (Note 1)
Rick Cassidy
L.C. Tu (Note 1)
Vice President & General Counsel
Richard Thurston (Note 1)
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5. OPERATIONAL HIGHLIGHTS
5.1 Business Activities
5.1.1 Business Scope
TSMC’s business scope is semiconductor foundry and associated services. The Company excels in all aspects of its business, including
semiconductor process technology research and development, wafer manufacturing, logistics management, capacity utilization, customer
service, and associated services such as design services, mask manufacturing, wafer probing, in-house bumping and testing. TSMC strives to
provide the best overall value to customers, and the success of TSMC’s business is manifested in the success of its customers.
Since TSMC plans to expand into new business activities in LED lighting and solar energy related industries, TSMC’s Board of Directors has
proposed additions to the business scope as specified in its Articles of Incorporation, and will submit such revisions for approval at TSMC’s 2010
Annual Shareholders’ Meeting.
5.1.2 Customer Applications
Over the past 22 years, more than 600 customers worldwide have relied on TSMC to manufacture chips that are used across the entire spectrum
of electronic applications, including computers and peripherals, information appliances, wired and wireless communications systems, automotive
and industrial equipment, consumer electronics such as DVDs, digital TVs, game consoles, digital still cameras (DSCs), and many other
applications.
The rapid evolution of end products drives our customers to utilize TSMC’s innovative technologies and services, while at the same time spurring
TSMC’s own development of technology. As always, success depends on leading rather than following industry trends.
5.1.3 Unconsolidated Shipments and Gross Sales in 2009 and 2008
Unit: Shipments (8-inch equivalent wafers) / Gross Sales (NT$ thousands)
Wafer
Package
Other
Total
Domestic
Export
Domestic
Export
Domestic
Export
Domestic
Export
2009
2008
Shipments
1,538,951
6,150,548
3
35,440
18,221
42,355
1,557,175
6,228,343
Gross Sales
40,272,613
232,626,513
3,517
5,111,486
3,593,192
17,863,893
43,869,322
255,601,892
Shipments
1,553,636
6,806,969
1
100,050
19,518
49,512
1,573,155
6,956,531
Gross Sales
39,822,198
260,386,524
14
3,694,690
3,884,590
22,440,011
43,706,802
286,521,225
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5.1.4 Production in 2009 and 2008
Unit: Capacity / Output (8-inch equivalent wafers) / Amount (NT$ thousands)
Year
2009
2008
Wafers
Capacity
9,954,558
9,376,612
Output
7,582,664
8,350,692
Amount
150,572,709
154,242,282
5.2 Technology Leadership
5.2.1 R&D Organization and Investment
TSMC expanded its Research and Development in 2009 to further
enhance one of its three strategic pillars: Technology Leadership. In
2009 the total R&D budget increased to 8% of total revenue. This level
of R&D investment is on par with, if not more than, many leading edge
technology companies. Along with the budget increase, the R&D
organization increased staffing by over 25%.
TSMC also brought one of its venerated leaders, Dr. Shang-yi Chiang,
Chairman of VisEra and Xintec, back as Senior Vice President of R&D.
TSMC recognizes that the technology challenge required to extend
Moore’s Law, the business law behind CMOS scaling, is getting more
and more difficult. The R&D organization is further strengthening its
capability, and Dr. Chiang brings his rich industry experience to lead the
R&D Expenditures
(Amount: NT$ thousands)
2008
2009
01/01/2010~
02/28/2010
4,082,623
21,480,937
21,593,398
R&D team navigating through the challenges. To assist Dr. Chiang, TSMC also appointed Dr. Jack Sun as Vice President and Chief Technology
Officer to ensure the technology pipeline is both full and ahead of the competition.
In 2009, TSMC offered the foundry segment’s first 40nm technology. After intense work on ramping this technology, customers started to enjoy
some benefits of stable and improved yield.
TSMC accelerated the development of advanced transistors, embedded memories, and Cu/low-K interconnect technologies. During 2009, the
R&D organization once again proved its capabilities by offering a first-to-market 45/40nm foundry technology portfolio as well as establishing
28nm HKMG capability.
TSMC also expanded its external R&D partnerships and alliances with world-class research institutions. For example, TSMC is a core partner of
IMEC, the respected European R&D consortium. TSMC also has a partnership agreement with NXP to conduct exploratory researches in special
“More Than Moore” technologies. In addition, TSMC strengthened its collaborations with key partners on design-process optimization. TSMC
provides funding for nanotechnology researches at major universities worldwide to promote innovation and the advancement of technology.
These research efforts enable the Company continuously to offer its customers the foundry-leading, first-to-market technology and design
solutions that contribute to their product success in the complex and challenging market environment.
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5.2.2 R&D Accomplishments in 2009
terms of minimizing the design risk and shortening the time to
market.
R&D Highlights
● 28nm Technology
TSMC continued to lead the foundry segment with the development
of the most advanced logic technologies both with conventional as
well as high-K/metal gate (HKMG) stacks. The high performance
(28HP) platform is aimed at high-speed GPU and CPU applications.
The 28HP platform also serves as the technology backbone for
high-end FPGA and SoC application domains through additional
device customization for leakage management. The low-leakage
(28LP and 28HPL) technologies are designed to support low-cost
mobile applications as well as low-end FPGA requirements.
TSMC achieved 64Mb SRAM yield breakthroughs of the foundry
segment’s highest density cell (0.127μm2) early in 2009. TSMC also
achieved 64Mb SRAM yield on its 28HP and 28HPL HKMG
technologies. Record high transistor performances, 5th generation Cu
and low-k interconnect, and the 2nd generation immersion lithography
effectively establish TSMC’s continued leadership in the foundry
segment’s technology development.
The Company also successfully supported customer design (test-chip)
evaluations through TSMC’s 28nm shuttle program. Functional silicon
was delivered in both conventional poly SiON and HKMG technology
platforms. TSMC’s 28nm technology offerings are all well on track for
qualification and risk production in 2010, supporting a broad range
of application domains from high-performance to low-leakage.
● 20nm Technology
In 2009, TSMC continued to focus on 20nm technology pathfinding.
To offer a leading-edge technology for both analog and digital
application, the Company adopted the most advanced 193nm
immersion and enhanced lithography process for smaller feature size.
With the 2nd generation high-K/metal gate (HKMG), more Si strain,
and new device structure, the intrinsic transistor performance
continues to boost up following Moore’s Law. Meanwhile, external
resistance can be effectively reduced and controlled by a specially
designed process technique. The BEOL interconnect process features
extreme low-K inter-metal dielectric materials and copper
metallization with the novel low RC scheme. The logic transistor and
SRAM bit-cell offering, using the 20nm process, will cover high
performance and mobile product application.
Recognizing the increasing importance of the interdependence of
circuit design and process technologies, TSMC has paid attention to
and made efforts to design and process co-optimization. TSMC was
invited to join the special session, “Confluence of Technology and
Design – Design Issues on 32/22nm and Beyond”, in the 2009
International Electron Device Meeting, and presented a paper entitled
“Design and Process Co-optimization for 28/22nm and Beyond – A
foundry’s Perspective”. Starting from the path-finding stage, the
Company has considered the design-process correlation by including
the complex layout effects in the test vehicle, generating a
design-friendly design package (DRM/DRC, SPICE model, and other
design enablement), and enhancing process variation monitoring.
Early engagement with customers has been launched. The mindset
change from developing a new technology by foundry itself to
co-optimizing the design and process should help our customers in
● Lithography
The 20nm optimal design gate density was achieved and is compliant
with semiconductor-industry-standard double-patterning design rules
by the design-integration-litho co-optimization. This accomplishment
ensures the extendibility of 193nm immersion technology to 20nm
and possibly to 15nm, before the next-generation lithography (NGL)
matures.
Another challenge is reducing k1, which enables the use of lasers with
low NA, and results in lower equipment costs. This challenge was
overcome with aggressive resolution-enhancement technologies and
the multi-layered optical proximity correction (OPC).
Low-single-digit immersion defects were achieved with track/material
co-optimization. It evolved from and is better than the previous
generation. To deal with various product requirements, customized
OPC was used. It smoothed the 40nm manufacturing ramping up.
Low-cost solutions were developed for 0.11μm logics and
multi-generation technologies.
For NGL technology development, a mulitple e-beam maskless pre-A
tool was installed in TSMC’s fab besides the satisfactory EUV mask
making and wafer exposures.
● Mask Technology
Mask technology is an integral part of advanced lithography
technology. TSMC has developed proprietary resolution-enhancement
techniques (RET) that are co-optimized with our in-house
mask-making technology. The Company integrates OPC, scanner
parameter optimization, and masks together to provide a total
solution in 193nm immersion lithography. TSMC’s mask-making
facilities feature state-of-the-art electron-beam mask writers, etchers,
inspection, repair, and verification tools for production at 28nm and
R&D at 20nm. In 2009, the Company collaborated with blank
suppliers to develop super-binary blanks for the 20nm generation to
improve the lithography process window, mask quality and cycle
time. TSMC also started to develop mask technologies for double
patterning with 193nm immersion lithography and extreme-UV
lithography for applications to the 20nm generation and beyond.
TSMC’s strength in mask technology gives significant and unique
benefits to its customers in terms of technical excellence, top quality,
fast cycle time, and one-stop service.
Integrated Interconnect and Packaging
The Integrated Interconnect and Package Development Division (IIPD)
was formed in late 2008 to develop and deliver an integrated
technology solution combining the advanced interconnect with
packaging technology. The introduction of extreme low-K dielectric
(ELK) in 45/40nm adds more challenges among many others to the
given tasks. In 2009, the major focus was to resolve interconnect/
package related bottlenecks and ensure smooth ramp of 45/40nm
first wave customers’ products. Enhancement in Si backend/bump
structure designs, and process optimization in bumping/assembly
processes have paved the way for customers’ products delivery with
reliable quality. Customers including GPU and FPGA products are in
volume production (with die size >20×20mm2).
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● Advanced Interconnect
In 2009, TSMC continued to lead the foundry segment in
demonstrating the lowest RC-delay interconnect technology in the
segment, which is also compatible with advanced package
technology.
Cu interconnect resistivity is trending up by generation node because
of the size effect. To keep the RC performance for the advanced
interconnect, TSMC has developed an extreme low resistance Cu –
interconnect solution for 28nm and beyond technology nodes. On
the 28nm test vehicle it showed an effective resistivity significantly
lower than that projected by the ITRS roadmap and demonstrated
promising reliability performance.
On the counterpart approach, the reduction of K value of low-K
material is the conventional way to drive RC delay for advanced
generations. However, the package becomes main challenge for
low-K with K less than 2.5. TSMC has evaluated and created advanced
CVD and SOD low-K materials with much better mechanical strength
and adhesion to adjacent layers for 20nm and beyond generations.
Integration work based on the two key indices of RC and package
performance is going on smoothly.
● Advanced Package Development
To achieve “Green package” requirements and to follow the EU code
for RoHS, the traditional tin-lead (Sn-Pb) based solder interconnect
will be replaced by lead-free (Sn-Ag or Cu post) technology
step-by-step. TSMC will continue to develop lead-free package
technology (including die sizes, bump pitches, substrate types, etc.) in
2010 to further enhance customer’s product performance.
Advanced Transistor Research
TSMC continues to make great strides in advanced transistor research.
We believe that as the conventional scaling is coming to its end,
Moore’s Law can be extended by other means of scaling by
equivalence. 3D transistor technology, such as FinFET, should help,
and the Company has spent great efforts to make the technology
toward perfection.
TSMC also believes that transistor architecture needs to be
complemented by material system change. R&D investigated an array
of new materials that might be more suitable for the transistor
channel or the contacts. TSMC, which plans to roll out these new
materials in the next few nodes, formed strong collaborations with
the worlds’ leading institutes on these advanced material researches.
By combining TSMC’s Si capability and academic know-how, most
technical issues have been overcome.
Although the technology challenges ahead are great, TSMC believes
that by overcoming these challenges it can produce true
differentiating value to customers. These challenges, therefore, are
great opportunities for TSMC, and its strategy is to move aggressively
to solve them ahead of time.
Spectrum of Technology
Beyond the highlights above, TSMC continued to develop a broad mix
of new technologies. The Company accelerated its SoC roadmap,
including embedded DRAM (eDRAM) and RF with earlier availability,
higher integration and more variants.
● Embedded DRAM
Embedded DRAM is important for many applications, such as game
consoles, digital TVs, networking, base stations, and hard-disk drives.
In 2009, TSMC successfully demonstrated 40nm low-power (N40LP)
eDRAM for games and hand-held applications, with low standby
power. Fully functional macro was also demonstrated with reasonable
yield in 40G general-purpose eDRAM technology, for high
performance networking applications with 412MHz clock rate.
● Silicon Germanium BiCMOS RF Technology
Having resolved thermal stress challenges, high resistive silicon-on-
insulator (HR-SOI) substrate was successfully implemented into
TSMC’s 0.18μm CMOS and SiGe BiCMOS process flow. On this
substrate, CMOS, NPN and PNP SiGe HBTs are all demonstrated
successfully. Furthermore, inductors with 60% higher Q is achieved
using this technology. Lower density, no-cost-adding
metal-oxide-metal (MOM) capacitors was developed in 2009 to
accommodate >10V applications.
● Mixed Signal/Radio Frequency (MS/RF) Technology
TSMC qualified a 40nm low-power RF process design kit with
silicon-validated model to facilitate design launch for an advanced
Blue-Tooth chip. Challenges in multi-finger RFMOSFET-related device
drive current behavior is investigated and resolved by analyzing with
distributing source/drain into multi-segments. To deliver accurate
model for small unit metal-oxide-metal (MOM) capacitors for high
frequency (67GHz, e.g.) applications, an innovated correlation
methodology along with smart MOM modeling array is successfully
implemented for 40nm, 45nm, 65nm and 90nm MOM modeling.
Small capacitor with ~1fF unit could be predicted accurately and the
total variation specification is thus tightened from 25% to 15% or
even down to 12%. This enhances the precision level for analog and
RF designs. For high-speed data link (≥10Gbits/s) needing
inductor-based LC oscillators in most advanced CMOS technologies
(28nm, e.g.), simulation-based RF design packages are under
development and implemented to significantly shorten design cycle.
● Power IC/BCD Technology
TSMC has driven multiple power IC platforms into production,
including 0.35μm 3.3/5/12~40V BCD & 0.25μm 2.5/5/12~40+60V
BCD. Fruitful features were enabled in these platform solutions, such
as world-leading Rdson performance, cost-effective modular flexibility
& customized characterization reports for friendly power IC design.
0.18μm BCD, for highly integrated SoC applications, has been
officially released for 24/40V phase, while an extension phase offering
more comprehensive components was qualified. TSMC also
dominated technology for CCD V-drivers with 0.18μm 1.8/3.3/32V
technology, together with a cost-competitive shrinkage path to
0.16μm 1.8/3.3/24V technology. Furthermore, TSMC’s offering of
0.6μm 60V BCD also achieved best-in-class Rdson, which is expected
to enable competitive LED drivers for the customers.
● Panel Driver Technology
TSMC has completed development of 0.13μm 32V technology for
small panel driver IC applications. The technology has the smallest
SRAM in the world.
TSMC has also provided three high-performance and cost-effective
technologies for large panel driver applications. Following them, there
are newly defined technologies in development to support customer
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demands. These technologies will enable SoC with power benefits for
next generation products.
● CMOS Image Sensor Technology
In 2009, TSMC was the first semiconductor company to have 1.4μm
pixel with Back Side Illumination (BSI) technology in production that
propelled our key customer to their performance leadership position.
On top of that, we also successfully demonstrated world-first 12”
bulk Si BSI technology with 1.1μm pixel size using 65nm design rules,
with optical performance surpassing 1.75μm pixel. This technology
would allow high performance sensors at density up to 16M pixels to
achieve the performance not attainable by the conventional front side
illumination at the same pixel size.
● Flash/Embedded Flash Technology
In 2009, TSMC qualified the low power, ultra low leakage 0.18μm
Flash for MCU applications. Followed the scaling path, the 90nm split
gate technology also achieved excellent yield and passed the
pre-qualification, and readied for first customer new product
tape-outs.
TSMC also attracted many IDM companies to co-develop embedded
Flash solutions for automotive and consumers applications, using
both 90nm and 65nm as the foundation platforms.
5.2.3 Technology Platform
Modern IC designers need sophisticated design infrastructure to
achieve acceptable productivity and cycle time. This includes design
flow for electronic design automation (EDA), silicon proven building
blocks such as libraries and IPs, simulation and verification design kits
such as process design kit (PDK) and tech files. All these are built on
top of the technology foundation, and each technology needs its own
design infrastructure to be usable for designers. This is the concept of
a technology platform.
For years, TSMC and its alliance partners spent considerable effort to
build TSMC technology platforms. The Company unveiled its Open
Innovation PlatformTM initiative in 2008 to further enhance TSMC
technology platforms. More OIP deliverables were rolled out in 2009.
In April 2009, TSMC announced the foundry segment’s first Mixed
Signal/Radio Frequency Reference Design Kit (MS/RF RDK). The new
RDK helps resolve the long-standing challenge of full chip verification
of SoCs with both analog, mixed signal and digital content. It enables
a top-down MS/RF design methodology and a system-level simulation
flow to reduce design cycle time and encourage IP reuse.
In May 2009, TSMC unveiled iRCX, an interoperable EDA data format,
for TSMC 65nm and 40nm technologies. Interconnect modeling data
is getting more important as chip designs in advanced technologies
require detailed views of parasitic effects for the accurate evaluation
of chip performance and power consumption. EDA tools that support
the iRCX format will be able to receive accurate interconnect
modeling data from the iRCX files developed and supported by TSMC.
Two more unified EDA data formats – interoperable design rule check
(iDRC) and interoperable layout-versus-schematic (iLVS) – for TSMC
40nm process technology were announced in July 2009. Design rules
for advanced process technologies are more complex and require
detailed and accurate descriptions for correct chip layout creation and
post-layout analyses. TSMC iDRC and iLVS formats, based on TSMC
process requirements, unify process design rules specification and
technology file generation, simplify data delivery, and ensure data
integrity and interpretation.
The Company also unveiled Reference Flow 10.0 and industry-first
interoperable process design kit (iPDK) in July 2009. TSMC iPDK
unified data model on industry-standard OpenAccess database
enables design reuse that is not possible with multiple proprietary
PDKs and design databases. It eliminates duplicate PDK development
efforts, significantly reduces PDK development, validation and support
costs across the design ecosystem, and promotes innovation in
analog and full custom design.
Reference Flow 10.0 continues the tradition of driving advances in
design methodology and addresses new design challenges of 28nm
process technology. To drive greater performance, advanced
stage-based On-Chip Variation (OCV) optimization and analysis is
made available for the first time, enabling customers to get a more
realistic look at timing for the purpose of removing redundant design
margins. A new electrical DFM feature was introduced for customers
to take into consideration the timing impact of “silicon stress effect”,
thus helping to increase yields.
System-in-Package (SiP) is a viable alternative for many customers to
realize their end product with the best cost and cycle time. Reference
Flow 10.0 also delivers innovations to enable SiP design for the first
time. It includes SiP package design, electrical analysis of package
extraction, timing, signal integrity, IR drop, and thermal to physical
verification of DRC and LVS.
5.2.4 Intellectual Property
A strong portfolio of intellectual property rights strengthens TSMC’s
technology leadership and protects our advanced and leading edge
technologies. In 2009, TSMC received 308 U.S. patents, 226
Taiwanese patents, 264 PRC patents, and other patents issued in
various other countries. TSMC’s patent portfolio now exceeds 12,000
patents worldwide. We continue to implement a unified model for
TSMC’s intellectual capital management. Strategic considerations and
close alignment with business objectives drive the timely creation,
management and use of our intellectual property.
At TSMC, we have built a process to extract value from our intellectual
property by aligning our intellectual property strategy with our R&D,
business objectives, marketing, and corporate development strategies.
Intellectual property rights protect our freedom to operate, enhance
our competitive position, and give us leverage to participate in many
profit-generating activities.
We have worked continuously to improve the quality of our
intellectual property portfolio and to reduce the cost of maintaining
it. We plan to continue investing in our intellectual property portfolio
and intellectual property management system to ensure that we
protect our technology leadership and receive maximum business
value from our intellectual property rights.
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5.2.5 Future R&D Plans
5.3 Manufacturing Excellence
Following the significant successes of TSMC’s advanced technologies
in 2009, the Company plans to continue to grow the R&D
organization. TSMC will further expand its 300mm R&D pilot line to
speed up 28nm qualification with its early engagement customers
and the 20nm path-finding programs with world-leading research
institutions. The Company plans to reinforce its exploratory
development work on new transistors and technologies such as 3D
structures, strained-layer CMOS, high mobility materials, and novel
3D-IC devices with TSV. These studies of the fundamental physics of
nanometer CMOS transistors are core aspects of our efforts to
improve the understanding and guide the design of transistors at
advanced nodes. The findings of these studies are being applied to
ensure our continued industry leadership at the 28nm and 20nm
nodes. One of TSMC’s goals is to extend Moore’s Law through
innovative in-house work, as well as by collaborating with industry
leaders and academia to push the envelope in finding cost-effective
technologies and manufacturing solutions.
TSMC will continue working closely with international consortia and
photolithography equipment suppliers to ensure the timely
development of 193nm high-NA scanner technology, liquid
immersion lithography, EUV lithography, and massively parallel
E-Beam direct-write technologies. These technologies are now
fundamental to TSMC’s process development efforts at the 20nm and
15nm nodes and beyond.
TSMC continues to work with mask inspection equipment suppliers to
develop viable inspection techniques, a collaborative partnership to
help ensure the Company maintains its leadership position in mask
quality and cycle time and continue to meet aggressive R&D,
prototyping and production requirements.
With a highly competent and dedicated R&D team, and unwavering
commitment to innovation, TSMC is confident of its ability to deliver
the best and most cost-effective SoC technologies for customers, and
to support the Company’s business growth and profitability.
TSMC R&D future major project summary:
Project Name
Description
28nm logic platform
technology and applications
28nm technology for both digital and
analog products
20nm logic platform
technology and applications
Next-generation technology for both
digital and analog products
15nm logic platform
technology and applications
Exploratory technology for both digital
and analog products
3D-IC
Next-generation
lithography
Long-term research
Cost-effective solution with better
form factor and performance for SIP
EUV and multiple E-Beam to extend
Moore’s Law
Special SoC technology (including new
NVM, MEMS, RF, analog) and 15nm
transistors
Risk Production (Estimated
Target Schedule)
2010
2012
2014
2011
2011 - 2012
2012 - 2014
The above plans account for roughly 70% of the total corporate R&D budget in 2010, which will be
around 7~8% of 2010 revenue.
5.3.1 Efficiency
Fast Yield Ramp
Fast yield ramp for new products is an important factor to help
TSMC’s customers shorten their time-to-market. TSMC has developed
a comprehensive technology transfer methodology extending from
R&D to production in order to shorten the yield learning curve of
leading edge technologies.
Accurate Delivery
TSMC has a proven record of providing customers with consistent
on-time delivery. The Company has equipped a state-of-the-art
supply chain management system in an effort try to improve both
our customers’ forecast processes and TSMC’s delivery schedule
accuracy. In 2009, the Company was able to make over 98 percent
of deliveries within one day of the scheduled delivery date.
Best-in-Class Cycle Time Management
Fast manufacturing cycle time is another important factor behind
TSMC’s continued competitive success and that of our customers.
Accordingly, TSMC has developed a sophisticated manufacturing
scheduling and dispatching system, implemented industry-leading
automated materials handling systems, and employed effective lean
manufacturing approaches. In 2009, the Company unceasingly
strived to optimize manufacturing processes and cycle time
management techniques, and continued to break cycle time records.
Flexible Manufacturing Management
Flexible Manufacturing is a crucial element that addresses the
fluctuations in demand forecast. In many cases, TSMC has the ability
to meet unanticipated customer demand surges, thanks in large part
to our cluster fab capability as well as to our extensive know-how in
performance matching for both tools and fabs.
Knowledge Management
TSMC has built the industry’s leading, state-of-the-art knowledge
management, and Best Known Method (BKM) systems. TSMC
maintains a vast database of key TSMC knowledge, which features a
sophisticated expert system that embeds captured knowledge into
TSMC’s engineering system.
Inventory Management
As semiconductor devices become more diverse, inventory
management becomes more critical. TSMC has built integrated
supply and demand information into its inventory management
system to improve the Company’s responsiveness to the variability of
wafer demand forecasts. The speed and accuracy of TSMC’s response
has been improved through real-time demand information sharing.
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5.3.2 GIGAFABTM Fabrications
TSMC’s 12-inch fabs are a key part of its manufacturing strategy. TSMC currently operates two 12-inch GIGAFABTM fabrication facilities – Fab 12
and Fab 14. The combined capacity of the two GIGAFABTMs reached 486,000 12-inch wafers in the fourth quarter of 2009. Production within
these two facilities supports 0.13μm, 90nm, 65nm and 40nm process technologies, and their sub-nodes. Part of the capacity is reserved for
research and development work and currently supports 28nm, 20nm and beyond technology development.
The GIGAFABTMs are the cornerstones of TSMC’s unceasing efforts to improve manufacturing excellence and to deliver manufacturing
breakthroughs. GIGAFABTMs have the inherent scale advantages over smaller fabs and also enable greater flexibility to adapt to demand
fluctuations, improve product quality and yields, accelerate yield learning and time-to-volume, shorten cycle times, and minimize costly product
re-qualification.
5.3.3 450mm Wafer Manufacturing Transition
TSMC and other leading semiconductor companies have reached a pro-competitive agreement on the need for industry-wide collaboration to
target a transition to larger, 450mm-sized wafers. The transition to larger wafers will help lower production costs and energy consumption per
chip and enable continued growth of the semiconductor industry.
TSMC will continue to work with International Sematech (ISMI), and material and equipment suppliers to collaborate on new materials, next
wafer size transition, lithography strategy, efficient tool platform, and eco-friendly process.
5.3.4 Raw Materials and Supply Chain Risk Management
In 2009, TSMC continued running monthly Supply Chain Risk Management meetings to integrate Company resources from materials
management, fab operations, risk management and quality management in lowering supply chain risk. TSMC worked with its suppliers to
enhance the performance of quality, delivery, risk management, and to support Green procurement, environmental protection and safety.
Raw Materials Supply
Major Materials
Major Suppliers
Market Status
Procurement Strategy
Raw Wafers
F.S.T.
MEMC
S.E.H.
Siltronic
SUMCO
These five suppliers together provide over 85% of the
world’s wafer supply.
● TSMC’s suppliers of silicon wafers are required to pass stringent quality certification
procedures.
Each supplier has multiple manufacturing sites in order
to meet customer demand, including plants in North
America, Asia, and Europe.
● TSMC procures wafers from multiple sources to ensure adequate supplies for volume
manufacturing and to appropriately manage supply risk.
● TSMC maintains competitive price and service agreements with its wafer suppliers, and,
when necessary, enters into strategic and collaborative agreements with key suppliers.
● TSMC regularly reviews the quality, delivery, cost and service performance of its wafer
suppliers. The results of these reviews are incorporated into TSMC’s subsequent
purchasing decisions.
● A periodic audit of each wafer supplier’s quality assurance systems ensures that TSMC
can maintain the highest quality in its own products.
Chemicals
Photoresist
Gases
Slurry, Pad, Disk
Air Products
ATMI
BASF
Dow
MGC
TYS
AZ
Nissan
Shin-Etsu Chemical
Sumitomo
T.O.K.
Air Liquide
Air Products
Linde
Taiyo Nippon Sanso
3M
Cabot
DA Nano
Kinik
Planar Solutions
Dow
These six companies are the major suppliers for bulk and
specialty chemicals.
● Most suppliers have relocated many of their operations closer to TSMC’s major
manufacturing facilities, thereby significantly improving procurement logistics.
● The suppliers’ products are regularly reviewed to ensure that TSMC’s specifications are
met and product quality is satisfactory.
These five companies are the major suppliers for
photoresist.
● TSMC works closely with its suppliers to ensure that they have adequate production lead
time to supply the required products to TSMC.
These four companies are the major suppliers of specialty
gases.
● The majority of the four suppliers are located in different geographic locations,
minimizing supply risk to TSMC.
● TSMC conducts periodic audits of the suppliers’ quality assurance systems to ensure that
they meet TSMC’s standards.
The products of these four suppliers are interchangeable.
These six companies are the major suppliers for CMP
materials.
● TSMC has long-term contracts with these suppliers to ensure supply stability and service
quality. In addition, the availability of other domestic suppliers enables TSMC to secure
better purchase terms for these gases.
● TSMC conducts periodic audits of the suppliers’ quality assurance systems to ensure that
they meet TSMC’s standards.
● Most suppliers have relocated many of their operations closer to TSMC’s major
manufacturing facilities, thereby improving procurement logistics and mitigating supply
chain risk.
● TSMC conducts periodic audits of the suppliers’ quality assurance systems to ensure that
they meet TSMC’s standards.
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Suppliers Accounted for at least 10% of Annual Consolidated Net Procurement
Unit: NT$ thousands
Supplier
Company A
SSMC
VIS
Company B
Others
2009 Total Net
Procurement
2009
2008
Procurement
Amount
As % of 2009 Total
Net Procurement
Relation to TSMC
Supplier
Procurement
Amount
As % of 2008 Total
Net Procurement
Relation to TSMC
3,597,802
3,537,659
3,330,288
2,916,069
13,151,568
26,533,386
14%
13%
13%
11%
49%
100%
None
Company A
Investee accounted for using
equity method
Investee accounted for using
equity method
SSMC
VIS
None
Company B
Others
2008 Total Net
Procurement
4,535,133
4,441,795
3,260,160
3,633,076
13,723,047
29,593,211
None
Investee accounted for using
equity method
Investee accounted for using
equity method
None
15%
15%
11%
12%
47%
100%
5.3.5 Quality and Reliability
TSMC is committed to providing customers with the best quality wafers for their products. Our Quality and Reliability (Q&R) services lead the
partnership between customers and the entire TSMC organization to achieve “quality on demand”. The goal of quality on demand is to fulfill
customers’ needs regarding time-to-market, reliable quality, and market competition over a broad range of products.
In the technology development and customer product design stage, Q&R technical services assist customers to design-in their product reliability
requirements. Q&R has worked with R&D to successfully establish and implement new qualification methodology for high-k/metal gate since
2008. Q&R also works with design services on embedded memory, high voltage, e-Fuse and MEMS IP developments to expand TSMC’s design
portfolio. In package reliability, Q&R extends characterization to the system level by establishing Power Cycling capability and methodology.
Q&R has deployed systems to ensure robust quality, in managing production dynamics and in design services as the Company meets the business
requirements of our customers. To sustain production quality and minimize risks to customers when deviations occur, manufacturing quality
monitoring and event management span all critical stages – from raw material supply, mask making, and real-time in-process monitoring, to
bumping, wafer sort and reliability performance. Advanced failure and materials analysis techniques are also developed and effectively deployed in
process development, customer new product development, and product manufacturing. In 2009, new techniques were developed to correlate
physical parameters to electrical performance to support ramping of 40nm products and development of 28nm technology nodes. To meet
time-to-market needs of customer products in the 45/40nm technology node, in 2009 Q&R established a collaboration platform with customers and
major outsource assembly & testing subcontractors (OSAT) to validate assembly and testing processes. This has enabled our customers to introduce
and ramp 45 and 40nm products with effective assembly quality improvement. Q&R will continue to enhance this collaboration platform for 28nm
and future technologies to support customers from wafer processing to assembly and testing quality management.
TSMC Q&R is also responsible for leading the Company towards the ultimate goal of zero-defect production, through the use of continuous
improvement programs. Periodic customer feedback indicates that products shipped from TSMC have consistently met or exceeded their field
quality and reliability requirements. In 2009, the effectiveness of TSMC quality management system was upgraded by third-party audit to ISO/TS
16949:2009, and IECQ QC080000 certification was renewed.
5.4 Customer Partnership
5.4.1 Customers
TSMC’s global customers have diverse product specialties and excellent performance records in various segments of the semiconductor industry.
Fabless customers include: Altera Corporation, Advanced Micro Devices, Inc., Broadcom Corporation, Marvell Semiconductor Inc., NVIDIA
Corporation, Qualcomm Inc. and MediaTek Inc. IDM customers include: Analog Devices Inc., Freescale Semiconductor Inc., NXP Semiconductors,
and Texas Instruments Inc.
Customer Service
TSMC believes that providing superior customer service is critical to enhancing customer satisfaction and loyalty, which is the path to retaining
existing customers, attracting new customers, and strengthening customer partnerships. TSMC’s goal is to maintain our position as the provider
of the most advanced and largest semiconductor foundry services.
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To facilitate customer interaction and information access on a real-time basis, TSMC has established a wide range of web-based services covering
applications in design, engineering, and logistics collaborations, collectively branded as EFOUNDRY® service. The design collaboration focuses on
content availability and accessibility, with attention to complete, accurate and current information at each level of the wafer design life cycle. The
engineering collaboration includes online access to pilot lots, wafer yields, wafer acceptance test (WAT) analysis, and quality reliability data.
Logistics collaboration provides access to data updated three times a day on the status of a given wafer lot during fabrication, assembly and
testing, final testing, order and shipping.
Customer Satisfaction
TSMC conducts an annual customer satisfaction survey (ACSS) to assess customer satisfaction and to ensure that their needs and wants are
adequately understood and addressed. In the survey, all active customers are invited to participate either by web or interview survey through an
independent consultancy. Continual improvement plans based upon customer feedback are an integral part of this business process. TSMC has
maintained a focus on customer survey data as a key indicator of corporate performance – not just of past performance, but also as a leading
indicator of future performance. TSMC has acted on the belief that satisfaction leads to loyalty, and customer loyalty leads to higher levels of
retention and expansion.
Customers Accounted for at least 10% of Annual Consolidated Net Sales
Unit: NT$ thousands
Customer
Customer A
Customer B
Others
2009 Total Net
Sales
2009
Net Sales
As % of 2009 Total
Net Sales
Relation to TSMC
Customer
30,276,650
30,162,597
235,302,992
295,742,239
None
None
10%
10%
80%
100%
Customer A
Customer B
Others
2008 Total Net
Sales
2008
Net Sales
As % of 2008 Total
Net Sales
Relation to TSMC
45,592,598
29,665,642
257,899,420
333,157,660
None
None
14%
9%
77%
100%
5.4.2 Design Enablement
In order to lower the design barrier for customer to design on TSMC technologies, TSMC offers extensive design support to customers through its
own design support team as well as its alliance partners. TSMC technology platform provides a solid foundation for design enablement.
Tech File and PDK
Customers heavily leverage tech files and PDK provided by TSMC. There were more than 20,000 downloads in 2009. TSMC also sees high
demand on PDK for mainstream technologies and is increasing resources to support the demand.
Library and IP
TSMC and its alliance partners offer a rich portfolio of libraries and IPs for TSMC customers. These reusable building blocks are essential for many
design projects. In 2009, nearly half of new tape-outs to TSMC adopted one or more libraries or IPs from TSMC or its IP partners. To support the
high demand, TSMC also invested resource to expand the library and IP portfolio. The total number of library or IP in the portfolio increased to
2,221 in 2009 from about 1,600 in 2008.
Design Methodology and Flow
TSMC released the first foundry-specific Integrated Sign-Off Flow in April 2009. The Integrated Sign-Off Flow, targeting initially at 65nm process
node with planned extensions into other process technology nodes, supports advanced design techniques for low power and design-for-
manufacturability (DFM). With validated libraries and IP, qualified EDA tools, a full set of proper technology files, and automated installation
scripts, Integrated Sign-Off Flow significantly shortens the time it normally takes a design team to set up the design environment and flow before
starting the design project. The built-in advanced design methodology and proven sign-off scripts further shortens the design cycle, and improves
tape-out quality.
New Service
PowerTrim is a new service rolled out in 2009. It is a first-of-its-kind technology that blends a layer of design technology with advanced
semiconductor processing to reduce a design’s power leakage. For example, LSI Corporation achieves a 25% reduction in overall leakage in a
next-generation product by implementing TSMC’s PowerTrim power optimization technology on TSMC’s 65nm low power (LP) process. Tela
Innovations provides the patented PowerTrim technology and services under an exclusive license to TSMC.
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5.5 Employees
5.5.1 Human Capital
5.5.3 People Development
Continuous learning is the cornerstone of TSMC’s employee
development strategy. It is especially important for Company success
Human capital is one of the most important assets of TSMC. TSMC
in this tough economic environment. A tailor-made individual
strives to provide employees with a challenging, enjoyable and
development plan is established for each employee appropriate to
rewarding work environment. In 2009, TSMC was named the “Most
the employee’s development needs. Employees are provided with a
Admired Company in Taiwan” by Commonwealth Magazine for the
13th consecutive year.
comprehensive network of resources, including on-the-job training,
coaching, mentoring, job rotation, on-site courses, e-learning, and
external learning opportunities.
At the end of 2009, TSMC had more than 24,000 employees
worldwide, including 2,792 managers and 9,861 professionals.
TSMC provides employees with a wide range of on-site general,
Female managers comprised 11.2% of all managers, and
professional and management training programs. In addition to
non-Taiwanese nationals comprised 10.1% of all TSMC managers
external experts engaged as trainers, hundreds of TSMC employees
and professionals. The following tables summarize TSMC’s workforce
are trained as qualified instructors for training courses. During 2009,
structure at the end of February, 2010:
TSMC Workforce Structure
Job
Gender
Managers
Professionals
Assistant Engineer/
Clerical
Technician
Male (%)
Female (%)
Ph.D.
Master’s
Education
Bachelor’s
Other higher
education
High school
Average Age (years)
Average Years of Service (years)
12/31/2008
12/31/2009
02/28/2010
2,618
8,830
824
2,792
9,861
761
2,826
10,102
774
10,571
11,052
11,558
48.6%
51.4%
3.1%
30.6%
20.2%
18.2%
27.9%
32.7
6.5
50.7%
49.3%
3.5%
32.8%
20.7%
16.5%
26.5%
37.8
6.0
50.7%
49.3%
3.5%
32.6%
21.2%
16.3%
26.4%
33.0
6.4
Total
22,843
24,466
25,260
5.5.2 Recruitment
Attracting new employees and retaining and motivating existing
employees are key to the success of TSMC’s human resources
strategy. TSMC believes in equal opportunity employment.
Recruitment is conducted via an open selection process and is based
on the candidate’s ability to fulfill the needs of each position,
regardless of race, gender, age, religion, nationality, or political
affiliation. In order to seek out the best talents around the world,
TSMC conducted 726 internal training sessions totaling 506,907
training hours. A total of 255,311 attendees participated in those
trainings. The total training expenses were NT$58 million. TSMC’s
training programs include:
● Management Training: includes development training programs
tailored to the needs of managers at all levels. These include New
Manager Program, Experienced Manager Program, and Senior
Manager Program, as well as other elective courses.
● General Training: refers to training required by government
regulations and Company policies. Such training includes
industry-specific safety, workplace health and safety, quality, fab
emergency response team, languages, and personal effectiveness
training.
● Professional/Functional Training: provides technical and
professional training required by various functions within the
Company, offering training courses on equipment engineering,
process engineering, accounting, and information technology,
among others.
● Direct Labor (DL) Training: DL training enables production line
employees to acquire the knowledge, skills and attitudes they need
to perform their job well. It also helps employees pass required
tests in order to be certified for operating equipment. Training
includes DL Skill Training, Technician “Train-the-Trainer” Training,
and Manufacturing Leader Training.
● New Employee Training: includes pre-job training, new employee
basic training and job orientation.
TSMC has established the “Procedure of Employee Training and
Education”, which not only enables the on-site training courses but
also best suits company and individual development objectives
through external training courses. Under the guideline, employees
are encouraged to participate in various training programs, and
subsidies are provided when taking short courses, credit courses and
TSMC employs a number of recruiting programs, including academic/
degrees.
corporate collaboration programs, Joint Development Program in
Campus, summer internships, job fairs, and Technology Talents
Career Symposium. During 2009, TSMC recruited 143 managers,
2,289 professionals and 1,567 technicians.
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5.5.4 Employee Satisfaction
The company also endeavors to establish and promote policies and
measures for ensuring gender equality in accordance with
To enhance employee career satisfaction, TSMC has continuously
employment laws and sexual harassment prevention policies to
promoted programs devoted to employee benefits, employee care,
create a fair working environment for employees of both sexes.
employee rewards, and employee communication. TSMC works hard
to enrich its employees’ working experience by providing an
As a result of TSMC’s 2008 annual performance management and
environment that is challenging yet enjoyable.
development (PMD) appraisal, some employees separated from the
Employee Benefits Programs
● TSMC Employee Welfare Committee plans and implements various
welfare programs, including hobby clubs, art and cultural seminars,
Company filed complaints with the Science Park Administration
seeking mediations of labor disputes arising from the PMD process
and result. The Company continuously communicated with those
ex-employees and resolved most of the disputes amicably, by
employee outings, TSMC Sports Day, and TSMC Family Day. In
offering to reinstate those ex-employees, or provide financial
addition, TSMC provides holiday bonuses, wedding bonuses,
assistance to those who refused reinstatement. The disputes did not
funeral and emergency subsidies.
have a material impact on the Company’s operations or financial
● To ensure that employees have all the conveniences they need
condition.
while at work, TSMC provides on-site cafeteria, dry-cleaning, travel,
banking, haircut services, housing, and commuting assistances.
We firmly believe that harmonious labor relations provide an
● Health improvement programs and psychological consultation
services are provided to employees to ensure the physical and
psychological well being of all employees.
● In order to promote healthy living, the Company established TSMC
Sports Center. It is open to all employees and their family members.
essential basis to sustain the Company’s growth. The Company’s
management team has become even more devoted to cultivating
positive employee relations. To harmonize labor relations and create
a win-win situation for the Company and its employees, execution of
the Performance Management and Development system (PMD)
And it provides a variety of workout facilities. TSMC provides
should be done in a positive and constructive manner, and mutual
Children Centers at Hsinchu and Tainan sites to meet employees’
and timely employee communication based on existing platforms
needs for childcare.
Employee Recognition
In order to recognize employees’ outstanding achievement, TSMC
should be enforced.
5.5.5 Retention
applies various award programs including the Outstanding Engineer
From the employee’s initial adjustment to professional and career
Award for each fab and the Total Quality Excellence Conference
development, TSMC works hard to retain outstanding employees
Award. In 2009, TSMC employees were recognized nationally,
through creating an innovative, challenging, and developmental
including: the National Model Worker Award, the Top 10 National
environment. We are committed to:
Outstanding Managers Award, the Outstanding Engineer Award,
and the Outstanding Young Engineer Award.
Employee Communication
TSMC is committed to keeping an open communication channel with
● Setting up retention and counseling plans for different groups. For
example, TSMC employs a “Buddy System” to help new employees
to fit in quickly through assistance provided by senior employees.
● Enabling employees to enhance professional knowledge and to
its employees. Regular communication meetings are held for the
pursue further career development through numerous employee
various levels of managers and employees. Periodic employee
development programs.
satisfaction surveys are conducted. eSilicon Garden, a quarterly
electronic TSMC internal publication, is issued covering things from
work to fun. These all help maintain the free flow of information
● Establishing a synergized welfare platform and providing a
work-life balanced environment to all employees; Enhancing
employees’ loyalty and commitment through employee
between TSMC and its employees.
engagement programs.
In order to ensure that employees’ opinions and voices can be heard,
5.5.6 Compensation
responded to, and resolved, impartial and smooth voice submission
mechanisms have been established:
● Whistleblower channels for complaints related to major
management, financial and auditing issues directed to:
1) Independent Audit Committee Chairman
2) “Ombudsman”, headed by a vice president
TSMC’s compensation program includes cash compensation and
profit sharing bonus. Cash compensation includes a monthly salary
and a variable incentive bonus. The employee is entitled to profit
sharing of no less than one percent of TSMC’s net income after
deducting the losses of previous years and contributions to legal and
special reserves. The purpose of this profit sharing bonus is to reward
● Suggestion Box for employees to express their opinions regarding
employees’ contributions appropriately, to encourage employees to
their work and the working environment in general.
work consistently to ensure the success of TSMC, and to link
● HR Call Center and employee care teams in each fab to deal with
employees’ interests with those of TSMC’s shareholders.
issues related to employees’ work and personal life.
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The amount and form of the profit distribution are determined by
3) Export Control
the Board of Directors based on the Compensation Committee’s
4) Principle of Fair Dealing
recommendation and are subject to shareholders’ approval at the
5) Corporate Social Responsibility
Annual Shareholders’ Meeting. The Company determines the amount
of the profit sharing based on operating results and industry practice
Conflicts of Interest and Insider Trading Prevention
in the Republic of China. Individual awards are based on each
1) Avoid Conflicts of Interest
employee’s job responsibility, contribution and performance.
As a member of TSMC, one should maintain the highest
business ethics when encountering a conflict or potential
To raise TSMC’s competitiveness in recruiting, TSMC made a
conflict of interest situation.
structural salary increase in 2010, and distributes employees’ cash
2) Gifts and Hospitality
bonus from the Company’s profits on a quarterly bases to share the
TSMC’s business practice is based on objective norms and
rewards of employees’ hard work in a timely fashion.
integrity, and TSMC Employees do not accept gifts or special
favors exceeding company policy allowed limit.
In addition to providing employees of TSMC’s overseas subsidiaries
3) Insider Trading Prevention
with a locally competitive base salary, the Company grants
It is prohibited for TSMC Employees to trade any TSMC or other
short-term and long-term bonuses as a part of total compensation.
company’s securities while in possession of material non-public
The performance bonus is a short-term incentive and is granted in
information or to pass such information to others for personal
line with local regulations, market practices, and the overall
financial interests.
operating performance of each subsidiary. The long-term incentive
bonus is awarded based on TSMC’s financial performance and is
vested over the course of several years in order to encourage
Company Assets
All Employees should properly manage the Company’s assets in
long-term employee commitment and development within the
accordance with in-house policies and rules and will not use them for
Company.
5.5.7 Retirement Policy
private purposes.
Implementation
1) Issues & Questions
TSMC’s retirement policy is in accordance with the provisions in the
If Employees have any question concerning this Code, they can
Labor Standards Law and Labor Pension Act of the Republic of China.
consult or seek help from: immediate supervisors, Human
5.5.8 Code of Ethics and Business Conduct
Resources, Company website, Legal, Employees Suggestion
Boxes, and the Ombudsman system
2) Prevention and Reporting Violations
Purpose & Scope
Honorable, honest and legitimate business practice is one of TSMC’s
All Employees must look out for any violation of this Code. When
Employees find or reasonably suspect any violation of this Code,
foundations for its long-term success. TSMC is known as a company
it should be reported to their supervisors immediately.
with an outstanding reputation for high ethical standards.
3) Exceptions to this Code need to be approved by CEO.
This Code covers the behavioral norms for all Employees and Board
Violation of this Code is subject to disciplinary actions.
of Directors in their dealings with each other as well as with the
Company, customers, suppliers, investors and the general public.
5.6 Material Contracts
4) Disciplinary Actions
Statement of Commitments and Obligations
In addition to strictly abiding by laws and regulations of Taiwan, ROC
Shareholders Agreement
Term of Agreement:
and the other countries where TSMC engages in business activities,
Effective as of 03/30/1999 and may be terminated as provided in the
TSMC requires all Employees to employ individual integrity at all
agreement
times, and clearly understand and act in accordance with business
Contracting Parties:
ethics principles that meet or exceed the public’s heightened
Koninklijke Philips Electronics N.V. (Philips) and EDB Investments Pte
expectations of global companies.
Ltd. (EDBI)
Compliance with Laws and Regulations; Social
Responsibility
All Employees and Board members should comply with all applicable
(In September 2006, Philips assigned its rights and obligations under
this agreement to Philips Semiconductors International B.V. which
has now been renamed NXP B.V. In November 2006, NXP B.V. and
TSMC purchased all SSMC shares owned by EDBI; EDBI is no longer a
laws, regulations, and in-house policies, including this Code, in every
contracting party to this agreement.)
aspect of the Company’s corporate activities at all times, including
Summary:
the following:
TSMC, Philips and EDBI had formed a Singapore joint venture
1) Internal Controls, Keeping Accurate Books and Records
“Systems on Silicon Manufacturing Company Pte Ltd.” (SSMC) for
2) Respect for Intellectual Property and Proprietary Information
providing IC foundry services. Philips Semiconductor (now NXP B.V.)
Protection
and TSMC are committed to purchasing a certain percentage of
SSMC’s capacity.
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Technology Cooperation Agreement
Term of Agreement:
Patent License Agreement
Term of Agreement:
03/30/1999 - 03/29/2004, automatically renewable for successive
01/01/2001 - 12/31/2011
five-year terms until and unless either party gives written notice to
Contracting Party:
terminate one year before the end of then existing term
A multinational company
Contracting Party:
Summary:
Systems on Silicon Manufacturing Company Pte Ltd. (SSMC)
The parties entered into a cross licensing arrangement for certain
Summary:
semiconductor patents. TSMC pays license fees to the contracting
TSMC agreed to transfer certain process technologies to SSMC, and
party.
SSMC agreed to pay TSMC a certain percentage of the net selling
price of SSMC products.
Patent License Agreement
Term of Agreement:
12/20/2007 - 12/31/2017
Contracting Party:
A multinational company
Settlement Agreement
Effective Date of Agreement:
11/09/2009
Contracting Parties:
Semiconductor Manufacturing International Corp. (SMIC) and certain
of its subsidiaries
Summary:
Summary:
The parties entered into a cross licensing arrangement for certain
The parties settled their trade secret misappropriation and breach of
2005 settlement agreement disputes, whereby SMIC agrees to pay
semiconductor patents. TSMC pays license fees to the contracting
TSMC US$200 million, which are in addition to $135 million
company.
previously paid to TSMC under the 2005 settlement agreement, and
other valuable consideration.
Manufacturing, License, and Technology Transfer
Agreement
Term of Agreement:
04/01/2004 - 03/31/2006, automatically renewable for successive
Amended Research and Development Collaboration
Agreement
Term of Agreement:
one-year terms until and unless both parties decide otherwise by
01/01/2009 - 12/31/2009, renewable on annual basis upon mutual
mutual consent in writing
Contracting Party:
Vanguard International Semiconductor Corporation (VIS)
Summary:
agreement
Contracting Party:
NXP B.V.
Summary:
VIS reserves certain capacity to manufacture TSMC products on
The parties entered into research and development collaboration to
mutually agreed terms. TSMC may also transfer certain technologies
develop advanced semiconductor technologies.
to VIS, for which it will in return receive royalties from VIS.
Patent License Agreement
Term of Agreement:
11/01/2002 - 10/31/2012
Contracting Party:
A multinational company
Summary:
Share Subscription Agreement
Effective Date of Agreement:
12/09/2009
Contracting Parties:
Motech Industries, Inc. (Motech)
Summary:
In accordance with the terms and conditions of the Share Purchase
The parties entered into a cross licensing arrangement for certain
Agreement, TSMC agreed to subscribe through a private placement
semiconductor patents. TSMC pays license fees to the contracting
for new shares of Motech Industries Inc. (“Motech”), which
party.
Patent License Agreement
Term of Agreement:
07/01/2002 - 06/30/2009
Contracting Party:
A multinational company
Summary:
The parties entered into a cross licensing arrangement for certain
semiconductor patents. TSMC pays license fees to the contracting
party.
represents 20% of the total outstanding shares of Motech. The total
consideration is approximately NT$6.2 billion (US$193 million).
Note: TSMC is not currently party to any other material contract,
other than contracts entered into in the ordinary course of our
business. The Company’s “Significant Commitments and
Contingencies” are disclosed in the “Financial Information” of
Annual Report (II), pages 66-67.
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6. FINANCIAL HIGHLIGHTS
TSMC’s trinity of strengths, technology leadership, manufacturing excellence, and customer partnership, are built on a foundation of financial
strength. In 2009, we generated positive free cash flow (equal to operating cash flow minus capital expenditure) for the 8th consecutive year. We
also returned a significant amount of cash to our shareholders through cash dividends. With our strong balance sheet and our consistent
profitability, we believe we are well positioned for our future growth and for delivering increasing long-term returns to our shareholders.
6.1 Financial Status and Operating Results
6.1.1 Financial Status
Unconsolidated
Unit: NT$ thousands
Item
Current Assets
Fixed Assets
Other Assets
Total Assets
Current Liabilities
Long-term Liabilities
Total Liabilities
Capital Stock
Capital Surplus
Retained Earnings
Total Shareholders’ Equity
2009
185,831,537
254,751,526
18,415,746
577,426,622
72,571,095
9,772,815
82,343,910
259,027,066
55,486,010
181,882,682
495,082,712
2008
179,849,479
219,282,502
17,242,603
540,559,247
53,099,467
11,082,669
64,182,136
256,254,373
49,875,255
170,053,667
476,377,111
Difference
5,982,058
35,469,024
1,173,143
36,867,375
19,471,628
(1,309,854)
18,161,774
2,772,693
5,610,755
11,829,015
18,705,601
%
3%
16%
7%
7%
37%
-12%
28%
1%
11%
7%
4%
● Analysis of Deviation over 20%
The increase in both current liabilities and total liabilities was mainly due to an increase in payables to contractors and equipment suppliers.
● Major Impact on Financial Position
The above deviations over 20% had no major impact on TSMC’s financial position.
● Future Plan on Financial Position: Not applicable.
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Consolidated
Unit: NT$ thousands
Item
Current Assets
Fixed Assets
Other Assets
Total Assets
Current Liabilities
Long-term Liabilities
Total Liabilities
Capital Stock
Capital Surplus
Retained Earnings
Equity Attributable to Shareholders of the Parent
Total Shareholders’ Equity
2009
259,803,748
273,674,787
23,372,182
594,696,220
79,133,288
16,514,384
95,647,672
259,027,066
55,486,010
181,882,682
495,082,712
499,048,548
2008
252,618,431
243,645,350
22,671,293
558,916,589
56,806,756
21,737,366
78,544,122
256,254,373
49,875,255
170,053,667
476,377,111
480,372,467
Difference
7,185,317
30,029,437
700,889
35,779,631
22,326,532
(5,222,982)
17,103,550
2,772,693
5,610,755
11,829,015
18,705,601
18,676,081
%
3%
12%
3%
6%
39%
-24%
22%
1%
11%
7%
4%
4%
● Analysis of Deviation over 20%
The increase in current liabilities was mainly due to an increase in payables to contractors and equipment suppliers.
The decrease in long-term liabilities was mainly due to the reclassification of payables for acquisition of property, plant and equipment, long-term
bank loans and payable for royalties from long-term liabilities to current.
The increase in total liabilities was mainly due to an increase in payables to contractors and equipment suppliers.
● Major Impact on Financial Position
The above deviations over 20% had no major impact on TSMC’s financial position.
● Future Plan on Financial Position: Not applicable.
6.1.2 Operating Results
Unconsolidated
Unit: NT$ thousands
Item
Gross Sales
Sales Returns & Allowances
Net Sales
Cost of Sales
Gross Profit
Realized (Unrealized) Gross Profit From Affiliates
Realized Gross Profit
Operating Expenses
Income from Operations
Non-operating Income & Gains
Non-operating Expenses & Losses
Income before Income Tax
Income Tax Expenses
Income after Income Tax
2009
299,471,214
(13,728,346)
285,742,868
159,106,619
126,636,249
(160,279)
126,475,970
31,953,617
94,522,353
4,121,509
3,662,840
94,981,022
(5,763,186)
89,217,836
2008
330,228,027
(8,460,944)
321,767,083
183,589,540
138,177,543
72
138,177,615
31,887,383
106,290,232
6,725,625
2,257,039
110,758,818
(10,825,650)
99,933,168
Difference
(30,756,813)
(5,267,402)
(36,024,215)
(24,482,921)
(11,541,294)
(160,351)
(11,701,645)
66,234
(11,767,879)
(2,604,116)
1,405,801
(15,777,796)
5,062,464
(10,715,332)
%
-9%
62%
-11%
-13%
-8%
-100%
-8%
0%
-11%
-39%
62%
-14%
-47%
-11%
● Analysis of Deviation over 20%
Increase in sales returns and allowance: The increase was the result of higher provision on the potential sales returns and allowances.
Increase in unrealized gross profit from affiliates: The increase was due to higher sales to the affiliates in 4Q’09.
Decrease in non-operating income and gains: The decrease was primarily due to lower interest income and foreign exchange gain.
Increase in non-operating expenses and losses: The increase was primarily due to higher equity in losses of equity method investees but offset by
lower valuation loss on financial instruments.
Decrease in income tax expenses: The decrease was primarily due to lower taxable income and an increase in tax credit attributed to higher
capital expenditure.
● Sales Volume Forecast and Related Information
For additional details, please refer to “Letter to Shareholders” on pages 3-5 of this Annual Report.
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Consolidated
Unit: NT$ thousands
Item
Gross Sales
Sales Returns & Allowances
Net Sales
Cost of Sales
Gross Profit
Operating Expenses
Income from Operations
Non-operating Income & Gains
Non-operating Expenses & Losses
Income before Income Tax
Income Tax Expenses
Net Income
Net Income Attributable to Shareholders of the Parent
2009
309,655,614
(13,913,375)
295,742,239
166,413,628
129,328,611
37,366,725
91,961,886
5,653,548
2,152,787
95,462,647
(5,996,424)
89,466,223
89,217,836
2008
341,983,355
(8,825,695)
333,157,660
191,408,099
141,749,561
37,314,193
104,435,368
10,821,449
3,784,571
111,472,246
(10,949,009)
100,523,237
99,933,168
Difference
(32,327,741)
(5,087,680)
(37,415,421)
(24,994,471)
(12,420,950)
52,532
(12,473,482)
(5,167,901)
(1,631,784)
(16,009,599)
4,952,585
(11,057,014)
(10,715,332)
%
-9%
58%
-11%
-13%
-9%
0%
-12%
-48%
-43%
-14%
-45%
-11%
-11%
● Analysis of Deviation over 20%
Increase in sales return and allowances: The increase was the result of higher provision on the potential sales return and allowances.
