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
2.1 An Introduction to TSMC
2.2 Market/Business Summary
2.3 Organization
2.4 Board Members
2.5 Management Team
3. CORPORATE GOVERNANCE
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
4. CAPITAL AND SHARES
4.1 Capital and Shares
4.2 Issuance of Corporate Bonds
4.3 Preferred Shares
4.4 Issuance of American Depositary Shares
4.5 Status of Employee Stock Option Plan
4.6 Status of New Share Issuance in Connection with Mergers and Acquisitions
4.7 Financing Plans and Implementation
5. OPERATIONAL HIGHLIGHTS
5.1 Business Activities
5.2 Technology Leadership
5.3 Manufacturing Excellence
5.4 Customer Partnership
5.5 Employees
5.6 Material Contracts
6. FINANCIAL HIGHLIGHTS
6.1 Financial Status and Operating Results
6.2 Risk Management
7. CORPORATE SOCIAL RESPONSIBILITY
7.1 Environmental, Safety and Health (ESH) Management
7.2 TSMC Education and Culture Foundation
7.3 Social Responsibility Implementation Status as Required by
the Taiwan Financial Supervisory Commission
8. AFFILIATE INFORMATION AND
OTHER SPECIAL NOTES
8.1 Affiliates
8.2 Status of TSMC Common Shares and ADRs Acquired, Disposed of,
and Held by Subsidiaries
8.3 Special Notes
2
6
7
8
10
12
18
24
25
27
29
30
31
31
31
32
33
39
39
40
42
42
42
44
45
46
51
54
55
58
60
61
65
72
74
77
79
80
81
85
85
1
1. Letter to Shareholders
Financial Performance
Consolidated revenue for 2010 totaled NT$419.54 billion, an
increase of 41.9 percent over NT$295.74 billion in 2009. Net income
was NT$161.61 billion or 81.1 percent above NT$89.22 billion the
previous year. Diluted earnings per share were NT$6.23, up 81.1
percent compared with NT$3.44 in 2009.
In US dollars, TSMC generated net income of US$5.13 billion on
consolidated revenue of US$13.32 billion, compared with net
income of US$2.71 billion on consolidated revenue of US$9 billion
for 2009.
Gross profit margin was 49.4 percent compared with 43.7 percent in
2009, with Operating Profit Margin of 37.9 percent compared with
31.1 percent a year earlier. Net profit margin reached 38.5 percent,
an increase of 8.3 percentage points from the 2009’s level. TSMC
shipped 11.86 million eight-inch equivalent wafers compared with
7.74 million wafers a year ago.
Dear Shareholders,
2010 was a year of record high revenue and profit for TSMC. Amid
gradual recovery of the global economy, semiconductor industry
revenue grew 31% in 2010. Meanwhile, TSMC’s revenue grew 48%
in US dollars compared with 43% for the overall foundry segment.
Our growth momentum was fueled by both timely addition and fast
ramp-up of capacity, wide customer adoption of our advanced
technologies, and a strong growth in specialty technology revenue.
TSMC’s strong performance delivered in 2010 reflected our trinity of
strengths: technology leadership, manufacturing excellence, and
customer partnership. Significant achievements included:
● We operated at full production utilization rate averaged across all
fabs throughout the year, and have installed 14 percent more
capacity overall, with an increase of 37 percent in capacities at 12”
wafer fabs.
● We deployed over 157 technologies, and manufactured more than
8,300 products for more than 450 customers over the course of
2010.
● In 2010, we fast ramped-up to full production of our
40/45-nanometer technology, which generated 17 percent of total
wafer revenue, with considerable market share, and margins that
approached the corporate average by year’s end.
● Following on the success of our 65- and 40-nanometer process
technology productions, development of our 28-nanometer
products – three high-k metal gate processes and one conventional
silicon oxynitride (SiON) process – proceeded as planned with
record customer engagements.
3
Expanding Growth
Technological Developments
In 2010, TSMC took important steps to further our development of
At this time, TSMC’s 28-nanometer technology is industry leading
advanced technologies and to accelerate capacity expansion.
and production ready. We have achieved, in the R&D phase, superior
In expanding our technology leadership we have spent considerable
40-nanometer, using our gate-last high-k metal-gate process. A few
resources for R&D. 2010 R&D capital expenditure was US$355
customer products have already taped out and are in prototyping.
million, 85% higher than 2009, while regular R&D budget also
Meanwhile, our 28-nanometer lead-free bumping is eco-friendly and
increased by about 40% to US$940 million. The major focus of these
compatible with superior low-resistance ELK interconnect.
investments is further development of 28-, 20-, and 14-nanometer
technologies and exploratory work on 10- and 7-nanometer
In addition to our efforts in pushing Moore’s Law with advanced
performance, reliability and density, which is 2 times over that of
technologies.
geometries, we have also spent considerable resources in developing
specialty technologies to capture both the market trend of
In 2010, TSMC spent a record of US$5.94 billion on capital
integrating more specialty features with CMOS logic, and the trend
expenditures to meet the capacity needs of our customers. Although
of continuing scaling down the geometries for cost and form factor
we exerted our utmost efforts to accelerate capacity expansion, we
advantages.
still had sizeable unfilled requests for capacity from customers by the
end of 2010.
TSMC’s technology leadership in these specialty technologies
includes both feature improvement and the ability to further shrink
Having already invested additional capital to expand capacity at our
the geometries. We have already achieved some industry leading
two existing 12-inch GIGAFABTM facilities, Fab 12 in Hsinchu and Fab
14 in Tainan, we began construction last July on our third
results. For example: we plan to use 65- and 90-nanometer processes
to deliver engine control processes for automotive ICs, and we use
GIGAFABTM, Fab 15, in Taichung’s Central Taiwan Science Park.
Meanwhile, we also obtained a new site in the Hsinchu Science Park
for sub-14- nanometer R&D.
65-nanometer and back-side illumination (BSI) technology to achieve
the best quantum efficiency for CMOS image sensors. For embedded
DRAM, we use 40-nanometer to deliver the fastest network
TSMC also is actively pursuing new revenue opportunities that
ultra low leakage micro controller unit (MCU) of one pico amp per
leverage our technological strengths, engineering capabilities, and
micron (1pA/μm). For MEMS, we use 0.18-micron to complete
experiences in large-scale manufacturing. During the year,
three-dimensional CMOS-MEMS integration; and for power IC, we
construction was begun on TSMC’s first solid-state lighting facility in
use 0.18-micron to achieve the lowest turn-on resistance (Ron) in the
processors; and for embedded Flash, we use 0.11-micron to enable
Hsinchu to pursue opportunities in the lighting industry. We also
industry.
began construction on our first Thin Film Solar R&D Center and Fab
in Taichung, laying the foundation for TSMC’s entry into the thin-film
Our efforts in both Moore’s Law progression and specialty
solar photovoltaic market serving the solar energy market. Each of
technologies have encouraged many customers to expand their
these initiatives represents an opportunity for TSMC to establish a
engagements with TSMC.
significant foothold in the emerging green energy industries.
4
Capacity Plan
Sales Breakdown by Technology
6%
2009
2010
2011
14%
20%
Annual Growth Rate
Capacity: 8-inch equivalent wafers
9.96 million
11.33 million
13.56 million
2009
2010
2011
33%
28%
24%
67%
72%
76%
≥ 0.15 μm
≤ 0.13 μm
2011 wafer shipment is expected to be
approximately 14 million 8-inch equivalent wafers.
Honors and Awards
Outlook
In 2010, TSMC continued to garner recognition and awards from
Recovery of the global economic condition is likely to continue into
around the world as a corporate role model. Our commitment to
2011. Global semiconductor revenue growth is forecast to be about
creating shareholder value and to corporate social responsibilities
5 percent, while the foundry segment is forecast to outpace the
have won top honors from AsiaMoney, FinanceAsia, IR Magazine,
overall semiconductor industry at a growth rate of about 15 percent
Corporate Governance Asia, CommonWealth Magazine, and
in 2011. Because TSMC possesses the right technologies, effective
GlobalView Magazine in the areas of corporate governance,
capacity, and we continue to earn the trust of our customers, we are
management, investor relations and corporate social responsibilities.
well positioned to capture greater share within the dedicated
We received again the Corporate Social Responsibility (CSR) “Gold
foundry segment and to continually deliver growth and profitability
Award,” the highest honor bestowed by the Taiwan Institute for
for our shareholders.
Sustainable Energy, and were chosen the Semiconductor Sector
Leader in Dow Jones Sustainability Index (DJSI) 2010 Survey. TSMC
has been a DJSI component for 10 consecutive years.
Citing “outstanding leadership in the semiconductor industry”,
Institute of Electrical and Electronics Engineers (IEEE) has named me
the recipient of the 2011 IEEE Medal of Honor. I believe the honor
belongs to the entire TSMC.
Morris Chang
Morris Chang
Chairman and CEO
February 15, 2011
5
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,
TSMC continued to lead the foundry segment of the semiconductor
industry in both advanced and “More-than-Moore“ process
Taiwan, TSMC pioneered the business model of focusing solely on
technologies. Already the first foundry to provide 65nm and 40nm
manufacturing customers’ semiconductor designs. As a pure-play
production capacity, TSMC also announced it will deliver 28nm as a
semiconductor foundry, the Company does not design, manufacture,
full node technology, with the portfolio of 28HP & 28HPM for high
or market semiconductor products under its own brand name,
performance and 28LP & 28HPL for low power to enrich its 28nm
ensuring that TSMC does not compete directly with its customers.
offering. In addition to general-purpose logic process technology,
With a diverse global customer base, TSMC-manufactured
embedded non-volatile memory, embedded DRAM, Mixed Signal/RF,
microchips are used in a broad variety of applications that cover
high voltage, CMOS image sensor, color filter, MEMS, silicon
various segments of the computer, communications and consumer
germanium technologies and automotive service packages.
TSMC supports the wide-ranging needs of its customers with
electronics markets.
Total capacity of the manufacturing facilities managed by TSMC,
related to solid state lighting and solar business activities. Both of
including subsidiaries and joint ventures, totaled 11.33 million 8-inch
these business are still developing their technology base and are not
equivalent wafers in 2010. In Taiwan, TSMC operates two advanced
expected to contribute significantly to revenue until after 2011.
During 2010 TSMC made investments in two new lines of business
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
The Company is listed on the Taiwan Stock Exchange (TWSE) under
subsidiaries: WaferTech in the United States and TSMC China
ticker number 2330, and its American Depositary Shares trade on the
Company Limited. In addition, TSMC obtains 8-inch wafer capacity
New York Stock Exchange (NYSE) under the symbol “TSM”.
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
33,000 people worldwide as of the end of 2010.
7
2.2 Market/Business Summary
2.2.1 TSMC Achievements
In 2010, TSMC maintained its leading position in the total foundry
segment of the global semiconductor industry, with an estimated
market segment share of 45.5%. 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 2010, 72% of TSMC’s wafer
revenue came from manufacturing processes with geometries of
0.13μm and below. A critical milestone was reached in November
2010, when TSMC shipped its half-millionth 45/40nm 12-inch wafer.
TSMC also piloted the leading-edge 28nm process with its foundry
customers. As of the fourth quarter of 2010, 52% 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 2010 was the
foundry segment’s first Analog/Mixed Signal Reference flow. TSMC
also launched the Soft IP Alliance, bringing TSMC power,
performance, and area metrics to the soft IP providers in TSMC’s IP
Alliance. The second revision of the radio frequency (RF) reference
design kit was delivered, which enriched the Open Innovation
PlatformTM to facilitate timely innovation among the semiconductor
design community. Lastly, after the debut of a series of interoperable
data formats in iRCX, iDRC, iLVS and iPDK in 2009, TSMC
demonstrated its strong commitment to industry users in 2010 with
its industry-first iDRC & iLVS runsets, and iPDKs in many TSMC
advanced process nodes from 0.13μm to 28nm.
TSMC continued to advance the semiconductor roadmap in 2010.
Examples of technologies the Company developed or rolled out
include:
● 28nm High Performance (28HP) technology to support
performance driven markets like CPU, GPU (Graphics Processing
Unit), APU (Accelerated Processing Unit), FPGA & high-speed
Networking applications.
● 28nm High Performance Mobile computing (28HPM) technology
for tablet, smart phone, and high end System-on-Chip (SoC)
applications.
● 28nm Low Power (28LP & 28HPL) technology for mainstream smart
phone, tablet and digital consumer products.
● 40nm general purpose technology to support performance-driven
markets like CPU, FPGA, 3D image, Gaming & Gigabit Ethernet
applications.
● 40nm low power and RF technology for cellular phone, application
processor, home entertainment, game and wireless connectivity
solutions.
● 55nm low power RF technology for WLAN, Cellular BB, DTV, STB,
Bluetooth, PMP, MID and handheld high-end applications.
● 65nm eFlash multi-time programmable non-volatile memory
technology under joint development for high-end automotive
application.
● 80nm high voltage process for smart phone display driver.
● 85nm low power technology for flash controller application.
● 90nm eFlash technology qualified for microcontroller application.
● 0.18μm and 0.25μm qualified OTP solution for automotive
application.
● 0.18μm and 0.25μm high precision analog process.
● 0.18μm BCD for digital power management IC.
In addition, TSMC further strengthened its comprehensive
development of specialty technologies in 2010, including Back-side
Illumination CMOS image sensor (BSI CIS), 90/65nm embedded flash
and 0.13μm analog technologies. In 2010, TSMC began to offer 3D
MEMS platform to selected fabless customers. These specialty
technologies are key differentiators from our competitors and
provide customers more value.
2.2.2 Market Overview
We estimate that the semiconductor market in 2010 reached
US$298 billion in revenue, a 32% increase compared to 2009. Total
foundry, a manufacturing sub-segment of the semiconductor
industry, generated total revenues of US$28 billion in 2010, or 10%
of total semiconductor industry revenue and 43% YoY growth. In
2010, the largest geographic market (based on the location of
customers’ corporation headquarters) for foundry services was North
America, accounting for 59% of overall foundry revenue. The second
largest geographic market was Asia Pacific (excluding Japan), which
accounted for 27% of foundry revenue. European-based customers
accounted for 9%, and orders from companies based in Japan
contributed 5%.
2.2.3 Industry Outlook, Opportunities and Threats
Industry Demand and Supply Outlook
After a challenging year in 2009, foundry sales recovered and grew
strongly in 2010, increasing 43% compared to 2009, mainly driven
by improved end-market demand and supply chain inventory
replenishment.
We forecast total foundry sales to grow at 15% YoY in 2011. In the
longer term, increasing semiconductor content in electronics devices
and increasing IDM outsourcing, foundry sales are expected to display
a 10% compound annual growth rate (CAGR) from 2010 through
2015, higher than the 4% CAGR for the total semiconductor industry.
As an upstream supplier in the semiconductor supply chain, the
foundry segment is tightly correlated with the market health of the
3Cs: communications, computer and consumer.
● Communications
The communications sector, particularly the handset segment,
increased 14% in unit shipment for 2010 from 2009. The growing
number of new subscribers in emerging countries such as China and
India and stabilizing sales in developed countries has boosted the
sales of handsets. Smartphones, which have much higher
semiconductor content and significant growth, have been a bright
spot in the overall handset market.
The growing popularity of 3G and emerging 4G/LTE cellular phones
will bring positive momentum to the market. Smartphones with
8
increasing performance, lower power and more intelligent
applications will continue to propel the buying momentum of new
handsets in the coming 2011.
Low power IC design is a must-have feature among handset
customers. The System-on-Chip (SoC) design and the appetite for
higher performance to run complicated software will also speed up
the migration to advanced process technologies in which TSMC is
already the leader.
● Computer
The computer sector posted a solid unit shipment growth of 14%
YoY after a single-digit growth year in 2009, driven by strong
corporate replacement partially offset by relatively weak consumer
demand as a result of perceived economic uncertainty and minor
cannibalization of media tablet in low-end consumer notebooks.
China and other emerging countries led the growth while the
developed regions showed softness.
Moving into 2011, PC growth remains healthy. Corporate replacement
will continue to fuel the growth of PC sales while consumer PC will be
impacted by the growing variety of alternative devices that enable
better on-the-go content consumption, such as tablets and
next-generation smartphones. Emerging countries will continue to be
the growth engine. New applications and features such as
“virtualization” and “green” notebook will also help spur PC sales.
In terms of IC product design, the requirements of lower power,
higher performance, and integration for key components in
computers, such as CPU, GPU, Chipset, etc., will drive near-term
demand for advanced process technologies, particularly in 40nm and
28nm.
● Consumer
After the stagnant sales in the last two years, the aggregate unit
shipment of digital consumer electronics devices regained
momentum in 2010, with 8% YoY growth. Government subsidy
programs (e.g., China and Japan), CRT replacement in emerging
countries, and deferred Digital-Still-Camera (DSC) sales support the
growing demand after the economic recession. Average selling price
(ASP) declined for consumer products, such as DTV, Blu-ray DVD,
and DSC, have also spurred the buying sentiment.
In 2011, new products with attractive features may stimulate sales of
consumer products. The continual trend toward HD video,
connectivity, and 3D will still be the catalyst to drive sales of products
like DTV, STB and Blu-ray DVD.
Increasing innovations in the digital consumer sector have also
encouraged new usage models, such as motion recognition for TV
game consoles and 3D display for handheld game consoles. 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.
● Emerging Applications
Emerging new applications, such as media tablet, are increasing
contributions to foundry’s revenue. Media tablet, led by Apple’s iPad,
shipped a total of 17 million units in 2010. The strong sales
momentum will continue in 2011 with more models introduced by
traditional PC and Handset OEMs. We forecast the tablet market will
grow with ~40% CAGR from 2011 to 2015, and will emerge as a
strong growth driver for foundry.
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 foundry segment of the semiconductor
manufacturing industry, TSMC commanded a 45.5% share of this
segment in 2010, with total consolidated revenue of US$13.3 billion.
In terms of geographic distribution of net sales, 67% came from
companies headquartered in North America, 15% from the Asia
Pacific region, excluding China and Japan, 11% from Europe, 3%
from China and 4% from Japan. In terms of end product application,
27% of TSMC’s wafer revenue came from the computer sector, 43%
from communications, 13% from consumer products, and 17% from
other categories, such as industrial products.
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, as it does every year, TSMC
conducted throughout 2010 customer reviews and surveys to better
9
Audit Committee
Compensation
Committee
Shareholders’
Meeting
Board of Directors
Chairman
Vice Chairman
CEO
understand customer needs and wants, and accordingly may adjust
its offerings in response, thereby strengthening its partnership with
customers.
2.3 Organization
2.3.1 Organization Chart
To address the challenges of falling wafer prices and fiercer
competition from other semiconductor manufacturing companies,
TSMC continually strengthens its core competitiveness, and properly
deploys its short-term and long-term technology and business
development plans in order to enhance Return on Investment and
growth.
● Short-term semiconductor business development plan
1) Substantially ramp up the business and sustain market segment
share of advanced technologies with further investment on
capacity.
2) Maintain market segment share of mainstream technology by
expanding business into new customers and market segments
with off-the-shelf technologies.
3) Grow business with IDMs by deepening the partnership on
technology development and business model arrangement.
● Long-term semiconductor business development plan
1) Continue developing the leading edge technologies consistent
with Moore’s law.
2) Broaden “More-than-Moore” business contribution by further
developing derivative technologies.
3) Further expand TSMC’s business and service infrastructure into
emerging and developing markets.
2.2.5 New Businesses
In May 6, 2009, TSMC established the New Businesses organization
to explore non-foundry related business opportunities. During 2010
and early 2011, the New Businesses organization consists of two
business divisions responsible for: (1) solid state lighting business
activities, such as developing efficient Light Emitting Diode (LED)
technologies that can be used in various lighting applications; and
(2) solar business activities, such as producing and marketing
photovoltaic modules.
In March 2010, construction began on phase one of our new LED
production facility in the Hsinchu Science Park, which was made ready
for tool move-in by September 2010. A pilot line had been installed at
the end of 2010, to be initially used for development activities and
subsequently extended to full production set-up in the future.
In June 2010, TSMC through its investment fund invested US$50
million to acquire a 21% stake in Stion Corporation, a manufacturer
of thin-film photovoltaic modules in the U.S. In addition, TSMC
entered into several agreements with Stion Corporation on CIGSS
technology licensing, supply and joint development. In the second
half of 2010, a team of our engineers worked with Stion Corporation
to prepare the transfer of CIGSS technology to us in 2011. In
September 2010, construction began on phase one of our solar
business production site in the Taichung’s Central Taiwan Science
Park, with tool move-in expected to start in the second quarter of
2011. In February 2010, we also acquired a 20% equity interest in
Motech, a Taiwan solar cell manufacturer.
10
New Businesses
Operations
Business
Development
Corporate
Planning
Organization
Quality
and
Reliability
Worldwide Sales
and
Marketing
Research
and
Development
Information
Technology
Materials
Management
and Risk
Management
Human
Resources
Finance
and
Spokesperson
Legal
Internal
Audit
2.3.2 Major Corporate Functions
New Businesses
● Business development of solid state lighting and solar related
businesses
Operations
● Product development, manufacturing technology, mainstream fabs,
300mm fabs, affiliate fabs, and backend technology and service
Business Development
● Solidify customer partnership, identify new applications and
markets, and build new partnership in computer, consumer,
communication, and industrial business
Corporate Planning Organization
● Operation resources planning, production and demand planning,
and business process integration
2.3 Organization
2.3.1 Organization Chart
New Businesses
Audit Committee
Compensation
Committee
Shareholders’
Meeting
Board of Directors
Chairman
Vice Chairman
CEO
Operations
Business
Development
Corporate
Planning
Organization
Quality
and
Reliability
Worldwide Sales
and
Marketing
Research
and
Development
Information
Technology
Materials
Management
and Risk
Management
Human
Resources
Finance
and
Spokesperson
Legal
Internal
Audit
Quality and Reliability
● Quality and reliability management
Worldwide Sales and Marketing
● Brand management, market research, customer service, regional
sales operations and field technical support
Human Resources
● Human resources management and organizational development
● Proprietary information protection (PIP)
Finance and Spokesperson
● Corporate finance, accounting, investor relations, public relations,
tax, financial planning, investment management, and strategic
Research and Development
● Advanced and mainstream technology research and development,
program
● Corporate spokesperson
exploratory research and development, design services and
technology platform development
Information Technology
● Technology system integration, business system integration, IT
infrastructure, communication service, IT security, IT productivity
and quality management
Materials Management and Risk Management
● Purchasing, warehousing, import and export, logistics support,
industrial safety, and environmental protection
Legal
● Corporate legal affairs, litigation, commercial transactions, patents
and other intellectual property management, compliance and
regulatory work
Internal Audit
● Internal audit and process compliance audit
11
2.4 Board Members
2.4.1 Information Regarding Board Members
Title/Name
Chairman
Morris Chang
Vice Chairman
F.C. Tseng
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
121,137,914
%
0.47%
Shares
135,217
%
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%
34,662,675
0.13%
132,855
0.00%
Ph.D. in Electrical Engineering, National Chengkung University, Taiwan
Director
National Development Fund, Executive Yuan
Representatives: (Notes 1, 2, 3)
Johnsee Lee (Note 1)
06/10/2009
06/09/2012
12/10/1986
1,645,482,861
6.42%
1,653,709,980
6.38%
-
-
-
-
Director
Rick Tsai
Independent Director
Sir Peter Leahy Bonfield
Independent Director
Stan Shih
Independent Director
Thomas J. Engibous
06/10/2009
06/09/2012
06/03/2003
33,768,636
0.13%
34,481,046
0.13%
06/10/2009
06/09/2012
05/07/2002
-
-
-
-
Non-Executive Director and Chairman, NXP Semiconductors N.V.
Former CEO and Chairman of the Executive Committee, British Telecommunications Plc
Vice President, the British Quality Foundation
- Mentor Graphics Corporation Inc., Oregon, USA
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
06/10/2009
06/09/2012
06/10/2009
-
-
-
-
-
-
Bachelor Degree in Electrical Engineering, Purdue University
Lead Director, J. C. Penney Company Inc.
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 Chemical Engineering, Illinois Institute of Technology
MBA, University of Chicago
Graduate of Harvard Business School’s Advanced Management Program
Former Principal Investigator, Argonne National Laboratory
Former Senior Manager, Johnson Matthey Inc.
Former President, Industrial Technology Research Institute (ITRI)
Chairman of the Development Center for Biotechnology
President of Taiwan Bio Industry Organization
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
-
-
-
-
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
Former Executive Vice President and President of the Semiconductor Group, Texas Instruments Inc.
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
Chairman of:
- TSMC China Company Limited
- Global Unichip Corp.
Director of:
- digimax, Inc.
President, New Businesses, TSMC
Director, TSMC subsidiary
President, TSMC subsidiaries
Director, Motech Industries, Inc.
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
Group Chairman, iD SoftCapital
Director of:
- Acer Incorporated
- Qisda Corporation
- Wistron Corporation
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: The former representative of National Development Fund, Mr. Tian-Jy Chen, resigned on May 11, 2010. Mr. Johnsee Lee was appointed as the representative on August 6, 2010.
Note 2: 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 3: Major institutional shareholders of National Development Fund: Not applicable.
Top 10 Shareholders
Not Applicable
12
Title/Name
Chairman
Morris Chang
Vice Chairman
F.C. Tseng
Director
Rick Tsai
Independent Director
Sir Peter Leahy Bonfield
Independent Director
Stan Shih
Independent Director
Thomas J. Engibous
Date Elected
Term Expires
Date First Elected
06/10/2009
06/09/2012
12/10/1986
Shares
118,047,697
%
0.46%
Shares
121,137,914
%
0.47%
Shareholding When Elected
Current Shareholding
Spouse & Minor Shareholding
Shares
135,217
%
0.00%
06/10/2009
06/09/2012
05/13/1997
36,144,509
0.14%
34,662,675
0.13%
132,855
0.00%
Selected Education, Past Positions & Current Positions at Non-profit Organizations
Selected Current Positions at TSMC and Other Companies
As of 02/28/2011
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.
Director
06/10/2009
06/09/2012
12/10/1986
1,645,482,861
6.42%
1,653,709,980
6.38%
National Development Fund, Executive Yuan
Representatives: (Notes 1, 2, 3)
Johnsee Lee (Note 1)
06/10/2009
06/09/2012
06/03/2003
33,768,636
0.13%
34,481,046
0.13%
06/10/2009
06/09/2012
05/07/2002
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Ph.D. in Chemical Engineering, Illinois Institute of Technology
MBA, University of Chicago
Graduate of Harvard Business School’s Advanced Management Program
Former Principal Investigator, Argonne National Laboratory
Former Senior Manager, Johnson Matthey Inc.
Former President, Industrial Technology Research Institute (ITRI)
Chairman of the Development Center for Biotechnology
President of Taiwan Bio Industry Organization
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 subsidiary
President, TSMC subsidiaries
Director, Motech Industries, Inc.
Non-Executive Director and Chairman, NXP Semiconductors N.V.
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
06/10/2009
06/09/2012
04/14/2000
1,472,922
0.01%
1,480,286
0.01%
16,116
0.00%
06/10/2009
06/09/2012
06/10/2009
-
-
-
-
-
-
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
Group Chairman, iD SoftCapital
Director of:
- Acer Incorporated
- Qisda Corporation
- Wistron Corporation
Management, USA
Former Chairman, CEO and Co-Founder, Acer Group
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
Lead Director, J. C. Penney Company Inc.
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.
13
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.
E
L
I
F
O
R
P
Y
N
A
P
M
O
C
Name/Criteria
Chairman
Morris Chang
Vice Chairman
F.C. Tseng
Director
Johnsee Lee
Director
Rick Tsai
Independent Director
Sir Peter Leahy Bonfield
Independent Director
Stan Shih
Independent Director
Thomas J. Engibous
Meet One of the Following Professional Qualification Requirements, Together with at Least Five Years Work Experience
Criteria (Note)
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
0
0
0
0
0
0
0
Note: 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.
14
Name/Criteria
Chairman
Morris Chang
Vice Chairman
F.C. Tseng
Director
Johnsee Lee
Director
Rick Tsai
Independent Director
Sir Peter Leahy Bonfield
Independent Director
Stan Shih
Independent Director
Thomas J. Engibous
ˇ
Meet One of the Following Professional Qualification Requirements, Together with at Least Five Years Work Experience
Criteria (Note)
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
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
Stan Shih
Independent Director
Thomas J. Engibous
Director
National Development Fund, Executive Yuan
Representatives:
Johnsee Lee
Base Compensation (A)
Severance Pay and Pensions
(B) (Note 2)
Bonus to Directors (C) (Note 3)
Allowances (D) (Note 4)
Remuneration
Total Remuneration
(A+B+C+D) as a % of 2010
Net Income
Base Compensation, Bonuses,
Severance Pay and Pensions
and Allowances (E) (Note 5)
(F) (Note 2)
Employee Profit Sharing (G) (Note 6)
Compensation Earned as Employees of TSMC or of TSMC’s Consolidated Entities
Exercisable Employee Stock
Options (H) (Note 7)
Total Compensation
(A+B+C+D+E+F+G) as a %
of 2010 Net Income (Note 8)
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
28,210
28,210
660
660
43,131
43,131
792
792
0.05%
0.05%
181,261
181,261
239
239
170,954
0
170,954
0
0
0.27%
0.27%
None
0
0
0
0
8,000
8,000
0
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: Pensions funded according to applicable law.
Note 3: The Board adopted a proposal for 2010 bonus to TSMC’s directors in the amount of NT$51,131 thousand at its meeting on February 15, 2011. The proposed bonus will be effected upon the approval of shareholders at the
Annual Shareholders’ Meeting on June 9, 2011.
Note 4: Includes the expense for company cars and gasoline reimbursement. Excludes compensation paid to company drivers totaled NT$4,961 thousand.
Note 5: Includes the employees’ cash bonuses distributed in May, August, November 2010 and February 2011.
Note 6: The Board adopted a proposal for 2010 employee profit sharing distribution in 2011 with respect to 2010 earnings at its meeting on February 15, 2011. 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 9, 2011.
Note 7: Represents the number of cumulative employee stock options exercisable as of the date of this Annual Report.
Note 8: Total remuneration and compensation earned as employees paid to TSMC’s directors in 2009 was NT$386,907 thousand, accounting for 0.43% of 2009 net income.
Remuneration Paid to Directors
Under NT$2,000,000
NT$2,000,000 ~ NT$4,999,999
NT$5,000,000 ~ NT$9,999,999
NT$10,000,000 ~ NT$14,999,999
NT$15,000,000 ~ NT$29,999,999
NT$30,000,000 ~ NT$49,999,999
NT$50,000,000 ~ NT$99,999,999
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
2010
From TSMC
Rick Tsai (Note)
National Development Fund, Executive Yuan
National Development Fund, Executive Yuan
Sir Peter Leahy Bonfield, Stan Shih, Thomas J. Engibous
Sir Peter Leahy Bonfield, Stan Shih, Thomas J. Engibous
Morris Chang (Note), F.C. Tseng
F.C. Tseng
7
Morris Chang (Note), Rick Tsai (Note)
7
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. Morris Chang
and Dr. Rick Tsai.
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
Stan Shih
Independent Director
Thomas J. Engibous
Director
Representatives:
Johnsee Lee
National Development Fund, Executive Yuan
Base Compensation (A)
Bonus to Directors (C) (Note 3)
Allowances (D) (Note 4)
Remuneration
Severance Pay and Pensions
(B) (Note 2)
Total Remuneration
(A+B+C+D) as a % of 2010
Net Income
Base Compensation, Bonuses,
and Allowances (E) (Note 5)
Severance Pay and Pensions
(F) (Note 2)
Employee Profit Sharing (G) (Note 6)
Compensation Earned as Employees of TSMC or of TSMC’s Consolidated Entities
Exercisable Employee Stock
Options (H) (Note 7)
Total Compensation
(A+B+C+D+E+F+G) as a %
of 2010 Net Income (Note 8)
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
28,210
28,210
660
660
43,131
43,131
792
792
0.05%
0.05%
181,261
181,261
239
239
170,954
0
170,954
0
0
0
0
0
8,000
8,000
0
0
0
0
0
0
0
0
0
0
0
0
0
0.27%
0.27%
None
0
17
2.5 Management Team
2.5.1 Information Regarding Management Team
On-board Date
(Note 1)
01/01/1987
Shareholding
Spouse & Minor
Shareholding
121,137,914
%
0.47%
Shareholding
135,217
%
0.00%
12/18/1989
34,481,046
0.13%
Senior Vice President & Chief Information Officer
Information Technology & Materials Management
and Risk Management
Stephen T. Tso
12/16/1996
15,475,064
0.06%
07/07/1997
11/15/1993
2,412,481
0.01%
12,840,573
0.05%
Title
Name
Chairman & CEO
Morris Chang
President
New Businesses
Rick Tsai
Senior Vice President
Research and Development
Shang-yi Chiang
Senior Vice President
Operations
Mark Liu
Senior Vice President
Business Development
C.C. Wei
Senior Vice President & General Counsel
Legal
Richard Thurston (Note 2)
Senior Vice President, Chief Financial Officer &
Spokesperson
Finance
Lora Ho (Note 2)
Senior Vice President
Worldwide Sales and Marketing
Jason C.S. Chen (Note 2)
Vice President
Operations/Affiliate Fabs
M.C. Tzeng
Vice President
Operations/Manufacturing Technology
Wei-Jen Lo
Vice President & Chief Technology Officer
Research and Development
Jack Sun
Vice President
Operations/Product Development
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
Vice President
Operations/Mainstream Fabs
J.K. Lin (Note 3)
Vice President
Operations/300mm Fabs
J.K. Wang (Note 3)
Vice President
Corporate Planning Organization
Irene Sun (Note 3)
Vice President
Research and Development
Burn J. Lin (Note 4)
-
-
-
-
-
-
-
-
-
-
-
-
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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Ph.D., Materials Science & Engineering, University of California, Berkeley, USA
Director, TSMC subsidiary
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
Ph.D., Electrical Engineering, Stanford University, USA
Senior Vice President, Research and Development, 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.
J.D., Rutgers School of Law, State University of New Jersey, USA
Ph.D., History, University of Virginia, USA
Partner, Haynes Boone, LLP.
Director, Accounting, TSMC
Vice President& CFO, TI-Acer Semiconductor Manufacturing Corp.
Master, Business Administration, University of Missouri-Columbia, USA
Vice President & Co-Director of Worldwide Sales & Marketing Group, Intel
Master, Applied Chemistry, Chungyuan University, Taiwan
Vice President, Mainstream Technology Business, TSMC
Senior Director, Fab 2 Operation, TSMC
Vice President, Advanced Technology Business, TSMC
Vice President, Research & Development, TSMC
Vice President, Operation II, TSMC
Director, Advanced Technology Development & CTM Plant Manager, Intel
Vice President, Research and Development, TSMC
Senior Director, Logic Technology Division, TSMC
R&D, International Business Machines
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.
Master, Business Administration, Tulane University, USA
Senior Director, Corporate Planning Organization, TSMC
Senior Director, Fab 5 Operation, TSMC
Bachelor, Science, National Changhua University of Education, Taiwan
Senior Director, Mainstream Fabs, TSMC
Master, Chemical Engineering, National Cheng Kung University, Taiwan
Senior Director, 300mm fab operations, TSMC
Ph.D., Materials Science and Engineering, Cornell University, USA
Senior Director, Corporate Planning Organization, TSMC
Ph.D., Electrical Engineering, Ohio State University
Senior Director, Nanopatterning Technology Division, TSMC
Director, TSMC subsidiary
President, TSMC subsidiaries
Director, Motech Industries, Inc.
Director, TSMC subsidiary
Director, TSMC affiliates
Director, TSMC subsidiaries
Director, TSMC affiliates
Director, TSMC affiliates
President, TSMC subsidiaries
Director, TSMC subsidiaries
None
None
None
None
None
None
None
None
None
Bachelor, Engineering Technology, United States Military Academy at West Point, USA
Director, TSMC North America
Vice President of TSMC North America Account Management
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Manager
J.J. Wang
Siblings
Manager
Thomas T. Sun
Siblings
Vice President Corporate Staff, Assistant General Counsel, Texas Instruments Incorporated
Master, Business Administration, National Taiwan University, Taiwan
Director and/or Supervisor, TSMC subsidiaries
Director, TSMC subsidiaries
M.J. Tzeng
Siblings
Department
Manager
Ph.D., Solid State Physics & Surface Chemistry, University of California, Berkeley, USA
None
Ph.D., Electrical Engineering, University of Illinois at Urbana-Champaign, USA
None
02/01/1998
8,390,325
0.03%
261
0.00%
01/02/2002
1,839,892
0.01%
-
-
06/01/1999
6,221,080
0.02%
110,268
0.00%
03/31/2005
01/01/1987
07/01/2004
2,453,320
0.01%
122
0.00%
7,663,595
0.03%
102,722
0.00%
2,485,127
0.01%
06/02/1997
4,904,831
0.02%
01/01/1987
03/01/2000
11/14/1997
01/01/1987
01/01/1987
02/11/1987
10/01/2003
04/26/2000
5,959,823
0.02%
102,808
0.00%
2,051,180
0.01%
1,103,253
0.00%
-
-
-
-
9,310,067
0.04%
1,252,481
0.00%
12,182,118
0.05%
1,644,874
0.01%
2,553,947
0.01%
211,141
0.00%
1,399,709
0.01%
-
-
3,023,502
0.01%
1,024,933
0.00%
Note 1: On-board date means the offical date joining TSMC.
Note 2: Effective August 10, 2010, Mr. Richard Thurston, Ms. Lora Ho and Mr. Jason C.S. Chen were promoted to Senior Vice President.
Note 3: Effective August 10, 2010, Mr. J.K. Lin, Mr. J.K. Wang and Ms. Irene Sun were appointed as Vice President of TSMC.
Note 4: Effective February 15, 2011, Mr. Burn J. Lin was appointed as Vice President of TSMC.
18
On-board Date
(Note 1)
01/01/1987
Shareholding
Spouse & Minor
Shareholding
121,137,914
%
0.47%
Shareholding
135,217
%
0.00%
TSMC Shareholding by
Nominee Arrangement (Shares)
12/18/1989
34,481,046
0.13%
Senior Vice President & Chief Information Officer
12/16/1996
Information Technology & Materials Management
15,475,064
0.06%
07/07/1997
11/15/1993
2,412,481
0.01%
12,840,573
0.05%
02/01/1998
8,390,325
0.03%
261
0.00%
Senior Vice President & General Counsel
01/02/2002
1,839,892
0.01%
Senior Vice President, Chief Financial Officer &
06/01/1999
6,221,080
0.02%
110,268
0.00%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,453,320
0.01%
122
0.00%
7,663,595
0.03%
102,722
0.00%
2,485,127
0.01%
5,959,823
0.02%
102,808
0.00%
2,051,180
0.01%
1,103,253
0.00%
-
-
9,310,067
0.04%
1,252,481
0.00%
12,182,118
0.05%
1,644,874
0.01%
2,553,947
0.01%
211,141
0.00%
1,399,709
0.01%
3,023,502
0.01%
1,024,933
0.00%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Title
Name
Chairman & CEO
Morris Chang
President
New Businesses
Rick Tsai
and Risk Management
Stephen T. Tso
Senior Vice President
Research and Development
Shang-yi Chiang
Senior Vice President
Operations
Mark Liu
Senior Vice President
Business Development
C.C. Wei
Legal
Richard Thurston (Note 2)
Spokesperson
Finance
Lora Ho (Note 2)
Senior Vice President
Worldwide Sales and Marketing
Jason C.S. Chen (Note 2)
Vice President
Operations/Affiliate Fabs
M.C. Tzeng
Vice President
Wei-Jen Lo
Operations/Manufacturing Technology
Research and Development
Jack Sun
Vice President
Operations/Product Development
Y.P. Chin
Vice President
Quality and Reliability
N.S. Tsai
Vice President
Rick Cassidy
Vice President
Human Resources
L.C. Tu
Vice President
President of TSMC North America
Operations/Mainstream Fabs
J.K. Lin (Note 3)
Vice President
Operations/300mm Fabs
J.K. Wang (Note 3)
Vice President
Corporate Planning Organization
Irene Sun (Note 3)
Vice President
Research and Development
Burn J. Lin (Note 4)
03/31/2005
01/01/1987
07/01/2004
01/01/1987
03/01/2000
11/14/1997
01/01/1987
01/01/1987
02/11/1987
10/01/2003
04/26/2000
Vice President & Chief Technology Officer
06/02/1997
4,904,831
0.02%
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.
Ph.D., Materials Science & Engineering, University of California, Berkeley, USA
President, WaferTech, L.L.C.
Senior Vice President, Operations, TSMC
Ph.D., Electrical Engineering, Stanford University, USA
Senior Vice President, Research and Development, TSMC
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.
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.
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
None
Director, TSMC subsidiary
President, TSMC subsidiaries
Director, Motech Industries, Inc.
Director, TSMC subsidiary
None
None
Director, TSMC subsidiary
Director, TSMC affiliates
Director, TSMC subsidiaries
Director, TSMC affiliates
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
President, TSMC subsidiaries
Master, Business Administration, University of Missouri-Columbia, USA
Vice President & Co-Director of Worldwide Sales & Marketing Group, Intel
Master, Applied Chemistry, Chungyuan University, Taiwan
Vice President, Mainstream Technology Business, TSMC
Senior Director, Fab 2 Operation, TSMC
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
Ph.D., Electrical Engineering, University of Illinois at Urbana-Champaign, USA
Vice President, Research and Development, TSMC
Senior Director, Logic Technology Division, TSMC
R&D, International Business Machines
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.
Director, TSMC subsidiaries
Director, TSMC subsidiaries
None
None
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
Bachelor, Science, National Changhua University of Education, Taiwan
Senior Director, Mainstream Fabs, TSMC
Master, Chemical Engineering, National Cheng Kung University, Taiwan
Senior Director, 300mm fab operations, TSMC
Ph.D., Materials Science and Engineering, Cornell University, USA
Senior Director, Corporate Planning Organization, TSMC
Ph.D., Electrical Engineering, Ohio State University
Senior Director, Nanopatterning Technology Division, TSMC
None
None
None
None
None
As of 02/28/2011
Managers Who are Spouses or within Second-degree Relative
of Consanguinity to Each Other
Title
Name
Relation
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Department
Manager
M.J. Tzeng
Siblings
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Manager
J.J. Wang
Siblings
Manager
Thomas T. Sun
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 6)
Bonuses and Allowances (Note 7)
Employee Profit Sharing (Note 8)
Total Compensation as a % of 2010 Net
Exercisable Employee Stock Options
Income (Note 9)
(Note 10)
Compensation
Received from
Non-consoildated
Affiliates
From All
Consoildated
Entities
Chairman & CEO
President
New Businesses
Senior Vice President & Chief Information Officer
Information Technology & Materials Management and
Risk Management
Senior Vice President
Research and Development
Senior Vice President
Operations
Senior Vice President
Business Development
Senior Vice President & General Counsel
Legal
Senior Vice President, Chief Financial Officer &
Spokesperson
Finance
Senior Vice President
Worldwide Sales and Marketing
Vice President
Operations/Affiliate Fabs
Vice President
Materials Management and Risk Management
Vice President
Operations/Manufacturing Technology
Vice President & Chief Technical Officer
Research and Development
Vice President
Deputy Head of Research and Development
Design and Technology Platform
Vice President
Operations/Product Development
Vice President
Quality and Reliability
Vice President &
President of TSMC North America
Vice President
Human Resources
Vice President
Operations/Mainstream Fabs
Vice President
Operations/300mm Fabs
Vice President
Corporate Planning Organization
Morris Chang
Rick Tsai
Stephen T. Tso
Shang-yi Chiang
Mark Liu
C.C. Wei
Richard Thurston (Note 2)
Lora Ho (Note 2)
Jason C.S. Chen (Note 2)
M.C. Tzeng
P.H. Chang (Note 3)
Wei-Jen Lo
Jack Sun
Fu-Chieh Hsu (Note 4)
Y.P. Chin
N.S. Tsai
Rick Cassidy
L.C. Tu
J.K. Lin (Note 5)
J.K. Wang (Note 5)
Irene Sun (Note 5)
76,642
87,527
2,115
10,627
614,631
705,218
579,391
0
579,391
0
0.79%
0.86%
1,471
2,442
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,
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: Mr. Richard Thurston, Ms. Lora Ho and Mr. Jason C.S. Chen were promoted to Senior Vice President on August 10, 2010.
Note 3: Mr. P.H. Chang retired on March 31, 2010.
Note 4: Mr. Fu-Chieh Hsu resigned on August 28, 2010.
Note 5: Mr. J.K. Lin, Mr. J.K. Wang and Ms. Irene Sun were promoted to Vice President on August 10, 2010.
Note 6: Pensions funded according to applicable law.
Note 7: Includes the expense for the employees’ cash bonuses distributed in May, August, November 2010 and February 2011, company cars; and gasoline reimbursement. Excludes compensation paid to company drivers totaled
NT$4,158 thousand.
Note 8: The Board adopted a proposal for 2010 employee profit sharing distribution in 2011 with respect to 2010 earnings at its meeting on February 15, 2011. 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 9, 2011.
Note 9: Total compensation paid to TSMC’s CEO, President and vice presidents in 2009 was NT$957,831 thousand, accounting for 1.08% of 2009 net income.
Note 10: 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
NT$2,000,000 ~ NT$4,999,999
NT$5,000,000 ~ NT$9,999,999
NT$10,000,000 ~ NT$14,999,999
NT$15,000,000 ~ NT$29,999,999
NT$30,000,000 ~ NT$49,999,999
NT$50,000,000 ~ NT$99,999,999
Over NT$100,000,000
Total
20
2010
From TSMC
P.H. Chang, Rick Cassidy
-
-
-
Fu-Chieh Hsu, Irene Sun
Y.P. Chin, N.S. Tsai, L.C. Tu, J.K. Lin, J.K. Wang
Stephen T. Tso, Shang-yi Chiang, Mark Liu, C.C. Wei, Richard Thurston,
Lora Ho, Jason C.S. Chen, M.C. Tzeng, Wei-Jen Lo, Jack Sun
Morris Chang, Rick Tsai
21
From All Consolidated Entities
P.H. Chang
-
-
-
Fu-Chieh Hsu, Irene Sun
Y.P. Chin, N.S. Tsai, L.C. Tu, J.K. Lin, J.K. Wang
Stephen T. Tso, Shang-yi Chiang, Mark Liu, C.C. Wei, Richard Thurston,
Lora Ho, Jason C.S. Chen, M.C. Tzeng, Wei-Jen Lo, Jack Sun
Morris Chang, Rick Tsai, Rick Cassidy
21
Salary
Severance Pay and Pensions (Note 6)
Bonuses and Allowances (Note 7)
Employee Profit Sharing (Note 8)
Total Compensation as a % of 2010 Net
Income (Note 9)
Exercisable Employee Stock Options
(Note 10)
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
76,642
87,527
2,115
10,627
614,631
705,218
579,391
0
579,391
0
0.79%
0.86%
1,471
2,442
None
Senior Vice President & Chief Information Officer
Stephen T. Tso
Information Technology & Materials Management and
Senior Vice President & General Counsel
Richard Thurston (Note 2)
Senior Vice President, Chief Financial Officer &
Lora Ho (Note 2)
Title
Chairman & CEO
President
New Businesses
Risk Management
Senior Vice President
Research and Development
Senior Vice President
Operations
Senior Vice President
Business Development
Legal
Spokesperson
Finance
Senior Vice President
Worldwide Sales and Marketing
Vice President
Operations/Affiliate Fabs
Materials Management and Risk Management
Vice President
Vice President
Operations/Manufacturing Technology
Vice President & Chief Technical Officer
Research and Development
Vice President
Deputy Head of Research and Development
Design and Technology Platform
Vice President
Operations/Product Development
President of TSMC North America
Vice President
Quality and Reliability
Vice President &
Vice President
Human Resources
Vice President
Operations/Mainstream Fabs
Vice President
Operations/300mm Fabs
Vice President
Corporate Planning Organization
Name
Morris Chang
Rick Tsai
Shang-yi Chiang
Mark Liu
C.C. Wei
Jason C.S. Chen (Note 2)
M.C. Tzeng
P.H. Chang (Note 3)
Fu-Chieh Hsu (Note 4)
Wei-Jen Lo
Jack Sun
Y.P. Chin
N.S. Tsai
Rick Cassidy
L.C. Tu
J.K. Lin (Note 5)
J.K. Wang (Note 5)
Irene Sun (Note 5)
21
Stock
(Fair Market Value)
Cash
Total Employee Profit Sharing
Total Employee Profit Sharing Paid to
Management Team as a % of 2010 Net Income
0
604,271
604,271
0.37%
2.5.3 Employee Profit Sharing Granted to Management Team (Note 1)
Unit: NT$ thousands
Title
Chairman &
CEO
President
New Businesses
Senior Vice President & Chief Information Officer
Information Technology & Materials Management and Risk Management
Senior Vice President
Research and Development
Senior Vice President
Operations
Senior Vice President
Business Development
Senior Vice President & General Counsel
Legal
Senior Vice President, Chief Financial Officer & Spokesperson
Finance
Senior Vice President
Worldwide Sales and Marketing
Vice President
Operations/Affiliate Fabs
Vice President
Materials Management and Risk Management
Vice President
Operations/Manufacturing Technology
Vice President & Chief Technical Officer
Research and Development
Vice President
Deputy Head of Research and Development
Design and Technology Platform
Vice President
Operations/Product Development
Vice President
Quality and Reliability
Vice President
Human Resources
Vice President
Operations/Mainstream Fabs
Vice President
Operations/300mm Fabs
Vice President
Corporate Planning Organization
Senior Director
New Businesses
Senior Director
New Businesses
Name
Morris Chang
Rick Tsai
Stephen T. Tso
Shang-yi Chiang
Mark Liu
C.C. Wei
Richard Thurston (Note 2)
Lora Ho (Note 2)
Jason C.S. Chen (Note 2)
M.C. Tzeng
P.H. Chang (Note 3)
Wei-Jen Lo
Jack Sun
Fu-Chieh Hsu (Note 4)
Y.P. Chin
N.S. Tsai
L.C. Tu
J.K. Lin (Note 5)
J.K. Wang (Note 5)
Irene Sun (Note 5)
Jan Kees van Vliet
Y.C. Chao
Note 1: The Board adopted a proposal for 2010 employee profit sharing distribution in 2011 with respect to 2010 earnings at its meeting on February 15, 2011. 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 9, 2011.
Note 2: Mr. Richard Thurston, Ms. Lora Ho and Mr. Jason C.S. Chen were promoted to Senior Vice President on August 10, 2010.
Note 3: Mr. P.H. Chang retired on March 31, 2010.
Note 4: Mr. Fu-Chieh Hsu resigned on August 28, 2010.
Note 5: Mr. J.K. Lin, Mr. J.K. Wang and Ms. Irene Sun were promoted to Vice President on August 10, 2010.
22
Senior Vice President & Chief Information Officer
Information Technology & Materials Management and Risk Management
Senior Vice President & General Counsel
Senior Vice President, Chief Financial Officer & Spokesperson
Title
Chairman &
CEO
President
New Businesses
Senior Vice President
Research and Development
Senior Vice President
Operations
Senior Vice President
Business Development
Legal
Finance
Senior Vice President
Worldwide Sales and Marketing
Vice President
Operations/Affiliate Fabs
Materials Management and Risk Management
Vice President
Vice President
Operations/Manufacturing Technology
Vice President & Chief Technical Officer
Research and Development
Vice President
Deputy Head of Research and Development
Design and Technology Platform
Vice President
Operations/Product Development
Vice President
Quality and Reliability
Vice President
Human Resources
Vice President
Operations/Mainstream Fabs
Vice President
Operations/300mm Fabs
Vice President
Corporate Planning Organization
Senior Director
New Businesses
Senior Director
New Businesses
Name
Morris Chang
Rick Tsai
Stephen T. Tso
Shang-yi Chiang
Mark Liu
C.C. Wei
Richard Thurston (Note 2)
Lora Ho (Note 2)
Jason C.S. Chen (Note 2)
M.C. Tzeng
P.H. Chang (Note 3)
Fu-Chieh Hsu (Note 4)
Wei-Jen Lo
Jack Sun
Y.P. Chin
N.S. Tsai
L.C. Tu
J.K. Lin (Note 5)
J.K. Wang (Note 5)
Irene Sun (Note 5)
Jan Kees van Vliet
Y.C. Chao
Stock
(Fair Market Value)
Cash
Total Employee Profit Sharing
Total Employee Profit Sharing Paid to
Management Team as a % of 2010 Net Income
0
604,271
604,271
0.37%
23
3. Corporate Governance
TSMC advocates and acts upon the principles of operational
In the spirit of Chairman Chang’s approach to corporate governance,
transparency and respect for shareholder rights. We believe that the
a board of directors’ primary duty is to supervise. The Board should
basis for successful corporate governance is a sound and effective
Board of Directors. In line with this principle, TSMC’s Board of
supervise the Company’s: compliance with relevant laws and
regulations; financial transparency; timely disclosure of material
Directors established an Audit Committee in 2002 and a
information, and maintaining of the highest integrity within the
Compensation Committee in 2003.
Company. TSMC’s Board of Directors strives to perform through the
Audit Committee and the Compensation Committee, the hiring of a
TSMC’s corporate governance won international recognition in 2010:
Corporate Governance Asia honored TSMC with its “Corporate
financial expert for the Audit Committee, coordination with the
Internal Audit department, and through the ombudsman reporting
Governance Asia Annual Recognition Awards 2010”. FinanceAsia
system.
Magazine ranked TSMC’s corporate governance as the best among
all companies with its “Best Corporate Governance” for the Taiwan
The second duty of the Board of Directors is to provide guidance to
region.
3.1 Board of Directors
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
TSMC’s Board of Directors consists of seven distinguished members
updates TSMC’s Board on the progress of the strategies, obtaining
with a great breadth of experience as world-class business leaders or
Board guidance as appropriate.
scholars. Three of the seven members are independent directors:
former British Telecommunications Chief Executive Officer, Sir Peter
The third duty of the Board of Directors is to evaluate the
Bonfield; former Acer Group Chairman, Mr. Stan Shih; and former
management’s performance and to dismiss officers of the Company
Texas Instrument Inc. Chairman of the Board, Mr. Thomas J.
when necessary. TSMC’s management has maintained a healthy and
Engibous. Under the leadership of Chairman Morris Chang, TSMC’s
functional communication with TSMC Board of Directors, has been
Board of Directors takes a serious and forthright approach to its
devoted in executing guidance of TSMC Board of Directors, and is
duties and is a serious, competent and independent Board.
dedicated in running the business operations, all to achieve the best
interests for TSMC shareholders.
25
Board of Directors Meeting Status
Dr. Morris Chang, the Chairman of the Board of Directors, convened four regular meetings and one special meeting in 2010. The directors’
attendance status is as follows:
Title
Name
Chairman
Morris Chang
Vice Chairman
F.C. Tseng
Director
National Development Fund,
Executive Yuan
Representative: Johnsee Lee
Director
Rick Tsai
Independent Director
Sir Peter Leahy Bonfield
Independent Director
Stan Shih
Independent Director
Thomas J. Engibous
Attendance
in Person
By Proxy
Attendance Rate
in Person (%)
Notes
5
5
3
5
4
4
4
0
0
2
0
1
1
1
100%
None
100%
None
60%
The former representative of National Development Fund, Mr. Tian-Jy Chen, resigned
on May 11, 2010. Mr. Johnsee Lee was appointed as the representative on August 6,
2010.
Mr. Tian-Jy Chen participated in the discussion through telephone at one Special
Meeting, represented by proxy.
100%
None
80%
80%
80%
Sir Peter Bonfield participated in the discussion through telephone at one Special
Meeting, represented by proxy.
None
Mr. Engibous participated in the discussion through telephone at one Special Meeting,
represented by proxy.
Annotations:
1. In 2010, 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 2010.
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 2011, 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 five special meetings in 2010. The Committee
members’ attendance status is as follows:
Title
Chair
Member
Member
Name
Sir Peter Leahy Bonfield
Stan Shih
Thomas J. Engibous
Financial Expert
J.C. Lobbezoo
Attendance
in Person
By Proxy
Attendance Rate
in Person (%)
9
8
9
9
0
1
0
0
100%
89%
100%
100%
Notes
None
None
None
None
Annotations:
1. There was no Securities and Exchange Act §14-5 resolution which was not approved by the Audit Committee but was approved by two thirds or more of all directors in 2010.
2. There were no recusals of independent directors due to conflicts of interests in 2010.
3. Descriptions of the communications between the independent directors, the internal auditors, and the independent auditors in 2010 (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 2010, 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 review or 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 2010, the Company’s independent auditors did not report any irregularity. The
communication channel between the Audit Committee and the independent auditors functioned well.
26
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 2011, 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 2010. The Committee members’ attendance status
is as follows:
Title
Chair
Member
Member
Member
Name
Stan Shih
Morris Chang
Sir Peter Leahy Bonfield
Thomas J. Engibous
Attendance in Person
3
4
4
4
Attendance Rate in
Person (%)
Notes
75%
None
100%
A non-voting member
100%
100%
None
None
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 Corporate Communication
Division, 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, Mr. Stan Shih, and Mr. Thomas J. Engibous 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 Corporate Communication
Division, 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. Corporate Communication
Division, 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 page 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 page 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 page 55-58 of this Annual Report.
(2) Status of investor relations, supplier relations and rights of stakeholders: Please refer to the “Corporate Social Responsibility” on page 73-79 of this Annual Report.
(3) Status of Risk Management Policies and Risk Evaluation: Please refer to the “Risk Management” section on page 65-71 of this Annual Report.
(4) Status of Customer Relations Policies: Please refer to the “Customer Partnership” section on page 54-55 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 2010: Corporate Governance Asia honored TSMC with its “Corporate Governance Asia Annual Recognition Awards 2010”. FinanceAsia Magazine
ranked TSMC’s corporate governance as the best among all companies with its “Best Corporate Governance” for the Taiwan region.
Continuing Education/Training of Directors in 2010
Date
03/17
11/03
08/12
05/11
Host by
GSA (Global Semiconductor Alliance) Global
Leadership Summit
ACGA (Asian Corporate Governance
Association)
Training/Speech Title
Collaborate to succeed
Opportunities & Challenges facing Taiwan’s High tech. sector
Securities and Futures Institute
Recent Cross-Strait M&A opportunities
TSMC
Speech: “IFRS Presentation: Conversion Status and Other Key Considerations”
by auditors from Deloitte & Touche
- Ricky Lin, Audit Engagement Partner;
- Sean Bronson, Global IFRS & Offerings Services (GlOS) Managing Director
Duration
1 hour
1.5 hours
3 hours
1 hour
08/09
TSMC
Legal Training for Directors by Dr. Richard Thurston, Senior Vice President & General
Counsel, TSMC
0.5 hour
Name
Morris Chang (Note)
F.C. Tseng
Morris Chang
F.C. Tseng
Sir Peter Leahy Bonfield
Stan Shih
Thomas J. Engibous
Rick Tsai
Morris Chang
F.C. Tseng
Sir Peter Leahy Bonfield
Thomas J. Engibous
Johnsee Lee
Rick Tsai
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 2010
Title/Name
Director, Accounting
Division
Jessica Chou
Date
05/11
Host by
TSMC
Training
Speech: “IFRS Presentation: Conversion Status and Other Key Considerations”
by auditors from Deloitte & Touche
- Ricky Lin, Audit Engagement Partner;
- Sean Bronson, Global IFRS & Offerings Services (GlOS) Managing Director
Duration
1 hour
12/09 – 12/10
Accounting Research and Development
Foundation
Continuing Education Course for Principal Accounting Officers of Issuers, Securities
Firms, and Securities Exchanges
12 hours
10/27
12/27
05/11
The Institute of Internal Auditors
Diagnose internal control issues and weakness
The Institute of Internal Auditors
Internal audit work planning practice and case studies
TSMC
Speech: “IFRS Presentation: Conversion Status and Other Key Considerations”
by auditors from Deloitte & Touche
- Ricky Lin, Audit Engagement Partner;
- Sean Bronson, Global IFRS & Offerings Services (GlOS) Managing Director
6 hours
6 hours
1 hour
08/09
TSMC
Legal Training for Directors by Dr. Richard Thurston, Senior Vice President & General
Counsel, TSMC
0.5 hour
Director, Internal Audit
John Liang
Senior Vice Presidents &
Vice Presidents:
Mark Liu
C.C. Wei
Richard Thurston
Lora Ho
Jason Chen
Senior Vice Presidents &
Vice Presidents:
Mark Liu
C.C. Wei
Shang-yi Chiang
Lora Ho
Jason Chen
Irene Sun
28
3.3 Major Resolutions of Shareholders’
Meeting and Board Meetings
3.3.1 Major Resolutions of Shareholders’ Meeting
and Implementation Status
(3) Regular Board Meeting of August 10, 2010:
● approving capital appropriations of US$3,165.4 million;
● approving the increase of 2010 R&D and sustaining capital
appropriation to US$678.73 million from US$534.63 million;
● approving a capital injection of no more than US$225 million
into TSMC China Company Limited;
TSMC’s 2010 regular Shareholders’ Meeting was held in Hsinchu,
● approving 2010 semi-annual financial statements; and
Taiwan on June 15, 2010. At the meeting, shareholders present in
person or by proxy approved the following resolutions:
● approving the promotion of Lora Ho, Richard Thurston and
Jason Chen as Senior Vice Presidents, and the promotion of
(1) The 2009 Business Report and Financial Statements;
Irene Sun, J.K. Lin and J.K. Wang as Vice Presidents.
(2) The distribution of 2009 profits;
(4) Regular Board Meeting of November 8 & 9, 2010:
(3) The revisions to the Articles of Incorporation; and
● approving capital appropriations of US$1,880.9 million;
(4) The revisions to the Policies and Procedures for Financial
● approving 2011 R&D and sustaining capital appropriation of
Derivatives Transactions.
US$803.76 million; and
Implementation Status: All the resolutions of the Shareholders’
Europe B.V.
Meeting have been fully implemented in accordance with the
(5) Regular Board Meeting of February 14 & 15, 2011:
● approving capital injection of 9.4 million euros into TSMC Solar
resolutions.
3.3.2 Major Resolutions of Board Meetings
● approving 2010 business report and financial statements;
● approving distribution of 2010 profits, and cash dividends,
employee cash bonus and employee profit sharing;
● approving capital appropriations of US$2.9 billion;
During the 2010 calendar year, and through the period of January 1
● approving capital injection of US$5 million into TSMC Solar
to February 28, 2011, five regular board meetings and two special
North America;
board meetings were convened. Major resolutions approved at these
● convening the 2011 Annual Shareholders’ Meeting;
meetings are summarized below:
● determining the number of Directors to be nine, and approving
(1) Regular Board Meeting of February 8 & 9, 2010:
the election of two additional independent directors at the
● approving 2009 business report and financial statements;
2011 Annual Shareholders’ Meeting; and
● approving distribution of 2009 profits, and cash dividends,
● approving the promotion of Dr. Burn Lin as Vice President.
employee cash bonus and employee profit sharing;
● approving 2010 R&D and sustaining capital appropriations of
US$534.6 million;
● approving capital appropriations of US$2,272.4 million;
● approving amendments to TSMC’s Articles of Incorporation
expanding the Company’s business scope to encompass LED
lighting and solar energy; and
● convening the 2010 Annual Shareholders’ Meeting
(2) Regular Board Meeting of May 10 & 11, 2010:
● approving capital appropriations of US$1,582.6 million; and
● approving the full conversion of TSMC’s common shares into
paperless form, and setting July 13, 2010 as the conversion
date.
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,
2010 to February 28, 2011: None.
29
3.4 Internal Control System Execution Status
Taiwan Semiconductor Manufacturing Company Limited
Statement of Internal Control System
Date: February 15, 2011
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 year 2010:
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: effectiveness and efficiency of operations (including profitability, performance, and safeguarding
of assets), reliability of financial reporting, and 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, on December 31, 2010, 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 2010 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 15, 2011, 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.
E
C
N
A
N
R
E
V
O
G
E
T
A
R
O
P
R
O
C
30
3.5 Status of Personnel Responsible for Preparing Financial Reports
3.5.1 Resignation or Dismissal of Personnel Responsible for Financial Report: None.
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
3
2
5
0
0
0
0
3
2
1
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
System
Design
Company
Registration
Human
Resource
Others
Subtotal
No
Audit
Period
Yes
ˇ
Deloitte & Touche
Hung-Peng Lin,
Shu-Chieh Huang,
and others
68,089
-
771
-
6,095
6,866
Note: Article 10-4 of Regulation Governing Information to be published in Annual Report of Public Companies was not applicable to TSMC.
Finance
20
9
6
2
2
1
1
0
0
0
Note
3.6.2 TSMC did not replace its independent auditor during 2009, 2010, and as of February 28, 2011.
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 2010.
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.
31
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
03/2010
06/2010
09/2010
12/2010
10
10
10
10
28,050,000,000
280,500,000,000
25,902,706,622
259,027,066,220
28,050,000,000
280,500,000,000
25,903,769,184
259,037,691,840
28,050,000,000
280,500,000,000
25,905,017,151
259,050,171,510
28,050,000,000
280,500,000,000
25,907,343,943
259,073,439,430
Exercise of Employee Stock Options:
NT$20,442,830
Exercise of Employee Stock Options:
NT$10,625,620
Exercise of Employee Stock Options:
NT$12,479,670
Exercise of Employee Stock Options:
NT$23,267,920
None
None
None
None
As of 02/28/2011
Date of Approval &
Approval Document No.
03/11/2010 Yuan Shang Tzu
No. 0990005852
06/01/2010 Yuan Shang Tzu
No. 0990015685
09/02/2010 Yuan Shang Tzu
No. 0990025771
12/02/2010 Yuan Shang Tzu
No. 0990035818
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 02/28/2011
Total
25,912,723,077
0
25,912,723,077
2,137,276,923
28,050,000,000
Common Share
Type of Shareholders
Number of Shareholders
Shareholding
Holding Percentage (%)
Government
Agencies
15
Financial
Institutions
221
Other Juridical
Persons
Foreign Institutions
& Natural Persons
Domestic Natural
Persons
1,021
2,937
485,248
Total
489,442
1,726,974,007
945,780,842
822,827,641
18,744,932,517
3,664,502,144
25,905,017,151
6.67%
3.65%
3.18%
72.35%
14.15%
100.00%
As of 07/12/2010 (last record date)
33
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
175,527
204,738
50,666
20,758
8,977
9,938
4,492
2,844
5,259
2,493
1,385
530
246
187
1,402
489,442
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
Cathay Life Insurance Co.,Ltd.
Government of Singapore
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
JPMorgan Chase Bank N.A. Taipei Branch in custody for ABU DHABI Investment Authority
iShares, Inc.
Lazard Emerging Markets Equity Portfolio
Ownership
40,110,178
454,900,977
355,057,896
247,055,888
156,242,591
238,509,904
153,842,731
127,326,964
362,185,248
342,677,354
388,134,797
258,637,133
169,874,050
167,929,955
22,442,531,485
25,905,017,151
Total Shares Owned
5,485,679,458
1,653,709,980
763,124,250
338,425,235
325,381,129
296,968,311
286,860,170
256,386,838
202,100,882
189,986,284
As of 07/12/2010 (last record date)
Ownership (%)
0.15%
1.76%
1.37%
0.95%
0.60%
0.92%
0.59%
0.49%
1.40%
1.32%
1.50%
1.00%
0.66%
0.65%
86.64%
100.00%
As of 07/12/2010 (last record date)
Ownership (%)
21.18%
6.38%
2.95%
1.31%
1.26%
1.15%
1.11%
0.99%
0.78%
0.73%
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 & CEO
Morris Chang
Vice Chairman
F.C. Tseng
Director
National Development Fund, Executive Yuan
Representative:
Johnsee Lee
Director & New Businesses President
Rick Tsai
Independent Director
Sir Peter Leahy Bonfield
Independent Director
Stan Shih
Independent Director
Thomas J. Engibous
34
2010
01/01/2011 ~ 02/28/2011
Net Change in Shareholding
Net Change in Shares Pledged
(Note 1)
Net Change in Shareholding
Net Change in Shares Pledged
(Note 1)
2,550,000
(440,000)
-
-
-
(1,323,554,208)
766,541
(1,700,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(Continued)
2010
01/01/2011 ~ 02/28/2011
Net Change in Shareholding
Net Change in Shares Pledged
(Note 1)
Net Change in Shareholding
Net Change in Shares Pledged
(Note 1)
Title
Name
Senior Vice President & Chief Information Officer
Information Technology & Materials Management and Risk
Management
Stephen T. Tso
Senior Vice President
Research and Development
Shang-yi Chiang
Senior Vice President
Operations
Mark Liu
Senior Vice President
Business Development
C.C. Wei
Senior Vice President & General Counsel
Richard Thurston
Senior Vice President, Chief Financial Officer & Spokesperson
Lora Ho
Senior Vice President
Worldwide Sales and Marketing
Jason C.S. Chen
Vice President
Operations/Affiliate Fabs
M.C. Tzeng
Vice President
Operations/Manufacturing Technology
Wei-Jen Lo
Vice President & Chief Technology Officer
Research and Development
Jack Sun
Vice President
Operations/Product Development
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
Vice President
Operations/Mainstream Fabs
J.K. Lin (Note 2)
Vice President
Operations/300mm Fabs
J.K. Wang (Note 2)
Vice President
Corporate Planning Organization
Irene Sun
Vice President
Research and Development
Burn J. Lin (Note 3)
Senior Director
New Businesses
Jan Kees van Vliet
Senior Director
New Businesses
Y.C. Chao
389,371
-
(180,000)
-
(400,000)
-
(35,000)
(9,000)
(350,000)
87,736
(200,000)
-
-
-
-
200,000
(65,000)
-
(700,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(54,000)
-
-
-
(27,000)
(70,000)
-
(30,000)
-
-
-
-
-
-
-
-
-
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: Mr. J.K. Lin and Mr. J.K. Wang were promoted on August 10, 2010. Net change in their shareholding or shares pledged were from August 10, 2010 to February 28, 2011.
Note 3: Mr. Burn J. Lin was promoted on February 15, 2011. Net change in his shareholding or shares pledged was from February 15, 2011 to February 28, 2011.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
35
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
Common
Name
Current Shareholding
Spouse & Minor Shareholding
TSMC Shareholding by
Nominee Arrangement
Shares
%
Shares
ADR-Taiwan Semiconductor Manufacturing Company, Ltd.
5,485,679,458
National Development Fund, Executive Yuan
1,653,709,980
Representatives: Johnsee Lee
JPMorgan Chase Bank N.A. Taipei Branch in custody for Saudi
Arabian Monetary Agency
-
763,124,250
21.18%
6.38%
-
2.95%
Cathay Life Insurance Co.,Ltd.
Chairman: Hong-Tu Tsai
Government of Singapore
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
338,425,235
1.31%
325,381,129
296,968,311
1.26%
1.15%
286,860,170
1.11%
JPMorgan Chase Bank N.A. Taipei Branch in custody for ABU
DHABI Investment Authority
256,386,838
0.99%
iShares, Inc.
Lazard Emerging Markets Equity Portfolio
202,100,882
189,986,284
0.78%
0.73%
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
Shares
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
4.1.9 Long-term Investment Ownership
As of 07/12/2010 (last record date)
Name and Relationship
between TSMC’s Shareholders
as Defined in the Statement of
Financial Accounting Standards
No.6
Name
Relationship
%
N/A
N/A
N/A
N/A
None
None
None
None
N/A
None
N/A
N/A
None
None
N/A
None
N/A
None
N/A
N/A
None
None
None
None
None
None
None
None
None
None
None
None
None
Ownership by TSMC (1)
Direct/Indirect Ownership by Directors and
Management (2)
Total Ownership (1) + (2)
As of 12/31/2010
Shares
%
Shares
Shares
%
%
0%
0%
0%
0%
0%
0%
0%
0%
0%
988,268,244
1,284
11,000,000
200
6,000
80,000
1,000
200
1,000
0
0
0
0
0
0
0
0
0
0
0
0% Not Applicable (Note 1)
0%
313,603
274,029,592
16.7% (Note 2)
902,253,085
0
0
0
0
0
0
0%
0%
0%
76,069,382
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%
100.0%
100.0%
100.0%
38.8%
38.2%
20.0%
40.8%
35.0%
99.5%
98.0%
98.9%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
38.8%
54.9%
20.0%
40.8%
35.0%
99.5%
98.0%
98.9%
(Continued)
Long-term Investment
Equity Method:
TSMC Partners, Ltd.
TSMC Global, Ltd.
TSMC North America
TSMC Europe B.V.
TSMC Japan Limited
TSMC Korea Limited
TSMC Solar North America, Inc.
TSMC Solar Europe B.V.
TSMC Lighting North America, Inc.
988,268,244
1,284
11,000,000
200
6,000
80,000
1,000
200
1,000
TSMC China Company Limited
Not Applicable (Note 1)
Systems on Silicon Manufacturing Co. Pte Ltd.
Vanguard International Semiconductor Corp.
Motech Industries Inc.
Xintec Inc.
Global UniChip Corporation
Emerging Alliance Fund, L.P.
VentureTech Alliance Fund II, L.P.
VentureTech Alliance Fund III, L.P.
313,603
628,223,493
76,069,382
93,081,225
46,687,859
Not Applicable (Note 1)
Not Applicable (Note 1)
Not Applicable (Note 1)
36
Long-term Investment
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)
Shares
%
Shares
%
Shares
%
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: 16.7% 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.
4.1.10 Share Information
TSMC’s earnings per share increased 81.1% in 2010 to NT$6.23 per share. The following table details TSMC’s net worth, earnings, dividends and
market price per common share in 2010, as well as other data regarding return on investment.
Net Worth, Earnings, Dividends, and Market Price Per Common Share
Unit: NT$, 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
Adjusted Diluted Earnings Per Share (Note 1)
Dividends Per Share
Cash Dividends
Accumulated Undistributed Dividend
Return on Investment
Price/Earnings Ratio (Note 2)
Price/Dividend Ratio (Note 3)
Cash Dividend Yield (Note 4)
Note 1: Retroactively adjusted for appropriation of earnings
Note 2: Price/Earnings Ratio = Average Market Price/Adjusted Diluted Earnings Per Share
Note 3: Price/Dividend Ratio = Average Market Price/Cash Dividends Per Share
Note 4: Cash Dividend Yield = Cash Dividends Per Share/Average Market Price
Note 5: Pending for shareholders’ approval
2009
2010
01/01/2011 ~ 02/28/2011
61.82 (Note 1)
35.46 (Note 1)
51.31 (Note 1)
19.11
16.11
25,913,603
3.44
3.44
3.00
-
14.92
17.10
6%
72.90 (Note 1)
54.41 (Note 1)
60.55 (Note 1)
22.16
(Note 5)
25,920,094
6.23 (Note 5)
(Note 5)
3.00 (Note 5)
-
(Note 5)
(Note 5)
(Note 5)
78.00
69.80
73.52
-
-
-
-
-
-
-
-
-
-
37
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.
4.1.12 Distribution of Profit
The Board adopted a proposal for 2010 profit distribution at its Meeting on February 15, 2011. The proposal will be effected according to the
relevant regulations, upon the approval of shareholders at the Annual Shareholders’ Meeting on June 9, 2011.
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 2011 Annual Shareholders’ Meeting was
recorded as a charge to earnings of approximately 6.75% of net income in year 2010; 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 9, 2011. 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 2010 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 2010 which have been expensed under the Company’s income statements are listed below:
－NT$10,908,338,094 distributed employees’ cash bonus
－NT$10,908,338,094 employees’ cash profit sharing to be distributed after 2011 Annual Shareholders’ Meeting
－NT$51,131,000 directors’ bonus to be paid after 2011 Annual Shareholders’ Meeting
2009 Directors’ Bonus and Employee Profit Sharing
77,730,235,992
Directors’ Bonus (Cash)
Employee’s Cash Profit Sharing
Total
Board Resolution (02/09/2010)
Actual Result (Note)
Amount (NT$)
67,692,222
6,691,337,704
6,759,029,926
Amount (NT$)
67,692,222
6,691,337,704
6,759,029,926
Note: Each of the above two items, being approved by the Board, has been expensed at the same amount under the company’s 2009 income statements.
4.1.13 Impact to 2011 Business Performance and EPS Resulting from Stock Dividend Distribution: Not
applicable.
4.1.14 Buyback of Common Stock: Not applicable.
38
4.2 Issuance of Corporate Bonds
4.2.1 Corporate Bonds
As of 02/28/2011
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$4,500,000,000
None
Customary Covenants
twAAA
(Taiwan Ratings Corporation, 10/20/2010)
None
Not Applicable
None
None
Issuance
Issuing Date
Denomination
Offering Price
Total Amount
Coupon Rate
Tenure
Guarantor
Trustee
Underwriter
Legal Counsel
Auditor
Repayment
Outstanding
Redemption or Early Repayment Clause
Covenants
Credit Rating
Other Rights of Bondholders
Conversion Right
Amount of Converted or Exchanged Common Shares, ADRs
or Other Securities
Dilution Effect and Other Adverse Effects on Existing Shareholders
Custodian
4.2.2 Convertible Bond: None.
4.2.3 Exchangeable Bond: None.
4.2.4 Shelf Registration: None.
4.2.5 Bond with Warrants: None.
4.3 Preferred Shares
4.3.1 Preferred Share: None.
4.3.2 Preferred Share with Warrants: None.
39
4.4 Issuance of American Depositary Shares
Issuing Date
10/08/1997
11/20/1998
01/12/1999 -
01/14/1999
07/15/1999
08/23/1999 -
09/09/1999
02/22/2000 -
03/08/2000
04/17/2000
06/07/2000 -
06/15/2000
06/12/2001
11/27/2001
02/07/2002 -
02/08/2002
11/21/2002 -
12/19/2002
07/14/2003 -
07/21/2003
11/14/2003
05/23/2007
08/10/2005 -
09/08/2005
Issuance & Listing
NYSE
NYSE
NYSE
NYSE
NYSE
NYSE
NYSE
NYSE
Total Amount (US$)
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
8.6
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
Shares from Selling
Shares from Selling
Shares from Selling
Shareholders
Shareholders
Shareholders
Shareholders
Shareholders
Shareholders
Shareholders
(Pursuant to ADR
Conversion Sale
Program)
from Selling
Shareholders
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. –
Taipei Branch
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. –
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$)
2010
01/01/2011 -
02/28/2011
High
Low
Average
High
Low
Average
12.69
9.07
10.21
13.68
12.12
13.05
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 1,147,835,205 ADSs. As of February 28, 2011, total number of
outstanding ADSs was 1,096,448,377 after 51,386,828 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.
40
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$)
594,720,000
184,554,440
35,500,000
296,499,641
158,897,089
379,134,599
224,640,000
1,167,873,850
240,999,660
297,649,640
320,600,000
1,001,650,000
160,097,914
908,514,880
1,077,000,000
1,402,036,500
2,563,200,000
24.516
28.964
57.79
20.63
20.63
16.03
16.75
8.73
10.40
10.77
8.6
10.68
01/12/1999 -
01/14/1999
NYSE
17.75
NYSE
15.26
Offering Price Per ADS
24.78
(US$)
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
2010
(US$)
High
Low
High
Low
Average
Average
12.69
9.07
10.21
13.68
12.12
13.05
01/01/2011 -
02/28/2011
41
4.5 Status of Employee Stock Option Plan
4.5.1 Issuance of Employee Stock Options
ESOP Granted
Approval Date by The Securities & Futures Bureau
Issue (Grant) Date
Number of Options Granted
Percentage of Shares Exercisable to Outstanding Common Shares
Option Duration
Source of Option Shares
Vesting Schedule
Shares Exercised
Value of Shares Exercised (NT$)
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%
17,144,420
604,197,297
3,474,835
NT$53.0
NT$27.6
0.01341%
1,145,758
39,083,833
270,445
NT$51.0
NT$26.6
0.00104%
4,525,733
111,392,267
3,058,821
NT$41.6
NT$21.7
0.01181%
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
15,250,526
571,713,878
9,634,518
NT$58.5
NT$30.5
0.03718%
Fifth Grant
10/29/2003
12/03/2003
842,900
0.00416%
10 years
422,956
21,783,581
160,155
NT$66.5
NT$50.1
0.00062%
Sixth Grant
10/29/2003
02/19/2004
15,720
0.00008%
10 years
8,585
417,657
6,831
NT$63.5
NT$47.8
0.00003%
Seventh Grant
Eighth Grant
10/29/2003
05/11/2004
11,167,817
0.05510%
10 years
8,315,128
370,037,908
2,056,273
NT$57.5
NT$43.2
0.00794%
10/29/2003
08/11/2004
135,300
0.00058%
10 years
120,159
4,684,478
7,855
NT$43.8
NT$38.0
0.00003%
Ninth Grant
01/06/2005
05/17/2005
10,742,350
0.04620%
10 years
6,198,483
295,773,115
2,767,698
NT$54.3
NT$47.2
0.01068%
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$)
% of Shares Exercised
to Outstanding
Common Shares
% of Shares
Unexercised to
Outstanding
Common Shares
Chairman & Chief Executive Officer
President
Senior Vice President
Senior Vice President
Senior Vice President
Morris Chang (Note 1)
Rick Tsai (Note 1)
Stephen T. Tso (Note 1)
Mark Liu (Note 1)
C.C. Wei (Note 1)
Senior Vice President & General Counsel
Richard Thurston (Note 1)
Vice President
Vice President
Vice President
Vice President
Jack Sun (Note 1)
Rick Cassidy
L.C. Tu (Note 1)
J.K. Lin (Note 1)
5,480,052
0.02115%
3,037,739
25.1
76,384,138
0.01172%
2,442,313
25.1
61,420,328
0.00943%
Note 1: TSMC granted options to certain of its officers (as listed above) as a result of their voluntary selection to exchange part of their profit sharing for stock options in 2003. This includes a voluntary exchange by Chairman Morris
Chang in his capacity as Chief Executive Officer.
Note 2: Number of options granted includes the additional shares due to stock dividend distributed in 2004, 2005, 2006, 2007, 2008 and 2009.
4.6 Status of New Share Issuance in Connection with Mergers and Acquisitions
TSMC did not issue new shares in connection with mergers or acquisitions in 2010, and as of the date of this Annual Report.
4.7 Financing Plans and Implementation: Not applicable.
42
Percentage of Shares Exercisable to Outstanding Common Shares
ESOP Granted
Approval Date by The Securities & Futures Bureau
Issue (Grant) Date
Number of Options Granted
Option Duration
Source of Option Shares
Vesting Schedule
Shares Exercised
Value of Shares Exercised (NT$)
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
17,144,420
604,197,297
3,474,835
NT$53.0
NT$27.6
0.01341%
Second Grant
06/25/2002
11/08/2002
1,085,000
0.00583%
10 years
1,145,758
39,083,833
270,445
NT$51.0
NT$26.6
0.00104%
Third Grant
06/25/2002
03/07/2003
6,489,514
0.03485%
10 years
4,525,733
111,392,267
3,058,821
NT$41.6
NT$21.7
0.01181%
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 12/31/2010
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%
15,250,526
571,713,878
9,634,518
NT$58.5
NT$30.5
0.03718%
422,956
21,783,581
160,155
NT$66.5
NT$50.1
0.00062%
8,585
417,657
6,831
NT$63.5
NT$47.8
0.00003%
8,315,128
370,037,908
2,056,273
NT$57.5
NT$43.2
0.00794%
120,159
4,684,478
7,855
NT$43.8
NT$38.0
0.00003%
6,198,483
295,773,115
2,767,698
NT$54.3
NT$47.2
0.01068%
Dilution to Shareholders’
Dilution to Shareholders’
Dilution to Shareholders’
Equity is limited
Equity is limited
Equity is limited
Dilution to Shareholders’
Equity is limited
Dilution to Shareholders’
Equity is limited
Dilution to Shareholders’
Equity is limited
Dilution to Shareholders’
Equity is limited
Dilution to Shareholders’
Equity is limited
Dilution to Shareholders’
Equity is limited
Title
Name
Number of Options Granted
% of Shares Exercisable to
(Note 2)
Outstanding Common Shares
Exercised
Unexercised
Shares Exercised
Exercise Price
Per Share
Value of Shares
Exercised (NT$)
% of Shares Exercised
to Outstanding
Common Shares
Shares Unexercised
Adjusted Grant Price
Per Share
Value of Shares
Unexercised (NT$)
As of 12/31/2010
% of Shares
Unexercised to
Outstanding
Common Shares
Senior Vice President & General Counsel
Richard Thurston (Note 1)
5,480,052
0.02115%
3,037,739
25.1
76,384,138
0.01172%
2,442,313
25.1
61,420,328
0.00943%
Chairman & Chief Executive Officer
President
Senior Vice President
Senior Vice President
Senior Vice President
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)
J.K. Lin (Note 1)
43
5. Operational Highlights
5.1 Business Activities
5.1.1 Business Scope
5.1.2 Customer Applications
As the founder and a leader of the dedicated IC foundry segment,
Over the past 23 years, more than 600 customers worldwide have
TSMC has built its reputation by offering advanced and
relied on TSMC to manufacture chips that are used across the entire
“More-than-Moore” wafer production processes and unparalleled
spectrum of electronic applications, including computers and
manufacturing efficiency. TSMC strives to provide the best overall
peripherals, information appliances, wired and wireless
value to customers, and the success of TSMC’s business is manifested
communications systems, automotive and industrial equipment,
in the success of its customers.
consumer electronics such as DVDs, digital TVs, game consoles,
digital still cameras (DSCs), and many other applications.
TSMC provides a full range of integrated IC foundry services that
fulfill the increasing variety of customer needs. In the process, it has
The rapid evolution of end products drives our customers to utilize
experienced strong growth by building partnerships with customers.
TSMC’s innovative technologies and services, while at the same time
IC suppliers from around the world trust TSMC with their
spurring TSMC’s own development of technology. As always, success
manufacturing needs, thanks to its unique integration of
depends on leading rather than following industry trends.
cutting-edge process technologies, pioneering design services,
manufacturing productivity and product quality.
In May 2009, TSMC established the New Businesses organization to
explore non-foundry related business opportunities. During 2010 and
early 2011, the New Businesses organization consists of two business
divisions responsible for solid state lighting and solar business
activities.
45
5.1.3 Unconsolidated Shipments and Gross Sales in 2010 and 2009
Unit: Shipments (8-inch equivalent wafers) / Gross Sales (NT$ thousands)
2010
2009
Wafer
Package
Other
Total
Domestic
Export
Domestic
Export
Domestic
Export
Domestic
Export
5.1.4 Production in 2010 and 2009
Unit:Capacity / Output (8-inch equivalent wafers) / Amount (NT$ thousands)
Year
2010
2009
Shipments
2,132,697
9,688,352
0
23,550
20,278
53,137
2,152,975
9,765,039
Wafers
Capacity
11,328,601
9,954,558
Gross Sales
51,312,831
340,474,577
0
963,427
3,974,831
21,940,782
55,287,662
363,378,786
Shipments
1,495,305
6,194,167
3
35,467
17,597
42,979
1,512,905
6,272,613
Output
11,806,566
7,582,664
Gross Sales
38,538,370
238,090,692
487
1,384,580
3,272,217
18,184,868
41,811,074
257,660,140
Amount
199,376,792
150,572,709
5.2 Technology Leadership
5.2.1 R&D Organization and Investment
TSMC expanded Research and Development in 2010 to further enhance
one of its three strategic pillars: Technology Leadership. In 2010 the
total R&D budget was 7% of total revenue. This level of R&D investment
is equal to or more than that of many leading edge technology
companies. Along with the budget increase, the R&D organization
increased staffing by over 17%.
TSMC recognizes that the technology challenge required to extend
Moore’s Law, the business law behind CMOS scaling, is getting
R&D Expenditures
(Amount: NT$ thousands)
2009
2010
21,593,398
29,706,662
01/01/2011~
02/28/2011
4,904,939
increasingly difficult. Dr. Shang-yi Chiang, TSMC Senior Vice President of R&D brings his rich industry experience to lead the strengthening of the
R&D team and to navigate through the technological and competitive challenges ahead.
In 2010, TSMC offered the foundry segment’s first 28nm technology. After intense work on ramping this technology, customers started to
experience its benefits of stable and improved yield.
TSMC accelerated the development of advanced transistors, embedded memories, and copper (Cu)/low-K interconnect technologies. During
2010, the R&D organization once again proved its capabilities by offering a first-to-market 28nm high-K/metal gate (HKMG) foundry technology
portfolio as well as establishing 20nm path-finding 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 strategic agreement with IP provider to enable the development of physical IP
through the advanced technology nodes. 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.
46
5.2.2 R&D Accomplishments in 2010
R&D Highlights
● 28nm Technology
TSMC continued to lead the foundry segment with the development
● Lithography
To overcome unprecedented low k1 for imaging, state-of-the-art
optical lithography resolution enhancement techniques, such as
source-mask optimization and multiple patterning, have been
implemented to achieve 2X the gate density of previous generation.
of the most advanced logic technologies both with conventional as
Combined with an optimized etching technique and film stack, a
well as HKMG stacks. The high performance (28HP) platform is
nonlinear photoresist was introduced to achieve a 2.2nm line-width-
aimed at high-speed GPU and CPU applications. It also serves as the
roughness (LWR) on the switching gates to gain device performance.
technology backbone for high-end FPGA and SoC application
domains through additional device customization for leakage
The reticle for Test Vehicle 1 of the 20nm node was taped out in mid
management. The low-leakage (28LP and 28HPL) technologies are
2010 with an advanced super binary intensity mask (BIM) blank. The
designed to support low-cost mobile applications as well as low-end
overlay control for inter- and intra-layers reached 6nm, a 25% gain
FPGA requirements.
from the previous generation. Moreover, with design rule
optimization, the patterning technique of the active layer can be
With the improvement and development momentum, TSMC has
simplified from 3P2E to 2P2E, resulting in significant cost reduction.
continuously demonstrated breakthroughs in both 64Mb SRAM yield
and technology reliability for all the 28nm technology family,
Low-single-digit immersion defects for the 28nm node were achieved
including 28LP, 28HP and 28HPL. In addition, 28LP has completed
with track/material co-optimization that evolved from and is better
the technology qualification in September 2010 and proved to be
the first 28nm technology within the semiconductor and foundry
than the previous generation. To deal with various product
requirements, customized OPC was used. Low-cost solutions were
industries ready for risk production. HKMG technology qualification
developed for 0.11μm logics, multi-generation technologies, and
is also under way.
special technologies such as eDRAM and CMOS Image Sensor (CIS).
In parallel, TSMC provided 28nm shuttle service program and
For next generation lithography (NGL) technology development, a
successfully delivered proven and functional test-chips for both
multiple e-beam maskless pre-Alpha tool installed in TSMC’s fab has
conventional SiON/poly and HKMG technologies. More than 10
been demonstrating imaging with 110 beams and patterns of the
shuttle services were offered in 2010, and more than 25 customers
20nm node using e-beam proximity correction.
validated their test-chips and critical IPs with TSMC’s 28nm
technologies for various market segments, including GPU/CPU, FPGA
In early 2010, the Company announced the acquisition of a full-field
and mobile applications.
extreme-ultraviolet (EUV) scanner from ASML Netherlands B.V. for
the development of lithographic processes for devices of the 20nm
● 20nm Technology
In 2010, TSMC continued to focus on 20nm technology path finding
node and below at TSMC’s Fab 12 GIGAFABTM. TSMC has also made
progress on demonstrating 20nm device processing with EUV
and development. To offer a leading-edge technology for both
lithography using the alpha demo tool located at our IMEC partner
analog and digital application, the Company adopted the most
site.
advanced 193nm immersion and enhanced lithography process for
smaller feature size. With the second generation of HKMG, more Si
strain, and new device structure, the intrinsic transistor performance
● Mask Technology
Mask technology is an integral part of advanced lithography
continues to ramp following Moore’s Law. Meanwhile, external
technology. TSMC has developed proprietary resolution-
resistance can be effectively reduced and controlled by a specially
enhancement techniques (RET) that are co-optimized with our
designed process technique. The back end-of-line (BEOL)
interconnect process features extreme low-K intermetal dielectric
in-house mask-making technology. The Company integrates optical
proximity correction (OPC) and scanner parameter optimization, and
materials and copper metallization with the novel low-resistance
masks them together to provide a total solution in 193nm immersion
scheme. The logic transistor and SRAM bit-cell offering, using the
lithography. TSMC’s mask-making facilities feature state-of-the-art
20nm process, will cover high performance and System-on-Chip
electron-beam mask writers, etchers, inspection, repair, verification,
(SoC) application.
and metrology tools for production at 28nm and R&D at 20nm and
beyond. TSMC continues to develop mask technologies for double
Development of 20nm technology will create superior gate density
patterning with 193nm immersion lithography and EUV lithography
and chip performance. The cost and complexity of advanced
for applications to the 20nm generation and beyond and participates
technology will continue to escalate for customers. In 2010, TSMC
actively in developing the infrastructure for EUV mask-making.
provided process flow, design kits and intellectual property (IP) to
TSMC’s strength in mask technology gives significant and unique
help reduce foundry costs. TSMC’s high-performance 20nm process
benefits to its customers in terms of technical excellence, top quality,
will enter risk production in the third quarter of 2012, with volume
fast cycle time, and one-stop service.
production scheduled for the first quarter of 2013.