Decrease in non-operating income and gains: The decrease was primarily due to lower interest income and foreign exchange gain.
Decrease in non-operating expenses and losses: The decrease was primarily due to lower loss on impairment of financial assets and valuation loss
on financial instruments.
Decrease in income tax expenses: The decrease was primarily due to lower taxable income and an increase in tax credit attributed to higher
capital expenditure.
● Sales Volume Forecast and Related Information
For additional details, please refer to “Letter to Shareholders” on pages 3-5 of this Annual Report.
6.1.3 Cash Flow
Unconsolidated
Unit: NT$ thousands
Cash Balance 12/31/2008
Net Cash Provided by Operating
Activities in 2009
Net Cash Outflows from Investing
and Financing Activities in 2009
Cash Balance 12/31/2009
Remedy for Cash Shortfall
Investment Plan
Financing Plan
138,208,360
155,902,046
(177,066,863)
117,043,543
-
-
● Analysis of Cash Flow
NT$155.9 billion net cash provided by operating activities: Mainly from net income and depreciation/amortization.
NT$92.0 billion net cash used in investing activities: Primarily for capital expenditures.
NT$85.1 billion net cash used in financing activities: Mostly for the payout of cash dividends and repayment of corporate bonds.
● Remedial Actions for Cash Shortfall: In view of positive cash flows and ample cash on-hand, remedial actions are not required.
● Cash Flow Projection for Next Year: Not applicable.
Consolidated
Unit: NT$ thousands
Cash Balance 12/31/2008
Net Cash Provided by Operating
Activities in 2009
Net Cash Outflows from Investing
and Financing Activities in 2009
Cash Balance 12/31/2009
Remedy for Cash Shortfall
Investment Plan
Financing Plan
194,613,752
159,966,465
(183,303,876)
171,276,341
-
-
● Analysis of Cash Flow
NT$160.0 billion net cash provided by operating activities: Mainly from net income and depreciation/amortization.
NT$97.8 billion net cash used in investing activities: Primarily for capital expenditures.
NT$85.5 billion net cash used in financial activities: Mostly for the payout of cash dividends and repayment of corporate bonds.
● Remedial Actions for Cash Shortfall: In view of positive cash flows and ample cash on-hand, remedial actions are not required.
● Cash Flow Projection for Next Year: Not applicable.
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6.1.4 Major Capital Expenditure
Major Capital Expenditure and Sources of Funding
Unit: NT$ thousands
Plan
Actual or Planned Source of Capital
Total Amount as of 12/31/2009
Status of Actual or Projected Use of Capital
2006
2007
2008
2009
Production Facilities and Equipment
Cash flow generated from operations
289,395,456
73,643,829
77,925,776
56,902,459
80,923,392
R&D Equipment
Cash flow generated from operations
17,156,029
3,746,173
5,401,157
1,637,643
6,371,056
Expected Future Benefits
With the above-mentioned capital expenditures, it is estimated that TSMC’s annual production capacity will increase by approximately 1.3 million
8-inch equivalent wafers in 2010.
6.1.5 Long-term Investment Policy and Results
TSMC’s long-term investments accounted for under equity method are all for strategic purpose. In 2009, the investment loss from these
investments amounted to NT$2,695,720 thousands, significantly higher than last year mainly due to the negative impact from global financial
crisis and economic downturn. For future investments, TMSC will continue to focus on strategic purpose through prudent assessments.
6.2 Risk Management
TSMC and its subsidiaries are committed to proactively and cost-effectively integrating and managing strategic, operational, financial and
hazardous risks together with potential consequences to operations and revenue. TSMC established its Enterprise Risk Management (ERM)
program based on both its corporate vision and its long-term sustainability and responsibility to both industry and society. The ERM program
seeks to provide for TSMC’s adequate management of risks on behalf of all stakeholders.
In 2008 and 2009, TSMC was affected, as were other companies, by the global financial crisis. TSMC successfully managed the downside and
seized opportunity by expanding capacity early to meet subsequent urgent demand from customers. Cost-effective integrated risk management
efforts can reduce threats to TSMC’s corporate objectives.
6.2.1 Risk Management (RM) Organization Chart
Audit Committee
CEO
RM Steering Committee
Materials Management
and Risk Management
RM Working Committee
RM Division
Organization Description
● RM Steering Committee:
Reports to Audit Committee;
Is composed of functional heads;
Reviews risk control progress; and
Identifies and approves the prioritized risk lists.
● RM Working Committee:
Is composed of representatives from each function;
Aligns functional ERM activities; and
Follows up the risk control action plan.
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● RM Division:
Coordinates the RM Working Committee activities;
Facilitates functional risk management activities; and
Consolidates ERM reports into the RM Steering Committee.
6.2.2 Strategic Risks
Industry Developments
The semiconductor market and microelectronics industries have
historically been cyclical and subject to significant, and often rapid,
increases and decreases in product demand. TSMC’s semiconductor
foundry business is affected by market conditions in such highly
cyclical semiconductor and microelectronics industries. Most of the
Company’s customers operate in these industries. Variations in order
levels from customers result in volatility in the Company’s revenues
and earnings.
From time to time, the semiconductor and microelectronics industries
have experienced significant, and sometimes prolonged, periods of
downturns and overcapacity. Because TSMC is, and will continue to
be, dependent on the requirements of semiconductor and
microelectronics companies for its services, periods of downturns and
overcapacity in the general semiconductor and microelectronics
industries lead to reduced demand for overall semiconductor foundry
services, including the Company’s services. If it cannot take
appropriate actions such as reducing TSMC’s costs to sufficiently
offset declines in demand, the Company’s revenues, margin and
earnings will suffer during periods of downturns and overcapacity.
Changes in Technology
The semiconductor industry and the technologies used in it are
constantly changing. TSMC competes by developing process
technologies using increasingly smaller nodes and on manufacturing
products with multiple or more advanced functions. If it does not
anticipate these changes in technologies in a timely manner and
rapidly develop new and innovative technologies, or if the Company’s
competitors unforeseeably gain sudden access to more advanced
technologies, TSMC may not be able to provide advanced foundry
services on competitive terms. Although it has concentrated on
maintaining a competitive edge in research and development, if TSMC
fails to achieve advances in technologies or processes, or to obtain
access to advanced technologies or processes developed by others, it
may become less competitive.
Decrease in Demand and Average Selling Price
A vast majority of the Company’s sales revenue is derived from
customers who use TSMC’s services in communication devices,
personal computers, consumer electronics products and industrial
devices. Any significant decrease in the demand for the products may
decrease the demand for overall global semiconductor foundry
services, including TSMC’s services, and may adversely affect the
Company’s revenues. In addition, the historical and current trend of
declining average selling prices of end-use applications places
downward pressure on the prices of the components that go into
such applications. If the average selling prices of end use applications
continue to decrease, the pricing pressure on components produced
by us may lead to a reduction of TSMC’s revenues, margin and
earnings.
Competition
TSMC competes internationally and domestically with pure-play
foundry service providers, as well as with integrated device
manufacturers that devote a significant portion of their
manufacturing capacity to foundry operations. Some of these
companies may have access to more advanced technologies and
greater financial and other resources than us, (such as the possibility
of receiving direct or indirect government bailout/economic stimulus
funds or other incentives that are unavailable to us). The Company’s
competition may, from time to time, also decide to undertake
aggressive pricing initiatives in one or more technology nodes.
Competitive activities may cause us to lose customers or to decrease
TSMC’s customer base, or TSMC’s average selling prices, or both.
The Company competes primarily on the basis of process technology,
quality and service. The level of competition differs according to the
process technology involved. For example, in more mature
technologies, the competition tends to be more intense. Some
companies compete with TSMC in selected geographic regions or
application end markets. In recent years, substantial investments have
been made by others to establish new pure-play foundry companies
in mainland China and elsewhere; or to spin off Integrated Device
Manufacturers’ manufacturing operations and transform them into a
pure-play foundry company.
Risks Associated with Changes in the Government Policies
and Regulatory Environment
TSMC’s management team always closely monitors domestic and
foreign governmental policies and regulations that might have
impacts on TSMC’s business and financial operations, and establish
relevant risk management procedures. 2009 saw the following
changes or developments in governmental policies and regulations
that may influence the Company’s business operations.
Article 5 of “Income Tax Act” was amended in May 2009. The
corporate income tax rate was reduced from 25% to 20% effective
from 2010, which will reduce the Company’s tax burden. The tax
incentive schemes under the “Statute of Upgrading Industries” expired
on December 31, 2009. As of the print date of this annual report, the
Taiwan legislative authority has not passed any statute containing
similar or identical tax incentives. Therefore, there is a likelihood that
the Company’s tax burden will increase. TSMC has taken into account
the various factors which may impact its financial management, and
will continue to monitor developments of relevant tax regulations.
In an effort to liberalize doing business or investing in mainland
China, in February 2010 the competent authority amended and
promulgated relevant regulations for Taiwanese investment or
technical cooperation projects in mainland China. Such liberalization
will enable TSMC to adopt a more flexible mainland China investment
and business strategy.
The Taiwan Financial Supervisory Commission (FSC) requires listed
companies to prepare financial statements in accordance with
International Financial Reporting Standards (IFRS) starting from
January 1, 2013. TSMC has setup an IFRS project team and has
launched the project plan for its IFRS adoption. In addition, the
progress of such adoption has been regularly reported to the Board.
The impact of the IFRS adoption may include changes of accounting
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treatment for certain types of transactions and certain modification in
the presentation of its financial report. We will keep monitoring the
update of IFRS and the development of related laws and regulations
in Taiwan and evaluate the respective impact to TSMC.
In addition, the Taiwan legislative authority has been studying the
relevant laws relating to environmental protection, e.g. “Greenhouse
Gas Reduction Act” and Energy Tax. Since there has been no concrete
guidance or laws issuing from the Taiwan government as of yet, the
impacts of such laws are indeterminable at the moment. However, it
is very likely that such laws may increase the operating cost of the
Company.
Other than the above laws and regulations, it is not expected that the
relevant governmental policies and regulatory changes would
materially impact TSMC’s operations and financial condition.
6.2.3 Operational Risks
Risks Associated with Capacity Expansion
In response to customer demand, since 2004, TSMC has steadily
ramped up the production of 12-inch wafer fabs in the Hsinchu
Science Park and Tainan Science Park, respectively. Total monthly
capacity of the Company’s 12-inch wafer fabs was increased from
154,300 wafers in December 31, 2008 to 171,400 wafers in
December 31, 2009. Overall, TSMC increased its annual production
capacity by approximately 0.6 million 8-inch equivalent wafers in
2009. The total average billing utilization rate for 2009 was 75% as a
result of the global economic recession in the first half. Expansion and
modification of the Company’s production facilities will, among other
factors, increase TSMC’s costs. For example, the Company will need to
purchase additional equipment, train personnel to operate the new
equipment or hire additional personnel. If it does not increase its net
sales accordingly in order to offset these higher costs, TSMC’s
financial performance may be adversely affected.
As of the date of this Annual Report, the benefits brought about by
such capacity expansion were in line with TSMC’s expectations. TSMC
has established systems to evaluate and forecast market demand and
refers to these forecasts and evaluations when considering whether to
expand or reduce capacity.
Risks Associated with Sales Concentration
While it generates revenue from hundreds of customers worldwide,
TSMC’s ten largest customers accounted for approximately 53% of
net sales in both 2008 and 2009, and the Company’s largest
customer accounted for approximately 14% and 10% of net sales in
2008 and 2009, respectively. The loss of, or significant curtailment of
purchases by, one or more of the Company’s top customers,
including curtailments due to a change in the design or
manufacturing sourcing policies or practices of these customers, or
the timing of customer or distributor inventory adjustments, may
adversely affect TSMC’s results of operations and financial condition.
Risks Associated with Purchase Concentration
● Raw Materials
TSMC’s production operations require that it obtain adequate
supplies of raw materials, such as silicon wafers, gases, chemicals,
and photoresist, on a timely basis. Shortages in the supply of some
materials experienced by specific vendors or by the semiconductor
industry generally have in the past resulted in occasional
industry-wide price adjustments and delivery delays. Also, since TSMC
procures some raw materials from sole-source suppliers, there is a risk
that the Company’s need for such raw materials may not be met
when needed. The Company’s revenue and earnings could decline if it
is unable to obtain adequate supplies of the necessary raw materials
in a timely manner or if there are significant increases in the costs of
raw materials that it cannot pass on to its customers.
● Equipment
The Company’s operations and ongoing expansion plans depend on
its ability to obtain an appropriate amount of equipment and related
services from a limited number of suppliers in a market that is
characterized by limited supply and long delivery cycles. During such
times, supplier-specific or industry-wide lead times for delivery can be
as long as nine months. To better manage its supply chain, the
Company has implemented various business models and risk
management contingencies with suppliers to shorten the
procurement lead time. TSMC also provides its projected demand for
various items to many of the Company’s equipment suppliers to help
them plan their production in advance. If it is unable to obtain
equipment in a timely manner and at a reasonable cost, TSMC may be
unable to fulfill customers’ orders, which could negatively impact its
financial condition and results of operations.
Risks Associated with Intellectual Property Rights
Our ability to compete successfully and to achieve future growth may
depend in part on the continued strength of our intellectual property
portfolio. While we actively procure, enforce and protect our
intellectual property rights, there can be no assurance that our efforts
will be adequate to prevent the misappropriation or improper use of
our proprietary technology, trade secrets, software or know-how.
Also, we cannot assure you that, as our business or business models
expand into new areas, we will be able to independently develop the
technology, trade secrets, software or know-how necessary to
conduct our business or that we can do so without the intellectual
property rights of others. As a result, we may have to rely increasingly
on obtaining licenses to certain technologies from third parties. To
the extent that we rely on licenses from others, there can be no
assurance that we will be able to obtain any or all of the necessary
licenses in the future on terms we consider reasonable or at all. The
lack of necessary licenses could expose us to claims for damages and/
or injunctions from third parties, as well as claims for indemnification
by our customers in instances where we have contractually agreed to
indemnify our customers against damages resulting from
infringement claims.
We have received, from time-to-time, communications from third
parties asserting that our technologies, manufacturing processes, the
design of the integrated circuits made by us or the use by our
customers of semiconductors made by us may infringe their patents
or other intellectual property rights. And, because of the nature of the
semiconductor industry, we may continue to receive such
communications in the future. In some instances, these disputes have
resulted in litigation. If we fail to obtain or maintain certain
government, technology or intellectual property licenses and, if
litigation relating to an intellectual property claim occurs, it could
prevent us from manufacturing or selling certain products or using
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certain manufacturing processes or technologies, which could reduce
our opportunities to compete or generate revenues.
Risks Associated with Litigation
As is the case with many companies in the semiconductor industry,
we have received from time-to-time communications from third
parties asserting that our technologies, manufacturing processes, the
design of the integrated circuits made by us or the use by our
customers of semiconductors made by us may infringe upon patents
or other intellectual property rights of others. In some instances, these
disputes have resulted in litigation by or against us and certain
settlement payments by us in some cases. Irrespective of the validity
of these claims, we could incur significant costs in the defense thereof
or could suffer adverse effects on our operations.
In August 2006, we filed a lawsuit against SMIC in the Superior Court
of California for Alameda County for breach of a 2005 agreement
that settled an earlier trade secret misappropriation and patent
infringement litigation between the parties, as well as for trade secret
misappropriation, seeking injunctive relief and monetary damages. In
September 2006, SMIC filed a cross-complaint against us in the same
court alleging breach of settlement agreement, implied covenant of
good faith and fair dealing. SMIC also filed a civil action against us in
November 2006 with the Beijing People’s High Court alleging
defamation and breach of good faith. The Beijing People’s High Court
on June 10, 2009 ruled in favor of TSMC and dismissed SMIC’s
lawsuit. On November 4, 2009, after a two-month trial, a jury in the
California action found SMIC to have both breached the 2005
settlement agreement and misappropriated TSMC’s trade secrets. We
have subsequently settled both lawsuits with SMIC. Pursuant to the
new settlement agreement, the parties have agreed to the entry of a
stipulated judgment in favor of TSMC in the California action, and to
the dismissal of SMIC’s appeal against the Beijing High Court’s finding
in favor of TSMC. Under the new settlement agreement and the
related stipulated judgment, SMIC has agreed to make cash payments
to TSMC totaling US$200 million, which are in addition to the
US$135 million previously paid to TSMC under the 2005 settlement
agreement, and to provide TSMC with other valuable consideration.
Other than the matters described above, we were not involved in any
other material litigation in 2009 and are not currently involved in any
material litigation.
Risks Associated with Mergers and Acquisitions
In 2009, and as of the date of this Annual Report, there were no such
risks for TSMC.
Risks Associated with Recruiting and Retaining Qualified
Personnel
The Company depends on the continued services and contributions of
its executive officers and skilled technical and other personnel. TSMC’s
business could suffer if it lost, for whatever reasons, the services and
contributions of some of these personnel and it cannot adequately
replace them. The Company may be required to increase the number
of employees in connection with any business expansion, and since
there is intense competition for the recruitment of these personnel, it
cannot ensure it will be able to fulfill its personnel requirements in a
timely manner.
Therefore, the Compensation Committee of the Board of Directors
decided to change the compensation system, including a structural
increase on base salary and timely distribution of employees' cash
bonus from the Company's profits in order to attract and retain
talent.
Future R&D Plans and Expected R&D Spending
For additional details, please refer to “Future R&D Plans” on page 50
of this Annual Report.
Changes in Corporate Image and Impact on Company’s
Crisis Management
TSMC has established an excellent corporate image for its firm belief
in its core values, its rigorous corporate governance, its outstanding
operations, and its vision of a society that works together towards
sustainable development, equality and justice, and a harmonious
environment to live and work. For its efforts the Company has won
wide recognition, such as:
● The Executive Yuan’s Enterprise Sustainable Development Award
● The Ministry of Economic Affairs’ Outstanding Innovation
Achievement Award
● The Council of Labor Affairs’ National Workplace Safety Award
● The Environmental Protection Administration’s National Enterprise
Environmental Protection Award
● Commonwealth Magazine’s benchmark for Most Admired Company
in Taiwan
● Commonwealth Magazine’s Best Corporate Citizenship for a large
company
● GlobalViews Magazine’s Corporate Social Responsibility award
● Number one in the Asian Wall Street Journal’s survey of the top 10
companies in Taiwan
● First place in Cheers Magazine’s survey of Company Most Admired
by the New Generation
● IR Magazine’s award for Best Corporate Governance and Best
Investor Relations in Taiwan and Hong Kong
Management believes this recognition is the strongest evidence of
TSMC’s corporate image.
In addition, the Company has established departments such as Brand
Management, Customer Service, Public Relations, Employee Relations,
Investor Relations, Risk Management, Internal Audit, and the TSMC
Education and Culture Foundation to further improve TSMC’s
corporate image and to make preparations for prevention and control
of potential risks.
Risks Associated with Change in Management
On June 11, 2009, TSMC’s Board of Directors approved two major
personnel appointments, effective June 12, 2009:
● Appointed Dr. Morris Chang to serve as Chief Executive Officer
concurrent with his position as Chairman of the Board
● Appointed Dr. Rick Tsai to serve as President, New Businesses,
reporting directly to the Chairman & CEO
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6.2.4 Financial Risks
Internal Management of Economic Risks
● Interest Rate Fluctuation
TSMC’s exposure to interest rate risks derives primarily from long-term
debt obligations incurred in the normal course of business. In order to
limit its exposure to interest rate risks, TSMC finances its funding
needs through internal generation of cash and the occasional
issuance of long-term, fixed-rate debt. On the asset side, the primary
objective of TSMC’s investments in fixed income securities is to
preserve principal in highly liquid markets. In order to maintain the
Company’s liquidity profile, the majority of fixed income securities are
at the short end of the yield curve.
● Foreign Exchange Volatility
Over half of TSMC’s capital expenditures and manufacturing costs are
denominated in currencies other than NT dollars, primarily in US
dollars, Japanese yen and Euros. More than 90% of the Company’s
sales are denominated in U.S. dollars and currencies other than NT
dollars. Therefore, any significant fluctuation to the Company’s
disadvantage in such exchange rates would have an adverse effect on
TSMC’s financial condition. TSMC hedged its foreign exchange
exposure mainly through cross currency swaps and currency forward
contracts.
In addition, fluctuations in the exchange rate between the US dollar
and the NT dollar may affect the US dollar value of the Company’s
common shares and the market price of the Company’s American
Depositary Shares (ADSs) and of any cash dividends paid in NT dollars
on TSMC’s common shares represented by ADSs.
● Inflation & Deflation
TSMC’s most significant export market is North America, and
management does not believe that inflation or deflation in the R.O.C.
or North America had a material impact on the Company’s results of
operations in 2009. However, TSMC cannot provide assurance that
there will be no significant variations in the nature, extent or scope of
inflation or deflation within any of the Company’s key markets in the
future or whether deflation possibly arising from the global economic
crisis would not have a material impact on TSMC’s results of
operations.
Risks Associated with High-risk/High-leveraged Investment;
Lending, Endorsements, and Guarantees for Other Parties;
and Financial Derivative Transactions
TSMC did not make high-risk or high-leveraged financial investments
during 2009 and up to the date of this report. Neither did TSMC
provide lending, endorsements or guarantees for other parties in the
period.
The financial transactions of a “derivative” nature that TSMC entered
into were strictly for hedging purposes and not for any trading or
speculative purpose. For more information, please refer to the
“Financial Information” on pages 52-53 of Annual Report (II).
The fair market value of our trading and available for sale financial
investments are subject to prevailing market conditions and may
fluctuate from TSMC’s carrying value from time to time, which may
impact the returns of those investments. To control various types of
financial transactions, the Company has established internal policies
and procedures based on sound financial and business practices, all in
compliance with the relevant rules and regulations issued by the
Taiwan Securities and Futures Bureau. TSMC policies and procedures
include “Policies and Procedures for Financial Derivative Transactions”,
“Procedures for Lending Funds to Other Parties”, “Procedures for
Acquisition or Disposal of Assets”, and “Procedures for Endorsement
and Guarantee”.
Risks Associated with Impairment Charges
Under Generally Accepted Accounting Principles (GAAP) of both the
Republic of China and the United States, TSMC is required to evaluate
its long-lived assets and intangible assets for impairment whenever
there is an indication of impairment. If certain criteria are met, TSMC
is required to record an impairment charge. TSMC is also required
under ROC GAAP and US GAAP to evaluate goodwill for impairment
at least on an annual basis or whenever a so-called “triggering event”
or an indication of impairment occurs.
Management currently is unable to estimate the extent or timing of
any impairment charge for future years. Any impairment charge
required may have a material adverse effect on the Company’s net
income.
The determination of an impairment charge at any given time is
substantially based on the expected results of the Company’s
operations over a number of years subsequent to that time. As a
result, an impairment charge is more likely to occur during a period
when the Company’s operating results are otherwise already
depressed. TSMC has established the process and system to closely
monitor and access the outlook of capacity utilization and economic
cycle.
6.2.5 Hazardous Risks
TSMC maintains a comprehensive risk management system dedicated
to the conservation of natural resources, safety of people, and
protection of property. In order to effectively handle emergencies and
natural disasters at each facility, management has developed
comprehensive plans and procedures that focus on risk prevention,
emergency response, crisis management, and business continuity.
TSMC has adopted local and international standards for ESH
management. All TSMC fabs have been ISO 14001 certified
(Environmental Management System), OHSAS 18001 certified
(Occupational Health and Safety Management System) and
QC080000 certified (Hazardous Substance Process Management
System); all fabs in Taiwan have also been TOSHMS (Taiwan
Occupational Safety and Health Management System) certified.
TSMC pays special attention to emergency preparedness for disasters,
such as typhoon, flood, drought caused by climate change,
earthquakes, environmental contamination, large-scale product
returns, disruption of IT systems, strikes, pandemic (such as H1N1
influenza) and disruptions to the supply of raw materials or water,
electricity, gases, and public utilities. TSMC has established a
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company-wide task force managing water shortage risk that might be
a key issue due to climate change. This task force keeps watch on
external supply and internal demand of water. Cross-company
consolidations and external collaborations with public agencies are
also ongoing in the industrial parks to sustain stable water supply.
TSMC further strengthened its business continuity plans, which
include risk assessment, control implementation and the
establishment of emergency task forces when necessary; the
preparation of a thorough analysis of the emergency, its impact,
alternatives, and solution for each possible scenario; and appropriate
precautionary and/or recovery measures. Each task force is given the
responsibility to ensure TSMC’s ability to conduct business while
minimizing personal injuries, business disruption, and financial impact
under the circumstances. Customers are informed of TSMC’s strong
business continuity plan to establish their supply chain resilience and
insurance placement. For the year 2009, and up to the date of this
Annual Report, there are no reportable material events that have
necessitated the activation of such contingency plans. In 2009, the
Company also conducted the continuous improvement project for
building anti-seismic capability evaluation, earthquake response drills
and tool anchorage fixation and enhanced TSMC business continuity
procedures reference to BS 25999 business continuity management.
Some combustible materials are used in TSMC’s manufacturing
processes and are therefore subject to explosion and fire risk. The
Company maintains many overlapping risk prevention and protection
systems, as well as comprehensive fire and casualty insurance,
including insurance for loss of property and loss of profit resulting
from business interruption. Nonetheless, TSMC’s risk management
and insurance coverage may, in certain circumstances, be insufficient
to cover all of the Company’s potential losses. If any of TSMC’s fabs
were to be damaged or cease operations as a result of an explosion,
fire, or environmental excursions, it could reduce the Company’s
manufacturing capacity and might cause us to lose important
customers, thereby having a potentially material adverse impact on
TSMC’s financial performance. In addition to periodic fire protection
system inspection and fire fighting drills, the Company also carried
out a corporate-wide fire risk mitigation project focused on
management and hardware improvements.
Any of the above contingencies resulting from the actual and
potential impact of local or international laws and regulations as well
as international accords on environmental or climate change could
harm our business and results of operations by increasing our
expenses or requiring us to alter our manufacturing and assembly
and test processes.
Increasing climate change and environmental concerns also presents
other commercial challenges because some of our customers and
suppliers may request us to exceed the legal standard set for
environmentally compliant products and services. If we are unable to
offer such products or services, we may lose market share to our
competitors.
Further, energy costs in general could increase significantly to be
driven by climate change regulations. Therefore our energy costs may
increase significantly if utility or power companies pass on their costs,
such as those associated with carbon taxes, emission cap and carbon
credit trading programs, or other similar programs imposed locally or
worldwide.
6.2.7 Other Risks
Potential Impact and Risks Associated with Sales of
Significant Numbers of Shares by TSMC’s Directors, and
Major Shareholders Who Own 10% or More of TSMC’s
Total Outstanding Shares
The value of TSMC shareholders’ investment may be reduced by
possible future sales of TSMC shares owned by the major
shareholders.
One or more of our existing shareholders may, from time to time,
dispose of significant numbers of our common shares or ADSs. For
example, the National Development Fund, who owned 6.4% of
TSMC’s outstanding shares as of February 28, 2010, had sold our
shares in the form of ADSs in several transactions during the period
between 1997 and 2005.
There is currently no shareholder who owns 10% or more of TSMC’s
total outstanding shares.
Changes may cause unpredictable production interruption. In order to
reduce such uncertainty, TSMC has adopted a number of standards to
maintain operational continuity ranging from design, procurement,
and construction, to operation and decommission.
Other Material Risks
During 2009 and as of the date of this Annual Report, TSMC’s
management is not aware of any other risk event that could impart a
potentially material impact on the financial status of the Company.
6.2.6 Climate Change Risks
If applicable laws, regulations or international accords directly or
indirectly requires us: (a) to use certain alternative chemicals or raw
materials in; and/or (b) exclude prohibited chemicals or raw materials
from our products, processes and designs, we cannot offer any
assurances that the resulting product, processes or designs would be
as reliable or efficient. Also, our failure to manage the import,
export, use, transportation, emissions, discharge, storage, recycling,
or disposal of such chemicals and materials could subject us to
increased costs or future liabilities.
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7. CORPORATE SOCIAL
RESPONSIBILITY
TSMC’s core values of Integrity, Commitment, Innovation, and Customer Partnership extend to every facet of its business. TSMC believes that a
corporation’s most important responsibility to society is to help bring about healthy and positive changes. To fulfill this responsibility:
1) We are honest to our shareholders, to the public, and to our tens of thousands of employees.
2) We respect the rule of law, and we do not engage in illegal activity.
3) We abhor cronyism. We do not seek favoritism from the government or any government official, and we do not bribe.
4) We practice good corporate governance.
5) We do not engage in politics.
6) We aim to provide not just job opportunities, but well-paying job opportunities in a good work environment.
7) We emphasize protection of the environment and climate.
8) We practice unceasing innovation.
9) We invest in LED lighting and solar energy to directly contribute to a greener world through innovation.
10) Within our corporate means, we make contributions to cultural and educational and community activities.
7.1 Typhoon Morakot Disaster Relief Project
Typhoon Morakot struck south Taiwan, causing Taiwan’s most severe flooding in 50 years. TSMC and all its employees are deeply saddened by
the suffering caused by this typhoon, and we have assembled a “Typhoon Morakot Project Team” and have decided to donate NT$200 million
to provide some small measure of relief to the people and places affected by this disaster.
1) Distributed NT$50 million in relief funds to more than 1,000 employees affected by the floods.
As TSMC employees come from all over Taiwan, many colleagues and their families live in areas severely affected by this disaster. We therefore
asked managers at all levels to inquire whether their staff was affected by the flooding and whether they need assistance. Currently, about
1,000 of our employees and their relatives live in severely flooded areas, and the great majority are production-line technicians. To provide the
fastest and most direct support, TSMC will disburse up to NT$50 million in aid funds. Our employees’ direct supervisors will conduct site
visits, and we will also use all our available resources to help our employees find missing family members. We hope that these efforts will
demonstrate TSMC’s commitment to its employees and also reduce some of the government’s relief burden.
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2) Provided NT$50 million to assist in the repair and restoration of
order to reduce overall environmental, safety and health risk. In
damaged middle and elementary schools around the South
2006, TSMC began to adopt the IECQ QC080000 Hazardous
Taiwan Science Park to reopen before the beginning of the school
Substance Process Management (HSPM) System in order to meet
year.
customer needs for management of hazardous materials and to
meet the European Union’s Restriction of Hazardous Substances
Many Schools near TSMC’s Tainan site were severely affected by
(RoHS) directive. All TSMC manufacturing facilities were QC080000
this disaster, with heavy damage to fences, classrooms,
certified in 2007.
computers, schools, and other equipment. Students would be
unable to begin classes on schedule if they were not restored
TSMC communicates with suppliers and contractors on
quickly. TSMC disbursed NT$50 million to take direct responsibility
environmental, safety and health issues and encourages them to
for repairing, cleaning, and rebuilding in a safe and timely fashion.
improve their ESH performance. In line with this policy, TSMC uses
We believe this was the most direct and efficient fashion to help
priority work management and self-management to govern work
restore damaged schools, help students return to school on time,
performed by contractors. TSMC requires contractors performing
and do our part for the disaster area.
high-risk operations to complete certification for technicians, and to
establish their own OHSAS 18001 safety and health management
At the same time, colleagues in TSMC began a book collection
system before bidding on contracts. This self-management is aimed
drive inside and outside the company, which received enthusiastic
at increasing contractors’ sense of ownership and responsibility, with
support. TSMC received more than 50,000 books and donated
the goal of promoting safety awareness and technical improvement
them to schools in Tainan, Chiayi, Kaohsiung, Pingtung, Nantou,
and Taitung that were affected by Typhoon Morakot
for contractors in the industry.
3) Pledged NT$100 million to assist in the government’s overall relief
suppliers’ and testing/assembly subcontractors since 2005. TSMC
TSMC has also conducted on-site ESH audits of local material
efforts.
requires suppliers or subcontractors that performed poorly on ESH
audits to take preventive and corrective action to improve their ESH
Aboriginal villages were among the main disaster areas of
management. TSMC also assists them to improve their ESH
Typhoon Morakot, and aborigines have long been an
management.
underprivileged minority in Taiwan. TSMC has focused its relief
efforts on aboriginal villages to support the government. Our goal
In 2009, TSMC maintained its supplier ESH management program,
is to quickly and effectively find the appropriate roles for
which is tied to a sustainability index that includes three
government, villagers, and the private sector in building a model
components: Green Index, Social Index and Risk Index. “Green Index”
of cooperation that will provide long-term support to these
includes environmental management system, regulatory compliance,
villages.
7.2 Environmental, Safety and Health
(ESH) Management
hazardous substance management, greenhouse gases inventory and
green activities. “Social Index” includes labor & ethical conduct and
participation of social activities. “Risk Index” includes: safety &
health, fire, natural disaster, transportation, supply chain
management, pandemic plan and business continuity plan. The
TSMC believes its environmental, safety and health practices should
sustainability index is applied to TSMC’s critical suppliers.
not only comply with legal requirements, but also measure up to
recognized international practices. The Company aims to prevent
7.2.1 Environmental Protection
pollution, efficiently use all resources, prevent accidents, improve
employee safety and health, protect property, and establish a work
environment that promotes the well-being of our employees and of
Greenhouse Gases (GHG) Emission Reduction
TSMC is an active participant in international environmental
the communities in which we operate.
protection programs. In 2005, TSMC was Taiwan’s first
semiconductor company to make a complete inventory of its GHG
All TSMC manufacturing facilities have received ISO 14001:2004
and to gain ISO 14064 certification for its processes and outputs.
certification for environmental management systems and OHSAS
The purpose of the inventory was to serve as a baseline reference for
18001:2007 certification for occupational health and safety
TSMC’s strategy to reduce GHG, to meet future domestic regulatory
management systems. All fabs in Taiwan have also been TOSHMS
requirements, and to prepare for carbon trading and corporate
(Taiwan Occupational Safety and Health Management System)
carbon asset management. All TSMC facilities continue to conduct a
certified in 2009. TSMC strives for continuous improvement and
GHG inventory on an annual basis. The inventory result shows that
actively seeks to enhance pollution prevention, power and resource
the major direct GHG emission is perfluorinated compounds (PFCs),
conservation, waste reduction, health and safety management, fire
which are used in the semiconductor manufacturing process. The
and explosion prevention and other risks, such as earthquakes, in
primary indirect GHG emission is electricity consumption.
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TSMC is also taking measures to reduce its emission of greenhouse
gases. TSMC has endorsed a memorandum of understanding
Waste Management and Recycling
TSMC has established a designated unit responsible for waste
between the Taiwan Semiconductor Industry Association, the ROC
recycling and disposal. To meet the goal of sustainable resource
Environmental Protection Administration, and the World
utilization, TSMC’s first priority is to reduce process waste before
Semiconductor Council, whereby TSMC is committed to reducing PFC
considering recycling or disposal. TSMC carefully selects waste
emissions to 10% below the average of 1997 and 1999 by 2010. This
disposal and recycling contractors and performs annual audits of
emissions target remains fixed as TSMC continues to grow and
certification documents, site operations and transportation routes to
expand its manufacturing facilities. The Company is taking the
ensure legal and proper disposal of waste. Waste recycling has
following measures to reduce emissions in line with recommendations
achieved the goal of 90% in 2009, and the Company’s landfill rate
provided by the Intergovernmental Panel on Climate Change (IPCC):
has been reduced to less than 1%.
●Accurate measurement of PFC gas production and the effectiveness
of exhaust gas abatement equipment in order to calculate actual
Other Environmental Protection Programs
TSMC has implemented an environmental accounting system,
PFC emission volumes.
allowing each fab to calculate cost savings or profits created by each
●Evaluation of feasible alternatives to greenhouse gases and
environmental program.
gradually replacement of greenhouse gases at all manufacturing
facilities, 97% has been deployed in 2009.
In addition, TSMC conducts “Product Life Cycle Assessments”
●Evaluation and installation of PFC exhaust gas abatement
(Product LCA), collecting and analyzing data from the entire
equipment, in line with effectiveness and safety considerations. The
installation will be carried out from 2008 to 2010, 33% of which
semiconductor manufacturing chain from raw materials suppliers to
finished products, including statistics for such items as energy, raw
was completed in 2009.
Coal-fired power generators are a major source of electricity in
Taiwan and emit large amounts of carbon dioxide (CO2). TSMC
makes continuous efforts to conserve energy, which reduces both
materials consumption, and pollution. The product LCA study has
established “Eco-Profiles” for all TSMC fabs and will help the
Company to meet future international regulations such as the
European Union’s “Energy-Using Product” directive. These
“Eco-Profiles” can also be provided to customers who require such
carbon dioxide gas emissions and costs. TSMC has not only adopted
documentation. In 2009, TSMC collaborated with its assembly
energy-conservative designs for both manufacturing fabs and offices,
subcontractor, Advanced Semiconductor Engineering Group (ASE) to
but has also improved the energy efficiency of facilities during
complete the world’s first Integrated Circuit Product Category Rule
operation. In 2009, the Company collaborated with vendors to
(IC PCR). This IC PCR follows ISO 14025 standards, and addresses the
improve the energy and lighting efficiency assisted by some energy
unique nature of semiconductor manufacturing. It was compiled
efficiency consulting companies.
Air and Water Pollution Control
TSMC has installed effective air and water pollution control
based on input from major semiconductor companies around the
world. The content of the IC PCR covers energy and water
consumption, pollutant production, waste production, air pollution,
carbon footprint, and other factors. It can act as a reference for
equipment in each wafer fab to meet regulatory emissions standards.
global semiconductor companies when completing an Environmental
In addition, TSMC maintains backup pollution control systems,
Product Declaration Type III (EPD), and also support the global
including emergency power supplies, to lower the risk of pollutant
electronics supply chain in meeting requirements from Wal-Mart, the
emission in the event of equipment breakdown. TSMC monitors the
world’s largest retailer, for all suppliers to provide eco-labeling within
operations of air and water pollution control equipment centrally
5 years. Meanwhile, TSMC and ASE followed this IC PCR to complete
around the clock and tracks system effectiveness to ensure emitted
an EPD Type III for integrated circuits and obtained a Carbon
air and discharged water quality.
Water Conservation
To make the most effective use of Taiwan’s limited water resources,
Footprint Certification from the Taiwan Electrical and Electronic
Manufacturers’ Association (TEEMA), taking a major step forward in
manufacturing low-carbon products.
all TSMC fabs make efforts to increase water reclamation rates by
TSMC also maintains “green procurement” procedures, requiring raw
adjusting the water usage of manufacturing equipment and
materials suppliers to declare that the materials they supply to TSMC
improving wastewater reclamation systems. New fabs are able to
do not contain any prohibited substances. This ensures that products
reclaim more than 85% of process water, meeting or exceeding the
manufactured by TSMC comply with customer requirements and the
standards of the Science Park Administration and outperforming
regulatory requirements of the European Union’s RoHS directive. TSMC
most semiconductor fabs around the world. TSMC also strives to
also encourages employees to use “Green Mark” products in offices,
reduce non-manufacturing-related water consumption, including
such as recycled paper, desktop PCs, LCD monitors, and batteries.
water used in air conditioning systems, sanitary facilities, cleaning,
landscaping and kitchens.
TSMC has adopted the standards of Taiwan “Green Building” and the
US Leadership in Energy and Environmental Design (LEED) to apply on
future new fab and office building design, which may achieve better
71
energy and resource efficiency than usual designs. In the meantime,
7.2.2 Safety and Health
TSMC plans to upgrade existing office buildings to comply with the
LEED standard year by year starting in 2008. In August 2008, TSMC
Fab 14 Phase III facility based in Southern Taiwan Science Park won
Safety and Health Management
TSMC’s safety and health management is built on the framework of
certification from the US Green Building Council’s Leadership in
the OHSAS 18001 system, and adheres to the management principle
Energy and Environmental Design – New Construction (LEED-NC)
of “Plan, Do, Check, Act” to prevent accidents and protect employee
green building rating system with a “gold class” score. TSMC Fab 12
safety and health as well as Company assets. In 2009, TSMC fabs in
Phase IV facility based in Taiwan Hsinchu also won the same
Taiwan have simultaneously received OHSAS 18001 certification and
certification in 2009. Fab 14 Phase III is the first building in Taiwan to
TOSHMS certification for Taiwan occupational safety and health
receive certification from the US Green Building Council. In December
management system.
2008, Fab 14 Phase III also has passed Taiwan’s “Diamond Class
Ecology, Energy Saving, Waste Reduction, and Health (EEWH)”
Besides accident prevention, TSMC has established emergency
certification, which is the second “Diamond” class in Taiwan and the
response procedures to protect the lives of employees and
first recognized factory; TSMC Fab 12 Phase IV facility based in
contractors if disasters should occur, as well as to minimize the
Taiwan Hsinchu also won the same certification in 2009.
negative impact on society and the environment. TSMC
communicates to suppliers to reduce potential risks in the operation
TSMC initiated a “Taiwan Corporate Sustainability Forum (TCSF)”,
of production equipment and follows safety control procedures
which unites 20 Taiwan leading companies as founders. The forum
when installing production equipment. The Company places
also welcomes new members. TSMC’s 2008 Green Forum is the first
of a series of Taiwan Corporate Sustainability Forum events. At this
stringent controls on high-risk operations and also evaluates the
seismic tolerance of facilities and equipment to reduce the risk of
meeting, TSMC shared its hands-on experience in obtaining the US
earthquake damage. In health management, TSMC maintains regular
Green Building Council’s LEED certification, and applying for
wellness and professional health programs, such as kitchen GHP
Taiwan’s Ecology, Energy Saving, Waste Reduction, and Health
(Good Health Practice) establish, metal health appraisal and control
(EEWH) certification for its Fab 14 Phase III facility. TSMC also
and specific group health examination alignment. It also establishes
proposed working with green building experts to draft guidelines for
Company-level prevention committees when infectious diseases such
green industrial buildings in Taiwan, helping more domestic
as H1N1 influenza, Severe Acute Respiratory Syndrome (SARS) or
companies construct their own green factories and promote green
Avian Influenza pose a potential risk to the Company.
manufacturing. In 2009, the TCSF continued to invite Taiwan leading
companies to join the TCSF. Epson Taiwan and Mediatek have
become new members. TCSF held an experience sharing for
Working Environment and Employee Safety Protection
TSMC’s ESH policy commits to preventing adverse incidents,
performing corporate social responsibility in November 2009.
improving employees’ safety and health, protecting property and
establishing a secure working environment. TSMC safety and health
In 2009, TSMC completed the first “Supply Chain Carbon Inventory
management operations apply to:
Assistance Plan” in Taiwan. With the assistance of the Taiwan
Ministry of Economic Affairs Industrial Development Bureau, TSMC in
●Hardware Safety of Equipment Used by Process, Facilities, IT, and
June 2009 became the first company in Taiwan to lead its suppliers
General Services Departments
in successfully completing and registering a carbon inventory. TSMC
In addition to meeting regulatory and internal standards when
not only actively inventories and reduces its own greenhouse gas
building or rebuilding facilities, TSMC also maintains procedures
emissions, but also requires suppliers to inventory greenhouse gas
governing new equipment and raw materials management, safety
emissions. Under this plan, TSMC as well as 36 factories at 20
approvals for bringing new tools online, revising safety rules, seismic
partner companies registered and disclosed greenhouse gas
emissions under the guidance of the Taiwan Green Productivity
Foundation. Together with our supplier partners, TSMC both
supports the Taiwan government’s carbon emission reduction policy,
protection measures, and other safety measures.
●General Safety Management, Training and Audit
All TSMC manufacturing facilities hold environmental, safety and
and helps the industry prepare for the coming global trend of
health committee meetings on a monthly basis. TSMC takes
product carbon footprint labeling and eco-labeling. This move by
preventive measures such as controls on high-risk work, contractor
TSMC demonstrates that corporations can take a long-term,
management, chemical safety management, personal protective
macro-level view when making plans regarding climate change and
equipment requirements, and safety audit management. In addition,
global warming, and effectively implement these plans pragmatically
TSMC also maintains detailed disaster response procedures and
through the supply chain.
performs regular drills to minimize harm to employees and property,
as well as the impact on society and the environment in the event of
Environmental Compliance Record
There were no environmental penalties or fines in 2009.
a disaster.
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●Working Environment Measurement
TSMC conducts working environment physical and chemical
Health enhancement activities include nutritional consultation,
weight-loss classes, an acupuncture weight-loss program, carotid
measurements every six months to safeguard employees’ health,
and thyroid ultrasound examinations, an endocrinology clinic, a
including measurement of factors such as noise, air quality, chemical
dermatology clinic, bone mineral densitometry examinations and
exposure, and illumination. The measurement results for each item
cancer screenings. Canteens also provide healthy meals with high
must be compliant with regulatory requirements; otherwise
fiber and low fat, as well as all-fruit meals. TSMC fabs have fitness
corrective action is undertaken.
●H1N1 Influenza
Since World Health Organization (WHO) announced the H1N1
influenza global pandemic alert during April 2009, TSMC Corporate
centers with treadmills, exercise equipment, and aerobics classrooms
to encourage employees to participate in athletic activity. In addition,
all employees can find health information through the Company’s
healthcare website.
Pandemic Influenza Response Committee has convened to monitor
the global pandemic status and developed the response strategies.
Supplier and Contractor Management
For the purpose of enhancing its supply chain management, TSMC is
These strategies include educating its employees’ H1N1 prevention
committed to communicating with and encouraging its contractors
and response knowledge (such as poster everywhere, all-user mail
and suppliers to improve their environmental, safety and health
announcement, dedicated H1N1 web) publishing the managers’
performance. By means of communication between senior
H1N1 handling guideline, guideline of employee sick-leave due to flu
managers, site audits and experience sharing, TSMC collaborates
and installing the alcohol-based hand sanitizers. The Committee also
with major suppliers and contractors to enhance partnership and
monitors the status of employee leaves due to flu status and, at the
same time, develops the continuous plan of manpower shortage to
ensure continual improvement for increased joint contributions to
society. Contractors performing high-risk activities must lay out
address both the employees’ health and business impact.
clearly defined safety precautions and preventative measures. In
●Emergency Response
Planning and execution of an effective emergency response requires
big-picture thinking, continuous improvement and practice drills.
addition, contractors working on high-risk engineering projects must
establish OHSAS 18001 systems and the workers must successfully
complete work skill training.
TSMC’s emergency response plans include procedures for rapid
In 2009, the global recession affected most companies and caused
response to accidents and disaster recovery as well as establishing
some of them operational difficulty because of financial issues. TSMC
response procedures for potential disasters.
quickly evaluated each key supplier’s financial status and took
appropriate actions to help our suppliers continue their operation
All TSMC fabs conduct major annual emergency response exercises
and support TSMC fab operations.
and evacuation drills. TSMC’s on-site service contractors also
participate in emergency response planning and exercises to ensure
cooperation in handling accidents and to effectively minimize
damage caused by disasters.
Environmental, Safety and Health-related Awards in 2009
●Chosen for membership in the Dow Jones Sustainability World
Index for a 9th consecutive year, and the only Taiwan member from
2003 to 2007
In addition to regular emergency response drills held by engineering
●Recognized by the Taiwan Institute of Sustainable Energy for “Gold
and facilities departments each quarter, the Company’s laboratory,
Award for Taiwan Corporate Sustainability Report Award”
canteen, dormitory, and shuttle bus personnel also hold emergency
●Recognized by the Atomic Energy Council for “Excellence in
response drills to prepare for events such as earthquake, chemical
Radiation Protection”
leakage, ammonia release, fires, and automobile accidents.
●Fab 12 Phase IV was recognized by the U.S. Green Building Council
●Employee Health Enhancement
TSMC provides healthcare and staff assistance services in every fab.
(USGBC) for “Golden Award for Leadership in Energy and
Environmental Design of New Construction (LEED-NC)”
●Fab 12 Phase IV has passed Taiwan’s “Diamond Class Ecology,
TSMC employees enjoy health services such as 24-hour nursing care,
Energy Saving, Waste Reduction, and Health (EEWH)” certification
annual physical examinations, psychological consultations, stress
●Fab 8 was recognized by the Science Park Administration (SPA) for
management programs, workshops, and staff assistance projects. In
“Low Carbon Enterprise Award”
addition, the Company also provides clinical and dental care services,
●Fab 12 was recognized by the Science Park Administration (SPA) for
women’s healthcare, acupuncture and massage services and
“Excellence in Labor Safety and Hygiene”
programs.
●Fab 6 and Fab 14 were recognized by the Southern Taiwan Science
Park Administration for “Excellence in Environmental Protection”
73
7.3 TSMC Education and Culture
Foundation
In 2009, financial crisis engulfed the global economy and Taiwan
was gravely affected. To help minimize the impact to the society and
students to read and write. At the primary-school level, TSMC’s focus
is on aesthetic education. TSMC Foundation has been organizing the
TSMC Aesthetic Tour to bring elementary students to visit museums
for the 7th consecutive year. In 2009, the Company also sponsored
the exhibition “Smiling Kingdom - The Terracotta Warriors of Han
sustain our confidence, TSMC continues to contribute substantial
Yang Ling” to give children in remote townships opportunities to
amount of resources to education and culture sponsorship.
appreciate Chinese traditional art and culture.
The TSMC Education and Culture Foundation, established in 1988 to
7.3.2 Contributions to Communities
coordinate the Company’s sponsorship as part of its efforts in
corporate social responsibility, continues to devote its resources
The Foundation continues to promote arts and cultural activities in
towards education, sponsorships of art and culture events,
TSMC site communities of Hsinchu and Tainan. Every year the
communities building, and the employee volunteer program. We are
Company organizes the TSMC Hsin-Chu Art Festival to bring the
committed to cultivating talents and improving the education
culture activities to these high-tech cities and encourage a greater art
infrastructure. In 2009, Tzi-Shueh Hall of the Chemistry Department
appreciation in the communities.
in National Taiwan University, donated by the TSMC Foundation, was
inaugurated. The new research building will provide a strong base
In an effort to minimize the local impact of the financial crisis that
for scientific research and development in Taiwan.
swept the world last year, the TSMC Foundation chose “Find a New
7.3.1 Commitment to Education
World” as the theme of Hsin-Chu Art Festival to arrange a series of
educational and cultural programs. Through these programs, we
hope to sustain the confidence of our community to fight the tough
Talents are essential to the development of the economy. As a leader
situation, and to look forward to a better future.
of Taiwan’s knowledge-based industry, TSMC regards cultivating
talented people for society as a major responsibility.
The festival opened with a series of lectures. Writers and experts were
invited to guide people through the difficult economic situation.
Tzi-Shueh Hall of the Chemistry Department in National Taiwan
Promoting Chinese Theatre as an important feature of the festival,
University, to which the TSMC Foundation donated 120 million NT
the festival brought Kunqu Opera “The Jade Hairpin” to present the
dollars, was completed and inaugurated in November 2009. The
beauty of Kunqu. Also, the Hsinchu-born maestro Shao-chia Lu led
naming of the new building was to honor the donation of TSMC by
the National Orchestra to present a wonderful concert. Taiwan writer
combining the word “Tzi” from the Chinese name of TSMC, with the
Chun-Ming Huang invited Hsinchu local children to take part in the
word “Shueh” taken from the Department of Chemistry. Literally
drama performance. Through their participation, children developed
meaning the accumulation of knowledge in Chinese, Tzi-Shueh Hall
the correct attitude toward the environment. Meanwhile, several
will help to prepare true talents. The Company hopes that this
charity programs encouraged the care of the underprivileged from
building will continue to support state of the art research activities,
every corner, especially in difficult situations.
foster top-notch talents, and eventually will lead basic scientific
research in Taiwan.
7.3.3 Sponsorship of Arts
In the meantime, TSMC continues to devote resources to various
To promote the Chinese classics and culture, the TSMC Foundation
programs targeting a whole range of education at different age
continued to support the broadcasting program “Analects in Hsin’s
levels. For secondary schools, we emphasize developing students’
View”. The program received overwhelming positive response from
potential in both science and humanities. For science education, the
Foundation keeps supporting the Wu Chien-Shiung and the Wu
the society and overseas. As an extension of the program, the TSMC
Foundation also sponsored the publishing of the records of the
Ta-You Science Camps for talented science students to meet with
broadcasting program to let more people easily understand the
world-class scholars. For humanity education, the Company
wisdom of the Confucianism.
continues to sponsor the second TSMC Youth Chinese Calligraphy
Contest, providing high school students an opportunity to compete
TSMC continued its support of the Taiwan Literature Camp, which
and learn both from masters and peers. This year the TSMC
provides workshop and lectures by distinguished authors to people
Foundation also organized various programs of calligraphy education
interested in literature. In 2009, 400 literary devotees from across
to extend the social participation in calligraphy arts. In addition, it
continued the 6th TSMC Youth Literature Award to encourage young
writers. For the past years, the contest has developed numerous
Taiwan convened at Cheng Kung University at Tainan for
opportunities to meet masters form Taiwan and China and to receive
three days of training and pure inspiration. TSMC also hopes that by
talented young writers, and cultivated an appreciation of literature in
holding the camp to infuse the technology campus with humanities.
the community. The TSMC Youth Literature Award has made an
impact, and is now an important channel for encouraging young
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7.3.4 Employee Volunteer Program
In addition to sponsoring education and art programs, the TSMC
Foundation encourages TSMC employees to devote themselves to
promote education, bridge the resources gap, and pursue energy
conservation. The newly formed Energy-Saving Volunteer team
provided two Hsin-chu high schools with the means to evaluate the
safety and efficiency in their power usage with counseling in
energy-saving programs. The result was extraordinary, with positive
responses from the schools and the community. In 2009, the service
has extended to 5 high schools in Hsin-chu and Tainan. The team will
continue to help to reduce carbon emission and to build a better and
safer community.
In addition to the Energy-Saving Volunteer team, TSMC employees
have also served as guides to introduce the electronic industry at the
National Science Museums during weekends, and read books to the
elementary students in remote townships on weekdays. Several
hundred of TSMC “Museum Touring” and “Book Reading” volunteers
have already served for six years. Since 2003, there are total 3,000
TSMC employees to devote themselves to the society.
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8. AFFILIATE INFORMATION
AND OTHER SPECIAL NOTES
TSMC’s affiliates support our core foundry business with related services such as design service and back-end assembly and test, enabling TSMC
to provide customers with complete solutions meeting their needs.
8.1 Affiliates
8.1.1 TSMC Affiliated Companies Chart
WaferTech, LLC
Shareholding: 99.99%
Taiwan
Semiconductor
Manufacturing
Company Limited
TSMC North America
Shareholding: 100%
TSMC Europe B.V.
Shareholding: 100%
TSMC Japan Limited
Shareholding: 100%
TSMC Korea Limited
Shareholding: 100%
TSMC China Company Limited
Shareholding: 100%
TSMC Partners, Ltd.
Shareholding: 100%
TSMC Global Ltd.
Shareholding: 100%
Global Unichip Corporation
Shareholding: 35.38%
Xintec Inc.
Shareholding: 41.09%
As of 12/31/2009
As of 12/31/2009
TSMC Technology, Inc.
Shareholding: 100%
TSMC Development, Inc.
Shareholding: 100%
InveStar Semiconductor
Development Fund, Inc.
Shareholding: 97.09%
InveStar Semiconductor
Development Fund, Inc. (II) LDC.
Shareholding: 97.09%
TSMC Design Technology Canada Inc.
Shareholding: 100%
Global Unichip Europe B.V.
Shareholding: 100%
Global Unichip Japan Co., Ltd.
Shareholding: 100%
Global Unichip Corporation-NA
Shareholding: 100%
Emerging Alliance Fund, L.P.
Shareholding: 99.5%
Global Unichip (BVI) Corp.
Shareholding: 100%
VentureTech Alliance Fund II, L.P.
Shareholding: 98%
VentureTech Alliance Fund III, L.P.
Shareholding: 98%
VentureTech Alliance Holdings, LLC
Shareholding: 100%
Mutual-Pak Technology Co., Ltd.
Shareholding: 58.96%
Growth Fund Limited
Shareholding: 100%
Note: To simplify the organization structure of investment, TSMC Partners, Ltd. merged TSMC International Investment Ltd. in June 2009.
77
8.1.2 Business Scope of TSMC and Its Affiliated Companies
TSMC’s affiliates support the Company’s core business of providing dedicated foundry services and other related businesses. Some of TSMC’s
affiliated companies are focused on investing in companies involved in design, manufacturing, and other related businesses in the semiconductor
industry. TSMC and its affiliates provide mutual support in technology, capacity, marketing and services to maximize synergy within the group,
enabling TSMC to provide its customers with the most complete dedicated foundry services worldwide and ensure TSMC’s leading position in the
global foundry market.
8.1.3 TSMC Affiliated Companies
Unit: NT(US, EUR, JPY, KRW, RMB, CAD)$ thousands
As of 12/31/2009
Company
TSMC North America
TSMC Europe B.V.
TSMC Japan Limited
TSMC Korea Limited
TSMC China Company Limited
Date of Incorporation
Place of Registration
Capital Stock
Business Activities
Jan. 18, 1988
San Jose, California, U.S.A.
US$ 11,000
Selling and marketing of integrated circuits and
semiconductor devices
Mar. 04, 1994
Sep. 10, 1997
May 02, 2006
Aug. 04, 2003
Amsterdam, The Netherlands
EUR 100
Marketing and engineering supporting activities
Yokohama, Japan
Seoul, Korea
Shanghai, China
JPY 300,000
Marketing activities
KRW 400,000
Customer service and technical supporting activities
RMB 3,070,623
Manufacturing and selling of integrated circuits at the order
of and pursuant to product design specifications provided by
customers
TSMC Technology, Inc.
Feb. 20, 1996
Delaware, U.S.A.
US$ 0.001
Engineering supporting activities
InveStar Semiconductor Development Fund, Inc.
Sep. 10, 1996
InveStar Semiconductor Development Fund, Inc.(II)
LDC.