47
Integrated Interconnect and Packaging
The Integrated Interconnect and Package Development Division (IIPD)
Advanced Transistor Research
Historically, transistor performance requirement follows different
was formed in late 2008 to develop and deliver an integrated
market segments: high performance applications, such as desk top
technology solution combining advanced interconnect with
computing; low-operating power applications, such as laptop
packaging technology. The introduction of extreme low-K dielectric
computers and mobile internet devices; and low standby power
(ELK) in 45/40nm adds more challenges among many others to the
applications, such as cell phones for long standby time. TSMC has
given tasks. In 2010, the major focus was to resolve interconnect/
been the technology leader in the low-operating power applications
package related bottlenecks and ensure smooth ramp of 45/40nm
with G-family transistors and low standby power applications with LP
first-wave customers’ products. Enhancement in Si backend/bump
family transistors. As low-operating power applications spread into
structure designs, and process optimization in bumping/assembly
the high performance domain, TSMC is embracing the challenge to
processes have paved the way for customers’ products delivery with
retune our transistor offering to assure customers that they have the
reliable quality. Customers including GPU and FPGA products are in
most competitive transistor offering from TSMC.
volume production (with die size >20×20mm2).
● Advanced Interconnect
In 2010, TSMC continued to lead the foundry segment in
Spectrum of Technology
Beyond the highlights above, TSMC continued to develop a broad
mix of new technologies. The Company accelerated its SoC roadmap,
demonstrating the lowest resistance/capacitance (RC) -delay
including embedded DRAM (eDRAM) and RF with earlier availability,
interconnect technology in the segment, which is also compatible
higher integration and more variants.
with advanced package technology.
Copper interconnect resistivity is trending up by generation node
● Embedded DRAM
Continued with TSMC leadership in eDRAM, in 2010 we started to
because of the size effect. To keep the RC performance for the
ramp up early production of 40nm LP eDRAM for more efficient
advanced interconnect, TSMC has developed an extreme low
memory density and throughput required for bandwidth and graphic
resistance Cu interconnect solution for 28nm and beyond technology
applications such as games and DTV. This will be followed by
nodes. On the 28nm, we also improve effective resistivity of Cu lines
baseband and network applications, using the N40G base logic with
to be significantly lower than that projected by the International
412MHz and 500MHz clock rate. Development also began on N28
Technology Roadmap for Semiconductors and demonstrate
eDRAM using HKMG logic as a base technology.
promising reliability performance.
● Advanced Package Development
To achieve “Green package” requirements and to follow the EU code
● Silicon Germanium BiCMOS Radio Frequency (RF) Technology
SeGi018: Upgraded TSMC SiGe-BiCMOS technology performance to
tier-1 SiGe process specifications. For the moment, we are ahead of
for RoHS, the traditional tin-lead (Sn-Pb) based solder interconnect
the ITRS roadmap targets.
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.)
● Mixed Signal/Radio Frequency (MS/RF) Technology
TSMC delivered a 28nm EM simulation base LC tank design package
and Fan-in Wafer Level Packaging (Fan-in WLP) for handheld/mobile
to facilitate high speed Serdes design. This approach successfully
devices/applications in 2011 to further enhance customers’ product
fulfilled requirements for different customized metal schemes in a
performance and competitiveness
● 3D IC
TSMC has committed to work with customers closely to develop
cost-effective 3D IC system integration solutions using in-house
significantly shorter time. In the category of More-than-Moore
product enhancement, we developed IPD technology on high R
substrate, and provided excellent inductor (Q>50) and precise MiM
(C corner<5%) for the RF-FEM (front-end module) segment.
proprietary through silicon via (TSV) and foundry compatible
Thin film Resistor: Demonstrated a close to zero TCR TFR which is key
wafer-level-packaging (WLP) technologies. Our 3D System-in-Package
for high-precision ADC.
(SiP) solution is a viable alternative for many customers to realize
their end product with the best cost and cycle time. TSMC delivers
innovations to enable SiP design for the first time. It includes SiP
● Power IC/BCD Technology
In 2010, TSMC released a multiple-time re-programmable (MTP)
package design, electrical analysis of package extraction, timing,
non-volatile memory into the existing C025BCD power management
signal integrity, IR drop, and thermal to physical verification of design
IC technology. A one-time programmable (e-fuse) solution was
rule check (DRC) and Layout Verification of Schematic (LVS). Such
qualified in 0.25u/5V and 0.18u/5V mixed signal technologies and
integrated solution for product realization will be made available to
their derivatives (BCD, HV). These features enable customers to trim
customers in 2012/13.
critical analog characteristics at wafer, package or board level in a cost
efficient manner (e-Fuse) or enhance the product functionality (MTP).
48
Besides continuing various BCD technology developments for DC-DC
5.2.3 Technology Platform
conversion, TSMC successfully delivered UHV (800V) technology that
supports designs for energy-efficient lighting (CFL, LED, E-balaster)
Modern IC designers need sophisticated design infrastructure to
and mobile adaptors.
achieve acceptable productivity and cycle time. This includes design
flow for electronic design automation (EDA), silicon proven building
● Panel Driver Technology
In mobile device display drivers, TSMC released two new technologies
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
in 2010: C011HV and N80HV. These technologies are targeted for
top of the technology foundation, and each technology needs its
high resolution displays in smart phones.
own design infrastructure to be usable for designers. This is the
concept of a technology platform.
To meet more stringent standards in large panel displays (color depth
and speed) for new TVs, such as 3D LCD TV, TSMC released two
Today’s TSMC technology platforms reflect the culmination of years
technologies in 2010.
● Microelecrtromechancial Systems (MEMS) Technology
There are several MEMS technologies for different applications in
of work by TSMC and its alliance partners. In 2008, TSMC’s Open
Innovation PlatformTM was launched to further enhance the
Company’s technology platforms, with additional deliverables added
on in 2010. The Company unveiled an extension to its IP Alliance
development at TSMC. In 2010, we worked with a customer to
program in October to include Soft IP partners.
release a gyroscope device in production. We also demonstrated
preliminary success in a DNA sequencing device, and made
significant progress in our motion sensor platform technology
In April, TSMC announced the foundry segment’s first Analog/Mixed
Signal (AMS) Reference Flow, and the second revision of the Radio
development.
● CMOS Image Sensor Technology
In 2010, TSMC extended our leadership in back-side illumination
Frequency Reference Design Kit (RF RDK). The new AMS Reference
Flow is TSMC’s first custom design flow that targets leading edge
28nm design challenges, such as Layout Dependent Effects (LDE),
Design For Manufacturing (DFM) and Sub-1V, to minimize design
(BSI) to enable our key customer to win more visible business with
barriers and reduce iterations. AMS Reference Flow is a fully
popular handheld products. At the same time, BSI wafer processing
integrated multi-vendor program and part of an innovative design
in 12” bulk-silicon also started risk production with the 65nm
package.
8-megapixel product to be ramped up in early 2011, followed by
many others.
The updated RDK provides a solution to common bottlenecks that
designers encounter on a daily basis. RDK 2.0 includes step-by-step
TSMC also won the business for another leading CIS provider for 12”
tutorials and setup scripts to facilitate users going through Circuit
technology development, with wafer loading scheduled for 2012.
Sizing/Design Centering, a comprehensive EM design flow with
● Flash/Embedded Flash Technology
In 2010, TSMC delivered a refined low power, extremely low leakage
TSMC PDK, and to analyze substrate noise coupling in RF circuits
with TSMC qualified SNA tools.
0.18μm Flash for microprocessor control unit (MCU) applications.
After the debut of a series of interoperable data formats in iRCX,
The 90nm split gate technology has passed technology qualification.
iDRC, iLVS and iPDK in 2009, TSMC demonstrated its strong
Three macros were qualified. One key customer has delivered
commitment to industry users in 2010 with its industry-first iDRC &
Bluetooth engineering samples to their customers. Smart card IP is
iLVS runsets in 40nm, and iPDKs in many TSMC advanced process
being qualified with several customers joining shuttle service for
nodes from 0.13μm to 28nm. Working with EDA partners, TSMC
product prototyping.
publishes quarterly reports for their qualified interoperable tools and
versions.
TSMC has engaged with several IDM companies to co-develop
embedded flash solutions for automotive, industrial and consumer
The Soft IP Alliance program aims to improve soft IP readiness for
applications. The technology foundation used includes 90nm, 65nm
advanced technology nodes and to drive earlier time-to-market. Soft
and 55nm, with the flash cells varying from floating gate and
IP has historically been process technology independent and,
split-gate to hybrid.
therefore, not optimized for power, performance and area
considerations. Given the ever-increasing need of first-time silicon
success and early time-to-market for highly integrated circuits, such
as Systems-on-Chip (SoC), close technical collaboration between the
foundry and the IP provider is imperative to emphasize this critical
trade-off.
49
iRCX, an interoperable EDA data format, integrates all key process
interconnect modeling data, which is increasingly important as chip
Entering its 10th year, the TSMC Reference Flow continues to
anticipate customer needs in advanced design methodologies, and
designs in advanced technologies require detailed views of parasitic
to serve the purpose of pipe-cleaning EDA tool capabilities.
effects for the accurate evaluation of chip performance and power
Traditionally the Reference Flow addresses design challenges in
consumption. iRCX offers foundry interconnect model data for
power, timing, and design for manufacturing. Reference Flow 11.0
various applications across the board, covering not only parasitic RC
incorporated new requirements associated with leading edge
tools at transistor & gate levels, but also the commonly-used tools
technologies, such as 28nm, and expanded into two new areas: 3D
for Electrical Magnetic (EM) Solver, Field Solver and ElectroMigration
IC with TSV (through silicon via) and ESL system level design. The
(EM)/Current (IR) Drop Analysis. EDA tools that support the iRCX
former supports heterogeneous integration of multiple dice and to
format will be able to receive accurate interconnect modeling data
achieve superior timing/power/form factor optimization, while the
from the iRCX files developed and supported by TSMC.
latter supports the trend of designers moving up to system level,
enabling earlier and more accurate tradeoff with accurate TSMC PPA
Executable physical verification runsets for interoperable design rule
(power, performance and area).
check (iDRC), interoperable density fill (iFill) and interoperable layout-
versus-schematic (iLVS) in TSMC 40nm process technology were
5.2.4 Intellectual Property
delivered to TSMC beta customers in 2010. Design rules for
advanced process technologies are more complex and require
A strong portfolio of intellectual property rights strengthens TSMC’s
detailed and accurate descriptions for correct chip layout creation
technology leadership and protects our advanced and leading edge
and post-layout analyses. TSMC iDRC and iLVS formats, based on
TSMC process requirements, unify process design rules specification
technologies. In 2010, TSMC received 434 U.S. patents, 173
Taiwanese patents, 180 PRC patents, and other patents issued in
and technology file generation, simplify data delivery, and ensure
various other countries. TSMC’s patent portfolio now exceeds 13,000
data integrity and interpretation. These are also the deliverables that
patents worldwide. We continue to implement a unified model for
represent TSMC’s tight collaboration with its EDA partners and
TSMC’s intellectual capital management. Strategic considerations
mutual customers.
and close alignment with the business objectives drive the timely
creation, management and use of our intellectual property.
TSMC iPDK unified data model on industry-standard OpenAccess
database enables design reuse that is not possible with multiple
At TSMC, we have built a process to extract value from our
proprietary PDKs and design databases among various EDA design
intellectual property by aligning our intellectual property strategy
platforms. It eliminates duplicate PDK development efforts,
with our R&D, business objectives, marketing, and corporate
significantly reduces PDK development, validation and support costs
development strategies. Intellectual property rights protect our
across the design ecosystem, and promotes innovation in analog and
freedom to operate, enhance our competitive position, and give us
full custom design. With a wide range of available iPDKs in TSMC
leverage to participate in many profit-generating activities.
process nodes and industry available EDA design platforms, users are
now offered a higher degree of design flexibility in choosing the best
We have worked continuously to improve the quality of our
tool features to fit their design needs.
intellectual property portfolio and to reduce the costs of maintaining
it. We plan to continue investing in our intellectual property portfolio
To ensure OIP Ecosystem partners’ compliance with TSMC new
and intellectual property management system to ensure that we
process requirements, TSMC works with partners to publish the “EDA
protect our technology leadership and receive maximum business
Tool Qualification Report” on TSMC-Online, providing customers
value from our intellectual property rights.
with an actively maintained status of individual EDA tools including
DRC, LVS, RC extraction, Placement and Routing. The physical
verification tool qualification report of DRC/LVS/RCX is updated on
5.2.5 Future R&D Plans
quarterly basis, and started to cover iDRC/iLVS/iRCX/iFill from 2010.
Following the significant accomplishments of TSMC’s advanced
Also new for Year 2010, routing qualification of 28nm was
technologies in 2010, the Company plans to continue to grow its
introduced as the design rule becomes Version 1.0.
R&D investments. TSMC will further expand its 300mm R&D pilot line
to speed up 28nm production ramp and 20nm development. The
In order to lower the barrier of technology adoption for customers,
Company plans to reinforce its exploratory development work on
TSMC first introduced the Integrated Sign-Off Flow (ISF) in
new transistors and technologies, such as 3D structures,
65nm/55nm in 2009. ISF is a production proven design flow based
strained-layer CMOS, high mobility materials, novel 3D-IC devices
on TSMC’s internal design expertise accumulated over the years. ISF
with TSV, and interposer. These studies of the fundamental physics
started to bear fruits in 2010, and enabled a large number of first
of nanometer CMOS transistors are core aspects of our efforts to
time 65nm/55nm customers. ISF significantly reduced technology
improve the understanding and guide the design of transistors at
adoption gap in emerging markets such as China.
advanced nodes. The findings of these studies are being applied to
50
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
5.3 Manufacturing Excellence
5.3.1 GIGAFABTM Fabrications
technologies and manufacturing solutions.
TSMC’s 12-inch fabs are a key part of its manufacturing strategy.
TSMC will continue working closely with international consortia and
TSMC currently operates two 12-inch GIGAFABTM fabrication facilities
– Fab 12 and Fab 14 – whose combined capacity reached 2,520,000
photolithography equipment suppliers to ensure the timely
12-inch wafers in 2010. Production within these two facilities
development of 193nm high-NA scanner technology, EUV
supports 0.13μm, 90nm, 65nm, 40nm, and 28nm process
lithography, and massively parallel E-Beam direct-write technologies.
technologies, and their sub-nodes. Part of the capacity is reserved for
These technologies are now fundamental to TSMC’s process
research and development work and currently supports 20nm, 14nm
development efforts at the 20nm and 14nm nodes and beyond.
and beyond technology development. A third GIGAFABTM fabrication,
Fab 15, located in Taichung’s Central Taiwan Science Park, is on track
TSMC continues to work with mask inspection equipment suppliers
for equipment move-in during the second quarter of 2011.
to develop viable inspection techniques, a collaborative partnership
to help ensure the Company maintains its leadership position in mask
TSMC has developed a centralized fab manufacturing management
quality and cycle time and continue to meet aggressive R&D,
for the customers’ benefit of same quality and reliability
prototyping and production requirements.
performance, greater flexibility of demand fluctuations, faster yield
With a highly competent and dedicated R&D team, and unwavering
commitment to innovation, TSMC is confident of its ability to deliver
learning and time-to-volume, and minimized costly product
re-qualification.
the best and most cost-effective SoC technologies for customers, and
5.3.2 Engineering Performance Optimization
to support the Company’s business growth and profitability.
TSMC R&D future major project summary:
advanced equipment control and fault detection, are implemented to
Highly sophisticated information technology (IT) solutions, such as
Project Name
Description
Risk Production (Estimated
Target Schedule)
28nm logic platform
technology and applications
28nm technology for both digital and
analog products
2010 - 2011
20nm logic platform
technology and applications
Next-generation technology for both
digital and analog products
14nm 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 14nm
transistors
2012
2014
2012 - 2013
2011 - 2012
2012 - 2014
The above plans account for roughly 70% of the total corporate R&D budget in 2011, which is
currently estimated to be around 7-8% of 2011 revenue.
optimize TSMC equipment performance and improve production
efficiency.
Advanced analytical methods identify critical equipment and process
parameters that are linked to device performance. Methodologies
such as virtual metrology and yield management integrate Advanced
Process Control (APC), Fault Detection Classification (FDC), Statistical
Process Control (SPC), and Circuit Probe data in order to optimize
equipment performance to match device performance. Accurate
modeling and control at each process stage drives intelligent module
loop control.
The process control hierarchy dispatched via sophisticated
computer-integrated manufacturing system enable optimization
from equipment to end product, which achieves precision and lean
operation in a high product-mix semiconductor manufacturing
environment.
51
5.3.3 Precision and Lean Operations
TSMC’s unique manufacturing infrastructure is tailored for a high product mix foundry environment. Following its commitment to manufacturing
excellence, TSMC has equipped a sophisticated scheduling and dispatching system, implemented industry-leading automated materials handling
systems, and employed Lean Manufacturing approaches to provide customers with on-time-delivery and best-in-class cycle time. Real-time
equipment productivity monitoring, analysis, diagnosis and control minimize production interruption and maximize cost effectiveness.
5.3.4 450mm Wafer Manufacturing Transition
The Company contributes to infrastructure development of 450mm wafer transition, which will enable industry continue path of cost reduction .
TSMC will continue to work with International SEMATECH, ISMI, material and equipment suppliers on the next wafer size transition, lithography
strategy, efficient tool design, new material development and eco-friendly process development.
Recently, we made plans to set up 450mm pilot line in 2013 to 2014, and production line in 2015 to 2016.
5.3.5 Raw Materials and Supply Chain Risk Management
In 2010, 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.
Each supplier has multiple manufacturing sites in
order to meet customer demand, including plants in
North America, Asia, and Europe.
● TSMC’s suppliers of silicon wafers are required to pass stringent quality certification procedures.
● 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
Litho Materials
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
Cabot Microelectronics
DA Nano
Dow Chemical
Hitachi Chemical
Kinik
Planar Solutions
3M
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
worldwide litho materials
● TSMC works closely with its suppliers to develop materials able to meet application and cost
requirements.
● TSMC and suppliers periodically conduct improvement programs of their quality, delivery, sustainability
and green policy, to ensure continuous progress of TSMC’s supply chain.
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.
The products of these four suppliers are
interchangeable.
● TSMC conducts periodic audits of the suppliers’ quality assurance systems to ensure that they meet
TSMC’s standards.
These seven companies are the major suppliers for
CMP materials.
● 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.
52
Suppliers Accounted for at Least 10% of Annual Consolidated Net Procurement
Unit: NT$ thousands
Supplier
Procurement Amount
2010
As % of 2010 Total
Net Procurement
Relation to TSMC
Supplier
Procurement Amount
2009
As % of 2009 Total
Net Procurement
Relation to TSMC
Company A
VIS
SSMC
Company B
Others
2010 Total Net
Procurement
7,001,961
4,959,050
4,521,046
3,443,962
14,281,849
34,207,868
20%
14%
13%
10%
43%
100%
None
Company A
Investee accounted for
using equity method
Investee accounted for
using equity method
None
VIS
SSMC
Company B
Others
2009 Total Net
Procurement
3,597,802
3,330,288
3,537,659
2,916,069
13,151,568
26,533,386
None
Investee accounted for
using equity method
Investee accounted for
using equity method
None
14%
13%
13%
11%
49%
100%
5.3.6 Quality and Reliability
TSMC is committed to providing customers with the best quality wafers for their products. Our Quality and Reliability (Q&R) services aim to
achieve “quality on demand” 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. Since 2008, Q&R has worked with R&D to successfully establish and implement new qualification methodology for high-k/metal
gate (HKMG). 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 2010, Q&R worked with R&D and the design service team to develop an integrated R&D and design quality platform that
included items such as SPICE, DRM, DFM, IP/lib. 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 and in design services including third-party IP management as the
Company meets the business requirements of customers. In 2010, Q&R implemented innovative statistical matching methodologies for
manufacturing quality enhancement, including matching of facility, metrology and process tools, wafer acceptance test (WAT) data and reliability
performance.
To sustain production quality and minimize risk 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 2010, analytical techniques traditionally used in a laboratory environment were
adapted to aid in the release and monitoring of advanced Fab tools and processes for the 40nm and 28nm technology nodes.
In compliance with the electronic industry’s lead-free and green IC package policy, Q&R qualified and released lead-free bumping to satisfy customer
demands and made lead free bump package possible for 0.13μm, 45nm and 40nm technology products by collaborating with the major outsource
assembly & testing subcontractors (OSAT) in 2010. This has enabled TSMC customers to introduce and ramp lead-free products with excellent
assembly quality. 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. For mainstream technologies, Q&R has been building reliability testing and monitoring to
ensure excellent manufacturing quality of automotive, high-voltage products, CMOS image sensors and MEMS products.
In addition to the silicon wafer business, TSMC has expanded into new areas related to solid state lighting and solar businesses, for which Q&R is
engaged in establishing new, rigorous standards of quality and reliability leveraging our years of experience in the semiconductor industry.
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 2010, the effectiveness of the TSMC quality management system was verified by a third-party audit to
comply with ISO/TS 16949:2009 and IECQ QC080000 certificates requirements.
53
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 strives to provide world-class, high-quality,
efficient and professional integrated services to achieve optimum service experience for our customers and, in return, to gain customer’s trust
and sustain Company profitability
To facilitate customer interaction and information access on a real-time basis, TSMC has offered a suite of web-based applications that provide a
more active role in design, engineering, and logistics, collectively branded as EFOUNDRY® service. The design collaboration focuses on content
availability and accessibility, with attention to accurate and updated information at each level of the design lifecycle. 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
2010 Total Net
Sales
2010
Net Sales
As % of 2010 Total
Net Sales
Relation to TSMC
Customer
38,619,756
37,202,785
343,715,370
419,537,911
None
None
9%
9%
82%
100%
Customer A
Customer B
Others
2009 Total Net
Sales
2009
Net Sales
As % of 2009 Total
Net Sales
Relation to TSMC
30,276,650
30,162,597
235,302,992
295,742,239
None
None
10%
10%
80%
100%
54
5.4.2 Design Enablement
In order to lower the design barriers for customers to design on
incorporate soft IP. The goal is to improve soft IP readiness for
TSMC technologies, the Company offers extensive design support to
advanced technology nodes and to drive earlier time-to-market. Due
its customers through a direct design support team as well as via
to its history of independence from process technology, soft IP was
alliance partners. TSMC’s technology platform provides a solid
not optimized for power, performance and area considerations. With
The Company expanded its IP Alliance program in 2010 to
foundation for design enablement.
Tech File and PDK
Customers heavily leverage tech files and process design kits (PDK)
provided by TSMC, as evidenced by more than 20,000 downloads in
2010. TSMC also experiences high demand on PDK for mainstream
technologies and is increasing resources to support that demand.
the increasing need of first- time silicon success and early
time-to-market for highly integrated circuits, such as
Systems-on-Chip (SoC), close technical collaboration between the
foundry and IP provider is imperative.
5.5 Employees
5.5.1 Human Capital
Library and IP
TSMC and its alliance partners offer TSMC’s customers a rich
Human capital is one of the most important assets of TSMC. TSMC
portfolio of libraries and IPs. These reusable building blocks are
strives to provide employees with a challenging, enjoyable and
essential for many design projects. In 2010, over half of new
rewarding work environment. In 2010, TSMC was named the “Most
tape-outs to TSMC adopted one or more libraries or IPs from TSMC
and/or its IP partners. To support the high demand, TSMC also
invested resources to expand the library and IP portfolio. The total
Admired Company in Taiwan” by Commonwealth Magazine for the
14th consecutive year.
number of library or IP in the portfolio increased to 3,005 in 2010
At the end of 2010, TSMC had more than 33,000 employees
from about 2,221 in 2009.
worldwide, including 3,142 managers and 12,729 professionals.
Female managers comprised 11.2% of all managers, and
Design Methodology and Flow
TSMC released the first foundry-specific Integrated Sign-Off Flow in
non-Taiwanese nationals comprised 9.6% of all TSMC managers and
professionals. The following tables summarize TSMC’s workforce
April 2009. Initially targeting 65nm process node with planned
structure at the end of February, 2011:
extensions into other process technology nodes, the Integrated
Sign-Off Flow supports advanced design techniques for low power
TSMC Workforce Structure
and design-for-manufacturability. With validated libraries and IP,
qualified EDA tools, a full set of proper technology files, and
automated installation scripts, Integrated Sign-Off Flow significantly
Job
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.
Gender
Two New Programs
In another first for the foundry segment, TSMC announced in April
2010 the first Analog/Mixed Signal (AMS) Reference Flow, and the
second revision of the Radio Frequency Reference Design Kit (RF
RDK).
TSMC’s AMS Reference Flow is our first custom design flow that
targets a host of design challenges associated with leading edge
Education
Ph.D.
Master’s
Bachelor’s
Other Higher
Education
High school
28nm – Layout Dependent Effects (LDE), Design for Manufacturing
Average Age (years)
(DFM) and Sub-1V – to minimize design barriers and reduce
Average Years of Service (years)
Manager
Professional
Assistant Engineer/
Clerical
Technician
Male (%)
Female (%)
12/31/2009
12/31/2010
02/28/2011
2,792
9,861
761
3,142
12,729
2,650
3,189
12,904
2,672
11,052
14,711
14,904
50.7%
49.3%
3.5%
32.8%
20.7%
16.5%
26.5%
37.8
6.0
53.4%
46.6%
3.3%
31.7%
25.9%
14.3%
24.8%
32.3
5.5
53.5%
46.5%
3.3%
31.9%
25.9%
14.1%
24.8%
32.4
5.5
iterations. AMS Reference Flow is a fully integrated multi-vendor
program and part of an innovative design package.
Total
24,466
33,232
33,669
55
5.5.2 Recruitment
● Professional/Functional Training: provides technical and
professional training required by various functions within the
Attracting new employees, and retaining and motivating existing
Company, offering training courses on equipment engineering,
employees are key to the success of TSMC’s human resources
process engineering, accounting, and information technology,
strategy. TSMC believes in equal opportunity employment.
among others.
Recruitment is conducted via an open selection process and is based
● Direct Labor (DL) Training: DL training enables production line
on the candidate’s ability to fulfill the needs of each position,
employees to acquire the knowledge, skills and attitudes they need
regardless of race, gender, age, religion, nationality, or political
to perform their job well. It also helps employees to pass required
affiliation. In order to seek out the best talents around the world,
tests in order to be certified for operating equipment. Training
TSMC employs a number of recruiting programs, including academic/
includes DL Skill Training, Technician “Train-the-Trainer” Training,
corporate collaboration programs, Joint Development Program in
and Manufacturing Leader Training.
Campus, summer internships, job fairs, and Technology Talents
● New Employee Training: includes new employee basic training and
Career Symposium. During 2010, TSMC recruited 185 managers,
job orientation.
4,012 professionals, 1,919 assistant engineer/clerical and 4,599
technicians.
TSMC has established the Procedure of Employee Training and
Education, which not only enables the on-site training courses but
The past successes of TSMC have relied on contributions from all
also best suits Company and individual development objectives
employees, and our future development will need a keen sense of
through external training courses. Under the guideline, employees
commitment to continue to succeed in competition to come.
Therefore, in 2010, we recruited around 2,100 qualified existing
are encouraged to participate in various training programs, and
subsidies are provided when taking short-term courses, credit courses
outsourced staff to be regular workforce. We deeply believe that
and degrees.
employees are our greatest asset, and doing so will not only allow us
to take care of more colleagues, it will also bolster morale and inspire
5.5.4 Employee Satisfaction
us to do our best together.
5.5.3 People Development
To enhance employee satisfaction, TSMC continuously promotes
programs devoted to employee benefits, employee care, employee
rewards, and employee communication. TSMC works hard to enrich
A key to TSMC’s long-term success has been our employee
its employees’ working experience by providing an environment that
development strategy, which emphasizes continuous learning
is challenging yet enjoyable.
especially important for success in this challenging economic
environment. A tailor-made individual development plan is
established for each employee appropriate to the employee’s
Employee Benefits Programs
● TSMC’s Employee Welfare Committee plans and implements
development needs. Employees are provided with a comprehensive
various welfare programs, including hobby clubs, art and cultural
network of resources, including on-the-job training, coaching,
seminars, employee outings, TSMC Sports Day, and TSMC Family
mentoring, job rotation, on-site courses, e-learning, and external
Day. In addition, TSMC provides holiday bonuses, marriage
learning opportunities.
bonuses, condolence allowances and emergency subsidies.
● To ensure that employees have all the comforts and conveniences
TSMC provides employees with a wide range of on-site general,
they need while at work, TSMC provides on-site cafeterias,
professional and management training programs. In addition to
dry-cleaning, travel, banking, haircut services, housing, and
external experts engaged as trainers, hundreds of TSMC employees
commuting assistances.
are trained as qualified instructors for training courses. During 2010,
TSMC conducted 1,465 internal training sessions, the total training
● Health improvement programs and psychological consultation
services are available to employees to ensure their physical and
hours achieved 968,457 and a total of 569,941 attendees
psychological well-being.
participated in those trainings; employees on average attended
29.14 hours of training. The total training expenses were NT$70
● In order to promote a healthy lifestyle, TSMC Sports Center offers a
variety of workout facilities and is open to all employees and their
million. TSMC’s training programs include:
family members. In addition, daycare centers are available at
Hsinchu and Tainan sites to meet employees’ need for childcare.
● 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
Employee Recognition
In order to recognize employees’ outstanding achievement, TSMC
Manager Program, as well as other elective courses.
runs various award programs including the Outstanding Engineer
● General Training: refers to training required by government
regulations and Company policies. Such training includes
Award for each fab and the Total Quality Excellence Conference
Award. During 2010, TSMC employees were recognized nationally,
industry-specific safety, workplace health and safety, quality, fab
including the National Model Worker Award, the Top 10 National
emergency response team, languages, and personal effectiveness
Outstanding Managers Award, the Outstanding Engineer Award,
training.
and the Outstanding Young Engineer Award.
56
Employee Communication
TSMC values two-way communication and is committed to keeping
5.5.6 Compensation
the communication channels between the management level and
TSMC’s compensation program includes a monthly salary, an
their subordinates, as well as between the peers, open and
employees’ cash bonus based on quarterly business results, and an
transparent. Our unceasing efforts lie in the reinforcement of mutual
employee profit sharing when the Company distributes its profit each
and timely employee communication, based on existing platforms,
year.
which in turn fosters harmonious labor relations and creates a
win-win situation for the company and the employees.
To raise TSMC’s competitiveness in recruiting, TSMC made a
Regular communication meetings are held for the various levels of
employees’ cash bonus quarterly based on the Company’s financial
managers and employees. Periodic employee satisfaction surveys are
performance to share the rewards of employees’ hard work in a
structural salary increase in 2010, and started the distribution of the
conducted. eSilicon Garden, an electronic internal publication, is
timely fashion.
issued on a bi-weekly basis with topics ranging from work to fun.
These all help maintain the unobstructed flow of information
The purpose of the employee cash bonus and profit sharing program
between TSMC and its employees.
is to reward employees’ contributions appropriately, to encourage
employees to work consistently to ensure the success of TSMC, and
In order to ensure that employees’ opinions and voices are heard,
to link employees’ interests with those of TSMC’s shareholders. The
and their issues are addressed and solved, impartial and smooth
Company determines the amount of the cash bonus and profit
voice submission mechanisms are in place to provide timely support:
sharing based on operating results and industry practice in the
Republic of China. The amount and form of the employee cash
● Complaints regarding major management, financial and auditing
issues are directed to the following channels, which handle the
bonus and profit sharing are determined by the Board of Directors
based on the Compensation Committee’s recommendation and the
complaints with high level of confidentiality: 1) The Independent
employee profit sharing is subject to shareholders’ approval at the
Audit Committee and 2) The Ombudsman system led by a selected
Annual Shareholders’ Meeting. Individual awards are based on each
Vice President.
employee’s job responsibility, contribution and performance.
● The Suggestion Box for employees to express their opinions
regarding their work and the work environment in general.
In addition to providing employees of TSMC’s overseas subsidiaries
● HR Call Center and employee care teams in each fab take care of
with a locally competitive base salary, the Company grants
the issues related to employees’ work and personal life. The
short-term and long-term bonuses as a part of total compensation.
Company also sets and promotes policies and measures for
The performance bonus is a short-term incentive and is granted in
ensuring gender equality in accordance with employment laws and
line with local regulations, market practices, and the overall
sexual harassment prevention policies to create a fair work
operating performance of each subsidiary. The long-term incentive
environment for employees of both genders.
bonus is awarded based on TSMC’s financial performance and is
5.5.5 Retention
vested over the course of several years in order to encourage
long-term employee commitment and development within the
Company.
From the employee’s initial adaptation to professional and career
development, TSMC works hard to retain outstanding employees
5.5.7 Retirement Policy
through creating an innovative, challenging, and fun environment.
We are committed to:
TSMC’s retirement policy is in accordance with the provisions in the
Labor Standards Law and Labor Pension Act of the Republic of China.
● 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 the assistance provided by senior
employees.
● Enabling employees to enhance professional knowledge and to
pursue further career development through numerous employee
development programs.
● Establishing a synergized welfare platform and providing an
environment for employees’ work-life balance; enhancing
employees’ loyalty and commitment through employee
engagement programs.
57
5.5.8 Ethics and Business Conduct
5.6 Material Contracts
Ethics Values
Integrity is the most important core value of TSMC’s culture. TSMC is
Shareholders Agreement
Term of Agreement:
committed to act ethically in all aspects of our business; constantly
Effective as of 03/30/1999 and may be terminated as provided in the
and vigilantly promoting integrity, honesty, fairness, accuracy, and
agreement
transparency in all that we say and do.
Contracting Parties:
TSMC’s Code of Ethics and Business Conduct (“Code”) requires that
Ltd. (EDBI)
each of TSMC’s employees bears a heavy personal responsibility to
(In September 2006, Philips assigned its rights and obligations under
preserve and to protect TSMC’s ethical values and reputation. In so
this agreement to Philips Semiconductors International B.V. which
doing, each of us: must not advance our personal interests at the
has now been renamed NXP B.V. In November 2006, NXP B.V. and
expense of, or in conflict with the Company; must refrain from
TSMC purchased all SSMC shares owned by EDBI; EDBI is no longer a
Koninklijke Philips Electronics N.V. (Philips) and EDB Investments Pte
corruption, unfair competition, fraud, waste and abuse; must not
contracting party to this agreement.)
undertake any practices detrimental to TSMC, the environment and
Summary:
to society; must abide by both the spirit and letter of all applicable
TSMC, Philips and EDBI had formed a Singapore joint venture
laws, rules and regulations; and must avoid any efforts improperly to
“Systems on Silicon Manufacturing Company Pte Ltd.” (SSMC) for
influence the decisions of anyone, including government officials,
providing IC foundry services. Philips Semiconductor (now NXP B.V.)
agencies, and courts, as well as our customers, suppliers, and
vendors.
and TSMC are committed to purchasing a certain percentage of
SSMC’s capacity.
In order to continue to build an environment of innovation,
technology leadership, and sustainable profitable growth, this Code
Technology Cooperation Agreement
Term of Agreement:
requires that we must promote business relationships founded upon
03/30/1999 - 03/29/2004, automatically renewable for successive
an unwavering respect for the intellectual property rights, proprietary
five-year terms until and unless either party gives written notice to
information and trade secrets of TSMC, our customers, and others;
terminate one year before the end of then existing term
and the proper use of the Company’s assets, not for personal use,
Contracting Party:
but for achieving TSMC’s vision for many years to come.
Systems on Silicon Manufacturing Company Pte Ltd. (SSMC)
Summary:
All employees, officers and Board members must whole-heartedly
TSMC agreed to transfer certain process technologies to SSMC, and
embrace and practice this Code. TSMC’s management must set the
SSMC agreed to pay TSMC a certain percentage of the net selling
best example of integrity and ethical conduct. TSMC’s officers,
price of SSMC products.
especially our CEO, CFO, and General Counsel, with oversight from
our Board, are responsible for the full, fair, accurate, timely, and
understandable financial accounting and financial disclosure in
Patent License Agreement
Term of Agreement:
reports/documents filed by the Company with securities authorities
12/20/2007 - 12/31/2017
and in all TSMC public communications/disclosures.
Code Administration and Disciplinary Action
All employees, officers and managers must comply with this Code
Contracting Party:
A multinational company
Summary:
The parties entered into a cross licensing arrangement for certain
and its related procedures. TSMC expects our customers, suppliers,
vendors, advisors and others with which we come into contact to
semiconductor patents. TSMC pays license fees to the contracting
company.
understand and respect the Company’s ethics standards and culture.
When an employee finds or suspects a breach of this Code, he/she
should report it immediately to any of the following persons: their
Manufacturing, License, and Technology Transfer
Agreement
Term of Agreement:
supervisor; the Function Head of Human Resources; the Company’s
04/01/2004 - 03/31/2006, automatically renewable for successive
Ombudsmen; or to the Chairman of the Company’s Audit
one-year terms until and unless both parties decide otherwise by
Committee, depending on the nature of the suspected breach.
mutual consent in writing
Contracting Party:
The Company will discipline employees who violate this Code in
Vanguard International Semiconductor Corporation (VIS)
accordance with the Company’s “Employee Recognition and
Summary:
Discipline Policy” (including the possibility of the termination of
VIS reserves certain capacity to manufacture TSMC products on
employment).
mutually agreed terms. TSMC may also transfer certain technologies
to VIS, for which it will in return receive royalties from VIS.
58
Patent License Agreement
Term of Agreement:
11/01/2002 - 10/31/2012
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.
Patent License Agreement
Term of Agreement:
01/01/2001 - 12/31/2011
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.
Amended Research and Development Collaboration
Agreement
Term of Agreement:
01/01/2009 - 12/31/2009, renewable on annual basis upon mutual
agreement
Contracting Party:
NXP B.V.
Summary:
The parties entered into research and development collaboration to
develop advanced semiconductor technologies.
Purchase Agreement
Effective Date of Agreement:
12/30/2010
Contracting Party:
Powerchip Technology Corporation
Summary:
TSMC spent NT$2.9 billion to acquire from Powerchip Technology
Corporation the substructure of the building under construction
located in Hsinchu Science Park.
Note: TSMC is not currently party to any other material contract,
other than contracts entered into in the ordinary course of our
business. The Company’s “Significant Commitments and
Contingencies” are disclosed in the “Financial Information” of
Annual Report (II), page 69-70.
59
6. Financial Highlights
6.1 Financial Status and Operating Results
6.1.1 Financial Status
Unconsolidated
Unit: NT$ 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
2010
192,234,282
366,854,299
24,237,329
701,239,666
118,022,260
9,072,488
127,094,748
259,100,787
55,698,434
265,779,571
574,144,918
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
Difference
6,402,745
112,102,773
5,821,583
123,813,044
45,451,165
(700,327)
44,750,838
73,721
212,424
83,896,889
79,062,206
%
3%
44%
32%
21%
63%
-7%
54%
0%
0%
46%
16%
● Analysis of Deviation over 20%
The increase in fixed assets was mainly due to higher capital expenditures for advanced technology equipment during 2010.
The increase in other assets was mainly due to an increase in refundable deposits.
The increase in total assets was mainly due to an increase in fixed assets.
The increase in current liabilities and total liabilities was mainly due to increases in short-term loans and payables to contractors and equipment
suppliers.
The increase in retained earnings was mainly due to higher net income during 2010.
● 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.
61
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
2010
261,519,317
388,444,023
29,190,036
718,928,904
123,191,113
17,033,386
140,224,499
259,100,787
55,698,434
265,779,571
574,144,918
578,704,405
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
Difference
1,715,569
114,769,236
5,817,854
124,232,684
44,057,825
519,002
44,576,827
73,721
212,424
83,896,889
79,062,206
79,655,857
%
1%
42%
25%
21%
56%
3%
47%
0%
0%
46%
16%
16%
● Analysis of Deviation over 20%
The increase in fixed assets was mainly due to higher capital expenditures for advanced technology equipment during 2010.
The increase in other assets was mainly due to an increase in refundable deposits.
The increase in total assets was mainly due to an increase in fixed assets.
The increase in current liabilities and total liabilities was mainly due to an increase in short-term loans and payables to contractors and equipment
suppliers.
The increase in retained earnings was mainly due to higher net income during 2010.
● 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
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
2010
418,666,448
(11,703,136)
406,963,312
209,921,268
197,042,044
(52,742)
196,989,302
42,142,794
154,846,508
15,907,968
1,464,272
169,290,204
(7,685,195)
161,605,009
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
Difference
119,195,234
2,025,210
121,220,444
50,814,649
70,405,795
107,537
70,513,332
10,189,177
60,324,155
11,786,459
(2,198,568)
74,309,182
(1,922,009)
72,387,173
%
40%
-15%
42%
32%
56%
-67%
56%
32%
64%
286%
-60%
78%
33%
81%
● Analysis of Deviation over 20%
Increase in gross sales and net sales: The increase was the result of higher wafer shipment during 2010, partially offset by the unfavorable impact of
change in foreign exchange rate.
Increase in cost of sales: The increase was the result of higher wafer shipment during 2010, partially offset by the higher capacity utilization.
Increase in gross profit and realized gross profit: The increase was mainly due to higher wafer shipment during 2010.
Decrease in unrealized gross profit from affiliates: The decrease was primarily due to lower sales to the affiliates in 4Q’10.
Increase in operating expenses: The increase was mainly due to higher research and development expenditures for advanced technology.
62
Increase in income from operations: The increase was mainly due to realized gross profit increased at a higher degree than operating expenses.
Increase in non-operating income and gains: The increase was primarily due to higher settlement income and equity in earnings of equity method
investees turning positive in 2010.
Decrease in non-operating expenses and losses: The decrease was primarily due to equity in earnings of equity method investees turning positive in
2010.
Increase in income before income tax: The increase was mainly due to both higher income from operations and non-operating income and gains.
Increase in income tax expenses: The increase was mainly due to higher taxable income, partially offset by a decrease in corporate income tax rate.
Increase in income after income tax: The increase was mainly due to higher income before income tax.
● Sales Volume Forecast and Related Information
For additional details, please refer to “Letter to Shareholders” on page 3-5 of this Annual Report.
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
2010
431,630,858
(12,092,947)
419,537,911
212,484,320
207,053,591
47,878,256
159,175,335
13,136,072
2,041,012
170,270,395
(7,988,465)
162,281,930
161,605,009
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
Difference
121,975,244
1,820,428
123,795,672
46,070,692
77,724,980
10,511,531
67,213,449
7,482,524
(111,775)
74,807,748
(1,992,041)
72,815,707
72,387,173
%
39%
-13%
42%
28%
60%
28%
73%
132%
-5%
78%
33%
81%
81%
● Analysis of Deviation over 20%
Increase in gross sales and net sales: The increase was the result of higher wafer shipment during 2010, partially offset by the unfavorable impact of
change in foreign exchange rate.
Increase in cost of sales: The increase was the result of higher wafer shipment during 2010, partially offset by the higher capacity utilization.
Increase in gross profit: The increase was mainly due to higher wafer shipment during 2010.
Increase in operating expenses: The increase was mainly due to higher research and development expenditures for advanced technology.
Increase in income from operations: The increase was mainly due to gross profit increased at a higher degree than operating expenses.
Increase in non-operating income and gains: The increase was primarily due to higher settlement income and equity in earnings of equity method
investees.
Increase in income before income tax: The increase was mainly due to both higher income from operations and non-operating income and gains.
Increase in income tax expenses: The increase was mainly due to higher taxable income, partially offset by a decrease in corporate income tax rate.
Increase in income after income tax: The increase was mainly due to higher income before income tax.
● Sales Volume Forecast and Related Information
For additional details, please refer to “Letter to Shareholders” on page 3-5 of this Annual Report.
63
6.1.3 Cash Flow
Unconsolidated
Unit: NT$ thousands
Cash Balance 12/31/2009
Net Cash Provided by Operating
Activities in 2010
Net Cash Outflows from Investing
and Financing Activities in 2010
Cash Balance 12/31/2010
Remedy for Cash Shortfall
Investment Plan
Financing Plan
117,043,543
222,023,176
(229,555,589)
109,511,130
-
-
● Analysis of Cash Flow
NT$222.0 billion net cash provided by operating activities: Mainly from net income and depreciation/amortization.
NT$182.8 billion net cash used in investing activities: Primarily for capital expenditures.
NT$46.8 billion net cash used in financing activities: Mainly for the payment of cash dividends, partially offset by an increase in short-term loans.
● Remedial Actions for Cash Shortfall: In view of positive operating cash flow and ample cash on-hand, remedial actions are not required.
● Cash Flow Projection for Next Year: Not applicable.
Consolidated
Unit: NT$ thousands
Cash Balance 12/31/2009
Net Cash Provided by Operating
Activities in 2010
Net Cash Outflows from Investing
and Financing Activities in 2010
Cash Balance 12/31/2010
Remedy for Cash Shortfall
Investment Plan
Financing Plan
171,276,341
229,475,766
(252,865,152)
147,886,955
-
-
● Analysis of Cash Flow
NT$229.5 billion net cash provided by operating activities: Mainly from net income and depreciation/amortization.
NT$202.1 billion net cash used in investing activities: Primarily for capital expenditures.
NT$48.6 billion net cash used in financing activities: Mainly for the payment of cash dividends, partially offset by an increase in short-term loans.
● Remedial Actions for Cash Shortfall: As a result of positive operating cash flows and ample cash on-hand, remedial actions are not required.
● Cash Flow Projection for Next Year: Not applicable.
6.1.4 Major Capital Expenditures
Major Capital Expenditures and Sources of Funding
Unit: NT$ thousands
Plan
Actual or Planned Source of Capital
Total Amount as of 12/31/2010
Status of Actual or Projected Use of Capital
2007
2008
2009
2010
Production Facilities and Equipment
Cash flow generated from operations
390,242,212
77,925,776
56,902,459
80,923,392
174,490,585
R&D Equipment
Cash flow generated from operations
24,644,885
5,401,157
1,637,643
6,371,056
11,235,029
Expected Future Benefits
With the capital expenditures mentioned above and projected for 2011, it is estimated that TSMC’s annual production capacity will increase by
approximately 2.23 million 8-inch equivalent wafers in 2011.
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 2010, the investment gain from these
investments amounted to NT$7,111,443 thousands (NT$2,298,159 thousands on consolidated basis), improving significantly compared to 2009
mainly due to the global economy recovery and the strategic synergy effects. For future investments, TMSC will continue to focus on strategic
purposes through prudent assessments.
64
6.2 Risk Management
6.2.2 Strategic Risks
TSMC and its subsidiaries are committed to proactively and cost-
effectively integrating and managing strategic, operational, financial
Industry Developments
The semiconductor market and microelectronics industries have
and hazardous risks together with potential consequences to
historically been cyclical and subject to significant, and often rapid,
operations and revenue. TSMC established its Enterprise Risk
increases and decreases in product demand. TSMC’s semiconductor
Management (ERM) program based on both its corporate vision and
foundry business is affected by market conditions in such highly
its long-term sustainability and responsibility to both industry and
cyclical semiconductor and microelectronics industries. Most of the
society. ERM seeks to provide for the appropriate management of
Company’s customers operate in these industries. Variations in order
risks by TSMC on behalf of all stakeholders.
levels from customers result in volatility in the Company’s revenues
As TSMC expanded capacity in 2010, risk treatment practices and
green factory projects also initiated and implemented, begining in
From time to time, the semiconductor and microelectronics
the design phase for all new fabs.
industries have experienced significant, and sometimes prolonged,
periods of downturns and overcapacity. Because TSMC is, and will
6.2.1 Risk Management (RM) Organization Chart
continue to be, dependent on the requirements of semiconductor
and earnings.
Audit Committee
CEO
RM Steering Committee
Materials Management
and Risk Management
and microelectronics companies for its services, periods of downturn
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, margins and
earnings will suffer during periods of downturn 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
RM Working Committee
RM Division
rapidly develop new and innovative technologies, or if the
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.
● RM Division:
Coordinates the RM Working Committee activities;
Facilitates functional risk management activities; and
Consolidates ERM reports for submission to the RM Steering
Committee.
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 some or all of
these products may decrease the demand for overall global
semiconductor foundry services, including TSMC’s services, and may
adversely affect the Company’s revenues. Further, a significant
portion of our operating costs is fixed because we own most of our
manufacturing capacities. In general, these costs do not decline
when customer demand or our capacity utilization rates drop, and
thus declines in customer demand, among other factors, may
significantly decrease our margins. Conversely, as product demand
65
rises and factory utilization increases, the fixed costs are spread over
The Taiwan Financial Supervisory Commission (FSC) requires listed
increased output, which can improve our margins. In addition, the
companies to prepare financial statements in accordance with
historical and current trend of declining average selling prices of
International Financial Reporting Standards (IFRS) starting from
end-use applications places downward pressure on the prices of the
January 1, 2013. TSMC has setup an IFRS project team and has
components that go into such applications. If the average selling
launched the project plan for its IFRS adoption. In addition, the
prices of end-use applications continue to decrease, the pricing
progress of such adoption is regularly reported to the Board. The
pressure on components produced by us may lead to a reduction of
impact of the IFRS adoption may include changes of accounting
TSMC’s revenues, margin and earnings.
Competition
TSMC competes internationally and domestically with other pure-play
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
foundry service providers, as well as with integrated device
addition, according to FSC’s requirement, TSMC will disclose the IFRS
manufacturers that devote a significant portion of their
project plan, status and significant difference between IFRS and
manufacturing capacity to foundry operations. Some of these
current accounting policy in the financial statements for the year
companies may have access to more advanced technologies and
ended December 31, 2011.
greater financial and other resources than us, (such as the possibility
of receiving direct or indirect government bailout/economic stimulus
The Taiwan “National Health Insurance Act” was amended in January
funds or other incentives that are unavailable to us). The Company’s
26, 2011, to create an obligation to fund the health insurance
competition may, from time to time, also decide to undertake
aggressive pricing initiatives in one or more technology nodes.
scheme by paying an extra 2% “supplementary premium” (based on
2% of the total profit sharing and variable bonus) plus the “basic
Competitive activities may cause us to lose customers or to decrease
premium” charge. Such extra 2% “supplementary premium” will be
TSMC’s customer base, or TSMC’s average selling prices, or both.
incurred in connection with future payouts of profit sharing and
The Company competes primarily on the basis of process technology,
official implementation of this law. TSMC has studied the
quality and service. The level of competition differs according to the
implications of this new amendment and has taken the necessary
process technology involved. For example, in more mature
managerial precautionary steps with respect to such amendment.
variable bonus. The Executive Yuan has not yet promulgated the
technologies, the competition tends to be more intense. Some
companies compete with TSMC in selected geographic regions or
In addition, the Taiwan legislative authority has been studying the
application end markets. In recent years, substantial investments
relevant laws relating to environmental protection, e.g. “Greenhouse
have been made by others to establish new pure-play foundry
Gas Reduction Act” and Energy Tax. Since there has been no
companies in mainland China and elsewhere, or to spin off
concrete guidance or laws issuing from the Taiwan government as of
integrated device manufacturers’ manufacturing operations and
yet, the impacts of such laws are indeterminable at the moment.
transform them into a pure-play foundry company.
However, it is very likely that such laws may increase the operating
Risks Associated with Changes in the Government Policies
and Regulatory Environment
TSMC’s management team closely monitors domestic and foreign
governmental policies and regulations that might impact TSMC’s
costs 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.
business and financial operations. 2010 saw the following changes
6.2.3 Operational Risks
or developments in governmental policies and regulations that may
influence the Company’s business operations.
Risks Associated with Capacity Expansion
In response to customer demand, since 2004, TSMC has steadily
ROC government promulgated the legislation of “Statute for
ramped up the production of 12-inch wafer fabs in the Hsinchu
Industries Innovation” in May 2010. The scope of the tax incentive
Science Park and Tainan Science Park. Total monthly capacity of the
for “Statute for Industries Innovation” is narrower than the prior
Company’s 12-inch wafer fabs increased from 171,400 wafers in
“Statute for Upgrading Industries” and therefore the Company’s tax
December 31, 2009 to 244,600 wafers in December 31, 2010.
burden will increase. But, Article 5 of “Income Tax Acts” was
Overall, TSMC increased its annual production capacity by
amended in June 2010, thereby reducing the corporate income tax
approximately 1.5 million 8-inch equivalent wafers in 2010. The total
rate from 20% to 17% effective retroactively from 2010, which will
average billing utilization rate for 2010 was 101%. Expansion and
reduce the Company’s tax burden. TSMC has taken into account the
modification of the Company’s production facilities will, among
various factors which may impact its financial management.
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.
66
As of the date of this Annual Report, the benefits brought about by
reasonable cost, TSMC may be unable to fulfill customers’ orders,
such capacity expansion were in line with TSMC’s expectations. TSMC
which could negatively impact its financial condition and results of
has established systems to evaluate and forecast market demand and
operations.
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,
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
TSMC’s ten largest customers accounted for approximately 53% and
intellectual property rights, we cannot guarantee that our efforts will
54% of net sales in 2009 and 2010, and the Company’s largest
be adequate to entirely prevent the misappropriation or improper
customer accounted for approximately 10% and 9% of net sales in
use of our proprietary technology, trade secrets, software or
2009 and 2010, respectively. TSMC’s results of operations and
know-how. Also, we cannot guarantee that, as our businesses or
financial condition could be adversely affected by the loss of, or
business models expand into new areas, we will be able to
significant curtailment of purchases by, one or more of the
independently develop the technology, trade secrets, software or
Company’s top customers, including curtailments due to increased
know-how necessary to conduct our business or that we can do so
competitive pressures, a change in the design or manufacturing
without the intellectual property rights of others. As a result, we may
sourcing policies or practices of these customers, or the timing of
have to rely on obtaining licenses to certain technologies from third
customer or distributor inventory adjustments.
parties. To the extent that we rely on licenses from others, we cannot
Risks Associated with Purchase Concentration
● Raw Materials
TSMC’s production operations require that it obtain adequate
guarantee that we will be able to obtain any or all of the necessary
licenses on terms we consider reasonable. 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
supplies of raw materials, such as silicon wafers, gases, chemicals,
customers in instances where we have contractually agreed to
and lithographic materials, on a timely basis. Shortages in the supply
indemnify our customers against damages resulting from
of some materials experienced by specific vendors or by the
infringement claims.
semiconductor industry generally have in the past resulted in
occasional industry-wide price adjustments and delivery delays. Also,
We have received, from time-to-time, communications from third
since TSMC procures some raw materials from sole-source suppliers,
parties asserting that our technologies, manufacturing processes, the
there is a risk that our need for such raw materials may not be met
design of the integrated circuits made by us or the use by our
when needed or that back-up supplies may not be readily
customers of semiconductors made by us may infringe their patents
obtainable. Many of our raw materials are sourced from Japan. The
or other intellectual property rights. And, because of the nature of
effects of the earthquake that hit Japan may undercut our ability to
the semiconductor industry, we may continue to receive such
procure on a timely basis sufficient raw materials to produce our
communications in the future. In some instances, these disputes may
products and render our services. The Company’s revenue and
result in litigation. If we fail to obtain or maintain certain
earnings could decline if it is unable to obtain adequate supplies of
government, technology or intellectual property licenses and, if
the necessary raw materials in a timely manner or if there are
litigation relating to an intellectual property claim occurs, it could
significant increases in the costs of raw materials that it cannot pass
prevent us from manufacturing or selling certain products or using
on to its customers.
certain manufacturing processes or technologies, which could reduce
our opportunities to compete or generate revenues.
● Equipment
The Company’s operations and ongoing expansion plans depend on
its ability to obtain an appropriate amount of equipment and related
Risks Associated with Litigation
As is the case with many companies in the semiconductor industry,
services from a limited number of suppliers in a market that is
we have received from time-to-time communications from third
characterized by limited supply and long delivery cycles. During such
parties asserting that our technologies, manufacturing processes, the
times, supplier-specific or industry-wide lead times for delivery can be
design of the integrated circuits made by us or the use by our
as long as nine months. To better manage its supply chain, the
customers of semiconductors made by us may infringe upon patents
Company has implemented various business models and risk
or other intellectual property rights of others. In some instances,
management contingencies with suppliers to shorten the
these disputes have resulted in litigation by or against us and certain
procurement lead time. TSMC also provides its projected demand for
settlement payments by us in some cases. Irrespective of the validity
various items to many of the Company’s equipment suppliers to help
of these claims, we could incur significant costs in the defense
them plan their production in advance. We have purchased used
thereof or could suffer adverse effects on our operations.
tools and continue to seek opportunities in acquiring relevant used
tools. If it is unable to obtain equipment in a timely manner and at a
67
In June 2010, STC.UNM, the technology transfer arm of the
University of New Mexico, filed a complaint in the U.S. International
Future R&D Plans and Expected R&D Spending
For additional details, please refer to “Future R&D Plans” on page
Trade Commission (USITC) accusing TSMC and one other company of
50-51 of this Annual Report.
allegedly infringing a single U.S. patent. Based on this complaint, the
USITC has initiated an investigation in July 2010. TSMC and STC.
UNM have subsequently reached a settlement agreement and, on
November 15, 2010, filed a joint motion to terminate the
Changes in Corporate Image and Impact on Company’s
Crisis Management
TSMC has established an excellent corporate image based on its firm
investigation based on that settlement agreement. As a result, the
belief in its core values, its rigorous corporate governance, its
Administrative Law Judge (ALJ) assigned to the investigation has
outstanding operations, and its vision of a society that works
made an initial determination (ID) to terminate the investigation. The
together towards sustainable development, equality, justice, and a
USITC has decided not to review the ALJ’s ID and, therefore, officially
harmonious environment to live and work. For its efforts the
terminating the investigation.
Company has won wide recognition over the years, including:
In June 2010, Keranos, LLC. filed a lawsuit in the U.S. District Court
● Membership in the Dow Jones Sustainability Index since 2001, and
for the Eastern District of Texas alleging that TSMC, TSMC NA, and
awarded semiconductor sector leader in 2010
several other leading technology companies infringe three expired
● The Executive Yuan’s Enterprise Sustainable Development Award
U.S. patents. The outcome of this litigation cannot be determined at
● The Ministry of Economic Affairs’ Outstanding Innovation
this time.
Achievement Award
In December 2010, Ziptronix, Inc. filed a complaint in the U.S.
● The Environmental Protection Administration’s National Enterprise
District Court for the Northern District of California accusing TSMC,
Environmental Protection Award
TSMC NA and one other company of allegedly infringing six U.S.
● Commonwealth Magazine’s benchmark for Most Admired
patents. This litigation is in its very early stages and therefore the
Company in Taiwan
outcome of the case cannot be determined at this time.
● Commonwealth Magazine’s Best Corporate Citizenship for a large
● The Council of Labor Affairs’ National Workplace Safety Award
company
Other than the matters described above, we were not involved in any
● GlobalViews Magazine’s Corporate Social Responsibility award
other material litigation in 2010 and are not currently involved in any
● Ranked Number one in the Asian Wall Street Journal’s survey of the
material litigation.
Risks Associated with Mergers and Acquisitions
In 2010, and as of the date of this Annual Report, there were no
such risks for TSMC.
top 10 companies in Taiwan for 9th consecutive year in 2010
● 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.
Risks Associated with Recruiting and Retaining Qualified
Personnel
The Company depends on the continued services and contributions
Management believes such recognition is the strongest evidence of
TSMC’s corporate image.
of its executive officers and skilled technical and other personnel.
In addition, the Company has established departments such as Brand
TSMC’s business could suffer if it lost, for whatever reasons, and
Management, Customer Service, Public Relations, Employee
could not adequately replace the services and contributions of some
Relations, Investor Relations, Risk Management, Internal Audit, and
of these personnel. The Company may be required to increase the
the TSMC Education and Culture Foundation to further improve
number of employees in connection with any business expansion,
and since there is intense competition for the recruitment of these
TSMC’s corporate image, coordinate crisis management, and to
make preparations for prevention and control of potential risks.
personnel, it cannot ensure it will be able to fulfill its personnel
requirements in a timely manner.
Risks Associated with Change in Management
In 2010, and as of the date of this Annual Report, there were no
Therefore, in order to attract and retain talent, the Compensation
such risks for TSMC.
Committee of the Board of Directors decided to enhance the
compensation system, including a structural increase on base salary
in 2010 and a timely distribution of employees’ cash bonus from the
Company’s profits.
68
6.2.4 Financial Risks
Internal Management of Economic Risks
● Interest Rate Fluctuation
TSMC’s exposure to interest rate risks derives primarily from
Risks Associated with High-risk/High-leveraged Investment;
Lending, Endorsements, and Guarantees for Other Parties;
and Financial Derivative Transactions
TSMC neither made high-risk or high-leveraged financial investments
nor provided endorsements or guarantees for other parties during
short-term borrowing and long-term debt obligations incurred in the
2010 and up to the date of this report. As of February 28, 2011,
normal course of business. In order to limit its exposure to interest
TSMC had an intercompany loan of US$200 million arranged
rate risks, TSMC finances its funding needs primarily through internal
between two wholly-owned subsidiaries, which was in compliance
generation of cash and the occasional issuance of long-term,
with relevant rules and regulations.
fixed-rate debt. On the asset side, the primary objective of TSMC’s
investments in fixed income securities is to preserve principal in
The financial transactions of a “derivative” nature that TSMC entered
highly liquid markets. In order to maintain the Company’s liquidity
into were strictly for hedging purposes and not for any trading or
profile, the majority of fixed income securities are at the short end of
speculative purpose. For more information, please refer to the
the yield curve.
“Financial Information” on page 56 and 58 of Annual Report (II).
● Foreign Exchange Volatility
Over half of TSMC’s capital expenditures and manufacturing costs
The fair market value of our trading and available for sale financial
securities are subject to prevailing market conditions and may
are denominated in currencies other than NT dollars, primarily in US
fluctuate from TSMC’s carrying value from time to time, which may
dollars, Japanese yen and Euros. More than 90% of the Company’s
sales are denominated in US dollars and currencies other than NT
impact the returns of those securities.
dollars. Therefore, any significant fluctuation to the Company’s
To control various types of financial transactions, the Company has
disadvantage in such exchange rates would have an adverse effect
established internal policies and procedures based on sound financial
on TSMC’s financial condition. For example, during the period from
and business practices, all in compliance with the relevant rules and
September 1, 2010 to December 30, 2010, the US dollar depreciated
regulations issued by the Taiwan Securities and Futures Bureau.
8.97% against the NT dollar, which had a negative impact on our
TSMC policies and procedures include “Policies and Procedures for
results of operations. Specifically, every 1% depreciation of the US
Financial Derivative Transactions”, “Procedures for Lending Funds to
dollar against the NT dollar exchange rate results in approximately
Other Parties”, “Procedures for Acquisition or Disposal of Assets”,
0.4 percentage point decrease in TSMC’s operating margin. TSMC
and “Procedures for Endorsement and Guarantee”.
hedged its foreign exchange exposure mainly through cross currency
swaps and currency forward contracts. In addition, TSMC increased
its short-term loan denominated in foreign currencies to deal with
Risks Associated with Impairment Charges
Under Generally Accepted Accounting Principles (GAAP) of both the
increasing hedging needs resulting from strong growth in sales
Republic of China and the United States, TSMC is required to
revenue.
evaluate its long-lived assets and intangible assets for impairment
whenever there is an indication of impairment. If certain criteria are
Fluctuations in the exchange rate between the US dollar and the NT
met, TSMC is required to record an impairment charge. TSMC is also
dollar may affect the US dollar value of the Company’s common
required under ROC GAAP and US GAAP to evaluate goodwill for
shares and the market price of the Company’s American Depositary
impairment at least on an annual basis or whenever a so-called
Shares (ADSs) and of any cash dividends paid in NT dollars on
“triggering event” or an indication of impairment occurs.
TSMC’s common shares represented by ADSs.
● Inflation & Deflation
TSMC’s most significant export market is North America, and
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
management does not believe that inflation or deflation in the ROC
income.
or North America had a material impact on the Company’s results of
operations in 2010. However, TSMC cannot provide assurance that
The determination of an impairment charge at any given time is
there will be no significant variations in the nature, extent or scope
substantially based on the expected results of the Company’s
of inflation or deflation within any of the Company’s key markets in
operations over a number of years subsequent to that time. As a
the future, which may have a material impact on TSMC’s results of
result, an impairment charge is more likely to occur during a period
operations.
when the Company’s operating results are otherwise already
depressed. TSMC has established the process and system to closely
monitor and access the outlook for capacity utilization and economic
cycle.
69
6.2.5 Hazardous Risks
activation of such contingency plans. The Company has also
conducted a continuous improvement project, including evaluating
TSMC maintains a comprehensive risk management system dedicated
building anti-seismic capability, holding earthquake response drills
to the conservation of natural resources, safety of people, and
and enhancing tool anchorage, and has improved TSMC business
protection of property. In order to effectively handle emergencies
continuity procedures with reference to BS 25999 business continuity
and natural disasters at each facility, management has developed
management.
comprehensive plans and procedures that focus on risk prevention,
emergency response, crisis management, and business continuity.
A wide variety of combustible materials are used in TSMC’s
TSMC has adopted local and international standards for
manufacturing processes and, consequently, are subject to the risk of
Environmental, Safety & Health (ESH) management. All TSMC
explosion and fire. The Company maintains many overlapping risk
manufacturing fabs have been ISO 14001 certified (Environmental
prevention and protection systems, as well as comprehensive fire and
Management System), OHSAS 18001 certified (Occupational Health
casualty insurance, including insurance for loss of property and loss
and Safety Management System) and QC080000 certified
of profit resulting from business interruption. Nonetheless, TSMC’s
(Hazardous Substance Process Management System); all
risk management and insurance coverage may, in certain
manufacturing fabs in Taiwan have also been TOSHMS (Taiwan
circumstances, be insufficient to cover all of the Company’s potential
Occupational Safety and Health Management System) certified.
losses. If any of TSMC’s fabs were to be damaged or cease
The Company pays special attention to preparedness for emergencies
it could reduce the Company’s manufacturing capacity and might
or disasters, such as typhoons, floods, droughts caused by climate
change, earthquakes, environmental contamination, large-scale
cause us to lose important customers, thereby potentially having a
materially adverse impact on TSMC’s financial performance. In
product returns, disruption of IT systems, strikes, pandemics (such as
addition to periodic fire protection system inspection and firefighting
H1N1 influenza), and sudden and unexpected disruptions to the
drills, the Company has also carried out a corporate-wide fire risk
supply of raw materials or water, electricity, and other public utilities.
mitigation project focused on management and hardware
operations as a result of an explosion, fire or environmental mishap,
TSMC has established a company-wide task force dedicated to
improvements.
managing the risk of water shortage that might arise due to climate
change. This task force keeps watch on the external supply and
Changes may cause unpredictable interruption to production. In
internal demand for water, large volumes of which are essential to
order to reduce such uncertainty, TSMC has adopted a number of
the daily needs of both the public and industry. Cross-company
standards to maintain operational continuity, ranging from design,
consolidations and external collaborations with public agencies are
procurement and construction of facilities, to operation and
also ongoing in the industrial parks to ensure and sustain a stable
decommission. We have also designed our new LED and solar
water supply.
factories to address specific ESH concerns, such as wastewater
treatment, air abatement, and process equipment hazards.
TSMC has further strengthened its business continuity plans, which
include risk assessment, control, implementation, through the
establishment of emergency task forces when necessary, combined
with the preparation of a thorough analysis of the emergency, its
impact, alternative actions, and solutions for each possible scenario
together with appropriate precautionary and/or recovery measures.
Each task force is given the responsibility of ensuring TSMC’s ability
to conduct business while minimizing personal injury, business
disruption, and financial impact under the circumstances. TSMC’s
business continuity plan is periodically reviewed according to results
of test scenariosor practical implementation for ensuring effective
and successful business continuity. Customers are informed of
TSMC’s strong business continuity plan in order to establish resilience
and flexibility in both their supply chain and insurance placement.
For the year 2010, and up to the date of this Annual Report, there
have been no reportable material events that have necessitated the
70
6.2.6 Climate Change Risks
6.2.7 Other Risks
If applicable laws, regulations or international accords directly or
indirectly require usto: (a) use certain alternative chemicals or raw
materials; and/or (b) exclude prohibited chemicals or raw materials
from our products, processes and designs, TSMC cannot offer any
assurances that the resulting product, processes or designs would be
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
as reliable or efficient. Also, our failure to manage the import,
possible future sales of TSMC shares owned by the major
export, use, transportation, emissions, discharge, storage, recycling,
shareholders.
or disposal of such chemicals and materials could subject us to
increased costs or future liabilities.
One or more of our existing shareholders may, from time to time,
dispose of significant numbers of our common shares or ADSs. For
Any of the above contingencies resulting from the actual and
example, the National Development Fund, who owned 6.4% of
potential impact of local or international laws and regulations as well
TSMC’s outstanding shares as of February 28, 2011, sold our shares
as international accords on environmental or climate change, could
in the form of ADSs in several transactions during the period
harm our business and operational results by increasing our expenses
between 1997 and 2005.
or requiring us to alter our manufacturing, assembly and test
processes.
Currently no shareholder owns 10% or more of TSMC’s total
outstanding shares.
Increasing climate change and environmental concerns also presents
other commercial challenges. For example, a request by some of our
customers and/or suppliers ask that we exceed the legal standard set
Other Material Risks
During 2010 and as of the date of this Annual Report, TSMC’s
for environmentally compliant products and services could result in
management is not aware of any other risk event that could impart a
lost market share to possibly more accommodating competitors.
potentially material impact on the financial status of the Company.
Further, energy costs in general could increase significantly as a result
of future climate change regulations. 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.
To mitigate risks resulting from climate change, TSMC continues to
carry out energy conservation measures, implementing voluntary PFC
emission reduction projects and conducting GHG inventory and
verification each year. TSMC has publicly disclosed climate change
information every year since 2005 through participation in an annual
survey conducted by the nonprofit Carbon Disclosure Project (CDP),
which includes greenhouse gas emission and reduction information
for all TSMC fabs.
71
7. Corporate Social
Responsibility
TSMC is an important part of the technology industry, and as we
look to the future, we not only aim to maintain our leadership in
worldwide competition and promote Taiwan’s globalization and
economic growth, we also will continue to carry out our corporate
social responsibility and do our utmost to be good corporate
citizens.
Our 10 principles for practicing corporate social responsibility are
important standards for continuing to support positive change in
society:
1. We insist on honesty and integrity. We are honest to our
shareholders, customers, employees, and to the public alike.
2. We respect the rule of law and always obey the law.
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, and balance the
interests of shareholders, employees, and all stakeholders in the
company.
5. We do not engage in politics.
6. We provide good job opportunities with a safe, comfortable, and
intellectually challenging environment to give our employees both
physical comfort and mental stimulation.
7. We contribute our part in controlling climate change and place
great importance on the protection of the environment.
8. We emphasize and reward innovation, and actively manage the
risks that innovation may bring.
9. We invest in green businesses such as LED lighting and solar
power to contribute to a greener world.
10. We support educational and cultural activities, and provide
long-term care to communities.
TSMC fulfills its social responsibilities to all stakeholders. As we carry
out the principles listed above, it is our firm belief that customers will
trust us more because of our honesty and integrity, respect for the
law, and good corporate governance. Investors will be more willing
to invest over the long term because of our clear core values, and
employees will feel closer to the Company as they identify with those
values. Carrying out TSMC’s social responsibilities brings us greater
competitive advantage, creates greater value for shareholders, and
benefits all of our stakeholders.
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7.1 Environmental, Safety and Health
(ESH) Management
TSMC believes its environmental, safety and health practices should
not only comply with legal requirements, but also measure up to
recognized international practices. In 2010, our ESH policy was
renewed and endorsed by Chairman and Chief Executive Officer Dr.
Morris Chang. The policy aims to reach the goals of “zero incident”
and “sustainable development”, and to make TSMC a world-class
company in environmental, safety and health management. Our
strategies for reaching these goals are to comply with regulations,
promote safety and health, strengthen recycling and pollution
prevention, manage ESH risks, instill an ESH culture, establish a green
supply chain, and fulfill our related corporate social responsibilities.
TSMC was honored to be included in the Dow Jones Sustainability
Index for the tenth consecutive year, and recognized as DJSI’s
worldwide leader in the semiconductor sector in 2010. We received
the best score in the Environmental dimension and a full score for
the “Environmental Policy/Management system” section.
All TSMC manufacturing facilities have received ISO 14001:2004
certification for environmental management systems and OHSAS
18001:2007 certification for occupational safety and health
management systems. All fabs in Taiwan have also been TOSHMS
(Taiwan Occupational Safety and Health Management System)
certified since 2009. TSMC strives for continuous improvement and
actively seeks to enhance pollution prevention, power and resource
conservation, waste reduction, safety and health management, fire
and explosion prevention and minimize the impact of other risks,
such as earthquakes, in order to reduce the overall environmental,
safety and health risk. In 2006, TSMC began to adopt the IECQ
QC080000 Hazardous Substance Process Management (HSPM)
System in order to meet customer needs for the management of
hazardous materials and to meet the European Union’s Restriction of
Hazardous Substances (RoHS) Directive. All TSMC manufacturing
facilities have been QC080000 certified since 2007.
TSMC communicates with suppliers and contractors regarding
environmental, safety and health issues and encourages them to
improve their ESH performance. In line with this policy, TSMC uses
priority work management and self-management to govern work
performed by contractors. TSMC requires contractors performing
high-risk operations to complete certification for technicians, and to
establish their own OHSAS 18001 safety and health management
system before bidding on contracts. This self-management is aimed
at increasing the sense of responsibility of our contractors, with the
goal of promoting safety awareness and technical improvement for
all contractors in the industry.
TSMC collaborates with suppliers to improve the sustainability of our
supply chain regarding ESH-related issues such as carbon and water
footprinting, and conflict metal management. We not only perform
on-site ESH audits at our suppliers manufacturing sites, but also
proactively assist them with improving ESH performance.
Reducing the carbon and water footprints of our supply chain is
essential to our green supply chain ideals. Since 2009, TSMC has
required our suppliers to set up carbon inventory procedures. In
2010, TSMC took the initiative by inviting selected suppliers to
participate in the Taiwanese government’s carbon footprint
development project and collaborated with them in activities
designed to reduce their carbon footprints. TSMC also began
monitoring potential water shortages in the supply chain and
investigating the supply chain’s water inventory. TSMC is also
preparing to work with suppliers on water footprinting and
conservation plans. The ESH management programs of TSMC
suppliers are tied to a sustainability index that includes three
components: the Green Index, the Social Index and the Risk Index.
The “Green Index” includes environmental management systems,
regulatory compliance, hazardous substance management, conflict
mineral investigation, greenhouse gas inventory, carbon footprinting,
water footprinting and other green activities. The “Social Index”
includes labor and ethical conducts and participation in social
activities. The “Risk Index” includes safety and health management,
fire prevention, natural disaster mitigation, IT interruption recovery,
transportation reliability, supply chain management, pandemic
response planning and a business continuity plan. This sustainability
index is applied to TSMC’s critical suppliers.
TSMC launched an e-ESH management system called Total Safety
Management (TSM). This web-based platform integrates over 20 ESH
IT sub-systems covering the four sectors of “Plan”, “Do”, “Check”,
and “Act”, and information, such as risk assessment, safety
management of change, contractor management, training/testing,
accident/incident corrective action requests (CAR), ESH indicators and
others. The TSM system serves as the backbone of ESH KPI
management and facilitates the comparison between fabs and the
ability to take business decisions and improve operational efficiency.
TSMC aims to reduce both costs and risks while improving ESH
management efficiency and effectiveness through the cross-fab
implementation of this platform.
7.1.1 Environmental Protection
Greenhouse Gas (GHG) Emission Reduction
TSMC is an active participant in international environmental
protection programs. In 2010 we achieved our voluntary PFC
emissions reduction goal as per our commitment to the World
Semiconductor Council (WSC) and the Taiwan Environmental
Protection Administration (EPA).
In 2005, TSMC was Taiwan’s first semiconductor company to make a
complete inventory of its GHG emissions and to gain ISO 14064
certification for its processes and outputs. The purpose of the
inventory was to serve as a baseline reference for TSMC’s strategy to
reduce GHG emissions, to meet future domestic regulatory
requirements, and to prepare for carbon trading and corporate
carbon asset management. All TSMC facilities continue to conduct a
GHG inventory on an annual basis. The inventory result shows that
the major direct GHG emissions are perfluorinated compounds
(PFCs), which are used in the semiconductor manufacturing process.
The primary indirect GHG emission is electricity consumption.
TSMC is also taking measures to reduce its emission of GHGs. TSMC
has endorsed a memorandum of understanding between the Taiwan
Semiconductor Industry Association, the Taiwan EPA, and the WSC,
whereby TSMC is committed to reducing PFC emissions to 10%
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below the average of 1997 and 1999 by 2010, a commitment that
we are proud to successfully achieve. This emissions target remains
fixed as TSMC continues to grow and expand its manufacturing
facilities.
certification documents, site operations and transportation routes to
ensure the legal and proper disposal of waste. TSMC achieved a 92%
waste recycling rate in 2010, surpassing its goal of 90%. The
Company’s landfill rate has been reduced to less than 1%.
Coal-fired power generators are the major source of electricity in
Taiwan and emit large amounts of carbon dioxide (CO2). TSMC
makes continuous efforts to conserve energy, which reduces both
carbon dioxide gas emissions and costs. TSMC has not only adopted
energy-conservative designs for both its manufacturing fabs and
offices, but has also improved the energy efficiency of facilities
during operation. In 2010, TSMC Fab 3 won the Ministry of
Economic Affairs’ “Energy Conservation Award” for the second time.
The improvements at this 15-year-old Fab served as a good model of
continuous energy efficiency improvement for the industry.
Air and Water Pollution Control
TSMC has installed effective air and water pollution control
equipment in each wafer fab to meet regulatory emissions standards.
In addition, TSMC maintains backup pollution control systems,
including emergency power supplies, to lower the risk of pollutant
emission in the event of equipment breakdown. TSMC centrally
monitors the operations of air and water pollution control
equipment around the clock and tracks system effectiveness to
ensure the quality of emitted air and discharged water. We have also
designed our new LED and solar factories to address specific ESH
concerns, such as wastewater treatment, air abatement, and process
equipment hazards.
Water Conservation
To make the most effective use of Taiwan’s limited water resources,
all TSMC fabs make an effort to increase water reclamation rates by
adjusting the water usage of manufacturing equipment and
improving wastewater reclamation systems. New fabs are able to
reclaim more than 85% of process water, meeting or exceeding the
standards of the each Science Park Administration and
outperforming most semiconductor fabs around the world. TSMC
also strives to reduce non-manufacturing-related water consumption,
including water used in air conditioning systems, sanitary facilities,
cleaning, landscaping and kitchens. We use an intranet website to
collect and measure water recycling and/or reuse volumes (e.g.
process water recycling) company-wide.
Since water resources are inherently local, TSMC shares its water
saving experiences with other semiconductor companies through the
Association of Science-Based Industrial Park to promote water
conservation. At the same time, TSMC collaborates with the Science
Park Administrations to assist small facilities in each Science Park with
water resource management in order to achieve the Science Park’s
goals and ensure a long-term balance of supply and demand. A total
of six out of TSMC’s seven fabs in Taiwan have won the Ministry of
Economic Affairs’ “Water Saving Award”.
Waste Management and Recycling
TSMC has established a designated unit responsible for waste
recycling and disposal. To meet the goal of sustainable resource
utilization, TSMC’s first priority is to reduce process waste before
considering recycling or disposal. TSMC carefully selects waste
disposal and recycling contractors and performs annual audits of
Other Environmental Protection Programs
TSMC has implemented an environmental accounting system,
allowing each fab to calculate cost savings or profits created by their
individual environmental programs.
In addition, TSMC conducts “Product Life Cycle Assessments”
(Product LCA), collecting and analyzing data from the entire
semiconductor manufacturing chain from raw materials suppliers to
finished products, including statistics for such items as energy, raw
material 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
documentation.
TSMC also maintains “green procurement” procedures, requiring raw
materials suppliers to declare that the materials they supply to TSMC
do not contain any prohibited substances. This ensures that products
manufactured by TSMC comply with customer requirements and the
regulatory requirements of the European Union’s RoHS Directive.
TSMC also encourages employees to use “Green Mark” products in
offices, such as recycled paper, desktop PCs, LCD monitors, and
batteries.
TSMC has adopted both the Taiwan “Green Building” and the US
Leadership in Energy and Environmental Design (LEED) standards for
new fab and office building designs since 2006 to achieve better
energy and resource efficiency than conventional designs. At the
same time, TSMC plans to upgrade existing office buildings to
comply with the LEED standard each year. In 2008 and 2009,
respectively, TSMC’s newly-constructed Fab 14 Phase 3 and Fab 12
Phase 4 achieved EEWH Diamond and LEED Gold certification. For
these projects, TSMC invited Dr. Kath Williams, former vice president
of the United States Green Building Council (USGBC) to serve as a
consultant, and also consulted experts from leading Taiwan
universities. TSMC believes that manufacturing companies should
convert their facilities into green factories to effectively improve the
environment and lower construction costs. Therefore, we freely share
our practical experience with industry, government, and academia.
Forty groups (more than 1,800 visitors) from industry, government,
academia and the general community contacted TSMC to gain an
understanding and discuss our green factory practices. TSMC believes
if something is worth doing, it’s worth doing well in order to protect
the Earth.
TSMC initiated the “Taiwan Corporate Sustainability Forum (TCSF)”,
which united 20 leading Taiwan companies as founders. The forum
also welcomes new members. TSMC’s 2008 Green Forum was the
first of a series of TCSF events. At this meeting, TSMC shared its
hands-on experience in obtaining the US Green Building Council’s
LEED certification, and applying for Taiwan’s Ecology, Energy Saving,
Waste Reduction, and Health (EEWH) certification for its Fab 14
Phase 3 facility. TSMC also proposed working with green building
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experts to draft guidelines for green industrial buildings in Taiwan,
helping other domestic companies construct their own green
factories and promote green manufacturing. The TCSF continues to
invite leading Taiwan companies to join the TCSF.
Environmental Compliance Record
In 2010, TSMC commissioned the construction of multiple new
factories. However, construction projects of this type are complex
and, unfortunately, certain minor administrative oversights on the
part of TSMC and its contractors resulted in TSMC being fined a total
of NT$210,000 by the relevant authority. To prevent similar
situations occurring in the future, TSMC took immediate corrective
and preventive actions to improve contractor management and
personnel training.
7.1.2 Safety and Health
Safety and Health Management
TSMC’s safety and health management is built on the framework of
the OHSAS 18001 system, and adheres to the management principle
of “Plan, Do, Check, Act” to prevent accidents and protect employee
safety and health as well as Company assets. TSMC fabs in Taiwan
have also received TOSHMS (Taiwan Occupational Safety and Health
Management System) certification.
Besides accident prevention, TSMC has established emergency
response procedures to protect the lives of employees and
contractors if disasters should occur, as well as to minimize the
negative impact on society and the environment. TSMC continually
communicates with its suppliers to ensure that potential risk in the
operation of production equipment is minimized and rigorously
follows safety control procedures when installing production
equipment. The Company places stringent controls on high-risk
operations and also evaluates the seismic tolerance of its facilities
and equipment to reduce the risk of earthquake damage.
In health management, TSMC sponsors regular wellness activities
and specific health examinations as well as ensuring the health of
employees beyond regulatory requirements, such as the
improvement of office ergonomics, the promotion of Good Health
Practice (GHP) in food production areas, and the continual appraisal
and control of the impact on the health of employees of heavy
metals . TSMC also establishes Company-level prevention committees
when infectious diseases such as H1N1 influenza, Severe Acute
Respiratory Syndrome (SARS) or Avian Influenza pose a potential risk
to the Company.
Working Environment and Employee Safety Protection
TSMC’s ESH policy is committed to establishing a safe working
environment, preventing occupational injury and illness, keeping
employees healthy, enhancing every employee’s awareness and sense
of accountability to ESH, and building an ESH culture. TSMC safety
and health management operations apply to:
● Hardware Safety of Equipment Used by Process, Facilities, IT, and
General Services Departments
In addition to meeting regulatory requirements and internal
standards as well as mitigating ESH-related risks when building or
rebuilding facilities, TSMC also maintains procedures governing new
equipment and raw materials, safety approvals for bringing new
tools online, updating safety rules, seismic protection measures, and
other safety measures.
● Environmental, Safety and Health Evaluation of Hazardous
Chemical Substances
Any new chemical substance introduced to TSMC -- from the R&D
phase to mass production -- is carefully reviewed before use by the
”New Chemical Review Committee” to ensure that environmental
and safety and health concerns are well controlled, including
engineering control, the installation of personal protection
equipment, and operational safety training during storage,
transportation, usage, and disposal.
● General Safety Management, Training and Audit
All TSMC manufacturing facilities hold environmental, safety and
health committee meetings on a monthly basis. TSMC takes
preventive measures such as controls on high-risk work, contractor
management, chemical safety management, personal protective
equipment requirements, and safety audit management. In addition,
TSMC also maintains detailed disaster response procedures and
performs regular drills designed to minimize harm to employees and
property, as well as the impact on society and the environment in the
event of a disaster.
● Working Environment Measurement
TSMC conducts physical and chemical measurements of the working
environment every six months to safeguard employee health,
including measurement of factors such as noise, air quality, chemical
exposure, and illumination. If the measurement results for each item
are not compliant with regulatory requirements corrective action is
undertaken. In addition, materials and equipments that have ionizing
radiation concerns are regularly monitored. Workers operating these
equipments have received annual training and worn dosimeters any
time they work with or are in the vicinity of a radiation source to
ensure any potential exposure is monitored and controlled. In 2010,
TSMC received an Excellence Award from the Atomic Energy Council
for the successful implementation of protection measures for
non-medical radioactive materials and ionizing radiation equipments.
● Emerging Infectious Disease Response
In the TSMC ESH management system, we have a dedicated
corporate ESH organization which monitors emerging infectious
diseases around the world, assesses any potential impact on the
workplace and provides a strategic response plan. In previous
outbreaks (such as SARS in 2003 and the H1N1 influenza outbreak in
2009), we convened the Corporate Influenza Response Committee to
develop our strategies. These strategies include educating our
employees in prevention and response, publishing guidelines for
managers, establishing guidelines for employee sick leave due to flu,
and installing alcohol-based hand sanitizers at appropriate locations.
The Committee also monitors the status of employee leave due to
illness and, at the same time, develops a continuous plan to address
manpower shortages and protect employee health as well as
minimize business impact. In 2010, we provided health information
for foreign employees and travel guidelines about NDM-1
Enterobacteriaceae, which was identified in India, Pakistan, Japan,
the United States, and Europe.
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● Emergency Response
The planning and execution of an effective emergency response
requires big-picture thinking, continuous improvement and practice
drills. TSMC’s emergency response plans include procedures for rapid
response to accidents and disaster recovery as well as establishing
response procedures for potential disasters.
All TSMC fabs conduct major annual emergency response exercises
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 any
damage caused by disasters.
In addition to the regular emergency response drills held by
engineering and facilities departments each quarter, the Company’s
laboratory, canteen, dormitory, and shuttle bus personnel also hold
emergency response drills to prepare for events such as earthquakes,
chemical leakage, ammonia release, fires and automobile accidents.
● Employee Health Enhancement
TSMC provides healthcare and employee assistance programs in each
fab. TSMC employees can utilize these health services to reduce
physical and mental stress while strengthening their health. These
services include 24-hour nursing care, annual physical examinations,
psychological consultations, stress management programs, self
healthcare workshops, and staff assistance projects. In addition, the
Company also provides clinical and dental care services, women’s
healthcare, acupuncture and massage services and programs.
Health promotion and disease prevention activities include nutritional
consultation, weight-loss classes, an acupuncture weight-loss
program, carotid and thyroid ultrasound examinations, an
endocrinology clinic, a dermatology clinic, bone mineral
densitometry examinations and cancer screenings. Canteens also
provide healthy high fiber and low fat meals, as well as all-fruit
meals. All TSMC fabs have fitness 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.
Environmental, Safety and Health-related Awards in 2010
● Chosen for membership in the Dow Jones Sustainability World
Index for a 10th consecutive year; leader in the semiconductor
sector in 2010
● Recognized by the Taiwan Institute of Sustainable Energy with the
“Gold Award for Taiwan Corporate Sustainability Reports” for two
consecutive years
● Recognized by the Atomic Energy Council for “Excellence in
Radiation Protection”
● Fab 12 was recognized by the Environmental Protection
Administration with the “The Annual Enterprise Environmental
Protection Award”
● Fab 12 Phase 4 was recognized by the Ministry of Economic Affairs
with the “Water Saving Award”
● Fab 12 Phase 4 was recognized by the Hsinchu Science Park
Administration with the “Low Carbon Enterprise Award”
● Fab 12 Phase 4 was recognized by the Hsinchu Science Park
Administration with the “Water Saving Award”
● Fab 14 was recognized by the Southern Taiwan Science Park
Administration with the “Water Saving Award”
● Fab 3 was recognized by the Ministry of Economic Affairs with the
“Energy Conservation Award”
● Fab 12 and Fab 3 were recognized by the Hsinchu Science Park
Administration with the “Excellence in Labor Safety and Hygiene
Award”
7.2 TSMC Education and Culture
Foundation
Established in 1988, the TSMC Education and Culture Foundation
continues to devote its resources towards education, community
building, promotion of arts and culture events, and the employee
volunteer program, as part of TSMC’s efforts in corporate social
responsibility.
In 2010, to promote the knowledge of science and strengthen the
foundation of science education, the TSMC Foundation continued to
infuse resources the program ”Raising the Level of High School
Physics Experiments” renovation of the exhibition “The World of the
Integrated Circuits,” and the launching of “TSMC Science Tour,”.
Aside from financial sponsorships, TSMC Foundation supports TSMC
Volunteer Society, organizing the employees to devote themselves to
the caring of the underprivileged of the communities.
Commitment to Education
Talents are essential to the development of our economy. As a leader
of Taiwan’s knowledge-based industry, we regard cultivating
talented people for society as a core responsibility of TSMC. The
Foundation tailors various programs to target a whole range of
education at different age levels.
At the college level, in 2010, the TSMC Foundation created “TSMC
Mentor Scholarship” to encourage underprivileged students of
National Tsing Hua University and National Central University. In
addition to providing financial supports, the Foundation recruited
senior TSMC employees to mentor the students regularly. We hope
that TSMC employees’ rich experiences can provide productive
consultations for the students both in schools and future career
paths. In the meantime, the Foundation continued to endow chair
professorships to enhance academic research of Taiwan universities.
At the high school level, TSMC emphasizes the need for a balanced
education in both science and the humanities. In science,
collaborating with the Education Prime Minister and the Wu
Chien-Shiung Foundation, TSMC Foundation in 2010 initiated the
program ”Raising the Level of High School Physics Experiments,”
which establishes a full series of high school physics experimental kits
and holds regular workshops for high school science teachers. In the
meantime, the Foundation continued to sponsor science camps for
talented science students to meet with world-class scholars.
In the humanities, we organized the third “TSMC Youth Calligraphy
Contest.” This year we held the workshops on campus to inspire the
students to appreciate the beauty and cultural richness of
calligraphy. We also continued the TSMC Youth Literature Award.
During past seven years, numerous competition winners created
more sophisticated works and brought new energy to national
literature.
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At the primary-school level, in order to arouse children’s interest in
science, the Foundation launched “TSMC Science Tour,” taking
children from remote townships to National Taiwan Science
Education Center, National Museum of Natural Science, and National
Science and Technology Museum. To cultivate children’s art
appreciation, every year the Foundation organizes the TSMC
Aesthetic Tour to take underprivileged children to visit the National
Palace Museum and art sites in Taiwan. This year over 4,000 children
were invited to join the tour.
Renovations of “The World of the Integrated Circuits,” a permanent
exhibition sponsored by TSMC Foundation, is underway at the
National Museum of Natural Science. The new exhibition, will be
renamed “The World of the Semiconductor”, with widened space
will be strengthened with the fully updated content to reflect the
most advanced technology. Through more interactive presentations,
the renovated exhibition will facilitate the promotion of science
education and help visitors understand the development and
importance of the semiconductor Integrated Circuit technology.
Community Building
The Foundation continues to promote arts and cultural activities in
our site communities of Hsinchu and Tainan. Every year we organize
the TSMC Hsin-Chu Art Festival to bring cultural activities to these
high-tech cities and encourage a greater art appreciation in the
communities.
Promoting Chinese Theatre is an important feature of the festival.
After inviting the masterpieces of Kungu opera, Peking opera and
Nanguan in the past years, this year the Festival brought Taiwan
Bang-zi Opera Company to share the beauty of Bang-zi opera.
Celebrating the ceremony of the bicentennial of Chopin’s birth, the
Festival invited three prestigious pianists – Garrick Ohlsson, Alexander
Kobrin, and Yu-ja Wang – to perform three beautiful concerts. We
arranged Puppet Beings Theatre Company to perform marvelous
puppet shows at the piazza and hosted a charity show for the
underprivileged. More than 70 performances of the Hsin-Chu Festival
nurtured the inhabitants from every corner of the communities.