Aug. 25, 2000
Cayman Islands
Cayman Islands
US$ 7,911
Investing in new start-up technology companies
US$ 22,058
Investing in new start-up technology companies
TSMC Development, Inc.
WaferTech, LLC
Feb. 16, 1996
Jun. 03, 1996
Delaware, U.S.A.
Washington, U.S.A.
US$ 0.001
Investment activities
US$ 330,000
Manufacturing, selling, testing and computer-aided
designing of integrated circuits and other semiconductor
devices
TSMC Partners, Ltd.
Mar. 26, 1998
Tortola, British Virgin Islands
US$ 988,268
Investment in companies involved in the design,
manufacture, and other related business in the
semiconductor industry.
TSMC Design Technology Canada Inc.
TSMC Global Ltd.
Global Unichip Corporation
Global Unichip Japan Co., Ltd.
Global Unichip Corporation-NA
Global Unichip Europe B.V.
Global Unichip (BVI) Corp.
Xintec Inc.
Mutual-Pak Technology Co., Ltd.
Emerging Alliance Fund, L.P.
VentureTech Alliance Fund II, L.P.
VentureTech Alliance Fund III, L.P.
Growth Fund Limited
VentureTech Alliance Holdings, LLC
May 28, 2007
Jul. 13, 2006
Jan. 22, 1998
Jun. 16, 2005
Feb. 02, 2004
May 08, 2008
Feb. 20, 2009
Sep. 11, 1998
Mar. 22, 2006
Jan. 10, 2001
Feb. 27, 2004
Mar. 25, 2006
May 30, 2007
Apr. 25, 2007
Ontario, Canada
CAD 2,434
Engineering support activities
Tortola, British Virgin Islands
US$ 1,284,000
Investment activities
Hsin-Chu, Taiwan
NT$ 1,319,749
Researching, developing, manufacturing, testing and
marketing of integrated circuits
Japan
U.S.A.
JPY 30,000
Products consulting services
US$ 800
Products consulting services
The Netherlands
EUR 100
Products consulting services
Tortola, British Virgin Islands
US$ 550
Investment activities
Taoyuan, Taiwan
Taipei, Taiwan
Cayman Islands
Cayman Islands
Cayman Islands
Cayman Islands
Delaware, U.S.A.
NT$ 2,265,287
Wafer level chip size packaging service
NT$ 155,690
Manufacturing and selling of electronic parts and
researching, developing and testing of RFID
US$ 28,095
Investing in new start-up technology companies
US$ 33,055
Investing in new start-up technology companies
US$ 52,950
Investing in new start-up technology companies
US$ 1,550
Investing in new start-up technology companies
N/A
Investing in new start-up technology companies
8.1.4 Common Shareholders of TSMC and Its Subsidiaries or Its Affiliates with Deemed Control: None.
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8.1.5 Rosters of Directors, Supervisors, and Presidents of TSMC’s Affiliated Companies
Unit: US/EUR$, except shareholding
Company
TSMC North America
TSMC Europe B.V.
TSMC Japan Limited
TSMC Korea Limited
TSMC China Company Limited
TSMC Partners, Ltd.
TSMC Technology, Inc.
InveStar Semiconductor Development Fund,
Inc.
InveStar Semiconductor Development Fund,
Inc. (II) LDC.
TSMC Design Technology Canada Inc.
TSMC Development, Inc.
WaferTech, LLC
TSMC Global Ltd.
Global Unichip Corporation
Title
Director
Director
President
Director
Director
Director
President
Chairman
Director
Director
Supervisor
President
Director
Director
Chairman
Director
Director
Supervisor
President
Director
Director
President
Chairman
Director
President
Director
Director
Director
Director
Director
President
Chairman
Director
President
Chairman
Director
President
Director
Director
Chairman
Director
Director
Director
Director
Director
Name
Jason Chen
Rick Cassidy
Rick Cassidy
Jason Chen
Wendell Huang
Maria Marced
Maria Marced
Rick Tsai
Jason Chen
Makoto Onodera
Lora Ho
Makoto Onodera
C.C. Pan
Chih-Chun Tsai
F.C.Tseng
C.C.Wei
Y.C. Chao
Lora Ho
C.H. Chen
Lora Ho
Richard Thurston
Lora Ho
Lora Ho
Richard Thurston
Lora Ho
Wendell Huang
Wendell Huang
Fu-Chieh Hsu
Sreedhar Natarajan
Richard Thurston
Cliff Hou
Lora Ho
Richard Thurston
Lora Ho
Rick Tsai
Steve Tso
Kuo-Chin Hsu
Lora Ho
Richard Thurston
Representative of TSMC: F.C. Tseng
Representative of TSMC: Lora Ho
Representative of TSMC: Jim Lai
Representative of TSMC: Fu-Chieh Hsu
Re presentative of Chin Yu Investment Ltd.: C.C.
Shiue
Re presentative of Chuang Yi Investment Ltd.: K.C.
Independent Director
Independent Director
Independent Director
President
Shih
C.W. Jen
W.C. Liu
W.Y. Wang
Jim Lai
As of 12/31/2009
Shareholding
Shares (Investment Amount)
% (Investment Holding %)
-
-
-
TSMC holds 11,000,000 shares
-
-
-
-
TSMC holds 200 shares
-
-
-
-
-
TSMC holds 6,000 shares
-
-
TSMC holds 80,000 shares
-
-
-
-
-
(TSMC’s investment US$371,000,000)
-
-
-
TSMC holds 988,268,244shares
-
-
-
TSMC Partners, Ltd. holds 1,000 shares
-
TSMC Partners, Ltd. holds 7,680,107 share
-
TSMC Partners, Ltd. holds 21,415,133 shares
-
-
-
-
TSMC Partners, Ltd. holds 2,300,000 shares
-
-
-
TSMC Partners, Ltd.holds 1,000 shares
-
-
-
TSMC Development, Inc.holds 293,636,833
shares
-
-
TSMC holds 1,284 shares
46,687,859 shares
46,687,859 shares
47,470,644 shares
46,687,859 shares
1,391,531 shares
5,318,765 shares
-
-
-
782,785 shares
-
-
-
100%
-
-
-
-
100%
-
-
-
-
-
100%
-
-
100%
-
-
-
-
-
(100%)
-
-
-
100%
-
-
-
100%
-
97.09%
-
97.09%
-
-
-
-
100%
-
-
-
100%
-
-
-
99.99%
-
-
100%
35.38%
35.38%
35.97%
35.38%
1.05%
4.03%
-
-
-
0.59%
(Continued)
79
Company
Global Unichip Japan Co., Ltd.
Global Unichip Corporation-NA
Global Unichip Europe B.V.
Global Unichip (BVI) Corp.
Xintec Inc.
Mutual-Pak Technology Co., Ltd.
Emerging Alliance Fund, L.P.
VentureTech Alliance Fund II, L.P.
VentureTech Alliance Fund III, L.P.
Growth Fund Limited
VentureTech Alliance Holdings, LLC
Title
Director
Director
Director
Supervisor
President
Director
Director
President
Director
Director
Director
Chairman
Director
Director
Director
Director
Supervisor
Supervisor
President
Chairman
Director
Director
Supervisor
President
None
None
None
None
None
Name
Jim Lai
Chung-Lin Tsai
James Cheng
K.C. Shih
Chung-Lin Tsai
James Cheng
Jim Lai
Jim Lai
Hwang, Yawlin
Representative of GUC: Jim Lai
Representative of GUC: Chien, Pei-Lun
Representative of TSMC: Shang-yi Chiang
Representative of TSMC: C.C.Wei
Representative of TSMC: Lora Ho
Re presentative of OmniVision Investment Holding
Inc.: XinPing He
Tzun Zing Chen
Re presentative of Cheng Xin Technology
Development Corp.: Toang Chiou Lu
Re presentative of VisEra Holding Company: W.M.
Sheng
Lidon Chen
Hsu-Tung Chen
Lewis Hwan
Re prsentative of VentureTech Alliance Fund III, L.P.:
Juine-Kei Tseng
Wei-Pong Lin
Lewis Hwan
None
None
None
None
None
Shareholding
Shares (Investment Amount)
% (Investment Holding %)
-
-
-
-
-
GUC holds 600 shares
-
-
-
GUC holds 800,000 shares
-
(GUC’s investment EUR$100,000)
-
-
GUC holds 550,000 shares
93,081,225 shares
93,081,225 shares
93,081,225 shares
9,616,150 shares
1,614,985 shares
1,205,793 shares
36,502,320 shares
368,813 shares
80,000 shares
1,759,000 shares
9,180,000 shares
30,000 shares
1,759,000 shares
(TSMC’s investment US$27,954,767)
(TSMC’s investment US$32,394,351)
(TSMC’s investment US$51,891,000)
(VentureTech Alliance Fund III, L.P.’s investment
US$1,550,000)
None
-
-
-
-
-
100%
-
-
-
100%
-
(100%)
-
-
100%
41.09%
41.09%
41.09%
4.25%
0.71%
0.53%
16.11%
0.16%
0.51%
11.30%
58.96%
0.19%
11.30%
(99.5%)
(98%)
(98%)
(100%)
(100%)
9
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8.1.6 Operational Highlights of TSMC Affiliated Companies (Note)
Unit: NT$ thousands, except EPS ($)
Company
Capital Stock
Assets
Liabilities
Net Worth
Net Sales
Income from
Operation
Net Income
(Net of Tax)
Basic EPS
(Net of Tax)*
Remark
As of 12/31/2009
TSMC North America
TSMC Europe B.V.
TSMC Japan Limited
TSMC Korea Limited
352,330
26,484,291
23,622,179
2,862,112
163,703,629
287,821
4,625
104,520
11,000
243,450
169,182
20,406
83,983
33,519
1,887
159,467
135,663
18,519
344,790
232,726
14,224
43,374
10,578
1,293
197,076
35,445
4,203
2,392
TSMC China Company Limited
14,410,434
13,416,228
10,457,521
2,958,707
4,244,911
(3,068,425)
(3,244,458)
TSMC Technology, Inc.
InveStar Semiconductor Development Fund, Inc.
InveStar Semiconductor Development Fund, Inc.
(II) LDC.
0.03
253,389
706,518
340,224
242,192
453,515
49,695
160
200
290,529
242,032
453,315
420,441
20,021
8,074
(49,405)
365,640
32,443
21,879
(49,673)
31,724
17.92
177,225
700.50
29.90
N/A
21,879
(6.28)
1.44
TSMC Development, Inc.
0.03
6,289,511
143
6,289,368
-
WaferTech, LLC
TSMC Partners, Ltd.
10,569,900
5,763,134
552,447
5,210,687
5,556,299
31,654,232
32,638,619
93,000
32,545,619
TSMC Design Technology Canada Inc.
74,281
122,951
20,686
102,265
TSMC Global Ltd.
41,126,520
45,401,566
4,310
45,397,256
Global Unichip Corporation
1,319,749
4,074,386
1,296,078
2,778,308
8,269,806
480,345
156,653
714,607
10,452
25,624
4,625
17,617
14,812
41,140
5,244
17,488
1,869
2,474
14
-
12,943
38,666
5,230
17,488
39,992
158,175
7,484
-
2,265,287
4,958,081
1,459,941
3,498,140
2,354,536
155,690
899,891
95,624
307,410
VentureTech Alliance Fund II, L.P.
1,058,752
1,141,194
VentureTech Alliance Fund III, L.P.
1,695,989
1,318,787
Growth Fund Limited
VentureTech Alliance Holdings, LLC
49,647
26,354
-
-
5,120
7
610
-
-
-
90,504
307,403
1,140,584
1,318,787
26,354
-
-
11,078
53,786
3,100
1
-
Global Unichip Japan Co., Ltd.
Global Unichip Corporation-NA
Global Unichip Europe B.V.
Global Unichip (BVI) Corp.
Xintec Inc.
Mutual-Pak Technology Co., Ltd.
Emerging Alliance Fund, L.P.
185,091
185,091
(4,139)
(54,907)
6,939
(0.01)
(0.06)
3.02
505,232
393,482.87
(2,932)
(16,467)
(54,907)
14,300
505,232
397,234
1,904
7,353
365
(134)
(1,963)
(43,537)
(92,606)
(178,442)
(224,620)
(4,200)
412,771
1,614
5,617
354
(133)
10,597
(36,515)
(92,606)
(178,442)
(224,620)
(4,200)
-
-
3.15
2,690
7.02
N/A
(0.24)
0.05
(2.35)
N/A
N/A
N/A
N/A
N/A
*TSMC Japan Limited, TSMC Europe B.V., TSMC Korea Limited, Global, TSMC Design Technology Canada Inc., Unichip Japan Co., Ltd. and Global Unichip (BVI) Corp., the basic EPS of each group entity is calculated based on audit
figures.
Note: Foreign exchange rates for balance sheet amounts are as follows: $1 USD = $32.030 NT, $1 EUR = $46.250 NT, $1 JPY = $0.3484 NT, $1 RMB = $4.693NT, $1 KRW = $0.0275 NT, $1 CAD= $30.52 NT
Foreign exchange rates for income statement amounts are as follows: $1 USD = $33.036 NT, $1 EUR = $46.192 NT, $1 JPY = $0.3550 NT, $1 RMB = $4.838 NT, $1 KRW = $0.0260NT, $1 CAD= $29.07 NT
8.2 Status of TSMC Common Shares and ADRs Acquired, Disposed of, and Held by
Subsidiaries: None.
8.3 Special Notes
8.3.1 Private Placement Securities in 2009 and as of the Date of this Annual Report: None.
8.3.2 Regulatory Authorities’ Legal Penalties to the Company or Its Employees, and the Company’s
Resulting Punishment on Its Employees for Violations of Internal Control System Provisions,
Principal Deficiencies, and the State of Any Efforts to Make Improvements in 2009 and as of the
Date of this Annual Report
The authorities inspected TSMC’s human resources management procedure and job time records and issued fines totalling NT$42,000 for
incompleteness of the relevant records. TSMC will work closely with the authorities to address the concerns of both sides fairly.
8.3.3 Any Events in 2009 and as of the Date of this Annual Report that Had Significant Impacts on
Shareholders’ Right or Security Prices as Stated in Item 2 Paragraph 2 of Article 36 of Securities and
Exchange Law of Taiwan: None.
8.3.4 Other Necessary Supplement: None.
81
TSMC ANNUAL REPORT 2009 (II) FINANCIAL INFORMATION
TWSE: 2330
NYSE: TSM
(cid:339) Taiwan Stock Exchange Market Observation Post System: http://newmops.tse.com.tw
(cid:339) TSMC annual report is available at http://www.tsmc.com/english/e_investor/e02_annual/e02_annual.htm
Printed on March 12, 2010
TABLE OF CONTENTS
1. Condensed Balance Sheet
2. Condensed Statement of Income
3. Financial Analysis
4. Auditors’ Opinions from 2005 to 2009
5. Audit Committee’s Report
6. Financial Difficulties
2
3
4
6
6
6
7. Financial Statements for the Years Ended
7
December 31, 2009 and 2008 and
Independent Auditors’ Report
8. Consolidated Financial Statements for the
42
Years Ended December 31, 2009 and 2008
and Independent Auditors’ Report
9. U.S. GAAP Financial Information
87
1. Condensed Balance Sheet
1.1 Condensed Balance Sheet from 2005 to 2009 (Unconsolidated)
1.2 Condensed Balance Sheet from 2005 to 2009 (Consolidated)
Unit: NT$ thousands
Unit: NT$ thousands
Item
Current Assets
2005
2006
2007
2008
2009
Item
2005
2006
2007
2008
2009
197,562,416
193,676,010
174,299,286
179,849,479
185,831,537
Current Assets
212,300,790
260,317,168
249,822,329
252,618,431
259,803,748
Long-term Investments
80,659,601
137,378,205
123,891,153
124,184,663
118,427,813
Long-term Investments
42,382,494
53,895,151
36,461,325
39,981,515
37,845,503
Fixed Assets
Other Assets
Current Liabilities
Before Distribution
After Distribution
214,145,633
228,235,359
234,564,558
219,282,502
254,751,526
15,172,165
14,295,330
19,017,626
17,242,603
18,415,746
32,184,415
42,905,154
43,800,810
53,099,467
72,571,095
97,699,015
125,252,816
124,798,894
129,975,779
*
Fixed Assets
Other Assets
Current Liabilities
Before Distribution
After Distribution
244,823,292
254,094,190
260,252,187
243,645,350
273,674,787
20,003,013
19,178,650
24,329,385
22,671,293
23,372,182
35,122,227
46,860,531
48,706,007
56,806,756
79,133,288
100,636,827
129,208,193
129,704,091
133,683,068
*
Long-term Liabilities
22,111,575
14,175,271
14,001,462
5,431,252
4,916,390
Long-term Liabilities
30,410,171
22,873,542
24,284,470
16,191,041
11,388,479
Other Liabilities
Capital Stock
Capital Surplus
Retained Earnings
Before Distribution
After Distribution
7,613,476
8,523,195
6,878,949
5,651,417
4,856,425
247,300,246
258,296,879
264,271,037
256,254,373
259,027,066
57,117,886
54,107,498
53,732,682
49,875,255
55,486,010
142,771,034
197,124,532
218,864,571
170,053,667
181,882,682
70,114,801
109,687,478
133,414,062
92,664,846
*
Other Liabilities
Capital Stock
Capital Surplus
Retained Earnings
Before Distribution
After Distribution
7,738,483
8,612,970
7,189,178
5,546,325
5,125,905
247,300,246
258,296,879
264,271,037
256,254,373
259,027,066
57,117,886
54,107,498
53,732,682
49,875,255
55,486,010
142,771,034
197,124,532
218,864,571
170,053,667
181,882,682
70,114,801
109,687,478
133,414,062
92,664,846
*
Cumulative Transaction Adjustments
(640,742)
(1,191,165)
(1,072,853)
481,158
(1,766,667)
Cumulative Transaction Adjustments
(640,742)
(1,191,165)
(1,072,853)
481,158
(1,766,667)
Unrealized Gain/loss on Financial
Instruments
Total Assets
Total Liabilities
Before Distribution
After Distribution
Total Equity
Before Distribution
After Distribution
*Pending shareholders’ meeting resolution
-
561,615
680,997
(287,342)
453,621
507,539,815
573,584,904
551,772,623
540,559,247
577,426,622
61,909,466
65,603,620
64,681,221
64,182,136
82,343,910
127,424,066
147,951,282
145,679,305
141,058,448
*
445,630,349
507,981,284
487,091,402
476,377,111
495,082,712
380,115,749
425,633,622
406,093,318
399,500,799
*
Unrealized Gain/loss on Financial
Instruments
Total Assets
Total Liabilities
Before Distribution
After Distribution
Equity Attributable to Shareholders of the
Parent
Before Distribution
After Distribution
Minority Interest
Total Equity
Before Distribution
After Distribution
*Pending shareholders’ meeting resolution
-
561,615
680,997
(287,342)
453,621
519,509,589
587,485,159
570,865,226
558,916,589
594,696,220
73,270,881
78,347,043
80,179,655
78,544,122
95,647,672
138,785,481
160,694,705
161,177,739
155,420,434
*
445,630,349
507,981,284
487,091,402
476,377,111
495,082,712
380,115,749
425,633,622
406,093,318
399,500,799
*
608,359
1,156,832
3,594,169
3,995,356
3,965,836
446,238,708
509,138,116
490,685,571
480,372,467
499,048,548
380,724,108
426,790,454
409,687,487
403,496,155
*
2
2. Condensed Statement of Income
2.1 Condensed Statement of Income from 2005 to 2009 (Unconsolidated)
Unit: NT$ thousands (Except EPS: NT$)
2.2 Condensed Statement of Income from 2005 to 2009 (Consolidated)
Unit: NT$ thousands (Except EPS: NT$)
Item
Net Sales
Gross Profit
2005
2006
2007
2008
2009
264,588,364
313,881,635
313,647,644
321,767,083
285,742,868
Item
Net Sales
2005
2006
2007
2008
2009
266,565,070
317,407,171
322,630,596
333,157,660
295,742,239
115,244,049
149,718,400
137,159,314
138,177,615
126,475,970
Gross Profit
118,202,874
155,810,090
142,350,211
141,749,561
129,328,611
Income from Operations
93,013,824
126,299,859
112,252,047
106,290,232
94,522,353
Income from Operations
90,968,559
127,264,694
111,721,907
104,435,368
91,961,886
Non-operating Income and Gains
7,381,360 ***
11,562,877 ***
11,105,792 ***
6,725,625
4,121,509
Non-operating Income and Gains
9,399,360 ***
9,839,081 ***
11,933,803
10,821,449
5,653,548
Non-operating Expenses and Losses
6,575,761 ***
3,056,237 ***
2,606,433 ***
2,257,039
3,662,840
Non-operating Expenses and Losses
6,104,672 ***
3,741,567 ***
2,013,684
3,784,571
2,152,787
Interest Revenue
Interest Expense
2,506,769 ***
3,382,868
2,634,636
2,728,892
1,117,374
1,180,484 ***
661,200
584,736
355,056
142,026
Interest Revenue
Interest Expense
2,806,226 ***
4,542,149
5,651,700
5,373,823
2,600,925
1,413,374 ***
890,602
842,242
614,988
391,479
93,819,423
134,806,499
120,751,406
110,758,818
94,981,022
93,575,035
127,255,917
109,177,093
99,933,168
89,217,836
Income from Operations of Continued
Segments - before Tax
Income from Operations of Continued
Segments - after Tax
94,263,247
133,362,208
121,642,026
111,472,246
95,462,647
93,632,668
125,588,497
109,932,400
100,523,237
89,466,223
93,575,035
127,009,731
109,177,093
99,933,168
89,217,836
Net Income
93,632,668
127,195,246
109,932,400
100,523,237
89,466,223
Income from Operations of Continued
Segments - before Tax
Income from Operations of Continued
Segments - after Tax
Net Income
Basic Earnings Per Share
Adjusted Basic Earnings Per Share
Capitalized Interest
3.79 *
3.47 **
-
4.93 *
4.70 **
-
4.14 *
4.04 **
-
3.86 *
3.84 **
-
3.45 *
-
-
* Based on weighted average shares outstanding in each year
** Retroactively adjusted for stock dividends until 2008 and profit sharing to employees in stock until 2007
*** Certain accounts have been reclassified to conform to year 2008 classifications.
Net Income Attributable to Shareholders
of the Parent
Basic Earnings Per Share
Adjusted Basic Earnings Per Share
Capitalized Interest
93,575,035
127,009,731
109,177,093
99,933,168
89,217,836
3.79 *
3.47 **
-
4.93 *
4.70 **
-
4.14 *
4.04 **
-
3.86 *
3.84 **
-
3.45 *
-
-
* Based on weighted average shares outstanding in each year
** Retroactively adjusted for stock dividends until 2008 and profit sharing to employees in stock until 2007
*** Certain accounts have been reclassified to conform to year 2008 classifications
3
3. Financial Analysis
3.1 Financial Analysis from 2005 to 2009 (Unconsolidated)
Capital Structure Analysis
Debt Ratio (%)
Liquidity Analysis
Long-term Fund to Fixed Assets Ratio (%)
Current Ratio (%)
Quick Ratio (%)
Times Interest Earned (Times)
Operating Performance Analysis
Average Collection Turnover (Times)
Profitability Analysis
Days Sales Outstanding
Average Inventory Turnover (Times)
Average Inventory Turnover Days
Average Payment Turnover (Times)
Fixed Assets Turnover (Times)
Total Assets Turnover (Times)
Return on Total Assets (%)
Return on Equity (%)
Operating Income to Paid-in Capital Ratio (%)
Pre-tax Income to Paid-in Capital Ratio (%)
Net Margin (%)
Basic Earnings Per Share (NT$) (Note 1)
Diluted Earnings Per Share (NT$) (Note 1)
Cash Flow
Cash Flow Ratio (%)
Leverage
Cash Flow Adequacy Ratio (%)
Cash Flow Reinvestment Ratio (%)
Operating Leverage
Financial Leverage
2005
12.20
218.42
613.84
560.93
80.48
8.08
45.18
9.82
37.19
14.24
1.24
0.52
19.01
22.16
37.61
37.94
35.37
3.47
3.46
468.02
150.88
12.50
2.30
1.01
Analysis of Deviation over 20% for 2009 vs. 2008:
1. The debt ratio increased by 20% as a result of an increase of current liabilities, primarily due to an increase of payables to contractors and equipment suppliers.
2. The current ratio decreased by 24% and quick ratio decreased by 27%, mainly due to an increase in current liabilities.
3. The times interest earned increased by 114%, as a result of a decrease in interest expense at a higher percentage than the decrease in earning before interest and taxes.
4. The fixed asset turnover decreased by 24%, primarily due to an increase in net fixed assets and a decrease in net sales.
5. The cash flow ratio decreased by 46%, mainly due to a decrease in cash provided by operating activities and an increase in current liabilities.
6. The cash flow reinvestment ratio decreased by 46%, resulting from a decrease in cash provided by operating activities and an increase in gross fixed assets.
2006
11.44
228.78
451.40
404.49
204.39
9.26
39.40
9.27
39.37
15.81
1.38
0.55
23.60
26.64
48.90
52.06
40.46
4.70
4.69
457.01
153.75
14.18
2.04
1.01
2007
11.72
213.63
397.94
348.53
207.51
8.82
41.40
8.78
41.57
16.05
1.34
0.57
19.49
21.94
42.48
45.69
34.81
4.04
4.04
397.52
139.35
9.73
2.23
1.01
2008
11.87
219.72
338.70
312.83
312.95
11.08
32.93
10.86
33.59
20.40
1.47
0.60
18.35
20.74
41.48
43.22
31.06
3.84
3.81
399.16
134.79
12.95
2.50
1.00
2009
14.26
196.27
256.07
228.94
669.76
11.17
32.66
10.06
36.29
18.46
1.12
0.49
15.98
18.37
36.49
36.67
31.22
3.45
3.44
214.83
122.02
6.99
2.46
1.00
Note 1: Retroactively adjusted for stock dividends until 2008 and profit sharing to employees in stock until 2007.
Note 2: Certain accounts of year 2005 have been reclassified to conform to year 2006 classifications.
*Glossary
1. Capital Structure Analysis
(1) Debt Ratio
(2) Long-term Fund to Fixed Assets Ratio = (Shareholders’ Equity + Long-term Liabilities) / Net
= Total Liabilities / Total Assets
Fixed Assets
= Current Assets / Current Liabilities
= (Current Assets - Inventories - Prepaid Expenses) /
Current Liabilities
(4) Average Inventory Turnover Days
(5) Average Payment Turnover
(6) Fixed Assets Turnover
(7) Total Assets Turnover
4. Profitability Analysis
(1) Return on Total Assets
= 365 / Average Inventory Turnover
= Cost of Sales / Average Trade Payables
= Net Sales / Net Fixed Assets
= Net Sales / Total Assets
= (Net Income + Interest Expenses * (1 - Effective Tax
Rate) ) / Average Total Assets
(2) Return on Equity
(3) Operating Income to Paid-in Capital
= Net Income / Average Shareholders’ Equity
= Operating Income / Paid-in Capital
5. Cash Flow
(1) Cash Flow Ratio
= Net Cash Provided by Operating Activities / Current
Liabilities
(2) Cash Flow Adequacy Ratio
= Five-year Sum of Cash from Operations / Five-year
(3) Cash Flow Reinvestment Ratio
= (Cash Provided by Operating Activities - Cash
Sum of Capital Expenditures, Inventory Additions, and
Cash Dividend
= Earnings before Interest and Taxes / Interest Expenses
Ratio
= Net Sales / Average Trade Receivables
= 365 / Average Collection Turnover
= Cost of Sales / Average Inventory
(4) Pre-tax Income to Paid-in Capital Ratio = Income before Tax / Paid-in Capital
(5) Net Margin
(6) Earnings Per Share
= Net Income / Net Sales
= (Net Income - Preferred Stock Dividend) / Weighted
Average Number of Shares Outstanding
6. Leverage
(1) Operating Leverage
(2) Financial Leverage
Dividends) / (Gross Fixed Assets + Investments +
Other Assets + Working Capital)
= (Net Sales - Variable Cost) / Income from Operations
= Income from Operations / (Income from Operations -
Interest Expenses)
2. Liquidity Analysis
(1) Current Ratio
(2) Quick Ratio
(3) Times Interest Earned
3. Operating Performance Analysis
(1) Average Collection Turnover
(2) Days Sales Ooutstanding
(3) Average Inventory Turnover
4
3.2 Financial Analysis from 2005 to 2009 (Consolidated)
Capital Structure Analysis
Debts Ratio (%)
Liquidity Analysis
Long-term Fund to Fixed Assets (%)
Current Ratio (%)
Quick Ratio (%)
Times Interest Earned (Times)
Operating Performance Analysis
Average Collection Turnover (Times)
Profitability Analysis
Days Sales Outstanding
Average Inventory Turnover (Times)
Average Inventory Turnover Days
Average Payment Turnover (Times)
Fixed Assets Turnover (Times)
Total Assets Turnover (Times)
Return on Total Assets (%)
Return on Equity (%)
Operating Income to Paid-in Capital Ratio (%)
Pre-tax Income to Paid-in Capital Ratio (%)
Net Margin (%)
Basic Earnings Per Share (NT$) (Note 1)
Diluted Earnings Per Share (NT$) (Note 1)
Cash Flow
Cash Flow Ratio (%)
Leverage
Industry Specific Key Performance
Indicator
Cash Flow Adequacy Ratio (%)
Cash Flow Reinvestment Ratio (%)
Operating Leverage
Financial Leverage
Billing Utilization Rate (%)
Advanced Technologies (0.13-micron and below)
Percentage of Wafer Sales (%)
Sales Growth (%)
Net Income Growth (%)
2005
14.10
194.69
604.46
549.94
67.69
7.84
46.54
8.91
40.94
14.37
1.09
0.51
18.89
22.16
36.78
38.12
35.13
3.47
3.46
447.65
154.53
12.64
2.31
1.02
94
45
3.6
1.4
Analysis of Deviation over 20% for 2009 vs. 2008:
1. The current ratio decreased by 26% and quick ratio decreased by 28%, mainly due to an increase in current liabilities.
2. The times interest earned increased by 34%, as a result of a decrease in interest expense at a higher percentage than the decrease in earnings before interest and taxes.
3. The fixed asset turnover decreased by 21%, primarily due to an increase in net fixed assets and a decrease in net sales.
4. The cash flow ratio decreased by 48%, mainly due to a decrease in cash provided by operating activities.
5. The cash flow reinvestment ratio decreased by 47%, resulting from a decrease in cash provided by operating activities and an increase in gross fixed assets
2006
13.34
209.38
555.51
506.39
152.46
8.84
41.28
8.25
44.22
15.41
1.25
0.54
23.12
26.64
49.27
52.22
40.07
4.70
4.69
437.46
156.75
14.36
1.99
1.01
102
49
19.1
35.7
Note 1: Retroactively adjusted for stock dividends until 2008 and profit sharing to employees in stock until
2007.
Note 2: Capacity includes wafers committed by Vanguard.
Note 3: Certain accounts of year 2005 have been reclassified to conform to year 2006 classifications.
*Glossary
1. Capital Structure Analysis
(1) Debt Ratio
(2) Long-term Fund to Fixed Assets Ratio = (Shareholders’ Equity + Long-term Liabilities) / Net
= Total Liabilities / Total Assets
2. Liquidity Analysis
(1) Current Ratio
(2) Quick Ratio
Fixed Assets
= Current Assets / Current Liabilities
= (Current Assets - Inventories - Prepaid Expenses) /
Current Liabilities
(3) Times Interest Earned
= Earnings before Interest and Taxes / Interest Expenses
3. Operating Performance Analysis
(1) Average Collection Turnover
(2) Days Sales Outstanding
(3) Average Inventory Turnover
(4) Average Inventory Turnover Days
(5) Average Payment Turnover
(6) Fixed Assets Turnover
(7) Total Assets Turnover
4. Profitability Analysis
(1) Return on Total Assets
= Net Sales / Average Trade Receivables
= 365 / Average Collection Turnover
= Cost of Sales / Average Inventory
= 365 / Average Inventory Turnover
= Cost of Sales / Average Trade Payables
= Net Sales / Net Fixed Assets
= Net Sales / Total Assets
= (Net Income + Interest Expenses * (1 - Effective Tax
Rate) ) / Average Total Assets
(2) Return on Equity
(3) Operating Income to Paid-in Capital
= Net Income / Average Shareholders’ Equity
= Operating Income / Paid-in Capital
Ratio
(4) Pre-tax Income to Paid-in Capital Ratio = Income before Tax / Paid-in Capital
(5) Net Margin
= Net Income / Net Sales
6. Leverage
(1) Operating Leverage
(2) Financial Leverage
2007
14.05
197.87
512.92
461.11
145.43
8.55
42.69
7.96
45.85
15.76
1.24
0.57
19.10
21.94
42.28
46.03
34.07
4.04
4.04
377.30
142.46
10.07
2.21
1.01
2008
14.05
203.81
444.70
415.32
182.26
10.73
34.01
9.88
36.94
20.02
1.37
0.60
17.89
20.74
40.75
43.50
30.17
3.84
3.81
389.91
139.50
12.98
2.53
1.01
2009
16.08
186.51
328.31
300.15
244.85
10.78
33.86
9.30
39.25
18.77
1.08
0.50
15.57
18.37
35.50
36.85
30.25
3.45
3.44
202.15
126.39
6.90
2.53
1.00
93 (Note2)
88 (Note2)
76 (Note2)
55
1.6
-14.0
64
3.3
-8.5
67
-11.2
-10.7
(6) Earnings Per Share
5. Cash Flow
(1) Cash Flow Ratio
= (Net Income - Preferred Stock Dividend) / Weighted
Average Number of Shares Outstanding
= Net Cash Provided by Operating Activities / Current
Liabilities
(2) Cash Flow Adequacy Ratio
= Five-year Sum of Cash from Operations / Five-year
(3) Cash Flow Reinvestment Ratio
= (Cash Provided by Operating Activities - Cash
Sum of Capital Expenditures, Inventory Additions, and
Cash Dividend
Dividends) / (Gross Fixed Assets + Investments +
Other Assets + Working Capital)
= (Net Sales - Variable Cost) / Income from Operations
= Income from Operations / (Income from Operations -
Interest Expenses)
5
4. Auditors’ Opinions from 2005 to 2009
6. Financial Difficulties
The Company should disclose the financial impact to the Company if the Company and its affiliated
companies have incurred any financial or cash flow difficulties in 2009 and as of the date of this Annual
Report: None
Year
2005
2006
2007
2008
2009
CPA
Hung-Wen Huang, Ming-Cheng Chang
Hung-Wen Huang, Ming-Cheng Chang
Hung-Wen Huang, Ming-Cheng Chang
Hung-Peng Lin, Shu-Chieh Huang
Hung-Peng Lin, Shu-Chieh Huang
Deloitte & Touche
12F, No. 156, Sec. 3, Min-Sheng E. Rd., Taipei, Taiwan, R.O.C.
Tel: 886-2-2545-9988
5. Audit Committee’s Report
Audit Opinion
An Unqualified Opinion
An Unqualified Opinion
An Unqualified Opinion
An Unqualified Opinion with explanatory paragraph
referring to adoption of new accounting standards
An Unqualified Opinion with explanatory paragraph
referring to adoption of new accounting standards
The Board of Directors has prepared the Company’s 2009 Business Report, Financial Statements, and
proposal for allocation of profits. The CPA firm of Deloitte & Touche was retained to audit TSMC’s Financial
Statements and has issued an audit report relating to the Financial Statements. The Business Report,
Financial Statements, and profit allocation proposal have been reviewed and determined to be correct and
accurate by the Audit Committee members of Taiwan Semiconductor Manufacturing Company Limited.
According to Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Law, we
hereby submit this report.
Taiwan Semiconductor Manufacturing Company Limited
Chairman of the Audit Committee: Sir Peter Leahy Bonfield
February 9, 2010
6
7. Financial Statements for the Years Ended December 31, 2009 and 2008 and Independent Auditors’ Report
INDEPENDENT AUDITORS’ REPORT
Notice to Readers
The accompanying financial statements are intended only to present the financial position, results of
operations and cash flows in accordance with accounting principles and practices generally accepted in the
Republic of China and not those of any other jurisdiction. The standards, procedures and practices to audit
such financial statements are those generally accepted and applied in the Republic of China.
For the convenience of readers, the auditors’ report and the accompanying financial statements have been
translated into English from the original Chinese version prepared and used in the Republic of China. If
there is any conflict between the English version and the original Chinese version or any difference in the
interpretation of the two versions, the Chinese-language auditors’ report and financial statements shall
prevail.
The Board of Directors and Shareholders
Taiwan Semiconductor Manufacturing Company Limited
We have audited the accompanying balance sheets of Taiwan Semiconductor Manufacturing Company Limited
as of December 31, 2009 and 2008, and the related statements of income, changes in shareholders’ equity
and cash flows for the years then ended. These financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the Rules Governing the Audit of Financial Statements by
Certified Public Accountants and auditing standards generally accepted in the Republic of China. Those rules
and standards require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial
position of Taiwan Semiconductor Manufacturing Company Limited as of December 31, 2009 and 2008,
and the results of its operations and its cash flows for the years then ended in conformity with the Guidelines
Governing the Preparation of Financial Reports by Securities Issuers, requirements of the Business Accounting
Law and Guidelines Governing Business Accounting with respect to financial accounting standards, and
accounting principles generally accepted in the Republic of China.
As discussed in Note 3 to the financial statements, effective January 1, 2009, Taiwan Semiconductor
Manufacturing Company Limited adopted the newly revised Statements of Financial Accounting Standards No.
10, “Accounting for Inventories”. In addition, effective January 1, 2008, Taiwan Semiconductor Manufacturing
Company Limited adopted Interpretation 2007-052, “Accounting for Bonuses to Employees, Directors and
Supervisors”, issued by the Accounting Research and Development Foundation of the Republic of China and
relevant requirements promulgated by the Financial Supervisory Commission of the Executive Yuan.
We have also audited, in accordance with the Rules Governing the Audit of Financial Statements by Certified
Public Accountants and auditing standards generally accepted in the Republic of China, the consolidated
financial statements of Taiwan Semiconductor Manufacturing Company Limited and subsidiaries as of
and for the years ended December 31, 2009 and 2008, and expressed an unqualified opinion with an
explanatory paragraph relating to the adoption of the newly revised Statement of Financial Accounting
Standard, Accounting for Inventories, and the adoption of Interpretation 2007-052, respectively, on such
consolidated financial statements.
January 22, 2010
7
Taiwan Semiconductor Manufacturing Company Limited
BALANCE SHEETS
DECEMBER 31, 2009 AND 2008
(In Thousands of New Taiwan Dollars, Except Par Value)
ASSETS
CURRENT ASSETS
Cash and cash equivalents (Notes 2 and 4)
Financial assets at fair value through profit or loss (Notes 2, 5 and 23)
Held-to-maturity financial assets (Notes 2, 7 and 23)
Receivables from related parties (Note 24)
Notes and accounts receivable
Allowance for doubtful receivables (Notes 2 and 8)
Allowance for sales returns and others (Notes 2 and 8)
Other receivables from related parties (Note 24)
Other financial assets (Note 25)
Inventories (Notes 2, 3 and 9)
Deferred income tax assets (Notes 2 and 17)
Prepaid expenses and other current assets
Total current assets
LONG-TERM INVESTMENTS (Notes 2, 6, 7, 10, 11 and 23)
Investments accounted for using equity method
Available-for-sale financial assets
Held-to-maturity financial assets
Financial assets carried at cost
Total long-term investments
PROPERTY, PLANT AND EQUIPMENT (Notes 2, 12 and 24)
Cost
Buildings
Machinery and equipment
Office equipment
Accumulated depreciation
Advance payments and construction in progress
2009
Amount
$ 117,043,543
181,743
9,944,843
22,541,773
19,884,520
(431,000)
(8,583,632)
246,003
1,104,072
18,830,216
4,063,410
1,006,046
185,831,537
104,660,098
1,046,672
12,219,055
501,988
118,427,813
2008
Amount
$ 138,208,360
42,460
5,881,999
11,728,204
11,441,176
(436,746)
(5,868,582)
489,742
711,755
12,807,936
3,650,700
1,192,475
179,849,479
109,871,178
2,032,658
11,761,325
519,502
124,184,663
%
20
-
2
4
3
-
(1)
-
-
3
1
-
32
18
1
2
-
21
%
26
-
1
2
2
-
(1)
-
-
2
1
-
33
20
1
2
-
23
124,522,047
713,426,126
10,781,099
848,729,272
(627,764,323)
33,786,577
22
123
2
147
(109)
6
114,014,588
635,008,261
9,748,869
758,771,718
(557,247,254)
17,758,038
21
118
2
141
(103)
3
Net property, plant and equipment
254,751,526
44
219,282,502
41
INTANGIBLE ASSETS
Goodwill (Note 2)
Deferred charges, net (Notes 2 and 13)
Total intangible assets
OTHER ASSETS
Deferred income tax assets (Notes 2 and 17)
Refundable deposits
Others (Note 2)
Total other assets
TOTAL
The accompanying notes are an integral part of the financial statements.
(With Deloitte & Touche audit report dated January 22, 2010)
8
1,567,756
5,891,685
7,459,441
7,763,643
2,698,116
494,546
10,956,305
-
1
1
1
1
-
2
1,567,756
6,401,461
7,969,217
6,497,972
2,719,737
55,677
9,273,386
-
1
1
1
1
-
2
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
2009
2008
Amount
%
Amount
%
Financial liabilities at fair value through profit or loss (Notes 2, 5 and 23)
Accounts payable
Payables to related parties (Note 24)
Income tax payable (Notes 2 and 17)
Salary and bonus payable
Accrued profit sharing to employees and bonus to directors (Notes 2, 3 and 19)
Payables to contractors and equipment suppliers
Accrued expenses and other current liabilities (Notes 15 and 23)
Current portion of bonds payable (Notes 14 and 23)
$ -
9,678,849
2,039,342
8,761,120
8,677,299
6,771,338
28,756,884
7,886,263
-
-
2
-
2
1
1
5
1
-
$ 83,618
4,314,265
1,202,350
9,222,811
1,601,897
15,148,057
7,574,891
5,951,578
8,000,000
-
1
-
2
-
3
1
1
2
Total current liabilities
72,571,095
12
53,099,467
10
LONG-TERM LIABILITIES
Bonds payable (Notes 14 and 23)
Other long-term payables (Notes 15 and 23)
Total long-term liabilities
OTHER LIABILITIES
Accrued pension cost (Notes 2 and 16)
Guarantee deposits (Note 27)
Deferred credits (Notes 2 and 24)
Total other liabilities
Total liabilities
CAPITAL STOCK - NT$10 PAR VALUE (Notes 19 and 21)
Authorized: 28,050,000 thousand shares
Issued: 25,902,706 thousand shares in 2009
25,625,437 thousand shares in 2008
CAPITAL SURPLUS (Notes 2 and 19)
RETAINED EARNINGS (Note 19)
Appropriated as legal capital reserve
Appropriated as special capital reserve
Unappropriated earnings
OTHERS (Notes 2, 21 and 23)
Cumulative translation adjustments
Unrealized gain/loss on financial instruments
4,500,000
416,390
4,916,390
3,807,176
1,001,376
47,873
4,856,425
82,343,910
259,027,066
55,486,010
77,317,710
-
104,564,972
181,882,682
(1,766,667)
453,621
(1,313,046)
1
-
1
1
-
-
1
14
45
10
13
-
18
31
-
-
-
4,500,000
931,252
5,431,252
3,710,009
1,479,152
462,256
5,651,417
1
-
1
1
-
-
1
64,182,136
12
256,254,373
49,875,255
67,324,393
391,857
102,337,417
170,053,667
481,158
(287,342)
193,816
47
9
13
-
19
32
-
-
-
88
100
$ 577,426,622
100
$ 540,559,247
100
TOTAL
$ 577,426,622
100
$ 540,559,247
Total shareholders’ equity
495,082,712
86
476,377,111
Taiwan Semiconductor Manufacturing Company Limited
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)
GROSS SALES (Notes 2 and 24)
$ 299,471,214
$ 330,228,027
NON-OPERATING EXPENSES AND LOSSES
2009
Amount
%
2008
Amount
%
SALES RETURNS AND ALLOWANCES (Notes 2 and 8)
13,728,346
8,460,944
NET SALES
285,742,868
100
321,767,083
100
COST OF SALES (Notes 3, 9, 18 and 24)
GROSS PROFIT
REALIZED (UNREALIZED) GROSS PROFIT FROM AFFILIATES (Note 2)
REALIZED GROSS PROFIT
OPERATING EXPENSES (Notes 18 and 24)
Research and development
General and administrative
Marketing
Total operating expenses
INCOME FROM OPERATIONS
NON-OPERATING INCOME AND GAINS
Settlement income (Note 27)
Interest income (Note 2)
Valuation gain on financial instruments, net (Notes 2, 5 and 23)
Technical service income (Notes 24 and 27)
Ga in on settlement and disposal of financial assets, net (Notes 2 and
23)
Foreign exchange gain, net (Note 2)
Equity in earnings of equity method investees, net (Notes 2 and 10)
Others (Notes 2 and 24)
Total non-operating income and gains
159,106,619
126,636,249
(160,279)
126,475,970
19,688,032
10,238,131
2,027,454
31,953,617
94,522,353
1,464,915
1,117,374
587,151
375,118
53,364
-
-
523,587
4,121,509
56
44
-
44
7
3
1
11
33
1
-
-
-
-
-
-
-
1
183,589,540
138,177,543
72
138,177,615
19,737,038
9,895,617
2,254,728
31,887,383
106,290,232
951,180
2,728,892
-
619,237
452,159
1,113,406
72,568
788,183
6,725,625
57
43
-
43
6
3
1
10
33
-
1
-
-
-
1
-
-
2
(Continued)
Equity in losses of equity method investees, net (Notes 2 and 10)
Foreign exchange loss, net (Note 2)
Interest expense
Valuation loss on financial instruments, net (Notes 2, 5 and 23)
Impairment of financial assets (Notes 2 and 11)
Loss on idle assets (Note 2)
Others (Note 2)
Total non-operating expenses and losses
INCOME BEFORE INCOME TAX
INCOME TAX EXPENSE (Notes 2 and 17)
2009
Amount
%
2008
Amount
$ 2,695,720
630,455
142,026
-
-
-
194,639
3,662,840
94,981,022
5,763,186
1
-
-
-
-
-
-
1
33
2
$ -
-
355,056
1,230,966
247,488
210,477
213,052
2,257,039
110,758,818
10,825,650
%
-
-
-
1
-
-
-
1
34
3
31
NET INCOME
$ 89,217,836
31
$ 99,933,168
EARNINGS PER SHARE (NT$, Note 22)
Basic earnings per share
Diluted earnings per share
2009
2008
Before
Income Tax
After
Income Tax
Before
Income Tax
After
Income Tax
$ 3.68
$ 3.67
$ 3.45
$ 3.44
$ 4.25
$ 4.22
$ 3.84
$ 3.81
Certain pro forma information (after income tax) is shown as follows, based on the assumption that the Company’s stock held by subsidiaries is
treated as available-for-sale financial assets instead of treasury stock for the year ended December 31, 2008 (Notes 2 and 21):
NET INCOME
EARNINGS PER SHARE (NT$)
Basic earnings per share
Diluted earnings per share
The accompanying notes are an integral part of the financial statements.
(With Deloitte & Touche audit report dated January 22, 2010)
2008
$ 100,035,447
$ 3.84
$ 3.81
(Concluded)
9
Taiwan Semiconductor Manufacturing Company Limited
STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
(In Thousands of New Taiwan Dollars, Except Dividends Per Share)
Capital Stock - Common Stock
Retained Earnings
Shares
(In Thousands)
Capital Surplus
Amount
Legal Capital
Reserve
Special Capital
Reserve
Unappropriated
Earnings
Total
Cumulative
Translation
Adjustments
Others
Unrealized
Gain (Loss)
on Financial
Instruments
Treasury Stock
Total
Shareholders’
Equity
BALANCE, JANUARY 1, 2008
26,427,104
$ 264,271,037
$ 53,732,682
$ 56,406,684
$ 629,550
$ 161,828,337
$ 218,864,571
$ (1,072,853)
$ 680,997
$ (49,385,032)
$ 487,091,402
Appropriations of prior year’s earnings
Legal capital reserve
Reversal of special capital reserve
Profit sharing to employees - in cash
Profit sharing to employees - in stock
Cash dividends to shareholders - NT$3.00 per share
Stock dividends to shareholders - NT$0.02 per share
Bonus to directors
Capital surplus transferred to capital stock
Net income in 2008
Ad justment arising from changes in percentage of ownership in
equity method investees
Translation adjustments
Issuance of stock from exercising stock options
Cash dividends received by subsidiaries from the Company
Valuation loss on available-for-sale financial assets
Ne t change in unrealized gain (loss) on financial instruments from
equity method investees
Treasury stock repurchased
Treasury stock retired
-
-
-
393,988
-
51,254
-
76,881
-
-
-
6,027
-
-
-
-
-
3,939,883
-
512,542
-
768,813
-
-
-
60,266
-
-
-
-
-
-
-
-
-
(768,813)
-
(137,063)
-
166,884
102,279
-
-
-
(1,329,817)
-
-
(13,298,168)
-
-
(3,220,714)
10,917,709
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(237,693)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(10,917,709)
237,693
(3,939,883)
(3,939,883)
(76,881,311)
(512,542)
(176,890)
-
99,933,168
-
-
-
-
-
-
-
(3,939,883)
(3,939,883)
(76,881,311)
(512,542)
(176,890)
-
99,933,168
-
-
-
-
-
-
-
(63,293,563)
-
-
(63,293,563)
-
-
-
-
-
-
-
-
-
-
1,554,011
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(233,915)
(734,424)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(30,427,413)
79,812,445
BALANCE, DECEMBER 31, 2008
25,625,437
256,254,373
49,875,255
67,324,393
391,857
102,337,417
170,053,667
481,158
(287,342)
Appropriations of prior year’s earnings
Legal capital reserve
Reversal of special capital reserve
Cash dividends to shareholders - NT$3.00 per share
Stock dividends to shareholders - NT$0.02 per share
Profit sharing to employees - in stock
Capital surplus transferred to capital stock
Net income in 2009
Ad justment arising from changes in percentage of ownership in
equity method investees
Translation adjustments
Issuance of stock from exercising stock options
Valuation gain on available-for-sale financial assets
Ne t change in unrealized gain (loss) on financial instruments from
equity method investees
-
-
-
51,251
141,870
76,876
-
-
-
7,272
-
-
-
-
-
512,509
1,418,699
768,763
-
-
-
72,722
-
-
-
-
-
-
6,076,289
(768,763)
-
115,418
-
187,811
-
-
9,993,317
-
-
-
-
-
-
-
-
-
-
-
-
(391,857)
-
-
-
-
-
-
-
-
-
-
(9,993,317)
391,857
(76,876,312)
(512,509)
-
-
89,217,836
-
-
(76,876,312)
(512,509)
-
-
89,217,836
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2,247,825)
-
-
-
-
-
-
-
-
-
-
-
-
14,014
-
726,949
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(3,939,883)
-
(76,881,311)
-
(176,890)
-
99,933,168
(137,063)
1,554,011
227,150
102,279
(233,915)
(734,424)
(30,427,413)
-
476,377,111
-
-
(76,876,312)
-
7,494,988
-
89,217,836
115,418
(2,247,825)
260,533
14,014
726,949
BALANCE, DECEMBER 31, 2009
25,902,706
$ 259,027,066
$ 55,486,010
$ 77,317,710
$ -
$ 104,564,972
$ 181,882,682
$ (1,766,667)
$ 453,621
$ -
$ 495,082,712
Note: Profit sharing to employees and bonus to directors in the amount of NT$6,771,338 thousand and NT$15,148,057 thousand, respectively, had been charged against earnings of 2009 and 2008.
The accompanying notes are an integral part of the financial statements.
(With Deloitte & Touche audit report dated January 22, 2010)
10
Taiwan Semiconductor Manufacturing Company Limited
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
(In Thousands of New Taiwan Dollars)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income
Ad justments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization
Unrealized (realized) gross profit from affiliates
Amortization of premium/discount of financial assets
Impairment of financial assets
Gain on disposal of available-for-sale financial assets, net
Gain on held-to-maturity financial assets redeemed by the issuer
Loss (gain) on disposal of financial assets carried at cost, net
Equity in losses (earnings) of equity method investees, net
Dividends received from equity method investees
Ga in on disposal of property, plant and equipment and other
assets, net
Loss on idle assets
Deferred income tax
Changes in operating assets and liabilities:
Decrease (increase) in:
Fin ancial assets and liabilities at fair value through profit or
loss
Receivables from related parties
Notes and accounts receivable
Allowance for doubtful receivables
Allowance for sales returns and others
Other receivables from related parties
Other financial assets
Inventories
Prepaid expenses and other current assets
Increase (decrease) in:
Accounts payable
Payables to related parties
Income tax payable
Salary and bonus payable
Accrued profit sharing to employees and bonus to directors
Accrued expenses and other current liabilities
Accrued pension cost
Deferred credits
2009
2008
$ 89,217,836
$ 99,933,168
74,327,868
160,279
6,322
-
(37,370)
(16,091)
97
2,695,720
1,402,592
(138,613)
-
(1,678,381)
(222,901)
(10,813,569)
(8,443,344)
(5,746)
2,715,050
235,470
(392,317)
(6,022,280)
290,470
4,925,758
836,992
(461,691)
7,075,402
(881,731)
1,259,544
97,167
(230,487)
74,569,562
(72)
(97,381)
247,488
(443,404)
-
(8,755)
(72,568)
1,804,351
(298,769)
210,477
2,361,261
(164,405)
14,973,444
6,470,152
(252,226)
2,011,897
43,835
(380,057)
8,179,206
(330,664)
(5,171,553)
(1,797,280)
(1,766,153)
(30,280)
15,148,057
(3,112,220)
52,330
(129,494)
Net cash provided by operating activities
155,902,046
211,949,947
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions of:
Property, plant and equipment
Available-for-sale financial assets
Held-to-maturity financial assets
Investments accounted for using equity method
Financial assets carried at cost
Proceeds from disposal or redemption of:
Available-for-sale financial assets
Held-to-maturity financial assets
Financial assets carried at cost
Property, plant and equipment and other assets
(86,970,843)
-
(10,803,805)
(320,443)
(1,411)
1,037,370
6,293,000
18,828
71,850
(56,766,192)
(23,697,000)
(12,371,965)
(494,765)
(20,681)
45,584,934
15,004,000
10,606
2,042,899
(Continued)
Proceeds from return of capital by investees
Cash from merger of subsidiaries
Increase in deferred charges
Decrease in refundable deposits
2009
2008
$ 27,753
-
(1,347,228)
21,621
$ 2,465,293
270,650
(3,199,813)
21,801
Net cash used in investing activities
(91,973,308)
(31,150,233)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of bonds payable
Decrease in guarantee deposits
Proceeds from exercise of employee stock options
Cash dividends
Profit sharing to employees in cash
Bonus to directors
Repurchase of treasury stock
Net cash used in financing activities
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
(8,000,000)
(477,776)
260,533
(76,876,312)
-
-
-
(85,093,555)
(21,164,817)
138,208,360
-
(761,525)
227,150
(76,881,311)
(3,939,883)
(176,890)
(33,480,997)
(115,013,456)
65,786,258
72,422,102
CASH AND CASH EQUIVALENTS, END OF YEAR
$ 117,043,543
$ 138,208,360
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid
Income tax paid
INVESTING AND FINANCING ACTIVITIES AFFECTING BOTH CASH AND
NON-CASH ITEMS
Acquisition of property, plant, and equipment
Increase in payables to contractors and equipment suppliers
Nonmonetary exchange trade-out price
Cash paid
Disposal of property, plant and equipment and other assets
Decrease (increase) in other receivables from related parties
Nonmonetary exchange trade-out price
Cash received
Repurchase of treasury stock
Decrease in accrued expenses and other current liabilities
Cash paid
NON-CASH FINANCING ACTIVITIES
Current portion of bonds payable
Cu rrent portion of other long-term payable (under accrued expenses
$ 351,803
$ 7,791,196
$ 355,056
$ 10,282,464
$ 108,592,471
(21,620,819)
(809)
$ 86,970,843
$ 64,390
8,269
(809)
$ 71,850
$ -
-
$ -
$ 58,951,343
(2,185,151)
-
$ 56,766,192
$ 2,051,168
(8,269)
-
$ 2,042,899
$ 30,427,413
3,053,584
$ 33,480,997
$ -
$ 8,000,000
and other current liabilities)
$ 769,144
$ 1,026,421
The accompanying notes are an integral part of the financial statements.
(With Deloitte & Touche audit report dated January 22, 2010)
(Concluded)
11
Taiwan Semiconductor Manufacturing Company Limited
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)
1. GENERAL
Taiwan Semiconductor Manufacturing Company Limited (the “Company” or “TSMC”), a Republic of China
(R.O.C.) corporation, was incorporated on February 21, 1987. The Company is a dedicated foundry in
the semiconductor industry which engages mainly in the manufacturing, selling, packaging, testing and
computer-aided designing of integrated circuits and other semiconductor devices and the manufacturing
of masks. On September 5, 1994, its shares were listed on the Taiwan Stock Exchange (TSE). On October
8, 1997, TSMC listed some of its shares of stock on the New York Stock Exchange (NYSE) in the form of
American Depositary Shares (ADSs).
As of December 31, 2009 and 2008, the Company had 22,292 and 20,425 employees, respectively.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements are presented in conformity with the Guidelines Governing the Preparation of
Financial Reports by Securities Issuers, Business Accounting Law, Guidelines Governing Business Accounting,
and accounting principles generally accepted in the R.O.C.
For the convenience of readers, the accompanying financial statements have been translated into English
from the original Chinese version prepared and used in the R.O.C. If there is any conflict between the English
version and the original Chinese version or any difference in the interpretation of the two versions, the
Chinese-language financial statements shall prevail.
Significant accounting policies are summarized as follows:
Use of Estimates
The preparation of financial statements in conformity with the aforementioned guidelines, law and principles
requires management to make reasonable assumptions and estimates of matters that are inherently
uncertain. The actual results may differ from management’s estimates.
Classification of Current and Noncurrent Assets and Liabilities
Current assets are assets held for trading purposes and assets expected to be converted to cash, sold or
consumed within one year from the balance sheet date. Current liabilities are obligations incurred for trading
purposes and obligations expected to be settled within one year from the balance sheet date. Assets and
liabilities that are not classified as current are noncurrent assets and liabilities, respectively.
Financial Assets/Liabilities at Fair Value Through Profit or Loss
Derivatives that do not meet the criteria for hedge accounting are initially recognized at fair value, with
transaction costs expensed as incurred. The derivatives are remeasured at fair value subsequently with
changes in fair value recognized in earnings. A regular way purchase or sale of financial assets is accounted
for using settlement date accounting.
Fair value is estimated using valuation techniques incorporating estimates and assumptions that are
consistent with prevailing market conditions. When the fair value is positive, the derivative is recognized as a
financial asset; when the fair value is negative, the derivative is recognized as a financial liability.
Available-for-sale Financial Assets
Available-for-sale financial assets are initially recognized at fair value plus transaction costs that are directly
attributable to the acquisition. Changes in fair value from subsequent remeasurement are reported as a
separate component of shareholders’ equity. The corresponding accumulated gains or losses are recognized
in earnings when the financial asset is derecognized from the balance sheet. A regular way purchase or sale
of financial assets is accounted for using settlement date accounting.
The fair value of debt securities is determined using the average of bid and asked prices at the end of the year.
Any difference between the initial carrying amount of a debt security and the amount due at maturity is
amortized using the effective interest method, with the amortization recognized in earnings.
If there is objective evidence which indicates that a financial asset is impaired, a loss is recognized. If, in
a subsequent period, the amount of the impairment loss decreases, for equity securities, the previously
recognized impairment loss is reversed to the extent of the decrease and recorded as an adjustment to
shareholders’ equity; for debt securities, the amount of the decrease is recognized in earnings, provided that
the decrease is clearly attributable to an event which occurred after the impairment loss was recognized.
Held-to-maturity Financial Assets
Debt securities for which the Company has a positive intention and ability to hold to maturity are
categorized as held-to-maturity financial assets and are carried at amortized cost. Those financial assets are
initially recognized at fair value plus transaction costs that are directly attributable to the acquisition. Gains
or losses are recognized at the time of derecognition, impairment or amortization. A regular way purchase
or sale of financial assets is accounted for using settlement date accounting.
If there is objective evidence which indicates that a financial asset is impaired, a loss is recognized. If, in a
subsequent period, the amount of the impairment loss decreases and the decrease is clearly attributable to
an event which occurred after the impairment loss was recognized, the previously recognized impairment
loss is reversed to the extent of the decrease. The reversal may not result in a carrying amount that exceeds
the amortized cost that would have been determined as if no impairment loss had been recognized.
Cash Equivalents
Repurchase agreements collateralized by government bonds acquired with maturities of less than three
months from the date of purchase are classified as cash equivalents. The carrying amount approximates fair
value.
Allowance for Doubtful Receivables
An allowance for doubtful receivables is provided based on a review of the collectability of receivables. The
Company determines the amount of the allowance for doubtful receivables with a charge of 1% of the
amount of outstanding receivables considering the account aging analysis and current trends in the credit
quality of its customers.
12
Revenue Recognition and Allowance for Sales Returns and Others
The Company recognizes revenue when evidence of an arrangement exists, the rewards of ownership
and significant risk of the goods has been transferred to the buyer, price is fixed or determinable, and
collectability is reasonably assured. Provisions for estimated sales returns and others are recorded in the year
the related revenue is recognized, based on historical experience, management’s judgment, and any known
factors that would significantly affect the allowance.
Sales prices are determined using fair value taking into account related sales discounts agreed to by the
Company and its customers. Sales agreements typically provide that payment is due 30 days from invoice
date for a majority of the customers and 30 to 45 days after the end of the month in which sales occur for
some customers. Since the receivables from sales are collectible within one year and such transactions are
frequent, fair value of the receivables is equivalent to the nominal amount of the cash to be received.
Inventories
Inventories are recorded at standard cost and adjusted to approximate weighted-average cost on the
balance sheet date.
Prior to January 1, 2009, inventories were stated at the lower of cost or market value. Any write-down was
made on a total-inventory basis. Market value represented replacement cost for raw materials, supplies and
spare parts and net realizable value for work in process and finished goods.
As stated in Note 3, effective January 1, 2009, inventories are stated at the lower of cost or net realizable
value. Inventory write-downs are made on an item-by-item basis, except where it may be appropriate
to group similar or related items. Net realizable value is the estimated selling price of inventories less all
estimated costs of completion and necessary selling costs.
Investments Accounted for Using Equity Method
Investments in companies wherein the Company exercises significant influence over the operating and
financial policy decisions are accounted for using the equity method. The Company’s share of the net
income or net loss of an investee is recognized in the “equity in earnings/losses of equity method investees,
net” account. The cost of an investment shall be analyzed and the cost of investment in excess of the fair
value of identifiable net assets acquired, representing goodwill, shall not be amortized. If the fair value
of identifiable net assets acquired exceeds the cost of investment, the excess shall be proportionately
allocated as reductions to fair values of non-current assets (except for financial assets other than investments
accounted for using the equity method and deferred income tax assets). When an indication of impairment
is identified, the carrying amount of the investment is reduced, with the related impairment loss recognized
in earnings.
When the Company subscribes for additional investee’s shares at a percentage different from its existing
ownership percentage, the resulting carrying amount of the investment in the investee differs from the
amount of the Company’s share of the investee’s equity. The Company records such a difference as an
adjustment to long-term investments with the corresponding amount charged or credited to capital surplus.
Company has a controlling interest is deferred until such gains or losses are realized through subsequent
sales of the related products to third parties. Gains or losses on sales from equity method investees to the
Company are deferred in proportion to the Company’s ownership percentages in the investees until they are
realized through transactions with third parties. Gains or losses on sales between equity method investees
over each of which the Company has control are deferred in proportion to the Company’s weighted-average
ownership percentage in the investee which records gains or losses. In transactions between equity method
investees over either or both of which the Company has no control, gains or losses on sales are deferred in
proportion to the multiplication of the Company’s weighted-average ownership percentages in the investees.
Such gains or losses are recorded until they are realized through transactions with third parties.
If an investee’s functional currency is a foreign currency, differences will result from the translation of the
investee’s financial statements into the reporting currency of the Company. Such differences are charged or
credited to cumulative translation adjustments, a separate component of shareholders’ equity.
Financial Assets Carried at Cost
Investments for which the Company does not exercise significant influence and that do not have a quoted
market price in an active market and whose fair value cannot be reliably measured, such as non-publicly
traded stocks and mutual funds, are carried at their original cost. The costs of non-publicly traded stocks
and mutual funds are determined using the weighted-average method. If there is objective evidence which
indicates that a financial asset is impaired, a loss is recognized. A subsequent reversal of such impairment
loss is not allowed.
Cash dividends are recognized as investment income upon resolution of shareholders of an investee but
are accounted for as a reduction to the original cost of investment if such dividends are declared on the
earnings of the investee attributable to the period prior to the purchase of the investment. Stock dividends
are recorded as an increase in the number of shares held and do not affect investment income. The cost per
share is recalculated based on the new total number of shares.
Property, Plant and Equipment, Assets Leased to Others and Idle Assets
Property, plant and equipment and assets leased to others are stated at cost less accumulated depreciation.
When an indication of impairment is identified, any excess of the carrying amount of an asset over its
recoverable amount is recognized as a loss. If the recoverable amount increases in a subsequent period,
the amount previously recognized as impairment would be reversed and recognized as a gain. However,
the adjusted amount may not exceed the carrying amount that would have been determined, net of
depreciation, as if no impairment loss had been recognized. Significant additions, renewals and betterments
incurred during the construction period are capitalized. Maintenance and repairs are expensed as incurred.
Depreciation is computed using the straight-line method over the following estimated service lives: buildings
- 10 to 20 years; machinery and equipment - 5 years; and office equipment - 3 to 5 years.
Upon sale or disposal of property, plant and equipment and assets leased to others, the related cost and
accumulated depreciation are deducted from the corresponding accounts, with any gain or loss recorded as
non-operating gains or losses in the year of sale or disposal.
Gains or losses on sales from the Company to equity method investees are deferred in proportion to
the Company’s ownership percentages in the investees until such gains or losses are realized through
transactions with third parties. The entire amount of the gains or losses on sales to investees over which the
When property, plant and equipment are determined to be idle or useless, they are transferred to idle assets
at the lower of the net realizable value or carrying amount. Depreciation on the idle assets is provided
13
continuously, and the idle assets are tested for impairment on a periodical basis.
Intangible Assets
Goodwill represents the excess of the consideration paid for acquisition over the fair value of identifiable net
assets acquired. Goodwill is no longer amortized and instead is tested for impairment annually. If an event
occurs or circumstances change which indicate that the fair value of goodwill is more likely than not below
its carrying amount, an impairment loss is recognized. A subsequent reversal of such impairment loss is not
allowed.
Deferred charges consist of technology license fees, software and system design costs and other charges.
The amounts are amortized over the following periods: Technology license fees - the shorter of the estimated
life of the technology or the term of the technology transfer contract; software and system design costs and
other charges - 3 years. When an indication of impairment is identified, any excess of the carrying amount
of an asset over its recoverable amount is recognized as a loss. If the recoverable amount increases in a
subsequent period, the previously recognized impairment loss would be reversed and recognized as a gain.
However, the adjusted amount may not exceed the carrying amount that would have been determined, net
of amortization, as if no impairment loss had been recognized.
Expenditures related to research activities and those related to development activities that do not meet the
criteria for capitalization are charged to expenses when incurred.
Stock-based Compensation
Employee stock options that were granted or modified in the period from January 1, 2004 to December
31, 2007 are accounted for by the interpretations issued by the Accounting Research and Development
Foundation of the Republic of China. The Company adopted the intrinsic value method and any
compensation cost determined using this method is recognized in earnings over the employee vesting
period. Employee stock option plans that were granted or modified after December 31, 2007 are accounted
for using fair value method in accordance with Statement of Financial Accounting Standards No. 39,
“Accounting for Share-based Payment”. The Company did not grant or modify any employee stock options
since January 1, 2008.
Profit Sharing to Employees and Bonus to Directors
Effective January 1, 2008, the Company adopted Interpretation 2007-052, “Accounting for Bonuses to
Employees, Directors and Supervisors”, which requires companies to record profit sharing to employees and
bonus to directors as an expense rather than as an appropriation of earnings.
Treasury Stock
Treasury stock is stated at cost and shown as a deduction in shareholders’ equity. When the Company retires
treasury stock, the treasury stock account is reduced and the common stock as well as the capital surplus -
additional paid-in capital are reversed on a pro rata basis. When the book value of the treasury stock exceeds
the sum of the par value and additional paid-in capital, the difference is charged to capital surplus - treasury
stock transactions and to retained earnings for any remaining amount.
Pension Costs
For employees who participate in defined contribution pension plans, pension costs are recorded based on
the actual contributions made to employees’ individual pension accounts during their service periods. For
employees who participate in defined benefit pension plans, pension costs are recorded based on actuarial
calculations.
The Company’s stock held by its subsidiaries is treated as treasury stock and reclassified from investments
accounted for using equity method to treasury stock. The gains resulted from disposal of the treasury stock
held by subsidiaries and cash dividends received by subsidiaries from the Company are recorded under
capital surplus - treasury stock transactions.
Income Tax
The Company applies an inter-period allocation for its income tax whereby deferred income tax assets
and liabilities are recognized for the tax effects of temporary differences and unused tax credits. Valuation
allowances are provided to the extent, if any, that it is more likely than not that deferred income tax assets
will not be realized. A deferred tax asset or liability is classified as current or noncurrent in accordance with
the classification of its related asset or liability. However, if a deferred tax asset or liability does not relate to
an asset or liability in the financial statements, then it is classified as either current or noncurrent based on
the expected length of time before it is realized or settled.
Any tax credits arising from purchases of machinery, equipment and technology, research and development
expenditures, personnel training expenditures, and investments in important technology-based enterprises
are recognized using the flow-through method.
Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.
Income tax on unappropriated earnings at a rate of 10% is expensed in the year of shareholder approval
which is the year subsequent to the year the earnings are generated.
Foreign-currency Transactions
Foreign-currency transactions other than derivative contracts are recorded in New Taiwan dollars at the rates
of exchange in effect when the transactions occur. Exchange gains or losses derived from foreign-currency
transactions or monetary assets and liabilities denominated in foreign currencies are recognized in earnings.
At the balance sheet date, monetary assets and liabilities denominated in foreign currencies are revalued at
prevailing exchange rates with the resulting gains or losses recognized in earnings.
3. ACCOUNTING CHANGES
Effective January 1, 2009, the Company adopted the newly revised Statement of Financial Accounting
Standards (SFAS) No. 10, “Accounting for Inventories”. The main revisions are (1) inventories are stated
at the lower of cost or net realizable value, and inventories are written down to net realizable value on
an item-by-item basis except when the grouping of similar or related items is appropriate; (2) unallocated
overheads are recognized as expenses in the year in which they are incurred; and (3) abnormal cost,
write-downs of inventories and any reversal of write-downs are recorded as cost of sales for the year. Such
changes in accounting principle did not have significant effect on the Company’s financial statements for
the year ended December 31, 2009.
14
Effective January 1, 2008, the Company adopted Interpretation 2007-052, “Accounting for Bonuses to
Employees, Directors and Supervisors”, issued in March 2007 by the ARDF, which requires companies
to record profit sharing to employees and bonus to directors and supervisors as an expense rather than
as an appropriation of earnings. The adoption of this interpretation resulted in a decrease in net income
and earnings per share (after income tax and retroactively adjusted for the issuance of stock dividend) of
NT$12,627,332 thousand and NT$0.48, respectively, for the year ended December 31, 2008.
Outstanding forward exchange contracts consisted of the following:
December 31, 2008
Sell US$/Buy NT$
Sell EUR/Buy NT$
Maturity Date
Contract Amount (In Thousands)
January 2009 to February 2009
January 2009
US$135,000/NT$4,430,925
EUR1,500/NT$63,150
Effective January 1, 2008, the Company adopted SFAS No. 39, “Accounting for Share-based Payment”,
which requires companies to record share-based payment transactions in the financial statements at fair
value. Such a change in accounting principle did not have any effect on the Company’s financial statements
as of and for the year ended December 31, 2008.
Outstanding cross currency swap contracts consisted of the following:
Maturity Date
December 31, 2009
Contract Amount
(In Thousands)
Range of
Interest Rates Paid
Range of
Interest Rates Received
4. CASH AND CASH EQUIVALENTS
January 2010 to February 2010
US$750,000/NT$24,201,706
0.24% - 0.70%
0.00% - 0.38%
Cash and deposits in banks
Repurchase agreements collateralized by government bonds
$ 114,023,307
3,020,236
$ 129,538,047
8,670,313
$ 117,043,543
$ 138,208,360
For the years ended December 31, 2009 and 2008, changes in fair value related to derivative financial
instruments recognized in earnings was a net gain of NT$587,151 thousand and a net loss of NT$1,230,966
thousand, respectively.
December 31
2009
December 31, 2008
2008
January 2009
US$307,000/NT$10,061,232
0.54% - 5.00%
0.00% - 3.83%
5. FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS
6. AVAILABLE-FOR-SALE FINANCIAL ASSETS
Trading financial assets
Forward exchange contracts
Cross currency swap contracts
Trading financial liabilities
Forward exchange contracts
Cross currency swap contracts
December 31
2009
2008
$ -
181,743
$ 28,411
14,049
$ 181,743
$ 42,460
$ -
-
$ 34,243
49,375
$ -
$ 83,618
The Company entered into derivative contracts during the years ended December 31, 2009 and 2008 to
manage exposures due to fluctuations of foreign exchange rates. The derivative contracts entered into by
the Company did not meet the criteria for hedge accounting. Therefore, the Company did not apply hedge
accounting treatment for its derivative contracts.
Corporate bonds
$ 1,046,672
$ 2,032,658
December 31
2009
2008
7. HELD-TO- MATURITY FINANCIAL ASSETS
Corporate bonds
Structured time deposits
Government bonds
Current portion
December 31
2009
$ 12,266,311
7,000,000
2,897,587
22,163,898
(9,944,843)
2008
$ 16,136,752
-
1,506,572
17,643,324
(5,881,999)
$ 12,219,055
$ 11,761,325
15
Structured time deposits categorized as held-to-maturity financial assets consisted of the following:
10. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD
December 31, 2009
Principal Amount
Interest Receivable
Range of Interest Rates
Maturity Date
Callable domestic deposits
$ 7,000,000
$ 4,308
0.36% - 0.95%
Ju ly 2010 to August
2011
8. ALLOWANCES FOR DOUBTFUL RECEIVABLES, SALES RETURNS AND OTHERS
Movements of the allowance for doubtful receivables were as follows:
Balance, beginning of year
Provision
Write-off
Balance, end of year
Years Ended December 31
2009
2008
$ 436,746
238,061
(243,807)
$ 688,972
-
(252,226)
$ 431,000
$ 436,746
Movements of the allowance for sales returns and others were as follows:
Balance, beginning of year
Provision
Write-off
Balance, end of year
9. INVENTORIES
Finished goods
Work in process
Raw materials
Supplies and spare parts
Years Ended December 31
2009
2008
$ 5,868,582
13,728,346
(11,013,296)
$ 3,856,685
8,460,944
(6,449,047)
$ 8,583,632
$ 5,868,582
December 31
2009
$ 2,355,232
14,230,318
1,420,466
824,200
2008
$ 4,444,657
7,117,049
716,870
529,360
$ 18,830,216
$ 12,807,936
Write-down of inventories to net realizable value in the amount of NT$199,732 thousand and NT$879,434
thousand, respectively, were included in the cost of sales for the years ended December 31, 2009 and 2008.
December 31
2009
2008
Carrying
Amount
% of
Ownership
Carrying
Amount
% of
Ownership
TSMC Global Ltd. (TSMC Global)
TSMC Partners, Ltd. (TSMC Partners)
Vanguard International Semiconductor Corporation (VIS)
Systems on Silicon Manufacturing Company Pte Ltd. (SSMC)
TSMC China Company Limited (TSMC China)
TSMC North America
Xintec Inc. (Xintec)
VentureTech Alliance Fund III, L.P. (VTAF III)
VentureTech Alliance Fund II, L.P. (VTAF II)
Global UniChip Corporation (GUC)
Emerging Alliance Fund, L.P. (Emerging Alliance)
Ta iwan Semiconductor Manufacturing Company Europe B.V. (TSMC
Europe)
TSMC Japan Limited (TSMC Japan)
TSMC Korea Limited (TSMC Korea)
TSMC International Investment Ltd. (TSMC International)
$ 45,397,256
32,545,619
9,365,232
6,157,141
2,961,043
2,723,727
1,475,014
1,309,615
1,122,810
983,126
305,866
159,467
135,663
18,519
-
100
100
37
39
100
100
41
98
98
35
99
100
100
100
-
$ 45,756,519
3,730,913
9,787,275
6,808,192
6,267,128
2,435,666
1,506,384
1,305,605
975,367
950,263
433,481
124,594
137,617
15,117
29,637,057
100
100
37
39
100
100
42
98
98
36
99
100
100
100
100
$ 104,660,098
$ 109,871,178
The Company will subscribe through a private placement for new shares of Motech Industries Inc. (“Motech”)
under a Share Subscription Agreement entered into on December 9, 2009. The total consideration is
approximately NT$6.2 billion (US$193 million). After the subscription of shares, the Company will own 20%
of the Motech shares. The transaction is still subject to Motech’s shareholders’ approval and regulatory
approval.
TSMC Partners and TSMC International were both 100% owned subsidiaries of the Company. To simplify the
organization structure of investment, TSMC Partners merged TSMC International in June 2009.
Chi Cherng and Hsin Ruey, both 100% owned subsidiaries of the Company, were engaged in investing
activities. To simplify the organization structure of investment, the Company merged Chi Cherng and Hsin
Ruey into the Company in the third quarter of 2008.
For the years ended December 31, 2009 and 2008, equity in earnings/losses of equity method investees was
a net loss of NT$2,695,720 thousand and a net gain of NT$72,568 thousand, respectively. Related equity
in earnings/losses of equity method investees were determined based on the audited financial statements,
except those of TSMC Japan, TSMC Europe and TSMC Korea for the year ended December 31, 2009. The
Company believes that, had TSMC Japan, TSMC Europe and TSMC Korea’s financial statements been audited,
any adjustments arising would have had no material effect on the Company’s financial statements.
As of December 31, 2009 and 2008, fair values of publicly traded stocks in investments accounted for using
equity method (VIS and GUC) were NT$18,027,990 thousand and NT$9,889,107 thousand, respectively.
16
Movements of the difference between the cost of investments and the Company’s share in investees’ net
assets allocated to depreciable assets were as follows:
Years Ended December 31
2009
2008
Cost
Balance, beginning of year
Amortization
Balance, end of year
$ 2,053,253
(624,135)
$ 2,677,388
(624,135)
$ 1,429,118
$ 2,053,253
Movements of the aforementioned difference allocated to goodwill were as follows:
Buildings
Machinery and equipment
Office equipment
Accumulated depreciation
Buildings
Machinery and equipment
Office equipment
Years Ended December 31
Advance payments and construction in progress
Balance, beginning of year
From merger of subsidiaries
Balance, end of year
2009
2008
$ 1,061,885
-
$ 987,349
74,536
$ 1,061,885
$ 1,061,885
Year Ended December 31, 2008
Balance,
Beginning of
Year
Additions
(Deductions)
Disposals
Reclassification
$ 12,115,531
49,396,313
764,414
$ 62,276,258
$ 8,010,214
63,145,978
935,140
$ 72,091,332
$ (3,324,915)
$ (8,524)
(3,385,502)
(182,709)
$ (3,576,735)
$ (8,524)
(1,258,542)
(182,706)
$ (1,449,772)
$ -
$ (311)
(134,175)
57
$ (134,429)
$ (4)
(119,347)
26
$ (119,325)
$ -
$ 101,907,892
589,131,625
9,167,107
700,206,624
57,349,828
422,278,071
7,097,120
486,725,019
21,082,953
$ 234,564,558
Balance,
End of Year
$ 114,014,588
635,008,261
9,748,869
758,771,718
65,351,514
484,046,160
7,849,580
557,247,254
17,758,038
$ 219,282,502
No interest was capitalized during the years ended December 31, 2009 and 2008.
13. DEFERRED CHARGES, NET
11. FINANCIAL ASSETS CARRIED AT COST
Non-publicly traded stocks
Mutual funds
December 31
2009
2008
$ 338,584
163,404
$ 357,509
161,993
$ 501,988
$ 519,502
Technology license fees
Software and system design costs
Patent and others
For the year ended December 31 2008, the Company recognized impairment of financial assets carried at
cost of NT$247,488 thousand.
12. PROPERTY, PLANT AND EQUIPMENT
Cost
Buildings
Machinery and equipment
Office equipment
Accumulated depreciation
Buildings
Machinery and equipment
Office equipment
Advance payments and construction in progress
Balance,
Beginning of
Year
$ 114,014,588
635,008,261
9,748,869
758,771,718
65,351,514
484,046,160
7,849,580
557,247,254
17,758,038
$ 219,282,502
Year Ended December 31, 2009
Additions
Disposals
Reclassification
$ 10,520,371
80,824,102
1,219,459
$ 92,563,932
$ 8,186,551
63,395,862
882,718
$ 72,465,131
$ 16,028,539
$ (12,978)
(2,408,802)
(187,163)
$ (2,608,943)
$ (12,971)
(1,750,677)
(186,979)
$ (1,950,627)
$ -
$ 66
2,565
(66)
$ 2,565
$ 66
2,565
(66)
$ 2,565
$ -
Balance,
End of Year
$ 124,522,047
713,426,126
10,781,099
848,729,272
73,525,160
545,693,910
8,545,253
627,764,323
33,786,577
$ 254,751,526
Technology license fees
Software and system design costs
Patent and others
14. BONDS PAYABLE
Year Ended December 31, 2009
Balance,
Beginning of
Year
$ 3,786,251
1,559,857
1,055,353
Additions
Amortization
Disposals
Reclassification
Balance,
End of Year
$ -
861,783
485,445
$ (806,450)
(774,667)
(275,887)
$ -
-
-
$ -
-
-
$ 2,979,801
1,646,973
1,264,911
$ 6,401,461
$ 1,347,228
$ (1,857,004)
$ -
$ -
$ 5,891,685
Year Ended December 31, 2008
Balance,
Beginning of
Year
$ 5,349,937
1,309,272
513,204
Additions
Amortization
Disposals
Reclassification
Balance,
End of Year
$ -
945,279
733,342
$ (1,563,686)
(680,474)
(191,193)
$ -
(14,279)
-
$ -
59
-
$ 3,786,251
1,559,857
1,055,353
$ 7,172,413
$ 1,678,621
$ (2,435,353)
$ (14,279)
$ 59
$ 6,401,461
Domestic unsecured bonds:
Issued in January 2002 and repayable in January 2009 and 2012 in two
installments, 2.75% and 3.00% interest payable annually, respectively
Current portion
December 31
2009
2008
$ 4,500,000
-
$ 12,500,000
(8,000,000)
$ 4,500,000
$ 4,500,000
17
15. OTHER LONG-TERM PAYABLES
b. Reconciliation of funded status of the plans and accrued pension cost at December 31, 2009 and 2008
The Company’s long-term payables mainly resulted from license agreements for certain semiconductor-
related patents. As of December 31, 2009, future payments for other long-term payables were as follows:
Year of Payment
2010
2011
Current portion (classified under accrued expenses and other current liabilities)
Amount
$ 769,144
416,390
1,185,534
(769,144)
$ 416,390
16. PENSION PLANS
The pension mechanism under the Labor Pension Act is deemed a defined contribution plan. Pursuant to
the Act, the Company has made monthly contributions equal to 6% of each employee’s monthly salary to
employees’ pension accounts and recognized pension costs of NT$608,731 thousand and NT$657,870
thousand for the years ended December 31, 2009 and 2008, respectively.
The Company has a defined benefit plan under the Labor Standards Law that provides benefits based on an
employee’s length of service and average monthly salary for the six-month period prior to retirement. The
Company contributes an amount equal to 2% of salaries paid each month to a pension fund (the Fund),
which is administered by the Labor Pension Fund Supervisory Committee (the Committee) and deposited in
the Committee’s name in the Bank of Taiwan.
Pension information on the defined benefit plan is summarized as follows:
a. Components of net periodic pension cost for the year
Benefit obligation
Vested benefit obligation
Nonvested benefit obligation
Accumulated benefit obligation
Additional benefits based on future salaries
Projected benefit obligation
Fair value of plan assets
Funded status
Unrecognized net transition obligation
Prior service cost
Unrecognized net loss
Accrued pension cost
Vested benefit
c. Actuarial assumptions at December 31, 2009 and 2008
Discount rate used in determining present values
Future salary increase rate
Expected rate of return on plan assets
d. Contributions to the Funds for the year
e. Payments from the Funds for the year
2009
2008
$ 123,524
3,754,388
3,877,912
2,614,358
6,492,270
(2,612,295)
3,879,975
(91,291)
161,977
(143,485)
$ 114,930
4,146,366
4,261,296
3,245,483
7,506,779
(2,441,687)
5,065,092
(99,591)
169,216
(1,424,708)
$ 3,807,176
$ 3,710,009
$ 135,501
$ 126,259
2009
2.25%
3.00%
1.50%
2008
2.00%
3.00%
2.25%
2009
2008
$ 191,554
$ 202,263
2009
2008
$ 37,801
$ 28,990
2009
2008
$ 166,460
149,297
(56,170)
29,134
$ 151,603
170,025
(67,315)
3,776
17. INCOME TAX
$ 288,721
$ 258,089
a. A reconciliation of income tax expense based on “income before income tax” at statutory rate and income
tax currently payable was as follows:
Income tax expense based on “income before income tax” at statutory
rate (25%)
Tax effect of the following:
Tax-exempt income
Temporary and permanent differences
Others
Income tax credits used
Years Ended December 31
2009
2008
$ 23,745,246
$ 27,689,695
(8,621,941)
3,124,974
247,050
(9,914,570)
(9,610,935)
1,815,594
41,235
(10,967,795)
Income tax currently payable
$ 8,580,759
$ 8,967,794
Service cost
Interest cost
Projected return on plan assets
Amortization
Net periodic pension cost
18
b. Income tax expense consisted of the following:
e. All earnings generated prior to December 31, 1997 have been appropriated.
Income tax currently payable
Income tax adjustments on prior years
Other income tax adjustments
Net change in deferred income tax assets
Investment tax credits
Temporary differences
Valuation allowance
Income tax expense
Years Ended December 31
2009
2008
$ 8,580,759
(1,155,113)
15,921
$ 8,967,794
(707,255)
203,850
(1,119,523)
41,456
(600,314)
1,224,537
(1,792,789)
2,929,513
$ 5,763,186
$ 10,825,650
f. As of December 31, 2009, investment tax credits consisted of the following:
Law/Statute
Item
Statute for Upgrading Industries
Purchase of machinery
and equipment
c. Net deferred income tax assets consisted of the following:
Statute for Upgrading Industries
Research and development
expenditures
Current deferred income tax assets
Investment tax credits
Temporary differences
Allowance for sales returns and others
Others
Noncurrent deferred income tax assets
Investment tax credits
Temporary differences
Depreciation
Others
Valuation allowance
December 31
2009
2008
$ 3,210,254
$ 2,791,000
794,507
58,649
710,098
149,602
$ 4,063,410
$ 3,650,700
$ 11,521,487
$ 10,821,218
1,909,152
132,336
(5,799,332)
1,625,499
450,901
(6,399,646)
Statute for Upgrading Industries
Personnel training expenditures
Statute for Upgrading Industries
Investments in important
technology-based enterprises
$ 7,297
79,804
$ -
-
2009
2010
$ 87,101
$ -
Total
Creditable
Amount
Remaining
Creditable
Amount
Expiry Year
$ 579,804
1,216,551
4,644,652
3,457,388
3,310,922
$ -
-
-
3,457,388
3,310,922
$ 13,209,317
$ 6,768,310
$ 2,663,784
2,671,264
2,691,517
3,250,265
$ -
1,971,732
2,691,517
3,250,265
$ 11,276,830
$ 7,913,514
2009
2010
2011
2012
2013
2010
2011
2012
2013
$ 23,146
19,293
30,624
$ -
19,293
30,624
2010
2011
2012
$ 73,063
$ 49,917
$ 7,763,643
$ 6,497,972
g. The profits generated from the following projects are exempt from income tax for a five-year period:
In May 2009, the amendment of Article 5 of the Income Tax Law of the Republic of China announced that
the income tax rate of profit-seeking enterprises will be reduced from 25% to 20%, and will be effective
starting in 2010. The Company recalculated its deferred tax assets in accordance with the amended Article
and adjusted the resulting difference as an income tax expense.
Construction of Fab 14 - Module A
Construction of Fab 12 - Module B and expansion of Fab 14 - Module A
Construction of Fab 14 - Module B and expansion of Fab 12 and others
Tax-exemption Period
2006 to 2010
2007 to 2011
2008 to 2012
d. Integrated income tax information:
h. The tax authorities have examined income tax returns of the Company through 2007. All investment tax
credit adjustments assessed by the tax authorities have been recognized accordingly.
The balance of the imputation credit account as of December 31, 2009 and 2008 were NT$369,265
thousand and NT$521,634 thousand, respectively.
The estimated and actual creditable ratios for distribution of earnings of 2009 and 2008 was 0.35% and
9.10%, respectively.
The imputation credit allocated to shareholders is based on its balance as of the date of dividend
distribution. The estimated creditable ratio may change when the actual distribution of imputation credit
is made.
19
18. LABOR COST, DEPRECIATION AND AMORTIZATION
Capital surplus consisted of the following:
Labor cost
Salary and bonus
Labor and health insurance
Pension
Meal
Welfare
Others
Depreciation
Amortization
Labor cost
Salary and bonus
Labor and health insurance
Pension
Meal
Welfare
Others
Depreciation
Amortization
Year Ended December 31, 2009
Classified as
Cost of Sales
Classified as
Operating Expenses
Total
$ 15,874,268
630,735
557,206
414,749
155,795
97,229
$ 12,218,675
385,013
340,181
180,542
97,282
19,108
$ 28,092,943
1,015,748
897,387
595,291
253,077
116,337
$ 17,729,982
$ 13,240,801
$ 30,970,783
$ 68,606,242
$ 1,199,386
$ 3,842,623
$ 657,618
$ 72,448,865
$ 1,857,004
Additional paid-in capital
From merger
From convertible bonds
From long-term investments
Donations
December 31
2009
$ 23,457,805
22,805,390
8,893,190
329,570
55
2008
$ 17,962,468
22,805,390
8,893,190
214,152
55
$ 55,486,010
$ 49,875,255
The Company’s Articles of Incorporation provide that, when allocating the net profits for each fiscal year, the
Company shall first offset its losses in previous years and then set aside the following items accordingly:
Year Ended December 31, 2008
Company’s paid-in capital;
a. Legal capital reserve at 10% of the profits left over, until the accumulated legal capital reserve equals the
Classified as
Cost of Sales
Classified as
Operating Expenses
Total
$ 17,088,512
677,817
587,281
437,910
174,641
190,323
$ 11,989,661
379,196
328,669
174,906
100,989
15,979
$ 29,078,173
1,057,013
915,950
612,816
275,630
206,302
$ 19,156,484
$ 12,989,400
$ 32,145,884
$ 68,373,886
$ 1,771,919
$ 3,701,241
$ 663,434
$ 72,075,127
$ 2,435,353
19. SHAREHOLDERS’ EQUITY
As of December 31, 2009, 1,097,513 thousand ADSs of the Company were traded on the NYSE. The
number of common shares represented by the ADSs is 5,487,565 thousand (one ADS represents five
common shares).
Capital surplus can only be used to offset a deficit under the Company Law. However, the capital surplus
generated from donations and the excess of the issuance price over the par value of capital stock (including
the stock issued for new capital, mergers, convertible bonds and the surplus from treasury stock transactions)
may be appropriated as stock dividends, which are limited to a certain percentage of the Company’s paid-in
capital. In addition, the capital surplus from long-term investments may not be used for any purpose.
20
b. Special capital reserve in accordance with relevant laws or regulations or as requested by the authorities in
charge;
c. Bonus to directors and profit sharing to employees of the Company of not more than 0.3% and not less
than 1% of the remainder, respectively. Directors who also serve as executive officers of the Company
are not entitled to receive the bonus to directors. The Company may issue profit sharing to employees in
stock of an affiliated company meeting the conditions set by the Board of Directors or, by the person duly
authorized by the Board of Directors;
d. Any balance left over shall be allocated according to the resolution of the shareholders’ meeting.
The Company’s Articles of Incorporation also provide that profits of the Company may be distributed by way
of cash dividend and/or stock dividend. However, distribution of profits shall be made preferably by way of
cash dividend. Distribution of profits may also be made by way of stock dividend; provided that the ratio for
stock dividend shall not exceed 50% of the total distribution.
Any appropriations of the profits are subject to shareholder’s approval in the following year.
The Company has recorded profit sharing to employees as a charge to earnings of approximately 7.5% and
15% of net income for the years ended December 2009 and 2008, respectively; bonuses to directors were
accrued with an estimate based on historical experience. If the actual amounts subsequently resolved by the
shareholders differ from the estimated amounts, the differences are recorded in the year of shareholders’
resolution as a change in accounting estimate. If profit sharing is resolved to be distributed to employees in
stock, the number of shares is determined by dividing the amount of profit sharing by the closing price (after
considering the effect of dividends) of the shares on the day preceding the shareholders’ meeting.
The Company no longer has supervisors since January 1, 2007. The required duties of supervisors are being
fulfilled by the Audit Committee.
The appropriation for legal capital reserve shall be made until the reserve equals the Company’s paid-in
capital. The reserve may be used to offset a deficit, or be distributed as dividends and bonuses for the
portion in excess of 50% of the paid-in capital if the Company has no unappropriated earnings and the
reserve balance has exceeded 50% of the Company’s paid-in capital. The Company Law also prescribes
that, when the reserve has reached 50% of the Company’s paid-in capital, up to 50% of the reserve may be
transferred to capital.
A special capital reserve equivalent to the net debit balance of the other components of shareholders’ equity
(for example, cumulative translation adjustments and unrealized loss on financial instruments, but excluding
treasury stock) shall be made from unappropriated earnings pursuant to existing regulations promulgated by
the Securities and Futures Bureau (SFB). Any special reserve appropriated may be reversed to the extent that
the net debit balance reverses.
The appropriations of earnings for 2008 and 2007 had been approved in the shareholders’ meetings held on
June 10, 2009 and June 13, 2008, respectively. The appropriations and dividends per share were as follows:
Under the Integrated Income Tax System that became effective on January 1, 1998, R.O.C. resident
shareholders are allowed a tax credit for their proportionate share of the income tax paid by the Company
on earnings generated since January 1, 1998.
20. STOCK-BASED COMPENSATION PLANS
The Company’s Employee Stock Option Plans, consisting of the 2004 Plan, 2003 Plan and 2002 Plan were
approved by the SFB on January 6, 2005, October 29, 2003 and June 25, 2002, respectively. The maximum
number of options authorized to be granted under the 2004 Plan, 2003 Plan and 2002 Plan was 11,000
thousand, 120,000 thousand and 100,000 thousand, respectively, with each option eligible to subscribe for
one common share when exercisable. The options may be granted to qualified employees of the Company
or any of its domestic or foreign subsidiaries, in which the Company’s shareholding with voting rights,
directly or indirectly, is more than fifty percent (50%). The options of all the plans are valid for ten years
and exercisable at certain percentages subsequent to the second anniversary of the grant date. Under the
terms of the plans, the options are granted at an exercise price equal to the closing price of the Company’s
common shares listed on the TSE on the grant date.
Appropriation of Earnings
Dividends Per Share (NT$)
For Fiscal
Year 2008
For Fiscal
Year 2007
For Fiscal
Year 2008
For Fiscal
Year 2007
Options of the plans that had never been granted or had been granted but subsequently canceled had
expired as of December 31, 2009.
Information about outstanding options for the years ended December 31, 2009 and 2008 was as follows:
$ 3.00
0.02
$ 3.00
0.02
Number of Options
(In Thousands)
Weighted-average
Exercise Price (NT$)
Legal capital reserve
Special capital reserve
Profit sharing to employees - in cash
Profit sharing to employees - in stock
Cash dividends to shareholders
Stock dividends to shareholders
Bonus to directors
$ 9,993,317
(391,857)
-
-
76,876,312
512,509
-
$ 10,917,709
(237,693)
3,939,883
3,939,883
76,881,311
512,542
176,890
$ 86,990,281
$ 96,130,525
Profit sharing to employees that have been paid in cash and in stock as well as bonus to directors in
the amounts of NT$7,494,988 thousand, NT$7,494,988 thousand and NT$158,080 thousand for
2008, respectively, had been approved in the shareholders’ meeting held on June 10, 2009. The profit
sharing to employee in stock of 141,870 thousand shares was determined by the closing price of the
Company’s common shares (after considering the effect of dividends) of the day immediately preceding
the shareholders’ meeting, which was NT$52.83. The resolved amounts of the profit sharing to employees
and bonus to directors were consistent with the resolutions of meeting of the Board of Directors held on
February 10, 2009 and same amount had been charged against earnings of 2008.
The shareholders’ meeting held on June 10, 2009 also resolved to distribute stock dividends out of capital
surplus, and stock dividends to shareholders as well as profit sharing to employees to be paid in stock in the
amount of NT$768,763 thousand, NT$512,509 thousand and NT$7,494,988 thousand, respectively. The
aforementioned capital increase had taken effect on July 21, 2009.
As of January 22, 2010, the Board of Directors has not resolved the appropriation for earnings of 2009.
The information about the appropriations of profit sharing to employees and bonus to directors is available
at the Market Observation Post System website.
Year ended December 31, 2009
Balance, beginning of year
Options granted
Options exercised
Options canceled
Balance, end of year
Year ended December 31, 2008
Balance, beginning of year
Options granted
Options exercised
Options canceled
Balance, end of year
36,234
175
(7,272)
(327)
28,810
41,875
767
(6,027)
(381)
36,234
$ 34.0
34.0
35.8
46.5
33.5
35.6
35.2
37.7
46.5
35.3
The numbers of outstanding options and exercise prices have been adjusted to reflect the distribution
of earnings in accordance with the plans. The options granted were the result of the aforementioned
adjustment.
21
As of December 31, 2009, information about outstanding options was as follows:
Range of
Exercise Price (NT$)
$22.8 - $32.0
38.0 - 50.1
Number of Options
(In Thousands)
21,179
7,631
28,810
Options Outstanding
Weighted-average
Remaining Contractual Life
(Years)
3.18
4.88
3.63
Weighted-average
Exercise Price (NT$)
$ 29.1
45.5
33.5
As of December 31, 2009, all of the above outstanding options were exercisable.
The Company held a meeting of the Board of Directors on May 13, 2008 and approved a share buyback
plan to repurchase the Company’s common shares up to 500,000 thousand shares listed on the TSE
during the period from May 14, 2008 to July 13, 2008 for the buyback price in the range from NT$48.25
to NT$100.50. The Company had repurchased 216,674 thousand common shares. All the treasury stock
repurchased under this share buyback plan was retired in August 2008.
The Company held a meeting of the Board of Directors on August 12, 2008 and approved a share buyback
plan to repurchase the Company’s common shares up to 283,000 thousand shares listed on the TSE during
the period from August 13, 2008 to October 12, 2008 for the buyback price in the range from NT$42.85
to NT$86.20. The Company had repurchased 278,875 thousand common shares. All the treasury stock
repurchased under this share buyback plan was retired in November 2008.
No compensation cost was recognized under the intrinsic value method for the years ended December 31,
2009 and 2008. Had the Company used the fair value based method to evaluate the options using the
Black-Scholes model, the assumptions and pro forma results of the Company for the years ended December
31, 2009 and 2008 would have been as follows:
As discussed in Note 10, the Company merged Chi Cherng and Hsin Ruey in the third quarter of 2008. The
Company’s common shares held by Chi Cherng and Hsin Ruey in the number of 34,267 thousand shares
were retired in August 2008.
Years Ended December 31
2009
2008
22. EARNINGS PER SHARE
EPS is computed as follows:
Assumptions:
Expected dividend yield
Expected volatility
Risk free interest rate
Expected life
Net income:
Net income as reported
Pro forma net income
Earnings per share (EPS) - after income tax (NT$):
Basic EPS as reported
Pro forma basic EPS
Diluted EPS as reported
Pro forma diluted EPS
21. TREASURY STOCK
Year ended December 31, 2008
Parent company stock held by subsidiaries
Repurchase under share buyback plan
1.00% - 3.44%
43.77% - 46.15%
3.07% - 3.85%
5 years
1.00% - 3.44%
43.77% - 46.15%
3.07% - 3.85%
5 years
$ 89,217,836
88,838,182
$ 99,933,168
100,037,622
$ 3.45
3.44
3.44
3.43
$ 3.84
3.84
3.81
3.81
Amounts (Numerator)
Before
Income Tax
After
Income Tax
Number of
Shares
(Denominator)
(In Thousands)
EPS (NT$)
Before
Income Tax
After
Income Tax
Year ended December 31, 2009
Basic EPS
Earnings available to common shareholders
Effect of dilutive potential common shares
$ 94,981,022
-
$ 89,217,836
-
25,835,802
77,801
$ 3.68
$ 3.45
Diluted EPS
Earnings available to common shareholders
(including effect of dilutive potential common
shares)
$ 94,981,022
$ 89,217,836
25,913,603
$ 3.67
$ 3.44
(Shares in Thousands)
Year ended December 31, 2008
Beginning
Shares
Addition
Stock
Dividends
Retirement
Ending
Shares
Basic EPS
Earnings available to common shareholders
Effect of dilutive potential common shares
$ 110,758,818
-
$ 99,933,168
-
26,039,186
196,493
$ 4.25
$ 3.84
34,096
800,000
-
495,549
834,096
495,549
171
-
171
34,267
1,295,549
1,329,816
-
-
-
Diluted EPS
Earnings available to common shareholders
(including effect of dilutive potential common
shares)
$ 110,758,818
$ 99,933,168
26,235,679
$ 4.22
$ 3.81
The Company held a meeting of the Board of Directors on November 13, 2007 and approved a share
buyback plan to repurchase the Company’s common shares up to 800,000 thousand shares listed on the
TSE during the period from November 14, 2007 to January 13, 2008 for the buyback price in the range from
NT$43.2 to NT$94.2. The Company had repurchased 800,000 thousand common shares. All the treasury
stock repurchased under this share buyback plan was retired in February 2008.
As discussed in Note 3, effective January 1, 2008, the Company adopted Interpretation 2007-052 that
requires companies to record profit sharing to employees as an expense rather than as an appropriation of
earnings. If the Company may settle the obligation by cash, by issuing shares, or in combination of both cash
and shares, profit sharing to employees which will be settled in shares should be included in the weighted
average number of shares outstanding in calculation of diluted EPS, if the shares have a dilutive effect. The
number of shares is estimated by dividing the amount of profit sharing to employees in stock by the closing
price (after considering the dilutive effect of dividends) of the common shares on the balance sheet date.
22
Such dilutive effect of the potential shares needs to be included in the calculation of diluted EPS until the
shares of profit sharing to employees are resolved in the shareholders’ meeting in the following year.
c. The changes in fair value of derivatives contracts which were outstanding as of December 31, 2009 and
2008 estimated using valuation techniques were recognized as net gains of NT$181,743 thousand and
net losses of NT$41,158 thousand, respectively.
The average number of shares outstanding for EPS calculation has been retroactively adjusted for the
issuance of stock dividends. This adjustment caused both of the basic and diluted after income tax EPS
for the year ended December 31, 2008 to decrease from NT$3.86 to NT$3.84 and NT$3.83 to NT$3.81,
respectively.
d. As of December 31, 2009 and 2008, financial assets exposed to fair value interest rate risk were
NT$23,392,313 thousand and NT$19,718,442 thousand, respectively and financial liabilities exposed to
fair value interest rate risk were NT$4,500,000 thousand and NT$12,583,618 thousand, respectively.
23. DISCLOSURES FOR FINANCIAL INSTRUMENTS
e. Movements of the unrealized gains or losses on financial instruments for the years ended December 31,
a. Fair values of financial instruments were as follows:
2009 and 2008 were as follows:
December 31
2009
2008
Carrying
Amount
Fair Value
Carrying
Amount
Fair Value
Assets
Financial assets at fair value through profit or loss
Available-for-sale financial assets
Held-to-maturity financial assets
$ 181,743
1,046,672
22,163,898
$ 181,743
1,046,672
22,251,517
$ 42,460
2,032,658
17,643,324
$ 42,460
2,032,658
17,674,733
Liabilities
Financial liabilities at fair value through profit or loss
Bonds payable (including current portion)
Other long-term payables (including current portion)
-
4,500,000
1,185,534
-
4,574,979
1,185,534
83,618
12,500,000
1,957,673
83,618
12,612,423
1,957,673
b. Methods and assumptions used in the estimation of fair values of financial instruments
1) The aforementioned financial instruments do not include cash and cash equivalents, receivables, other
financial assets, refundable deposits, payables and guarantee deposits. The carrying amounts of these
financial instruments approximate their fair values due to their short maturities.
2) Except for derivatives and structured time deposits, fair values of financial assets at fair value through
profit or loss, available-for-sale and held-to-maturity financial assets were based on their quoted market
prices.
3) The fair values of those derivatives and structured time deposits are determined using valuation
techniques incorporating estimates and assumptions that were consistent with prevailing market
conditions.
4) Fair value of the bonds payable was based on their quoted market price.
5) Fair value of other long-term payables was based on the present value of expected cash flows, which
approximates their carrying amount.
Year Ended December 31, 2009
From Available-
for-sale Financial
Assets
From Available-
for-sale Financial
Assets Held by
Investees
Total
Balance, beginning of year
Recognized directly in shareholders’ equity
Removed from shareholders’ equity and recognized in earnings
$ 32,658
51,384
(37,370)
$ (320,000)
726,949
-
$ (287,342)
778,333
(37,370)
Balance, end of year
$ 46,672
$ 406,949
$ 453,621
Year Ended December 31, 2008
From Available-
for-sale Financial
Assets
From Available-
for-sale Financial
Assets Held by
Investees
Total
Balance, beginning of year
Recognized directly in shareholders’ equity
Removed from shareholders’ equity and recognized in earnings
$ 266,573
209,489
(443,404)
$ 414,424
(734,424)
-
$ 680,997
(524,935)
(443,404)
Balance, end of year
$ 32,658
$ (320,000)
$ (287,342)
f. Information about financial risks
1) Market risk. The derivative financial instruments categorized as financial assets/liabilities at fair value
through profit or loss are mainly used to hedge the exchange rate fluctuations of foreign-currency
assets and liabilities; therefore, the market risk of derivatives will be offset by the foreign exchange risk
of these hedged items. Available-for-sale financial assets and held-to-maturity financial assets held by
the Company are mainly fixed-interest-rate debt securities; therefore, the fluctuations in market interest
rates will result in changes in fair values of these debt securities. Subject to turmoil in the global
financial market, the Company had evaluated its financial instruments and the Company believed the
exposure to market risk as of December 31, 2009 was not significant.
2) Credit risk. Credit risk represents the potential loss that would be incurred by the Company if the
counter-parties or third-parties breached contracts. Financial instruments with positive fair values at the
balance sheet date are evaluated for credit risk. Subject to turmoil in the global financial market, the
Company evaluated whether the financial instruments for any possible counter-party or third-parties
are reputable financial institutions, business enterprises, and government agencies and accordingly,
the Company believed that the Company’s exposure to credit risk as of December 31, 2009 was not
significant.
23
3) Liquidity risk. The Company has sufficient operating capital to meet cash needs upon settlement of
derivative financial instruments and bonds payable. Therefore, the liquidity risk is low.
Transactions with the aforementioned parties, other than those disclosed in other notes, are summarized as
follows:
4) Cash flow interest rate risk. The Company mainly invests in fixed-interest-rate debt securities. Therefore,
cash flows are not expected to fluctuate significantly due to changes in market interest rates.
24. RELATED PARTY TRANSACTIONS
The Company engages in business transactions with the following related parties:
a. Subsidiaries
TSMC North America
TSMC China
TSMC Europe
TSMC Japan
TSMC Korea
b. Investees
GUC (with a controlling financial interest)
Xintec (with a controlling financial interest)
VIS (accounted for using equity method)
SSMC (accounted for using equity method)
c. Indirect subsidiaries
WaferTech, LLC (WaferTech)
TSMC Technology, Inc. (TSMC Technology)
TSMC Design Technology Canada, Inc. (TSMC Canada)
d. Indirect investee
VisEra Technology Company, Ltd. (VisEra), an indirect investee accounted for using equity method.
e. Others
Related parties over which the Company has control or exercises significant influence but with which the
Company had no material transactions.
24
For the year
Sales
TSMC North America
Others
Purchases
WaferTech
TSMC China
SSMC
VIS
Manufacturing expenses
Xintec (rent and outsourcing)
VisEra (outsourcing)
Marketing expenses - commission
TSMC Europe
TSMC Japan
Others
Research and development expenses
TSMC Technology (primarily consulting fee)
TSMC Canada (primarily consulting fee)
Others
Sales of property, plant and equipment
Xintec
TSMC China
Other
Non-operating income and gains
VIS (primarily technical service income, see Note 27e)
TSMC China
SSMC (primarily technical service income, see Note 27d)
VisEra
Others
2009
2008
Amount
%
Amount
%
$ 161,251,368
2,231,343
$ 163,482,711
$ 5,560,707
3,787,113
3,537,659
3,312,656
$ 16,198,135
$ 36,101
35,737
$ 71,838
$ 325,463
233,855
24,726
$ 584,044
$ 409,686
157,527
49,251
$ 616,464
$ 58,450
595
263
$ 59,308
$ 224,740
184,626
141,488
-
263
54
1
55
18
12
11
10
51
-
-
-
16
12
1
29
2
1
-
3
91
1
-
92
5
4
3
-
-
$ 192,986,719
1,814,440
$ 194,801,159
$ 8,207,876
4,717,676
4,441,795
3,209,028
$ 20,576,375
$ -
72,174
$ 72,174
$ 367,846
251,367
16,408
$ 635,621
$ 352,900
172,291
19,934
$ 545,125
$ -
1,849,317
10,843
$ 1,860,160
$ 296,250
297,418
244,865
100,821
178
58
1
59
22
12
12
8
54
-
-
-
16
11
1
28
2
1
-
3
-
91
-
91
4
5
4
1
-
$ 551,117
12
$ 939,532
14
(Continued)
As of December 31
Receivables
TSMC North America
Others
Other receivables
TSMC China
VIS
SSMC
TSMC North America
Others
Payables
WaferTech
VIS
TSMC China
SSMC
TSMC Technology
TSMC North America
Others
Deferred credits
TSMC China
2009
2008
Amount
%
Amount
%
Compensation of directors and management personnel:
$ 22,203,242
338,531
98
2
$ 11,512,777
215,427
98
2
$ 22,541,773
100
$ 11,728,204
100
$ 111,103
81,663
39,629
8,676
4,932
45
33
16
4
2
$ 112,933
42,969
56,949
256,624
20,267
23
9
12
52
4
$ 246,003
100
$ 489,742
100
$ 561,165
529,060
481,500
238,741
109,220
4,222
115,434
27
26
24
12
5
-
6
$ 171,089
317,491
117,417
162,807
41,904
327,250
64,392
14
26
10
14
3
28
5
Salaries, incentives and special compensation
Bonus
Years Ended December 31
2009
2008
$ 588,508
411,358
$ 272,325
705,376
$ 999,866
$ 977,701
The information about the compensation of directors and management personnel is available in the annual
report for the shareholders’ meeting. Total compensation expense for the year ended December 31, 2009
includes estimated profit sharing to employees and bonus to directors of the Company that relate to
2009 but will be paid in the following year. The actual amount will be finalized and approved upon the
resolution of the shareholders’ meeting in 2010. The total compensation for the year ended December 31,
2008 included the bonuses appropriated from earnings of 2008 which was approved by the shareholders’
meeting held in 2009.
25. PLEDGED OR MORTGAGED ASSETS
As of December 31, 2009, the Company had pledged time deposits of NT$824,797 thousand (classified as
other financial assets) as collateral for land lease agreements and customs duty guarantee.
$ 2,039,342
100
$ 1,202,350
100
26. SIGNIFICANT LONG-TERM LEASES
$ 7,970
17
$ 183,896
40
(Concluded)
The Company leases several parcels of land from the Science Park Administration. These operating leases
expire on various dates from March 2010 to December 2029 and can be renewed upon expiration.
The sales prices and payment terms to related parties were not significantly different from those of sales
to third parties. For other related party transactions, prices and terms were determined in accordance with
mutual agreements.
The Company leased certain buildings, facilities, and machinery and equipment from Xintec. The lease terms
and prices were determined in accordance with mutual agreements. The rental expense was classified under
manufacturing expenses.
The Company deferred the net gains (classified under the deferred credits) derived from sales of property,
plant and equipment to TSMC China and VisEra, and then recognized such gains (classified under
non-operating income and gains) over the depreciable lives of the disposed assets.
The Company leased certain buildings and facilities to VisEra. The rental income was classified under
non-operating income and gains. The lease terms and prices were determined in accordance with mutual
agreements. The lease agreement between the Company and VisEra expired in April 2008.
As of December 31, 2009, future lease payments were as follows:
Year
2010
2011
2012
2013
2014
2015 and thereafter
Amount
$ 355,842
353,566
353,566
331,921
318,935
2,754,388
$ 4,468,218
27. SIGNIFICANT COMMITMENTS AND CONTINGENCIES
Significant commitments and contingencies of the Company as of December 31, 2009, excluding those
disclosed in other notes, were as follows:
a. Under a technical cooperation agreement with ITRI, the R.O.C. Government or its designee approved by
the Company can use up to 35% of the Company’s capacity if the Company’s outstanding commitments
to its customers are not prejudiced. The term of this agreement is for five years beginning from January
1, 1987 and is automatically renewed for successive periods of five years unless otherwise terminated by
either party with one year prior notice.