Besides holding the Hsin-chu Art Festival, TSMC shows a keen
concern for wildlife and the natural environment. The Foundation
supported the Taiwan Wild Bird Society in order to improve Tainan
Pheasant-tailed Jacana Park so that Jacanas can have a better shelter
during the winters.
Promotion of Arts and Culture
The TSMC Education and Culture Foundation has devoted its efforts
to the promotion of arts and culture for years. In 2010, the
Foundation sponsored “The Body Beautiful in Ancient Greece,” the
exhibition of Greek Sculptures from the British Museum, to give
Taiwan visitors opportunities to appreciate the highlights of the
British Museum’s rich collections. The Foundation also sponsored
1,000 students from rural areas to visit the Exhibit to increase their
appreciation for fine art.
To promote the Chinese classics and culture, TSMC Foundation
continued to support the broadcasting program “Analects in Hsin’s
View.” Through Professor Hsin Yih-yun’s rich knowledge and vivid
examples, the program received enthusiastic response from the society
and overseas. This year Professor Hsin was awarded Taipei Culture
Award for his long-term devotions to promoting Chinese culture.
TSMC Volunteer Program
TSMC’s most valuable asset is the knowledge and professional skills
of its employees. With an employee volunteer program launched in
2004, the TSMC Foundation encourages TSMC employees to do
volunteer work for the society to promote education and culture. The
TSMC volunteers’ services include serving as tour guides at the
National Science Museums during weekends to introduce the
semiconductor industry, reading to elementary students in remote
townships on weekdays, and providing the local community with
energy-saving measures. In 2009, a new team of Community
Volunteers was formed to help the local community with emergency
assistance. They also provide service to the elderly men in the Veterans
Home and the children in the St. Teresa Children Center in Hsinchu.
In 2010, Ms. Sophie Chang (Su-feng Chang) was elected as the
director of TSMC Volunteer Program, and has been leading
volunteers to devote themselves to various and more educational and
philanthropic activities to serve the society.
● TSMC Tour Guide Volunteer Program
To promote science education, the Foundation donated to renovate
an exhibition hall in the National Museum of Natural Science
(Taichung) and set up an exhibition titled “The World of the
Integrated Circuits.” Many of TSMC’s employees serve as volunteer
guides at the exhibition on weekends. The volunteer team continues
to grow with the enthusiastic participation of our employees’ family
members and employees of TSMC affiliates. In 2010, 600 volunteers
were organized by the TSMC Volunteers Society, and devoted their
time and effort to promoting science education.
● TSMC Books Reading Volunteer Program
Since 2004, the Foundation has sponsored the Hope Reading
Program organized by the renowned CommonWealth Magazine,
donating 20,000 books to children in 200 schools in remote rural
areas of Taiwan. In addition, TSMC employees traveled to read
stories to students in remote townships for stimulating their interest
in learning. Volunteers also prepared games or plays during holidays
to further encourage children’s interest in reading. The volunteers
have developed profound friendships with the school children by
working with them over the long term. In 2010 alone, TSMC Books
Reading Volunteers contributed 147 volunteers and about 1,634
hours to five rural schools in Hsinchu and Tainan. They have served
for six consecutive years and will continue to help pave the road for
these underprivileged children’s future.
● TSMC Energy Conservation Volunteer Program
Pollution becomes an increasingly serious issue with the advance of
industrialization and technology, causing rapid global warming and
triggering natural disasters. Global attention has turned to urgent
actions in energy saving and carbon emission reduction. Due to the
threats of global warming and energy consumption, environmental
protection and energy conservation have become everyone’s
concern. To show our support for environmental protection, the
TSMC Foundation helps schools in Hsinchu and Tainan reduce power
consumption by recruiting employees who have related technical
knowledge and experience as team members for this program.
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Through inspections and communications, the volunteer team offers plans for energy conservation to schools for improving their power
efficiency. The Energy-saving Volunteer was formed in 2008 by 25 TSMC employees. For over 1,200 working hours of service, the volunteer team
has suggested 168 environmental and safety strategies with potential to reduce 360 tons of carbon emissions. The professional service of the
team has been much appreciated by these schools. In 2010, the service was extended to five high schools in Hsinchu and Tainan.
● TSMC Community Volunteer Program
Volunteer Activity at the “Hsinchu Veterans Home”: In 2010, TSMC Community Volunteer Program held three kinds of activities at the Hsinchu
Veterans. Volunteers play croquet with the veterans there every two weeks in the morning, sing songs to or with veterans whose mobility is
limited, and art classes in which volunteers and the veterans work together on interesting creative projects, and hence have the opportunity to
know each other better. We hope the veterans share their wishes with us so that we may be able to make their dreams come true one day.
7.3 Social Responsibility Implementation Status as Required by the Taiwan Financial
Supervisory Commission
Item
Implemention Status
1. Implementation of Corporate Governance
(1) Corporate social responsibility policy and performance evaluation
(1) TSMC follows the ten principles of corporate social responsibility set by the
Chairman, Dr. Morris Chang, Please refer to “7. Corporate Social Responsibility” in
this report page 73-79.
(2) Dedicated organization for the promotion and execution of corporate social
(2) Each unit in TSMC incorporates corporate social responsibility principals into daily
Non-implentation and Its
Reason(s)
None
responsibility
(3) Regular training and promotion of corporate ethics among employees and the
Board of Directors, and integration with the employee performance appraisal
system
operations. All issues of stakeholders’ concerns are collected regularly or through ad
hoc communication channels. Each unit will assess and identify material issues, and
incorporate them into execution plans and daily operations.
(3) Please refer to “5.5.8 Ethics and Business Conduct” in this report page 58.
2. Sustainable Environment Development
Please see “7.1.1 Environmental Protection” in this report page 74-76.
None
(1) Commitment to improving resources utilization and the use of renewable
materials
(2) Environmental management system designed to industry characteristics.
(3) Dedicated environmental management unit or personnel
(4) Company strategy for climate change, energy conservation and greenhouse gas
reduction
3. Promotion of social welfare
(1) Compliance with labor regulations, protection of employee rights, and
(1) Please refer to “5.5 Employees” in this report page 55-58.
appropriate management measures and procedures
(2) Safety and health in working environment
(2) Please refer to “7.1.2 Safety and Health” in this report page 76-77.
(3) Disclosure of consumer rights policy, and official channel for consumer
(3) Please refer to “5.4 Customer Partnership” page 54-55.
None
complaints
(4) Collaboration with suppliers
(4) TSMC brought together fab operations, materials management, risk management,
and quality system management in an internal committee dedicated to managing
our supply chain. The focuses of the committee are risk mitigation and supply chain
improvement. The steering team, including a senior vice president and managers,
sets goals annually and reviews progress each quarter. The committee’s working
team assists suppliers in lowering production and transportation risks by sharing
risk management practices and helping suppliers improve quality systems, green
procurement, protection of the environment, and safety. At the same time, we
monitor the financial situation of key suppliers through regular communication or
public information, and the inventory of supply chain, with corresponding backup
plans. The working team holds monthly meetings to monitor progress and actively
handle suppliers’ issues. Please refer to TSMC’s website for additional information:
http://www.tsmc.com/english/csr/supply_chain_management.htm
(5) Participation in community development and charities through commercial
(5) Please refer “7. Corporate Social Responsibility” in this report page 73-79.
activities, donations or volunteers
4. Enhancement of Information Disclosure
(1) Disclosure of corporate social responsibility related information with significance
and reliability.
(2) Published corporate social responsibility report and disclosure of implementation
of corporate social responsibility
TSMC has published “Corpoarte Social Responsibility Report” since 2008, which has
been verified by third party in compliance with the requirements of Global Reporting
Initiative (GRI) G3 level A+ and AA1000AS: 2008 standard.
None
5. If the company has established its corporate social responsibility code of practice according to “Listed Companies Corporate Social Responsibility Code of Practice”, please describe the operational status and
differences.
TSMC does not establish the code for corporate social responsibility. For our corporate social responsibility operational status, please refer to “7. Corporate Social Responsibility” in this report page 73-79 and our
corporate social responsibility related information in our website: http://www.tsmc.com/english/csr/index.htm
6. Other important information to facilitate better understanding of the Company’s implementation of corporate social responsibility (e.g., environmental protection, community participation, social contribution, social
services, social welfare, consumers’ rights, human rights and safety and health):
Please refer to TSMC’s website for our corporate social responsibility implementation status: http://www.tsmc.com/english/csr/index.htm
7. Other information regarding products or “Corporate Social Responsibility Report” which are verified by certification bodies:
(1) TSMC obtained Integrated Circuit carbon footprint and Type 3 Environmental Product Label verification, which comply with PAS2050 and ISO14025 standards.
(2) TSMC Corporate Social Responsibility Report is compliant with the requirements of Global Reporting Initiative (GRI) G3 level A+ and AA1000AS:2008 standard.
79
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 the most complete set of solutions for their needs. Beginning in 2010, TSMC’s affiliates support two new lines of
business related to solid state lighting and solar business activities.
8.1 Affiliates
8.1.1 TSMC Affiliated Companies Chart
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 Corp.
Shareholding: 34.95%
Xintec Inc.
Shareholding: 40.76%
Emerging Alliance Fund, L.P.
Shareholding: 99.5%
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%
Global Unichip (BVI) Corp.
Shareholding: 100%
As of 12/31/2010
WaferTech, LLC
Shareholding: 100%
Global Unichip
Corporation-Shanghai
Shareholding: 100%
VentureTech Alliance Fund II, L.P.
Shareholding: 98%
VentureTech Alliance Holdings, LLC
Shareholding: 100%
VentureTech Alliance Fund III, L.P.
Shareholding: 99%
TSMC Lighting North America, Inc.
Shareholding: 100%
TSMC Solar North America, Inc.
Shareholding: 100%
Mutual-Pak Technology Co., Ltd.
Shareholding: 57.25%
Growth Fund Limited
Shareholding: 100%
TSMC Solar Europe B.V.
Shareholding: 100%
TSMC Solar Europe GmbH
Shareholding: 100%
81
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 to customers around the world. Several 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. Beginning in 2010, the Company also engages in the researching, developing, designing, manufacturing and selling of
LED lighting devices and related applications products and systems, and renewable energy and efficiency related technologies and products.
8.1.3 TSMC Affiliated Companies
Unit: NT(US, EUR, JPY, KRW, RMB, CAD)$ thousands
As of 12/31/2010
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 support 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 support activities
InveStar Semiconductor Development Fund, Inc.
Sep. 10, 1996
InveStar Semiconductor Development Fund, Inc. (II)
LDC
Aug. 25, 2000
Cayman Islands
Cayman Islands
US$ 4,211
Investing in new start-up technology companies
US$ 17,028
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$ 280,000
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.
Global Unichip Corporation-Shanghai
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
TSMC Solar North America, Inc.
TSMC Lighting North America, Inc.
TSMC Solar Europe B.V.
TSMC Solar Europe GmbH
May 28, 2007
Jul. 13, 2006
Jan. 22, 1998
Jun. 16, 2005
Feb. 02, 2004
May 08, 2008
Feb. 20, 2009
Nov. 04, 2009
Sep. 11, 1998
Mar. 22, 2006
Jan. 10, 2001
Feb. 27, 2004
Mar. 25, 2006
May 30, 2007
Apr. 25, 2007
Sep. 03, 2010
Sep. 03, 2010
Sep. 29, 2010
Dec. 17, 2010
Ontario, Canada
CAD 2,434
Engineering support activities
Tortola, British Virgin Islands
US$ 1,284,000
Investment activities
Hsin-Chu, Taiwan
NT$ 1,335,669
Researching, developing, manufacturing, testing and
marketing of integrated circuits
Japan
U.S.A.
JPY 30,000
Consulting services in main products
US$ 1,249
Consulting services in main products
The Netherlands
EUR 100
Consulting services in main products
Tortola, British Virgin Islands
US$ 550
Investment activities
Shanghai, China
Taoyuan, Taiwan
Taipei, Taiwan
Cayman Islands
Cayman Islands
Cayman Islands
Cayman Islands
Delaware, U.S.A.
Delaware, U.S.A.
Delaware, U.S.A.
US$ 500
Consulting services in main products
NT$ 2,283,849
Wafer level chip size packaging service
NT$ 207,312
Manufacturing and selling of electronic parts and
researching, developing and testing of RFID
US$ 28,495
Investing in new start-up technology companies
US$ 35,355
Investing in new start-up technology companies
US$ 110,850
Investing in new start-up technology companies
US$ 1,700
Investing in new start-up technology companies
N/A
Investing in new start-up technology companies
US$ 1
Selling and marketing of solar related products
US$ 1
Selling and marketing of solid state lighting related products
Amsterdam, The Netherlands
EUR 100
Investing in solar related business
Hamburg, Germany
EUR 100
Selling of solar related products and providing customer
service
8.1.4 Common Shareholders of TSMC and Its Subsidiaries or Its Affiliates with Actual of Deemed Control:
None.
82
8.1.5 Rosters of Directors, Supervisors, and Presidents of TSMC’s Affiliated Companies
Unit: NT(US/EUR)$ , except shareholding
Company
TSMC North America
TSMC Europe B.V.
TSMC Japan Limited
TSMC Korea Limited
TSMC China Company Limited
TSMC Technology, Inc.
InveStar Semiconductor Development Fund,
Inc.
InveStar Semiconductor Development Fund,
Inc. (II) LDC
TSMC Development, Inc.
WaferTech, LLC
TSMC Partners, Ltd.
TSMC Design Technology Canada Inc.
TSMC Global, Ltd.
Global Unichip Corporation (GUC)
Title
Director
Director
President
Director
Director
Director
President
Director
Director
Supervisor
President
Director
Director
Chairman
Director
Director
Supervisor
President
Chairman
Director
President
Director
Director
Chairman
Director
President
Director
Director
President
Director
Director
President
Director
Director
Director
President
Director
Director
Chairman
Director
Director
Director
Director
Director
Independent Director
Independent Director
Independent Director
President
Name
Jason Chen
Rick Cassidy
Rick Cassidy
Jason Chen
Wendell Huang
Maria Marced
Maria Marced
Jason Chen
Makoto Onodera
Lora Ho
Makoto Onodera
C.C. Pan
Chih-Chun Tsai
F.C. Tseng
M.C. Tzeng
Jason Chen
Lora Ho
C.H. Chen
Lora Ho
Richard Thurston
Lora Ho
Wendell Huang
Wendell Huang
Lora Ho
Richard Thurston
Lora Ho
M.C. Tzeng
Steve Tso
Kuo-Chin Hsu
Lora Ho
Richard Thurston
Lora Ho
Cliff Hou
Sreedhar Natarajan
Richard Thurston
Cliff Hou
Lora Ho
Richard Thurston
Representative of TSMC: F.C. Tseng
Representative of TSMC: Lora Ho
Representative of TSMC: Jim Lai
Representative of TSMC: Cliff Hou
Representative of Chin Yu Investment Ltd.: W.S. Hu
Representative of Chuang Yi Investment Ltd.:
K.C. Shih
C.W. Jen
W.C. Liu
W.Y. Wang
Jim Lai
As of 12/31/2010
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 Partners, Ltd. holds 1,000 shares
-
TSMC Partners, Ltd. holds 4,087,876 share
-
TSMC Partners, Ltd. holds 16,531,637 shares
-
-
-
TSMC Partners, Ltd. holds 1,000 shares
-
-
-
TSMC Development, Inc.holds 293,636,833
shares
-
-
-
TSMC holds 988,268,244 shares
-
-
-
-
TSMC Partners, Ltd. holds 2,300,000 shares
-
-
TSMC holds 1,284 shares
46,687,859 shares
46,687,859 shares
47,174,644 shares
46,687,859 shares
1,391,531 shares
5,218,765 shares
-
-
-
486,785 shares
-
-
-
100%
-
-
-
-
100%
-
-
-
-
100%
-
-
100%
-
-
-
-
-
(100%)
-
-
-
100%
-
97.09%
-
97.09%
-
-
-
100%
-
-
-
100%
-
-
-
100%
-
-
-
-
100%
-
-
100%
34.95%
34.95%
35.32%
34.95%
1.04%
3.91%
-
-
-
0.36%
(Continued)
83
Company
Global Unichip Japan Co., Ltd.
Global Unichip Corporation-NA
Global Unichip Europe B.V.
Global Unichip (BVI) Corp.
Global Unichip Corporation-Shanghai
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
TSMC Lighting North America, Inc.
TSMC Solar North America, Inc.
TSMC Solar Europe B.V.
TSMC Solar Europe GmbH
Title
Director
Director
Director
Supervisor
President
Director
Director
President
Director
Director
Director
Director
Director
Director
President
Chairman
Director
Director
Director
Director
Supervisor
Supervisor
President
Chairman
Director
Director
Supervisor
President
None
None
None
None
None
Director
Director
President
Director
Director
President
Director
Director
Director
Director
Director
Director
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
James Cheng
Jim Lai
C.C. Hsieh
Chu Lung
Representative of TSMC: J.B. Chen
Representative of TSMC: C.C.Wei
Representative of TSMC: Lora Ho
Re presentative of OmniVision Investment Holding
Inc.: Shaw Hong
Tzun Eing Chen
Re presentative of VisEra Holding Company:
Cheng Ho
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-Kai Tsang
Wei-Pong Lin
Lewis Hwan
None
None
None
None
None
Lora Ho
Richard Thurston
Rick Tsai
Lora Ho
Richard Thurston
Rick Tsai
Lora Ho
Richard Thurston
Rick Tsai
Lora Ho
Richard Thurston
Goetz Bendele
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
-
-
-
-
(GUC’s investment US$500,000)
93,081,225 shares
93,081,225 shares
93,081,225 shares
9,616,150 shares
1,614,985 shares
36,502,320 shares
36,502,320 shares
368,813 shares
810,600 shares
1,963,000 shares
11,867,600 shares
30,000 shares
1,963,000 shares
(TSMC’s investment US$27,954,767)
(TSMC’s investment US$32,394,351)
(TSMC’s investment US$109,638,001)
(VentureTech Alliance Fund III, L.P.’s investment
US$1,700,000)
None
-
-
-
TSMC holds 1,000 shares
-
-
-
TSMC holds 1,000 shares
-
-
TSMC holds 200 shares
-
-
-
-
TSMC holds 200 shares
-
-
-
-
-
100%
-
-
-
100%
-
(100%)
-
-
100%
-
-
-
-
(100%)
40.76%
40.76%
40.76%
4.21%
0.71%
15.98%
15.98%
0.24%
3.91%
9.47%
57.25%
0.14%
9.47%
(99.5%)
(98%)
(99%)
(100%)
(100%)
-
-
-
100%
-
-
-
100%
-
-
100%
-
-
-
-
100%
84
660,935
514,747.01
16,593
660,935
584,922
2,181
10,490
(705)
(50)
(7,761)
573,390
(56,837)
2,564
122,449
10,978
604,501
1,407
10,601
(706)
(8,022)
(7,991)
505,260
(59,222)
2,345
120,613
6.53
2.34
4.77
4.56
2,345.00
13.25
N/A
(14.59)
N/A
2.21
(2.86)
N/A
N/A
N/A
N/A
N/A
8.1.6 Operational Highlights of TSMC Affiliated Companies (Note)
Unit: NT$ 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 12/31/2010
TSMC North America
TSMC Europe B.V.
TSMC Japan Limited
TSMC Korea Limited
334,048
30,090,852
27,073,597
3,017,255
222,966,697
287,068
206,178
18.74
4,065
112,050
10,840
290,747
210,259
22,864
112,963
59,947
1,935
177,784
150,312
20,929
454,544
266,447
19,390
49,959
12,064
1,770
38,890
194,450.68
4,704
2,709
783.99
33.87
N/A
TSMC China Company Limited
14,150,966
19,041,086
14,764,464
4,276,622
8,935,261
1,443,914
1,385,770
TSMC Technology, Inc.
InveStar Semiconductor Development Fund, Inc.
InveStar Semiconductor Development Fund, Inc.
(II) LDC
TSMC Development, Inc.
WaferTech, LLC
TSMC Partners, Ltd.
0.03
127,880
517,106
352,950
768,364
427,418
52,984
95,151
156
299,966
673,213
427,262
551,645
355,896
235,315
26,269
282,280
156,896
25,446
25,445.91
281,659
156,265
68.90
9.45
0.03
7,837,921
(586)
7,838,507
1,949,300
1,947,540
1,946,954
1,946,953.64
8,503,040
6,083,306
781,952
5,301,354
7,825,894
1,906,096
1,916,070
30,011,730
33,565,775
-
33,565,775
2,747,026
2,313,672
2,313,672
TSMC Design Technology Canada Inc.
74,014
132,982
TSMC Global, Ltd.
38,992,512
43,785,942
20,196
75,399
112,786
43,710,543
182,522
693,597
Global Unichip Corporation
Global Unichip Japan Co., Ltd.
Global Unichip Corporation-NA
Global Unichip Europe B.V.
Global Unichip (BVI) Corp.
Global Unichip Corporation-Shanghai
1,335,669
4,670,382
1,487,095
3,183,287
10,271,392
11,205
37,930
4,065
16,702
15,184
18,510
61,698
4,061
9,134
11,929
3,176
1,186
147
-
4,105
15,334
60,512
3,914
9,134
7,824
45,792
224,510
1,764
-
22,312
Xintec Inc.
2,283,849
5,464,912
1,459,161
4,005,751
3,962,254
Mutual-Pak Technology Co., Ltd.
Emerging Alliance Fund, L.P.
207,312
865,336
97,316
311,854
VentureTech Alliance Fund II, L.P.
1,073,661
1,080,671
VentureTech Alliance Fund III, L.P.
3,366,293
2,774,876
Growth Fund Limited
51,626
25,681
VentureTech Alliance Holdings, LLC
TSMC Solar North America, Inc.
TSMC Lighting North America, Inc.
TSMC Solar Europe B.V.
TSMC Solar Europe GmbH
-
30
30
4,065
4,065
-
45,209
3,037
23,971
4,065
14,412
6,015
1,806
-
-
-
18,682
-
-
407
82,904
305,839
1,078,865
-
73,324
189,076
2,774,876
(195,331)
(247,276)
(247,276)
25,681
-
26,527
3,037
23,971
3,658
-
-
-
-
-
-
(4,008)
(4,008)
-
-
(35,503)
(35,513)
(35,512.58)
-
-
-
-
(433)
(421)
-
(2,166.23)
(2,105.46)
*Except TSMC Japan Limited, TSMC Europe B.V., TSMC Korea Limited, TSMC Design Technology Canada Inc., Global Unichip Japan Co., Ltd., Global Unichip (BVI) Corp., TSMC Technology, Inc., Global Unichip Europe B.V., Global
Unichip Corporation-Shanghai, Mutual-Pak Technology Co., Ltd., Emerging Alliance Fund, L.P., Growth Fund Limited, VentureTech Alliance Holdings, LLC, and TSMC Solar Europe GmbH, 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 = $30.3680 NT, $1 EUR = $46.6500 NT, $1 JPY = $0.3735 NT, $1 RMB = $4.6085 NT, $1 KRW = $0.0271 NT, $1 CAD= $30.4100 NT
Foreign exchange rates for income statement amounts are as follows: $1 USD = $31.5252 NT, $1 EUR = $42.0165 NT, $1 JPY = $0.3604 NT, $1 RMB = $4.6573 NT, $1 KRW = $0.0274 NT, $1 CAD = $30.6565 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 2010 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 2010 and as of the
Date of this Annual Report
The competent authorities determined that TSMC’s personnel management procedures were incomplete and therefore issued fines totalling of
NT$138,000. After communicating with the authorities, TSMC has been completing relevant remedial measures.
8.3.3 Any Events in 2010 and as of the Date of this Annual Report that Had Significant Impacts on
Shareholders’ Right or Security Prices as Stated in Item 2 Paragraph 2 of Article 36 of Securities and
Exchange Law of Taiwan
After the Board Meeting of February 15, 2011, TSMC publicly announced that, as part of TSMC’s strategic planning, the Board of Directors is also
considering the formation of two wholly-owned subsidiaries for solid state lighting and solar businesses.
8.3.4 Other Necessary Supplement: None.
85
TABLE OF CONTENTS
1. Condensed Balance Sheet
2. Condensed Statement of Income
3. Financial Analysis
4. Auditors’ Opinions from 2006 to 2010
5. Audit Committee’s Report
6. Financial Difficulties
2
3
4
6
6
6
7. Financial Statements for the Years Ended
7
December 31, 2010 and 2009 and
Independent Auditors’ Report
8. Consolidated Financial Statements for the
46
Years Ended December 31, 2010 and 2009
and Independent Auditors’ Report
9. U.S. GAAP Financial Information
94
1. Condensed Balance Sheet
1.1 Condensed Balance Sheet from 2006 to 2010 (Unconsolidated)
1.2 Condensed Balance Sheet from 2006 to 2010 (Consolidated)
Unit: NT$ thousands
Unit: NT$ thousands
Item
Current Assets
2006
2007
2008
2009
2010
Item
2006
2007
2008
2009
2010
193,676,010
174,299,286
179,849,479
185,831,537
192,234,282
Current Assets
260,317,168
249,822,329
252,618,431
259,803,748
261,519,317
Long-term Investments
137,378,205
123,891,153
124,184,663
118,427,813
117,913,756
Long-term Investments
53,895,151
36,461,325
39,981,515
37,845,503
39,775,528
Fixed Assets
Other Assets
Current Liabilities
Before Distribution
After Distribution
228,235,359
234,564,558
219,282,502
254,751,526
366,854,299
14,295,330
19,017,626
17,242,603
18,415,746
24,237,329
42,905,154
43,800,810
53,099,467
72,571,095
118,022,260
125,252,816
124,798,894
129,975,779
150,279,215
*
Fixed Assets
Other Assets
Current Liabilities
Before Distribution
After Distribution
254,094,190
260,252,187
243,645,350
273,674,787
388,444,023
19,178,650
24,329,385
22,671,293
23,372,182
29,190,036
46,860,531
48,706,007
56,806,756
79,133,288
123,191,113
129,208,193
129,704,091
133,683,068
156,841,408
*
Long-term Liabilities
14,175,271
14,001,462
5,431,252
4,916,390
4,500,000
Long-term Liabilities
22,873,542
24,284,470
16,191,041
11,388,479
12,050,755
Other Liabilities
Capital Stock
Capital Surplus
Retained Earnings
Before Distribution
After Distribution
8,523,195
6,878,949
5,651,417
4,856,425
4,572,488
258,296,879
264,271,037
256,254,373
259,027,066
259,100,787
54,107,498
53,732,682
49,875,255
55,486,010
55,698,434
197,124,532
218,864,571
170,053,667
181,882,682
265,779,571
109,687,478
133,414,062
92,664,846
104,174,562
*
Other Liabilities
Capital Stock
Capital Surplus
Retained Earnings
Before Distribution
After Distribution
8,612,970
7,189,178
5,546,325
5,125,905
4,982,631
258,296,879
264,271,037
256,254,373
259,027,066
259,100,787
54,107,498
53,732,682
49,875,255
55,486,010
55,698,434
197,124,532
218,864,571
170,053,667
181,882,682
265,779,571
109,687,478
133,414,062
92,664,846
104,174,562
*
Cumulative Transaction Adjustments
(1,191,165)
(1,072,853)
481,158
(1,766,667)
(6,543,163)
Cumulative Transaction Adjustments
(1,191,165)
(1,072,853)
481,158
(1,766,667)
(6,543,163)
Unrealized Gain/Loss on Financial
Instruments
561,615
680,997
(287,342)
453,621
109,289
Total Assets
Total Liabilities
Before Distribution
After Distribution
Total Equity
Before Distribution
After Distribution
*Pending for shareholders’ meeting resolution
573,584,904
551,772,623
540,559,247
577,426,622
701,239,666
65,603,620
64,681,221
64,182,136
82,343,910
127,094,748
147,951,282
145,679,305
141,058,448
160,052,030
*
507,981,284
487,091,402
476,377,111
495,082,712
574,144,918
425,633,622
406,093,318
399,500,799
417,374,592
*
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 for shareholders’ meeting resolution
561,615
680,997
(287,342)
453,621
109,289
587,485,159
570,865,226
558,916,589
594,696,220
718,928,904
78,347,043
80,179,655
78,544,122
95,647,672
140,224,499
160,694,705
161,177,739
155,420,434
173,355,792
*
507,981,284
487,091,402
476,377,111
495,082,712
574,144,918
425,633,622
406,093,318
399,500,799
417,374,592
*
1,156,832
3,594,169
3,995,356
3,965,836
4,559,487
509,138,116
490,685,571
480,372,467
499,048,548
578,704,405
426,790,454
409,687,487
403,496,155
421,340,428
*
2
2. Condensed Statement of Income
2.1 Condensed Statement of Income from 2006 to 2010 (Unconsolidated)
Unit: NT$ thousands (Except EPS: NT$)
2.2 Condensed Statement of Income from 2006 to 2010 (Consolidated)
Unit: NT$ thousands (Except EPS: NT$)
Item
Net Sales
Gross Profit
2006
2007
2008
2009
2010
313,881,635
313,647,644
321,767,083
285,742,868
406,963,312
Item
Net Sales
2006
2007
2008
2009
2010
317,407,171
322,630,596
333,157,660
295,742,239
419,537,911
149,718,400
137,159,314
138,177,615
126,475,970
196,989,302
Gross Profit
155,810,090
142,350,211
141,749,561
129,328,611
207,053,591
Income from Operations
126,299,859
112,252,047
106,290,232
94,522,353
154,846,508
Income from Operations
127,264,694
111,721,907
104,435,368
91,961,886
159,175,335
Non-operating Income and Gains
11,562,877***
11,105,792***
6,725,625
4,121,509
15,907,968
Non-operating Income and Gains
9,839,081***
11,933,803
10,821,449
5,653,548
13,136,072
Non-operating Expenses and Losses
3,056,237***
2,606,433***
2,257,039
3,662,840
1,464,272
Non-operating Expenses and Losses
3,741,567***
2,013,684
3,784,571
2,152,787
2,041,012
3,382,868
2,634,636
2,728,892
1,117,374
661,200
584,736
355,056
142,026
764,027
214,641
Interest Revenue
Interest Expense
134,806,499
120,751,406
110,758,818
94,981,022
169,290,204
127,255,917
109,177,093
99,933,168
89,217,836
161,605,009
Income from Operations of Continued
Segments - before Tax
Income from Operations of Continued
Segments - after Tax
4,542,149
5,651,700
5,373,823
2,600,925
1,665,193
890,602
842,242
614,988
391,479
425,356
133,362,208
121,642,026
111,472,246
95,462,647
170,270,395
125,588,497
109,932,400
100,523,237
89,466,223
162,281,930
127,009,731
109,177,093
99,933,168
89,217,836
161,605,009
Net Income
127,195,246
109,932,400
100,523,237
89,466,223
162,281,930
Interest Revenue
Interest Expense
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
4.93*
4.70**
-
4.14*
4.04**
-
3.86*
3.84**
-
3.45*
3.45
-
6.24*
-
-
* Based on weighted average shares outstanding in each year
** Retroactively adjusted for stock dividends for earning year 2006 to earning year 2008 and profit sharing to employees in stock for earning year 2006 to earning
year 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
127,009,731
109,177,093
99,933,168
89,217,836
161,605,009
4.93*
4.70**
-
4.14*
4.04**
-
3.86*
3.84**
-
3.45*
3.45
-
6.24*
-
-
* Based on weighted average shares outstanding in each year
** Retroactively adjusted for stock dividends for earning year 2006 to earning year 2008 and profit sharing to employees in stock for earning year 2006 to earning
year 2007.
*** Certain accounts have been reclassified to conform to year 2008 classifications.
3
3. Financial Analysis
3.1 Financial Analysis from 2006 to 2010 (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)
Diluted Earnings Per Share (NT$) (Note)
Cash Flow
Cash Flow Ratio (%)
Leverage
Cash Flow Adequacy Ratio (%)
Cash Flow Reinvestment Ratio (%)
Operating Leverage
Financial Leverage
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
2010
18.12
157.73
162.88
140.07
789.71
10.93
33.40
9.44
38.67
16.89
1.11
0.58
25.31
30.23
59.76
65.34
39.71
6.24
6.23
188.12
109.98
11.20
2.17
1.00
Analysis of Deviation over 20% for 2010 vs. 2009:
1. The debt ratio increased by 27% as a result of an increase of current liabilities, mainly due to increases in both short-term loans and payables to contractors and equipment suppliers.
2. The current ratio decreased by 36% and quick ratio decreased by 39%, primarily due to an increase in current liabilities.
3. The return on total assets increased by 58% and return on equity increased by 65%, primarily due to an increase in net income.
4. The operating income to paid-in capital ratio increased by 64%, mainly due to an increase in operating income, which was driven by the growth of gross profit.
5. The pre-tax income to paid-in capital ratio increased by 78%, primarily due to an increase in pre-tax income.
6. The net margin increased by 27%, as a result of an increase in net income.
7. The basic and diluted earnings per share both increased by 81%, mainly due to an increase in net income.
8. The cash flow reinvestment ratio increased by 60%, as a result of an increase in cash provided by operating activities.
Note: Retroactively adjusted for stock dividends for earning year 2006 to earning year 2008 and profit sharing to employees in stock for earning year 2006 to earning year 2007.
*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 Outstanding
(3) Average Inventory Turnover
4
3.2 Financial Analysis from 2006 to 2010 (Consolidated)
Capital Structure Analysis
Debt Ratio (%)
Liquidity Analysis
Long-term Fund to Fixed Assets (%)
Current Ratio (%)
Quick Ratio (%)
Times Interest Earned (Times)
Operating Performance Analysis
Average Collection Turnover (Times)
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 Ratio (%)
Cash Flow Adequacy Ratio (%)
Cash Flow Reinvestment Ratio (%)
Operating Leverage
Financial Leverage
Profitability Analysis
Cash Flow
Leverage
Industry Specific Key Performance Indicator
Billing Utilization Rate (%)
Advanced Technologies (0.13-micron and below) Percentage of Wafer Sales (%)
Sales Growth (%)
Net Income Growth (%)
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
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
2010
19.50
152.08
212.29
187.57
401.30
10.57
34.54
8.62
42.36
17.23
1.08
0.58
24.77
30.23
61.43
65.72
38.68
6.24
6.23
186.28
113.91
11.13
2.12
1.00
93 (Note2)
88 (Note2)
76 (Note2)
101 (Note2)
55
1.6
-14.0
64
3.3
-8.5
67
-11.2
-10.7
72
41.9
81.1
Analysis of Deviation over 20% for 2010 vs. 2009:
1. The debt ratio increased by 21%, as a result of an increase of current liabilities, mainly due to increases in both short-term loans and payables to contractors and
equipment suppliers.
2. The current ratio decreased by 35% and quick ratio decreased by 38%, primarily due to an increase in current liabilities.
3. The times interest earned increased by 64%, primarily due to an increase in income before tax.
4. The return on total assets increased by 59% and return on equity increased by 65%, primarily due to an increase in net income.
5. The operating income to paid-in capital ratio increased by 73%, mainly due to an increase in operating income, which was driven by the growth of gross profit.
6. The pre-tax income to paid-in capital ratio increased by 78%, primarily due to an increase in pre-tax income.
7. The net margin increased by 28%, as a result of an increase in net income.
8. The basic earnings per share and diluted earnings per share both increased by 81%, mainly due to an increase in net income.
9. The cash flow reinvestment increased by 61%, as a result of an increase in cash provided by operating activities.
10. The billing utilization rate increased by 33% and sales growth and net income growth increased, as a result of the overall growth in industry and
customer demand.
Note 1: Retroactively adjusted for stock dividends for earning year 2006 to earning year 2008 and profit sharing
to employees in stock for earning year 2006 to earning year 2007.
Note 2: Capacity includes wafers committed by Vanguard.
*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
2. Liquidity Analysis
(1) Current Ratio
(2) Quick Ratio
= 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
(5) Net Margin
(6) Earnings Per Share
5. Cash Flow
(1) Cash Flow Ratio
= Net Income / Net Sales
= (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
Sum of Capital Expenditures, Inventory Additions, and
Cash Dividend
(3) Cash Flow Reinvestment Ratio
= (Cash Provided by Operating Activities - Cash
(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
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)
5
4. Auditors’ Opinions from 2006 to 2010
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 2010 and as of the date of this Annual
Report: None.
Year
2006
2007
2008
2009
2010
CPA
Hung-Wen Huang, Ming-Cheng Chang
Hung-Wen Huang, Ming-Cheng Chang
Hung-Peng Lin, Shu-Chieh Huang
Hung-Peng Lin, Shu-Chieh Huang
Audit 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
Hung-Peng Lin, Shu-Chieh Huang
An Unqualified Opinion
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
The Board of Directors has prepared the Company’s 2010 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 15, 2011
6
7. Financial Statements for the Years Ended December 31, 2010 and 2009 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, 2010 and 2009, 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, 2010 and 2009,
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 Statement of Financial Accounting Standards
No. 10, “Accounting for Inventories.”
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 year ended December 31, 2010 on which we have issued an unqualified opinion and as of and for
the year ended December 31, 2009 on which we have issued an unqualified opinion with an explanatory
paragraph relating to the adoption of the newly revised Statement of Financial Accounting Standards No.
10, “Accounting for Inventories.”
January 24, 2011
7
Taiwan Semiconductor Manufacturing Company Limited
BALANCE SHEETS
DECEMBER 31, 2010 AND 2009
(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)
Available-for-sale financial assets (Notes 2, 6 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 18)
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
2010
Amount
$ 109,511,130
-
3,918,274
4,796,589
25,733,974
22,250,905
(488,000)
(7,341,444)
1,302,281
418,206
25,646,348
5,133,775
1,352,244
192,234,282
114,977,174
1,033,049
1,405,698
497,835
117,913,756
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
%
15
-
-
1
4
3
-
(1)
-
-
4
1
-
27
17
-
-
-
17
%
20
-
-
2
4
3
-
(1)
-
-
3
1
-
32
18
1
2
-
21
128,646,942
852,733,592
11,730,537
993,111,071
(706,605,445)
80,348,673
18
122
2
142
(101)
11
124,522,047
713,426,126
10,781,099
848,729,272
(627,764,323)
33,786,577
22
123
2
147
(109)
6
Net property, plant and equipment
366,854,299
52
254,751,526
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 24)
Total other assets
1,567,756
5,456,427
7,024,183
7,154,266
8,638,749
1,420,131
17,213,146
-
1
1
1
2
-
3
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
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
2010
2009
Amount
%
Amount
%
Short-term loans (Note 14)
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 18)
Salary and bonus payable
Accrued profit sharing to employees and bonus to directors (Notes 2 and 20)
Payables to contractors and equipment suppliers
Accrued expenses and other current liabilities (Notes 16 and 23)
$ 30,908,637
7,834
10,559,283
2,574,450
7,108,869
5,287,751
10,959,469
41,992,198
8,623,769
4
-
2
-
1
1
2
6
1
$ -
-
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
Total current liabilities
118,022,260
17
72,571,095
12
LONG-TERM LIABILITIES
Bonds payable (Notes 15 and 23)
Other long-term payables (Notes 16 and 23)
Total long-term liabilities
OTHER LIABILITIES
Accrued pension cost (Notes 2 and 17)
Guarantee deposits (Note 27)
Deferred credits (Notes 2 and 24)
Total other liabilities
Total liabilities
CAPITAL STOCK - NT$10 PAR VALUE (Note 20)
Authorized: 28,050,000 thousand shares
Issued: 25,910,078 thousand shares in 2010
25,902,706 thousand shares in 2009
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 and 23)
Cumulative translation adjustments
Unrealized gain on financial instruments
Total shareholders’ equity
4,500,000
-
4,500,000
3,824,601
747,887
-
4,572,488
127,094,748
259,100,787
55,698,434
86,239,494
1,313,047
178,227,030
265,779,571
(6,543,163)
109,289
(6,433,874)
574,144,918
-
-
-
1
-
-
1
18
37
8
12
-
26
38
(1)
-
(1)
82
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)
495,082,712
1
-
1
1
-
-
1
14
45
10
13
-
18
31
-
-
-
86
100
TOTAL
$ 701,239,666
100
$ 577,426,622
100
TOTAL
$ 701,239,666
100
$ 577,426,622
The accompanying notes are an integral part of the financial statements.
(With Deloitte & Touche audit report dated January 24, 2011)
8
Taiwan Semiconductor Manufacturing Company Limited
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)
GROSS SALES (Notes 2 and 24)
$ 418,666,448
$ 299,471,214
NON-OPERATING EXPENSES AND LOSSES
2010
2009
Amount
%
Amount
%
2010
2009
Amount
%
Amount
%
SALES RETURNS AND ALLOWANCES (Notes 2 and 8)
11,703,136
13,728,346
NET SALES
406,963,312
100
285,742,868
100
COST OF SALES (Notes 3, 9, 19 and 24)
GROSS PROFIT
UNREALIZED GROSS PROFIT FROM AFFILIATES (Note 2)
REALIZED GROSS PROFIT
OPERATING EXPENSES (Notes 19 and 24)
Research and development
General and administrative
Marketing
Total operating expenses
INCOME FROM OPERATIONS
NON-OPERATING INCOME AND GAINS
Equity in earnings of equity method investees, net (Notes 2 and 10)
Settlement income (Note 27)
Interest income
Technical service income (Notes 24 and 27)
Valuation gain on financial instruments, net (Notes 2, 5 and 23)
Others (Notes 2 and 24)
Total non-operating income and gains
209,921,268
197,042,044
52,742
196,989,302
27,623,299
11,681,756
2,837,739
42,142,794
154,846,508
7,111,443
6,939,764
764,027
446,746
312,862
333,126
15,907,968
52
48
-
48
7
3
-
10
38
2
2
-
-
-
-
4
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
375,118
587,151
576,951
4,121,509
56
44
-
44
7
3
1
11
33
-
1
-
-
-
-
1
(Continued)
Loss on disposal of property, plant and equipment (Note 2)
Interest expense
Casualty loss (Note 9)
Foreign exchange loss, net (Note 2)
Equity in losses of equity method investees, net (Notes 2 and 10)
Others (Note 2)
$ 838,750
214,641
190,992
58,737
-
161,152
Total non-operating expenses and losses
INCOME BEFORE INCOME TAX
INCOME TAX EXPENSE (Notes 2 and 18)
1,464,272
169,290,204
7,685,195
-
-
-
-
-
-
-
42
2
$ 58,242
142,026
-
630,455
2,695,720
136,397
3,662,840
94,981,022
5,763,186
NET INCOME
$ 161,605,009
40
$ 89,217,836
-
-
-
-
1
-
1
33
2
31
EARNINGS PER SHARE (NT$, Note 22)
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 24, 2011)
2010
2009
Before
Income Tax
After
Income Tax
Before
Income Tax
After
Income Tax
$ 6.53
$ 6.53
$ 6.24
$ 6.23
$ 3.68
$ 3.67
$ 3.45
$ 3.44
(Concluded)
9
Taiwan Semiconductor Manufacturing Company Limited
STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009
(In Thousands of New Taiwan Dollars, Except Dividends Per Share)
Capital Stock - Common Stock
Retained Earnings
Others
Shares
(In Thousands)
Amount
Capital Surplus
Legal Capital
Reserve
Special Capital
Reserve
Unappropriated
Earnings
Total
Cumulative
Translation
Adjustments
Unrealized
Gain (Loss) on
Financial
Instruments
Total
Shareholders’
Equity
BALANCE, JANUARY 1, 2009
25,625,437
$ 256,254,373
$ 49,875,255
$ 67,324,393
$ 391,857
$ 102,337,417
$ 170,053,667
$ 481,158
$ (287,342)
$ 476,377,111
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
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 shareholders’ equity 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
-
-
-
-
-
-
-
-
-
-
-
BALANCE, DECEMBER 31, 2009
25,902,706
259,027,066
55,486,010
77,317,710
-
(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
-
-
(76,876,312)
-
7,494,988
-
89,217,836
115,418
(2,247,825)
260,533
14,014
726,949
104,564,972
181,882,682
(1,766,667)
453,621
495,082,712
Appropriations of prior year’s earnings
Legal capital reserve
Special capital reserve
Cash dividends to shareholders - NT$3.00 per share
Net income in 2010
Adjustment arising from changes in percentage of ownership in equity
method investees
Translation adjustments
Issuance of stock from exercising employee stock options
Valuation loss on available-for-sale financial assets
Net change in shareholders’ equity from equity method investees
-
-
-
-
-
-
7,372
-
-
-
-
-
-
-
-
73,721
-
-
-
-
-
-
(17,885)
-
171,103
-
59,206
8,921,784
-
-
-
-
1,313,047
-
-
(8,921,784)
(1,313,047)
(77,708,120)
161,605,009
-
-
(77,708,120)
161,605,009
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(4,776,496)
-
-
-
-
-
-
-
-
-
-
(441,978)
97,646
-
-
(77,708,120)
161,605,009
(17,885)
(4,776,496)
244,824
(441,978)
156,852
BALANCE, DECEMBER 31, 2010
25,910,078
$ 259,100,787
$ 55,698,434
$ 86,239,494
$ 1,313,047
$ 178,227,030
$ 265,779,571
$ (6,543,163)
$ 109,289
$ 574,144,918
The accompanying notes are an integral part of the financial statements.
(With Deloitte & Touche audit report dated January 24, 2011)
10
2010
2009
$ 161,605,009
$ 89,217,836
Proceeds from return of capital by investees
Increase in deferred charges
Decrease (increase) in refundable deposits
Increase in other assets
2010
2009
$ -
(1,538,301)
(5,940,633)
(1,004,581)
$ 27,753
(1,347,228)
21,621
-
Taiwan Semiconductor Manufacturing Company Limited
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009
(In Thousands of New Taiwan Dollars)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization
Unrealized gross profit from affiliates
Amortization of premium/discount 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 on disposal of financial assets carried at cost
Equity in losses (earnings) of equity method investees, net
Cash dividends received from equity method investees
Loss (gain) on disposal of property, plant and equipment and other
assets, net
Settlement income from receiving equity securities
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
Accrued expenses and other current liabilities
Accrued pension cost
Deferred credits
83,366,121
52,742
18,611
-
-
1,263
(7,111,443)
422,490
761,298
(4,434,364)
(373,253)
189,577
(3,192,201)
(2,366,385)
57,000
(1,242,188)
85,830
904,157
(6,816,132)
(445,797)
624,608
535,108
(1,652,251)
(3,389,548)
4,188,131
265,241
17,425
(47,873)
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)
Net cash provided by operating activities
222,023,176
155,902,046
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions of:
Property, plant and equipment
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
(182,335,032)
-
(8,262,519)
(480)
-
15,943,000
3,370
387,735
(86,970,843)
(10,803,805)
(320,443)
(1,411)
1,037,370
6,293,000
18,828
71,850
(Continued)
Net cash used in investing activities
(182,747,441)
(91,973,308)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in short-term loans
Repayment of bonds payable
Decrease in guarantee deposits
Proceeds from exercise of employee stock options
Cash dividends
30,908,637
-
(253,489)
244,824
(77,708,120)
-
(8,000,000)
(477,776)
260,533
(76,876,312)
Net cash used in financing activities
(46,808,148)
(85,093,555)
NET DECREASE IN CASH AND CASH EQUIVALENTS
(7,532,413)
(21,164,817)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
117,043,543
138,208,360
CASH AND CASH EQUIVALENTS, END OF YEAR
$ 109,511,130
$ 117,043,543
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid
Income tax paid
INVESTING 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
Increase in other financial assets
Nonmonetary exchange trade-out price
Cash received
$ 200,892
$ 9,640,396
$ 351,803
$ 7,791,196
$ 195,950,918
(13,491,140)
(124,746)
$ 182,335,032
$ 1,872,880
(1,142,108)
(218,291)
(124,746)
$ 387,735
$ 108,592,471
(21,620,819)
(809)
$ 86,970,843
$ 64,390
8,269
-
(809)
$ 71,850
NON-CASH FINANCING ACTIVITIES
Current portion of other long-term payables (under accrued expenses and
other current liabilities)
$ 718,637
$ 769,144
The accompanying notes are an integral part of the financial statements.