25
b. Under several foundry agreements, the Company shall reserve a portion of its production capacity for
certain major customers that have guarantee deposits with the Company. As of December 31, 2009 the
Company had a total of US$29,582 thousand of guarantee deposits.
c. Under a Shareholders Agreement entered into with Philips and EDB Investments Pte Ltd. on March
30, 1999, the parties formed a joint venture company, SSMC, which is an integrated circuit foundry
in Singapore. The Company’s equity interest in SSMC was 32%. Nevertheless, Philips parted with its
semiconductor company which was renamed as NXP B.V. in September 2006. The Company and NXP B.V.
purchased all the SSMC shares owned by EDB Investments Pte Ltd. pro rata according to the Shareholders
Agreement on November 15, 2006. After the purchase, the Company and NXP B.V. currently own
approximately 39% and 61% of the SSMC shares respectively. The Company and Philips (now NXP B.V.)
are required, in the aggregate, to purchase at least 70% of SSMC’s capacity, but the Company alone is not
required to purchase more than 28% of the capacity. If any party defaults on the commitment and the
capacity utilization of SSMC fall below a specific percentage of its capacity, the defaulting party is required
to compensate SSMC for all related unavoidable costs.
d. The Company provides technical services to SSMC under a Technical Cooperation Agreement (the
Agreement) effective March 30, 1999. The Company receives compensation for such services computed
at a specific percentage of net selling price of all products sold by SSMC. The Agreement shall remain
in force for ten years and will be automatically renewed for successive periods of five years each unless
pre-terminated by either party under certain conditions.
e. The Company provides a technology transfer to VIS under a Manufacturing License and Technology
Transfer Agreement entered into on April 1, 2004. The Company receives compensation for such
technology transfer in the form of royalty payments from VIS computed at specific percentages of net
selling price of certain products sold by VIS. VIS agreed to reserve its certain capacity to manufacture for
the Company certain products at prices as agreed by the parties.
of the (2005) Settlement Agreement” with SMIC. The Court also found “TSMC has demonstrated a
significant probability of establishing that SMIC retains and is using TSMC Information in SMIC’s 0.13um
and smaller technologies, and there is significant threat of serious irreparable harm to TSMC if SMIC were
to disclose or transfer that information before final resolution of the case”. Therefore, the Court ordered
that, effective immediately, SMIC must provide advance notice and an opportunity for TSMC, TSMC North
America and WaferTech to object before disclosing items enumerated in the Court Order to SMIC’s third
party partners. The Court, however, did not grant a preliminary injunction as requested by TSMC, TSMC
North America and WaferTech. In January 2009, the court in the California action held a four-day bench
trial to determine whether a Settlement Agreement existed between the parties, and if there were an
agreement, the interpretation of certain terms. SMIC contended that there was no binding Settlement
Agreement, and TSMC, TSMC North America and WaferTech contended that the Settlement Agreement
signed on January 30, 2005 and finalized shortly thereafter and repeatedly ratified bound the parties. On
March 10, 2009, the Court issued its Statement of Decision. The Court rejected SMIC’s contention, and
found that the parties were bound by the Settlement Agreement identified by TSMC, TSMC North America
and WaferTech. The Court also interpreted the meaning of certain provisions within the Settlement
Agreement. Regarding the claims raised by SMIC in the Beijing lawsuit, the Beijing People’s High Court
has on June 10, 2009 rejected those claims and dismissed the lawsuit. On November 4, 2009, after a
two-month trial, a jury in the California action found SMIC to have both breached the 2005 settlement
agreement and misappropriated TSMC, TSMC North America and WaferTech’s trade secrets. TSMC, TSMC
North America and WaferTech have subsequently settled both lawsuits with SMIC. Pursuant to the new
settlement agreement, the parties have agreed to the entry of a stipulated judgment in favor of TSMC,
TSMC North America and WaferTech in the California action, and to the dismissal of SMIC’s appeal against
the Beijing High Court’s finding in favor of TSMC, TSMC North America and WaferTech. Under the new
settlement agreement and the related stipulated judgment, SMIC has agreed to make cash payments by
installments to TSMC totaling US$200 million, which are in addition to the US$135 million previously paid
to TSMC under the 2005 settlement agreement, and to provide TSMC with other valuable consideration.
28. ADDITIONAL DISCLOSURES
f. TSMC, TSMC North America and WaferTech filed a series of lawsuits in late 2003 and 2004 against
Following are the additional disclosures required by the SFB for the Company and its investees:
Semiconductor Manufacturing International Corporation, SMIC (Shanghai) and SMIC Americas (aggregately
referring to as “SMIC”). The lawsuits alleged that SMIC infringed multiple TSMC, TSMC North America
and WaferTech patents and misappropriated TSMC, TSMC North America and WaferTech’s trade secrets.
These suits were settled out of court on January 30, 2005. As part of the settlement, Semiconductor
Manufacturing International Corporation shall pay US$175 million over six years to resolve TSMC, TSMC
North America and WaferTech’s claims. As of December 31, 2009, SMIC had paid US$135 million in
accordance with the terms of this settlement agreement. In August 2006, TSMC, TSMC North America
and WaferTech filed a lawsuit against SMIC in Alameda County Superior Court in California for breach of
aforementioned settlement agreement, breach of promissory notes and trade secret misappropriation,
seeking injunctive relief and monetary damages. In September 2006, SMIC filed a cross-complaint against
TSMC, TSMC North America and WaferTech in the same court, alleging TSMC, TSMC North America and
WaferTech of breach of the settlement agreement and implied covenant of good faith and fair dealing,
in response to TSMC, TSMC North America and WaferTech’s August complaint. In November 2006, SMIC
filed a complaint with Beijing People’s High Court against TSMC, TSMC North America and WaferTech
alleging defamation and breach of good faith. The California State Superior Court of Alameda County
issued an Order on TSMC, TSMC North America and WaferTech’s pre-trial motion for a preliminary
injunction against SMIC on September 7, 2007. In the Order, the Court found “TSMC has demonstrated a
significant likelihood that it will ultimately prevail on the merits of its claim for breach of certain paragraphs
26
a. Financing provided: None;
b. Endorsement/guarantee provided: None;
c. Marketable securities held: Please see Table 1 attached;
d. Marketable securities acquired or disposed of at costs or prices of at least NT$100 million or 20% of the
paid-in capital: Please see Table 2 attached;
e. Acquisition of individual real estate properties at costs of at least NT$100 million or 20% of the paid-in
capital: Please see Table 3 attached;
f. Disposal of individual real estate properties at prices of at least NT$100 million or 20% of the paid-in
capital: None;
g. Total purchases from or sales to related parties of at least NT$100 million or 20% of the paid-in capital:
29. SEGMENT FINANCIAL INFORMATION
Please see Table 4 attached;
a. Industry financial information
h. Receivable from related parties amounting to at least NT$100 million or 20% of the paid-in capital: Please
see Table 5 attached;
The Company operates in one industry. Therefore, the disclosure of industry financial information is not
applicable to the Company.
i. Names, locations, and related information of investees on which the Company exercises significant
influence: Please see Table 6 attached;
b. Geographic information
j. Information about derivatives of investees over which the Company has a controlling interest:
The Company has no significant foreign operations. Therefore, the disclosure of geographic information is
not applicable to the Company.
TSMC China entered into forward exchange contracts during the year ended December 31, 2009 to
manage exposures due to foreign exchange rate fluctuations.
As of December 31, 2009, no forward exchange contracts of TSMC China was outstanding. For the year
ended December 31, 2009, net losses arising from forward exchange contracts of TSMC China were
NT$866 thousand.
Xintec entered into forward exchange contracts during the year ended December 31, 2009 to manage
exposures due to foreign exchange rate fluctuations. Outstanding forward exchange contracts as of
December 31, 2009:
Sell US$/Buy NT$
Maturity Date
February 2010
Contract Amount
(In Thousands)
US$21,300/NT$686,788
c. Export sales
Area
Americas
Asia
Europe and others
Years Ended December 31
2009
2008
$ 166,813,136
59,496,755
31,350,249
$ 199,512,258
49,386,819
37,622,148
$ 257,660,140
$ 286,521,225
The export sales information is based on the amounts billed to customers within the areas.
d. Major customers representing at least 10% of gross sales
For the year ended December 31, 2009, net gains arising from forward exchange contracts of Xintec were
NT$4,448 thousand.
Customer A
k. Information on investment in Mainland China
1) The name of the investee in mainland China, the main businesses and products, its issued capital,
method of investment, information on inflow or outflow of capital, percentage of ownership, equity
in the net gain or net loss, ending balance, amount received as dividends from the investee, and the
limitation on investee: Please see Table 7 attached.
2) Significant direct or indirect transactions with the investee, its prices and terms of payment, unrealized
gain or loss, and other related information which is helpful to understand the impact of investment in
mainland China on financial reports: Please see Note 24.
Years Ended December 31
2009
Amount
$ 161,251,368
2008
Amount
$ 192,986,719
%
54
%
58
27
TABLE 1
Taiwan Semiconductor Manufacturing Company Limited and Investees
MARKETABLE SECURITIES HELD
DECEMBER 31, 2009
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)
Held Company Name
Marketable Securities Type and Name
Relationship with the
Company
Financial Statement Account
December 31, 2009
Shares/Units
(In Thousands)
Carrying Value
(US$ in Thousands)
Percentage of
Ownership (%)
Market Value or Net
Asset Value
(US$ in Thousands)
Note
TSMC
TSMC Partners
28
Corporate bond
Taiwan Mobile Co., Ltd.
Formosa Petrochemical Corporation
Taiwan Power Company
Nan Ya Plastics Corporation
Formosa Plastics Corporation
China Steel Corporation
CPC Corporation, Taiwan
Taipei Fubon Commercial Bank Co., Ltd.
First Commercial Bank Co., Ltd.
Government bond
European Investment Bank Bonds
2003 Asian Development Bank Govt. Bond
Stock
TSMC Global
TSMC Partners
VIS
SSMC
TSMC North America
Xintec
GUC
TSMC Europe
TSMC Japan
TSMC Korea
United Industrial Gases Co., Ltd.
Shin-Etsu Handotai Taiwan Co., Ltd.
W.K. Technology Fund IV
Fund
Horizon Ventures Fund
Crimson Asia Capital
Capital
TSMC China
VTAF III
VTAF II
Emerging Alliance
Corporate bond
General Elec Cap Corp. Mtn
General Elec Cap Corp. Mtn
-
-
-
-
-
-
-
-
-
-
-
Subsidiary
Subsidiary
Investee accounted for using
equity method
Investee accounted for using
equity method
Subsidiary
Investee with a controlling
financial interest
Investee with a controlling
financial interest
Subsidiary
Subsidiary
Subsidiary
-
-
-
-
-
Subsidiary
Subsidiary
Subsidiary
Subsidiary
-
-
Available-for-sale financial assets
Held-to-maturity financial assets
〃
〃
〃
〃
〃
〃
〃
Held-to-maturity financial assets
〃
In vestments accounted for using
equity method
〃
〃
〃
〃
〃
〃
〃
〃
〃
Financial assets carried at cost
〃
〃
Financial assets carried at cost
〃
In vestments accounted for using
equity method
〃
〃
〃
Held-to-maturity financial assets
〃
-
-
-
-
-
-
-
-
-
-
-
1
988,268
628,223
314
11,000
93,081
46,688
-
6
80
16,783
10,500
4,000
-
-
-
-
-
-
-
-
$ 1,046,672
3,178,551
3,004,941
2,000,145
1,671,815
1,512,130
500,031
298,884
99,814
2,003,877
893,710
45,397,256
32,545,619
9,365,232
6,157,141
2,723,727
1,475,014
983,126
159,467
135,663
18,519
193,584
105,000
40,000
103,992
59,412
2,961,043
1,309,615
1,122,810
305,866
US$ 20,543
US$ 20,219
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
100
100
37
39
100
41
35
100
100
100
10
7
2
12
1
100
98
98
99
N/A
N/A
$ 1,046,672
3,200,302
3,011,743
2,029,935
1,685,345
1,528,117
499,913
298,751
99,815
2,025,500
875,103
45,397,256
32,545,619
10,114,398
5,581,994
2,723,727
1,437,395
7,913,592
159,467
135,663
18,519
297,655
332,943
43,975
103,992
59,412
2,958,707
1,292,412
1,117,773
305,866
US$ 21,312
US$ 21,182
(Continued)
Held Company Name
Marketable Securities Type and Name
Relationship with the
Company
Financial Statement Account
December 31, 2009
Shares/Units
(In Thousands)
Carrying Value
(US$ in Thousands)
Percentage of
Ownership (%)
Market Value or Net
Asset Value
(US$ in Thousands)
Note
Common stock
TSMC Development, Inc. (TSMC Development)
VisEra Holding Company
InveStar Semiconductor Development Fund, Inc. (II) LDC. (ISDF II)
TSMC Technology
InveStar Semiconductor Development Fund, Inc. (ISDF)
TSMC Canada
Mcube Inc.
TSMC Development
Emerging Alliance
Preferred stock
Mcube Inc.
Corporate bond
GE Capital Corp.
JP Morgan Chase & Co.
Stock
WaferTech
Common stock
RichWave Technology Corp.
Global Investment Holding Inc.
Preferred stock
Audience, Inc.
Axiom Microdevices, Inc.
Mosaic Systems, Inc.
Next IO, Inc.
Optichron, Inc.
Pixim, Inc.
QST Holdings, LLC
Teknovus, Inc.
Subsidiary
In vestments accounted for using
1
US$ 340,387
100
US$ 340,387
equity method
In estee accounted for using
equity method
Subsidiary
Subsidiary
Subsidiary
Subsidiary
In vestee accounted for using
equity method
〃
〃
〃
〃
〃
〃
43,000
US$ 70,967
49
US$ 70,967
21,415
1
7,680
2,300
5,333
US$ 13,741
US$ 9,071
US$ 7,336
US$ 3,193
US$ 800
97
100
97
100
70
US$ 13,741
US$ 9,071
US$ 7,336
US$ 3,193
US$ 800
In vestee accounted for using
In vestments accounted for using
1,000
US$ 1,000
10
US$ 1,000
equity method
equity method
-
-
Held-to-maturity financial assets
〃
-
-
US$ 20,334
US$ 15,000
N/A
N/A
US$ 21,182
US$ 15,000
Subsidiary
In vestments accounted for using
293,637
US$ 154,432
100
US$ 154,432
equity method
-
-
-
-
-
-
-
-
-
-
Financial assets carried at cost
〃
4,247
10,000
US$ 1,648
US$ 3,065
10
6
US$ 1,648
US$ 3,065
Financial assets carried at cost
〃
〃
〃
〃
〃
〃
〃
1,654
1,000
2,481
800
1,281
4,641
-
6,977
-
US$ 250
US$ 24
US$ 12
US$ 500
US$ 1,072
US$ 1,137
US$ 131
US$ 1,327
-
1
1
6
1
2
2
4
2
7
US$ 250
US$ 24
US$ 12
US$ 500
US$ 1,072
US$ 1,137
US$ 131
US$ 1,327
-
Capital
VentureTech Alliance Holdings, LLC (VTA Holdings)
Subsidiary
In vestments accounted for using
equity method
VTAF II
Common stock
Leadtrend
RichWave Technology Corp.
Sentelic
Preferred stock
5V Technologies, Inc.
-
-
-
-
Av ailable-for-sale financial assets
Financial assets carried at cost
〃
1,515
1,043
1,200
US$ 9,721
US$ 730
US$ 2,040
4
1
15
US$ 9,721
US$ 730
US$ 2,040
Financial assets carried at cost
2,890
US$ 2,168
4
US$ 2,168
(Continued)
29
Held Company Name
Marketable Securities Type and Name
Relationship with the
Company
Financial Statement Account
December 31, 2009
Shares/Units
(In Thousands)
Carrying Value
(US$ in Thousands)
Percentage of
Ownership (%)
Market Value or Net
Asset Value
(US$ in Thousands)
Note
Aquantia
Audience, Inc.
Axiom Microdevices, Inc.
Beceem Communications
Impinj, Inc.
Next IO, Inc.
Optichron, Inc.
Pixim, Inc.
Power Analog Microelectronics
QST Holdings, LLC
Teknovus, Inc.
Xceive
Capital
VTA Holdings
Common stock
Mutual-Pak Technology Co., Ltd.
Acionn Technology Corporation
Preferred stock
Auramicro, Inc.
BridgeLux, Inc.
Exclara, Inc.
GTBF, Inc.
InvenSense, Inc.
LiquidLeds Lighting Corp.
M2000, Inc.
Neoconix, Inc.
Powervation, Ltd.
Quellan, Inc.
Silicon Technical Services, LLC
Tilera, Inc.
Validity Sensors, Inc.
Capital
Growth Fund Limited (Growth Fund)
VTA Holdings
Common stock
Staccato
SiliconBlue Technologies, Inc.
Common stock
Memsic, Inc.
Capella Microsystems (Taiwan), Inc.
Preferred stock
Integrated Memory Logic, Inc.
IP Unity, Inc.
Sonics, Inc.
Common stock
Memsic, Inc.
Sonics, Inc.
VTAF III
Growth Fund
ISDF
ISDF II
30
-
-
-
-
-
-
-
-
-
-
-
-
Financial assets carried at cost
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
3,974
7,956
759
834
475
3,795
2,784
33,347
7,027
-
1,599
3,936
US$ 3,816
US$ 1,838
US$ 650
US$ 1,701
US$ 1,000
US$ 953
US$ 2,664
US$ 1,878
US$ 3,383
US$ 593
US$ 454
US$ 1,516
Subsidiary
In vestments accounted for using
-
-
equity method
Subsidiary
In vestments accounted for using
9,180
US$ 2,112
In vestee accounted for using
〃
equity method
equity method
4,500
US$ 566
-
-
-
-
-
-
-
-
-
-
-
-
-
Financial assets carried at cost
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
Subsidiary
Subsidiary
In vestments accounted for using
equity method
〃
4,694
4,955
21,708
1,154
816
1,600
3,000
3,283
310
3,106
1,055
3,222
8,070
-
-
US$ 1,408
US$ 6,391
US$ 4,568
US$ 1,500
US$ 1,000
US$ 800
US$ 3,000
US$ 4,608
US$ 4,678
US$ 457
US$ 1,208
US$ 2,781
US$ 3,089
5
2
13
1
-
2
4
2
19
13
-
2
31
59
42
20
4
18
N/A
1
11
5
6
16
6
1
3
3
US$ 3,816
US$ 1,838
US$ 650
US$ 1,701
US$ 1,000
US$ 953
US$ 2,664
US$ 1,878
US$ 3,383
US$ 593
US$ 454
US$ 1,516
-
US$ 2,112
US$ 566
US$ 1,408
US$ 6,391
US$ 4,568
US$ 1,500
US$ 1,000
US$ 800
US$ 3,000
US$ 4,608
US$ 4,678
US$ 457
US$ 1,208
US$ 2,781
US$ 3,089
US$ 823
100
US$ 823
-
62
-
-
-
-
-
-
-
-
-
-
Financial assets carried at cost
〃
10
5,107
US$ 25
US$ 762
Available-for-sale financial assets
Financial assets carried at cost
1,364
557
US$ 4,472
US$ 154
Financial assets carried at cost
〃
〃
2,872
1,008
230
US$ 1,221
US$ 290
US$ 497
Available-for-sale financial assets
Financial assets carried at cost
1,145
278
US$ 3,754
US$ 10
-
2
6
2
9
1
2
5
3
US$ 25
US$ 762
US$ 4,472
US$ 154
US$ 1,221
US$ 290
US$ 497
US$ 3,754
US$ 10
(Continued)
Held Company Name
Marketable Securities Type and Name
Relationship with the
Company
Financial Statement Account
December 31, 2009
Shares/Units
(In Thousands)
Carrying Value
(US$ in Thousands)
Percentage of
Ownership (%)
Market Value or Net
Asset Value
(US$ in Thousands)
Note
GUC
Xintec
TSMC Global
Epic Communication, Inc.
EON Technology, Corp.
Goyatek Technology, Corp.
Capella Microsystems (Taiwan), Inc.
Auden Technology MFG. Co., Ltd.
Preferred stock
Alchip Technologies Limited
FangTek, Inc.
Kilopass Technology, Inc.
Sonics, Inc.
Open-end mutual fund
Jih Sun Bond Fund
FSITC Taiwan Bond Fund
Cathay Bond Fund
Common stock
GUC-NA
GUC-Japan
GUC-Europe
GUC-BVI
Capital
Compositech Ltd.
Corporate bond
Ab Svensk Exportkredit Swedish
African Development Bank
Allstate Life Global Fdg
Asian Development Bank
Astrazeneca Plc
Australia + New Zealand Bkg
Banco Bilbao Vizcaya P R
Bank New York Inc. Medium
Bank of New York Mellon
Bear Stearns Cos Inc.
Bear Stearns Cos Inc.
Bhp Billiton Fin USA Ltd.
Bnp Paribas SA
Boeing Co.
Bsch Issuances Ltd.
Cello Part/Veri Wirelss
Citibank NA
Citigroup funding Inc.
Credit Suisse New York
European Investment Bank
Federal Farm Cr Bks
Finance for Danish Ind
General Elec Cap Corp.
General Elec Cap Corp.
General Elec Cap Corp. Fdic Gtd
Goldman Sachs Group Inc.
Goldman Sachs Group Incser 2
Hewlett Packard Co.
HSBC Fin Corp.
HSBC USA Inc. Fdic Gtd Tlgp
IBM Corp.
-
-
-
-
-
-
-
-
-
-
-
-
Subsidiary
Subsidiary
Subsidiary
Subsidiary
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Financial assets carried at cost
〃
〃
〃
〃
Financial assets carried at cost
〃
〃
〃
Available-for-sale financial assets
〃
〃
In vestments accounted for using
equity method
〃
〃
〃
Financial assets carried at cost
Available-for-sale financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
50
2,368
932
561
1,049
6,979
1,032
3,887
264
5,668
352
2,509
800
1
-
550
587
5,000
2,600
220
2,500
2,150
2,000
3,250
2,100
2,200
5,000
3,500
2,000
2,310
450
2,250
2,000
5,000
2,000
2,000
2,250
2,250
1,900
1,000
7,000
2,500
2,000
3,000
3,000
2,315
2,200
1,800
US$ 23
US$ 656
US$ 545
US$ 210
US$ 223
US$ 3,664
US$ 686
US$ 500
US$ 456
$ 80,008
60,005
30,001
38,617
12,899
5,213
17,466
-
US$ 5,144
US$ 2,622
US$ 221
US$ 2,497
US$ 2,349
US$ 2,054
US$ 3,248
US$ 2,262
US$ 2,208
US$ 4,974
US$ 3,391
US$ 2,129
US$ 2,339
US$ 445
US$ 2,359
US$ 2,068
US$ 4,996
US$ 2,016
US$ 2,057
US$ 2,243
US$ 2,254
US$ 1,900
US$ 978
US$ 7,001
US$ 2,547
US$ 1,939
US$ 3,012
US$ 3,000
US$ 2,233
US$ 2,277
US$ 1,796
-
3
6
2
3
18
6
5
3
-
-
-
100
100
100
100
3
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
US$ 23
US$ 656
US$ 545
US$ 210
US$ 223
US$ 3,664
US$ 686
US$ 500
US$ 456
$ 80,008
60,005
30,001
38,617
12,899
5,213
17,466
-
US$ 5,144
US$ 2,622
US$ 221
US$ 2,497
US$ 2,349
US$ 2,054
US$ 3,248
US$ 2,262
US$ 2,208
US$ 4,974
US$ 3,391
US$ 2,129
US$ 2,339
US$ 445
US$ 2,359
US$ 2,068
US$ 4,996
US$ 2,016
US$ 2,057
US$ 2,243
US$ 2,254
US$ 1,900
US$ 978
US$ 7,001
US$ 2,547
US$ 1,939
US$ 3,012
US$ 3,000
US$ 2,233
US$ 2,277
US$ 1,796
(Continued)
31
Held Company Name
Marketable Securities Type and Name
Relationship with the
Company
Financial Statement Account
December 31, 2009
Shares/Units
(In Thousands)
Carrying Value
(US$ in Thousands)
Percentage of
Ownership (%)
Market Value or Net
Asset Value
(US$ in Thousands)
Note
International Business Machs
Intl Bk Recon + Develop
JP Morgan Chase + Co.
JP Morgan Chase + Co. Fdic Gtd Tlg
Kfw
Kfw Medium Term Nts Book Entry
Kreditanstalt Fur Wiederaufbau
Lloyds Tsb Bank Plc Ser 144A
Mellon Fdg Corp.
Met Life Glob Funding I
Met Life Glob Funding I
Metlife Inc.
Metropolitan Life Global Fdg
Metropolitan Life Global Fdg I
Morgan Stanley
Morgan Stanley
Morgan Stanley Fdic Gtd Tlgp
Morgan Stanley for Equity
Nordea Bank Fld Plc
Oesterreichische Kontrollbank
Ontario (Province of)
Paccar Finl Corp. Mtn Bk Ent
Pricoa Global Fdg I Med Term
Pricoa Global Funding 1
Pricoa Global Fdg I Medium
Royal Bk of Scotland Plc
Royal Bk Scotlnd Grp Plc 144A
Southern Co.
Sovereign Bancorp Fdic Gtd Tlg
State Str Corp.
Suncorp Metway Ltd.
Suncorp Metway Ltd.
Svenska Handelsbanken Ab
Swedbank Ab
Swedbank Foreningssparbanken A
Ubs Ag Stamford
US Central Federal Cred
Verizon Communications Inc.
Verizon Global Fdg Corp.
Wachovia Corp. New
Wells Fargo + Company
Westfield Cap Corp. Ltd.
Westpac Banking Corp.
Westpac Banking Corp.
Nationwide Building Society
Westpac Banking Corp. 12/12 Frn
Agency bond
Fannif Mae
Fed Hm Ln Pc Pool 1b2830
Fed Hm Ln Pc Pool 1g0115
Fed Hm Ln Pc Pool 1k1210
Fed Hm Ln Pc Pool 780741
Federal Farm Cr Bks
Federal Farm Credit Bank
Federal Farm Credit Bank
Federal Home Ln Bank
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Available-for-sale financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
Held-to-maturity financial assets
〃
Available-for-sale financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
3,000
2,000
2,500
3,000
2,230
1,950
650
5,950
3,500
2,100
500
2,000
750
3,340
2,200
2,000
2,210
2,000
2,250
2,000
2,000
1,000
1,750
1,200
2,200
5,000
9,450
600
2,200
1,940
2,000
5,000
2,200
2,000
1,500
1,300
4,800
2,200
500
4,000
2,000
500
2,100
2,170
8,000
5,000
2,820
2,554
2,271
2,053
2,121
2,000
3,000
2,200
11,000
1,350
3,421
US$ 3,027
US$ 2,069
US$ 2,523
US$ 3,030
US$ 2,236
US$ 1,953
US$ 673
US$ 6,049
US$ 3,419
US$ 2,142
US$ 502
US$ 2,017
US$ 739
US$ 3,278
US$ 2,212
US$ 2,032
US$ 2,244
US$ 1,943
US$ 2,240
US$ 2,059
US$ 1,980
US$ 1,007
US$ 1,638
US$ 1,167
US$ 2,130
US$ 5,078
US$ 9,578
US$ 602
US$ 2,246
US$ 1,920
US$ 2,004
US$ 5,170
US$ 2,214
US$ 1,994
US$ 1,537
US$ 1,300
US$ 4,799
US$ 2,294
US$ 528
US$ 4,246
US$ 2,013
US$ 514
US$ 2,112
US$ 2,168
US$ 8,000
US$ 5,000
US$ 2,814
US$ 2,635
US$ 2,315
US$ 2,121
US$ 2,181
US$ 2,117
US$ 2,990
US$ 2,258
US$ 11,028
US$ 1,352
US$ 3,533
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
US$ 3,027
US$ 2,069
US$ 2,523
US$ 3,030
US$ 2,236
US$ 1,953
US$ 673
US$ 6,049
US$ 3,419
US$ 2,142
US$ 502
US$ 2,017
US$ 739
US$ 3,278
US$ 2,212
US$ 2,032
US$ 2,244
US$ 1,943
US$ 2,240
US$ 2,059
US$ 1,980
US$ 1,007
US$ 1,638
US$ 1,167
US$ 2,130
US$ 5,078
US$ 9,578
US$ 602
US$ 2,246
US$ 1,920
US$ 2,004
US$ 5,170
US$ 2,214
US$ 1,994
US$ 1,537
US$ 1,300
US$ 4,799
US$ 2,294
US$ 528
US$ 4,246
US$ 2,013
US$ 514
US$ 2,112
US$ 2,168
US$ 8,008
US$ 4,999
US$ 2,814
US$ 2,635
US$ 2,315
US$ 2,121
US$ 2,181
US$ 2,117
US$ 2,990
US$ 2,258
US$ 11,028
US$ 1,352
US$ 3,533
32
(Continued)
Held Company Name
Marketable Securities Type and Name
Relationship with the
Company
Financial Statement Account
December 31, 2009
Shares/Units
(In Thousands)
Carrying Value
(US$ in Thousands)
Percentage of
Ownership (%)
Market Value or Net
Asset Value
(US$ in Thousands)
Note
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Loan Bank
Federal Home Loan Bank
Federal Home Loan Bank
Federal Home Loan Bank
Federal Home Loan Bank
Federal Home Loan Bank
Federal Home Loan Bank
Federal Home Loan Bank
Federal Home Loan Bank
Federal Home Loan Mtg Corp.
Federal Home Loan Mtg Corp.
Federal National Mort Assoc
Federal National Mort Assoc
Federal Natl Mtg Assn Gtd Remi
Federal Natl Mtg Assn Mtn
Federal Natl Mtg Assn Remic
Federal Natl Mtg Assn
Federal Natl Mtge Assn
Fhr 3087 Jb
Fnma Pool 745688
Fnma Pool 790772
Fnma Pool 819649
Fnma Pool 829989
Fnma Pool 846233
Fnma Pool 870884
Fnma Pool 879908
Fnr 2005 47 Ha
Fnr 2006 60 Co
Fnr 2009 70 Nt
Freddie Mac
Gnma II Pool 082431
Government bond
US Treasury N/B
US Treasury N/B
US Treasury Nts
United States Treas Nts
Societe De Financement De Lec
Corporate issued note
Barclays U.S. Fdg LLC
Royal Bk of Scotland
Money market fund
Ssga Cash Mgmt Global Offshore
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Available-for-sale financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
Available-for-sale financial assets
〃
〃
〃
Held-to-maturity financial assets
2,662
2,469
2,309
2,358
10,000
8,000
10,000
4,700
11,200
3,310
3,000
3,000
3,000
1,411
1,940
2,117
1,752
2,854
2,669
2,871
4,000
2,039
2,540
2,272
1,527
2,318
2,146
2,288
2,357
2,056
2,652
3,062
2,537
4,500
2,000
21,400
2,170
37,700
10,536
15,000
US$ 2,763
US$ 2,521
US$ 2,350
US$ 2,448
US$ 9,987
US$ 7,992
US$ 10,012
US$ 4,715
US$ 11,186
US$ 3,319
US$ 2,989
US$ 2,983
US$ 2,984
US$ 1,441
US$ 2,012
US$ 2,176
US$ 1,782
US$ 2,926
US$ 2,765
US$ 2,953
US$ 4,228
US$ 2,126
US$ 2,656
US$ 2,336
US$ 1,568
US$ 2,383
US$ 2,221
US$ 2,332
US$ 2,442
US$ 2,128
US$ 2,753
US$ 3,153
US$ 2,609
US$ 4,491
US$ 2,030
US$ 21,394
US$ 2,158
US$ 39,012
US$ 10,548
US$ 15,000
Available-for-sale financial assets
〃
4,500
5,000
US$ 4,489
US$ 4,982
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
US$ 2,763
US$ 2,521
US$ 2,350
US$ 2,448
US$ 9,987
US$ 7,992
US$ 10,012
US$ 4,715
US$ 11,186
US$ 3,319
US$ 2,989
US$ 2,983
US$ 2,984
US$ 1,441
US$ 2,012
US$ 2,176
US$ 1,782
US$ 2,926
US$ 2,765
US$ 2,953
US$ 4,228
US$ 2,126
US$ 2,656
US$ 2,336
US$ 1,568
US$ 2,383
US$ 2,221
US$ 2,332
US$ 2,442
US$ 2,128
US$ 2,753
US$ 3,153
US$ 2,609
US$ 4,491
US$ 2,030
US$ 21,394
US$ 2,158
US$ 39,012
US$ 10,548
US$ 15,091
US$ 4,489
US$ 4,982
Available-for-sale financial assets
8,858
US$ 8,858
N/A
US$ 8,858
(Concluded)
33
TABLE 2
Taiwan Semiconductor Manufacturing Company Limited and Investees
MARKETABLE SECURITIES ACQUIRED AND DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 2009
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)
Counter-party
Nature of
Relationship
Shares/Units
(In Thousands)
Amount
(US$ in
Thousands)
Shares/Units
(In Thousands)
(Note 1)
Amount
(US$ in
Thousands)
Shares/Units
(In Thousands)
Amount
(US$ in
Thousands)
Carrying
Value (US$ in
Thousands)
Gain (Loss) or
Disposal (US$
in Thousands)
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Beginning Balance
Acquisition
Disposal (Note 2)
Ending Balance (Note 3)
Company
Name
Marketable Securities Type and
Name
TSMC
Corporate bond
Taiwan Mobile Co., Ltd.
Formosa Petrochemical Corporation
Financial
Statement
Account
Available-for-sale
financial assets
Held-to-maturity
financial assets
Taiwan Power Company
Formosa Plastic Corporation
China Steel Corporation
Taipei Fubon Commercial Bank Co.,
〃
〃
〃
〃
Ltd.
Grand Cathay Securities Corp. and
several financial institutions
〃
〃
〃
〃
〃
Government bond
European Investment Bank Bonds
Held-to-maturity
financial assets
Grand Cathay Securities Corp. and
several financial institutions
Capital
VTAF III
Investments
-
accounted for
using equity
method
TSMC
Development
Corporate bond
JP Morgan Chase & Co.
GUC
Open-end mutual fund
Jih Sun Bond Fund
Held-to-maturity
financial assets
JP Morgan Securitied Inc.
Av ailable-for-sale
financial assets
Jih Sun Investment Trust Co., Ltd.
FSITC Taiwan Bond Fund
Prudential Financial Bond Fund
PCA Well Pool Fund
Hua Nan Phoenix Bond Fund
〃
〃
〃
〃
First Securities Investment Trust
Co., Ltd.
Prudential Financial Securities
Investment Trust Enterprise
PCA Securities Investment Trust
Co., Ltd.
Hua Nan Investment Trust Co., Ltd.
T SMC Global
Corporate bond
Ab Svensk Exportkredit Swedish
Av ailable-for-sale
financial assets
Banco Bilbao Vizcaya P R
Bear Stearns Cos Inc.
Bear Stearns Cos Inc.
Chase Manhattan Corp. New
Citibank NA
Citibank NA
Deutsche Bank Ag London
General Elec Cap Corp.
General Elec Cap Corp.
Goldman Sachs Group Incser 2
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
-
-
-
-
-
-
-
-
-
-
-
34
-
-
-
-
-
-
-
Subsidiary
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$ 2,032,658
3,554,908
4,209,629
2,385,285
1,000,000
-
383,387
1,305,605
-
-
-
-
-
-
-
-
-
-
3,250
-
-
2,995
-
-
-
-
-
-
US$ 3,353
-
-
US$ 3,013
-
-
-
-
-
-
-
-
-
-
-
$ -
457,351
203,892
203,994
514,672
298,677
2,025,500
262,922
-
US$ 15,000
-
-
-
-
-
-
-
-
-
$ 1,037,370
$ 1,000,000
$ 37,370
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
400,000
383,909
16,091
-
-
-
-
19,143
270,000
13,475
190,120
190,000
1,146
195,000
794
135,206
135,000
11,261
170,000
11,261
170,319
170,000
13,121
170,000
13,121
170,241
170,000
10,287
160,000
10,287
160,143
160,000
-
-
-
-
-
-
-
-
$ 1,046,672
3,178,551
3,004,941
1,671,815
1,512,130
298,884
2,003,876
1,309,615
-
US$ 15,000
5,668
352
80,008
60,005
-
-
-
-
-
-
-
-
120
206
319
241
143
5,000
US$ 5,185
3,250
5,000
3,500
-
3,000
5,000
-
5,000
7,000
3,000
US$ 3,250
US$ 4,965
US$ 3,360
-
US$ 3,002
US$ 4,995
-
US$ 4,834
US$ 7,002
US$ 3,016
-
-
-
-
3,250
3,000
-
2,995
4,000
-
-
-
-
-
5,000
US$ 5,144
-
-
-
US$ 3,380
US$ 3,002
-
US$ 3,021
US$ 3,880
-
-
-
-
-
US$ 3,480
US$ 3,002
-
US$ 3,041
US$ 3,868
-
-
-
-
-
US$ (100)
-
-
US$ (20)
US$ 12
-
-
3,250
5,000
3,500
-
-
5,000
-
1,000
7,000
3,000
US$ 3,248
US$ 4,974
US$ 3,391
-
-
US$ 4,996
-
US$ 978
US$ 7,001
US$ 3,012
(Continued)
Company
Name
Marketable Securities Type and
Name
International Business Machs
Financial
Statement
Account
Av ailable-for-sale
financial assets
JP Morgan Chase + Co. Fdic Gtd Tlg 〃
〃
Keycorp Fdic Gtd Tlgp
〃
Lloyds Tsb Bank Plc Ser 144A
〃
Mellon Fdg Corp.
〃
Metropolitan Life Global Fdg I
〃
Morgan Stanley
〃
Royal Bk of Scotland Plc
〃
Royal Bk Scotlnd Grp Plc 144A
〃
Suncorp Metway Ltd.
〃
US Central Federal Cred
〃
Wachovia Corp. New
〃
Wachovia Corp. New
〃
Wells Fargo + Co. New Med Trm
He ld-to-maturity
Nationwide Building Society
financial assets
Westpac Banking Corp. 12/12 Frn
〃
Agency bond
Fed Hm Ln Pc Pool 1g1282
Fed Hm Ln Pc Pool b19205
Fed Home Ln Bank
Federal Farm Cr Bks
Federal Farm Credit Bank
Federal Home Ln Bank
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Mtg
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Loan Bank
Federal Home Loan Bank
Federal Home Loan Bank
Federal Home Loan Bank
Federal Home Loan Bank
Federal Home Loan Bank
Federal Home Loan Bank
Federal Home Loan Bank
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Av ailable-for-sale
financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
Counter-party
Nature of
Relationship
Shares/Units
(In Thousands)
Amount
(US$ in
Thousands)
Shares/Units
(In Thousands)
(Note 1)
Amount
(US$ in
Thousands)
Shares/Units
(In Thousands)
Amount
(US$ in
Thousands)
Carrying
Value (US$ in
Thousands)
Gain (Loss) or
Disposal (US$
in Thousands)
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Beginning Balance
Acquisition
Disposal (Note 2)
Ending Balance (Note 3)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ -
3,000
US$ 3,030
-
US$ -
US$ -
US$ -
3,000
US$ 3,027
-
-
-
-
-
4,855
-
-
-
-
-
3,130
4,500
-
-
-
-
-
-
-
US$ 4,552
-
-
-
-
-
US$ 3,135
US$ 4,493
-
3,000
5,000
5,950
3,500
3,340
-
5,000
9,450
5,000
4,800
4,000
-
-
8,000
US$ 3,030
US$ 5,061
US$ 6,077
US$ 3,404
US$ 3,245
-
US$ 5,106
US$ 9,596
US$ 5,192
US$ 4,799
US$ 4,239
-
-
US$ 8,000
-
5,000
US$ 5,000
-
5,000
-
-
-
4,855
-
-
-
-
-
3,130
4,500
-
-
-
US$ 5,061
-
-
-
US$ 4,751
-
-
-
-
-
US$ 3,195
US$ 4,524
-
-
US$ 5,061
-
-
-
US$ 4,768
-
-
-
-
-
US$ 3,100
US$ 4,282
-
-
-
-
-
-
US$ (17)
-
-
-
-
-
US$ 95
US$ 242
-
3,000
-
5,950
3,500
3,340
-
5,000
9,450
5,000
4,800
4,000
-
-
8,000
US$ 3,030
-
US$ 6,049
US$ 3,419
US$ 3,278
-
US$ 5,078
US$ 9,578
US$ 5,170
US$ 4,799
US$ 4,246
-
-
US$ 8,000
-
-
-
5,000
US$ 5,000
3,215
US$ 3,285
-
-
3,179
US$ 3,281
US$ 3,171
US$ 110
-
-
5,449
5,000
3,400
3,375
-
3,725
5,000
4,000
5,000
3,340
3,500
3,500
-
3,060
-
-
-
-
-
-
-
4,500
-
3,700
4,000
3,500
-
3,750
US$ 5,501
US$ 5,305
US$ 3,610
US$ 3,433
-
US$ 3,854
US$ 5,320
US$ 4,148
US$ 5,340
US$ 3,428
US$ 3,560
US$ 3,743
-
US$ 3,108
-
-
-
-
-
-
-
US$ 4,710
-
US$ 3,713
US$ 4,169
US$ 3,809
-
US$ 4,134
-
-
-
-
11,000
-
-
-
-
-
-
-
3,679
-
10,000
10,000
10,000
4,700
11,200
3,310
3,000
-
9,246
-
-
-
4,000
-
-
-
-
-
US$ 11,038
-
-
-
-
-
-
-
US$ 3,824
-
US$ 9,996
US$ 10,002
US$ 10,035
US$ 4,723
US$ 11,200
US$ 3,310
US$ 3,000
-
US$ 9,474
-
-
-
US$ 4,261
-
5,335
5,000
3,400
3,375
-
3,725
5,000
4,000
5,000
3,340
3,500
3,500
-
3,005
-
2,000
-
-
-
-
-
4,500
9,246
3,700
4,000
3,500
-
3,750
US$ 5,511
US$ 5,282
US$ 3,590
US$ 3,429
-
US$ 3,851
US$ 5,312
US$ 4,151
US$ 5,334
US$ 3,431
US$ 3,561
US$ 3,749
-
US$ 3,078
-
US$ 2,000
-
-
-
-
-
US$ 4,709
US$ 9,461
US$ 3,712
US$ 4,180
US$ 3,801
-
US$ 4,127
US$ 5,225
US$ 5,035
US$ 3,411
US$ 3,370
-
US$ 3,721
US$ 5,098
US$ 4,136
US$ 5,186
US$ 3,335
US$ 3,494
US$ 3,786
-
US$ 3,003
-
US$ 2,000
-
-
-
-
-
US$ 4,518
US$ 9,474
US$ 3,700
US$ 4,117
US$ 3,645
-
US$ 4,151
US$ 286
US$ 247
US$ 179
US$ 59
-
US$ 130
US$ 214
US$ 15
US$ 148
US$ 96
US$ 67
US$ (37)
-
US$ 75
-
-
-
-
-
-
-
US$ 191
US$ (13)
US$ 12
US$ 63
US$ 156
-
US$ (24)
-
-
-
-
11,000
-
-
-
-
-
-
-
3,421
-
10,000
8,000
10,000
4,700
11,200
3,310
3,000
-
-
-
-
-
4,000
-
-
-
-
-
US$ 11,028
-
-
-
-
-
-
-
US$ 3,533
-
US$ 9,987
US$ 7,992
US$ 10,012
US$ 4,715
US$ 11,186
US$ 3,319
US$ 2,984
-
-
-
-
-
US$ 4,228
-
(Continued)
35
Counter-party
Nature of
Relationship
Shares/Units
(In Thousands)
Amount
(US$ in
Thousands)
Shares/Units
(In Thousands)
(Note 1)
Amount
(US$ in
Thousands)
Shares/Units
(In Thousands)
Amount
(US$ in
Thousands)
Carrying
Value (US$ in
Thousands)
Gain (Loss) or
Disposal (US$
in Thousands)
Shares/Units
(In Thousands)
Amount (US$
in Thousands)
Beginning Balance
Acquisition
Disposal (Note 2)
Ending Balance (Note 3)
-
US$ -
3,062
US$ 3,153
-
US$ -
US$ -
US$ -
2,854
US$ 2,926
Company
Name
Marketable Securities Type and
Name
Federal Natl Mtg Assn Gtd Remi
Federal Natl Mtg Assn Remic
Fnma Pool 257245
Fnma Pool 691283
Fnma Pool 852300
Fnma Pool 852347
Fnma Pool 888738
Fnma Pool 888793
Fnma Pool 955778
Fnr 2006 60 Co
Freddie Mac
Government bond
United States Treas Nts
US Treasury N/B
US Treasury N/B
US Treasury Nts
Societe De Financement De Lec
Corporate issued note
Barclays U.S. Fdg LLC
Royal Bk of Scotland
Money market fund
Ssga Cash Mgmt Global Offshore
Corporate issued asset-backed
securities
Banc Amer Coml Mtg Inc.
Cit Equip Coll Tr
Credit Suisse First Boston Mtg
First Un Natl Bk Coml Mtg Tr
Lb Ubs Coml Mtg Tr
Tiaa Seasoned Coml Mtg Tr
Wamu Mtg
Financial
Statement
Account
Av ailable-for-sale
financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
Av ailable-for-sale
financial assets
〃
〃
〃
He ld-to-maturity
financial assets
Av ailable-for-sale
financial assets
〃
Av ailable-for-sale
financial assets
Av ailable-for-sale
financial assets
〃
〃
〃
〃
〃
〃
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,036
-
-
9,276
3,761
-
-
7,680
3,239
4,500
-
41,900
3,520
50,000
15,000
US$ 3,127
-
-
US$ 9,843
US$ 3,991
-
-
US$ 8,138
US$ 3,352
US$ 4,490
-
3,415
2,932
9,206
3,721
3,659
4,071
7,395
-
-
-
US$ 3,513
US$ 3,028
US$ 9,773
US$ 3,950
US$ 3,828
US$ 4,265
US$ 7,829
-
-
-
US$ 3,437
US$ 2,920
US$ 9,770
US$ 3,949
US$ 3,801
US$ 4,207
US$ 7,836
-
-
-
US$ 76
US$ 108
US$ 3
US$ 1
US$ 27
US$ 58
US$ (7)
-
-
2,871
-
-
-
-
-
-
-
3,062
4,500
US$ 2,953
-
-
-
-
-
-
-
US$ 3,153
US$ 4,491
-
10,357
US$ 11,258
US$ 11,258
-
10,536
US$ 10,548
US$ 41,931
US$ 3,498
US$ 52,184
US$ 15,000
20,500
1,350
12,300
-
US$ 20,564
US$ 1,358
US$ 12,826
-
US$ 20,515
US$ 1,341
US$ 12,837
-
US$ 49
US$ 17
US$ (11)
-
21,400
2,170
37,700
15,000
US$ 21,394
US$ 2,158
US$ 39,012
US$ 15,000
-
3,456
2,963
-
-
3,669
4,105
-
-
-
-
US$ 3,513
US$ 3,039
-
-
US$ 3,776
US$ 4,242
-
-
-
10,266
US$ 10,374
-
-
-
-
-
-
-
-
-
-
-
-
4,500
US$ 4,489
5,000
US$ 4,982
-
-
-
-
-
-
-
-
-
4,500
US$ 4,489
5,000
US$ 4,982
8,858
US$ 8,858
30,435
US$ 30,435
495,908
US$ 495,908
517,485
US$ 517,485
US$ 517,485
4,597
US$ 4,584
4,000
4,353
4,788
3,737
3,397
3,214
US$ 3,884
US$ 4,349
US$ 4,715
US$ 3,495
US$ 3,163
US$ 2,925
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,472
US$ 4,480
US$ 4,584
US$ (104)
4,000
4,090
4,774
3,725
3,375
3,172
US$ 3,925
US$ 4,085
US$ 4,780
US$ 3,537
US$ 3,283
US$ 3,106
US$ 3,996
US$ 4,188
US$ 4,954
US$ 3,697
US$ 3,392
US$ 3,114
US$ (71)
US$ (103)
US$ (174)
US$ (160)
US$ (109)
US$ (8)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(Concluded)
Note 1: The shares/units and amount of marketable securities acquired do not include stock dividends from investees.
Note 2: The data for marketable securities disposed exclude bonds maturities and capital return from subsidiaries.
Note 3: The ending balance includes the amortization of premium/discount on bonds investments, unrealized valuation gains/losses on financial assets, translation adjustments or equity in earnings/losses of equity method investees.
36
TABLE 3
Taiwan Semiconductor Manufacturing Company Limited
ACQUISITION OF INDIVIDUAL REAL ESTATE PROPERTIES AT COSTS OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 2009
(Amounts in Thousands of New Taiwan Dollars)
Company Name
Types of Property
Transaction Date
Transaction
Amount
Payment Term
Counter-party
Nature of
Relationships
TSMC
Fab
Oc tober 25, 2009
$ 514,777
By the construction
Fu Tsu Construction
-
to December 30,
2009
progress
Co., Ltd. and China
Steel Structure Co.,
Ltd.
Prior Transaction of Related Counter-party
Relationships
Transfer Date
Amount
Price Reference
N/A
N/A
N/A
Public bidding
Owner
N/A
Purpose of
Acquisition
Ma nufacturing
purpose
Other Terms
None
TABLE 4
Taiwan Semiconductor Manufacturing Company Limited and Investees
TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 2009
(Amounts in Thousands of New Taiwan Dollars)
Company Name
Related Party
Nature of Relationships
Purchases/Sales
Amount
% to Total
Payment Terms
Unit Price (Note)
Payment Terms
(Note)
Ending Balance
% to Total
Note
Transaction Details
Abnormal Transaction
Notes/Accounts Payable or Receivable
TSMC
TSMC North America
GUC
VIS
WaferTech
TSMC China
SSMC
VIS
Subsidiary
Investee with a controlling financial interest
Investee accounted for using equity method
Indirect subsidiary
Subsidiary
Investee accounted for using equity method
Investee accounted for using equity method
GUC
TSMC North America
Same parent company
Sales
Sales
Sales
Purchases
Purchases
Purchases
Purchases
Purchases
$ 161,251,368
2,023,612
139,044
5,560,707
3,787,113
3,537,659
3,312,656
937,160
54
1
-
18
12
11
10
28
Net 30 days after invoice date
Net 30 days after monthly closing
Net 30 days after invoice date
Net 30 days after monthly closing
Net 30 days after monthly closing
Net 30 days after monthly closing
Net 30 days after monthly closing
Ne t 30 days after invoice date/net
45 days after monthly closing
Xintec
OmniVision
Pa rent company of director (represented for
Sales
1,801,655
77
Net 30 days after monthly closing
Xintec)
Note: The sales prices and payment terms to related parties were not significantly different from those of sales to third parties. For other related party transactions, prices and terms were determined in accordance with mutual agreements.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$ 22,203,242
338,502
-
(561,165)
(481,500)
(238,741)
(529,060)
(173,789)
397,695
52
1
-
5
4
2
5
25
73
37
TABLE 5
Taiwan Semiconductor Manufacturing Company Limited and Investees
RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
DECEMBER 31, 2009
(Amounts in Thousands of New Taiwan Dollars)
Company Name
Related Party
Nature of Relationships
Ending Balance
TSMC
Xintec
TSMC North America
GUC
TSMC China
Subsidiary
Investee with a controlling financial interest
Subsidiary
$ 22,211,918
338,502
111,103
OmniVision
Parent company of director (represented for Xintec)
397,695
Note 1: The calculation of turnover days excludes other receivables from related parties.
Note 2: The ending balance primarily consisted of other receivables, which is not applicable for the calculation of turnover days.
Turnover Days
(Note 1)
Overdue
Amounts
Action Taken
38
50
(Note 2)
81
$ 6,438,761
-
-
160
-
-
-
-
Amounts Received in
Subsequent Period
$ 8,899,170
-
-
Allowance for Bad Debts
$ -
-
-
127,130
-
38
TABLE 6
Taiwan Semiconductor Manufacturing Company Limited and Investees
NAMES, LOCATIONS, AND RELATED INFORMATION OF INVESTEES OVER WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCE
DECEMBER 31, 2009
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)
Investor Company
Investee Company
Location
Main Businesses and Products
TSMC
TSMC Global
TSMC Partners
Tortola, British Virgin Islands
Tortola, British Virgin Islands
VIS
SSMC
Hsin-Chu, Taiwan
13,232,288
13,232,288
628,223
Singapore
Fabrication and supply of integrated circuits
5,120,028
5,120,028
Investment activities
Investment in companies involved in the design,
manufacture, and other related business in the
semiconductor industry.
Research, design, development, manufacture,
packaging, testing and sale of memory integrated
circuits, LSI, VLSI and related parts
TSMC China
Shanghai, China
TSMC North America
San Jose, California, U.S.A.
Xintec
VTAF III
VTAF II
GUC
Emerging Alliance
TSMC Europe
TSMC Japan
TSMC Korea
Taoyuan, Taiwan
Cayman Islands
Cayman Islands
Hsin-Chu, Taiwan
Cayman Islands
Amsterdam, the Netherlands
Yokohama, Japan
Seoul, Korea
TSMC Partners
TSMC Development
VisEra Holding Company
Delaware, U.S.A.
Cayman Islands
ISDF II
TSMC Technology
ISDF
TSMC Canada
Mcube Inc. (Common Stock)
Cayman Islands
Delaware, U.S.A.
Cayman Islands
Ontario, Canada
Delaware, U.S.A.
Mcube Inc. (Preferred Stock)
Delaware, U.S.A.
TSMC Development
WaferTech
Washington, U.S.A.
VisEra Holding
Company
VisEra
Hsin-Chu, Taiwan
Manufacturing and selling of integrated circuits
at the order of and pursuant to product design
specifications provided by customers
Sales and marketing of integrated circuits and
semiconductor devices
Wafer level chip size packaging service
Investing in new start-up technology companies
Investing in new start-up technology companies
Researching, developing, manufacturing, testing
and marketing of integrated circuits
Investing in new start-up technology companies
Marketing and engineering supporting activities
Marketing activities
Customer service and technical support activities
Investment activities
Investment in companies involved in the design,
manufacturing, and other related businesses in
the semiconductor industry
Investing in new start-up technology companies
Engineering support activities
Investing in new start-up technology companies
Engineering support activities
Research, development, and sale of micro-
semiconductor device
Research, development, and sale of micro-
semiconductor device
Manufacturing, selling, testing and computer-
aided designing of integrated circuits and other
semiconductor devices
Manufacturing and selling of electronic parts and
providing turn-key services in back-end color filter
fabrication, package, test, and optical solutions
Original Investment Amount
Balance as of December 31, 2009
December 31,
2009 (Foreign
Currencies in
Thousands)
December 31,
2008 (Foreign
Currencies in
Thousands)
Shares (In
Thousands)
Percentage of
Ownership
Carrying
Value (Foreign
Currencies in
Thousands)
Net Income
(Losses) of
the Investee
(Foreign
Currencies in
Thousands)
Equity in
the Earnings
(Losses)
(Note 1)
(Foreign
Currencies in
Thousands)
Note
$ 42,327,245
31,456,130
$ 42,327,245
31,456,130
1
988,268
100
100
$ 45,397,256
32,545,619
$ 505,232
(54,907)
$ 505,232
(54,907)
Subsidiary
Subsidiary
12,180,367
12,180,367
333,718
333,718
1,357,890
1,357,890
1,703,163
1,093,943
386,568
959,044
15,749
83,760
13,656
1,440,241
1,036,422
386,568
986,797
15,749
83,760
13,656
US$ 0.001
US$ 43,000
US$ 0.001
US$ 43,000
US$ 21,415
US$ 0.001
US$ 7,680
US$ 2,300
US$ 800
US$ 32,289
US$ 0.001
US$ 7,680
US$ 2,300
-
US$ 1,000
-
314
-
11,000
93,081
-
-
46,688
-
-
6
80
1
43,000
21,415
1
7,680
2,300
5,333
1,000
37
39
9,365,232
89,241
(368,710)
6,157,141
1,608,714
427,022
Investee accounted for
using equity method
Investee accounted for
using equity method
100
2,961,043
(3,244,458)
(3,242,122)
Subsidiary
100
2,723,727
360,562
360,562
Subsidiary
1,475,014
10,597
(20,659)
Investee with a controlling
41
98
98
35
99
100
100
100
100
49
97
100
97
100
70
1,309,615
1,122,810
983,126
305,866
159,467
135,663
18,519
(224,620)
(178,442)
412,771
(92,606)
35,445
4,203
2,392
US$ 340,387
US$ 70,967
US$ 9,293
US$ 322
US$ 13,741
US$ 9,071
US$ 7,336
US$ 3,193
US$ 800
US$ 960
US$ 662
US$ (1,504)
US$ 210
US$ (24)
10
US$ 1,000
US$ (24)
(223,546)
(174,873)
146,384
(92,143)
35,445
4,203
2,392
Note 2
Note 2
Note 2
Note 2
Note 2
Note 2
Note 2
Note 2
financial interest
Subsidiary
Subsidiary
Investee with a controlling
financial interest
Subsidiary
Subsidiary (Note 3)
Subsidiary (Note 3)
Subsidiary (Note 3)
Subsidiary
Investee accounted for
using equity method
Subsidiary
Subsidiary
Subsidiary
Subsidiary (Note 3)
Investee accounted for
using equity method
Investee accounted for
using equity method
US$ 330,000
US$ 380,000
293,637
100
US$ 154,432
US$ (125)
Note 2
Subsidiary
US$ 91,041
US$ 91,041
253,120
89
US$ 125,983
US$ 313
Note 2
Subsidiary
(Continued)
39
Original Investment Amount
Balance as of December 31, 2009
Shares (In
Thousands)
Percentage of
Ownership
Carrying
Value (Foreign
Currencies in
Thousands)
Net Income
(Losses) of
the Investee
(Foreign
Currencies in
Thousands)
Equity in
the Earnings
(Losses)
(Note 1)
(Foreign
Currencies in
Thousands)
Note
9,180
4,500
-
-
-
800
1
-
550
-
59
42
100
62
31
100
100
100
100
7
US$ 2,112
US$ (1,105)
Note 2
Subsidiary
US$ 566
US$ (1,239)
Note 2
Investee accounted for
using equity method
US$ 823
-
US$ (127)
-
Note 2
Note 2
Subsidiary (Note 3)
Subsidiary (Note 3)
-
-
Note 2
Subsidiary (Note 3)
$ 38,617
12,899
5,213
17,466
$ 5,617
1,608
353
(133)
Note 2
Note 2
Note 2
Note 2
Subsidiary
Subsidiary (Note 3)
Subsidiary (Note 3)
Subsidiary (Note 3)
-
-
Note 2
Subsidiary (Note 3)
(Concluded)
Investor Company
Investee Company
Location
Main Businesses and Products
VTAF III
Mutual-Pak Technology Co., Ltd.
Taipei, Taiwan
Aiconn Technology Corp.
Taipei, Taiwan
Manufacturing and selling of electronic parts and
researching, developing, and testing of RFID
Wholesaling telecommunication equipments, and
manufacturing wired and wireless communication
equipments
December 31,
2009 (Foreign
Currencies in
Thousands)
December 31,
2008 (Foreign
Currencies in
Thousands)
US$ 3,088
US$ 1,705
US$ 1,777
US$ 1,777
VTAF II
GUC
Growth Fund
VTA Holdings
VTA Holdings
GUC-NA
GUC-Japan
GUC-Europe
GUC-BVI
Cayman Islands
Delaware, U.S.A.
Investing in new start-up technology companies
Investing in new start-up technology companies
US$ 1,550
-
US$ 700
-
Delaware, U.S.A.
Investing in new start-up technology companies
-
-
U.S.A.
Japan
The Netherlands
British Virgin Islands
Consulting services in main products
Consulting services in main products
Consulting services in main products
Investment activities
US$ 800
JPY 30,000
EUR 100
US$ 550
US$ 800
JPY 30,000
EUR 50
-
Emerging Alliance
VTA Holdings
Delaware, U.S.A.
Investing in new start-up technology companies
-
-
Note 1: Equity in earnings/losses of investees include the effect of unrealized gross profit from affiliates.
Note 2: The equity in the earnings/losses of the investee company is not reflected herein as such amount is already included in the equity in the earnings/losses of the investor company.
Note 3: Equity in earnings/losses was determined based on the unaudited financial statements.
40
TABLE 7
Taiwan Semiconductor Manufacturing Company Limited
INFORMATION OF INVESTMENT IN MAINLAND CHINA
FOR THE YEAR ENDED DECEMBER 31, 2009
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)
Investee Company
Main Businesses and Products
Total Amount of Paid-in Capital
(RMB in Thousand)
Method of Investment
TSMC China
Ma nufacturing and selling of
integrated circuits at the order
of and pursuant to product
design specifications provided by
customers
$ 12,180,367
(RMB 3,070,623)
(Note 1)
Accumulated Outflow of
Investment from Taiwan as of
January 1, 2009
(US$ in Thousand)
$ 12,180,367
(US$ 371,000)
Investment Flows
Outflow
Inflow
$ -
$ -
Accumulated Outflow of
Investment from Taiwan as of
December 31, 2009
(US$ in Thousand)
$ 12,180,367
(US$ 371,000)
Percentage of Ownership
100%
Equity in the Earnings (Losses)
(Note 2)
Carrying Value as of
December 31, 2009
Accumulated Inward Remittance
of Earnings as of
December 31, 2009
$ (3,242,122)
$ 2,961,043
$ -
Accumulated Investment in Mainland China as of
December 31, 2009 (US$ in Thousand)
Investment Amounts Authorized by
Investment Commission, MOEA (US$ in Thousand)
Upper Limit on Investment (US$ in Thousand)
$ 12,180,367
(US$ 371,000)
$ 12,180,367
(US$ 371,000)
$ 12,180,367
(US$ 371,000)
Note 1: Direct investments US$371,000 thousand in TSMC China.
Note 2: Amount was recognized based on the audited financial statements.
41
8. Consolidated Financial Statements for the Years Ended December 31, 2009 and 2008 and Independent Auditors’ Report
REPRESENTATION LETTER
The entities that are required to be included in the combined financial statements of Taiwan Semiconductor
Manufacturing Company Limited as of and for the year ended December 31, 2009, under the Criteria
Governing the Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial
Statements of Affiliated Enterprises are the same as those included in the consolidated financial statements
prepared in conformity with the revised Statement of Financial Accounting Standards No. 7, “Consolidated
Financial Statements”. In addition, the information required to be disclosed in the combined financial
statements is included in the consolidated financial statements. Consequently, Taiwan Semiconductor
Manufacturing Company Limited and Subsidiaries do not prepare a separate set of combined financial
statements.
Very truly yours,
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED
By
MORRIS CHANG
Chairman
January 22, 2010
42
IINDEPENDENT AUDITORS’ REPORT
Notice to Readers
The accompanying consolidated financial statements are intended only to present the consolidated
financial position, results of operations and cash flows in accordance with accounting principles and
practices generally accepted in the Republic of China and not those of any other jurisdiction. The standards,
procedures and practices to audit such consolidated financial statements are those generally accepted and
applied in the Republic of China.
For the convenience of readers, the auditors’ report and the accompanying consolidated financial statements
have been translated into English from the original Chinese version prepared and used in the Republic of
China. If there is any conflict between the English version and the original Chinese version or any difference
in the interpretation of the two versions, the Chinese-language auditors’ report and consolidated financial
statements shall prevail.
The Board of Directors and Shareholders
Taiwan Semiconductor Manufacturing Company Limited
We have audited the accompanying consolidated balance sheets of Taiwan Semiconductor Manufacturing
Company Limited and subsidiaries as of December 31, 2009 and 2008, and the related consolidated
statements of income, changes in shareholders’ equity and cash flows for the years then ended. These
consolidated financial statements are the responsibility of the Company’s management. Our responsibility is
to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the Rules Governing the Audit of Financial Statements by
Certified Public Accountants and auditing standards generally accepted in the Republic of China. Those rules
and standards require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the consolidated financial position of Taiwan Semiconductor Manufacturing Company Limited
and subsidiaries as of December 31, 2009 and 2008, and the results of their consolidated operations and
their consolidated cash flows for the years then ended in conformity with the Guidelines Governing the
Preparation of Financial Reports by Securities Issuers and accounting principles generally accepted in the
Republic of China.
As discussed in Note 3 to the consolidated financial statements, effective January 1, 2009, Taiwan
Semiconductor Manufacturing Company Limited and subsidiaries adopted the newly revised Statements of
Financial Accounting Standards No. 10, “Accounting for Inventories”. In addition, effective January 1, 2008,
Taiwan Semiconductor Manufacturing Company Limited and subsidiaries adopted Interpretation 2007-052,
“Accounting for Bonuses to Employees, Directors and Supervisors”, issued by the Accounting Research and
Development Foundation of the Republic of China and relevant requirements promulgated by the Financial
Supervisory Commission of the Executive Yuan.
January 22, 2010
43
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2009 AND 2008
(In Thousands of New Taiwan Dollars, Except Par Value)
ASSETS
CURRENT ASSETS
Cash and cash equivalents (Notes 2 and 4)
Financial assets at fair value through profit or loss (Notes 2, 5 and 24)
Available-for-sale financial assets (Notes 2, 6 and 24)
Held-to-maturity financial assets (Notes 2, 7 and 24)
Receivables from related parties
Notes and accounts receivable
Allowance for doubtful receivables (Notes 2 and 8)
Allowance for sales returns and others (Notes 2 and 8)
Other receivables from related parties
Other financial assets (Note 26)
Inventories (Notes 2, 3 and 9)
Deferred income tax assets (Notes 2 and 18)
Prepaid expenses and other current assets
Total current assets
LONG-TERM INVESTMENTS (Notes 2, 6, 7, 10, 11 and 24)
Investments accounted for using equity method
Available-for-sale financial assets
Held-to-maturity financial assets
Financial assets carried at cost
Total long-term investments
PROPERTY, PLANT AND EQUIPMENT (Notes 2, 12 and 26)
Cost
Land and land improvements
Buildings
Machinery and equipment
Office equipment
Leased assets
Accumulated depreciation
Advance payments and construction in progress
2009
Amount
$ 171,276,341
186,081
14,389,946
9,944,843
12,524
44,637,642
(543,325)
(8,724,481)
121,292
1,849,987
20,913,751
4,370,309
1,368,838
259,803,748
17,871,208
1,358,049
15,553,242
3,063,004
37,845,503
2008
Amount
$ 194,613,752
55,730
10,898,715
5,881,999
407
25,023,321
(455,751)
(6,071,026)
99,918
1,911,699
14,876,645
3,969,330
1,813,692
252,618,431
18,907,158
2,032,658
15,426,252
3,615,447
39,981,515
%
29
-
2
2
-
7
-
(1)
-
-
4
1
-
44
3
-
3
1
7
%
35
-
2
1
-
4
-
(1)
-
-
3
1
-
45
3
-
3
1
7
934,090
142,294,558
775,653,489
13,667,747
714,424
933,264,308
(693,743,886)
34,154,365
-
24
130
2
-
156
(117)
6
953,857
132,249,996
697,498,743
12,430,800
722,339
843,855,735
(618,816,267)
18,605,882
-
24
125
2
-
151
(110)
3
Net property, plant and equipment
273,674,787
45
243,645,350
44
INTANGIBLE ASSETS
Goodwill (Note 2)
Deferred charges, net (Notes 2 and 13)
Total intangible assets
OTHER ASSETS
Deferred income tax assets (Notes 2 and 18)
Refundable deposits
Others (Notes 2 and 26)
Total other assets
5,931,318
6,458,554
12,389,872
7,988,303
2,733,143
260,864
10,982,310
1
1
2
1
1
-
2
6,044,392
7,125,828
13,170,220
6,636,873
2,767,199
97,001
9,501,073
1
1
2
1
1
-
2
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
2009
2008
Amount
%
Amount
%
Financial liabilities at fair value through profit or loss (Notes 2, 5 and 24)
Accounts payable
Payables to related parties (Note 25)
Income tax payable (Notes 2 and 18)
Salary and bonus payable
Accrued profit sharing to employees and bonus to directors and supervisors
(Notes 2, 3 and 20)
Payables to contractors and equipment suppliers
Accrued expenses and other current liabilities (Notes 16, 24 and 28)
Current portion of bonds payable and bank loans (Notes 14, 15, 24 and 26)
$ 25
10,905,884
783,007
8,800,249
9,317,035
6,818,343
28,924,265
12,635,182
949,298
-
2
-
1
2
1
5
2
-
$ 85,187
5,553,151
489,857
9,331,825
2,215,780
15,369,730
7,998,773
7,540,055
8,222,398
-
1
-
2
-
3
1
1
2
Total current liabilities
79,133,288
13
56,806,756
10
LONG-TERM LIABILITIES
Bonds payable (Notes 14 and 24)
Long-term bank loans (Notes 15, 24 and 26)
Other long-term payables (Notes 16, 24 and 28)
Obligations under capital leases (Notes 2 and 24)
Total long-term liabilities
OTHER LIABILITIES
Accrued pension cost (Notes 2 and 17)
Guarantee deposits (Note 28)
Deferred credits (Note 2)
Others
Total other liabilities
Total liabilities
EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF THE PARENT
Capital stock - NT$10 par value (Notes 20 and 22)
Authorized: 28,050,000 thousand shares
Issued: 25,902,706 thousand shares in 2009
25,625,437 thousand shares in 2008
Capital surplus (Notes 2 and 20)
Retained earnings (Note 20)
Appropriated as legal capital reserve
Appropriated as special capital reserve
Unappropriated earnings
Others (Notes 2, 22 and 24)
Cumulative translation adjustments
Unrealized gain/loss on financial instruments
Equity attributable to shareholders of the parent
MINORITY INTERESTS (Note 2)
Total shareholders’ equity
4,500,000
578,560
5,602,420
707,499
11,388,479
3,797,032
1,006,023
185,689
137,161
5,125,905
1
-
1
-
2
1
-
-
-
1
4,500,000
1,420,476
9,548,226
722,339
16,191,041
3,701,584
1,484,495
316,537
43,709
5,546,325
1
-
2
-
3
1
-
-
-
1
95,647,672
16
78,544,122
14
259,027,066
55,486,010
77,317,710
-
104,564,972
181,882,682
(1,766,667)
453,621
(1,313,046)
495,082,712
3,965,836
499,048,548
43
9
13
-
18
31
-
-
-
83
1
84
256,254,373
49,875,255
67,324,393
391,857
102,337,417
170,053,667
481,158
(287,342)
193,816
476,377,111
3,995,356
480,372,467
46
9
12
-
18
30
-
-
-
85
1
86
TOTAL
$ 594,696,220
100
$ 558,916,589
100
TOTAL
$ 594,696,220
100
$ 558,916,589
100
The accompanying notes are an integral part of the consolidated financial statements.
(With Deloitte & Touche audit report dated January 22, 2010)
44
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)
2009
Amount
%
2008
Amount
%
GROSS SALES (Notes 2 and 25)
$ 309,655,614
$ 341,983,355
NON-OPERATING EXPENSES AND LOSSES
SALES RETURNS AND ALLOWANCES (Notes 2 and 8)
13,913,375
8,825,695
NET SALES
295,742,239
100
333,157,660
100
COST OF SALES (Notes 3, 9, 19 and 25)
GROSS PROFIT
OPERATING EXPENSES (Note 19)
Research and development
General and administrative
Marketing
Total operating expenses
INCOME FROM OPERATIONS
NON-OPERATING INCOME AND GAINS
Interest income (Note 2)
Settlement income (Note 28)
Valuation gain on financial instruments, net (Notes 2, 5 and 24)
Technical service income (Notes 25 and 28)
Equity in earnings of equity method investees, net (Notes 2 and 10)
Ga in on settlement and disposal of financial assets, net (Notes 2 and
24)
Foreign exchange gain, net (Note 2)
Others (Note 2)
Total non-operating income and gains
166,413,628
129,328,611
21,593,398
11,285,478
4,487,849
37,366,725
91,961,886
2,600,925
1,464,915
594,660
367,013
45,994
15,999
-
564,042
5,653,548
56
44
7
4
2
13
31
1
1
-
-
-
-
-
-
2
191,408,099
141,749,561
21,480,937
11,096,599
4,736,657
37,314,193
104,435,368
5,373,823
951,180
-
1,181,966
701,533
721,050
1,227,653
664,244
10,821,449
58
42
7
3
1
11
31
2
-
-
-
-
-
1
-
3
Impairment of financial assets (Notes 2, 6, 11 and 24)
Foreign exchange loss, net (Note 2)
Interest expense
Valuation loss on financial instruments, net (Notes 2, 5 and 24)
Loss on idle assets (Note 2)
Others (Note 2)
Total non-operating expenses and losses
INCOME BEFORE INCOME TAX
INCOME TAX EXPENSE (Notes 2 and 18)
NET INCOME
ATTRIBUTABLE TO:
Shareholders of the parent
Minority interests
EARNINGS PER SHARE (NT$, Note 23)
Basic earnings per share
Diluted earnings per share
(Continued)
The accompanying notes are an integral part of the consolidated financial statements.
(With Deloitte & Touche audit report dated January 22, 2010)
2009
Amount
$ 913,230
626,971
391,479
-
-
221,107
2,152,787
95,462,647
5,996,424
2008
Amount
$ 1,560,055
-
614,988
1,081,019
210,477
318,032
3,784,571
111,472,246
10,949,009
%
1
-
-
-
-
-
1
32
2
$ 89,466,223
30
$ 100,523,237
$ 89,217,836
248,387
$ 89,466,223
30
-
30
$ 99,933,168
590,069
$ 100,523,237
2009
2008
%
1
-
-
-
-
-
1
33
3
30
30
-
30
Income Attributable to
Shareholders of the Parent
Income Attributable to
Shareholders of the Parent
Before
Income Tax
After
Income Tax
Before
Income Tax
After
Income Tax
$ 3.68
$ 3.67
$ 3.45
$ 3.44
$ 4.26
$ 4.23
$ 3.84
$ 3.81
(Concluded)
45
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
(In Thousands of New Taiwan Dollars, Except Dividends Per Share)
Capital Stock - Common Stock
Retained Earnings
Shares
(In Thousands)
Amount
Capital
Surplus
Legal Capital
Reserve
Special
Capital
Reserve
Unappropriated
Earnings
Total
Cumulative
Translation
Adjustments
Others
Treasury
Stock
Unrealized
Gain (Loss)
on Financial
Instruments
Others Total
Total
Minority
Interests
Total
Shareholders’
Equity
Equity Attributable to Shareholders of the Parent
BALANCE, JANUARY 1, 2008
26,427,104
$ 264,271,037
$ 53,732,682
$ 56,406,684
$ 629,550
$ 161,828,337
$ 218,864,571
$ (1,072,853)
$ 680,997
$ (49,385,032)
$ (49,776,888)
$ 487,091,402
$ 3,594,169
$ 490,685,571
Appropriations of prior year’s earnings
Legal capital reserve
Reversal of special capital reserve
Profit sharing to employees - in cash
Profit sharing to employees - in stock
Cash dividends to shareholders - NT$3.00 per share
Stock dividends to shareholders - NT$0.02 per share
Bonus to directors
Capital surplus transferred to capital stock
Net income in 2008
Ad justment arising from changes in percentage of
ownership in equity method investees
Translation adjustments
Issuance of stock from exercising employee stock
options
Cash dividends received by subsidiaries from parent
company
Valuation loss on available-for-sale financial assets
Net change in unrealized gain (loss) on financial
instruments from equity method investees
Treasury stock repurchased
Treasury stock retired
Decrease in minority interests
-
-
-
393,988
-
51,254
-
76,881
-
-
-
-
-
-
3,939,883
-
512,542
-
768,813
-
-
-
-
-
-
-
-
-
-
(768,813)
-
(137,063)
-
6,027
60,266
166,884
-
-
-
-
102,279
-
-
-
(1,329,817)
-
-
-
(13,298,168)
-
-
-
(3,220,714)
-
10,917,709
-
-
-
-
-
-
-
-
-
(237,693)
-
-
-
-
-
-
-
(10,917,709)
237,693
(3,939,883)
(3,939,883)
(76,881,311)
(512,542)
(176,890)
-
99,933,168
-
-
(3,939,883)
(3,939,883)
(76,881,311)
(512,542)
(176,890)
-
99,933,168
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(63,293,563)
-
-
-
(63,293,563)
-
-
-
-
-
-
-
-
-
-
-
1,554,011
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(826,251)
(142,088)
-
-
-
BALANCE, DECEMBER 31, 2008
25,625,437
256,254,373
49,875,255
67,324,393
391,857
102,337,417
170,053,667
481,158
(287,342)
Appropriations of prior year’s earnings
Legal capital reserve
Reversal of special capital reserve
Cash dividends to shareholders - NT$3.00per share
Stock dividends to shareholders - NT$0.02per share
Profit sharing to employees - in stock
Capital surplus transferred to capital stock
Net income in 2009
Adjustment arising from changes in percentage of
ownership in equity method investees
Translation adjustments
Issuance of stock from exercising employee stock
options
Valuation gain on available-for-sale financial assets
Net change in unrealized gain (loss) on financial
instruments from equity method investees
Decrease in minority interests
-
-
-
51,251
141,870
76,876
-
-
-
7,272
-
-
-
-
-
-
512,509
1,418,699
768,763
-
-
-
72,722
-
-
-
-
-
-
-
6,076,289
(768,763)
-
115,418
-
187,811
-
-
-
9,993,317
-
-
-
-
-
-
-
(391,857)
-
-
-
-
-
(9,993,317)
391,857
(76,876,312)
(512,509)
-
-
89,217,836
-
-
(76,876,312)
(512,509)
-
-
89,217,836
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2,247,825)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
622,541
118,422
-
-
-
-
-
-
-
-
-
-
-
-
(3,939,883)
-
(76,881,311)
-
(176,890)
-
99,933,168
-
1,554,011
(137,063)
1,554,011
-
-
-
-
-
-
-
-
590,069
11,700
(68,792)
-
-
(3,939,883)
-
(76,881,311)
-
(176,890)
-
100,523,237
(125,363)
1,485,219
-
227,150
-
227,150
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(826,251)
102,279
(826,251)
-
(30,427,413)
79,812,445
-
(142,088)
(30,427,413)
79,812,445
-
(142,088)
(30,427,413)
-
-
-
(17,048)
-
-
-
(114,742)
102,279
(843,299)
(142,088)
(30,427,413)
-
(114,742)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
193,816
476,377,111
3,995,356
480,372,467
-
-
-
-
-
-
-
-
-
(76,876,312)
-
7,494,988
-
89,217,836
-
(2,247,825)
115,418
(2,247,825)
-
622,541
118,422
-
260,533
622,541
118,422
-
-
-
-
-
-
-
248,387
(38,966)
39,786
-
6,047
-
(284,774)
-
-
(76,876,312)
-
7,494,988
-
89,466,223
76,452
(2,208,039)
260,533
628,588
118,422
(284,774)
BALANCE, DECEMBER 31, 2009
25,902,706
$ 259,027,066
$ 55,486,010
$ 77,317,710
$ -
$ 104,564,972
$ 181,882,682
$ (1,766,667)
$ 453,621
$ -
$ (1,313,046)
$ 495,082,712
$ 3,965,836
$ 499,048,548
Note: TSMC’s profit sharing to employees and bonus to directors in the amount of NT$6,771,338 thousand and NT$15,148,057 thousand, respectively, had been charged against earnings of 2009 and 2008.
The accompanying notes are an integral part of the consolidated financial statements.
(With Deloitte & Touche audit report dated January 22, 2010)
46
2009
2008
$ 89,217,836
248,387
$ 99,933,168
590,069
Decrease in refundable deposits
Decrease (increase) in other assets
2009
2008
$ 34,056
1,176
$ 10,570
(8,163)
Net cash used in investing activities
(96,468,483)
(8,041,884)
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
(In Thousands of New Taiwan Dollars)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income attributable to shareholders of the parent
Net income attributable to minority interests
Ad justments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization
Amortization of premium/discount of financial assets
Impairment of financial assets
Loss (gain) on disposal of available-for-sale financial assets, net
Gain on held-to-maturity financial assets redeemed by the issuer
Gain on disposal of financial assets carried at cost, net
Equity in earnings of equity method investees, net
Dividends received from equity method investees
Gain on disposal of property, plant and equipment and other assets,
net
Loss on idle assets
Deferred income tax
Changes in operating assets and liabilities:
Decrease (increase) in:
Financial assets and liabilities at fair value through profit or loss
Receivables from related parties
Notes and accounts receivable
Allowance for doubtful receivables
Allowance for sales returns and others
Other receivables from related parties
Other financial assets
Inventories
Prepaid expenses and other current assets
Increase (decrease) in:
Accounts payable
Payables to related parties
Income tax payable
Salary and bonus payable
Accrued profit sharing to employees and bonus to directors and
supervisors
Accrued expenses and other current liabilities
Accrued pension cost
Deferred credits
80,814,748
21,483
913,230
20,337
(16,091)
(20,245)
(45,994)
1,239,490
(45,475)
-
(1,752,409)
(215,513)
(12,117)
(19,614,321)
87,574
2,653,455
(21,374)
7,834
(6,037,106)
585,430
4,916,885
293,150
(531,576)
7,101,255
(1,056,399)
1,356,269
95,448
(237,726)
81,512,191
(93,393)
1,560,055
(637,219)
-
(83,831)
(701,533)
1,661,134
(100,285)
210,477
2,279,414
1,412,531
10,478
22,180,805
(246,056)
1,981,991
143,702
(425,937)
8,985,615
(443,462)
(6,021,731)
(1,013,519)
(1,794,303)
(17,670)
15,369,730
(3,936,757)
36,062
(858,161)
Net cash provided by operating activities
159,966,465
221,493,565
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions of:
Property, plant and equipment
Available-for-sale financial assets
Held-to-maturity financial assets
Investments accounted for using equity method
Financial assets carried at cost
Proceeds from disposal or redemption of:
Available-for-sale financial assets
Held-to-maturity financial assets
Financial assets carried at cost
Property, plant and equipment and other assets
Proceeds from return of capital by investees
Increase in deferred charges
(87,784,906)
(38,800,577)
(12,224,353)
(42,947)
(321,195)
36,039,978
7,944,800
131,075
24,241
-
(1,469,831)
(59,222,654)
(85,273,867)
(16,523,275)
(55,871)
(463,211)
138,515,023
15,634,620
199,424
194,940
2,345,867
(3,395,287)
(Continued)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term bank loans
Repayments of:
Long-term bank loans
Bonds payable
Decrease in guarantee deposits
Proceeds from exercise of employee stock options
Cash dividends
Profit sharing to employees in cash
Bonus to directors
Repurchase of treasury stock
Decrease in minority interests
Net cash used in financing activities
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
286,574
(378,673)
(8,000,000)
(478,472)
260,533
(76,876,312)
-
-
-
(284,774)
(85,471,124)
(21,973,142)
(1,364,269)
194,613,752
98,400
(468,313)
-
(758,514)
227,150
(76,779,032)
(3,939,883)
(176,890)
(33,480,997)
(114,742)
(115,392,821)
98,058,860
1,568,404
94,986,488
CASH AND CASH EQUIVALENTS, END OF YEAR
$ 171,276,341
$ 194,613,752
SUPPLEMENTAL INFORMATION
Interest paid
Income tax paid
INVESTING AND FINANCING ACTIVITIES AFFECTING BOTH CASH AND
NON-CASH ITEMS
Acquisition of property, plant and equipment
Increase in payables to contractors and equipment suppliers
Nonmonetary exchange trade-out price
Increase in obligations under capital leases
Cash paid
Disposal of property, plant and equipment and other assets
Nonmonetary exchange trade-out price
Cash received
Repurchase of treasury stock
Decrease in accrued expenses and other current liabilities
Cash paid
NONCASH FINANCING ACTIVITIES
Current portion of bonds payable
Current portion of long-term bank loans
Cu rrent portion of other long-term payables (under accrued expenses
$ 580,376
$ 8,088,124
$ 676,318
$ 10,477,018
$ 109,151,226
(21,361,340)
(809)
(4,171)
$ 87,784,906
$ 25,050
(809)
$ 24,241
$ -
-
$ -
$ 60,978,527
(1,742,041)
-
(13,832)
$ 59,222,654
$ 194,940
-
$ 194,940
$ 30,427,413
3,053,584
$ 33,480,997
$ -
$ 949,298
$ 8,000,000
$ 222,398
and other current liabilities)
$ 4,005,307
$ 1,126,546
The accompanying notes are an integral part of the consolidated financial statements.
(With Deloitte & Touche audit report dated January 22, 2010)
(Concluded)
47
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
The consolidated entities were as follows:
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)
1. GENERAL
Taiwan Semiconductor Manufacturing Company, Limited (TSMC), a Republic of China (R.O.C.) corporation,
was incorporated on February 21, 1987. TSMC is a dedicated foundry in the semiconductor industry
which engages mainly in the manufacturing, selling, packaging, testing and computer-aided designing of
integrated circuits and other semiconductor devices and the manufacturing of masks. On September 5,
1994, its shares were listed on the Taiwan Stock Exchange (TSE). On October 8, 1997, TSMC listed some of
its shares of stock on the New York Stock Exchange (NYSE) in the form of American Depositary Shares (ADSs).
As of December 31, 2009 and 2008, TSMC and its subsidiaries had 26,390 and 24,834 employees,
respectively.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements are presented in conformity with the Guidelines Governing the
Preparation of Financial Reports by Securities Issuers and accounting principles generally accepted in the
R.O.C.
For the convenience of readers, the accompanying consolidated financial statements have been translated
into English from the original Chinese version prepared and used in the R.O.C. If there is any conflict
between the English version and the original Chinese version or any difference in the interpretation of the
two versions, the Chinese-language consolidated financial statements shall prevail.
Name of Investor
Name of Investee
TSMC
TSMC North America
TSMC Japan Limited (TSMC Japan)
TSMC Partners, Ltd. (TSMC Partners)
TSMC Korea Limited (TSMC Korea)
Taiwan Semiconductor Manufacturing
Company Europe B.V. (TSMC Europe)
Percentage of Ownership
December 31
Remark
2009
100%
100%
100%
100%
100%
2008
100%
100%
100%
100%
100%
-
-
-
-
-
TSMC International Investment Ltd.
-
100%
In June 2009, TSMC International was merged
(TSMC International)
TSMC Global Ltd. (TSMC Global)
TSMC China Company Limited (TSMC
China)
VentureTech Alliance Fund III, L.P.
(VTAF III)
VentureTech Alliance Fund II, L.P.
(VTAF II)
Emerging Alliance Fund, L.P.
(Emerging Alliance)
Global Unichip Corporation (GUC)
Xintec Inc. (Xintec)
TSMC Partners
TSMC Design Technology Canada Inc.
(TSMC Canada)
TSMC Technology, Inc. (TSMC
Technology)
TSMC Development, Inc. (TSMC
Development)
InveStar Semiconductor Development
Fund, Inc. (ISDF)
InveStar Semiconductor Development
Fund, Inc. (II) LDC. (ISDF II)
into TSMC Partners.
100%
100%
98%
98%
100%
100%
98%
98%
99.5%
99.5%
-
-
-
-
-
35%
41%
100%
100%
100%
97%
97%
36%
42%
TS MC has a controlling interest over the financial,
operating and personnel hiring decisions of GUC.
TS MC obtained three out of five director positions
and has a controlling interest in Xintec.
100%
-
-
-
-
-
Its previous shareholder, TSMC International, was
merged into TSMC Partners in June 2009.
Its previous shareholder, TSMC International, was
merged into TSMC Partners in June 2009.
Its previous shareholder, TSMC International, was
merged into TSMC Partners in June 2009.
Its previous shareholder, TSMC International, was
merged into TSMC Partners in June 2009.
Significant accounting policies are summarized as follows:
TSMC
WaferTech, LLC (WaferTech)
99.9%
99.9%
Development
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of all directly and indirectly
majority owned subsidiaries of TSMC, and the accounts of investees in which TSMC’s ownership percentage
is less than 50% but over which TSMC has a controlling interest. All significant intercompany balances and
transactions are eliminated upon consolidation.
VTAF III
Mutual-Pak Technology Co., Ltd.
(Mutual-Pak)
Growth Fund Limited (Growth Fund)
VentureTech Alliance Holdings, LLC
(VTA Holdings)
VTAF III, VTAF II
and Emerging
Alliance
GUC
Global Unichip Corporation-NA
(GUC-NA)
Global Unichip Japan Co., Ltd.
(GUC-Japan)
Global Unichip Europe B.V.
(GUC-Europe)
Global Unichip (BVI) Corp. (GUC- BVI)
59%
100%
100%
100%
100%
100%
100%
48
-
-
-
-
-
-
-
51%
100%
100%
100%
100%
100%
-
Newly established in February 2009.
The following diagram presents information regarding the relationship and ownership percentages between
TSMC and its consolidated investees as of December 31, 2009:
TSMC
100%
100%
100%
100%
100%
100%
100%
98%
98%
99.5%
35%
41%
TSMC North
America
TSMC Japan
TSMC
Partners
TSMC Korea
TSMC Europe
TSMC Global
TSMC China
VTAF III
VTAF II
Emerging
Alliance
GUC
Xintec
100%
100%
100%
97%
97%
59%
100%
100%
100%
100%
100%
TSMC
Canada
TSMC
Technology
TSMC
Development
ISDF
ISDF II
Mutual-Pak
Growth
Fund
VTA
Holdings
GUC-NA
GUC-Japan GUC-Europe
GUC-BVI
62%
31%
7%
99.9%
WaferTech
TSMC North America is engaged in selling and marketing of integrated circuits and semiconductor
devices. TSMC Japan, TSMC Korea and TSMC Europe are engaged mainly in marketing or customer service,
engineering and technical supporting activities. TSMC Partners is engaged in investment in companies
involved in the design, manufacture, and other related business in the semiconductor industry. TSMC Global
and TSMC Development are engaged in investing activities. TSMC China is engaged in the manufacturing
and selling of integrated circuits pursuant to the orders from and product design specifications provided by
customers. Emerging Alliance, VTAF II, VTAF III, VTA Holdings, ISDF, ISDF II, and Growth Fund are engaged
in investing in new start-up technology companies. TSMC Canada and TSMC Technology are engaged
mainly in engineering support activities. WaferTech is engaged in the manufacturing, selling, testing and
computer-aided designing of integrated circuits and other semiconductor devices. GUC is engaged in
researching, developing, manufacturing, testing and marketing of integrated circuits. GUC-NA, GUC-Japan,
and GUC-Europe are engaged in providing products consulting in North America, Japan, and Europe,
respectively. GUC-BVI is engaged in investing activities. Xintec is engaged in the provision of wafer packaging
service. Mutual-Pak is engaged in the manufacturing and selling of electronic parts, and researching,
developing and testing of RFID.
TSMC Partners and TSMC International were both 100% owned subsidiaries of TSMC. To simplify the
organization structure of investment, TSMC Partners merged TSMC International in June 2009.
Chi Cherng and Hsin Ruey, both 100% owned subsidiaries of TSMC, were engaged in investing activities.
To simplify the organization structure of investment, TSMC merged Chi Cherng and Hsin Ruey in the third
quarter of 2008.
TSMC together with its subsidiaries are hereinafter referred to collectively as the “Company”.
Minority interests in the aforementioned subsidiaries are presented as a separate component of shareholders’
equity.
Use of Estimates
The preparation of consolidated financial statements in conformity with the aforementioned guidelines
and principles requires management to make reasonable assumptions and estimates of matters that are
inherently uncertain. The actual results may differ from management’s estimates.
Classification of Current and Noncurrent Assets and Liabilities
Current assets are assets held for trading purposes and assets expected to be converted to cash, sold or
consumed within one year from the balance sheet date. Current liabilities are obligations incurred for trading
purposes and obligations expected to be settled within one year from the balance sheet date. Assets and
liabilities that are not classified as current are noncurrent assets and liabilities, respectively.
Cash Equivalents
Repurchase agreements collateralized by government bonds, agency bonds, corporate issued notes and
corporate bonds acquired with maturities of less than three months from the date of purchase are classified
as cash equivalents. The carrying amount approximates fair value.
Financial Assets/Liabilities at Fair Value Through Profit or Loss
Derivatives that do not meet the criteria for hedge accounting and financial assets acquired principally for
the purpose of selling them in the near term are initially recognized at fair value, with transaction costs
expensed as incurred. The derivatives and financial assets are remeasured at fair value subsequently with
49
changes in fair value recognized in earnings. A regular way purchase or sale of financial assets is accounted
for using settlement date accounting.
the amortized cost that would have been determined as if no impairment loss had been recognized.
Fair value is determined as follows: Publicly traded stocks - closing prices at the end of the year; derivatives -
using valuation techniques incorporating estimates and assumptions that are consistent with prevailing market
conditions. When the fair value is positive, the derivative is recognized as a financial asset; when the fair value
is negative, the derivative is recognized as a financial liability.
Allowance for Doubtful Receivables
An allowance for doubtful receivables is provided based on a review of the collectability of receivables.
The amount of the allowance for doubtful receivables is determined based on the account aging analysis
and current trends in the credit quality of the customers. TSMC’s provision is set at 1% of the amount of
outstanding receivables.
Available-for-sale Financial Assets
Investments designated as available-for-sale financial assets include debt securities and equity securities.
Available-for-sale financial assets are initially recognized at fair value plus transaction costs that are directly
attributable to the acquisition. Changes in fair value from subsequent remeasurement are reported as a
separate component of shareholders’ equity. The corresponding accumulated gains or losses are recognized
in earnings when the financial asset is derecognized from the balance sheet. A regular way purchase or sale
of financial assets is accounted for using settlement date accounting.
Fair value is determined as follows: open-end mutual funds and money market funds - net asset values at
the end of the year; publicly traded stocks - closing prices at the end of the year; and other debt securities -
average of bid and asked prices at the end of the year.
Cash dividends are recognized as investment income upon resolution of shareholders of an investee but
are accounted for as a reduction to the original cost of investment if such dividends are declared on the
earnings of the investee attributable to the period prior to the purchase of the investment. Stock dividends
are recorded as an increase in the number of shares held and do not affect investment income. The cost per
share is recalculated based on the new total number of shares.
Revenue Recognition and Allowance for Sales Returns and Others
The Company recognizes revenue when evidence of an arrangement exists, the rewards of ownership
and significant risk of the goods has been transferred to the buyer, price is fixed or determinable, and
collectability is reasonably assured. Provisions for estimated sales returns and others are recorded in the year
the related revenue is recognized, based on historical experience, management’s judgment, and any known
factors that would significantly affect the allowance.
Sales prices are determined using fair value taking into account related sales discounts agreed to by the
Company and its customers. Sales agreements typically provide that payment is due 30 days from invoice
date for a majority of the customers and 30 to 45 days after the end of the month in which sales occur for
some customers. Since the receivables from sales are collectible within one year and such transactions are
frequent, fair value of the receivables is equivalent to the nominal amount of the cash to be received.
Inventories
Inventories are recorded at standard cost and adjusted to approximate weighted-average cost on the
balance sheet date.
Any difference between the initial carrying amount of a debt security and the amount due at maturity is
amortized using the effective interest method, with the amortization recognized in earnings.
Prior to January 1, 2009, inventories were stated at the lower of cost or market value. Any write-down was
made on a total-inventory basis. Market value represented replacement cost for raw materials, supplies and
spare parts and net realizable value for work in process and finished goods.
If there is objective evidence which indicates that a financial asset is impaired, a loss is recognized. If, in
a subsequent period, the amount of the impairment loss decreases, for equity securities, the previously
recognized impairment loss is reversed to the extent of the decrease and recorded as an adjustment to
shareholders’ equity; for debt securities, the amount of the decrease is recognized in earnings, provided that
the decrease is clearly attributable to an event which occurred after the impairment loss was recognized.
As stated in Note 3, effective January 1, 2009, inventories are stated at the lower of cost or net realizable
value. Inventory write-downs are made on an item-by-item basis, except where it may be appropriate
to group similar or related items. Net realizable value is the estimated selling price of inventories less all
estimated costs of completion and necessary selling costs.
Held-to-maturity Financial Assets
Debt securities for which the Company has a positive intention and ability to hold to maturity are
categorized as held-to-maturity financial assets and are carried at amortized cost. Those financial assets are
initially recognized at fair value plus transaction costs that are directly attributable to the acquisition. Gains
or losses are recognized at the time of derecognition, impairment or amortization. A regular way purchase
or sale of financial assets is accounted for using settlement date accounting.
If there is objective evidence which indicates that a financial asset is impaired, a loss is recognized. If, in a
subsequent period, the amount of the impairment loss decreases and the decrease is clearly attributable to
an event which occurred after the impairment loss was recognized, the previously recognized impairment
loss is reversed to the extent of the decrease. The reversal may not result in a carrying amount that exceeds
50
Investments Accounted for Using Equity Method
Investments in companies wherein the Company exercises significant influence over the operating and
financial policy decisions are accounted for using the equity method. The Company’s share of the net
income or net loss of an investee is recognized in the “equity in earnings/losses of equity method investees,
net” account. The cost of an investment shall be analyzed and the cost of investment in excess of the fair
value of identifiable net assets acquired, representing goodwill, shall not be amortized. If the fair value
of identifiable net assets acquired exceeds the cost of investment, the excess shall be proportionately
allocated as reductions to fair values of non-current assets (except for financial assets other than investments
accounted for using the equity method and deferred income tax assets). When an indication of impairment
is identified, the carrying amount of the investment is reduced, with the related impairment loss recognized
in earnings.
When the Company subscribes for additional investee’s shares at a percentage different from its existing
ownership percentage, the resulting carrying amount of the investment in the investee differs from the
amount of the Company’s share of the investee’s equity. The Company records such a difference as an
adjustment to long-term investments with the corresponding amount charged or credited to capital surplus.
Gains or losses on sales from the Company to equity method investees or from equity method investees to
the Company are deferred in proportion to the Company’s ownership percentages in the investees until such
gains or losses are realized through transactions with third parties.
If an investee’s functional currency is a foreign currency, differences will result from the translation of the
investee’s financial statements into the reporting currency of the Company. Such differences are charged or
credited to cumulative translation adjustments, a separate component of shareholders’ equity.
Financial Assets Carried at Cost
Investments for which the Company does not exercise significant influence and that do not have a quoted
market price in an active market and whose fair value cannot be reliably measured, such as non-publicly
traded stocks and mutual funds, are carried at their original cost. The costs of non-publicly traded stocks
and mutual funds are determined using the weighted-average method. If there is objective evidence which
indicates that a financial asset is impaired, a loss is recognized. A subsequent reversal of such impairment
loss is not allowed.
The accounting treatment for cash dividends and stock dividends arising from financial assets carried at cost
is the same as that for cash and stock dividends arising from available-for-sale financial assets.
Property, Plant and Equipment, Assets Leased to Others and Idle Assets
Property, plant and equipment and assets leased to others are stated at cost less accumulated depreciation.
Properties covered by agreements qualifying as capital leases are carried at the lower of the leased
equipment’s market value or the present value of the minimum lease payments at the inception date of
the lease, with the corresponding amount recorded as obligations under capital leases. When an indication
of impairment is identified, any excess of the carrying amount of an asset over its recoverable amount is
recognized as a loss. If the recoverable amount increases in a subsequent period, the amount previously
recognized as impairment would be reversed and recognized as a gain. However, the adjusted amount may
not exceed the carrying amount that would have been determined, net of depreciation, as if no impairment
loss had been recognized. Significant additions, renewals and betterments incurred during the construction
period are capitalized. Maintenance and repairs are expensed as incurred.
continuously, and the idle assets are tested for impairment on a periodical basis.
Intangible Assets
Goodwill represents the excess of the consideration paid for acquisition over the fair value of identifiable net
assets acquired. Goodwill is no longer amortized and instead is tested for impairment annually. If an event
occurs or circumstances change which indicate that the fair value of goodwill is more likely than not below
its carrying amount, an impairment loss is recognized. A subsequent reversal of such impairment loss is not
allowed.
Deferred charges consist of technology license fees, software and system design costs and other charges.
The amounts are amortized over the following periods: Technology license fees - the shorter of the
estimated life of the technology or the term of the technology transfer contract; software and system
design costs and other charges - 2 to 5 years. When an indication of impairment is identified, any excess
of the carrying amount of an asset over its recoverable amount is recognized as a loss. If the recoverable
amount increases in a subsequent period, the previously recognized impairment loss would be reversed and
recognized as a gain. However, the adjusted amount may not exceed the carrying amount that would have
been determined, net of amortization, as if no impairment loss had been recognized.
Expenditures related to research activities and those related to development activities that do not meet the
criteria for capitalization are charged to expenses when incurred.
Pension Costs
For employees who participate in defined contribution pension plans, pension costs are recorded based on
the actual contributions made to employees’ individual pension accounts during their service periods. For
employees who participate in defined benefit pension plans, pension costs are recorded based on actuarial
calculations.
Income Tax
The Company applies an inter-period allocation for its income tax whereby deferred income tax assets and
liabilities are recognized for the tax effects of temporary differences, net operating loss carryforwards and
unused tax credits. Valuation allowances are provided to the extent, if any, that it is more likely than not
that deferred income tax assets will not be realized. A deferred tax asset or liability is classified as current
or noncurrent in accordance with the classification of its related asset or liability. However, if a deferred tax
asset or liability does not relate to an asset or liability in the financial statements, then it is classified as either
current or noncurrent based on the expected length of time before it is realized or settled.
Depreciation is computed using the straight-line method over the following estimated service lives: land
improvements - 20 years; buildings - 10 to 20 years; machinery and equipment - 3 to 5 years; office
equipment - 3 to 15 years; and leased assets - 20 years.
Any tax credits arising from purchases of machinery, equipment and technology, research and development
expenditures, personnel training expenditures, and investments in important technology-based enterprises
are recognized using the flow-through method.
Upon sale or disposal of property, plant and equipment and assets leased to others, the related cost and
accumulated depreciation are deducted from the corresponding accounts, with any gain or loss recorded as
non-operating gains or losses in the year of sale or disposal.
When property, plant and equipment are determined to be idle or useless, they are transferred to idle assets
at the lower of the net realizable value or carrying amount. Depreciation on the idle assets is provided
Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.
Income tax on unappropriated earnings (excluding earnings from foreign consolidated subsidiaries) at a rate
of 10% is expensed in the year of shareholder approval which is the year subsequent to the year the earnings
are generated.
51
Stock-based Compensation
Employee stock options that were granted or modified in the period from January 1, 2004 to December
31, 2007 are accounted for by the interpretations issued by the Accounting Research and Development
Foundation of the Republic of China. The Company adopted the intrinsic value method and any
compensation cost determined using this method is recognized in earnings over the employee vesting
period. Employee stock option plans that were granted or modified after December 31, 2007 are accounted
for using fair value method in accordance with Statement of Financial Accounting Standards No. 39,
“Accounting for Share-based Payment”. The Company did not grant or modify any employee stock options
since January 1, 2008.
Profit Sharing to Employees and Bonus to Directors and Supervisors
Effective January 1, 2008, the Company adopted Interpretation 2007-052, “Accounting for Bonuses to
Employees, Directors and Supervisors”, which requires companies to record profit sharing to employees and
bonus to directors and supervisors as an expense rather than as an appropriation of earnings.
Treasury Stock
Treasury stock is stated at cost and shown as a deduction in shareholders’ equity. When TSMC retires
treasury stock, the treasury stock account is reduced and the common stock as well as the capital surplus -
additional paid-in capital are reversed on a pro rata basis. When the book value of the treasury stock exceeds
the sum of the par value and additional paid-in capital, the difference is charged to capital surplus - treasury
stock transactions and to retained earnings for any remaining amount.
TSMC’s stock held by its subsidiaries is treated as treasury stock and reclassified from investments accounted
for using equity method to treasury stock. The gains resulted from disposal of the treasury stock held by
subsidiaries and cash dividends received by subsidiaries from TSMC are recorded under capital surplus -
treasury stock transactions.
Foreign-currency Transactions
Foreign-currency transactions other than derivative contracts are recorded in New Taiwan dollars at the rates
of exchange in effect when the transactions occur. Exchange gains or losses derived from foreign-currency
transactions or monetary assets and liabilities denominated in foreign currencies are recognized in earnings.
At the balance sheet date, monetary assets and liabilities denominated in foreign currencies are revalued at
prevailing exchange rates with the resulting gains or losses recognized in earnings.
Translation of Foreign-currency Financial Statements
The financial statements of foreign subsidiaries are translated into New Taiwan dollars at the following
exchange rates: Assets and liabilities - spot rates at year-end; shareholders’ equity - historical rates; income
and expenses - average rates during the year. The resulting translation adjustments are recorded as a
separate component of shareholders’ equity.
3. ACCOUNTING CHANGES
Effective January 1, 2009, the Company adopted the newly revised Statement of Financial Accounting
Standards (SFAS) No. 10, “Accounting for Inventories”. The main revisions are (1) inventories are stated
at the lower of cost or net realizable value, and inventories are written down to net realizable value on
an item-by-item basis except when the grouping of similar or related items is appropriate; (2) unallocated
52
overheads are recognized as expenses in the year in which they are incurred; and (3) abnormal cost,
write-downs of inventories and any reversal of write-downs are recorded as cost of sales for the year. Such
a change in accounting principle did not have significant effect on the Company’s consolidated financial
statements as of and for the year ended December 31, 2009.
Effective January 1, 2008, the Company adopted Interpretation 2007-052, “Accounting for Bonuses to
Employees, Directors and Supervisors”, issued in March 2007 by the ARDF, which requires companies
to record profit sharing to employees and bonus to directors and supervisors as an expense rather than
as an appropriation of earnings. The adoption of this interpretation resulted in a decrease in net income
and earnings per share (after income tax and retroactively adjusted for the issuance of stock dividend) of
NT$12,827,595 thousand and NT$0.49, respectively, for the year ended December 31, 2008.
Effective January 1, 2008, the Company adopted SFAS No. 39, “Accounting for Share-based Payment”,
which requires companies to record share-based payment transactions in the financial statements at fair
value. Such a change in accounting principle did not have any effect on the Company’s consolidated
financial statements as of and for the year ended December 31, 2008.
4. CASH AND CASH EQUIVALENTS
Cash and deposits in banks
Repurchase agreements collateralized by government bonds
Agency bonds
Corporate issued notes
Corporate bonds
December 31
2009
$ 167,448,973
3,359,754
253,013
160,150
54,451
2008
$ 185,943,439
8,670,313
-
-
-
$ 171,276,341
$ 194,613,752
5. FINANCIAL ASSETS/LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS
Trading financial assets
Forward exchange contracts
Cross currency swap contracts
Publicly traded stocks
Trading financial liabilities
Forward exchange contracts
Cross currency swap contracts
December 31
2009
2008
$ 4,338
181,743
-
$ 28,423
14,049
13,258
$ 186,081
$ 55,730
$ 25
-
$ 35,812
49,375
$ 25
$ 85,187
December 31, 2009
Sell US$/buy NT$
December 31, 2008
Sell US$/buy NT$
Sell EUR/buy NT$
Sell RMB/buy US$
Sell US$/buy JPY
The Company entered into derivative contracts during the years ended December 31, 2009 and 2008 to
manage exposures due to the fluctuations of foreign exchange rates. The derivative contracts entered into by
the Company did not meet the criteria for hedge accounting. Therefore, the Company did not apply hedge
accounting treatment for its derivative contracts.
For the years ended December 31, 2009 and 2008, the Company recognized impairment on available-
for-sale financial assets of NT$201,346 thousand and NT$934,584 thousand, respectively.
7. HELD-TO-MATURITY FINANCIAL ASSETS
Outstanding forward exchange contracts consisted of the following:
Maturity Date
Contract Amount
(In Thousands)
February 2010
US$21,300/NT$686,788
Corporate bonds
Structured time deposits
Government bonds
Current portion
December 31
2009
$ 15,120,048
7,000,000
3,378,037
25,498,085
(9,944,843)
2008
$ 18,158,679
1,643,000
1,506,572
21,308,251
(5,881,999)
$ 15,553,242
$ 15,426,252
January 2009 to February 2009
January 2009
January 2009 to April 2009
January 2009 to February 2009
US$138,900/NT$4,558,672
EUR1,500/NT$63,150
RMB55,010/US$8,000
US$131/JPY11,800
Structured time deposits categorized as held-to-maturity financial assets consisted of the following:
Principal Amount
Interest Receivable
Range of Interest
Rates
Maturity Date
Outstanding cross currency swap contracts consisted of the following:
December 31, 2009
Maturity Date
December 31, 2009
Contract Amount
(In Thousands)
Range of
Interest Rates Paid
Range of
Interest Rates Received
Callable domestic deposits
$ 7,000,000
$ 4,308
0.36% - 0.95%
July 2010 to August 2011
December 31, 2008
January 2010 to February 2010
US$750,000/NT$24,201,706
0.24% - 0.70%
0.00% - 0.38%
Callable foreign deposits
$ 1,643,000
$ 660
4.82%
December 2011
December 31, 2008
January 2009
US$307,000/NT$10,061,232
0.54% - 5.00%
0.00% - 3.83%
As of December 31, 2008, the principal of the structured time deposits that resided in banks located in
Hong Kong amounted to US$50,000 thousand, which was called back in March 2009.
For the years ended December 31, 2009 and 2008, changes in fair value related to derivative financial
instruments recognized in earnings was a net gain of NT$594,660 thousand and a net loss of NT$1,081,019
thousand, respectively.
8. ALLOWANCES FOR DOUBTFUL RECEIVABLES, SALES RETURNS AND OTHERS
Movements of the allowance for doubtful receivables were as follows:
6. AVAILABLE-FOR-SALE FINANCIAL ASSETS
Corporate bonds
Agency bonds
Government bonds
Publicly traded stocks
Corporate issued notes
Money market funds
Open-end mutual funds
Corporate issued asset-backed securities
Current portion
December 31
2009
$ 7,042,219
5,032,037
2,341,780
574,865
303,367
283,713
170,014
-
15,747,995
(14,389,946)
2008
$ 3,279,073
5,696,511
340,893
279,937
-
1,000,086
-
2,334,873
12,931,373
(10,898,715)
$ 1,358,049
$ 2,032,658
Balance, beginning of year
Provision
Write-off
Balance, end of year
Years Ended December 31
2009
2008
$ 455,751
331,485
(243,911)
$ 701,807
14,880
(260,936)
$ 543,325
$ 455,751
Movements of the allowance for sales returns and others were as follows:
Balance, beginning of year
Provision
Write-off
Balance, end of year
Years Ended December 31
2009
2008
$ 6,071,026
13,913,375
(11,259,920)
$ 4,089,035
8,825,695
(6,843,704)
$ 8,724,481
$ 6,071,026
53
9. INVENTORIES
Finished goods
Work in process
Raw materials
Supplies and spare parts
December 31
2009
$ 2,743,450
15,302,010
1,541,599
1,326,692
2008
$ 5,782,704
7,606,608
334,363
1,152,970
$ 20,913,751
$ 14,876,645
Reversal of inventories within the original write-down amount to net realizable value in the amount
of NT$428,162 thousand, and write-down of inventories to net realizable value in the amount of
NT$1,660,854 thousand were included in the cost of sales for the years ended December 31, 2009 and
2008, respectively.
10. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD
For the years ended December 31, 2009 and 2008, equity in earnings/losses of equity method investees was
net gain of NT$45,994 thousand and NT$701,533 thousand, respectively. Related equity in earnings/losses
of equity method investees were determined based on the audited financial statements, except for Mcube
for the year ended December 31, 2009. The Company believes that, had Mcube’s financial statements been
audited, any adjustments arising would have had no material effect on the Company’s consolidated financial
statements.
As of December 31, 2009 and 2008, fair values of publicly traded stocks in investments accounted for using
equity method (VIS) were NT$10,114,398 thousand and NT$4,680,264 thousand, respectively.
Movements of the difference between the cost of investments and the Company’s share in investees’ net
assets allocated to depreciable assets were as follows:
Balance, beginning of year
Amortization
Balance, end of year
Years Ended December 31
2009
2008
$ 1,990,621
(599,121)
$ 2,589,742
(599,121)
$ 1,391,500
$ 1,990,621
December 31
2009
2008
Carrying
Amount
% of
Ownership
Carrying
Amount
% of
Ownership
As of December 31, 2009 and 2008, the ending balances of the aforementioned difference allocated to
goodwill were both NT$1,061,885 thousand.
Common stock
Vanguard International Semiconductor Corporation (VIS)
Systems on Silicon Manufacturing Company Pte Ltd. (SSMC)
VisEra Holding Company (VisEra Holding)
Mcube Inc. (Mcube)
Aiconn Technology Corporation (Aiconn)
Preferred stock
Mcube
$ 9,365,232
6,157,141
2,273,065
25,624
18,116
32,030
37
39
49
70
42
10
$ 9,787,275
6,808,192
2,277,126
-
34,565
-
37
39
49
-
44
-
$ 17,871,208
$ 18,907,158
11. FINANCIAL ASSETS CARRIED AT COST
Non-publicly traded stocks
Mutual funds
December 31
2009
2008
$ 2,899,600
163,404
$ 3,453,454
161,993
$ 3,063,004
$ 3,615,447
The Company will subscribe through a private placement for new shares of Motech Industries Inc. (“Motech”)
under a Share Subscription Agreement entered into on December 9, 2009. The total consideration is
approximately NT$6.2 billion (US$193 million). After the subscription of shares, the Company will own 20% of
the Motech shares. The transaction is still subject to Motech’s shareholders’ approval and regulatory approval.
In August 2009, the common stock of Leadtrend Technology Corporation (“Leadtrend”) was listed on the
Taiwan Stock Exchange. Thus, the Company reclassified its investment in Leadtrend from financial assets
carried at cost to available-for-sale financial assets-noncurrent.
In September 2009, the Company acquired common stock and preferred stock of Mcube for NT$57,960
thousand. The Company took both ownership of stock and controlling power into consideration and
concluded that the Company did not have controlling interest over Mcube. Accordingly, the Company
applied equity method to account for this investment and the related equity in earnings/losses.
For the years ended December 31, 2009 and 2008, the Company recognized impairment on financial assets
carried at cost of NT$711,884 thousand and NT$625,471 thousand, respectively.
54
12. PROPERTY, PLANT AND EQUIPMENT
Cost
Land and land improvements
Buildings
Machinery and equipment
Office equipment
Leased asset
Accumulated depreciation
Land and land improvements
Buildings
Machinery and equipment
Office equipment
Leased asset
Advance payments and construction in progress
Cost
Land and land improvements
Buildings
Machinery and equipment
Office equipment
Leased asset
Accumulated depreciation
Land and land improvements
Buildings
Machinery and equipment
Office equipment
Leased asset
Advance payments and construction in progress
Balance, Beginning of
Year
Additions
Disposals
Reclassification
Effect of Exchange Rate
Changes
Balance, End of Year
Year Ended December 31, 2009
$ 953,857
132,249,996
697,498,743
12,430,800
722,339
843,855,735
$ -
10,530,802
81,548,279
1,491,370
4,171
$ 93,574,622
$ -
(12,978)
(1,872,721)
(226,779)
-
$ (2,112,478)
$ 1,817
(19,910)
9,964
22,821
7,143
$ 21,835
$ (21,584)
(453,352)
(1,530,776)
(50,465)
(19,229)
$ (2,075,406)
$ 934,090
142,294,558
775,653,489
13,667,747
714,424
933,264,308
295,898
72,681,699
535,962,291
9,693,809
182,570
618,816,267
18,605,882
$ 30,072
9,379,371
68,064,750
1,168,317
36,126
$ 78,678,636
$ 15,576,604
$ -
(12,971)
(1,791,122)
(224,769)
-
$ (2,028,862)
$ -
$ -
(5,779)
(6,271)
(158)
7,143
$ (5,065)
$ (26,426)
$ (8,390)
(220,602)
(1,434,174)
(47,850)
(6,074)
$ (1,717,090)
$ (1,695)
317,580
81,821,718
600,795,474
10,589,349
219,765
693,743,886
34,154,365
$ 243,645,350
$ 273,674,787
Balance, Beginning of
Year
Addition (Deductions)
Disposals
Reclassification
Effect of Exchange Rate
Changes
Balance, End of Year
Year Ended December 31, 2008
$ 942,197
118,640,027
646,419,427
11,829,640
652,296
778,483,587
$ -
12,750,078
50,423,075
997,253
13,832
$ 64,184,238
$ -
(8,524)
(1,320,975)
(294,526)
-
$ (1,624,025)
$ 821
(706)
131,067
(167,598)
-
$ (36,416)
$ 10,839
869,121
1,846,149
66,031
56,211
$ 2,848,351
$ 953,857
132,249,996
697,498,743
12,430,800
722,339
843,855,735
262,703
63,239,922
467,665,072
8,796,752
135,118
540,099,567
21,868,167
$ 28,613
9,117,602
68,349,425
1,223,475
33,901
$ 78,753,016
$ (3,205,711)
$ -
(8,524)
(1,179,517)
(293,433)
-
$ (1,481,474)
$ -
$ -
393
(35,055)
(84,663)
-
$ (119,325)
$ (98,013)
$ 4,582
332,306
1,162,366
51,678
13,551
$ 1,564,483
$ 41,439
295,898
72,681,699
535,962,291
9,693,809
182,570
618,816,267
18,605,882
$ 260,252,187
$ 243,645,350
The Company entered into agreements to lease buildings that qualify as capital leases. The terms of the
leases ranged from December 2003 to December 2013. The future minimum lease payments as of December
31, 2009 is NT$787,093 thousand.