(With Deloitte & Touche audit report dated January 24, 2011)
(Concluded)
11
Taiwan Semiconductor Manufacturing Company Limited
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009
(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 design of integrated circuits and other semiconductor devices and the manufacturing
of masks. Beginning in 2010, the Company also engages in the researching, developing, designing,
manufacturing and selling of LED lighting devices and related applications products and systems, and
renewable energy and efficiency related technologies and products. 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, 2010 and 2009, the Company had 33,232 and 22,292 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.
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 due to their short term nature.
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 overseas publicly traded stock is determined using the closing prices at the end of the year.
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.
12
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.
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 other allowances 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.
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
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 and Assets Leased to Others
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.
13
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.
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 patent and
others. The amounts are amortized over the following periods: Technology license fees - the estimated life of
the technology or the term of the technology transfer contract; software and system design costs - 3 years;
patent and others - the economic life or contract period. 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 expense 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 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.
which is the year subsequent to the year the earnings are generated.
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.
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.
4. CASH AND CASH EQUIVALENTS
Cash and deposits in banks
Repurchase agreements collateralized by government bonds
$ 108,735,942
775,188
$ 114,023,307
3,020,236
December 31
2010
2009
Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.
$ 109,511,130
$ 117,043,543
Income tax on unappropriated earnings at a rate of 10% is expensed in the year of shareholder approval
14
5. FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS
7. HELD-TO-MATURITY FINANCIAL ASSETS
Trading financial assets
Cross currency swap contracts
Trading financial liabilities
Forward exchange contracts
December 31
2010
2009
$ -
$ 181,743
Corporate bonds
Structured time deposits
Government bonds
Current portion
December 31
2010
$ 6,202,287
-
-
6,202,287
(4,796,589)
2009
$ 12,266,311
7,000,000
2,897,587
22,163,898
(9,944,843)
$ 7,834
$ -
$ 1,405,698
$ 12,219,055
The Company entered into derivative contracts during the years ended December 31, 2010 and 2009 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.
Structured time deposits categorized as held-to-maturity financial assets consisted of the following:
Principal Amount
Interest Receivable
Range of Interest Rates
Maturity Date
December 31, 2009
Outstanding forward exchange contracts consisted of the following:
Maturity Date
Contract Amount (In Thousands)
Callable domestic deposits
$ 7,000,000
$ 4,308
0.36% - 0.95%
July 2010 to August
2011 (redeemed by the
issuer from February
2010 to July 2010)
December 31, 2010
Sell NT$/Buy JPY
January 2011 to February 2011
NT$814,882/JPY2,278,420
8. ALLOWANCES FOR DOUBTFUL RECEIVABLES, SALES RETURNS AND OTHERS
Movements of the allowance for doubtful receivables were as follows:
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
January 2010 to February 2010
US$750,000/NT$24,201,706
0.24% - 0.70%
0.00% - 0.38%
For the years ended December 31, 2010 and 2009, changes in fair value related to derivative financial
instruments recognized in earnings was a net gain of NT$312,862 thousand and NT$587,151 thousand,
respectively.
6. AVAILABLE-FOR-SALE FINANCIAL ASSETS
Overseas publicly traded stock
Corporate bonds
Current portion
December 31
2010
$ 3,918,274
1,033,049
4,951,323
(3,918,274)
2009
$ -
1,046,672
1,046,672
-
$ 1,033,049
$ 1,046,672
Balance, beginning of year
Provision
Write-off
Balance, end of year
Years Ended December 31
2010
2009
$ 431,000
59,268
(2,268)
$ 436,746
238,061
(243,807)
$ 488,000
$ 431,000
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
2010
2009
$ 8,583,632
11,703,136
(12,945,324)
$ 5,868,582
13,728,346
(11,013,296)
$ 7,341,444
$ 8,583,632
15
9. INVENTORIES
Finished goods
Work in process
Raw materials
Supplies and spare parts
December 31
2010
$ 4,623,812
18,128,677
1,681,525
1,212,334
2009
$ 2,355,232
14,230,318
1,420,466
824,200
$ 25,646,348
$ 18,830,216
Write-down of inventories to net realizable value in the amount of NT$792,951 thousand and NT$199,732
thousand, respectively, were included in the cost of sales for the years ended December 31, 2010 and 2009.
Inventory losses related to earthquake damage in the amount of NT$190,992 thousand were classified
under non-operating expenses and losses for the year ended December 31, 2010.
10. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD
TSMC Global Ltd. (TSMC Global)
TSMC Partners, Ltd. (TSMC Partners)
Vanguard International Semiconductor Corporation (VIS)
Systems on Silicon Manufacturing Company Pte Ltd. (SSMC)
Motech Industries Inc. (Motech)
TSMC China Company Limited (TSMC China)
TSMC North America
VentureTech Alliance Fund III, L.P. (VTAF III)
Xintec Inc. (Xintec)
Global UniChip Corporation (GUC)
VentureTech Alliance Fund II, L.P. (VTAF II)
Emerging Alliance Fund, L.P. (Emerging Alliance)
TSMC Europe B.V. (TSMC Europe)
TSMC Japan Limited (TSMC Japan)
TSMC Solar North America, Inc. (TSMC Solar NA)
TSMC Solar Europe B.V. (TSMC Solar Europe)
TSMC Korea Limited (TSMC Korea)
TSMC Lighting North America, Inc. (TSMC Lighting NA)
December 31
2010
2009
Carrying
Amount
% of
Ownership
Carrying
Amount
% of
Ownership
$ 43,710,543
33,565,775
9,422,452
7,120,714
6,733,369
4,252,270
2,873,888
2,769,423
1,645,201
1,113,516
1,063,057
304,310
177,784
150,312
26,527
23,971
20,929
3,133
100
100
38
39
20
100
100
99
41
35
98
99
100
100
100
100
100
100
$ 45,397,256
32,545,619
9,365,232
6,157,141
-
2,961,043
2,723,727
1,309,615
1,475,014
983,126
1,122,810
305,866
159,467
135,663
-
-
18,519
-
100
100
37
39
-
100
100
98
41
35
98
99
100
100
-
-
100
-
In February 2010, the Company subscribed to 75,316 thousand shares of Motech through a private
placement for NT$6,228,661 thousand; after the subscription, the Company’s percentage of ownership in
Motech was 20%. Transfer of the aforementioned common shares within three years is prohibited according
to the related regulations.
For the years ended December 31, 2010 and 2009, equity in earnings/losses of equity method investees was
a net gain of NT$7,111,443 thousand and a net loss of NT$2,695,720 thousand, respectively. Related equity
in earnings/losses of equity method investees were determined based on the audited financial statements,
except those of Emerging Alliance, TSMC Europe, TSMC Japan and TSMC Korea for the year ended
December 31, 2010 and those of TSMC Europe, TSMC Japan and TSMC Korea for the year ended December
31, 2009. The Company believes that, had Emerging Alliance, TSMC Europe, TSMC Japan and TSMC Korea’s
financial statements been audited, any adjustments arising would have no material effect on the Company’s
financial statements.
As of December 31, 2010 and 2009, the quoted market price of publicly traded stocks in unrestricted
investments accounted for using the equity method (VIS and GUC) were NT$14,993,626 thousand and
NT$18,027,990 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
Additions
Amortization
Balance, end of year
Years Ended December 31
2010
2009
$ 1,429,118
2,055,660
(980,282)
$ 2,053,253
-
(624,135)
$ 2,504,496
$ 1,429,118
Movements of the difference allocated to goodwill were as follows:
Balance, beginning of year
Additions
Balance, end of year
$ 114,977,174
$ 104,660,098
11. FINANCIAL ASSETS CARRIED AT COST
For the renewable energy and efficiency related businesses development, the Company established
wholly-owned subsidiaries, TSMC Solar NA, TSMC Solar Europe and TSMC Lighting NA, in the third quarter
of 2010.
For the year ended December 31, 2010, the Company increased its investment in VTAF III for the amount of
NT$1,862,278 thousand, and the Company’s percentage of ownership in VTAF III increased from 98% to
99%.
Non-publicly traded stocks
Mutual funds
16
Years Ended December 31
2010
2009
$ 1,061,885
353,680
$ 1,061,885
-
$ 1,415,565
$ 1,061,885
December 31
2010
2009
$ 338,584
159,251
$ 338,584
163,404
$ 497,835
$ 501,988
12. PROPERTY, PLANT AND EQUIPMENT
Year Ended December 31, 2010
Balance,
Beginning of Year
Year Ended December 31, 2009
Additions
Amortization
Balance,
End of Year
Balance,
Beginning of
Year
Additions
Disposals
Reclassification
Balance,
End of Year
Technology license fees
Software and system design costs
Patent and others
$ 3,786,251
1,559,857
1,055,353
$ -
861,783
485,445
$ (806,450)
(774,667)
(275,887)
$ 2,979,801
1,646,973
1,264,911
$ 124,522,047
713,426,126
10,781,099
848,729,272
$ 4,262,592
141,033,304
1,639,082
$ 146,934,978
$ (135,497)
(1,867,880)
(689,202)
$ (2,692,579)
$ (2,200)
142,042
(442)
$ 139,400
$ 128,646,942
852,733,592
11,730,537
993,111,071
14. SHORT-TERM LOANS
$ 6,401,461
$ 1,347,228
$ (1,857,004)
$ 5,891,685
Cost
Buildings
Machinery and equipment
Office equipment
Accumulated depreciation
Buildings
Machinery and equipment
Office equipment
Advance payments and construction in progress
73,525,160
545,693,910
8,545,253
627,764,323
33,786,577
$ 7,951,678
72,528,436
906,714
$ 81,386,828
$ 49,015,940
$ (128,466)
(1,867,476)
(689,164)
$ (2,685,106)
$ (2,453,844)
$ (495)
140,337
(442)
$ 139,400
$ -
81,347,877
616,495,207
8,762,361
706,605,445
80,348,673
$ 366,854,299
Year Ended December 31, 2009
Additions
Disposals
Reclassification
Balance,
End of Year
$ 254,751,526
Balance,
Beginning of
Year
Cost
Buildings
Machinery and equipment
Office equipment
Accumulated depreciation
Buildings
Machinery and equipment
Office equipment
Advance payments and construction in progress
$ 114,014,588
635,008,261
9,748,869
758,771,718
$ 10,520,371
80,824,102
1,219,459
$ 92,563,932
$ (12,978)
(2,408,802)
(187,163)
$ (2,608,943)
$ 66
2,565
(66)
$ 2,565
$ 124,522,047
713,426,126
10,781,099
848,729,272
65,351,514
484,046,160
7,849,580
557,247,254
17,758,038
$ 8,186,551
63,395,862
882,718
$ 72,465,131
$ 16,028,539
$ (12,971)
(1,750,677)
(186,979)
$ (1,950,627)
$ -
$ 66
2,565
(66)
$ 2,565
$ -
$ 219,282,502
73,525,160
545,693,910
8,545,253
627,764,323
33,786,577
$ 254,751,526
No interest was capitalized during the years ended December 31, 2010 and 2009.
13. DEFERRED CHARGES, NET
Balance,
Beginning of Year
Year Ended December 31, 2010
Additions
Amortization
Balance,
End of Year
Technology license fees
Software and system design costs
Patent and others
$ 2,979,801
1,646,973
1,264,911
$ -
1,327,183
211,118
$ (701,969)
(898,221)
(373,369)
$ 2,277,832
2,075,935
1,102,660
$ 5,891,685
$ 1,538,301
$ (1,973,559)
$ 5,456,427
Unsecured loans:
US $864,000 thousand and EUR114,900 thousand, due in January 2011, and annual interest at
0.38% - 0.65%
$ 30,908,637
December 31, 2010
15. BONDS PAYABLE
Domestic unsecured bonds:
Issued in January 2002 and repayable in January 2012, 3.00% interest payable annually
$ 4,500,000
$ 4,500,000
December 31
2010
2009
16. OTHER LONG-TERM PAYABLES
The Company’s long-term payables mainly resulted from license agreements for certain semiconductor-
related patents.
As of December 31, 2010, the future payment of other long-term payable (classified under accrued expenses
and other current liabilities) due in 2011 amounted to NT$718,637 thousand.
17. 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$964,063 thousand and NT$608,731
thousand for the years ended December 31, 2010 and 2009, 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.
17
Pension information on the defined benefit plan is summarized as follows:
18. INCOME TAX
a. Components of net periodic pension cost for the year
a. A reconciliation of income tax expense based on “income before income tax” at the statutory rates and
income tax currently payable was as follows:
Service cost
Interest cost
Projected return on plan assets
Amortization
Net periodic pension cost
2010
2009
$ 129,552
145,151
(39,939)
1,061
$ 166,460
149,297
(56,170)
29,134
$ 235,825
$ 288,721
b. Reconciliation of funded status of the plans and accrued pension cost at December 31, 2010 and 2009
Income tax expense based on “income before income tax” at statutory
rate (17% and 25% for 2010 and 2009, respectively)
$ 28,779,335
$ 23,745,246
Years Ended December 31
2010
2009
Tax effect of the following:
Tax-exempt income
Temporary and permanent differences
Others
Additional tax at 10% on unappropriated earnings
Income tax credits used
(16,669,784)
(704,252)
-
127,489
(4,823,988)
(8,621,941)
3,124,974
247,050
-
(9,914,570)
2010
2009
Income tax currently payable
$ 6,708,800
$ 8,580,759
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, 2010 and 2009
Discount rate used in determining present values
Future salary increase rate
Expected rate of return on plan assets
d. Contributions to the Fund for the year
e. Payments from the Fund for the year
$ 189,047
5,390,113
5,579,160
3,634,495
9,213,655
(2,853,535)
6,360,120
(82,991)
154,738
(2,607,266)
$ 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)
$ 3,824,601
$ 3,807,176
$ 208,176
$ 135,501
2010
1.75%
3.00%
2.50%
2009
2.25%
3.00%
1.50%
2010
2009
$ 209,459
$ 191,554
2010
2009
$ 19,991
$ 37,801
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
Temporary differences
Valuation allowance
Income tax expense
c. Net deferred income tax assets consisted of the following:
Current deferred income tax assets
Investment tax credits
Temporary differences
Allowance for sales returns and others
Unrealized gain/loss on financial instruments
Others
Noncurrent deferred income tax assets
Investment tax credits
Temporary differences
Depreciation
Others
Valuation allowance
Years Ended December 31
2010
2009
$ 6,708,800
980,428
369,220
$ 8,580,759
(1,155,113)
15,921
(7,243,473)
16,790
6,853,430
(1,119,523)
41,456
(600,314)
$ 7,685,195
$ 5,763,186
December 31
2010
2009
$ 4,182,893
$ 3,210,254
624,023
87,735
239,124
794,507
-
58,649
$ 5,133,775
$ 4,063,410
$ 17,792,321
$ 11,521,487
1,981,915
32,792
(12,652,762)
1,909,152
132,336
(5,799,332)
$ 7,154,266
$ 7,763,643
18
Effective in May 2009 and June 2010, the Article 5 of the Income Tax Law of the Republic of China was
amended, in which the income tax rate of profit-seeking enterprises would be reduced from 25% to 20%
and from 20% to 17%, respectively. The last amended income tax rate of 17% is retroactively applied on
January 1, 2010. The Company recalculated its deferred tax assets in accordance with the new amended
Article and adjusted the resulting difference as an income tax expense in 2010 and 2009, respectively.
Under Article 10 of the Statute for Industrial Innovation (SII) legislated and effective in May 2010, a
profit-seeking enterprise may deduct up to 15% of its research and development expenditures from its
income tax payable for the year in which these expenditures are incurred, but this deduction should not
exceed 30% of the income tax payable for that year. This incentive is retroactive to January 1, 2010 and
effective until December 31, 2019.
g. The profits generated from the following projects are exempt from income tax for a five-year period:
Construction and expansion of 2001
Construction and expansion of 2003
Construction and expansion of 2004
Construction and expansion of 2005
Tax-exemption Period
2006 to 2010
2007 to 2011
2008 to 2012
2010 to 2014
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.
19. LABOR COST, DEPRECIATION AND AMORTIZATION
d. Integrated income tax information:
The balance of the imputation credit account as of December 31, 2010 and 2009 was NT$1,669,533
thousand and NT$369,265 thousand, respectively.
The estimated and actual creditable ratios for distribution of earnings of 2010 and 2009 were 4.70% and
9.85%, 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.
e. All earnings generated prior to December 31, 1997 have been appropriated.
f. As of December 31, 2010, investment tax credits consisted of the following:
Law/Statute
Item
Statute for Upgrading Industries
Purchase of machinery and
equipment
Total Creditable
Amount
Remaining
Creditable Amount
Expiry Year
$ 3,212,913
6,033,745
6,361,790
$ 2,512,408
6,033,745
6,361,790
2012
2013
2014
Statute for Upgrading Industries
Research and development
expenditures
Statute for Upgrading Industries
Personnel training expenditures
$ 15,608,448
$ 14,907,943
$ 1,000,000
1,054,194
2,691,517
4,328,009
$ -
-
2,691,517
4,328,009
2010
2011
2012
2013
$ 9,073,720
$ 7,019,526
$ 19,293
30,624
17,121
$ -
30,624
17,121
2011
2012
2013
$ 67,038
$ 47,745
Statute for Industrial Innovation
Research and development
$ 2,049,996
$ -
2010
expenditures
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, 2010
Classified as
Cost of Sales
Classified as
Operating Expenses
Total
$ 24,222,823
973,364
765,872
566,425
228,218
63,384
$ 17,849,735
550,731
433,932
229,247
133,376
26,614
$ 42,072,558
1,524,095
1,199,804
795,672
361,594
89,998
$ 26,820,086
$ 19,223,635
$ 46,043,721
$ 76,219,816
$ 1,242,824
$ 5,150,747
$ 730,735
$ 81,370,563
$ 1,973,559
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
20. SHAREHOLDERS’ EQUITY
As of December 31, 2010, 1,096,448 thousand ADSs of the Company were traded on the NYSE. The
number of common shares represented by the ADSs was 5,482,242 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)
19
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.
The Company no longer has supervisors since January 1, 2007. The required duties of supervisors are being
fulfilled by the Audit Committee.
Capital surplus consisted of the following:
Additional paid-in capital
From merger
From convertible bonds
From long-term investments
Donations
December 31
2010
$ 23,628,908
22,805,390
8,893,190
370,891
55
2009
$ 23,457,805
22,805,390
8,893,190
329,570
55
$ 55,698,434
$ 55,486,010
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:
a. Legal capital reserve at 10% of the profits left over, until the accumulated legal capital reserve equals the
Company’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 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 accrued profit sharing to employees as a charge to earnings of certain percentage of net
income during the year amounted to NT$10,908,338 thousand and NT$6,691,338 thousand for the years
ended December 2010 and 2009, respectively; bonuses to directors were accrued with an estimate based
on historical experience. If the actual amounts subsequently resolved by the shareholders differ from the
estimated amounts, the differences are recorded in the year of shareholders’ resolution as a change in
accounting estimate. If profit sharing is resolved to be distributed to employees in stock, the number of
shares is determined by dividing the amount of profit sharing by the closing price (after considering the
effect of dividends) of the shares on the day preceding the shareholders’ meeting.
20
The appropriation for legal capital reserve shall be made until the reserve equals the Company’s paid-in
capital. The reserve may be used to offset a deficit, or be distributed as dividends and bonuses for the
portion in excess of 50% of the paid-in capital if the Company has no unappropriated earnings and the
reserve balance has exceeded 50% of the Company’s paid-in capital. The Company Law also prescribes
that, when the reserve has reached 50% of the Company’s paid-in capital, up to 50% of the reserve may be
transferred to capital.
A special capital reserve equivalent to the net debit balance of the other components of shareholders’ equity
(for example, cumulative translation adjustments and unrealized loss on financial instruments, but excluding
treasury stock) shall be made from unappropriated earnings pursuant to existing regulations promulgated by
the Securities and Futures Bureau (SFB). Any special reserve appropriated may be reversed to the extent that
the net debit balance reverses.
The appropriations of earnings for 2009 and 2008 had been approved in the shareholders’ meetings held on
June 15, 2010 and June 10, 2009, respectively. The appropriations and dividends per share were as follows:
Appropriation of Earnings
Dividends Per Share (NT$)
For Fiscal
Year 2009
For Fiscal
Year 2008
For Fiscal
Year 2009
For Fiscal
Year 2008
Legal capital reserve
Special capital reserve
Cash dividends to shareholders
Stock dividends to shareholders
$ 8,921,784
1,313,047
77,708,120
-
$ 9,993,317
(391,857)
76,876,312
512,509
$ 87,942,951
$ 86,990,281
$ 3.00
-
$ 3.00
0.02
TSMC’s profit sharing to employees to be paid in cash and bonus to directors in the amounts of
NT$6,691,338 thousand and NT$67,692 thousand for 2009, respectively, and profit sharing to employees
to be 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 15, 2010 and June 10, 2009, respectively. The profit sharing to
employees in stock of 141,870 thousand shares for 2008 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 9, 2010 and February 10, 2009 and same amount had been charged against earnings of 2009 and
2008, respectively.
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.
As of January 24, 2011, the Board of Directors has not resolved the appropriation for earnings of 2010.
The information about the appropriations of profit sharing to employees and bonus to directors is available
at the Market Observation Post System website.
Under the Integrated Income Tax System that became effective on January 1, 1998, the 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.
21. 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 exercised. 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.
Options of the plans that had never been granted or had been granted but subsequently canceled had
expired as of December 31, 2010.
Information about outstanding options for the years ended December 31, 2010 and 2009 was as follows:
Year ended December 31, 2010
Balance, beginning of year
Options exercised
Options canceled
Balance, end of year
Year ended December 31, 2009
Balance, beginning of year
Options granted
Options exercised
Options canceled
Balance, end of year
Number of Options
(In Thousands)
Weighted-average
Exercise Price (NT$)
28,810
(7,372)
(1)
21,437
36,234
175
(7,272)
(327)
28,810
$ 32.4
33.2
50.1
32.3
34.0
34.0
35.8
46.5
33.5
The number of outstanding options and exercise prices have been adjusted to reflect the distribution of
earnings in accordance with the plans.
As of December 31, 2010, information about outstanding options was as follows:
Range of Exercise Price
(NT$)
$21.7 - $30.5
38.0 - 50.1
Options Outstanding
Number of Options
(In Thousands)
Weighted-average Remaining
Contractual Life (Years)
16,438
4,999
21,437
2.20
3.91
2.60
Weighted-average
Exercise Price (NT$)
$ 28.2
45.6
32.3
As of December 31, 2010, all of the above outstanding options were exercisable.
No compensation cost was recognized under the intrinsic value method for the years ended December 31,
2010 and 2009. Had the Company used the fair value based method to evaluate the options using the
Black-Scholes model, the assumptions at the various grant dates and pro forma results of the Company for
the years ended December 31, 2010 and 2009 would have been 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
22. EARNINGS PER SHARE
EPS is computed as follows:
Year ended December 31, 2010
Basic EPS
1.00% - 3.44%
43.77% - 46.15%
3.07% - 3.85%
5 years
Years Ended December 31
2010
2009
$ 161,605,009
161,470,030
$ 89,217,836
88,838,182
$ 6.24
6.23
6.23
6.23
$ 3.45
3.44
3.44
3.43
Amounts (Numerator)
Before
Income Tax
After
Income Tax
Number of
Shares
(Denominator)
(In Thousands)
EPS (NT$)
Before
Income Tax
After
Income Tax
Earnings available to common shareholders
Effect of dilutive potential common shares
$ 169,290,204
-
$ 161,605,009
-
25,905,832
14,262
$ 6.53
$ 6.24
Diluted EPS
Ea rnings available to common shareholders (including
effect of dilutive potential common shares)
$ 169,290,204
$ 161,605,009
25,920,094
$ 6.53
$ 6.23
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
77,319
$ 3.68
$ 3.45
Diluted EPS
Ea rnings available to common shareholders (including
effect of dilutive potential common shares)
$ 94,981,022
$ 89,217,836
25,913,121
$ 3.67
$ 3.44
21
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 considered for the effect of
retroactive adjustments. This adjustment caused each of the basic and diluted after income tax EPS for the
year ended December 31, 2009 to remain at NT$3.45 and NT$3.44, respectively.
23. DISCLOSURES FOR FINANCIAL INSTRUMENTS
a. Fair values of financial instruments were as follows:
4) Financial assets carried at cost have no quoted prices in an active market and entail an unreasonably
high cost to obtain verifiable fair values. Therefore, no fair value is presented.
5) Fair value of the bonds payable was based on their quoted market price.
6) Fair value of other long-term payables was based on the present value of expected cash flows, which
approximates their carrying amount.
c. The changes in fair value of derivatives contracts which were outstanding as of December 31, 2010 and
2009 estimated using valuation techniques were recognized as a net loss of NT$7,834 thousand and a
net gain of NT$181,743 thousand, respectively.
d. As of December 31, 2010 and 2009, financial assets exposed to fair value interest rate risk were
NT$7,235,336 thousand and NT$23,392,313 thousand, respectively, financial liabilities exposed to fair
value interest rate risk were NT$35,416,471 thousand and NT$4,500,000 thousand, respectively.
December 31
2010 and 2009 were as follows:
e. Movements of the unrealized gains or losses on financial instruments for the years ended December 31,
2010
Carrying
Amount
Fair Value
2009
Carrying
Amount
Fair Value
Assets
Financial assets at fair value through profit or loss
Available-for-sale financial assets
Held-to-maturity financial assets
Financial assets carried at cost
$ -
4,951,323
6,202,287
497,835
$ -
4,951,323
6,278,054
-
$ 181,743
1,046,672
22,163,898
501,988
$ 181,743
1,046,672
22,251,517
-
Liabilities
Financial liabilities at fair value through profit or loss
Bonds payable
Other long-term payables (including current portion)
7,834
4,500,000
718,637
7,834
4,538,660
718,637
-
4,500,000
1,185,534
-
4,574,979
1,185,534
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, short-term loans, 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, 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.
Balance, beginning of year
Recognized directly in shareholders’ equity
Year Ended December 31, 2010
From
Available-for-sale
Financial Assets
Equity-method
Investments
Total
$ 46,672
(441,978)
$ 406,949
97,646
$ 453,621
(344,332)
Balance, end of year
$ (395,306)
$ 504,595
$ 109,289
Year Ended December 31, 2009
From
Available-for-sale
Financial Assets
Equity-method
Investments
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
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 market exchange rate fluctuations of
foreign-currency assets and liabilities; therefore, the market exchange rate 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 and
overseas publicly traded stock; therefore, the fluctuations in market interest rates and market price will
result in changes in fair values of these debt securities.
22
Transactions with the aforementioned parties, other than those disclosed in other notes, are summarized as
follows :
2010
2009
Amount
%
Amount
%
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. 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 was not significant.
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.
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
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
For the year
Sales
TSMC North America
Others
Purchases
TSMC China
WaferTech
VIS
SSMC
Others
Manufacturing expenses
Xintec (rent and outsourcing)
VisEra (outsourcing)
VIS (rent)
Marketing expenses - commission
TSMC Europe
TSMC Japan
TSMC China
Others
Research and development expenses
TSMC Technology (primarily consulting fee)
TSMC Canada (primarily consulting fee)
VIS (primarily rent)
Others
Sales of property, plant and equipment and other assets
TSMC China
Xintec
Others
VisEra Technology Company, Ltd. (VisEra), an indirect investee accounted for using equity method.
Purchases of property, plant and equipment and intangible assets
e. Others
Related parties over which the Company has control or exercises significant influence but with which the
Company had no material transactions.
VIS
TSMC China
WaferTech
$ 220,529,792
3,071,549
$ 223,601,341
$ 8,748,101
7,878,260
4,937,617
4,521,046
39,099
$ 26,124,123
$ 313,397
44,488
9,845
$ 367,730
$ 415,765
266,194
59,180
19,318
$ 760,457
$ 547,838
181,943
12,017
66,074
$ 807,872
$ 1,409,862
3,841
80,495
$ 1,494,198
$ 109,855
66,337
9,624
$ 185,816
53
1
54
18
16
10
10
-
54
-
-
-
-
15
9
2
1
27
2
1
-
-
3
75
-
5
80
-
-
-
-
$ 161,251,368
2,231,343
$ 163,482,711
$ 3,787,113
5,560,707
3,312,656
3,537,659
-
$ 16,198,135
$ 36,101
35,737
-
$ 71,838
$ 325,463
233,855
10,302
14,424
$ 584,044
$ 409,686
157,527
1,264
47,987
$ 616,464
$ 595
58,450
263
$ 59,308
$ -
-
-
$ -
54
1
55
12
18
10
11
-
51
-
-
-
-
16
12
-
1
29
2
1
-
-
3
1
91
-
92
-
-
-
-
23
2010
Amount
%
2009
Amount
Non-operating income and gains
VIS (primarily technical service income, see Note 27e)
SSMC (primarily technical service income, see Note 27d)
TSMC China
Others
$ 267,370
198,218
49,738
9,655
$ 524,981
2
1
-
-
3
$ 224,740
141,488
184,626
263
$ 551,117
12
Compensation of directors and management personnel:
%
5
3
4
-
Salaries, incentives and special compensation
Bonus
Years Ended December 31
2010
2009
$ 773,134
578,343
$ 572,464
395,313
$ 1,351,477
$ 967,777
As of December 31
Receivables
TSMC North America
Others
Other receivables
TSMC China
VIS
SSMC
Others
Payables
TSMC China
WaferTech
SSMC
VIS
TSMC Technology
Others
Deferred debits (credits)
TSMC China
$ 25,579,259
154,715
99
1
$ 22,203,242
338,531
98
2
$ 25,733,974
100
$ 22,541,773
100
$ 1,170,407
70,798
53,788
7,288
90
5
4
1
$ 111,103
81,663
39,629
13,608
45
33
16
6
$ 1,302,281
100
$ 246,003
100
$ 895,193
568,685
430,235
428,797
88,292
163,248
35
22
17
17
3
6
$ 481,500
561,165
238,741
529,060
109,220
119,656
24
27
12
26
5
6
$ 2,574,450
100
$ 2,039,342
100
$ 27,327
2
$ (7,970)
(17)
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 paid monthly
and the related expenses were classified under manufacturing expenses.
The Company leased certain office space and facilities from VIS. The lease terms and prices were determined
in accordance with mutual agreements. The office rental was prepaid by the Company and the facilities
rental was paid quarterly. The related rental expenses were classified under research and development
expenses and manufacturing expenses.
The Company deferred the gains and losses (classified under deferred debits and deferred credits) derived
from sales of property, plant and equipment to TSMC China, and then recognized such gains and losses
(classified under non-operating gains and losses) over the depreciable lives of the disposed assets.
24
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, 2010
includes estimated profit sharing to employees and bonus to directors of the Company that relate to
2010 but will be paid in the following year. The actual amount will be finalized and approved upon the
resolution of the shareholders’ meeting in 2011. The total compensation for the year ended December 31,
2009 included the bonuses appropriated from earnings of 2009 which was approved by the shareholders’
meeting held in 2010.
25. PLEDGED OR MORTGAGED ASSETS
As of December 31, 2010 and 2009, the Company had pledged time deposits of NT$25,864 thousand
and NT$824,797 thousand (classified as other financial assets) as collateral for land lease agreements and
customs duty guarantee, respectively.
26. SIGNIFICANT LONG-TERM LEASES
The Company leases several parcels of land from the Science Park Administration. These operating leases
expire on various dates from April 2011 to July 2030 and can be renewed upon expiration.
As of December 31, 2010, future lease payments were as follows:
Year
2011
2012
2013
2014
2015
2016 and thereafter
Amount
$ 414,444
412,977
388,729
375,171
365,007
3,078,295
$ 5,034,623
27. SIGNIFICANT COMMITMENTS AND CONTINGENCIES
Significant commitments and contingencies of the Company as of December 31, 2010, 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.
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, 2010, the
Company had a total of US$22,653 thousand of guarantee deposits.
Investment Commission of Ministry of Economic Affairs and acquired the above mentioned common
shares on July 5, 2010, representing approximately 7.37% of Semiconductor Manufacturing International
Corporation’s total shares outstanding, and recognized settlement income amounting to NT$4,434,364
thousand.
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.
f. In August 2006, TSMC filed a lawsuit against Semiconductor Manufacturing International Corporation,
SMIC (Shanghai) and SMIC Americas (aggregately referred to as “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
TSMC in the same court alleging breach of settlement agreement, implied covenant of good faith and fair
dealing. SMIC also filed a civil action against TSMC in November 2006 with the Beijing People’s High Court
alleging defamation and breach of good faith. On June 10, 2009, the Beijing People’s High Court 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. TSMC has 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 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, conditional
upon relevant government regulatory approvals, to issue to TSMC a total of 1,789,493,218 common
shares of Semiconductor Manufacturing International Corporation and a three-year warrant to purchase
695,914,030 common shares (subject to adjustment) of Semiconductor Manufacturing International
Corporation at HK$1.30 per share (subject to adjustment). TSMC has received the approval from the
g. In June 2010, STC.UNM, the technology transfer arm of the University of New Mexico, filed a complaint
in the U.S. International Trade Commission (“USITC”) accusing the Company and one other company of
allegedly infringing a single U.S. patent. Based on this complaint, the USITC has initiated an investigation
in July 2010. The Company and STC.UNM have subsequently reached a settlement agreement and,
on November 15, 2010, filed a joint motion to terminate the investigation based on the settlement
agreement. As a result, the Administrative Law Judge (“ALJ”) assigned to the investigation has made an
initial determination to terminate the investigation based on the settlement agreement. The USITC, on
December 21, 2010, decided not to review the ALJ’s initial determination, which officially terminates this
investigation.
h. In June 2010, Keranos, LLC. filed a lawsuit in the U.S. District Court for the Eastern District of Texas
alleging that TSMC, TSMC North America, and several other leading technology companies infringe three
expired U.S. patents. The outcome of this litigation cannot be determined at this time.
i. In December 2010, Ziptronix, Inc. filed a complaint in the U.S. District Court for the Northern District
of California accusing TSMC, TSMC North America and one other company of allegedly infringing six
U.S. patents. This litigation is in its very early stages and therefore the outcome of the case cannot be
determined at this time.
28. OTHERS
The significant financial assets and liabilities denominated in foreign currencies were as follows:
December 31
2010
2009
Foreign Currency
(In Thousands)
Exchange Rate
(Note)
Foreign Currency
(In Thousands)
Exchange Rate
(Note)
Financial assets
Monetary assets
USD
EUR
JPY
Non-monetary assets
HKD
Investments accounted for using equity method
USD
EUR
JPY
RMB
Financial liabilities
Monetary liabilities
USD
EUR
JPY
$ 1,732,529
224,363
28,580,962
1,002,116
2,997,686
4,963
402,441
927,986
1,776,756
261,956
30,604,986
30.368
40.65
0.3735
3.91
30.368
40.65
0.3735
4.61
30.368
40.65
0.3735
$ 1,467,092
58,214
31,840,267
-
2,777,541
3,448
389,389
630,438
690,011
72,647
34,454,091
Note:Exchange rate represents the number of N.T. dollars for which one foreign currency could be exchanged.
32.03
46.25
0.3484
-
32.03
46.25
0.3484
4.693
32.03
46.25
0.3484
25
29. ADDITIONAL DISCLOSURES
Following are the additional disclosures required by the SFB for the Company and its investees:
a. Financing provided: Please see Table 1 attached;
b. Endorsement/guarantee provided: None;
c. Marketable securities held: Please see Table 2 attached;
Xintec entered into forward exchange contracts during the year ended December 31, 2010 to manage
exposures due to foreign exchange rate fluctuations. Outstanding forward exchange contracts as of
December 31, 2010 consisted of the following:
Sell US$/Buy NT$
January 2011 to March 2011
US$11,800/NT$353,076
Maturity Date
Contract Amount
(In Thousands)
For the year ended December 31, 2010, net gains arising from forward exchange contracts of Xintec
amounted to NT$11,005 thousand.
d. Marketable securities acquired or disposed of at costs or prices of at least NT$100 million or 20% of the
Meet the criteria for hedge accounting
paid-in capital: Please see Table 3 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 4 attached;
Xintec monitors and manages the financial risk through the analysis of business environment and
evaluation of entity’s financial risks. Further, Xintec seeks to reduce the effects of future cash flow related
interest rate exposures by primarily using derivative financial instruments.
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:
Please see Table 5 attached;
Xintec is exposed to interest rate risk because its long-term bank loans bear floating interest rates.
Accordingly, Xintec enters into interest rate sw ap contract to hedge such a cash flow interest rate risk. As
of December 31, 2010, the outstanding interest rate swap contract of Xintec consisted of the following:
Hedged Item
Hedging Financial
Instrument
Fair Value
December 31, 2010
Expected Cash Flow
Generated Period
Expected Timing for the
Recognition of Gains
or Losses from Hedge
h. Receivable from related parties amounting to at least NT$100 million or 20% of the paid-in capital: Please
Long-term bank loans
Interest rate swap contract
$ (814)
2010 to 2012
2010 to 2012
see Table 6 attached;
i. Names, locations, and related information of investees over which the Company exercises significant
influence: Please see Table 7 attached;
The adjustment to shareholders’ equity and the amount removed from shareholders’ equity and
recognized a loss of Xintec as a result of the above interest rate swap contract amounted to NT$814
thousand and NT$352 thousand for the year ended December 31, 2010, respectively.
j. Information about derivatives of investees over which the Company has a controlling interest:
k. Information on investment in Mainland China
Not meet the criteria for hedge accounting
TSMC China entered into forward exchange contracts during the year ended December 31, 2010 to
manage exposures due to foreign exchange rate fluctuations. Outstanding forward exchange contracts as
of December 31, 2010 consisted of the following:
Sell EUR/ Buy US$
Sell RMB/ Buy US$
Maturity Date
February 2011
May 2011 to June 2011
Contract Amount
(In Thousands)
EUR3,067/US$4,093
RMB529,190/US$80,000
For the year ended December 31, 2010, net losses arising from forward exchange contracts of TSMC
China amounted to NT$3,137 thousand.
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 8 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.
26
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.
b. Geographic information
The Company has no significant foreign operations. Therefore, the disclosure of geographic information is
not applicable to the Company.
c. Export sales
Area
Americas
Asia
Europe and others
Years Ended December 31
2010
2009
$ 228,283,198
86,188,861
48,906,727
$ 166,813,136
59,496,755
31,350,249
$ 363,378,786
$ 257,660,140
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
Customer A
Years Ended December 31
2010
Amount
$ 220,529,792
2009
Amount
$ 161,251,368
%
53
%
54
27
TABLE 1
Taiwan Semiconductor Manufacturing Company Limited and Investees
FINANCINGS PROVIDED
FOR THE YEAR ENDED DECEMBER 31, 2010
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)
No.
Financing Name
Financial statement
Account
Counter-party
Financing Limit for
Each Borrowing
Company
Maximum Balance
for the Period
(US$ in Thousands)
Ending Balance
(US$ in Thousands)
Interest Rate
Reason for Financing
Allowance for Bad
Debt
Collateral
Item
Value
Transaction
Amounts
Financing Company’s
Financing Amount Limits
(US$ in Thousands)
(Note 2)
1
TSMC Partners
Long-term receivables from
related parties
TSMC China
(Note 1)
$ 3,644,160
(US$ 120,000)
$ 3,644,160
(US$ 120,000)
0.25% - 0.26%
Purchase equipment
$ -
-
$ -
$ -
$ 33,565,775
Note 1: The total amount for lending to a company for funding for a short-term period shall not exceed ten percent (10%) of the net worth of TSMC Partners. In addition, the total amount lendable to any one borrower shall be no more than thirty percent (30%) of the borrower’s net worth. While offshore subsidiaries whose voting shares
are 100% owned, directly or indirectly, by TSMC will not subjected to this restriction.
Note 2: The total amount available for lending purpose shall not exceed the net worth of TSMC Partners.
28
TABLE 2
Taiwan Semiconductor Manufacturing Company Limited and Investees
MARKETABLE SECURITIES HELD
DECEMBER 31, 2010
(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
TSMC
Corporate bond
Taiwan Mobile Co., Ltd.
China Steel Corporation
Formosa Petrochemical Corporation
Taiwan Power Company
Nan Ya Plastics Corporation
Formosa Plastics Corporation
-
-
-
-
-
-
Stock
Semiconductor Manufacturing International Corporation
TSMC Global
-
Subsidiary
Available-for-sale financial assets
Held-to-maturity financial assets
〃
〃
〃
〃
Available-for-sale financial assets
In vestments accounted for using
equity method
TSMC Partners
VIS
SSMC
Motech
TSMC North America
Xintec
GUC
TSMC Europe
TSMC Japan
TSMC Solar NA
TSMC Solar Europe
TSMC Korea
TSMC Lighting NA
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
In vestee accounted for using equity
method
In vestee accounted for using equity
method
In vestee accounted for using equity
method
Subsidiary
In vestee with a controlling financial
interest
In vestee with a controlling financial
〃
〃
〃
〃
〃
〃
〃
interest
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
-
-
-
-
-
Subsidiary
Subsidiary
Subsidiary
Subsidiary
-
-
〃
〃
〃
〃
〃
〃
Financial assets carried at cost
〃
〃
Financial assets carried at cost
〃
In vestments accounted for using
equity method
〃
〃
〃
Held-to-maturity financial assets
〃
TSMC Partners
December 31, 2010
Shares/Units
(In Thousands)
Carrying Value
(US$ in Thousands)
Percentage of
Ownership (%)
Market Value or Net
Asset Value
(US$ in Thousands)
Note
-
-
-
-
-
-
$ 1,033,049
1,507,400
1,463,791
1,352,022
1,303,298
575,776
1,789,493
1
988,268
628,223
314
76,069
11,000
93,081
46,688
-
6
1
-
80
1
16,783
10,500
4,000
-
-
-
-
-
-
-
-
3,918,274
43,710,543
33,565,775
9,422,452
7,120,714
6,733,369
2,873,888
1,645,201
1,113,516
177,784
150,312
26,527
23,971
20,929
3,133
193,584
105,000
40,000
103,992
55,259
4,252,270
2,769,423
1,063,057
304,310
US$ 20,283
US$ 20,141
N/A
N/A
N/A
N/A
N/A
N/A
7
100
100
38
39
20
100
41
35
100
100
100
100
100
100
10
7
2
12
1
100
99
98
99
N/A
N/A
$ 1,033,049
1,516,479
1,472,381
1,360,403
1,347,296
581,495
3,918,274
43,710,543
33,565,775
9,297,707
6,742,565
4,685,200
2,873,888
1,632,596
5,695,919
177,784
150,312
26,527
23,971
20,929
3,133
321,548
356,893
43,977
103,992
55,259
4,278,014
2,749,807
1,057,288
304,310
US$ 21,065
US$ 21,391
(Continued)
29
Held Company Name
Marketable Securities Type and Name
Relationship with the Company
Financial Statement Account
Common stock
TSMC Development, Inc. (TSMC Development)
Subsidiary
In vestments accounted for using
equity method
VisEra Holding Company
InveStar Semiconductor Development Fund, Inc. (ISDF)
InveStar Semiconductor Development Fund, Inc. (II) LDC. (ISDF II)
TSMC Technology
TSMC Canada
Mcube Inc.
In vestee accounted for using equity
method
Subsidiary
Subsidiary
Subsidiary
Subsidiary
In vestee accounted for using equity
method
〃
〃
〃
〃
〃
〃
December 31, 2010
Shares/Units
(In Thousands)
Carrying Value
(US$ in Thousands)
Percentage of
Ownership (%)
Market Value or Net
Asset Value
(US$ in Thousands)
Note
1
US$ 403,257
100
US$ 403,257
43,000
US$ 83,057
49
US$ 83,057
4,088
16,532
1
2,300
5,333
US$ 21,523
US$ 13,660
US$ 9,878
US$ 3,714
-
97
97
100
100
70
10
US$ 21,523
US$ 13,660
US$ 9,878
US$ 3,714
-
-
In vestee accounted for using equity
In vestments accounted for using
1,000
-
method
equity method
-
-
Held-to-maturity financial assets
〃
-
-
US$ 20,215
US$ 15,000
N/A
N/A
US$ 21,391
US$ 15,075
Subsidiary
In vestments accounted for using
293,637
US$ 165,211
100
US$ 165,211
Preferred stock
Mcube Inc.
Corporate bond
GE Capital Corp.
JP Morgan Chase & Co.
Stock
WaferTech
Corporate bond
Beal Bk
Beal Bk Ssb
Cd Ally Bank
Cd Banco Popular De P R
H&R Block Bank
Common stock
RichWave Technology Corp.
Global Investment Holding Inc.
Preferred stock
Audience, Inc.
Next IO, Inc.
Optichron, Inc.
Pixim, Inc.
QST Holdings, LLC
-
-
-
-
-
-
-
-
-
-
-
-
Capital
VentureTech Alliance Holdings, LLC (VTA Holdings)
Subsidiary
Corporate bond
Beal Bk
Beal Bk Ssb
Cd Ally Bank
Cd Banco Popular De P R
H&R Block Bank
Common stock
Leadtrend
Aether Systems, Inc.
RichWave Technology Corp.