55
13. DEFERRED CHARGES, NET
Technology license fee
Software and system design costs
Patent and others
Technology license fee
Software and system design costs
Patent and others
Year Ended December 31, 2009
Balance, Beginning of
Year
Additions
Amortization
Disposals
Reclassification
Effect of Exchange Rate
Changes
Balance, Ending of Year
$ 4,125,212
1,801,831
1,198,785
$ 2,000
965,676
502,601
$ (902,061)
(928,583)
(299,731)
$ -
-
-
$ 378
(4,310)
(5,502)
$ 5,095
(86)
(2,751)
$ 3,230,624
1,834,528
1,393,402
$ 7,125,828
$ 1,470,277
$ (2,130,375)
$ -
$ (9,434)
$ 2,258
$ 6,458,554
Year Ended December 31, 2008
Balance, Beginning of
Year
Additions
Amortization
Disposals
Reclassification
Effect of Exchange Rate
Changes
Balance, Ending of Year
$ 5,819,148
1,449,603
654,850
$ 9,256
1,171,163
754,402
$ (1,691,242)
(806,096)
(218,957)
$ -
(14,279)
-
$ -
59
-
$ (11,950)
1,381
8,490
$ 4,125,212
1,801,831
1,198,785
$ 7,923,601
$ 1,934,821
$ (2,716,295)
$ (14,279)
$ 59
$ (2,079)
$ 7,125,828
14. BONDS PAYABLE
15. LONG-TERM BANK LOANS
December 31
2009
2008
Domestic unsecured bonds:
Iss ued in January 2002 and repayable in 2009 and 2012 in two
installments, 2.75% and 3.00% interest payable annually, respectively
$ 4,500,000
$ 12,500,000
Current portion
-
(8,000,000)
Secured loans:
Re payable from August 2009 in 17 quarterly installments, annual
interest at 0.67% - 2.70% in 2009 and 2.56% - 3.67% in 2008
US $20,000 thousand, repayable in full in one lump sum payment in
November 2010, annual interest at 0.68% - 0.97% in 2009 and
3.62% in 2008
$ 4,500,000
$ 4,500,000
Re payable from December 2007 in 8 semi-annual installments, annual
interest at 1.10% - 2.42% in 2009 and 2.42% - 3.23% in 2008
Re payable from May 2007 in 16 quarterly installments, fully repaid in
June 2009, annual interest at 2.42% - 3.00%
Re payable from March 2007 in 12 quarterly installments, fully repaid
in June 2009, annual interest at 2.53% - 3.21%
Re payable from April 2005 in 16 quarterly installments, annual interest
at 2.42% - 3.00%
Re payable from February 2005 in 17 quarterly installments, annual
interest at 2.56% - 3.15%
Current portion
December 31
2009
2008
$ 788,263
$ 728,400
640,895
98,700
-
-
-
-
1,527,858
(949,298)
658,719
168,750
37,828
32,472
8,995
7,710
1,642,874
(222,398)
$ 578,560
$ 1,420,476
56
Pursuant to the loan agreements, financial ratios calculated based on annual audited financial statements
of TSMC China have to meet certain financial covenants. As of December 31, 2009, TSMC China was not in
compliance with part of the aforementioned financial covenants. However, this did not have a significant
effect on the Company’s financial position. According to the terms of Xintec’s loan agreements, semi-annual
and annual financial statements of Xintec must comply with predetermined financial covenants. As of
December 31, 2009, Xintec was in compliance with all such financial covenants.
As of December 31, 2009, future principal repayments for the long-term bank loans were as follows:
Year of Repayment
2010
2011
2012
2013
Amount
$ 949,298
275,503
242,603
60,454
$ 1,527,858
17. PENSION PLANS
The pension mechanism under the Labor Pension Act is deemed a defined contribution plan. Pursuant
to the Act, TSMC, GUC, Xintec and Mutual-Pak have made monthly contributions equal to 6% of each
employee’s monthly salary to employees’ pension accounts. Furthermore, TSMC North America, TSMC
China, TSMC Europe and TSMC Canada are required by local regulations to make monthly contributions at
certain percentages of the basic salary of their employees. Pursuant to the aforementioned Act and local
regulations, the Company recognized pension costs of NT$748,071 thousand and NT$779,612 thousand
for the years ended December 31, 2009 and 2008, respectively.
TSMC, GUC and Xintec have defined benefit plans under the Labor Standards Law that provide benefits
based on an employee’s service years and average monthly salary for the six-month period prior to
retirement. The aforementioned companies contribute an amount equal to 2% of salaries paid each month
to their respective pension funds (the Funds), which are administered by the Labor Pension Fund Supervisory
Committee (the Committee) and deposited in the name of the committees in the Bank of Taiwan.
16. OTHER LONG-TERM PAYABLES
Pension information on the defined benefit plans is summarized as follows:
Payables for acquisition of property, plant and equipment (Note 28g)
Payables for royalties
Cu rrent portion (classified under accrued expenses and other current
liabilities)
December 31
2009
$ 8,355,395
1,252,332
9,607,727
2008
$ 8,579,726
2,095,046
10,674,772
(4,005,307)
(1,126,546)
$ 5,602,420
$ 9,548,226
a. Components of net periodic pension cost for the year
Service cost
Interest cost
Projected return on plan assets
Amortization
Net periodic pension cost
2009
2008
$ 166,480
150,647
(57,382)
29,924
$ 151,656
171,345
(68,373)
4,461
$ 289,669
$ 259,089
The payables for royalties were primarily attributable to several license arrangements that the Company
entered into for certain semiconductor-related patents.
As of December 31, 2009, future payments for other long-term payables were as follows:
Year of Payment
2010
2011
2012
Amount
$ 4,005,307
3,075,094
2,527,326
$ 9,607,727
b. Reconciliation of funded status of the plans and accrued pension cost at December 31, 2009 and 2008
Benefit obligation
Vested benefit obligation
Nonvested benefit obligation
Accumulated benefit obligation
Additional benefits based on future salaries
Projected benefit obligation
Fair value of plan assets
Funded status
Unrecognized net transition obligation
Prior service cost
Unrecognized net loss
Accrued pension cost
Vested benefit
2009
2008
$ 123,524
3,790,560
3,914,084
2,643,695
6,557,779
(2,661,566)
3,896,213
(92,777)
161,977
(168,381)
$ 114,930
4,182,434
4,297,364
3,263,413
7,560,777
(2,487,577)
5,073,200
(101,326)
169,216
(1,439,506)
$ 3,797,032
$ 3,701,584
$ 135,501
$ 126,259
57
c. Actuarial assumptions at December 31, 2009 and 2008
c. Net deferred income tax assets consisted of the following:
Discount rate used in determining present values
Future salary increase rate
Expected rate of return on plan assets
d. Contributions to the Funds for the year
e. Payments from the Funds for the year
2009
2.25%
3.00%
1.50% - 2.00%
2008
2.00% - 2.50%
2.00% - 3.00%
2.25% - 2.50%
2009
2008
$ 194,221
$ 206,873
2009
2008
$ 37,801
$ 28,990
Current deferred income tax assets
Investment tax credits
Temporary differences
Allowance for sales returns and others
Others
Valuation allowance
Noncurrent deferred income tax assets
Investment tax credits
Net operating loss carryforwards
Temporary differences
Depreciation
Others
Valuation allowance
December 31
2009
2008
$ 3,304,092
$ 2,885,762
814,557
665,586
(413,926)
710,098
846,376
(472,906)
$ 4,370,309
$ 3,969,330
$ 12,184,624
3,440,825
$ 11,311,852
3,588,968
(1,573,025)
1,106,746
(7,170,867)
(2,134,460)
506,181
(6,635,668)
$ 7,988,303
$ 6,636,873
18. INCOME TAX
a. A reconciliation of income tax expense based on “income before income tax” at statutory rates and
income tax currently payable was as follows:
Inc ome tax expense based on “income before income tax” at statutory
rates
The effect of the following:
Tax-exempt income
Temporary and permanent differences
Others
Additional tax at 10% on unappropriated earnings
Net operating loss carryforwards used
Income tax credits used
Years Ended December 31
2009
2008
$ 24,182,953
$ 27,970,388
(8,652,030)
3,136,013
247,050
30,707
(66,135)
(9,984,616)
(9,670,500)
2,122,899
44,073
13,926
(205,234)
(11,109,313)
Income tax currently payable
$ 8,893,942
$ 9,166,239
b. Income tax expense consisted of the following:
Income tax currently payable
Income tax adjustments on prior years
Other income tax adjustments
Net change in deferred income tax assets
Investment tax credits
Net operating loss carryforwards
Temporary differences
Valuation allowance
Years Ended December 31
2009
2008
$ 8,893,942
(1,159,353)
23,023
$ 9,166,239
(707,255)
204,587
(1,291,102)
59,940
(1,042,295)
512,269
1,060,599
411,368
(2,129,121)
2,942,592
Income tax expense
$ 5,996,424
$ 10,949,009
58
In May 2009, the amendment of Article 5 of the Income Tax Law of the Republic of China announced that
the income tax rate of profit-seeking enterprises will be reduced from 25% to 20%, and will be effective
starting in 2010. TSMC and its domestic subsidiaries which are subject to the Income Tax Law of the
Republic of China had recalculated their deferred tax assets in accordance with the amended Article and
adjusted the resulting difference as an income tax expense.
As of December 31, 2009, the net operating loss carryforwards generated by WaferTech, TSMC
Development, Xintec and Mutual-Pak would expire on various dates through 2026.
d. Integrated income tax information:
The balance of the imputation credit account (ICA) of TSMC as of December 31, 2009 and 2008 was
NT$369,265 thousand and NT$521,634 thousand, respectively.
The estimated and actual creditable ratios for distribution of TSMC’s earnings of 2009 and 2008 were
0.35% and 9.10%, respectively.
The imputation credit allocated to the shareholders is based on its balance as of the date of dividend
distribution. The estimated creditable ratio may change when the actual distribution of imputation credit
is made.
e. All of TSMC’s earnings generated prior to December 31, 1997 have been appropriated.
f. As of December 31, 2009, investment tax credits of TSMC, GUC, Xintec and Mutual-Pak consisted of the
19. LABOR COST, DEPRECIATION AND AMORTIZATION
following:
Law/Statute
Item
Statute for Upgrading
Industries
Purchase of machinery and
equipment
Statute for Upgrading
Industries
Research and development
expenditures
Statute for Upgrading
Industries
Personnel training expenditures
Total
Creditable
Amount
Remaining
Creditable
Amount
Expiry Year
$ 587,048
1,331,228
4,711,020
3,464,868
3,315,509
$ -
110,488
66,368
3,464,868
3,315,509
$ 13,409,673
$ 6,957,233
$ 2,711,736
2,809,829
2,968,208
3,409,744
$ 9,353
2,090,320
2,968,208
3,409,744
$ 11,899,517
$ 8,477,625
$ 37
23,905
20,081
32,534
484
$ -
759
20,081
32,534
484
$ 77,041
$ 53,858
2009
2010
2011
2012
2013
2010
2011
2012
2013
2009
2010
2011
2012
2013
Statute for Upgrading
Industries
Investments in important
technology-based enterprises
$ 7,297
79,804
$ -
-
2009
2010
$ 87,101
$ -
g. The profits generated from the following projects of TSMC, GUC and Xintec are exempt from income tax
for a five-year period:
Construction of Fab 14 - Module A
Construction of Fab 12 - Module B and expansion of Fab 14 - Module A
Construction of Fab 14 - Module B and expansion of Fab 12 and others
2003 plant expansion of GUC
2005 and 2006 plant expansion of GUC
2003 plant expansion of Xintec
Tax-Exemption Period
2006 to 2010
2007 to 2011
2008 to 2012
2007 to 2011
To be determined
2007 to 2011
h. The tax authorities have examined income tax returns of TSMC through 2007. All investment tax credit
adjustments assessed by the tax authorities have been recognized accordingly.
Labor cost
Salary and bonus
Labor and health insurance
Pension
Meal
Welfare
Others
Depreciation
Amortization
Labor cost
Salary and bonus
Labor and health insurance
Pension
Meal
Welfare
Others
Depreciation
Amortization
Year Ended December 31, 2009
Classified as
Cost of Sales
Classified as
Operating
Expenses
Total
$ 18,122,593
698,566
603,765
442,328
527,662
134,334
$ 15,798,756
579,231
433,910
195,758
201,487
233,258
$ 33,921,349
1,277,797
1,037,675
638,086
729,149
367,592
$ 20,529,248
$ 17,442,400
$ 37,971,648
$ 74,482,133
$ 1,259,949
$ 4,180,237
$ 870,426
$ 78,662,370
$ 2,130,375
Year Ended December 31, 2008
Classified as
Cost of Sales
Classified as
Operating
Expenses
Total
$ 19,574,249
766,952
634,730
474,048
640,817
262,144
$ 15,654,567
489,601
403,962
188,407
273,055
171,631
$ 35,228,816
1,256,553
1,038,692
662,455
913,872
433,775
$ 22,352,940
$ 17,181,223
$ 39,534,163
$ 74,703,223
$ 1,837,540
$ 4,033,588
$ 878,755
$ 78,736,811
$ 2,716,295
20. SHAREHOLDERS’ EQUITY
As of December 31, 2009, 1,097,513 thousand ADSs of TSMC were traded on the NYSE. The number
of common shares represented by the ADSs was 5,487,565 thousand (one ADS represents five common
shares).
Capital surplus can only be used to offset a deficit under the Company Law. However, the capital surplus
generated from donations and the excess of the issuance price over the par value of capital stock (including
the stock issued for new capital, mergers, convertible bonds and the surplus from treasury stock transactions)
may be appropriated as stock dividends, which are limited to a certain percentage of TSMC’s paid-in capital.
Also, the capital surplus from long-term investment may not be used for any purpose.
59
Capital surplus consisted of the following:
Additional paid-in capital
From merger
From convertible bonds
From long-term investments
Donations
December 31
2009
$ 23,457,805
22,805,390
8,893,190
329,570
55
2008
$ 17,962,468
22,805,390
8,893,190
214,152
55
$ 55,486,010
$ 49,875,255
TSMC’s Articles of Incorporation provide that, when allocating the net profits for each fiscal year, TSMC shall
first offset its losses in previous years and then set aside the following items accordingly:
a. Legal capital reserve at 10% of the profits left over, until the accumulated legal capital reserve equals
TSMC’s paid-in capital;
b. Special capital reserve in accordance with relevant laws or regulations or as requested by the authorities in
charge;
c. Bonus to directors and profit sharing to employees of TSMC of not more than 0.3% and not less than
1% of the remainder, respectively. Directors who also serve as executive officers of TSMC are not entitled
to receive the bonus to directors. TSMC may issue profit sharing to employees in stock of an affiliated
company meeting the conditions set by the Board of Directors or, by the person duly authorized by the
Board of Directors;
d. Any balance left over shall be allocated according to the resolution of the shareholders’ meeting.
TSMC’s Articles of Incorporation also provide that profits of TSMC may be distributed by way of cash
dividend and/or stock dividend. However, distribution of profits shall be made preferably by way of cash
dividend. Distribution of profits may also be made by way of stock dividend; provided that the ratio for stock
dividend shall not exceed 50% of the total distribution.
Any appropriations of the profits are subject to shareholders’ approval in the following year.
TSMC has recorded profit sharing to employees as a charge to earnings of approximately 7.5% and 15%
of net income for the years ended December 2009 and 2008, respectively; bonuses to directors were
accrued with an estimate based on historical experience. If the actual amounts subsequently resolved by the
shareholders differ from the estimated amounts, the differences are recorded in the year of shareholders’
resolution as a change in accounting estimate. If profit sharing is resolved to be distributed to employees in
stock, the number of shares is determined by dividing the amount of profit sharing by the closing price (after
considering the effect of dividends) of the shares on the day preceding the shareholders’ meeting.
The appropriation for legal capital reserve shall be made until the reserve equals TSMC’s paid-in capital. The
reserve may be used to offset a deficit, or be distributed as dividends and bonuses for the portion in excess
of 50% of the paid-in capital if TSMC has no unappropriated earnings and the reserve balance has exceeded
50% of TSMC’s paid-in capital. The Company Law also prescribes that, when the reserve has reached 50% of
TSMC’s paid-in capital, up to 50% of the reserve may be transferred to capital.
A special capital reserve equivalent to the net debit balance of the other components of shareholders’ equity
(for example, cumulative translation adjustments and unrealized loss on financial instruments, but excluding
treasury stock) shall be made from unappropriated earnings pursuant to existing regulations promulgated by
the Securities and Futures Bureau (SFB). Any special reserve appropriated may be reversed to the extent that
the net debit balance reverses.
The appropriations of earnings for 2008 and 2007 had been approved in the TSMC’s shareholders meetings
held on June 10, 2009 and June 13, 2008, respectively. The appropriations and dividends per share were as
follows:
Appropriation of Earnings
Dividends Per Share (NT$)
For Fiscal
Year 2008
For Fiscal
Year 2007
For Fiscal
Year 2008
For Fiscal
Year 2007
Legal capital reserve
Special capital reserve
Profit sharing to employees - in cash
Profit sharing to employees - in stock
Cash dividends to shareholders
Stock dividends to shareholders
Bonus to directors
$ 9,993,317
(391,857)
-
-
76,876,312
512,509
-
$ 10,917,709
(237,693)
3,939,883
3,939,883
76,881,311
512,542
176,890
$ 86,990,281
$ 96,130,525
$ 3.00
0.02
$ 3.00
0.02
TSMC’s profit sharing to employees that have been paid in cash and in stock as well as bonus to directors
in the amounts of NT$7,494,988 thousand, NT$7,494,988 thousand and NT$158,080 thousand for 2008,
respectively, had been approved in the shareholders’ meeting held on June 10, 2009. The profit sharing to
employee in stock of 141,870 thousand shares was determined by the closing price of TSMC’s common
shares (after considering the effect of dividends) of the day immediately preceding the shareholders’
meeting, which was NT$52.83. The resolved amounts of the profit sharing to employees and bonus to
directors were consistent with the resolutions of meeting of the Board of Directors held on February 10,
2009 and same amount had been charged against earnings of 2008.
TSMC’s shareholders meeting held on June 10, 2009 also resolved to distribute stock dividends out of capital
surplus, and stock dividends to shareholders as well as profit sharing to employees to be paid in stock in the
amount of NT$768,763 thousand, NT$512,509 thousand and NT$7,494,988 thousand, respectively. The
aforementioned capital increase had taken effect on July 21, 2009.
As of January 22, 2010, the Board of Directors of TSMC has not resolved the appropriation for earnings of
2009.
TSMC no longer has supervisors since January 1, 2007. The required duties of supervisors are being fulfilled
by the Audit Committee.
The information about the appropriations of profit sharing to employees and bonus to directors is available
at the Market Observation Post System website.
60
Under the Integrated Income Tax System that became effective on January 1, 1998, R.O.C. resident
shareholders are allowed a tax credit for their proportionate share of the income tax paid by TSMC on
earnings generated since January 1, 1998.
21. STOCK-BASED COMPENSATION PLANS
TSMC’s Employee Stock Option Plans, consisting of the TSMC 2004 Plan, TSMC 2003 Plan, and TSMC 2002
Plan, were approved by the SFB on January 6, 2005, October 29, 2003 and June 25, 2002, respectively. The
maximum number of options authorized to be granted under the TSMC 2004 Plan, TSMC 2003 Plan and
TSMC 2002 Plan was 11,000 thousand, 120,000 thousand and 100,000 thousand, respectively, with each
option eligible to subscribe for one common share of TSMC when exercisable. The options may be granted
to qualified employees of TSMC or any of its domestic or foreign subsidiaries, in which TSMC’s shareholding
with voting rights, directly or indirectly, is more than fifty percent (50%). The options of all the plans are
valid for ten years and exercisable at certain percentages subsequent to the second anniversary of the grant
date. Under the terms of the plans, the options are granted at an exercise price equal to the closing price of
TSMC’s common shares listed on the TSE on the grant date.
Options of the plans that had never been granted or had been granted but subsequently canceled had
expired as of December 31, 2009.
Information about TSMC’s outstanding options for the years ended December 31, 2009 and 2008 was as
follows:
Year ended December 31, 2009
Balance, beginning of year
Options granted
Options exercised
Options canceled
Balance, end of year
Year ended December 31, 2008
Balance, beginning of year
Options granted
Options exercised
Options canceled
Balance, end of year
Number of Options
(In Thousands)
Weighted-average
Exercise Price (NT$)
36,234
175
(7,272)
(327)
28,810
41,875
767
(6,027)
(381)
36,234
$ 34.0
34.0
35.8
46.5
33.5
35.6
35.2
37.7
46.5
35.3
The numbers of outstanding options and exercise prices have been adjusted to reflect the distribution of
earnings by TSMC in accordance with the plans. The options granted were the result of the aforementioned
adjustment.
As of December 31, 2009, information about TSMC’s outstanding options was as follows:
Range of
Exercise Price (NT$)
$22.8 - $32.0
38.0 - 50.1
Number of Options
(In Thousands)
21,179
7,631
28,810
Options Outstanding
Weighted-average
Remaining Contractual Life
(Years)
3.18
4.88
3.63
Weighted-average
Exercise Price
(NT$)
$ 29.1
45.5
33.5
As of December 31, 2009, all of the above outstanding options were exercisable.
GUC’s Employee Stock Option Plans, consisting of the GUC 2003 Plan and GUC 2002 Plan, were approved
by its Board of Directors on January 23, 2003 and July 1, 2002, respectively. The maximum number of
options authorized to be granted under the GUC 2003 Plan and GUC 2002 Plan was 7,535 and 5,000,
respectively, with each option eligible to subscribe for one thousand common shares of GUC when
exercisable. The options may be granted to qualified employees of GUC. The options of all the plans are valid
for six years and exercisable at certain percentages subsequent to the second anniversary of the grant date.
Moreover, the GUC 2007 Plan, GUC 2006 Plan, and GUC 2004 Plan were approved by the SFB on November
28, 2007, July 3, 2006, and August 16, 2004 to grant a maximum of 1,999 options, 3,665 options and
2,500 options, respectively, with each option eligible to subscribe for one thousand common shares of GUC
when exercisable. The options may be granted to qualified employees of GUC or any of its subsidiaries.
Except for the options of the GUC 2006 Plan which are valid until August 15, 2011, the options of the other
two GUC option Plans are valid for six years. Options of all three Plans are exercisable at certain percentages
subsequent to the second anniversary of the grant date.
Information about GUC’s outstanding options for the years ended December 31, 2009 and 2008 was as
follows:
Number of Options
Weighted-average
Exercise Prices (NT$)
Year ended December 31, 2009
Balance, beginning of year
Options granted
Options exercised
Options canceled
Balance, end of year
Year ended December 31, 2008
Balance, beginning of year
Options granted
Options exercised
Options canceled
Balance, end of year
5,557
87
(1,475)
(359)
3,810
7,598
284
(2,115)
(210)
5,557
$ 63.9
13.8
11.0
63.4
83.5
60.3
14.8
14.0
168.4
66.6
61
The numbers of outstanding options and exercise prices have been adjusted to reflect the appropriation of
earnings by GUC in accordance with the plans. The options granted were the result of the aforementioned
adjustment.
As of December 31, 2009, information about GUC’s outstanding and exercisable options was as follows:
Range of
Exercise Price (NT$)
Number of Options
Options Outstanding
Weighted-average
Remaining
Contractual Life
(Years)
Options Exercisable
Weighted-average
Exercise Price
(NT$)
Number of Options
Weighted-average
Exercise Price
(NT$)
$ 8.4
15.5
175.0
374
1,796
1,640
3,810
1.00
1.67
4.00
2.61
$ 8.4
15.5
175.0
83.5
374
154
-
528
$ 8.4
15.5
-
10.5
As of December 31, 2009, information about Xintec’s outstanding and exercisable options was as follows:
Options Outstanding
Options Exercisable
Range of
Exercise Price (NT$)
Number of Options
(In Thousands)
Weighted-average
Remaining
Contractual Life
(Years)
Weighted-average
Exercise Price
(NT$)
Number of Options
(In Thousands)
Weighted-average
Exercise Price
(NT$)
$12.2 - $14.1
15.2 - 19.2
2,092
1,868
3,960
6.79
7.68
7.21
$ 12.5
17.2
14.7
904
550
1,454
$ 12.5
17.2
14.4
No compensation cost was recognized under the intrinsic value method for the years ended December 31,
2009 and 2008. Had the Company used the fair value based method to evaluate the options using the
Black-Scholes model, the assumptions and pro forma results of the Company for the years ended December
31, 2009 and 2008 would have been as follows:
Xintec’s Employee Stock Option Plans, consisting of the Xintec 2007 Plan and Xintec 2006 Plan, were
approved by the SFB on June 26, 2007 and July 3, 2006, respectively. The maximum number of options
authorized to be granted under the Xintec 2007 Plan and Xintec 2006 Plan was 6,000 thousand each, with
each option eligible to subscribe for one common share of Xintec when exercisable. The options may be
granted to qualified employees of Xintec or any of its subsidiaries. The options of all the plans are valid for
ten years and exercisable at certain percentages subsequent to the second anniversary of the grant date.
Information about Xintec’s outstanding options for the years ended December 31, 2009 and 2008 was as
follows:
Number of Options
(In Thousands)
Weighted-average
Exercise Price (NT$)
Assumptions:
TSMC
GUC
Xintec
Year ended December 31, 2009
Balance, beginning of year
Options exercised
Options canceled
Balance, end of year
Year ended December 31, 2008
Balance, beginning of year
Options exercised
Options canceled
Balance, end of year
7,442
(2,552)
(930)
3,960
9,642
(728)
(1,472)
7,442
$ 14.8
13.5
17.1
14.7
15.1
12.4
15.5
14.8
Net income attributable to shareholders of the parent:
As reported
Pro forma
Earnings per share (EPS) - after income tax (NT$):
Basic EPS as reported
Pro forma basic EPS
Diluted EPS as reported
Pro forma diluted EPS
Expected dividend yield
Expected volatility
Risk free interest rate
Expected life
Expected dividend yield
Expected volatility
Risk free interest rate
Expected life
Expected dividend yield
Expected volatility
Risk free interest rate
Expected life
2009
2008
1.00% - 3.44%
43.77% - 46.15%
3.07% - 3.85%
5 years
0.00% - 0.60%
22.65% - 45.47%
2.12% - 2.56%
3 - 6 years
0.80%
31.79% - 47.42%
1.88% - 2.45%
3 years
1.00% - 3.44%
43.77% - 46.15%
3.07% - 3.85%
5 years
0.00% - 0.60%
22.65% - 45.47%
2.12% - 2.56%
3 - 6 years
0.80%
31.79% - 47.42%
1.88% - 2.45%
3 years
$ 89,217,836
88,838,182
$ 99,933,168
100,037,622
$ 3.45
3.44
3.44
3.43
$ 3.84
3.84
3.81
3.81
The exercise prices have been adjusted to reflect the appropriation of earnings by Xintec in accordance with
the plans.
62
22. TREASURY STOCK
Year ended December 31, 2008
Parent company stock held by subsidiaries
Repurchase under share buyback plan
Beginning
Shares
Addition
Stock
Dividends
Retirement
Ending
Shares
(Shares in Thousands)
34,096
800,000
-
495,549
834,096
495,549
171
-
171
34,267
1,295,549
1,329,816
-
-
-
23. EARNINGS PER SHARE
EPS is computed as follows:
Year ended December 31, 2009
Basic EPS
Ear nings available to common shareholders of the
Amounts (Numerator)
Before
Income Tax
After
Income Tax
Number of
Shares
(Denominator)
(In Thousands)
EPS (NT$)
Before
Income Tax
After
Income Tax
TSMC held a meeting of the Board of Directors on November 13, 2007 and approved a share buyback plan
to repurchase the TSMC’s common shares up to 800,000 thousand shares listed on the TSE during the
period from November 14, 2007 to January 13, 2008 for the buyback price in the range from NT$43.2 to
NT$94.2. TSMC had repurchased 800,000 thousand common shares. All the treasury stock repurchased
under this share buyback plan was retired in February 2008.
TSMC held a meeting of the Board of Directors on May 13, 2008 and approved a share buyback plan to
repurchase the TSMC’s common shares up to 500,000 thousand shares listed on the TSE during the period
from May 14, 2008 to July 13, 2008 for the buyback price in the range from NT$48.25 to NT$100.50.
TSMC had repurchased 216,674 thousand common shares. All the treasury stock repurchased under this
share buyback plan was retired in August 2008.
TSMC held a meeting of the Board of Directors on August 12, 2008 and approved a share buyback plan to
repurchase the TSMC’s common shares up to 283,000 thousand shares listed on the TSE during the period
from August 13, 2008 to October 12, 2008 for the buyback price in the range from NT$42.85 to NT$86.20.
TSMC had repurchased 278,875 thousand common shares. All the treasury stock repurchased under this
share buyback plan was retired in November 2008.
TSMC merged Chi Cherng and Hsin Ruey in the third quarter of 2008. TSMC’s common shares held by Chi
Cherng and Hsin Ruey in the number of 34,267 thousand shares were retired on August 2008.
parent
Effect of dilutive potential common shares
$ 95,189,766
-
$ 89,217,836
-
25,835,802
77,801
$ 3.68
$ 3.45
Diluted EPS
Ea rnings available to common shareholders of
the parent (including effect of dilutive potential
common shares)
Year ended December 31, 2008
Basic EPS
Ea rnings available to common shareholders of the
$ 95,189,766
$ 89,217,836
25,913,603
$ 3.67
$ 3.44
parent
Effect of dilutive potential common shares
$110,847,835
-
$ 99,933,168
-
26,039,186
196,493
$ 4.26
$ 3.84
Diluted EPS
Ea rnings available to common shareholders of
the parent (including effect of dilutive potential
common shares)
$110,847,835
$ 99,933,168
26,235,679
$ 4.23
$ 3.81
As discussed in Note 3, effective January 1, 2008, the Company adopted Interpretation 2007-052 that
requires companies to record profit sharing to employees as an expense rather than as an appropriation of
earnings. If the Company may settle the obligation by cash, by issuing shares, or in combination of both cash
and shares, profit sharing to employees which will be settled in shares should be included in the weighted
average number of shares outstanding in calculation of diluted EPS, if the shares have a dilutive effect. The
number of shares is estimated by dividing the amount of profit sharing to employees in stock by the closing
price (after considering the dilutive effect of dividends) of the common shares on the balance sheet date.
Such dilutive effect of the potential shares needs to be included in the calculation of diluted EPS until the
shares of profit sharing to employees are resolved in the shareholders’ meeting in the following year.
The average number of shares outstanding for EPS calculation has been retroactively adjusted for the
issuance of stock dividends. This adjustment caused each the basic and diluted after income tax EPS for
the year ended December 31, 2008 to decrease from NT$3.86 to NT$3.84 and NT$3.83 to NT$3.81,
respectively.
63
24. DISCLOSURES FOR FINANCIAL INSTRUMENTS
e. Movements of the unrealized gains or losses on financial instruments for the years ended December 31,
2009 and 2008 were as follows:
a. Fair values of financial instruments were as follows:
December 31
2009
2008
Carrying
Amount
Fair Value
Carrying
Amount
Fair Value
Assets
Financial assets at fair value through profit or loss
Available-for-sale financial assets
Held-to-maturity financial assets
$ 186,081
15,747,995
25,498,085
$ 186,081
15,747,995
25,671,664
$ 55,730
12,931,373
21,308,251
$ 55,730
12,931,373
21,457,008
Liabilities
Financial liabilities at fair value through profit or loss
Bonds payable (including current portion)
Long-term bank loans (including current portion)
Other long-term payables (including current portion)
Obligations under capital leases
25
4,500,000
1,527,858
9,607,727
707,499
25
4,574,979
1,527,858
9,607,727
707,499
85,187
12,500,000
1,642,874
10,674,772
722,339
85,187
12,612,423
1,642,874
10,674,772
722,339
Year Ended December 31, 2009
From Available-
for-sale Financial
Assets
From Available-
for-sale Financial
Assets Held by
Investees
Total
Balance, beginning of year
Recognized directly in shareholders’ equity
Removed from shareholders’ equity and recognized in earnings
$ (198,413)
391,801
230,740
$ (88,929)
118,422
-
$ (287,342)
510,223
230,740
Balance, end of year
$ 424,128
$ 29,493
$ 453,621
Year Ended December 31, 2008
From Available-
for-sale Financial
Assets
From Available-
for-sale Financial
Assets Held by
Investees
Total
Balance, beginning of year
Recognized directly in shareholders’ equity
Removed from shareholders’ equity and recognized in earnings
$ 627,838
(1,130,599)
304,348
$ 53,159
(142,088)
-
$ 680,997
(1,272,687)
304,348
b. Methods and assumptions used in estimating fair values of financial instruments
Balance, end of year
$ (198,413)
$ (88,929)
$ (287,342)
1) The aforementioned financial instruments do not include cash and cash equivalents, receivables, other
financial assets, refundable deposits, payables and guarantee deposits. The carrying amounts of these
financial instruments approximate their fair values due to their short maturities.
f. Information about financial risk
2) Except for derivatives and structured time deposits, fair values of financial assets at fair value through
profit or loss, available-for-sale and held-to-maturity financial assets were based on their quoted market
prices.
3) The fair values of those derivatives and structured time deposits are determined using valuation
techniques incorporating estimates and assumptions that were consistent with prevailing market
conditions.
4) Fair value of the bonds payable was based on their quoted market price.
5) Fair values of long-term bank loans, other long-term payables and obligations under capital leases were
based on the present value of expected cash flows, which approximate their carrying amounts.
c. The changes in fair value of derivatives contracts which were outstanding as of December 31, 2009 and
2008 estimated using valuation techniques were recognized as net gains of NT$186,056 thousand and
net losses of NT$42,715 thousand, respectively.
d. As of December 31, 2009 and 2008, financial assets exposed to fair value interest rate risk were
NT$40,857,296 thousand and NT$34,002,159 thousand, respectively; financial liabilities exposed to fair
value interest rate risk were NT$4,500,025 thousand and NT$12,585,187 thousand, respectively, and
financial liabilities exposed to cash flow interest rate risk were NT$1,527,858 thousand and NT$1,642,874
thousand, respectively.
64
1) Market risk. The publicly traded stocks categorized as financial assets at fair value through profit or
loss are exposed to market price fluctuations. The derivative financial instruments categorized as
financial assets/liabilities at fair value through profit or loss are mainly used to hedge the exchange
rate fluctuations of foreign-currency assets and liabilities; therefore, the market risk of derivatives will
be offset by the foreign exchange risk of these hedged items. Available-for-sale financial assets and
held-to-maturity financial assets held by the Company are mainly fixed-interest-rate debt securities;
therefore, the fluctuations in market interest rates would result in changes in fair value of these debt
securities. Subject to turmoil in the global financial market, the Company evaluated its financial assets
and determined that certain impairment for its asset-backed securities is other-than-temporary. The
Company had appropriately recognized related impairment losses.
2) Credit risk. Credit risk represents the potential loss that would be incurred by the Company if the
counter-parties or third-parties breached contracts. Financial instruments with positive fair values at the
balance sheet date are evaluated for credit risk. Subject to turmoil in the global financial market, the
Company evaluated the financial instruments for any possible counter-party or third-party default. As
a result of the evaluation, the Company determined that certain financial instruments are exposed to
credit risk and had appropriately recognized related impairment losses.
3) Liquidity risk. The Company has sufficient operating capital to meet cash needs upon settlement of
derivative financial instruments, bonds payable and bank loans. Therefore, the liquidity risk is low.
4) Cash flow interest rate risk. The Company mainly invests in fixed-interest-rate debt securities. Therefore,
cash flows are not expected to fluctuate significantly due to changes in market interest rates. The
Company’s long-term bank loans were floating-rate loans. Therefore, changes in the market interest
rates will result in changes in the effective rate of the long-term bank loans, which will affect future
cash flows.
25. RELATED PARTY TRANSACTIONS
Except as disclosed in the consolidated financial statements and other notes, the following is a summary of
significant related party transactions:
As of December 31
Payables
VIS
SSMC
VisEra
2009
2008
Amount
%
Amount
%
$ 531,459
238,741
12,807
68
31
1
$ 317,890
162,807
9,160
65
33
2
$ 783,007
100
$ 489,857
100
(Concluded)
a. Investees of TSMC
VIS (accounted for using equity method)
SSMC (accounted for using equity method)
b. VisEra Technology Company, Ltd. (VisEra), an indirect investee accounted for using equity method.
c. Others
Related parties over which the Company exercises significant influence but with which the Company had
no material transactions.
The sales prices and payment terms to related parties were not significantly different from those of sales
to third parties. For other related party transactions, prices and terms were determined in accordance with
mutual agreements.
TSMC deferred the net gains (classified under deferred credits) derived from sales of property, plant and
equipment to VisEra, and then recognized such gains (classified under non-operating income and gains)
over the depreciable lives of the disposed assets.
TSMC leased certain buildings and facilities to VisEra. The related rental income was classified under
non-operating income and gains. The lease terms and prices were determined in accordance with mutual
agreements. The lease agreement between TSMC and VisEra expired in April 2008.
2009
2008
Amount
%
Amount
%
Compensation of directors and management personnel:
For the year
Sales
VIS
VisEra
SSMC
Others
Purchases
SSMC
VIS
VisEra
Non-operating income and gains
VIS (primarily technical service income; see Note 28e)
SSMC (primarily technical service income; see Note 28d)
VisEra
$ 139,496
15,569
171
69
$ 155,305
$ 3,537,659
3,330,288
-
$ 6,867,947
$ 224,740
141,488
129
$ 366,357
-
-
-
-
-
2
2
-
4
4
2
-
6
$ 80,067
30,821
1,869
-
$ 112,757
$ 4,441,795
3,260,160
594
$ 7,702,549
$ 296,250
244,865
101,605
$ 642,720
-
-
-
-
-
2
2
-
4
3
2
1
6
(Continued)
Salaries, incentives and special compensation
Bonus
Years Ended December 31
2009
2008
$ 673,278
411,358
$ 352,227
705,376
$ 1,084,636
$ 1,057,603
The information about the compensation of directors and management personnel is available in the annual
report for the shareholders’ meeting. Total compensation expense for the year ended December 31, 2009
includes estimated profit sharing to employees and bonus to directors of the Company that relate to
2009 but will be paid in the following year. The actual amount will be finalized and approved upon the
resolution of the shareholders’ meeting in 2010. The total compensation for the year ended December 31,
2008 included the bonuses appropriated from earnings of 2008 which was approved by the shareholders’
meeting held in 2009.
65
26. PLEDGED OR MORTGAGED ASSETS
28. SIGNIFICANT COMMITMENTS AND CONTINGENCIES
The Company provided certain assets as collateral mainly for long-term bank loans, land lease agreements
and customs duty guarantee, which were as follows:
Significant commitments and contingencies of the Company as of December 31, 2009, excluding those
disclosed in other notes, were as follows:
Other financial assets
Property, plant and equipment, net
Others assets
December 31
2009
$ 949,368
2,808,057
20,000
2008
$ 33,377
4,032,571
-
$ 3,777,425
$ 4,065,948
27. SIGNIFICANT LONG-TERM LEASES
The Company leases several parcels of land and office premises from the SPA and Jhongli Industrial Park
Service Center. These operating leases expire on various dates from March 2010 to December 2029 and can
be renewed upon expiration.
The Company entered into lease agreements for its office premises and certain equipment located in the
United States, Europe, Japan, Shanghai and Taiwan. These operating leases expire between 2010 and 2018
and can be renewed upon expiration.
As of December 31, 2009, future lease payments were as follows:
Amount
$ 557,588
504,263
487,131
462,439
444,201
3,293,532
$ 5,749,154
Year
2010
2011
2012
2013
2014
2015 and thereafter
66
a. Under a technical cooperation agreement with ITRI, the R.O.C. Government or its designee approved
by TSMC can use up to 35% of TSMC’s capacity if TSMC’s outstanding commitments to its customers
are not prejudiced. The term of this agreement is for five years beginning from January 1, 1987 and is
automatically renewed for successive periods of five years unless otherwise terminated by either party with
one year prior notice.
b. Under several foundry agreements, TSMC shall reserve a portion of its production capacity for certain
major customers that have guarantee deposits with TSMC. As of December 31, 2009 TSMC had a total of
US$29,582 thousand of guarantee deposits.
c. Under a Shareholders Agreement entered into with Philips and EDB Investments Pte Ltd. on March
30, 1999, the parties formed a joint venture company, SSMC, which is an integrated circuit foundry in
Singapore. TSMC’s equity interest in SSMC was 32%. Nevertheless, Philips parted with its semiconductor
company which was renamed as NXP B.V. in September 2006. TSMC and NXP B.V. purchased all the
SSMC shares owned by EDB Investments Pte Ltd. pro rata according to the Shareholders Agreement on
November 15, 2006. After the purchase, TSMC and NXP B.V. currently own approximately 39% and
61% of the SSMC shares respectively. TSMC and Philips (now NXP B.V.) are required, in the aggregate, to
purchase at least 70% of SSMC’s capacity, but TSMC alone is not required to purchase more than 28%
of the capacity. If any party defaults on the commitment and the capacity utilization of SSMC fall below
a specific percentage of its capacity, the defaulting party is required to compensate SSMC for all related
unavoidable costs.
d. TSMC provides technical services to SSMC under a Technical Cooperation Agreement (the Agreement)
effective March 30, 1999. TSMC receives compensation for such services computed at a specific
percentage of net selling price of all products sold by SSMC. The Agreement shall remain in force for ten
years and will be automatically renewed for successive periods of five years each unless pre-terminated by
either party under certain conditions.
e. TSMC provides a technology transfer to VIS under a Manufacturing License and Technology Transfer
Agreement entered into on April 1, 2004. TSMC receives compensation for such technology transfer in
the form of royalty payments from VIS computed at specific percentages of net selling price of certain
products sold by VIS. VIS agreed to reserve its certain capacity to manufacture for TSMC certain products
at prices as agreed by the parties.
f. TSMC, TSMC North America and WaferTech filed a series of lawsuits in late 2003 and 2004 against
Semiconductor Manufacturing International Corporation, SMIC (Shanghai) and SMIC Americas (aggregately
referring to as “SMIC”). The lawsuits alleged that SMIC infringed multiple TSMC, TSMC North America
and WaferTech patents and misappropriated TSMC, TSMC North America and WaferTech’s trade secrets.
These suits were settled out of court on January 30, 2005. As part of the settlement, Semiconductor
Manufacturing International Corporation shall pay US$175 million over six years to resolve TSMC, TSMC
North America and WaferTech’s claims. As of December 31, 2009, SMIC had paid US$135 million in
accordance with the terms of this settlement agreement. In August 2006, TSMC, TSMC North America
and WaferTech filed a lawsuit against SMIC in Alameda County Superior Court in California for breach of
aforementioned settlement agreement, breach of promissory notes and trade secret misappropriation,
seeking injunctive relief and monetary damages. In September 2006, SMIC filed a cross-complaint against
TSMC, TSMC North America and WaferTech in the same court, alleging TSMC, TSMC North America and
WaferTech of breach of the settlement agreement and implied covenant of good faith and fair dealing,
in response to TSMC, TSMC North America and WaferTech’s August complaint. In November 2006, SMIC
filed a complaint with Beijing People’s High Court against TSMC, TSMC North America and WaferTech
alleging defamation and breach of good faith. The California State Superior Court of Alameda County
issued an Order on TSMC, TSMC North America and WaferTech’s pre-trial motion for a preliminary
injunction against SMIC on September 7, 2007. In the Order, the Court found “TSMC has demonstrated a
significant likelihood that it will ultimately prevail on the merits of its claim for breach of certain paragraphs
of the (2005) Settlement Agreement” with SMIC. The Court also found “TSMC has demonstrated a
significant probability of establishing that SMIC retains and is using TSMC Information in SMIC’s 0.13um
and smaller technologies, and there is significant threat of serious irreparable harm to TSMC if SMIC were
to disclose or transfer that information before final resolution of the case”. Therefore, the Court ordered
that, effective immediately, SMIC must provide advance notice and an opportunity for TSMC, TSMC North
America and WaferTech to object before disclosing items enumerated in the Court Order to SMIC’s third
party partners. The Court, however, did not grant a preliminary injunction as requested by TSMC, TSMC
North America and WaferTech. In January 2009, the court in the California action held a four-day bench
trial to determine whether a Settlement Agreement existed between the parties, and if there were an
agreement, the interpretation of certain terms. SMIC contended that there was no binding Settlement
Agreement, and TSMC, TSMC North America and WaferTech contended that the Settlement Agreement
signed on January 30, 2005 and finalized shortly thereafter and repeatedly ratified bound the parties. On
March 10, 2009, the Court issued its Statement of Decision. The Court rejected SMIC’s contention, and
found that the parties were bound by the Settlement Agreement identified by TSMC, TSMC North America
and WaferTech. The Court also interpreted the meaning of certain provisions within the Settlement
Agreement. Regarding the claims raised by SMIC in the Beijing lawsuit, the Beijing People’s High Court
has on June 10, 2009 rejected those claims and dismissed the lawsuit. On November 4, 2009, after a
two-month trial, a jury in the California action found SMIC to have both breached the 2005 settlement
agreement and misappropriated TSMC, TSMC North America and WaferTech’s trade secrets. TSMC, TSMC
North America and WaferTech have subsequently settled both lawsuits with SMIC. Pursuant to the new
settlement agreement, the parties have agreed to the entry of a stipulated judgment in favor of TSMC,
TSMC North America and WaferTech in the California action, and to the dismissal of SMIC’s appeal against
the Beijing High Court’s finding in favor of TSMC, TSMC North America and WaferTech. Under the new
settlement agreement and the related stipulated judgment, SMIC has agreed to make cash payments by
installments to TSMC totaling US$200 million, which are in addition to the US$135 million previously paid
to TSMC under the 2005 settlement agreement, and to provide TSMC with other valuable consideration.
g. The Company entered into an agreement with a counterparty in 2003 whereby TSMC China is obligated
to purchase certain property, plant and equipment at the agreed-upon price within the contract period.
If the purchase is not completed, TSMC China is obligated to compensate the counterparty for the loss
incurred. The property, plant and equipment have been in use by TSMC China since 2004 and are being
depreciated over their estimated service lives. The related obligation totaled NT$8,355,395 thousand and
NT$8,579,726 thousand as of December 31, 2009 and 2008, respectively, which is included in other
long-term payables.
h. Amounts available under unused letters of credit as of December 31, 2009 were NT$16,155 thousand.
29. ADDITIONAL DISCLOSURES
Following are the additional disclosures required by the SFB for TSMC and its investees in which all significant
intercompany balances and transactions are eliminated upon consolidation:
a. Financing provided: None;
b. Endorsement/guarantee provided: None;
c. Marketable securities held: Please see Table 1 attached;
d. Marketable securities acquired and disposed of at costs or prices of at least NT$100 million or 20% of the
paid-in capital: Please see Table 2 attached;
e. Acquisition of individual real estate properties at costs of at least NT$100 million or 20% of the paid-in
capital: Please see Table 3 attached;
f. Disposal of individual real estate properties at prices of at least NT$100 million or 20% of the paid-in
capital: None;
g. Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the
paid-in capital: Please see Table 4 attached;
h. Receivable from related parties amounting to at least NT$100 million or 20% of the paid-in capital: Please
see Table 5 attached;
i. Names, locations, and related information of investees over which TSMC exercises significant influence:
Please see Table 6 attached;
j. Information on investment in Mainland China
1) The name of the investee in mainland China, the main businesses and products, its issued capital,
method of investment, information on inflow or outflow of capital, percentage of ownership, equity
in the net gain or net loss, ending balance, amount received as dividends from the investee, and the
limitation on investee: Please see Table 7 attached.
2) Significant direct or indirect transactions with the investee, its prices and terms of payment, unrealized
gain or loss, and other related information which is helpful to understand the impact of investment in
mainland China on financial reports: Please see Table 8 attached.
k. Intercompany relationships and significant intercompany transactions: Please see Table 8 attached.
67
30. SEGMENT FINANCIAL INFORMATION
a. Industry financial information
The Company operates in one industry. Therefore, the disclosure of industry financial information is not
applicable to the Company.
c. Export sales
Area
Asia
Europe and others
Years Ended December 31
2009
2008
$ 65,491,264
44,602,706
$ 55,383,901
41,890,123
$ 110,093,970
$ 97,274,024
b. Geographic information:
2009
North America and
Others
Taiwan
Adjustments and
Elimination
Consolidated
The export sales information is based on the amounts billed to customers within the areas.
d. Major customers representing at least 10% of gross sales
Years Ended December 31
2009
Amount
$ 33,025,488
31,994,983
2008
Amount
$ 46,523,059
30,271,064
%
11
10
%
14
9
Sales to other than consolidated entities
Sales among consolidated entities
$ 162,783,488
11,891,274
$ 132,958,751
163,407,355
$ -
(175,298,629)
$ 295,742,239
-
Total sales
$ 174,674,762
$ 296,366,106
$ (175,298,629)
$ 295,742,239
Gross profit
Operating expenses
Non-operating income and gains
Non-operating expenses and losses
Income before income tax
Identifiable assets
Long-term investments
Total assets
2008
$ 2,004,734
$ 128,456,453
$ (1,132,576)
$ 113,023,501
$ 468,112,330
$ (24,285,114)
Customer A
Customer B
$ 129,328,611
(37,366,725)
5,653,548
(2,152,787)
$ 95,462,647
$ 556,850,717
37,845,503
$ 594,696,220
Sales to other than consolidated entities
Sales among consolidated entities
$ 193,727,539
16,280,818
$ 139,430,121
194,731,514
$ -
(211,012,332)
$ 333,157,660
-
Total sales
$ 210,008,357
$ 334,161,635
$ (211,012,332)
$ 333,157,660
Gross profit
Operating expenses
Non-operating income and gains
Non-operating expenses and losses
Income before income tax
Identifiable assets
Long-term investments
Total assets
$ 2,114,127
$ 140,540,236
$ (904,802)
$ 122,781,555
$ 425,545,212
$ (29,391,693)
$ 141,749,561
(37,314,193)
10,821,449
(3,784,571)
$ 111,472,246
$ 518,935,074
39,981,515
$ 558,916,589
68
TABLE 1
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
MARKETABLE SECURITIES HELD
DECEMBER 31, 2009
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)
Held Company Name
Marketable Securities Type and Name
Relationship with TSMC
Financial Statement Account
December 31, 2009
Shares/Units
(In Thousands)
Carrying Value
(US$ in Thousands)
Percentage of
Ownership (%)
Market Value or Net
Asset Value
(US$ in Thousands)
Note
TSMC
TSMC Partners
Corporate bond
Taiwan Mobile Co., Ltd.
Formosa Petrochemical Corporation
Taiwan Power Company
Nan Ya Plastics Corporation
Formosa Plastics Corporation
China Steel Corporation
CPC Corporation, Taiwan
Taipei Fubon Commercial Bank Co., Ltd.
First Commercial Bank Co., Ltd.
Government bond
European Investment Bank Bonds
2003 Asian Development Bank Govt. Bond
Stock
TSMC Global
TSMC Partners
VIS
SSMC
TSMC North America
Xintec
GUC
TSMC Europe
TSMC Japan
TSMC Korea
United Industrial Gases Co., Ltd.
Shin-Etsu Handotai Taiwan Co., Ltd.
W.K. Technology Fund IV
Fund
Horizon Ventures Fund
Crimson Asia Capital
Capital
TSMC China
VTAF III
VTAF II
Emerging Alliance
Corporate bond
General Elec Cap Corp. Mtn
General Elec Cap Corp. Mtn
-
-
-
-
-
-
-
-
-
-
-
Subsidiary
Subsidiary
Investee accounted for using
equity method
Investee accounted for using
equity method
Subsidiary
Investee with a controlling
financial interest
Investee with a controlling
financial interest
Subsidiary
Subsidiary
Subsidiary
-
-
-
-
-
Subsidiary
Subsidiary
Subsidiary
Subsidiary
-
-
Available-for-sale financial assets
Held-to-maturity financial assets
〃
〃
〃
〃
〃
〃
〃
Held-to-maturity financial assets
〃
Investments accounted for using
equity method
〃
〃
〃
〃
〃
〃
〃
〃
〃
Financial assets carried at cost
〃
〃
Financial assets carried at cost
〃
Investments accounted for using
equity method
〃
〃
〃
Held-to-maturity financial assets
〃
-
-
-
-
-
-
-
-
-
-
-
1
988,268
628,223
314
11,000
93,081
46,688
-
6
80
16,783
10,500
4,000
-
-
-
-
-
-
-
-
$ 1,046,672
3,178,551
3,004,941
2,000,145
1,671,815
1,512,130
500,031
298,884
99,814
2,003,877
893,710
45,397,256
32,545,619
9,365,232
6,157,141
2,723,727
1,475,014
983,126
159,467
135,663
18,519
193,584
105,000
40,000
103,992
59,412
2,961,043
1,309,615
1,122,810
305,866
US$ 20,543
US$ 20,219
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
100
100
37
39
100
41
35
100
100
100
10
7
2
12
1
100
98
98
99
N/A
N/A
$ 1,046,672
3,200,302
3,011,743
2,029,935
1,685,345
1,528,117
499,913
298,751
99,815
2,025,500
875,103
45,397,256
32,545,619
10,114,398
5,581,994
2,723,727
1,437,395
7,913,592
159,467
135,663
18,519
297,655
332,943
43,975
103,992
59,412
2,958,707
1,292,412
1,117,773
305,866
US$ 21,312
US$ 21,182
(Continued)
69
Held Company Name
Marketable Securities Type and Name
Relationship with TSMC
Financial Statement Account
December 31, 2009
Shares/Units
(In Thousands)
Carrying Value
(US$ in Thousands)
Percentage of
Ownership (%)
Market Value or Net
Asset Value
(US$ in Thousands)
Note
Common stock
TSMC Development, Inc. (TSMC Development)
VisEra Holding Company
InveStar Semiconductor Development Fund, Inc. (II) LDC. (ISDF II)
TSMC Technology
InveStar Semiconductor Development Fund, Inc. (ISDF)
TSMC Canada
Mcube Inc.
TSMC Development
Emerging Alliance
Preferred stock
Mcube Inc.
Corporate bond
GE Capital Corp.
JP Morgan Chase & Co.
Stock
WaferTech
Common stock
RichWave Technology Corp.
Global Investment Holding Inc.
Preferred stock
Audience, Inc.
Axiom Microdevices, Inc.
Mosaic Systems, Inc.
Next IO, Inc.
Optichron, Inc.
Pixim, Inc.
QST Holdings, LLC
Teknovus, Inc.
-
-
-
-
-
-
-
-
-
-
Subsidiary
Investments accounted for using
1
US$ 340,387
100
US$ 340,387
equity method
Investee accounted for using
equity method
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Investee accounted for using
equity method
〃
〃
〃
〃
〃
〃
43,000
US$ 70,967
49
US$ 70,967
21,415
1
7,680
2,300
5,333
US$ 13,741
US$ 9,071
US$ 7,336
US$ 3,193
US$ 800
97
100
97
100
70
US$ 13,741
US$ 9,071
US$ 7,336
US$ 3,193
US$ 800
Investee accounted for using
Investments accounted for using
1,000
US$ 1,000
10
US$ 1,000
equity method
equity method
-
-
Held-to-maturity financial assets
〃
-
-
US$ 20,334
US$ 15,000
N/A
N/A
US$ 21,182
US$ 15,000
Subsidiary
Investments accounted for using
293,637
US$ 154,432
100
US$ 154,432
equity method
Financial assets carried at cost
〃
4,247
10,000
US$ 1,648
US$ 3,065
10
6
US$ 1,648
US$ 3,065
Financial assets carried at cost
〃
〃
〃
〃
〃
〃
〃
1,654
1,000
2,481
800
1,281
4,641
-
6,977
-
US$ 250
US$ 24
US$ 12
US$ 500
US$ 1,072
US$ 1,137
US$ 131
US$ 1,327
-
Capital
VentureTech Alliance Holdings, LLC (VTA Holdings)
Subsidiary
Investments accounted for using
equity method
VTAF II
70
Common stock
Leadtrend
RichWave Technology Corp.
Sentelic
Preferred stock
5V Technologies, Inc.
Aquantia
Audience, Inc.
Axiom Microdevices, Inc.
Beceem Communications
Impinj, Inc.
Next IO, Inc.
Optichron, Inc.
Pixim, Inc.
Power Analog Microelectronics
QST Holdings, LLC
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Available-for-sale financial assets
Financial assets carried at cost
〃
1,515
1,043
1,200
US$ 9,721
US$ 730
US$ 2,040
Financial assets carried at cost
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
2,890
3,974
7,956
759
834
475
3,795
2,784
33,347
7,027
-
US$ 2,168
US$ 3,816
US$ 1,838
US$ 650
US$ 1,701
US$ 1,000
US$ 953
US$ 2,664
US$ 1,878
US$ 3,383
US$ 593
1
1
6
1
2
2
4
2
7
4
1
15
4
5
2
13
1
-
2
4
2
19
13
US$ 250
US$ 24
US$ 12
US$ 500
US$ 1,072
US$ 1,137
US$ 131
US$ 1,327
-
US$ 9,721
US$ 730
US$ 2,040
US$ 2,168
US$ 3,816
US$ 1,838
US$ 650
US$ 1,701
US$ 1,000
US$ 953
US$ 2,664
US$ 1,878
US$ 3,383
US$ 593
(Continued)
Held Company Name
Marketable Securities Type and Name
Relationship with TSMC
Financial Statement Account
December 31, 2009
Shares/Units
(In Thousands)
Carrying Value
(US$ in Thousands)
Percentage of
Ownership (%)
VTAF III
Growth Fund
ISDF
ISDF II
Teknovus, Inc.