Sentelic
-
-
-
-
-
-
-
-
-
TSMC Development
Emerging Alliance
VTAF II
30
equity method
Available-for-sale financial assets
〃
〃
〃
〃
249
249
249
249
249
US$ 249
US$ 249
US$ 249
US$ 249
US$ 249
N/A
N/A
N/A
N/A
N/A
US$ 249
US$ 249
US$ 249
US$ 249
US$ 249
Financial assets carried at cost
〃
4,074
11,124
US$ 1,545
US$ 3,065
10
6
US$ 1,545
US$ 3,065
Financial assets carried at cost
〃
〃
〃
〃
In vestments accounted for using
equity method
Available-for-sale financial assets
〃
〃
〃
〃
Available-for-sale financial assets
Financial assets carried at cost
〃
〃
1,654
800
1,276
4,641
-
US$ 250
US$ 500
US$ 1,145
US$ 1,137
US$ 142
-
249
249
249
249
249
-
US$ 249
US$ 249
US$ 249
US$ 249
US$ 249
738
1,600
1,267
1,806
US$ 3,159
US$ 1,503
US$ 1,036
US$ 2,607
-
1
2
2
4
7
N/A
N/A
N/A
N/A
N/A
2
25
3
9
US$ 250
US$ 500
US$ 1,145
US$ 1,137
US$ 142
-
US$ 249
US$ 249
US$ 249
US$ 249
US$ 249
US$ 3,159
US$ 1,503
US$ 1,036
US$ 2,607
(Continued)
Held Company Name
Marketable Securities Type and Name
Relationship with the Company
Financial Statement Account
December 31, 2010
Shares/Units
(In Thousands)
Carrying Value
(US$ in Thousands)
Percentage of
Ownership (%)
Market Value or Net
Asset Value
(US$ in Thousands)
Note
Preferred stock
5V Technologies, Inc.
Aquantia
Audience, Inc.
Beceem Communications
Impinj, Inc.
Next IO, Inc.
Optichron, Inc.
Pixim, Inc.
Power Analog Microelectronics
QST Holdings, LLC
Xceive
Capital
VTA Holdings
-
-
-
-
-
-
-
-
-
-
-
Financial assets carried at cost
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
Subsidiary
In vestments accounted for using
equity method
2,890
3,974
12,378
797
475
3,795
2,847
33,347
7,027
-
4,210
US$ 2,168
US$ 3,816
US$ 2,378
US$ 1,701
US$ 1,000
US$ 953
US$ 2,825
US$ 1,878
US$ 3,383
US$ 593
US$ 1,554
-
-
VTAF III
Common stock
Mutual-Pak Technology Co., Ltd.
Subsidiary
In vestments accounted for using
11,868
US$ 2,058
equity method
Aiconn Technology Corporation
In vestee accounted for using equity
〃
5,623
US$ 546
Preferred stock
Auramicro, Inc.
BridgeLux, Inc.
Exclara, Inc.
GTBF, Inc.
InvenSense, Inc.
LiquidLeds Lighting Corp.
Neoconix, Inc.
Powervation, Ltd.
Quellan, Inc.
Silicon Technical Services, LLC
Stion Corp.
Tilera, Inc.
Validity Sensors, Inc.
Capital
Growth Fund Limited (Growth Fund)
VTA Holdings
Common stock
SiliconBlue Technologies, Inc.
Veebeam
Common stock
Integrated Memory Logic, Inc.
Memsic, Inc.
Preferred stock
IP Unity, Inc.
Sonics, Inc.
Common stock
Memsic, Inc.
Alchip Technologies Limited
Growth Fund
ISDF
ISDF II
method
-
-
-
-
-
-
-
-
-
-
-
-
-
Financial assets carried at cost
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
Subsidiary
Subsidiary
In vestments accounted for using
equity method
〃
4,694
6,113
59,695
1,154
816
1,600
3,686
380
3,106
1,055
7,347
3,890
9,340
-
-
US$ 1,408
US$ 7,781
US$ 5,897
US$ 1,500
US$ 1,000
US$ 800
US$ 4,717
US$ 5,797
US$ 369
US$ 1,208
US$ 50,000
US$ 3,025
US$ 3,456
-
Financial assets carried at cost
〃
5,107
10
US$ 762
US$ 25
Available-for-sale financial assets
〃
3,541
1,286
US$ 12,400
US$ 4,371
Financial assets carried at cost
〃
1,008
230
US$ 290
US$ 497
-
-
-
-
-
-
-
-
4
3
3
1
-
2
4
2
19
13
3
31
57
43
20
4
15
N/A
1
11
4
16
N/A
-
23
2
4
US$ 2,168
US$ 3,816
US$ 2,378
US$ 1,701
US$ 1,000
US$ 953
US$ 2,825
US$ 1,878
US$ 3,383
US$ 593
US$ 1,554
-
US$ 2,058
US$ 546
US$ 1,408
US$ 7,781
US$ 5,897
US$ 1,500
US$ 1,000
US$ 800
US$ 4,717
US$ 5,797
US$ 369
US$ 1,208
US$ 50,000
US$ 3,025
US$ 3,456
62
1
-
5
5
1
2
-
US$ 762
US$ 25
US$ 12,400
US$ 4,371
US$ 290
US$ 497
US$ 846
100
US$ 846
Available-for-sale financial assets
Financial assets carried at cost
1,072
7,520
US$ 3,645
US$ 3,664
5
14
US$ 3,645
US$ 3,664
(Continued)
31
Held Company Name
Marketable Securities Type and Name
Relationship with the Company
Financial Statement Account
December 31, 2010
Shares/Units
(In Thousands)
Carrying Value
(US$ in Thousands)
Percentage of
Ownership (%)
GUC
GUC-BVI
Xintec
TSMC Solar Europe
TSMC Global
Sonics, Inc.
Goyatek Technology, Corp.
Auden Technology MFG. Co., Ltd.
Preferred stock
FangTek, Inc.
Sonics, Inc.
Common stock
GUC-NA
GUC-Japan
GUC-BVI
GUC-Europe
Capital
Global Unichip (Shanghai) Company, Limited (GUC-Shanghai)
Capital
Compositech Ltd.
Stock
TSMC Solar Europe GmbH
Corporate bond
African Development Bank
Allstate Life Gbl Fdg Secd
Alltel Corp.
American Honda Fin Corp. Mtn
Anz National Intl Ltd.
Asian Development Bank
Astrazeneca Plc
AT+T Wireless
Australia + New Zealand Bkg
Banco Bilbao Vizcaya P R
Bank New York Inc.
Bank New York Inc. Medium
Bank of America Corp.
Bank of New York Mellon
Bank of Nova Scotia
Barclays Bank Plc
Barclays Bank Plc NY
Bbva US Senior SA Uniper
Bear Stearns Cos Inc.
Bear Stearns Cos Inc.
Bear Stearns Cos Inc. Med Term
Berkshire Hathaway Inc. Del
Bhp Billiton Fin USA Ltd.
Bk Tokyo Mitsubishi Ufj
Bmw US Capital LLC
Bnp Paribas SA
Boeing Cap Corp.
Boeing Co.
Bp Captial Markets Plc
Caterpillar Financial Se
Cellco Part/Veri Wireless
Cello Part/Veri Wirelss
-
-
-
-
-
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
-
Subsidiary
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Financial assets carried at cost
〃
〃
278
932
1,049
US$ 10
US$ 545
US$ 223
Financial assets carried at cost
〃
1,032
264
US$ 686
US$ 456
3
6
3
6
3
Note
Market Value or Net
Asset Value
(US$ in Thousands)
US$ 10
US$ 545
US$ 223
US$ 686
US$ 456
In vestments accounted for using
800
$ 58,045
100
$ 58,045
equity method
〃
〃
〃
In vestments accounted for using
equity method
Financial assets carried at cost
In vestments accounted for using
equity method
Available-for-sale financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
1
550
-
-
587
1
2,600
4,430
100
4,000
3,500
2,500
3,150
3,500
2,000
3,250
1,615
2,100
2,100
2,200
5,000
12,000
400
2,645
2,200
3,500
2,400
3,500
2,000
2,000
1,600
3,810
2,925
450
3,900
900
1,000
2,000
14,706
8,761
3,747
7,468
-
3,658
US$ 2,622
US$ 4,824
US$ 108
US$ 3,995
US$ 3,554
US$ 2,501
US$ 3,397
US$ 3,823
US$ 2,047
US$ 3,249
US$ 1,613
US$ 2,253
US$ 2,154
US$ 2,206
US$ 5,000
US$ 11,997
US$ 400
US$ 2,638
US$ 2,199
US$ 3,494
US$ 2,618
US$ 3,517
US$ 2,104
US$ 2,042
US$ 1,602
US$ 3,844
US$ 3,192
US$ 458
US$ 3,988
US$ 901
US$ 1,159
US$ 2,020
100
100
100
100
3
100
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
14,706
8,761
3,747
7,468
-
3,658
US$ 2,622
US$ 4,824
US$ 108
US$ 3,995
US$ 3,554
US$ 2,501
US$ 3,397
US$ 3,823
US$ 2,047
US$ 3,249
US$ 1,613
US$ 2,253
US$ 2,154
US$ 2,206
US$ 5,000
US$ 11,997
US$ 400
US$ 2,638
US$ 2,199
US$ 3,494
US$ 2,618
US$ 3,517
US$ 2,104
US$ 2,042
US$ 1,602
US$ 3,844
US$ 3,192
US$ 458
US$ 3,988
US$ 901
US$ 1,159
US$ 2,020
32
(Continued)
Held Company Name
Marketable Securities Type and Name
Relationship with the Company
Financial Statement Account
December 31, 2010
Shares/Units
(In Thousands)
Carrying Value
(US$ in Thousands)
Percentage of
Ownership (%)
Market Value or Net
Asset Value
(US$ in Thousands)
Note
Cie Financement Foncier
Cie Financement Foncier
Citigroup Funding Inc.
Citigroup Funding Inc.
Citigroup Inc.
Citigroup Inc.
Citigroup Inc.
Citigroup Inc.
Coca Cola Co.
Commonwealth Bank Aust
Countrywide Finl Corp.
Credit Suisse First Boston USA
Credit Suisse New York
Deutsche Bank AG NY
Dexia Credit Local
Dexia Credit Local
Dexia Credit Local S.A
Dexia Credit Local SA NY
Du Pont E I De Nemours + Co.
Ebay Inc.
Eog Resources Inc.
Finance for Danish Ind
General Elec Cap Corp.
General Elec Cap Corp.
General Elec Cap Corp.
General Elec Cap Corp.
General Electric Capital Corp.
Georgia Pwr Co.
Georgia Pwr Co.
Gmac LLC
Goldman Sachs Group Inc.
Groupe Bpce
Hewlett Packard Co.
Hewlett Packard Co.
Household Fin Corp.
HSBC Bank Plc
HSBC Fin Corp.
HSBC Fin Corp.
IBM Corp.
IBM Corp.
IBM Corp.
Intl Bk Recon + Develop
Intl Bk Recon + Develop
John Deer Capital Corp. Fdic GT
JP Morgan Chase + Co.
JP Morgan Chase + Co.
Kfw Medium Term Nts Book Entry
Kreditanstalt Fur Wiederaufbau
Lilly Eli + Co.
Lloyds Tsb Bank Plc Ser 144A
Lloyds Tsb Bank Plc Ser 144A
Macquarie Bk Ltd. Sr
Massmutual Global Fdg II Mediu
Mellon Fdg Corp.
Merck + Co. Inc.
Merck + Co. Inc.
Merrill Lynch + Co. Inc.
Met Life Glob Funding I
Metlife Inc.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Available-for-sale financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
200
4,000
16,000
7,300
1,400
800
400
5,000
4,000
2,800
4,000
2,150
3,945
2,500
6,000
4,000
4,000
5,000
825
1,375
1,500
3,800
1,000
7,000
1,000
4,000
2,000
1,000
4,000
4,600
2,000
1,150
3,000
2,030
4,330
3,400
2,315
2,900
2,300
6,800
1,500
5,000
2,000
3,500
2,500
5,000
1,950
650
1,500
4,850
5,950
3,900
4,000
3,500
4,000
2,000
4,691
500
6,500
US$ 200
US$ 4,019
US$ 16,323
US$ 7,446
US$ 1,390
US$ 814
US$ 426
US$ 5,490
US$ 4,002
US$ 2,806
US$ 4,208
US$ 2,253
US$ 4,090
US$ 2,487
US$ 5,976
US$ 3,984
US$ 3,992
US$ 4,983
US$ 886
US$ 1,361
US$ 1,501
US$ 3,799
US$ 999
US$ 7,002
US$ 1,001
US$ 4,110
US$ 1,967
US$ 1,005
US$ 4,006
US$ 4,731
US$ 1,956
US$ 1,140
US$ 3,003
US$ 2,032
US$ 4,694
US$ 3,405
US$ 2,304
US$ 3,074
US$ 2,301
US$ 6,775
US$ 1,500
US$ 5,002
US$ 2,046
US$ 3,616
US$ 2,513
US$ 5,021
US$ 1,950
US$ 664
US$ 1,548
US$ 4,857
US$ 6,009
US$ 3,975
US$ 3,955
US$ 3,475
US$ 4,032
US$ 2,077
US$ 4,647
US$ 508
US$ 6,600
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
N/A
N/A
US$ 200
US$ 4,019
US$ 16,323
US$ 7,446
US$ 1,390
US$ 814
US$ 426
US$ 5,490
US$ 4,002
US$ 2,806
US$ 4,208
US$ 2,253
US$ 4,090
US$ 2,487
US$ 5,976
US$ 3,984
US$ 3,992
US$ 4,983
US$ 886
US$ 1,361
US$ 1,501
US$ 3,799
US$ 999
US$ 7,002
US$ 1,001
US$ 4,110
US$ 1,967
US$ 1,005
US$ 4,006
US$ 4,731
US$ 1,956
US$ 1,140
US$ 3,003
US$ 2,032
US$ 4,694
US$ 3,405
US$ 2,304
US$ 3,074
US$ 2,301
US$ 6,775
US$ 1,500
US$ 5,002
US$ 2,046
US$ 3,616
US$ 2,513
US$ 5,021
US$ 1,950
US$ 664
US$ 1,548
US$ 4,857
US$ 6,009
US$ 3,975
US$ 3,955
US$ 3,475
US$ 4,032
US$ 2,077
US$ 4,647
US$ 508
US$ 6,600
(Continued)
33
Held Company Name
Marketable Securities Type and Name
Relationship with the Company
Financial Statement Account
December 31, 2010
Shares/Units
(In Thousands)
Carrying Value
(US$ in Thousands)
Percentage of
Ownership (%)
Market Value or Net
Asset Value
(US$ in Thousands)
Note
Metlife Inc.
Microsoft Corp.
Monumental Global Fdg II
Monumental Global Fdg III
Morgan Stanley
Morgan Stanley Dean Witter
Morgan Stanley for Equity
National Australia Bank
New York Life Global Fdg
Nordea Bank Fld Plc
Occidental Pete Corp.
Occidental Petroleum Cor
Ontario (Province of)
Pacific Gas + Electric
Pnc Funding Corp.
Pricoa Global Fdg I Med Term
Principal Life Income Fundings
Princoa Global Fdg I Medium
Rabobank Nederland
Royal Bk of Scotland Plc
Royal Bk of Scotland Plc
Royal Bk Scotland Plc
Royal Bk Scotlnd Grp Plc 144A
Sbc Communications Inc.
Shell International Fin
Shell International Fin
Sovereign Bancorp Fdic Gtd Tlg
State Str Corp.
Sun Life Finl Global
Sun Life Finl Global Fdg II Lp
Suncorp Metway Ltd.
Svenska Handelsbanken AB
Swedbank AB
Swedbank Foreningssparbanken A
Swedbank Hypotek AB
Teva Pharma Fin III LLC
Tiaa Global Mkts Inc.
Tiaa Global Mkts Inc. Mtn
Ubs Ag Stamford CT
Ubs Ag Stamford CT
US Central Federal Cred
Verizon Communications Inc.
Wachovia Corp.
Wachovia Corp. Global Medium
Wachovia Corp. New
Wal Mart Stores Inc.
Wal Mart Stores Inc.
Wells Fargo + Company
Westpac Banking Corp.
Westpac Banking Corp.
Westpac Banking Corp.
Wyeth
Aust + Nz Banking Group
Commonwealth Bank of Australia
Commonwealth Bank of Australia
JP Morgan Chase + Co.
Nationwide Building Society-UK Government Guarantee
Westpac Banking Corp.
Westpac Banking Corp. 12/12 Frn
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Available-for-sale financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
Held-to-maturity financial assets
〃
〃
〃
〃
〃
〃
2,000
3,250
1,500
750
1,000
8,000
2,000
1,000
2,000
2,250
3,200
1,000
2,000
2,000
2,000
1,750
1,500
5,050
5,000
4,000
5,000
2,550
9,450
2,000
4,515
3,200
2,200
6,420
4,400
1,500
8,800
2,200
2,000
1,500
4,000
4,000
2,000
1,500
2,200
800
4,000
1,500
550
5,000
1,400
4,000
3,770
2,000
3,500
2,100
4,000
3,345
20,000
25,000
25,000
35,000
8,000
25,000
5,000
US$ 2,013
US$ 3,232
US$ 1,446
US$ 729
US$ 1,036
US$ 8,524
US$ 1,996
US$ 1,019
US$ 2,049
US$ 2,241
US$ 3,700
US$ 1,004
US$ 2,038
US$ 1,999
US$ 2,000
US$ 1,724
US$ 1,483
US$ 5,011
US$ 5,000
US$ 4,002
US$ 5,052
US$ 2,589
US$ 9,516
US$ 2,106
US$ 4,536
US$ 3,248
US$ 2,260
US$ 6,417
US$ 4,332
US$ 1,496
US$ 8,982
US$ 2,253
US$ 1,998
US$ 1,536
US$ 3,993
US$ 4,016
US$ 2,141
US$ 1,631
US$ 2,199
US$ 807
US$ 4,084
US$ 1,631
US$ 545
US$ 5,141
US$ 1,398
US$ 3,964
US$ 4,325
US$ 2,007
US$ 3,514
US$ 2,110
US$ 4,005
US$ 3,657
US$ 20,000
US$ 25,000
US$ 25,000
US$ 35,067
US$ 8,000
US$ 25,000
US$ 5,000
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
N/A
N/A
US$ 2,013
US$ 3,232
US$ 1,446
US$ 729
US$ 1,036
US$ 8,524
US$ 1,996
US$ 1,019
US$ 2,049
US$ 2,241
US$ 3,700
US$ 1,004
US$ 2,038
US$ 1,999
US$ 2,000
US$ 1,724
US$ 1,483
US$ 5,011
US$ 5,000
US$ 4,002
US$ 5,052
US$ 2,589
US$ 9,516
US$ 2,106
US$ 4,536
US$ 3,248
US$ 2,260
US$ 6,417
US$ 4,332
US$ 1,496
US$ 8,982
US$ 2,253
US$ 1,998
US$ 1,536
US$ 3,993
US$ 4,016
US$ 2,141
US$ 1,631
US$ 2,199
US$ 807
US$ 4,084
US$ 1,631
US$ 545
US$ 5,141
US$ 1,398
US$ 3,964
US$ 4,325
US$ 2,007
US$ 3,514
US$ 2,110
US$ 4,005
US$ 3,657
US$ 20,146
US$ 24,888
US$ 24,730
US$ 35,148
US$ 7,996
US$ 24,555
US$ 5,009
34
(Continued)
Held Company Name
Marketable Securities Type and Name
Relationship with the Company
Financial Statement Account
December 31, 2010
Shares/Units
(In Thousands)
Carrying Value
(US$ in Thousands)
Percentage of
Ownership (%)
Market Value or Net
Asset Value
(US$ in Thousands)
Note
Agency bond
Fannie Mae
Fannie Mae
Fannie Mae
Fannie Mae
Fannie Mae
Fannie Mae
Fannie Mae
Fed Hm Ln Pc Pool 1b2830
Fed Hm Ln Pc Pool 1g0115
Fed Hm Ln Pc Pool 1g1114
Fed Hm Ln Pc Pool 1k1210
Fed Hm Ln Pc Pool 780741
Federal Farm Credit Bank
Federal Farm Credit Bank
Federal Farm Credit Bank
Federal Farm Credit Bank
Federal Home Ln Bks
Federal Home Ln Mtg Assn
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 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 Mtg Corp.
Federal Home Loan Mtg Corp.
Federal National Mort Assoc
Federal Natl Mtg Assn
Federal Natl Mtg Assn Gtd
Federal Natl Mtg Assn Gtd Remi
Federal Natl Mtg Assn Gtd Remi
Federal Natl Mtg Assn Mtn
Federal Natl Mtg Assn Remic
Federal Natl Mtge Assn
Fhr 2647 Pb
Fhr 2953 Da
Fhr 3087 Jb
Fhr 3184 Fa
Fnma Pool 745131
Fnma Pool 745688
Fnma Pool 775852
Fnma Pool 790772
Fnma Pool 819649
Fnma Pool 829989
Fnma Pool 841068
Fnma Pool 846233
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Available-for-sale financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
11,100
3,900
16,104
8,765
4,600
3,000
4,000
1,836
2,023
799
1,550
1,800
4,000
4,000
5,000
5,000
5,000
2,768
3,732
1,443
2,664
1,915
1,778
422
246
1,298
3,324
2,450
5,000
6,800
8,000
1,400
1,400
10,000
8,400
5,000
5,183
710
535
471
2,346
1,917
436
1,276
1,080
1,428
2,561
3,284
1,520
4,096
1,743
1,384
340
1,162
1,876
1,626
482
1,729
US$ 11,096
US$ 3,861
US$ 16,102
US$ 8,763
US$ 4,589
US$ 2,994
US$ 4,003
US$ 1,922
US$ 2,086
US$ 837
US$ 1,613
US$ 1,879
US$ 3,984
US$ 3,994
US$ 5,004
US$ 5,008
US$ 5,046
US$ 2,810
US$ 3,727
US$ 1,505
US$ 2,793
US$ 1,969
US$ 1,849
US$ 423
US$ 247
US$ 1,341
US$ 3,453
US$ 2,491
US$ 5,007
US$ 6,817
US$ 8,040
US$ 1,399
US$ 1,399
US$ 9,998
US$ 8,397
US$ 4,998
US$ 5,168
US$ 718
US$ 539
US$ 471
US$ 2,425
US$ 1,988
US$ 437
US$ 1,304
US$ 1,094
US$ 1,506
US$ 2,595
US$ 3,466
US$ 1,602
US$ 4,084
US$ 1,803
US$ 1,440
US$ 343
US$ 1,215
US$ 1,950
US$ 1,695
US$ 505
US$ 1,800
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
N/A
US$ 11,096
US$ 3,861
US$ 16,102
US$ 8,763
US$ 4,589
US$ 2,994
US$ 4,003
US$ 1,922
US$ 2,086
US$ 837
US$ 1,613
US$ 1,879
US$ 3,984
US$ 3,994
US$ 5,004
US$ 5,008
US$ 5,046
US$ 2,810
US$ 3,727
US$ 1,505
US$ 2,793
US$ 1,969
US$ 1,849
US$ 423
US$ 247
US$ 1,341
US$ 3,453
US$ 2,491
US$ 5,007
US$ 6,817
US$ 8,040
US$ 1,399
US$ 1,399
US$ 9,998
US$ 8,397
US$ 4,998
US$ 5,168
US$ 718
US$ 539
US$ 471
US$ 2,425
US$ 1,988
US$ 437
US$ 1,304
US$ 1,094
US$ 1,506
US$ 2,595
US$ 3,466
US$ 1,602
US$ 4,084
US$ 1,803
US$ 1,440
US$ 343
US$ 1,215
US$ 1,950
US$ 1,695
US$ 505
US$ 1,800
(Continued)
35
December 31, 2010
Shares/Units
(In Thousands)
Carrying Value
(US$ in Thousands)
Percentage of
Ownership (%)
Market Value or Net
Asset Value
(US$ in Thousands)
Note
1,609
1,349
2,000
100
1,785
3,485
1,009
4,271
1,890
10,420
4,500
5,750
7,855
4,300
4,010
1,897
2,259
4,417
3,050
1,692
1,968
3,732
41,700
7,000
1,000
5,250
11,100
15,000
US$ 1,684
US$ 1,417
US$ 2,055
US$ 103
US$ 1,875
US$ 3,483
US$ 1,016
US$ 4,640
US$ 1,965
US$ 10,411
US$ 4,502
US$ 5,764
US$ 7,859
US$ 4,316
US$ 4,014
US$ 1,943
US$ 2,274
US$ 4,496
US$ 3,285
US$ 1,780
US$ 1,928
US$ 3,731
US$ 42,042
US$ 7,079
US$ 1,015
US$ 5,212
US$ 10,976
US$ 15,000
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$ 1,684
US$ 1,417
US$ 2,055
US$ 103
US$ 1,875
US$ 3,483
US$ 1,016
US$ 4,640
US$ 1,965
US$ 10,411
US$ 4,502
US$ 5,764
US$ 7,859
US$ 4,316
US$ 4,014
US$ 1,943
US$ 2,274
US$ 4,496
US$ 3,285
US$ 1,780
US$ 1,928
US$ 3,731
US$ 42,042
US$ 7,079
US$ 1,015
US$ 5,212
US$ 10,976
US$ 15,030
Available-for-sale financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
Available-for-sale financial assets
〃
〃
〃
〃
Held-to-maturity financial assets
Available-for-sale financial assets
12,387
US$ 12,387
N/A
US$ 12,387
(Concluded)
Held Company Name
Marketable Securities Type and Name
Relationship with the Company
Financial Statement Account
Fnma Pool 870884
Fnma Pool 879908
Fnma Pool AB0035
Fnma Pool AC9580
Fnr 2005 47 HA
Fnr 2006 60 CO
Fnr 2006 60 CO
Fnr 2009 116 A
Fnr 2009 70 NT
Freddie Mac
Freddie Mac
Freddie Mac
Freddie Mac
Freddie Mac
Freddie Mac
Gnma II Pool 082431
Gnr 2008 9 SA
Gnr 2009 45 AB
Government Natl Mtg Assn
Government Natl Mtg Assn Gtd
Ngn 2010 C1 A1
Ngn 2010 R2 1A
Government bond
US Treasury N/B
US Treasury N/B
US Treasury N/B
Wi Treasury N/B
Wi Treasury Sec
Societe De Financement De Lec
Money market fund
Ssga Cash Mgmt Global Offshore
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
36
TABLE 3
Taiwan Semiconductor Manufacturing Company Limited and Investees
MARKETABLE SECURITIES ACQUIRED AND DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 2010
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)
Company
Name
Marketable Securities Type and
Name
Financial
Statement
Account
Counter-party
Nature of
Relationship
Beginning Balance
Acquisition
Disposal (Note 2)
Ending Balance (Note 3)
Shares/Units
(In Thousands)
Amount
(US$ 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
Stock
Motech
Capital
VTAF III
VTAF III
Preferred stock
Stion Corp.
GUC
Open-end mutual fund
Jih Sun Bond Fund
PCA Well Pool Fund
TSMC Global
Corporate bond
Allstate Life Gbl Fdg Secd
Investments
accounted for using
equity method
Investments
accounted for using
equity method
Financial assets
carried at cost
Av ailable-for-sale
financial assets
〃
Av ailable-for-sale
financial assets
American Honda Fin Corp. Mtn
Anz National Intl Ltd.
AT+T Wireless
Bank of America
Bank of America Corp. Fdic Gtd
Bank of Nova Scotia
Bank of Scotland Plc
Barclays Bank Plc
Barclays Bank Plc NY
Bbva US Senior SA Uniper
Berkshire Hathaway Inc. Del
Boeing Cap Corp.
Bp Capital Markets Plc
Cie Financement Foncier
Citibank NA
Citibank NA
Citibank NA
Citigroup Funding Inc.
Citigroup Funding Inc.
Citigroup Inc.
Citigroup Inc.
Citigroup Inc.
Coca Cola Co.
Countrywide Finl Corp.
Dexia Credit Local
Dexia Credit Local
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
-
-
-
Jih Sun Investment Trust Co.,
Ltd.
PCA Securities Investment Trust
Co., Ltd.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
In vestee accounted
for using equity
method
In vestee accounted
for using equity
method
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,668
80,008
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 4,996
-
-
-
-
-
-
-
-
-
-
$ -
$ -
$ -
76,069
$ 6,733,369
-
-
-
$ -
75,316
$ 6,228,661
1,309,615
-
1,862,278
-
7,347
US$ 50,000
-
-
-
-
-
-
-
-
-
192
75
-
2,769,423
7,347
US$ 50,000
-
-
-
-
7,072
7,692
100,000
12,740
180,192
180,000
100,000
7,692
100,075
100,000
4,430
US$ 4,834
4,000
3,500
3,500
2,900
3,400
5,000
4,000
12,000
5,000
4,745
3,500
2,925
3,900
4,000
4,020
-
10,000
16,000
7,300
4,165
4,800
5,000
4,000
4,000
6,000
4,000
US$ 3,985
US$ 3,515
US$ 3,979
US$ 3,121
US$ 3,548
US$ 5,000
US$ 3,984
US$ 12,035
US$ 5,000
US$ 4,744
US$ 3,500
US$ 3,235
US$ 3,969
US$ 4,029
US$ 4,021
-
US$ 10,094
US$ 16,262
US$ 7,448
US$ 4,167
US$ 4,768
US$ 5,360
US$ 4,000
US$ 4,291
US$ 6,000
US$ 4,000
-
-
-
-
2,900
3,400
-
-
-
5,000
2,100
-
-
-
-
4,020
5,000
10,000
-
-
4,165
4,800
-
-
-
-
-
-
-
-
4,430
US$ 4,824
-
-
-
US$ 3,086
US$ 3,539
-
-
-
US$ 5,036
US$ 2,084
-
-
-
-
US$ 4,016
US$ 5,023
US$ 10,104
-
-
US$ 4,167
US$ 4,761
-
-
-
-
-
-
-
-
US$ 3,121
US$ 3,548
-
-
-
US$ 5,000
US$ 2,100
-
-
-
-
US$ 4,021
US$ 4,995
US$ 10,094
-
-
US$ 4,167
US$ 4,768
-
-
-
-
-
-
-
-
US$ (35)
US$ (9)
-
-
-
US$ 36
US$ (16)
-
-
-
-
US$ (5)
US$ 28
US$ 10
-
-
-
US$ (7)
-
-
-
-
-
4,000
3,500
3,500
-
-
5,000
-
12,000
-
2,645
3,500
2,925
3,900
4,000
-
-
-
16,000
7,300
-
-
5,000
4,000
4,000
6,000
4,000
US$ 3,995
US$ 3,554
US$ 3,823
-
-
US$ 5,000
-
US$ 11,997
-
US$ 2,638
US$ 3,517
US$ 3,192
US$ 3,988
US$ 4,019
-
-
-
US$ 16,323
US$ 7,446
-
-
US$ 5,490
US$ 4,002
US$ 4,208
US$ 5,976
US$ 3,984
(Continued)
37
Company
Name
Marketable Securities Type and
Name
Dexia Credit Local S.A
Financial
Statement
Account
Av ailable-for-sale
financial assets
〃
Dexia Credit Local SA NY
〃
General Elec Cap Corp.
〃
Georgia Pwr Co.
〃
Georgia Pwr Co.
〃
Gmac LLC
〃
Goldman Sachs Group Incser 2
〃
Household Fin Corp.
〃
HSBC Bank Plc
〃
HSBC Fin Corp.
〃
IBM Corp.
〃
IBM Corp.
〃
IBM Corp.
〃
Intl Bk Recon + Develop
〃
John Deer Capital Corp. Fdic GT
〃
JP Morgan Chase + Co.
JP Morgan Chase + Co. Fdic Gtd Tlg 〃
〃
Landwirtsch Rentenbank
〃
Lloyds Tsb Bank Plc Ser 144A
〃
Macquarie Bk Ltd. Sr
〃
Massmutual Global Fdg II Mediu
〃
Merck + Co. Inc.
〃
Merrill Lynch + Co. Inc.
〃
Met Life Glob Funding I
〃
Met Life Glob Funding I
〃
Metlife Inc.
〃
Metropolitan Life Global Fdg I
〃
Microsoft Corp.
〃
Morgan Stanley Dean Witter
〃
Occidental Pete Corp.
〃
Pepsico Inc.
〃
Rabobank Nederland
〃
Regions Bank Fdic Gtd Tlgp
〃
Royal Bk of Scotland Plc
〃
Shell International Fin
〃
Shell International Fin
〃
State Str Corp.
〃
State Street Corp.
〃
Sun Life Finl Global
〃
Suncorp Metway Ltd.
〃
Swedbank Hypotek AB
〃
Teva Pharma Fin III LLC
〃
US Central Federal Cred
〃
US Central Federal Cred
〃
Wachovia Corp. Global Medium
〃
Wachovia Corp. New
〃
Wal Mart Stores Inc.
〃
Wal Mart Stores Inc.
〃
Westpac Banking Corp.
〃
Westpac Banking Corp.
〃
Wyeth
He ld-to-maturity
Aust + Nz Banking Group
financial assets
Commonwealth Bank of Australia
Commonwealth Bank of Australia
JP Morgan Chase + Co.
Westpac Banking Corp.
〃
〃
〃
〃
38
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$ -
4,000
US$ 4,000
-
US$ -
US$ -
US$ -
4,000
US$ 3,992
-
-
-
-
-
3,000
-
-
-
1,800
3,000
-
-
-
-
3,000
-
-
-
-
-
-
-
2,100
-
3,340
-
-
-
-
-
-
-
-
-
1,940
-
-
5,000
-
-
4,800
-
-
4,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 3,012
-
-
-
US$ 1,796
US$ 3,027
-
-
-
-
US$ 3,030
-
-
-
-
-
-
-
US$ 2,142
-
US$ 3,278
-
-
-
-
-
-
-
-
-
US$ 1,920
-
-
US$ 5,170
-
-
US$ 4,799
-
-
US$ 4,246
-
-
-
-
-
-
-
-
-
-
5,000
4,000
6,000
4,000
4,600
-
4,330
3,400
2,900
4,300
-
6,800
5,000
3,500
5,000
-
3,800
4,850
3,900
4,000
4,000
4,691
5,000
2,575
6,500
-
3,250
8,000
3,200
3,000
5,000
10,000
4,000
4,515
3,200
5,080
5,500
4,400
3,800
4,000
4,000
8,000
4,000
5,000
-
4,000
3,770
3,500
4,000
3,345
20,000
25,000
25,000
35,000
25,000
US$ 5,000
US$ 4,117
US$ 6,000
US$ 4,024
US$ 4,727
-
US$ 4,781
US$ 3,407
US$ 3,142
US$ 4,302
-
US$ 6,772
US$ 5,014
US$ 3,634
US$ 5,000
-
US$ 3,800
US$ 4,895
US$ 3,984
US$ 3,926
US$ 4,066
US$ 4,603
US$ 5,004
US$ 2,623
US$ 6,527
-
US$ 3,249
US$ 8,796
US$ 3,752
US$ 3,000
US$ 4,997
US$ 10,372
US$ 4,015
US$ 4,528
US$ 3,227
US$ 5,065
US$ 5,585
US$ 4,304
US$ 3,933
US$ 4,002
US$ 4,000
US$ 8,074
US$ 4,093
US$ 5,138
-
US$ 3,986
US$ 4,383
US$ 3,500
US$ 4,044
US$ 3,699
US$ 20,000
US$ 25,000
US$ 25,000
US$ 35,103
US$ 25,000
-
-
5,000
-
-
3,000
-
-
-
3,800
3,000
-
-
-
-
3,000
3,800
-
-
-
-
-
5,000
4,675
-
3,340
-
-
-
3,000
-
10,000
-
-
-
600
5,500
-
-
-
-
12,800
-
-
4,000
-
-
-
-
-
-
-
-
-
-
-
-
US$ 5,015
-
-
US$ 3,012
-
-
-
US$ 3,804
US$ 3,020
-
-
-
-
US$ 3,028
US$ 3,801
-
-
-
-
-
US$ 5,003
US$ 4,757
-
US$ 3,327
-
-
-
US$ 3,001
-
US$ 10,347
-
-
-
US$ 597
US$ 5,559
-
-
-
-
US$ 12,899
-
-
US$ 4,205
-
-
-
-
-
-
-
-
-
-
-
-
US$ 5,000
-
-
US$ 3,016
-
-
-
US$ 3,801
US$ 3,029
-
-
-
-
US$ 3,030
US$ 3,800
-
-
-
-
-
US$ 5,004
US$ 4,755
-
US$ 3,245
-
-
-
US$ 3,000
-
US$ 10,372
-
-
-
US$ 596
US$ 5,585
-
-
-
-
US$ 12,873
-
-
US$ 4,239
-
-
-
-
-
-
-
-
-
-
-
US$ 15
-
-
US$ (4)
-
-
-
US$ 3
US$ (9)
-
-
-
-
US$ (2)
US$ 1
-
-
-
-
-
US$ (1)
US$ 2
-
US$ 82
-
-
-
US$ 1
-
US$ (25)
-
-
-
US$ 1
US$ (26)
-
-
-
-
US$ 26
-
-
US$ (34)
-
-
-
-
-
-
-
-
-
-
5,000
4,000
1,000
4,000
4,600
-
4,330
3,400
2,900
2,300
-
6,800
5,000
3,500
5,000
-
-
4,850
3,900
4,000
4,000
4,691
-
-
6,500
-
3,250
8,000
3,200
-
5,000
-
4,000
4,515
3,200
6,420
-
4,400
8,800
4,000
4,000
-
4,000
5,000
-
4,000
3,770
3,500
4,000
3,345
20,000
25,000
25,000
35,000
25,000
US$ 4,983
US$ 4,110
US$ 1,005
US$ 4,006
US$ 4,731
-
US$ 4,694
US$ 3,405
US$ 3,074
US$ 2,301
-
US$ 6,775
US$ 5,002
US$ 3,616
US$ 5,021
-
-
US$ 4,857
US$ 3,975
US$ 3,955
US$ 4,032
US$ 4,647
-
-
US$ 6,600
-
US$ 3,232
US$ 8,524
US$ 3,700
-
US$ 5,000
-
US$ 4,002
US$ 4,536
US$ 3,248
US$ 6,417
-
US$ 4,332
US$ 8,982
US$ 3,993
US$ 4,016
-
US$ 4,084
US$ 5,141
-
US$ 3,964
US$ 4,325
US$ 3,514
US$ 4,005
US$ 3,657
US$ 20,000
US$ 25,000
US$ 25,000
US$ 35,067
US$ 25,000
(Continued)
Company
Name
Marketable Securities Type and
Name
Agency bond
Fannie Mae
Fannie Mae
Fannie Mae
Fannie Mae
Fannie Mae
Fannie Mae
Fannie Mae
Fannie Mae
Fannie Mae
Fannie Mae
Fannie Mae
Fannie Mae
Federal Farm Credit Bank
Federal Farm Credit Bank
Federal Farm Credit Bank
Federal Farm Credit Bank
Federal Farm Credit Bank
Federal Farm Credit Bank
Federal Home Ln Bank
Federal Home Ln Bks
Federal Home Ln Mtg Assn
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 Ln Mtg Corp. Multi
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 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 Mortg
Federal Home Loan Mtg Corp.
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn Gtd
Fhr 2647 Pb
Fhr 2953 Da
Fhr 3184 Fa
Fnma Pool 745131
Fnma Pool 995672
Financial
Statement
Account
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$ -
8,000
US$ 7,995
8,000
US$ 7,999
US$ 7,995
US$ 4
-
US$ -
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
11,000
-
-
1,350
-
-
-
-
-
-
-
-
-
-
10,000
-
8,000
-
-
-
-
10,000
4,700
-
11,200
-
-
3,000
-
-
4,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 11,028
-
-
US$ 1,352
-
-
-
-
-
-
-
-
-
-
US$ 9,987
-
US$ 7,992
-
-
-
-
US$ 10,012
US$ 4,715
-
US$ 11,186
-
-
US$ 2,989
-
-
US$ 4,228
-
-
-
-
-
-
-
8,765
11,100
3,900
16,104
4,600
3,000
3,770
4,000
4,000
4,000
5,900
4,020
4,000
4,000
5,000
3,100
5,000
-
5,000
4,634
2,300
4,289
4,717
3,840
3,720
4,121
4,197
10,000
8,000
5,000
4,000
-
10,000
-
6,050
5,000
6,800
8,000
-
-
4,500
1,500
4,000
8,000
-
8,000
6,397
-
3,426
3,343
4,000
3,638
4,686
3,123
3,000
US$ 8,760
US$ 11,096
US$ 3,899
US$ 16,097
US$ 4,598
US$ 3,009
US$ 3,770
US$ 4,014
US$ 4,007
US$ 4,011
US$ 5,975
US$ 4,017
US$ 3,997
US$ 3,995
US$ 4,997
US$ 3,100
US$ 5,049
-
US$ 5,098
US$ 4,726
US$ 2,304
US$ 4,282
US$ 4,719
US$ 4,027
US$ 3,953
US$ 4,261
US$ 4,261
US$ 9,985
US$ 7,996
US$ 4,996
US$ 3,999
-
US$ 9,998
-
US$ 6,050
US$ 5,009
US$ 6,811
US$ 7,990
-
-
US$ 4,497
US$ 1,498
US$ 4,012
US$ 8,082
-
US$ 8,193
US$ 6,394
-
US$ 3,494
US$ 3,466
US$ 4,149
US$ 3,827
US$ 4,681
US$ 3,261
US$ 3,141
-
-
-
-
-
-
-
-
-
-
-
4,020
-
-
-
3,100
-
11,000
-
-
3,650
4,289
-
-
-
-
-
-
8,000
5,000
4,000
10,000
10,000
8,000
6,050
-
-
-
10,000
4,700
3,100
4,300
4,000
8,000
3,000
8,000
-
4,000
-
-
-
-
-
-
3,000
-
-
-
-
-
-
-
-
-
-
-
US$ 4,023
-
-
-
US$ 3,100
-
US$ 11,049
-
-
US$ 3,653
US$ 4,292
-
-
-
-
-
-
US$ 7,996
US$ 5,001
US$ 3,999
US$ 10,007
US$ 10,010
US$ 8,009
US$ 6,060
-
-
-
US$ 10,047
US$ 4,716
US$ 3,098
US$ 4,294
US$ 4,002
US$ 8,057
US$ 3,001
US$ 8,123
US$ 4,205
-
-
-
-
-
-
US$ 3,134
-
-
-
-
-
-
-
-
-
-
-
US$ 4,017
-
-
-
US$ 3,100
-
US$ 11,038
-
-
US$ 3,656
US$ 4,282
-
-
-
-
-
-
US$ 7,996
US$ 4,996
US$ 3,999
US$ 9,996
US$ 9,998
US$ 8,002
US$ 6,050
-
-
-
US$ 10,035
US$ 4,723
US$ 3,098
US$ 4,299
US$ 4,012
US$ 8,082
US$ 2,992
US$ 8,192
-
US$ 4,261
-
-
-
-
-
-
US$ 3,141
-
-
-
-
-
-
-
-
-
-
-
US$ 6
-
-
-
-
-
US$ 11
-
-
US$ (3)
US$ 10
-
-
-
-
-
-
-
US$ 5
-
US$ 11
US$ 12
US$ 7
US$ 10
-
-
-
US$ 12
US$ (7)
-
US$ (5)
US$ (10)
US$ (25)
US$ 9
US$ (69)
-
US$ (56)
-
-
-
-
-
-
US$ (7)
8,765
11,100
3,900
16,104
4,600
3,000
-
-
-
4,000
-
-
4,000
4,000
5,000
-
5,000
-
5,000
2,768
-
-
3,732
2,664
3,324
2,450
-
10,000
-
-
-
-
-
-
-
5,000
6,800
8,000
-
-
1,400
8,400
-
-
-
-
5,183
-
471
2,346
2,561
3,284
4,096
1,743
-
US$ 8,763
US$ 11,096
US$ 3,861
US$ 16,102
US$ 4,589
US$ 2,994
-
-
-
US$ 4,003
-
-
US$ 3,984
US$ 3,994
US$ 5,004
-
US$ 5,008
-
US$ 5,046
US$ 2,810
-
-
US$ 3,727
US$ 2,793
US$ 3,453
US$ 2,491
-
US$ 9,998
-
-
-
-
-
-
-
US$ 5,007
US$ 6,817
US$ 8,040
-
-
US$ 1,399
US$ 8,397
-
-
-
-
US$ 5,168
-
US$ 471
US$ 2,425
US$ 2,595
US$ 3,466
US$ 4,084
US$ 1,803
-
(Continued)
39
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
Fnma Pool AD9843
Fnma Tba Dec 30 Single Fam
Fnma Tba Nov 30 Single Fam
Fnma Tba Oct 30 Single Fam
Fnr 2006 60 CO
Fnr 2009 116 A
Freddie Mac
Freddie Mac
Freddie Mac
Freddie Mac
Freddie Mac
Freddie Mac
Freddie Mac
Freddie Mac
Freddie Mac
Gnr 2009 45 AB
Government Natl Mtg Assn
Ngn 2010 R2 1A
Government bond
United States Treas Nts
United States Treas Nts
US Treasury N/B
US Treasury N/B
US Treasury N/B
US Treasury N/B
US Treasury N/B
US Treasury N/B
US Treasury Nts
US Treasury Sec
US Treasury Sec.