Xceive
Capital
VTA Holdings
Common stock
Mutual-Pak Technology Co., Ltd.
Acionn Technology Corporation
Preferred stock
Auramicro, Inc.
BridgeLux, Inc.
Exclara, Inc.
GTBF, Inc.
InvenSense, Inc.
LiquidLeds Lighting Corp.
M2000, Inc.
Neoconix, Inc.
Powervation, Ltd.
Quellan, Inc.
Silicon Technical Services, LLC
Tilera, Inc.
Validity Sensors, Inc.
Capital
Growth Fund Limited (Growth Fund)
VTA Holdings
Common stock
Staccato
SiliconBlue Technologies, Inc.
Common stock
Memsic, Inc.
Capella Microsystems (Taiwan), Inc.
Preferred stock
Integrated Memory Logic, Inc.
IP Unity, Inc.
Sonics, Inc.
Common stock
Memsic, Inc.
Sonics, Inc.
Epic Communication, Inc.
EON Technology, Corp.
Goyatek Technology, Corp.
Capella Microsystems (Taiwan), Inc.
Auden Technology MFG. Co., Ltd.
Preferred stock
Alchip Technologies Limited
FangTek, Inc.
Kilopass Technology, Inc.
-
-
Financial assets carried at cost
〃
1,599
3,936
US$ 454
US$ 1,516
Subsidiary
Investments accounted for using
-
-
equity method
Subsidiary
Investments accounted for using
9,180
US$ 2,112
Investee accounted for using
〃
equity method
equity method
4,500
US$ 566
-
-
-
-
-
-
-
-
-
-
-
-
-
Financial assets carried at cost
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
Subsidiary
Subsidiary
Investments accounted for using
equity method
〃
4,694
4,955
21,708
1,154
816
1,600
3,000
3,283
310
3,106
1,055
3,222
8,070
-
-
US$ 1,408
US$ 6,391
US$ 4,568
US$ 1,500
US$ 1,000
US$ 800
US$ 3,000
US$ 4,608
US$ 4,678
US$ 457
US$ 1,208
US$ 2,781
US$ 3,089
Note
Market Value or Net
Asset Value
(US$ in Thousands)
US$ 454
US$ 1,516
-
US$ 2,112
US$ 566
US$ 1,408
US$ 6,391
US$ 4,568
US$ 1,500
US$ 1,000
US$ 800
US$ 3,000
US$ 4,608
US$ 4,678
US$ 457
US$ 1,208
US$ 2,781
US$ 3,089
-
2
31
59
42
20
4
18
N/A
1
11
5
6
16
6
1
3
3
US$ 823
100
US$ 823
-
62
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Financial assets carried at cost
〃
10
5,107
US$ 25
US$ 762
Available-for-sale financial assets
Financial assets carried at cost
1,364
557
US$ 4,472
US$ 154
Financial assets carried at cost
〃
〃
Available-for-sale financial assets
Financial assets carried at cost
〃
〃
〃
〃
〃
Financial assets carried at cost
〃
〃
2,872
1,008
230
1,145
278
50
2,368
932
561
1,049
6,979
1,032
3,887
US$ 1,221
US$ 290
US$ 497
US$ 3,754
US$ 10
US$ 23
US$ 656
US$ 545
US$ 210
US$ 223
US$ 3,664
US$ 686
US$ 500
-
2
6
2
9
1
2
5
3
-
3
6
2
3
US$ 25
US$ 762
US$ 4,472
US$ 154
US$ 1,221
US$ 290
US$ 497
US$ 3,754
US$ 10
US$ 23
US$ 656
US$ 545
US$ 210
US$ 223
18
6
5
US$ 3,664
US$ 686
US$ 500
(Continued)
71
Held Company Name
Marketable Securities Type and Name
Relationship with TSMC
Financial Statement Account
December 31, 2009
Shares/Units
(In Thousands)
Carrying Value
(US$ in Thousands)
Percentage of
Ownership (%)
Market Value or Net
Asset Value
(US$ in Thousands)
Note
GUC
Xintec
TSMC Global
Sonics, Inc.
Open-end mutual fund
Jih Sun Bond Fund
FSITC Taiwan Bond Fund
Cathay Bond Fund
Common stock
GUC-NA
GUC-Japan
GUC-Europe
GUC-BVI
Capital
Compositech Ltd.
Corporate bond
Ab Svensk Exportkredit Swedish
African Development Bank
Allstate Life Global Fdg
Asian Development Bank
Astrazeneca Plc
Australia + New Zealand Bkg
Banco Bilbao Vizcaya P R
Bank New York Inc. Medium
Bank of New York Mellon
Bear Stearns Cos Inc.
Bear Stearns Cos Inc.
Bhp Billiton Fin USA Ltd.
Bnp Paribas SA
Boeing Co.
Bsch Issuances Ltd.
Cello Part/Veri Wirelss
Citibank NA
Citigroup funding Inc.
Credit Suisse New York
European Investment Bank
Federal Farm Cr Bks
Finance for Danish Ind
General Elec Cap Corp.
General Elec Cap Corp.
General Elec Cap Corp. Fdic Gtd
Goldman Sachs Group Inc.
Goldman Sachs Group Incser 2
Hewlett Packard Co.
HSBC Fin Corp.
HSBC USA Inc. Fdic Gtd Tlgp
IBM Corp.
International Business Machs
Intl Bk Recon + Develop
JP Morgan Chase + Co.
JP Morgan Chase + Co. Fdic Gtd Tlg
Kfw
Kfw Medium Term Nts Book Entry
Kreditanstalt Fur Wiederaufbau
Lloyds Tsb Bank Plc Ser 144A
Mellon Fdg Corp.
Met Life Glob Funding I
-
-
-
-
Subsidiary
Subsidiary
Subsidiary
Subsidiary
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Financial assets carried at cost
264
US$ 456
3
US$ 456
Available-for-sale financial assets
〃
〃
5,668
352
2,509
$ 80,008
60,005
30,001
-
-
-
$ 80,008
60,005
30,001
Investments accounted for using
equity method
〃
〃
〃
Financial assets carried at cost
Available-for-sale financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
800
1
-
550
587
5,000
2,600
220
2,500
2,150
2,000
3,250
2,100
2,200
5,000
3,500
2,000
2,310
450
2,250
2,000
5,000
2,000
2,000
2,250
2,250
1,900
1,000
7,000
2,500
2,000
3,000
3,000
2,315
2,200
1,800
3,000
2,000
2,500
3,000
2,230
1,950
650
5,950
3,500
2,100
38,617
12,899
5,213
17,466
-
US$ 5,144
US$ 2,622
US$ 221
US$ 2,497
US$ 2,349
US$ 2,054
US$ 3,248
US$ 2,262
US$ 2,208
US$ 4,974
US$ 3,391
US$ 2,129
US$ 2,339
US$ 445
US$ 2,359
US$ 2,068
US$ 4,996
US$ 2,016
US$ 2,057
US$ 2,243
US$ 2,254
US$ 1,900
US$ 978
US$ 7,001
US$ 2,547
US$ 1,939
US$ 3,012
US$ 3,000
US$ 2,233
US$ 2,277
US$ 1,796
US$ 3,027
US$ 2,069
US$ 2,523
US$ 3,030
US$ 2,236
US$ 1,953
US$ 673
US$ 6,049
US$ 3,419
US$ 2,142
100
100
100
100
3
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
38,617
12,899
5,213
17,466
-
US$ 5,144
US$ 2,622
US$ 221
US$ 2,497
US$ 2,349
US$ 2,054
US$ 3,248
US$ 2,262
US$ 2,208
US$ 4,974
US$ 3,391
US$ 2,129
US$ 2,339
US$ 445
US$ 2,359
US$ 2,068
US$ 4,996
US$ 2,016
US$ 2,057
US$ 2,243
US$ 2,254
US$ 1,900
US$ 978
US$ 7,001
US$ 2,547
US$ 1,939
US$ 3,012
US$ 3,000
US$ 2,233
US$ 2,277
US$ 1,796
US$ 3,027
US$ 2,069
US$ 2,523
US$ 3,030
US$ 2,236
US$ 1,953
US$ 673
US$ 6,049
US$ 3,419
US$ 2,142
72
(Continued)
Held Company Name
Marketable Securities Type and Name
Relationship with TSMC
Financial Statement Account
December 31, 2009
Shares/Units
(In Thousands)
Carrying Value
(US$ in Thousands)
Percentage of
Ownership (%)
Market Value or Net
Asset Value
(US$ in Thousands)
Note
Met Life Glob Funding I
Metlife Inc.
Metropolitan Life Global Fdg
Metropolitan Life Global Fdg I
Morgan Stanley
Morgan Stanley
Morgan Stanley Fdic Gtd Tlgp
Morgan Stanley for Equity
Nordea Bank Fld Plc
Oesterreichische Kontrollbank
Ontario (Province of)
Paccar Finl Corp. Mtn Bk Ent
Pricoa Global Fdg I Med Term
Pricoa Global Funding 1
Pricoa Global Fdg I Medium
Royal Bk of Scotland Plc
Royal Bk Scotlnd Grp Plc 144A
Southern Co.
Sovereign Bancorp Fdic Gtd Tlg
State Str Corp.
Suncorp Metway Ltd.
Suncorp Metway Ltd.
Svenska Handelsbanken Ab
Swedbank Ab
Swedbank Foreningssparbanken A
Ubs Ag Stamford
US Central Federal Cred
Verizon Communications Inc.
Verizon Global Fdg Corp.
Wachovia Corp. New
Wells Fargo + Company
Westfield Cap Corp. Ltd.
Westpac Banking Corp.
Westpac Banking Corp.
Nationwide Building Society
Westpac Banking Corp. 12/12 Frn
Agency bond
Fannif Mae
Fed Hm Ln Pc Pool 1b2830
Fed Hm Ln Pc Pool 1g0115
Fed Hm Ln Pc Pool 1k1210
Fed Hm Ln Pc Pool 780741
Federal Farm Cr Bks
Federal Farm Credit Bank
Federal Farm Credit Bank
Federal Home Ln Bank
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Loan Bank
Federal Home Loan Bank
Federal Home Loan Bank
Federal Home Loan Bank
Federal Home Loan Bank
Federal Home Loan Bank
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Available-for-sale financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
Held-to-maturity financial assets
〃
Available-for-sale financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
500
2,000
750
3,340
2,200
2,000
2,210
2,000
2,250
2,000
2,000
1,000
1,750
1,200
2,200
5,000
9,450
600
2,200
1,940
2,000
5,000
2,200
2,000
1,500
1,300
4,800
2,200
500
4,000
2,000
500
2,100
2,170
8,000
5,000
2,820
2,554
2,271
2,053
2,121
2,000
3,000
2,200
11,000
1,350
3,421
2,662
2,469
2,309
2,358
10,000
8,000
10,000
4,700
11,200
3,310
US$ 502
US$ 2,017
US$ 739
US$ 3,278
US$ 2,212
US$ 2,032
US$ 2,244
US$ 1,943
US$ 2,240
US$ 2,059
US$ 1,980
US$ 1,007
US$ 1,638
US$ 1,167
US$ 2,130
US$ 5,078
US$ 9,578
US$ 602
US$ 2,246
US$ 1,920
US$ 2,004
US$ 5,170
US$ 2,214
US$ 1,994
US$ 1,537
US$ 1,300
US$ 4,799
US$ 2,294
US$ 528
US$ 4,246
US$ 2,013
US$ 514
US$ 2,112
US$ 2,168
US$ 8,000
US$ 5,000
US$ 2,814
US$ 2,635
US$ 2,315
US$ 2,121
US$ 2,181
US$ 2,117
US$ 2,990
US$ 2,258
US$ 11,028
US$ 1,352
US$ 3,533
US$ 2,763
US$ 2,521
US$ 2,350
US$ 2,448
US$ 9,987
US$ 7,992
US$ 10,012
US$ 4,715
US$ 11,186
US$ 3,319
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
US$ 502
US$ 2,017
US$ 739
US$ 3,278
US$ 2,212
US$ 2,032
US$ 2,244
US$ 1,943
US$ 2,240
US$ 2,059
US$ 1,980
US$ 1,007
US$ 1,638
US$ 1,167
US$ 2,130
US$ 5,078
US$ 9,578
US$ 602
US$ 2,246
US$ 1,920
US$ 2,004
US$ 5,170
US$ 2,214
US$ 1,994
US$ 1,537
US$ 1,300
US$ 4,799
US$ 2,294
US$ 528
US$ 4,246
US$ 2,013
US$ 514
US$ 2,112
US$ 2,168
US$ 8,008
US$ 4,999
US$ 2,814
US$ 2,635
US$ 2,315
US$ 2,121
US$ 2,181
US$ 2,117
US$ 2,990
US$ 2,258
US$ 11,028
US$ 1,352
US$ 3,533
US$ 2,763
US$ 2,521
US$ 2,350
US$ 2,448
US$ 9,987
US$ 7,992
US$ 10,012
US$ 4,715
US$ 11,186
US$ 3,319
(Continued)
73
Held Company Name
Marketable Securities Type and Name
Relationship with TSMC
Financial Statement Account
December 31, 2009
Shares/Units
(In Thousands)
Carrying Value
(US$ in Thousands)
Percentage of
Ownership (%)
Market Value or Net
Asset Value
(US$ in Thousands)
Note
Federal Home Loan Bank
Federal Home Loan Bank
Federal Home Loan Bank
Federal Home Loan Mtg Corp.
Federal Home Loan Mtg Corp.
Federal National Mort Assoc
Federal National Mort Assoc
Federal Natl Mtg Assn Gtd Remi
Federal Natl Mtg Assn Mtn
Federal Natl Mtg Assn Remic
Federal Natl Mtg Assn
Federal Natl Mtge Assn
Fhr 3087 Jb
Fnma Pool 745688
Fnma Pool 790772
Fnma Pool 819649
Fnma Pool 829989
Fnma Pool 846233
Fnma Pool 870884
Fnma Pool 879908
Fnr 2005 47 Ha
Fnr 2006 60 Co
Fnr 2009 70 Nt
Freddie Mac
Gnma II Pool 082431
Government bond
US Treasury N/B
US Treasury N/B
US Treasury Nts
United States Treas Nts
Societe De Financement De Lec
Corporate issued note
Barclays U.S. Fdg LLC
Royal Bk of Scotland
Money market fund
Ssga Cash Mgmt Global Offshore
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Available-for-sale financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
Available-for-sale financial assets
〃
〃
〃
Held-to-maturity financial assets
3,000
3,000
3,000
1,411
1,940
2,117
1,752
2,854
2,669
2,871
4,000
2,039
2,540
2,272
1,527
2,318
2,146
2,288
2,357
2,056
2,652
3,062
2,537
4,500
2,000
US$ 2,989
US$ 2,983
US$ 2,984
US$ 1,441
US$ 2,012
US$ 2,176
US$ 1,782
US$ 2,926
US$ 2,765
US$ 2,953
US$ 4,228
US$ 2,126
US$ 2,656
US$ 2,336
US$ 1,568
US$ 2,383
US$ 2,221
US$ 2,332
US$ 2,442
US$ 2,128
US$ 2,753
US$ 3,153
US$ 2,609
US$ 4,491
US$ 2,030
21,400
2,170
37,700
10,536
15,000
US$ 21,394
US$ 2,158
US$ 39,012
US$ 10,548
US$ 15,000
Available-for-sale financial assets
〃
4,500
5,000
US$ 4,489
US$ 4,982
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
US$ 2,989
US$ 2,983
US$ 2,984
US$ 1,441
US$ 2,012
US$ 2,176
US$ 1,782
US$ 2,926
US$ 2,765
US$ 2,953
US$ 4,228
US$ 2,126
US$ 2,656
US$ 2,336
US$ 1,568
US$ 2,383
US$ 2,221
US$ 2,332
US$ 2,442
US$ 2,128
US$ 2,753
US$ 3,153
US$ 2,609
US$ 4,491
US$ 2,030
US$ 21,394
US$ 2,158
US$ 39,012
US$ 10,548
US$ 15,091
US$ 4,489
US$ 4,982
Available-for-sale financial assets
8,858
US$ 8,858
N/A
US$ 8,858
(Concluded)
74
TABLE 2
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
MARKETABLE SECURITIES ACQUIRED AND DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 2009
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)
Company
Name
Marketable Securities Type and
Name
Financial
Statement
Account
Counter-party
Beginning Balance
Acquisition
Disposal (Note 2)
Ending Balance (Note 3)
Nature of
Relationship
Shares/Units
(In Thousands)
Amount
(US$ in
Thousands)
Shares/Units
(In Thousands)
(Note 1)
Amount
(US$ in
Thousands)
Shares/Units
(In Thousands)
Amount
(US$ in
Thousands)
Carrying
Value (US$ in
Thousands)
Gain (Loss) or
Disposal (US$
in Thousands)
Shares/Units
(In Thousands)
Amount
(US$ in
Thousands)
TSMC
Corporate bond
Taiwan Mobile Co., Ltd.
Formosa Petrochemical Corporation
Taiwan Power Company
Formosa Plastic Corporation
China Steel Corporation
Taipei Fubon Commercial Bank Co.,
Ltd.
Government bond
European Investment Bank Bonds
Capital
VTAF III
TSMC
Development
Corporate bond
JP Morgan Chase & Co.
GUC
Open-end mutual fund
Jih Sun Bond Fund
FSITC Taiwan Bond Fund
Prudential Financial Bond Fund
PCA Well Pool Fund
Hua Nan Phoenix Bond Fund
TSMC Global
Corporate bond
Ab Svensk Exportkredit Swedish
Banco Bilbao Vizcaya P R
Bear Stearns Cos Inc.
Bear Stearns Cos Inc.
Chase Manhattan Corp. New
Citibank NA
Citibank NA
Deutsche Bank Ag London
General Elec Cap Corp.
General Elec Cap Corp.
Available-for-sale
financial assets
Held-to-maturity
financial assets
〃
〃
〃
〃
Grand Cathay Securities Corp. and
several financial institutions
〃
〃
〃
〃
〃
Held-to-maturity
financial assets
Grand Cathay Securities Corp. and
several financial institutions
-
Investments
accounted for
using equity
method
Held-to-maturity
financial assets
JP Morgan Securitied Inc.
Available-for-sale
financial assets
〃
〃
〃
〃
Jih Sun Investment Trust Co., Ltd.
First Securities Investment Trust
Co., Ltd.
Prudential Financial Securities
Investment Trust Enterprise
PCA Securities Investment Trust
Co., Ltd.
Hua Nan Investment Trust Co., Ltd.
Available-for-sale
financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Subsidiary
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$ 2,032,658
3,554,908
4,209,629
2,385,285
1,000,000
-
383,387
1,305,605
-
-
-
-
-
-
-
-
-
-
3,250
-
-
2,995
-
-
-
-
-
US$ 3,353
-
-
US$ 3,013
-
-
-
-
-
-
-
-
-
-
$ -
457,351
203,892
203,994
514,672
298,677
2,025,500
262,922
-
US$ 15,000
-
-
-
-
-
-
-
-
-
$ 1,037,370
$ 1,000,000
$ 37,370
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
400,000
383,909
16,091
-
-
-
-
19,143
270,000
13,475
190,120
190,000
1,146
195,000
794
135,206
135,000
11,261
170,000
11,261
170,319
170,000
13,121
170,000
13,121
170,241
170,000
10,287
160,000
10,287
160,143
160,000
-
-
-
-
-
-
-
-
$ 1,046,672
3,178,551
3,004,941
1,671,815
1,512,130
298,884
2,003,876
1,309,615
-
US$ 15,000
5,668
352
80,008
60,005
-
-
-
-
-
-
-
-
120
206
319
241
143
5,000
US$ 5,185
3,250
5,000
3,500
-
3,000
5,000
-
5,000
7,000
US$ 3,250
US$ 4,965
US$ 3,360
-
US$ 3,002
US$ 4,995
-
US$ 4,834
US$ 7,002
-
-
-
-
3,250
3,000
-
2,995
4,000
-
-
-
-
5,000
US$ 5,144
-
-
-
US$ 3,380
US$ 3,002
-
US$ 3,021
US$ 3,880
-
-
-
-
US$ 3,480
US$ 3,002
-
US$ 3,041
US$ 3,868
-
-
-
-
US$ (100)
-
-
US$ (20)
US$ 12
-
3,250
5,000
3,500
-
-
5,000
-
1,000
7,000
US$ 3,248
US$ 4,974
US$ 3,391
-
-
US$ 4,996
-
US$ 978
US$ 7,001
(Continued)
75
Company
Name
Marketable Securities Type and
Name
Goldman Sachs Group Incser 2
International Business Machs
JP Morgan Chase + Co. Fdic Gtd
Tlg
Keycorp Fdic Gtd Tlgp
Lloyds Tsb Bank Plc Ser 144A
Mellon Fdg Corp.
Metropolitan Life Global Fdg I
Morgan Stanley
Royal Bk of Scotland Plc
Royal Bk Scotlnd Grp Plc 144A
Suncorp Metway Ltd.
US Central Federal Cred
Wachovia Corp. New
Wachovia Corp. New
Wells Fargo + Co. New Med Trm
Nationwide Building Society
Westpac Banking Corp. 12/12 Frn
Agency bond
Fed Hm Ln Pc Pool 1g1282
Fed Hm Ln Pc Pool b19205
Fed Home Ln Bank
Federal Farm Cr Bks
Federal Farm Credit Bank
Federal Home Ln Bank
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Bks
Federal Home Ln Mtg
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Loan Bank
Federal Home Loan Bank
Federal Home Loan Bank
Federal Home Loan Bank
Federal Home Loan Bank
Federal Home Loan Bank
Federal Home Loan Bank
Federal Home Loan Bank
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn Gtd Remi
Federal Natl Mtg Assn Remic
Fnma Pool 257245
Fnma Pool 691283
Fnma Pool 852300
Fnma Pool 852347
Financial
Statement
Account
Available-for-sale
financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
Held-to-maturity
financial assets
〃
Available-for-sale
financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
76
Counter-party
Nature of
Relationship
Shares/Units
(In Thousands)
Amount
(US$ in
Thousands)
Shares/Units
(In Thousands)
(Note 1)
Amount
(US$ in
Thousands)
Shares/Units
(In Thousands)
Amount
(US$ in
Thousands)
Carrying
Value (US$ in
Thousands)
Gain (Loss) or
Disposal (US$
in Thousands)
Shares/Units
(In Thousands)
Amount
(US$ in
Thousands)
Beginning Balance
Acquisition
Disposal (Note 2)
Ending Balance (Note 3)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,855
-
-
-
-
-
3,130
4,500
-
-
US$ -
3,000
US$ 3,016
-
-
-
-
-
-
US$ 4,552
-
-
-
-
-
US$ 3,135
US$ 4,493
-
3,000
3,000
5,000
5,950
3,500
3,340
-
5,000
9,450
5,000
4,800
4,000
-
-
8,000
US$ 3,030
US$ 3,030
US$ 5,061
US$ 6,077
US$ 3,404
US$ 3,245
-
US$ 5,106
US$ 9,596
US$ 5,192
US$ 4,799
US$ 4,239
-
-
US$ 8,000
-
5,000
US$ 5,000
-
-
-
5,000
-
-
-
4,855
-
-
-
-
-
3,130
4,500
-
-
US$ -
US$ -
US$ -
3,000
US$ 3,012
-
-
-
-
-
-
US$ 5,061
-
-
-
US$ 4,751
-
-
-
-
-
US$ 3,195
US$ 4,524
-
US$ 5,061
-
-
-
US$ 4,768
-
-
-
-
-
US$ 3,100
US$ 4,282
-
-
-
-
-
US$ (17)
-
-
-
-
-
US$ 95
US$ 242
-
3,000
3,000
-
5,950
3,500
3,340
-
5,000
9,450
5,000
4,800
4,000
-
-
8,000
US$ 3,027
US$ 3,030
-
US$ 6,049
US$ 3,419
US$ 3,278
-
US$ 5,078
US$ 9,578
US$ 5,170
US$ 4,799
US$ 4,246
-
-
US$ 8,000
-
-
-
5,000
US$ 5,000
3,215
US$ 3,285
-
-
3,179
US$ 3,281
US$ 3,171
US$ 110
-
-
5,449
5,000
3,400
3,375
-
3,725
5,000
4,000
5,000
3,340
3,500
3,500
-
3,060
-
-
-
-
-
-
-
4,500
-
3,700
4,000
3,500
-
3,750
-
-
3,456
2,963
-
-
US$ 5,501
US$ 5,305
US$ 3,610
US$ 3,433
-
US$ 3,854
US$ 5,320
US$ 4,148
US$ 5,340
US$ 3,428
US$ 3,560
US$ 3,743
-
US$ 3,108
-
-
-
-
-
-
-
US$ 4,710
-
US$ 3,713
US$ 4,169
US$ 3,809
-
US$ 4,134
-
-
US$ 3,513
US$ 3,039
-
-
-
-
-
-
11,000
-
-
-
-
-
-
-
3,679
-
10,000
10,000
10,000
4,700
11,200
3,310
3,000
-
9,246
-
-
-
4,000
-
3,062
3,036
-
-
9,276
3,761
-
-
-
-
US$ 11,038
-
-
-
-
-
-
-
US$ 3,824
-
US$ 9,996
US$ 10,002
US$ 10,035
US$ 4,723
US$ 11,200
US$ 3,310
US$ 3,000
-
US$ 9,474
-
-
-
US$ 4,261
-
US$ 3,153
US$ 3,127
-
-
US$ 9,843
US$ 3,991
5,335
5,000
3,400
3,375
-
3,725
5,000
4,000
5,000
3,340
3,500
3,500
-
3,005
-
2,000
-
-
-
-
-
4,500
9,246
3,700
4,000
3,500
-
3,750
-
-
3,415
2,932
9,206
3,721
US$ 5,511
US$ 5,282
US$ 3,590
US$ 3,429
-
US$ 3,851
US$ 5,312
US$ 4,151
US$ 5,334
US$ 3,431
US$ 3,561
US$ 3,749
-
US$ 3,078
-
US$ 2,000
-
-
-
-
-
US$ 4,709
US$ 9,461
US$ 3,712
US$ 4,180
US$ 3,801
-
US$ 4,127
-
-
US$ 3,513
US$ 3,028
US$ 9,773
US$ 3,950
US$ 5,225
US$ 5,035
US$ 3,411
US$ 3,370
-
US$ 3,721
US$ 5,098
US$ 4,136
US$ 5,186
US$ 3,335
US$ 3,494
US$ 3,786
-
US$ 3,003
-
US$ 2,000
-
-
-
-
-
US$ 4,518
US$ 9,474
US$ 3,700
US$ 4,117
US$ 3,645
-
US$ 4,151
-
-
US$ 3,437
US$ 2,920
US$ 9,770
US$ 3,949
US$ 286
US$ 247
US$ 179
US$ 59
-
US$ 130
US$ 214
US$ 15
US$ 148
US$ 96
US$ 67
US$ (37)
-
US$ 75
-
-
-
-
-
-
-
US$ 191
US$ (13)
US$ 12
US$ 63
US$ 156
-
US$ (24)
-
-
US$ 76
US$ 108
US$ 3
US$ 1
-
-
-
-
11,000
-
-
-
-
-
-
-
3,421
-
10,000
8,000
10,000
4,700
11,200
3,310
3,000
-
-
-
-
-
4,000
-
2,854
2,871
-
-
-
-
-
-
-
-
US$ 11,028
-
-
-
-
-
-
-
US$ 3,533
-
US$ 9,987
US$ 7,992
US$ 10,012
US$ 4,715
US$ 11,186
US$ 3,319
US$ 2,984
-
-
-
-
-
US$ 4,228
-
US$ 2,926
US$ 2,953
-
-
-
-
(Continued)
Company
Name
Marketable Securities Type and
Name
Fnma Pool 888738
Fnma Pool 888793
Fnma Pool 955778
Fnr 2006 60 Co
Freddie Mac
Government bond
United States Treas Nts
US Treasury N/B
US Treasury N/B
US Treasury Nts
Societe De Financement De Lec
Corporate issued note
Barclays U.S. Fdg LLC
Royal Bk of Scotland
Money market fund
Ssga Cash Mgmt Global Offshore
Corporate issued asset-backed
securities
Banc Amer Coml Mtg Inc.
Cit Equip Coll Tr
Credit Suisse First Boston Mtg
First Un Natl Bk Coml Mtg Tr
Lb Ubs Coml Mtg Tr
Tiaa Seasoned Coml Mtg Tr
Wamu Mtg
Financial
Statement
Account
Available-for-sale
financial assets
〃
〃
〃
〃
Available-for-sale
financial assets
〃
〃
〃
Held-to-maturity
financial assets
Available-for-sale
financial assets
〃
Available-for-sale
financial assets
Available-for-sale
financial assets
〃
〃
〃
〃
〃
〃
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Counter-party
Nature of
Relationship
Shares/Units
(In Thousands)
Amount
(US$ in
Thousands)
Shares/Units
(In Thousands)
(Note 1)
Amount
(US$ in
Thousands)
Shares/Units
(In Thousands)
Amount
(US$ in
Thousands)
Carrying
Value (US$ in
Thousands)
Gain (Loss) or
Disposal (US$
in Thousands)
Shares/Units
(In Thousands)
Amount
(US$ in
Thousands)
Beginning Balance
Acquisition
Disposal (Note 2)
Ending Balance (Note 3)
3,669
US$ 3,776
-
US$ -
3,659
US$ 3,828
US$ 3,801
US$ 27
-
US$ -
4,105
-
-
-
US$ 4,242
-
-
-
-
7,680
3,239
4,500
-
US$ 8,138
US$ 3,352
US$ 4,490
4,071
7,395
-
-
US$ 4,265
US$ 7,829
-
-
US$ 4,207
US$ 7,836
-
-
US$ 58
US$ (7)
-
-
-
-
3,062
4,500
-
-
US$ 3,153
US$ 4,491
10,266
US$ 10,374
-
-
-
-
-
-
-
-
-
-
-
-
-
41,900
3,520
50,000
15,000
-
10,357
US$ 11,258
US$ 11,258
-
10,536
US$ 10,548
US$ 41,931
US$ 3,498
US$ 52,184
US$ 15,000
20,500
1,350
12,300
-
US$ 20,564
US$ 1,358
US$ 12,826
-
US$ 20,515
US$ 1,341
US$ 12,837
-
US$ 49
US$ 17
US$ (11)
-
21,400
2,170
37,700
15,000
US$ 21,394
US$ 2,158
US$ 39,012
US$ 15,000
4,500
US$ 4,489
5,000
US$ 4,982
-
-
-
-
-
-
-
-
-
4,500
US$ 4,489
5,000
US$ 4,982
8,858
US$ 8,858
30,435
US$ 30,435
495,908
US$ 495,908
517,485
US$ 517,485
US$ 517,485
4,597
US$ 4,584
4,000
4,353
4,788
3,737
3,397
3,214
US$ 3,884
US$ 4,349
US$ 4,715
US$ 3,495
US$ 3,163
US$ 2,925
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,472
US$ 4,480
US$ 4,584
US$ (104)
4,000
4,090
4,774
3,725
3,375
3,172
US$ 3,925
US$ 4,085
US$ 4,780
US$ 3,537
US$ 3,283
US$ 3,106
US$ 3,996
US$ 4,188
US$ 4,954
US$ 3,697
US$ 3,392
US$ 3,114
US$ (71)
US$ (103)
US$ (174)
US$ (160)
US$ (109)
US$ (8)
Note 1: The shares/units and amount of marketable securities acquired do not include stock dividends from investees.
Note 2: The data for marketable securities disposed exclude bonds maturities and capital return from subsidiaries.
Note 3: The ending balance includes the amortization of premium/discount on bonds investments, unrealized valuation gains/losses on financial assets, translation adjustments or equity in earnings/losses of equity method investees.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(Concluded)
77
TABLE 3
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
ACQUISITION OF INDIVIDUAL REAL ESTATE PROPERTIES AT COSTS OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 2009
(Amounts in Thousands of New Taiwan Dollars)
Company Name
Types of Property
Transaction Date
Transaction
Amount
Payment Term
Counter-party
Nature of
Relationships
TSMC
Fab
Oc tober 25, 2009
$ 514,777
By the construction
Fu Tsu Construction
-
to December 30,
2009
progress
Co., Ltd. and China
Steel Structure Co.,
Ltd.
Prior Transaction of Related Counter-party
Relationships
Transfer Date
Amount
Price Reference
N/A
N/A
N/A
Public bidding
Owner
N/A
Purpose of
Acquisition
Ma nufacturing
purpose
Other Terms
None
TABLE 4
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 2009
(Amounts in Thousands of New Taiwan Dollars)
Company Name
Related Party
Nature of Relationships
Purchases/Sales
Amount
% to Total
Payment Terms
Unit Price (Note)
Payment Terms
(Note)
Ending Balance
% to Total
Note
Transaction Details
Abnormal Transaction
Notes/Accounts Payable or Receivable
TSMC
TSMC North America
GUC
VIS
WaferTech
TSMC China
SSMC
VIS
Subsidiary
Investee with a controlling financial interest
Investee accounted for using equity method
Indirect subsidiary
Subsidiary
Investee accounted for using equity method
Investee accounted for using equity method
GUC
TSMC North America
Same parent company
Sales
Sales
Sales
Purchases
Purchases
Purchases
Purchases
Purchases
$ 161,251,368
2,023,612
139,044
5,560,707
3,787,113
3,537,659
3,312,656
937,160
54
1
-
18
12
11
10
28
Net 30 days after invoice date
Net 30 days after monthly closing
Net 30 days after invoice date
Net 30 days after monthly closing
Net 30 days after monthly closing
Net 30 days after monthly closing
Net 30 days after monthly closing
Ne t 30 days after invoice date/net
45 days after monthly closing
Xintec
OmniVision
Pa rent company of director (represented for
Sales
1,801,655
77
Net 30 days after monthly closing
Xintec)
Note: The sales prices and payment terms to related parties were not significantly different from those of sales to third parties. For other related party transactions, prices and terms were determined in accordance with mutual agreements.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$ 22,203,242
338,502
-
(561,165)
(481,500)
(238,741)
(529,060)
(173,789)
397,695
52
1
-
5
4
2
5
25
73
78
TABLE 5
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
DECEMBER 31, 2009
(Amounts in Thousands of New Taiwan Dollars)
Company Name
Related Party
Nature of Relationships
Ending Balance
TSMC
Xintec
TSMC North America
GUC
TSMC China
Subsidiary
Investee with a controlling financial interest
Subsidiary
$ 22,211,918
338,502
111,103
OmniVision
Parent company of director (represented for Xintec)
397,695
Note 1: The calculation of turnover days excludes other receivables from related parties.
Note 2: The ending balance primarily consisted of other receivables, which is not applicable for the calculation of turnover days.
Turnover Days
(Note 1)
Overdue
Amounts
Action Taken
38
50
(Note 2)
81
$ 6,438,761
-
-
160
-
-
-
-
Amounts Received in
Subsequent Period
$ 8,899,170
-
-
Allowance for Bad Debts
$ -
-
-
127,130
-
79
TABLE 6
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
NAMES, LOCATIONS, AND RELATED INFORMATION OF INVESTEES OVER WHICH TSMC EXERCISES SIGNIFICANT INFLUENCE
DECEMBER 31, 2009
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)
Investor Company
Investee Company
Location
Main Businesses and Products
TSMC
TSMC Global
TSMC Partners
Tortola, British Virgin Islands
Tortola, British Virgin Islands
VIS
SSMC
Hsin-Chu, Taiwan
13,232,288
13,232,288
628,223
Singapore
Fabrication and supply of integrated circuits
5,120,028
5,120,028
Investment activities
Investment in companies involved in the design,
manufacture, and other related business in the
semiconductor industry.
Research, design, development, manufacture,
packaging, testing and sale of memory integrated
circuits, LSI, VLSI and related parts
Original Investment Amount
Balance as of December 31, 2009
December 31,
2009 (Foreign
Currencies in
Thousands)
December 31,
2008 (Foreign
Currencies in
Thousands)
Shares (In
Thousands)
Percentage of
Ownership
Carrying
Value (Foreign
Currencies in
Thousands)
Net Income
(Losses) of
the Investee
(Foreign
Currencies in
Thousands)
Equity in
the Earnings
(Losses)
(Note 1)
(Foreign
Currencies in
Thousands)
Note
$ 42,327,245
31,456,130
$ 42,327,245
31,456,130
1
988,268
100
100
$ 45,397,256
32,545,619
$ 505,232
(54,907)
$ 505,232
(54,907)
Subsidiary
Subsidiary
12,180,367
12,180,367
333,718
333,718
1,357,890
1,357,890
1,703,163
1,093,943
386,568
959,044
15,749
83,760
13,656
1,440,241
1,036,422
386,568
986,797
15,749
83,760
13,656
US$ 0.001
US$ 43,000
US$ 0.001
US$ 43,000
US$ 21,415
US$ 0.001
US$ 7,680
US$ 2,300
US$ 800
US$ 32,289
US$ 0.001
US$ 7,680
US$ 2,300
-
US$ 1,000
-
314
-
11,000
93,081
-
-
46,688
-
-
6
80
1
43,000
21,415
1
7,680
2,300
5,333
1,000
37
39
9,365,232
89,241
(368,710)
6,157,141
1,608,714
427,022
100
2,961,043
(3,244,458)
(3,242,122)
Investee accounted for
using equity method
Investee accounted for
using equity method
Subsidiary
100
2,723,727
360,562
360,562
Subsidiary
1,475,014
10,597
(20,659)
41
98
98
35
99
100
100
100
100
49
97
100
97
100
70
1,309,615
1,122,810
983,126
305,866
159,467
135,663
18,519
(224,620)
(178,442)
412,771
(92,606)
35,445
4,203
2,392
US$ 340,387
US$ 70,967
US$ 9,293
US$ 322
US$ 13,741
US$ 9,071
US$ 7,336
US$ 3,193
US$ 800
US$ 960
US$ 662
US$ (1,504)
US$ 210
US$ (24)
10
US$ 1,000
US$ (24)
(223,546)
(174,873)
146,384
(92,143)
35,445
4,203
2,392
Note 2
Note 2
Note 2
Note 2
Note 2
Note 2
Note 2
Note 2
Investee with a controlling
financial interest
Subsidiary
Subsidiary
Investee with a controlling
financial interest
Subsidiary
Subsidiary (Note 3)
Subsidiary (Note 3)
Subsidiary (Note 3)
Subsidiary
Investee accounted for
using equity method
Subsidiary
Subsidiary
Subsidiary
Subsidiary (Note 3)
Investee accounted for
using equity method
Investee accounted for
using equity method
US$ 330,000
US$ 380,000
293,637
100
US$ 154,432
US$ (125)
Note 2
Subsidiary
US$ 91,041
US$ 91,041
253,120
89
US$ 125,983
US$ 313
Note 2
Subsidiary
(Continued)
TSMC China
Shanghai, China
TSMC North America
San Jose, California, U.S.A.
Xintec
VTAF III
VTAF II
GUC
Emerging Alliance
TSMC Europe
TSMC Japan
TSMC Korea
Taoyuan, Taiwan
Cayman Islands
Cayman Islands
Hsin-Chu, Taiwan
Cayman Islands
Amsterdam, the Netherlands
Yokohama, Japan
Seoul, Korea
TSMC Partners
TSMC Development
VisEra Holding Company
Delaware, U.S.A.
Cayman Islands
ISDF II
TSMC Technology
ISDF
TSMC Canada
Mcube Inc. (Common Stock)
Cayman Islands
Delaware, U.S.A.
Cayman Islands
Ontario, Canada
Delaware, U.S.A.
Mcube Inc. (Preferred Stock)
Delaware, U.S.A.
TSMC Development
WaferTech
Washington, U.S.A.
VisEra Holding
Company
VisEra
Hsin-Chu, Taiwan
Manufacturing and selling of integrated circuits
at the order of and pursuant to product design
specifications provided by customers
Sales and marketing of integrated circuits and
semiconductor devices
Wafer level chip size packaging service
Investing in new start-up technology companies
Investing in new start-up technology companies
Researching, developing, manufacturing, testing
and marketing of integrated circuits
Investing in new start-up technology companies
Marketing and engineering supporting activities
Marketing activities
Customer service and technical support activities
Investment activities
Investment in companies involved in the design,
manufacturing, and other related businesses in
the semiconductor industry
Investing in new start-up technology companies
Engineering support activities
Investing in new start-up technology companies
Engineering support activities
Research, development, and sale of micro-
semiconductor device
Research, development, and sale of micro-
semiconductor device
Manufacturing, selling, testing and computer-
aided designing of integrated circuits and other
semiconductor devices
Manufacturing and selling of electronic parts and
providing turn-key services in back-end color filter
fabrication, package, test, and optical solutions
80
Original Investment Amount
Balance as of December 31, 2009
Shares (In
Thousands)
Percentage of
Ownership
Carrying
Value (Foreign
Currencies in
Thousands)
Net Income
(Losses) of
the Investee
(Foreign
Currencies in
Thousands)
Equity in
the Earnings
(Losses)
(Note 1)
(Foreign
Currencies in
Thousands)
Note
Investor Company
Investee Company
Location
Main Businesses and Products
VTAF III
Mutual-Pak Technology Co., Ltd.
Taipei, Taiwan
Aiconn Technology Corp.
Taipei, Taiwan
Manufacturing and selling of electronic parts and
researching, developing, and testing of RFID
Wholesaling telecommunication equipments, and
manufacturing wired and wireless communication
equipments
December 31,
2009 (Foreign
Currencies in
Thousands)
December 31,
2008 (Foreign
Currencies in
Thousands)
US$ 3,088
US$ 1,705
US$ 1,777
US$ 1,777
VTAF II
GUC
Growth Fund
VTA Holdings
VTA Holdings
GUC-NA
GUC-Japan
GUC-Europe
GUC-BVI
Cayman Islands
Delaware, U.S.A.
Investing in new start-up technology companies
Investing in new start-up technology companies
US$ 1,550
-
US$ 700
-
Delaware, U.S.A.
Investing in new start-up technology companies
-
-
U.S.A.
Japan
The Netherlands
British Virgin Islands
Consulting services in main products
Consulting services in main products
Consulting services in main products
Investment activities
US$ 800
JPY 30,000
EUR 100
US$ 550
US$ 800
JPY 30,000
EUR 50
-
Emerging Alliance
VTA Holdings
Delaware, U.S.A.
Investing in new start-up technology companies
-
-
Note 1: Equity in earnings/losses of investees include the effect of unrealized gross profit from affiliates.
Note 2: The equity in the earnings/losses of the investee company is not reflected herein as such amount is already included in the equity in the earnings/losses of the investor company.
Note 3: Equity in earnings/losses was determined based on the unaudited financial statements.
9,180
4,500
-
-
-
800
1
-
550
-
59
42
100
62
31
100
100
100
100
7
US$ 2,112
US$ (1,105)
Note 2
Subsidiary
US$ 566
US$ (1,239)
Note 2
Investee accounted for
using equity method
US$ 823
-
US$ (127)
-
Note 2
Note 2
Subsidiary (Note 3)
Subsidiary (Note 3)
-
-
Note 2
Subsidiary (Note 3)
$ 38,617
12,899
5,213
17,466
$ 5,617
1,608
353
(133)
Note 2
Note 2
Note 2
Note 2
Subsidiary
Subsidiary (Note 3)
Subsidiary (Note 3)
Subsidiary (Note 3)
-
-
Note 2
Subsidiary (Note 3)
(Concluded)
81
TABLE 7
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
INFORMATION OF INVESTMENT IN MAINLAND CHINA
FOR THE YEAR ENDED DECEMBER 31, 2009
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)
Investee Company
Main Businesses and Products
Total Amount of Paid-in Capital
(RMB in Thousand)
Method of Investment
TSMC China
Ma nufacturing and selling of
integrated circuits at the order
of and pursuant to product
design specifications provided by
customers
$ 12,180,367
(RMB 3,070,623)
(Note 1)
Accumulated Outflow of
Investment from Taiwan
as of January 1, 2009
(US$ in Thousand)
$ 12,180,367
(US$ 371,000)
Investment Flows
Outflow
Inflow
$ -
$ -
Accumulated Outflow of
Investment from Taiwan
as of December 31, 2009
(US$ in Thousand)
$ 12,180,367
(US$ 371,000)
Percentage of Ownership
100%
Equity in the Earnings (Losses)
(Note 2)
Carrying Value as of
December 31, 2009
Accumulated Inward Remittance
of Earnings as of
December 31, 2009
$ (3,242,122)
$ 2,961,043
$ -
Accumulated Investment in Mainland China as of
December 31, 2009 (US$ in Thousand)
Investment Amounts Authorized by
Investment Commission, MOEA (US$ in Thousand)
Upper Limit on Investment (US$ in Thousand)
$ 12,180,367
(US$ 371,000)
$ 12,180,367
(US$ 371,000)
$ 12,180,367
(US$ 371,000)
Note 1: Direct investments US$371,000 thousand in TSMC China.
Note 2: Amount was recognized based on the audited financial statements.
82
TABLE 8
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONS
(Amounts in Thousands of New Taiwan Dollars, Unless Otherwise Specified)
A. FOR THE YEAR ENDED DECEMBER 31, 2009
No.
0
Company Name
Counter Party
Nature of
Relationship
(Note 1)
Financial Statements Item
Amount
Terms (Note 2)
Percentage of Consolidated Total
Gross Sales or Total Assets
Intercompany Transactions
TSMC
TSMC North America
1
Sales
$ 161,251,368
TSMC China
TSMC Japan
TSMC Europe
TSMC Korea
GUC
TSMC Technology
WaferTech
TSMC Canada
Xintec
Receivables from related parties
Other receivables from related parties
Payables to related parties
1
Sales
Purchases
Gain on disposal of property, plant and equipment
Technical service income
Marketing expenses - commission
Other receivables from related parties
Payables to related parties
Deferred credits
Marketing expenses - commission
Payables to related parties
Marketing expenses - commission
Research and development expenses
Payables to related parties
Marketing expenses - commission
Payables to related parties
Sales
Research and development expenses
Receivables from related parties
Research and development expenses
Payables to related parties
Sales
Purchases
Other receivables from related parties
Payables to related parties
Research and development expenses
Payables to related parties
Manufacturing overhead
Payables to related parties
1
1
1
1
1
1
1
1
Sales of property, plant and equipment and other assets
22,203,242
8,676
4,222
63,278
3,787,113
176,521
8,105
10,302
111,103
481,500
7,970
233,855
23,288
325,463
21,463
31,342
14,424
1,418
2,023,612
26,488
338,502
409,686
109,220
4,482
5,560,707
4,932
561,165
157,527
13,653
35,466
37,363
58,450
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
52%
4%
-
-
-
1%
-
-
-
-
-
-
-
-
-
-
-
-
-
1%
-
-
-
-
-
2%
-
-
-
-
-
-
-
(Continued)
83
Company Name
Counter Party
Nature of
Relationship
(Note 1)
Financial Statements Item
Amount
Terms (Note 2)
Percentage of Consolidated Total
Gross Sales or Total Assets
Intercompany Transactions
No.
3
GUC
TSMC North America
3
Purchases
$ 937,160
GUC-NA
GUC-Japan
GUC-Europe
Manufacturing overhead
Payables to related parties
3
3
3
Operating expenses
Accrued Expense
Operating expenses
Accrued Expense
Operating expenses
303,687
173,789
157,345
14,618
39,755
3,462
7,305
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(Concluded)
Note 1: No. 1 represents the transactions from parent company to subsidiary.
No. 3 represents the transactions between subsidiaries.
Note 2: The sales prices and payment terms of intercompany sales are not significantly different from those to third parties. For other intercompany transactions, prices and terms are determined in accordance with mutual agreements.
84
B. FOR THE YEAR ENDED DECEMBER 31, 2008
No.
0
Company Name
Counter Party
Nature of
Relationship
(Note 1)
Financial Statements Item
Amount
Terms (Note 2)
Percentage of Consolidated Total
Gross Sales or Total Assets
Intercompany Transactions
TSMC
TSMC North America
1
Sales
$ 192,986,719
TSMC China
TSMC Japan
TSMC Europe
TSMC Korea
GUC
TSMC Technology
WaferTech
TSMC Canada
Emerging Alliance
TSMC International
Receivables from related parties
Other receivables from related parties
Payables to related parties
1
Sales
Purchases
Gain on disposal of property, plant and equipment
Technical service income
Other receivables from related parties
Payables to related parties
Deferred credits
Marketing expenses - commission
Payables to related parties
Marketing expenses - commission
Payables to related parties
Marketing expenses - commission
Payables to related parties
Sales
General and administrative expenses - rental expense
Research and development expenses
Receivables from related parties
Payables to related parties
Research and development expenses
Payables to related parties
Sales
Purchases
Other receivables from related parties
Payables to related parties
Research and development expenses
Payables to related parties
Other receivables from related parties
Other receivables
Deferred revenue
1
1
1
1
1
1
1
1
3
11,512,777
256,624
327,250
101,245
4,717,676
197,681
99,737
112,933
117,417
183,896
251,367
20,528
367,846
29,679
16,408
1,313
1,611,058
1,050
18,940
215,190
7,003
352,900
41,904
12,216
8,207,876
13,813
171,089
172,291
3,297
5,149
8,149,280
8,149,280
2
TSMC Partners
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
55%
2%
-
-
-
1%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2%
-
-
-
-
-
1%
1%
(Continued)
85
Company Name
Counter Party
Nature of
Relationship
(Note 1)
Financial Statements Item
Amount
Terms (Note 2)
Percentage of Consolidated Total
Gross Sales or Total Assets
Intercompany Transactions
No.
3
GUC
TSMC North America
3
Purchases
$ 1,747,488
GUC-NA
GUC-Japan
GUC-Europe
Manufacturing overhead
Operating Expense
Payables to related parties
Operating expenses
Payables to related parties
Operating expenses
Payables to related parties
Operating expenses
3
3
3
298,926
1,458
148,680
105,044
11,074
28,480
2,260
5,140
-
-
-
-
-
-
-
-
-
1%
-
-
-
-
-
-
-
-
(Concluded)
Note 1: No. 1 represents the transactions from parent company to subsidiary.
No. 3 represents the transactions between subsidiaries.
Note 2: The sales prices and payment terms of intercompany sales are not significantly different from those to third parties. For other intercompany transactions, prices and terms are determined in accordance with mutual agreements.
86
9. U.S. GAAP Financial Information
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND
SUBSIDIARIES
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. AND
SUBSIDIARIES
U.S. GAAP RECONCILIATIONS OF SHAREHOLDERS’ EQUITY
December 31, 2008 and 2009
(In Thousand New Taiwan Dollars)
U.S. GAAP RECONCILIATIONS OF NET INCOME
For the Years Ended December 31, 2008 and 2009
(In Thousand New Taiwan Dollars)
2009
2008
2009
2008
Total shareholders’ equity based on R.O.C. GAAP
$ 499,048,548
$ 480,372,467
Adjustments
- U.S. GAAP adjustments on equity-method investees
- Impairment of long-lived assets
- Loss on impairment of assets
- Reversal of depreciation on assets impaired under U.S. GAAP
- 10%tax on undistributed earnings
- Goodwill
- Carrying amount difference for 68% equity interest in TASMC’s
share acquisition
- Reversal of amortization of goodwill recognized under R.O.C.
GAAP
- Accrued pension cost
- Accrual for deferred pension loss under U.S. SFAS No. 158
- Income tax effect of U.S. GAAP adjustments
- Net adjustment
(449,910)
(10,439,143)
10,439,143
(3,588,008)
52,212,732
(11,318,915)
(31,734)
(10,712)
134,367
36,947,820
(484,992)
(10,709,654)
10,709,654
(4,554,897)
52,212,732
(11,228,894)
(35,622)
(1,288,895)
68,398
34, 687,830
Net income
Consolidated net income based on R.O.C. GAAP
Adjustments
- Realization of unrealized loss on marketable securities recognized
under R.O.C. GAAP prior to January 1, 2006
- U.S. GAAP adjustments on equity-method investees
- Reversal of depreciation on assets impaired under U.S. GAAP
- 10% tax on undistributed earnings
- Profit sharing to employees, directors and supervisors
- Current year accrual
- Fair market value adjustment of prior year accrual
- Pension expense
- Stock-based compensation
- Income tax effect of U.S. GAAP adjustments
- Net adjustment
$ 89,466,223
$ 100,523,237
-
(6,300)
-
966,889
-
(648,092)
3,888
(559,078)
69,929
(172,764)
(98,024)
(16,405)
675,651
983,382
-
(20,369,334)
4,289
215,766
(96,366)
(18,701,041)
Consolidated net income based on U.S. GAAP
$ 89,293,459
$ 81,822,196
Total equity based on U.S. GAAP
$ 535,996,368
$ 515,060,297
Attributable to
Shareholders of the parent
Noncontrolling interests
532,042,816
3,953,552
$ 535,996,368
511,089,189
3,971,108
$ 515,060,297
Attributable to
Shareholders of the parent
Noncontrolling interests
89,102,226
191,233
$ 89,293,459
81,473,243
348,953
$ 81,822,196
87
C O N T A C T I N F O R M A T I O N
TSMC Spokesperson
Name: Lora Ho
Title: Vice President & CFO
Tel: 886-3-5664602 Fax: 886-3-5670121
Email: cyhsu@tsmc.com
Deputy Spokesperson
Name: J.H. Tzeng
Title: Deputy Director, Public Relations
Tel: 886-3-5055028 Fax: 886-3-5670121
Email: jhtzeng@tsmc.com
TSMC Investor Relations
Name: Elizabeth Sun
Title: Director, Investor Relations
Tel: 886-3-5682085 Fax: 886-3-5797337
Email: invest@tsmc.com
Auditors
Company: Deloitte & Touche
Auditors: Hung-Peng Lin, Shu-Chieh Huang
Address: 12F, 156, Sec. 3, Min-Sheng E. Rd., Taipei, Taiwan 105-96, R.O.C.
Tel: 886-2-25459988 Fax: 886-2-25459966
Website: http://www.deloitte.com.tw
Common Share Transfer Agent and Registrar
Company: The Transfer Agency Department of Chinatrust
Commercial Bank
Address: 5F, 83, Sec. 1, Chung-Ching S. Rd., Taipei, Taiwan 100-08, R.O.C.
Tel: 886-2-21811911 Fax: 886-2-23116723
Website: http://www.chinatrust.com.tw
ADR Depositary Bank
Company: Citibank, N.A.
Depositary Receipts Services
Address: 388 Greenwich Street, New York, NY 10013, U.S.A.
Website: http://www.citigroup.com/adr
Tel: 1-877-2484237 (toll free)
Tel: 1-781-5754555 (out of US)
Fax: 1-201-3243284
E-mail: citibank@shareholders-online.com
TSMC’s depositary receipts of the common shares are listed on New
York Stock Exchange (NYSE) under the symbol TSM. The information
relating to TSM is available at http://www.nyse.com and http://
newmops.tse.com.tw
Corporate Headquarters & Fab 12
8, Li-Hsin Rd. 6, Hsinchu Science Park, Hsinchu, Taiwan 300-78, R.O.C.
Tel: 886-3-5636688 Fax: 886-3-5637000
Fab 2, Fab 5
121, Park Ave. 3, Hsinchu Science Park, Hsinchu, Taiwan 300-77, R.O.C.
Tel: 886-3-5636688 Fax: 886-3-5781546
Fab 3
9, Creation Rd. 1, Hsinchu Science Park, Hsinchu, Taiwan 300-77, R.O.C.
Tel: 886-3-5636688 Fax: 886-3-5781548
Fab 6
1, Nan-Ke North Rd., Tainan Science Park, Tainan, Taiwan 741-44, R.O.C.
Tel: 886-6-5056688 Fax: 886-6-5052057
Fab 8
25, Li-Hsin Rd., Hsinchu Science Park, Hsinchu, Taiwan 300-78, R.O.C.
Tel: 886-3-5636688 Fax: 886-3-5662051
Fab 14
1-1, Nan-Ke North Rd., Tainan Science Park, Tainan, Taiwan 741-44, R.O.C.
Tel: 886-6-5056688 Fax: 886-6-5051262
TSMC North America
2585 Junction Avenue, San Jose, CA 95134, U.S.A.
Tel: 408-3828000
Fax: 408-3828008
TSMC Europe B.V.
World Trade Center, Zuidplein 60, 1077 XV Amsterdam, The Netherlands
Tel: 31-20-3059900 Fax: 31-20-3059911
TSMC Japan Limited
21F, Queen’s Tower C, 2-3-5, Minatomirai, Nishi-ku, Yokohama
Kanagawa, 220-6221, Japan
Tel: 81-45-6820670 Fax: 81-45-6820673
TSMC China Company Limited
4000, Wen Xiang Road, Songjiang, Shanghai, China
Postcode: 201616
Tel: 86-21-57768000 Fax: 86-21-57762525
TSMC Korea Limited
15F, AnnJay Tower, 718-2, Yeoksam-dong, Gangnam-gu
Seoul 135-080, Korea
Tel: 82-2-20511688 Fax: 82-2-20511669
TSMC Liaison Office in India
1st Floor, Pine Valley, Embassy Golf-Links Business Park
Bangalore-560071, India
Tel: 91-80-41768615 Fax: 91-80-41764568
TSMC Design Technology Canada Inc.
349 Terry Fox Drive, Kanata, ON K2K 2V6, Canada
Tel: 1-613-5667067 Fax: 1-613-2713643
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