Wi Treasury N/B
Wi Treasury Sec
Wi Treasury Sec
Wi Treasury Sec
Financial
Statement
Account
Av ailable-for-sale
financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
Av ailable-for-sale
financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
Money market fund
Ssga Cash Mgmt Global Offshore
Corporate issued note
Barclays U.S. Fdg LLC
Av ailable-for-sale
financial assets
Av ailable-for-sale
financial assets
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ -
3,252
US$ 3,405
3,252
US$ 3,397
US$ 3,405
US$ (8)
-
US$ -
-
-
-
-
-
-
4,500
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
21,400
-
37,700
-
-
-
-
-
-
-
-
-
-
-
-
US$ 4,491
-
-
-
-
-
-
-
-
-
-
24,000
14,200
14,200
4,092
4,390
10,420
-
8,000
7,000
4,500
5,750
7,855
4,300
4,010
7,004
3,050
3,800
US$ 25,241
US$ 14,863
US$ 14,790
US$ 4,090
US$ 4,712
US$ 10,412
-
US$ 8,002
US$ 6,994
US$ 4,507
US$ 5,771
US$ 7,869
US$ 4,308
US$ 4,024
US$ 7,305
US$ 3,278
US$ 3,800
24,000
14,200
14,200
-
-
-
4,500
8,000
7,000
-
-
-
-
-
-
-
-
US$ 25,233
US$ 14,981
US$ 14,901
-
-
-
US$ 4,496
US$ 7,997
US$ 6,995
-
-
-
-
-
-
-
-
US$ 25,241
US$ 14,863
US$ 14,790
-
-
-
US$ 4,490
US$ 8,001
US$ 6,994
-
-
-
-
-
-
-
-
US$ (8)
US$ 118
US$ 111
-
-
-
US$ 6
US$ (4)
US$ 1
-
-
-
-
-
-
-
-
-
24,000
US$ 24,116
24,000
US$ 24,105
US$ 24,116
US$ (11)
-
-
-
-
-
US$ 21,394
-
US$ 39,012
-
-
-
-
-
-
45,070
43,900
53,000
16,800
49,700
-
7,000
-
8,000
10,000
5,250
11,100
4,400
5,000
US$ 45,309
US$ 43,832
US$ 53,069
US$ 16,889
US$ 49,742
-
US$ 7,078
-
US$ 8,040
US$ 10,040
US$ 5,195
US$ 11,084
US$ 4,380
US$ 5,009
45,070
43,900
53,000
16,800
8,000
21,400
-
37,700
8,000
10,000
-
-
4,400
5,000
US$ 45,258
US$ 44,134
US$ 53,316
US$ 16,897
US$ 8,066
US$ 21,487
-
US$ 38,784
US$ 8,028
US$ 10,045
-
-
US$ 4,464
US$ 4,977
US$ 45,309
US$ 43,831
US$ 53,069
US$ 16,889
US$ 8,013
US$ 21,416
-
US$ 39,346
US$ 8,040
US$ 10,040
-
-
US$ 4,380
US$ 5,009
US$ (51)
US$ 303
US$ 247
US$ 8
US$ 53
US$ 71
-
US$ (562)
US$ (12)
US$ 5
-
-
US$ 84
US$ (32)
-
-
-
3,485
4,271
10,420
-
-
-
4,500
5,750
7,855
4,300
4,010
4,417
3,050
3,732
-
-
-
-
-
41,700
-
7,000
-
-
-
5,250
11,100
-
-
-
-
-
US$ 3,483
US$ 4,640
US$ 10,411
-
-
-
US$ 4,502
US$ 5,764
US$ 7,859
US$ 4,316
US$ 4,014
US$ 4,496
US$ 3,285
US$ 3,731
-
-
-
-
-
US$ 42,042
-
US$ 7,079
-
-
-
US$ 5,212
US$ 10,976
-
-
8,858
US$ 8,858
337,008
US$ 337,008
333,479
US$ 333,479
US$ 333,479
4,500
US$ 4,489
-
-
4,500
US$ 4,489
US$ 4,489
-
-
12,387
US$ 12,387
-
-
(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 redemption by the issuer.
Note 3: The ending balance includes the amortization of premium/discount on bonds investments, unrealized valuation gains/losses on financial assets, translation adjustments, equity in earnings/losses of equity method investees and other adjustments to long-term investment using equity method.
40
TABLE 4
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, 2010
(Amounts in Thousands of New Taiwan Dollars)
Company Name
Types of
Property
Transaction Date
Transaction
Amount
Payment Term
Counter-party
Nature of
Relationships
Prior Transaction of Related Counter-party
Owner
Relationships
Transfer
Date
Price Reference
Amount
Purpose of
Acquisition
Other
Terms
TSMC
Fab
Fab
Fab
Fab
Fab
Fab
Fab
Ja nuary 28, 2010 to
December 27, 2010
Ja nuary 28, 2010 to
December 29, 2010
Fe bruary 19, 2010 to
December 29, 2010
Fe bruary 25, 2010 to
December 30, 2010
Ap ril 1, 2010 to
December 30, 2010
De cember 26, 2010 to
December 28, 2010
December 30, 2010
$ 1,169,132
By the construction
Ch ina Steel Structure
progress
Co., Ltd.
1,959,787
By the construction
Fu Tsu Construction
progress
Co., Ltd.
2,800,940
By the construction
Da Cin Constructure
progress
493,403
By the construction
progress
125,277
By the construction
progress
195,831
By the construction
progress
2,900,000
Based on the agreement
Co., Ltd.
Ta sa Construction
Corporation
I-Domain Industrial
Co., Ltd.
Mirle Automation
Corporation
Powerchip Technology
Corporation
-
-
-
-
-
-
-
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
Public bidding
N/A
Public bidding
N/A
Public bidding
N/A
Public bidding
N/A
Public bidding
N/A
Public bidding
N/A
Pricing report
Ma nufacturing
purpose
Ma nufacturing
purpose
Ma nufacturing
purpose
Ma nufacturing
purpose
Ma nufacturing
purpose
Ma nufacturing
purpose
Ma nufacturing
purpose
None
None
None
None
None
None
None
41
TABLE 5
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, 2010
(Amounts in Thousands of New Taiwan Dollars)
Company Name
Related Party
Nature of Relationships
TSMC
TSMC North America
GUC
VIS
TSMC China
WaferTech
VIS
SSMC
Subsidiary
Investee with a controlling financial interest
Investee accounted for using equity method
Subsidiary
Indirect subsidiary
Investee accounted for using equity method
Investee accounted for using equity method
GUC
TSMC North America
Same parent company
Purchases/
Sales
Sales
Sales
Sales
Purchases
Purchases
Purchases
Purchases
Purchases
Transaction Details
Abnormal Transaction
Notes/Accounts Payable or Receivable
Amount
% to Total
Payment Terms
Unit Price
(Note)
Payment Terms
(Note)
Ending Balance
% to Total
Note
$ 220,529,792
2,818,499
223,433
8,748,101
7,878,260
4,937,617
4,521,046
780,070
53
1
-
18
16
10
10
18
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
Net 30 days after monthly closing
Net 30 days after monthly closing
Ne t 30 days after invoice date/net
30 days after monthly closing
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$ 25,579,259
154,589
-
(895,193)
(568,685)
(428,797)
(430,235)
(102,302)
118,933
53
-
-
7
4
3
3
14
62
Xintec
OmniVision
Pa rent company of director (represented for
Sales
2,252,522
57
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.
TABLE 6
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, 2010
(Amounts in Thousands of New Taiwan Dollars)
Company Name
Related Party
Nature of Relationships
Ending Balance
TSMC
TSMC North America
TSMC China
GUC
Subsidiary
Subsidiary
Investee with a controlling financial interest
$ 25,582,932
1,170,407
154,589
Xintec
OmniVision
Pa rent company of director (represented for
118,933
Xintec)
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)
40
(Note 2)
32
42
Overdue
Amounts
Action Taken
$ 8,255,062
-
7,415
-
-
-
-
-
Amounts Received in Subsequent
Period
$ 11,282,114
-
-
Allowance for Bad Debts
$ -
-
-
-
-
42
TABLE 7
Taiwan Semiconductor Manufacturing Company Limited and Investees
NAMES, LOCATIONS, AND RELATED INFORMATION OF INVESTEES OVER WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCE
DECEMBER 31, 2010
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)
Investor Company
Investee Company
Location
Main Businesses and Products
Original Investment Amount
Balance as of December 31, 2010
December 31,
2010
(Foreign
Currencies in
Thousands)
December 31,
2009
(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
TSMC
TSMC Global
TSMC Partners
VIS
SSMC
Motech
Tortola, British Virgin Islands
Investment activities
Tortola, British Virgin Islands
Hsin-Chu, Taiwan
Investing 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
$ 42,327,245
$ 42,327,245
1
31,456,130
31,456,130
988,268
13,232,288
13,232,288
628,223
Singapore
Fabrication and supply of integrated circuits
5,120,028
5,120,028
314
Taipei, Taiwan
6,228,661
-
76,069
100
100
38
39
20
$ 43,710,543
$ 660,931
$ 660,931
Subsidiary
33,565,775
2,313,657
2,313,657
Subsidiary
9,422,452
1,952,385
343,252
7,120,714
3,881,067
1,308,468
6,733,369
4,584,720
542,218
Investee accounted for
using equity method
Investee accounted for
using equity method
Investee accounted for
using equity method
12,180,367
12,180,367
-
100
4,252,270
1,386,574
1,358,492
Subsidiary
TSMC China
Shanghai, China
TSMC North America
San Jose, California, U.S.A.
VTAF III
Xintec
GUC
VTAF II
Emerging Alliance
TSMC Europe
TSMC Japan
TSMC Solar NA
Cayman Islands
Taoyuan, Taiwan
Hsin-Chu, Taiwan
Cayman Islands
Cayman Islands
Amsterdam, the Netherlands
Yokohama, Japan
Delaware, U.S.A.
TSMC Solar Europe
Amsterdam, the Netherlands
TSMC Korea
TSMC Lighting NA
Seoul, Korea
Delaware, U.S.A.
Manufacturing and sales of solar cells, crystalline
silicon solar cell, and test and measurement
instruments and design and construction of solar
power systems
Manufacturing and selling of integrated circuits
at the order of and pursuant to product design
specifications provided by customers
Selling and marketing of integrated circuits and
semiconductor devices
Investing in new start-up technology companies
Wafer level chip size packaging service
Researching, developing, manufacturing, testing and
marketing of integrated circuits
Investing in new start-up technology companies
Investing in new start-up technology companies
Marketing and engineering supporting activities
Marketing activities
Engaged in selling and marketing of solar related
products
Engaged in investing activities of solar related
business
Customer service and technical supporting activities
Engaged in selling and marketing of LED related
products
333,718
333,718
3,565,441
1,357,890
1,703,163
1,357,890
386,568
386,568
1,166,470
971,785
15,749
83,760
60,962
25,350
13,656
3,133
1,093,943
959,044
15,749
83,760
-
-
13,656
-
TSMC Partners
TSMC Development
VisEra Holding Company
Delaware, U.S.A.
Cayman Islands
ISDF
ISDF II
TSMC Technology
TSMC Canada
Cayman Islands
Cayman Islands
Delaware, U.S.A.
Ontario, Canada
Investment activities
Investing in companies involved in the design,
manufacturing, and other related businesses in the
semiconductor industry
Investing in new start-up technology companies
Investing in new start-up technology companies
Engineering support activities
Engineering support activities
US$ 0.001
US$ 43,000
US$ 0.001
US$ 43,000
US$ 4,088
US$ 16,532
US$ 0.001
US$ 2,300
US$ 7,680
US$ 21,415
US$ 0.001
US$ 2,300
100
2,873,888
302,598
302,598
Subsidiary
2,769,423
1,645,201
(247,274)
505,260
(241,178)
180,912
1,113,516
604,501
211,199
11,000
-
93,081
46,688
-
-
-
6
1
-
80
1
1
43,000
4,088
16,532
1
2,300
99
41
35
98
99
100
100
100
100
100
100
100
49
97
97
100
100
1,063,057
304,310
177,784
150,312
26,527
23,971
20,929
3,133
120,612
2,345
38,893
4,704
(35,512)
(433)
2,709
-
US$ 403,257
US$ 83,057
US$ 62,870
US$ 11,321
US$ 21,523
US$ 13,660
US$ 9,878
US$ 3,714
US$ 8,934
US$ 4,957
US$ 807
US$ 348
Subsidiary
Investee with a controlling
financial interest
Investee with a controlling
financial interest
Subsidiary
Subsidiary (Note 3)
Subsidiary (Note 3)
Subsidiary (Note 3)
Subsidiary
118,200
2,333
38,893
4,704
(35,512)
(433)
Subsidiary
2,709
-
Subsidiary (Note 3)
Subsidiary
Note 2
Note 2
Note 2
Note 2
Note 2
Note 2
Subsidiary
Investee accounted for
using equity method
Subsidiary
Subsidiary
Subsidiary (Note 3)
Subsidiary (Note 3)
(Continued)
43
Investor Company
Investee Company
Location
Main Businesses and Products
Original Investment Amount
Balance as of December 31, 2010
December 31,
2010
(Foreign
Currencies in
Thousands)
December 31,
2009
(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
Mcube Inc. (Common Stock)
Delaware, U.S.A.
Mcube Inc. (Preferred Stock)
Delaware, U.S.A.
Research, development, and sale of micro-
semiconductor device
Research, development, and sale of micro-
semiconductor device
US$ 800
US$ 800
5,333
70
US$ -
US$ (6,915)
Note 2
US$ 1,000
US$ 1,000
1,000
10
-
(6,915)
Note 2
Investee accounted for
using equity method
(Note 3)
Investee accounted for
using equity method
(Note 3)
TSMC Development
WaferTech
Washington, U.S.A.
US$ 280,000
US$ 330,000
293,637
100
US$ 165,211
US$ 60,779
Note 2
Subsidiary
57
43
100
62
31
100
100
100
100
100
7
100
US$ 2,058
US$ (1,879)
Note 2
Subsidiary (Note 3)
US$ 546
US$ (1,030)
Note 2
Investee accounted for
using equity method
(Note 3)
US$ 846
-
US$ (127)
-
Note 2
Note 2
Subsidiary (Note 3)
Subsidiary (Note 3)
-
-
Note 2
Subsidiary (Note 3)
$ 58,045
14,706
8,761
3,747
$ 10,599
1,404
(8,021)
(703)
Note 2
Note 2
Note 2
Note 2
Subsidiary
Subsidiary (Note 3)
Subsidiary (Note 3)
Subsidiary (Note 3)
7,468
(7,971)
Note 2
Subsidiary (Note 3)
-
-
Note 2
Subsidiary (Note 3)
3,658
(421)
Note 2
Subsidiary (Note 3)
(Concluded)
-
-
-
800
1
550
-
-
-
1
Mutual-Pak Technology Co.,
Ltd.
Aiconn Technology Corp.
Taipei, Taiwan
Taipei, Taiwan
US$ 3,937
US$ 3,088
11,868
US$ 2,206
US$ 1,777
5,623
Manufacturing, selling, testing and computer-
aided designing of integrated circuits and other
semiconductor devices
Manufacturing and selling of electronic parts and
researching, developing, and testing of RFID
Wholesaling telecommunication equipments, and
manufacturing wired and wireless communication
equipments
VTAF III
VTAF II
GUC
Growth Fund
VTA Holdings
Cayman Islands
Delaware, U.S.A.
Investing in new start-up technology companies
Investing in new start-up technology companies
US$ 1,700
-
US$ 1,550
-
VTA Holdings
Delaware, U.S.A.
Investing in new start-up technology companies
-
-
GUC-NA
GUC-Japan
GUC-BVI
GUC-Europe
U.S.A.
Japan
British Virgin Islands
The Netherlands
Consulting services in main products
Consulting services in main products
Investment activities
Consulting services in main products
US$ 1,249
JPY 30,000
US$ 550
EUR 100
US$ 800
JPY 30,000
US$ 550
EUR 100
GUC-BVI
GUC-Shanghai
Shanghai, China
Consulting services in main products
US$ 500
Emerging Alliance
VTA Holdings
Delaware, U.S.A.
Investing in new start-up technology companies
-
TSMC Solar Europe
TSMC Solar Europe GmbH
Hamburg, Germany
Engaged in the selling and customer service of solar
cell modules and related products
EUR 100
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.
-
-
-
44
TABLE 8
Taiwan Semiconductor Manufacturing Company Limited and Investees
INFORMATION OF INVESTMENT IN MAINLAND CHINA
FOR THE YEAR ENDED DECEMBER 31, 2010
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)
Investor Company
Investee Company
Main Businesses and Products
Total Amount of Paid-in Capital
(Thousand)
Method of Investment
TSMC
GUC
TSMC China
GUC-Shanghai
Ma nufacturing and selling of
integrated circuits at the order
of and pursuant to product
design specifications provided
by customers
Co nsulting services in main
products
$ 12,180,367
(RMB 3,070,623)
(Note 1)
Accumulated Outflow of
Investment from Taiwan as of
January 1, 2010
(US$ in Thousand)
$ 12,180,367
(US$ 371,000)
Investment Flows
Outflow (US$
in Thousand)
Inflow (US$ in
Thousand)
$ -
$ -
Accumulated Outflow of
Investment from Taiwan as of
December 31, 2010 (US$ in
Thousand)
$ 12,180,367
(US$ 371,000)
16,160
(US$ 500)
(Note 2)
-
16,160
(US$ 500)
-
16,160
(US$ 500)
Investor Company
Percentage of Ownership
Equity in the Earnings (Losses)
Carrying Value
as of December 31, 2010
Accumulated Inward
Remittance of Earnings as of
December 31, 2010
Accumulated Investment in
Mainland China as of December
31, 2010 (US$ in Thousand)
Investment Amounts Authorized
by Investment Commission, MOEA
(US$ in Thousand)
Upper Limit on Investment
(US$ in Thousand)
TSMC
GUC
100%
100%
$ 1,358,492
(Note 3)
$ 4,252,270
$ -
$ 12,180,367
(US$ 371,000)
$ 12,180,367
(US$ 371,000)
$ 12,180,367
(US$ 371,000)
(7,971)
(Note 4)
7,468
-
16,160
(US$ 500)
16,160
(US$ 500)
1,909,972
(Note 5)
Note 1: TSMC directly invested US$371,000 thousand in TSMC China.
Note 2: GUC, TSMC’s investee with a controlling financial interest, indirectly invested in GUC-Shanghai through GUC-BVI.
Note 3: Amount was recognized based on the audited financial statements.
Note 4: Amount was determined based on the unaudited financial statements.
Note 5: Subject to 60% of net asset value of GUC according to the revised “Guidelines Governing the Approval of Investment or Technical Cooperation in Mainland China” issued by the Investment Commission.
45
8. Consolidated Financial Statements for the Years Ended December 31, 2010 and 2009 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, 2010, 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 24, 2011
46
INDEPENDENT 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, 2010 and 2009, 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, 2010 and 2009, 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 Statement of
Financial Accounting Standards No. 10, “Accounting for Inventories.”
January 24, 2011
47
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2010 AND 2009
(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 25)
Available-for-sale financial assets (Notes 2, 6 and 25)
Held-to-maturity financial assets (Notes 2, 7 and 25)
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 (Note 26)
Other financial assets (Note 27)
Inventories (Notes 2, 3 and 9)
Deferred income tax assets (Notes 2 and 20)
Prepaid expenses and other current assets
Total current assets
LONG-TERM INVESTMENTS (Notes 2, 6, 7, 10, 12 and 25)
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, 13, 26 and 27)
Cost
Land and land improvements
Buildings
Machinery and equipment
Office equipment
Leased assets
Accumulated depreciation
Advance payments and construction in progress
Net property, plant and equipment
INTANGIBLE ASSETS
Goodwill (Note 2)
Deferred charges, net (Notes 2 and 14)
Total intangible assets
OTHER ASSETS
Deferred income tax assets (Notes 2 and 20)
Refundable deposits
Others (Notes 2 and 27)
Total other assets
2010
Amount
$ 147,886,955
6,886
28,883,728
4,796,589
2,722
51,029,885
(504,029)
(7,546,264)
124,586
1,021,552
28,405,984
5,373,076
2,037,647
261,519,317
25,815,385
1,033,049
8,502,887
4,424,207
39,775,528
891,197
145,966,024
913,155,252
14,856,582
701,552
1,075,570,607
(773,278,157)
86,151,573
388,444,023
5,704,897
6,027,085
11,731,982
7,362,784
8,677,970
1,417,300
17,458,054
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
934,090
142,294,558
775,653,489
13,667,747
714,424
933,264,308
(693,743,886)
34,154,365
273,674,787
5,931,318
6,458,554
12,389,872
7,988,303
2,733,143
260,864
10,982,310
%
20
-
4
1
-
7
-
(1)
-
-
4
1
-
36
4
-
1
1
6
-
20
127
2
-
149
(107)
12
54
1
1
2
1
1
-
2
%
29
-
2
2
-
7
-
(1)
-
-
4
1
-
44
3
-
3
1
7
-
24
130
2
-
156
(117)
6
45
1
1
2
1
1
-
2
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Short-term loans (Note 15)
Financial liabilities at fair value through profit or loss (Notes 2, 5 and 25)
Hedging derivative financial liabilities (Notes 2, 11 and 25)
Accounts payable
Payables to related parties (Note 26)
Income tax payable (Notes 2 and 20)
Salary and bonus payable
Accrued profit sharing to employees and bonus to directors and supervisors
(Notes 2 and 22)
Payables to contractors and equipment suppliers
Accrued expenses and other current liabilities (Notes 18, 25 and 29)
Current portion of long-term bank loans (Notes 17, 25 and 27)
2010
Amount
$ 31,213,944
19,002
814
12,104,173
867,085
7,184,697
6,424,064
11,096,147
43,259,857
10,779,923
241,407
2009
Amount
$ -
25
-
10,905,884
783,007
8,800,249
9,317,035
6,818,343
28,924,265
12,635,182
949,298
%
4
-
-
2
-
1
1
2
6
1
-
%
-
-
-
2
-
1
2
1
5
2
-
Total current liabilities
123,191,113
17
79,133,288
13
LONG-TERM LIABILITIES
Bonds payable (Notes 16 and 25)
Long-term bank loans (Notes 17, 25 and 27)
Other long-term payables (Notes 18, 25 and 29)
Obligations under capital leases (Notes 2, 13 and 25)
Total long-term liabilities
OTHER LIABILITIES
Accrued pension cost (Notes 2 and 19)
Guarantee deposits (Note 29)
Deferred credits
Others
Total other liabilities
Total liabilities
EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF THE PARENT
Capital stock - NT$10 par value (Note 22)
Authorized: 28,050,000 thousand shares
Issued: 25,910,078 thousand shares in 2010
25,902,706 thousand shares in 2009
Capital surplus (Notes 2 and 22)
Retained earnings (Note 22)
Appropriated as legal capital reserve
Appropriated as special capital reserve
Unappropriated earnings
Others (Notes 2, 11 and 25)
Cumulative translation adjustments
Unrealized gain on financial instruments
Equity attributable to shareholders of the parent
MINORITY INTERESTS (Note 2)
Total shareholders’ equity
4,500,000
301,561
6,554,208
694,986
12,050,755
3,812,351
789,098
126,539
254,643
4,982,631
1
-
1
-
2
1
-
-
-
1
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
140,224,499
20
95,647,672
16
259,100,787
55,698,434
86,239,494
1,313,047
178,227,030
265,779,571
(6,543,163)
109,289
(6,433,874)
574,144,918
4,559,487
578,704,405
36
8
12
-
24
36
(1)
-
(1)
79
1
80
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
TOTAL
$ 718,928,904
100
$ 594,696,220
100
TOTAL
$ 718,928,904
100
$ 594,696,220
100
The accompanying notes are an integral part of the consolidated financial statements.
(With Deloitte & Touche audit report dated January 24, 2011)
48
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)
2010
2009
Amount
%
Amount
%
GROSS SALES (Notes 2 and 26)
$ 431,630,858
$ 309,655,614
NON-OPERATING EXPENSES AND LOSSES
SALES RETURNS AND ALLOWANCES (Notes 2 and 8)
12,092,947
13,913,375
NET SALES
419,537,911
100
295,742,239
100
COST OF SALES (Notes 3, 9, 21 and 26)
GROSS PROFIT
OPERATING EXPENSES (Notes 21 and 26)
Research and development
General and administrative
Marketing
Total operating expenses
INCOME FROM OPERATIONS
NON-OPERATING INCOME AND GAINS
Settlement income (Note 29)
Equity in earnings of equity method investees, net (Notes 2 and 10)
Interest income
Ga in on settlement and disposal of financial assets, net (Notes 2 and
25)
Technical service income (Notes 26 and 29)
Valuation gain on financial instruments, net (Notes 2, 5 and 25)
Others (Notes 2 and 26)
Total non-operating income and gains
212,484,320
207,053,591
29,706,662
12,803,997
5,367,597
47,878,256
159,175,335
6,939,764
2,298,159
1,665,193
736,843
450,503
320,730
724,880
13,136,072
51
49
7
3
1
11
38
2
1
-
-
-
-
-
3
166,413,628
129,328,611
21,593,398
11,285,478
4,487,849
37,366,725
91,961,886
1,464,915
45,994
2,600,925
15,999
367,013
594,660
564,042
5,653,548
56
44
7
4
2
13
31
1
-
1
-
-
-
-
2
(Continued)
Loss on disposal of property, plant and equipment (Note 2)
Interest expense
Casualty loss (Note 9)
Impairment of financial assets (Notes 2, 6, 12 and 25)
Foreign exchange loss, net (Note 2)
Others (Note 2)
Total non-operating expenses and losses
INCOME BEFORE INCOME TAX
INCOME TAX EXPENSE (Notes 2 and 20)
NET INCOME
ATTRIBUTABLE TO:
Shareholders of the parent
Minority interests
EARNINGS PER SHARE (NT$, Note 24)
Basic earnings per share
Diluted earnings per share
The accompanying notes are an integral part of the consolidated financial statements.
(With Deloitte & Touche audit report dated January 24, 2011)
2010
2009
Amount
%
Amount
%
$ 849,254
425,356
190,992
159,798
99,130
316,482
2,041,012
170,270,395
7,988,465
-
-
-
-
-
-
-
41
2
$ -
391,479
-
913,230
626,971
221,107
2,152,787
95,462,647
5,996,424
$ 162,281,930
39
$ 89,466,223
$ 161,605,009
676,921
$ 162,281,930
39
-
39
$ 89,217,836
248,387
$ 89,466,223
2010
2009
-
-
-
1
-
-
1
32
2
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
$ 6.54
$ 6.54
$ 6.24
$ 6.23
$ 3.68
$ 3.67
$ 3.45
$ 3.44
(Concluded)
49
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009
(In Thousands of New Taiwan Dollars, Except Dividends Per Share)
Capital Stock - Common Stock
Retained Earnings
Others
Equity Attributable to Shareholders of the Parent
Shares
(In Thousands)
Capital Surplus
Amount
Legal Capital
Reserve
Special Capital
Reserve
Unappropriated
Earnings
Total
Cumulative
Translation
Adjustments
Unrealized
Gain (Loss)
on Financial
Instruments
Total
Minority
Interests
Total
Shareholders’
Equity
BALANCE, JANUARY 1, 2009
25,625,437
$ 256,254,373
$ 49,875,255
$ 67,324,393
$ 391,857
$ 102,337,417
$ 170,053,667
$ 481,158
$ (287,342)
$ 476,377,111
$ 3,995,356
$ 480,372,467
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
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
Ne t change in shareholders’ equity 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
-
-
-
-
-
-
-
-
-
-
-
-
BALANCE, DECEMBER 31, 2009
25,902,706
259,027,066
55,486,010
77,317,710
-
(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
-
-
-
(76,876,312)
-
7,494,988
-
89,217,836
115,418
(2,247,825)
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)
104,564,972
181,882,682
(1,766,667)
453,621
495,082,712
3,965,836
499,048,548
Appropriations of prior year’s earnings
Legal capital reserve
Special capital reserve
Cash dividends to shareholders - NT$3.00 per share
Net income in 2010
Ad justment arising from changes in percentage of
ownership in equity method investees
Translation adjustments
Issuance of stock from exercising employee stock options
Valuation gain (loss) on available-for-sale financial assets
Ne t change in shareholders’ equity from equity method
investees
Ne t change in unrealized loss on hedging derivative
financial instruments
Decrease in minority interests
-
-
-
-
-
-
7,372
-
-
-
-
-
-
-
-
-
-
73,721
-
-
-
-
-
-
-
-
(17,885)
-
171,103
-
59,206
-
-
8,921,784
-
-
-
-
1,313,047
-
-
(8,921,784)
(1,313,047)
(77,708,120)
161,605,009
-
-
(77,708,120)
161,605,009
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(77,708,120)
161,605,009
(17,885)
(4,776,496)
244,824
(337,970)
-
-
-
676,921
4,387
7,258
-
3,949
-
-
(77,708,120)
162,281,930
(13,498)
(4,769,238)
244,824
(334,021)
-
(4,776,496)
-
-
-
-
-
(337,970)
-
-
-
(6,031)
53,175
31,702
84,877
(331)
-
(331)
-
(483)
(130,083)
(814)
(130,083)
BALANCE, DECEMBER 31, 2010
25,910,078
$ 259,100,787
$ 55,698,434
$ 86,239,494
$ 1,313,047
$ 178,227,030
$ 265,779,571
$ (6,543,163)
$ 109,289
$ 574,144,918
$ 4,559,487
$ 578,704,405
The accompanying notes are an integral part of the consolidated financial statements.
(With Deloitte & Touche audit report dated January 24, 2011)
50
2010
2009
$ 161,605,009
676,921
$ 89,217,836
248,387
Increase in deferred charges
Decrease (increase) in refundable deposits
Decrease (increase) in other assets
2010
2009
$ (1,801,728)
(5,944,827)
(1,015,458)
$ (1,469,831)
34,056
1,176
Net cash used in investing activities
(202,086,182)
(96,468,483)
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009
(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
Adjustments 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
Cash dividends received from equity method investees
Loss (gain) on disposal of property, plant and equipment and other
assets, net
Settlement income from receiving equity securities
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
87,810,103
34,142
159,798
(603,368)
-
(133,475)
(2,298,159)
320,002
633,230
(4,434,364)
319
(377,248)
198,172
9,802
(6,392,243)
(39,296)
(1,178,217)
(3,294)
740,959
(7,492,233)
(752,408)
933,894
84,078
(1,615,552)
(2,892,971)
4,277,804
248,192
15,319
(59,150)
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)
Net cash provided by operating activities
229,475,766
159,966,465
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
(186,944,203)
(48,340,334)
(4,101,501)
(6,242,350)
(1,812,928)
37,816,288
15,943,000
242,335
115,524
(87,784,906)
(38,800,577)
(12,224,353)
(42,947)
(321,195)
36,039,978
7,944,800
131,075
24,241
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in short-term loans
Proceeds from long-term bank loans
Repayments of:
Long-term bank loans
Bonds payable
Decrease in other long-term payables
Decrease in guarantee deposits
Proceeds from donation
Proceeds from exercise of employee stock options
Cash dividends
Decrease in minority interests
Net cash used in financing activities
NET DECREASE IN CASH AND CASH EQUIVALENTS
EFFECT OF EXCHANGE RATE CHANGES
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
31,213,944
-
(967,034)
-
(1,107,333)
(232,925)
49,021
244,824
(77,708,120)
(130,083)
(48,637,706)
(21,248,122)
(2,141,264)
171,276,341
-
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
CASH AND CASH EQUIVALENTS, END OF YEAR
$ 147,886,955
$ 171,276,341
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid
Income tax paid
INVESTING 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 other liabilities
Increase in obligations under capital leases
Cash paid
Acquisition of available-for-sale financial assets
Increase in accrued expenses and other current liabilities
Cash paid
Disposal of property, plant and equipment and other assets
Increase in other financial assets
Nonmonetary exchange trade-out price
Cash received
$ 392,805
$ 9,818,418
$ 580,376
$ 8,088,124
$ 201,696,476
(14,599,987)
(124,746)
(27,540)
-
$ 186,944,203
$ 48,405,875
(65,541)
$ 48,340,334
$ 458,561
(218,291)
(124,746)
$ 115,524
$ 109,151,226
(21,361,340)
(809)
-
(4,171)
$ 87,784,906
$ 38,800,577
-
$ 38,800,577
$ 25,050
-
(809)
$ 24,241
NON-CASH FINANCING ACTIVITIES
Current portion of long-term bank loans
Current portion of other long-term payables (under accrued expenses
and other current liabilities)
$ 241,407
$ 949,298
$ 1,406,601
$ 4,005,307
(Continued)
The accompanying notes are an integral part of the consolidated financial statements.
(With Deloitte & Touche audit report dated January 24, 2011)
(Concluded)
51
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
The consolidated entities were as follows:
Name of Investor
Name of Investee
Percentage of Ownership
December 31
Remark
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009
(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 design of integrated
circuits and other semiconductor devices and the manufacturing of masks. Beginning in 2010, TSMC also
engages in the researching, developing, designing, manufacturing and selling of LED lighting devices and
related applications products and systems, and renewable energy and efficiency related technologies and
products. 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, 2010 and 2009, TSMC and its subsidiaries had 38,393 and 26,390 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.
Significant accounting policies are summarized as follows:
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, VTAF II
and Emerging
Alliance
GUC
TSMC
TSMC North America
TSMC Japan Limited (TSMC Japan)
TSMC Partners, Ltd. (TSMC Partners)
TSMC Korea Limited (TSMC Korea)
TSMC Europe B.V. (TSMC Europe)
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 Solar North America, Inc.
(TSMC Solar NA)
TSMC Lighting North America, Inc.
(TSMC Lighting NA)
TSMC Solar Europe B.V. (TSMC Solar
Europe)
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)
(Mutual-Pak)
Growth Fund Limited (Growth Fund)
VentureTech Alliance Holdings, LLC
(VTA Holdings)
Global Unichip Corp.-NA (GUC-NA)
Global Unichip Japan Co., Ltd. (GUC-
Japan)
Global Unichip Europe B.V. (GUC-
Europe)
Global Unichip (BVI) Corp.
(GUC-BVI)
2010
100%
100%
100%
100%
100%
100%
100%
99%
98%
2009
100%
100%
100%
100%
100%
100%
100%
98%
98%
99.5%
99.5%
-
-
-
-
-
-
-
-
-
-
35%
41%
100%
100%
100%
100%
100%
100%
97%
97%
57%
100%
100%
100%
100%
100%
100%
35 %
TSMC has a controlling interest over the financial,
operating and personnel hiring decisions of GUC.
TSMC obtained three out of five director positions
41%
-
-
-
100%
100%
100%
97%
97%
59%
100%
100%
100%
100%
100%
100%
-
-
and has a controlling interest in Xintec.
Established in September 2010
Established in September 2010
Established in September 2010
-
-
-
-
-
-
-
-
-
-
-
-
-
Established in January 2010
Established in December 2010
TSMC
Development
WaferTech, LLC (WaferTech)
100%
99.9%
VTAF III
Mutual-Pak Technology Co., Ltd.
52
GUC-BVI
Global Unichip (Shanghai) Company,
100%
Limited (GUC-Shanghai)
TSMC Solar Europe
TSMC Solar Europe GmbH
100%
The following diagram presents information regarding the relationship and ownership percentages between
TSMC and its consolidated investees as of December 31, 2010:
TSMC
100%
100%
100%
100%
100%
100%
100%
99%
98%
99.5%
35%
41%
100%
100%
100%
TSMC North
America
TSMC Japan
TSMC Partners
TSMC Korea
TSMC Europe
TSMC Global
TSMC China
VTAF III
VTAF II
Emerging
Alliance
GUC
Xintec
TSMC Solar
NA
TSMC Lighting
NA
TSMC Solar
Europe
100%
100%
100%
97%
97%
57%
62%
100%
31%
7%
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
100%
TSMC Solar
Europe GmbH
100%
WaferTech
100%
GUC-Shanghai
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, GUC-Europe, and GUC-Shanghai are engaged in
providing products consulting in North America, Japan, Europe, and China, respectively. GUC-BVI is engaged
in investing activities. Xintec is engaged in the provision of wafer packaging service. TSMC Solar NA is engaged
in selling and marketing of solar related products. TSMC Lighting NA is engaged in selling and marketing of
LED related products. TSMC Solar Europe is engaged in investing activities of solar related business. TSMC
Solar Europe GmbH is engaged in the selling and customer service of solar cell modules and related products.
Mutual-Pak is engaged in the manufacturing and selling of electronic parts, and researching, developing and
testing of RFID.
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, corporate bonds, agency bonds and corporate
issued notes acquired with maturities of less than three months from the date of purchase are classified as
cash equivalents. The carrying amount approximates fair value due to their short term nature.
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.
53
Hedging Derivative Financial Instruments
Hedge derivatives are mainly derivatives instruments that are for cash flow hedge purposes and determined
to be an effective hedge. The portion of the gain or loss on the hedging instrument that is determined to be
an effective hedge is recognized in shareholders’ equity. The amount recognized in shareholders’ equity is
recognized in profit or loss in the same year or year during which the hedged forecast transaction or an asset
or liability arising from the hedged forecast transaction affects profit or loss. However, if all or a portion of a
loss recognized in shareholders’ equity is not expected to be recovered in the future, the amount that is not
expected to be recovered is reclassified into profit or loss.
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.
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 other allowances 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
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.
54
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.
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.
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 patent and others.
The amounts are amortized over the following periods: Technology license fees - the estimated life of the
technology or the term of the technology transfer contract; software and system design costs - 2 to 5 years;
patent and others - the economic life or contract period. 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 expense 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.
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.
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.
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.
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
continuously, and the idle assets are tested for impairment on a periodical basis.
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
55
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.
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.
5. FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS
Trading financial assets
Forward exchange contracts
Cross currency swap contracts
Trading financial liabilities
Forward exchange contracts
December 31
2010
2009
$ 6,886
-
$ 4,338
181,743
$6,886
$ 186,081
$ 19,002
$ 25
The Company entered into derivative contracts during the years ended December 31, 2010 and 2009 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 derivative contracts.
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.
Outstanding forward exchange contracts consisted of the following:
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
Standard (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 consolidated financial
statements as of and for the year ended December 31, 2009.
4. CASH AND CASH EQUIVALENTS
Cash and deposits in banks
Repurchase agreements collateralized by government bonds
Corporate bonds
Agency bonds
Corporate issued notes
56
December 31
2010
$ 146,622,854
960,432
151,840
151,829
-
2009
$ 167,448,973
3,359,754
54,451
253,013
160,150
$ 147,886,955
$ 171,276,341
December 31, 2010
Sell NT$/Buy JPY
Sell EUR/Buy US$
Sell RMB/Buy US$
Sell US$/Buy NT$
December 31, 2009
Sell US$/Buy NT$
Maturity Date
Contract Amount
(In Thousands)
January 2011 to February 2011
February 2011
May 2011 to June 2011
January 2011 to March 2011
NT$814,882/JPY2,278,420
EUR3,067/US$4,093
RMB529,190/US$80,000
US$11,800/NT$353,076
February 2010
US$21,300/NT$686,788
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
January 2010 to February 2010
US$750,000/NT$24,201,706
0.24% - 0.70%
0.00% - 0.38%
For the years ended December 31, 2010 and 2009, changes in fair value related to derivative financial
instruments recognized in earnings was a net gain of NT$320,730 thousand and NT$594,660 thousand,
respectively.
6. AVAILABLE-FOR-SALE FINANCIAL ASSETS
Movements of the allowance for sales returns and others were as follows:
Corporate bonds
Agency bonds
Publicly traded stocks
Government bonds
Money market funds
Corporate issued notes
Open-end mutual funds
Current portion
December 31
2010
$ 14,871,120
8,021,192
4,634,170
2,014,127
376,168
-
-
29,916,777
(28,883,728)
2009
$ 7,042,219
5,032,037
574,865
2,341,780
283,713
303,367
170,014
15,747,995
(14,389,946)
$ 1,033,049
$ 1,358,049
For the year ended December 31, 2009, the Company recognized impairment on available-for-sale financial
assets of NT$201,346 thousand.
7. HELD-TO-MATURITY FINANCIAL ASSETS
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
2010
2009
$ 8,724,481
12,092,947
(13,271,164)
$ 6,071,026
13,913,375
(11,259,920)
$ 7,546,264
$ 8,724,481
December 31
2010
$ 5,118,060
19,376,372
1,947,396
1,964,156
2009
$ 2,743,450
15,302,010
1,541,599
1,326,692
$ 28,405,984
$ 20,913,751
Corporate bonds
Government bonds
Structured time deposits
Current portion
December 31
2010
$ 12,843,956
455,520
-
13,299,476
(4,796,589)
2009
$ 15,120,048
3,378,037
7,000,000
25,498,085
(9,944,843)
$ 8,502,887
$ 15,553,242
Write-down of inventories to net realizable value in the amount of NT$900,221 thousand were included
in the cost of sales for the year ended December 31, 2010. The reversal of previously recognized inventory
write-downs amounting to NT$428,162 thousand was recorded for the year ended December 31, 2009.
Inventory losses related to earthquake damage in the amount of NT$190,992 thousand were classified
under non-operating expenses and losses for the year ended December 31, 2010.
10. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD
Structured time deposits categorized as held-to-maturity financial assets consisted of the following:
Principal Amount
Interest Receivable
Range of
Interest Rates
Maturity Date
December 31, 2009
Callable domestic deposits
$ 7,000,000
$ 4,308
0.36% - 0.95%
July 2010 to August 2011
(redeemed by the issuer from
February 2010 to July 2010)
8. ALLOWANCES FOR DOUBTFUL RECEIVABLES, SALES RETURNS AND OTHERS
Movements of the allowance for doubtful receivables were as follows:
Balance, beginning of year
Provision (reversal)
Write-off
Balance, end of year
Years Ended December 31
2010
2009
$ 543,325
(37,028)
(2,268)
$ 455,751
331,485
(243,911)
$ 504,029
$ 543,325
Common stock
Vanguard International Semiconductor Corporation (VIS)
Systems on Silicon Manufacturing Company Pte Ltd. (SSMC)
Motech Industries Inc. (Motech)
VisEra Holding Company (VisEra Holding)
Aiconn Technology Corporation (Aiconn)
Mcube Inc. (Mcube)
Preferred stock
Mcube
December 31
2010
2009
Carrying
Amount
% of
Ownership
Carrying
Amount
% of
Ownership
$ 9,422,452
7,120,714
6,733,369
2,522,267
16,583
-
-
38
39
20
49
43
70
10
$ 9,365,232
6,157,141
-
2,273,065
18,116
25,624
32,030
$ 25,815,385
$ 17,871,208
37
39
-
49
42
70
10
In February 2010, the Company subscribed to 75,316 thousand shares of Motech through a private
placement for NT$6,228,661 thousand; after the subscription, the Company’s percentage of ownership in
Motech was 20%. Transfer of the aforementioned common shares within three years is prohibited according
to the related regulations.
57
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.
The Company’s long-term bank loans bear floating interest rates; therefore, changes in the market interest
rate may cause future cash flows to be volatile. Accordingly, the Company entered into an interest rate swap
contract in order to hedge cash flow risk caused by floating interest rates. As of December 31, 2010, the
outstanding interest rate swap contract consisted of the following:
For the years ended December 31, 2010 and 2009, equity in earnings/losses of equity method investees was
a net gain of NT$2,298,159 thousand and NT$45,994 thousand, respectively. Related equity in earnings/
losses of equity method investees were determined based on the audited financial statements, except
for Aiconn and Mcube. The Company believes that, had Aiconn and Mcube’s financial statements been
audited, any adjustments arising would have had no material effect on the Company’s consolidated financial
statements.
Contract Amount
(In Thousands)
Maturity Date
Range of
Interest Rates Paid
Range of
Interest Rates Received
NT$ 128,000
August 31, 2012
1.38%
0.56% - 0.63%
The adjustment to shareholders’ equity and the amount removed from shareholders’ equity and recognized
a loss as a result of the above interest rate swap contract amounted to NT$814 thousand and NT$352
thousand, respectively.
As of December 31, 2010 and 2009, the quoted market price of publicly traded stocks in unrestricted
investments accounted for using the equity method (VIS) was NT$9,297,707 thousand and NT$10,114,398
thousand, respectively.
12. FINANCIAL ASSETS CARRIED AT COST
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:
Non-publicly traded stocks
Mutual funds
December 31
2010
2009
$ 4,264,956
159,251
$ 2,899,600
163,404
$ 4,424,207
$ 3,063,004
In June 2010, the Company invested in Stion Corporation (Stion, a United States corporation) for US$50,000
thousand and obtained Stion’s preferred stock of 7,347 thousand shares with 23.4% of ownership. Stion
is engaged in the manufacturing of high-efficiency thin-film solar photovoltaic modules. Due to certain
restrictions contained in the investment agreements, the Company does not have the ability to exert
significant influence over Stion’s operating and financial policy. Therefore, the investment was classified
under financial assets carried at cost.
The common stocks of Capella Microsystems (Taiwan), Inc., Integrated Memory Logic Limited and Leadtrend
Technology Corporation were listed on the Taiwan GreTai Securities Market or Taiwan Stock Exchange in
June 2010, May 2010, and August 2009, respectively. Thus, the Company reclassified the aforementioned
investments from financial assets carried at cost to available-for-sale financial assets.
For the years ended December 31, 2010 and 2009, the Company recognized impairment on financial assets
carried at cost of NT$159,798 thousand and NT$711,884 thousand, respectively.
Balance, beginning of year
Additions
Amortization
Balance, end of year
Years Ended December 31
2010
2009
$ 1,391,500
2,055,660
(955,269)
$ 1,990,621
-
(599,121)
$ 2,491,891
$ 1,391,500
Movements of the difference allocated to goodwill were as follows:
Balance, beginning of year
Additions
Balance, end of year
Years Ended December 31
2010
2009
$ 1,061,885
353,680
$ 1,061,885
-
$ 1,415,565
$ 1,061,885
11. HEDGING DERIVATIVE FINANCIAL INSTRUMENTS
Hedging derivative financial liabilities
Interest rate swap contract
December 31, 2010
$ 814
58
13. 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, 2010
$ 934,090
142,294,558
775,653,489
13,667,747
714,424
933,264,308
317,580
81,821,718
600,795,474
10,589,349
219,765
693,743,886
34,154,365
$ 273,674,787
$ -
4,361,536
142,125,965
1,997,654
-
$ 148,485,155
$ 28,746
9,100,935
75,237,057
1,165,827
35,084
$ 85,567,649
$ 53,211,321
$ -
(135,497)
(2,287,420)
(731,094)
-
$ (3,154,011)
$ -
(128,466)
(2,277,047)
(726,539)
-
$ (3,132,052)
$ (1,030,521)
$ 320
2,162
228,370
3,704
-
$ 234,556
$ -
(495)
133,318
(442)
-
$ 132,381
$ (108,035)
$ (43,213)
(556,735)
(2,565,152)
(81,429)
(12,872)
$ (3,259,401)
$ (17,534)
(320,989)
(2,620,166)
(70,519)
(4,499)
$ (3,033,707)
$ (75,557)
$ 891,197
145,966,024
913,155,252
14,856,582
701,552
1,075,570,607
328,792
90,472,703
671,268,636
10,957,676
250,350
773,278,157
86,151,573
$ 388,444,023
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
295,898
72,681,699
535,962,291
9,693,809
182,570
618,816,267
18,605,882
$ 243,645,350
$ -
10,530,802
81,548,279
1,491,370
4,171
$ 93,574,622
$ 30,072
9,379,371
68,064,750
1,168,317
36,126
$ 78,678,636
$ 15,576,604
$ -
(12,978)
(1,872,721)
(226,779)
-
$ (2,112,478)
$ -
(12,971)
(1,791,122)
(224,769)
-
$ (2,028,862)
$ -
$ 1,817
(19,910)
9,964
22,821
7,143
$ 21,835
$ -
(5,779)
(6,271)
(158)
7,143
$ (5,065)
$ (26,426)
$ (21,584)
(453,352)
(1,530,776)
(50,465)
(19,229)
$ (2,075,406)
$ (8,390)
(220,602)
(1,434,174)
(47,850)
(6,074)
$ (1,717,090)
$ (1,695)
$ 934,090
142,294,558
775,653,489
13,667,747
714,424
933,264,308
317,580
81,821,718
600,795,474
10,589,349
219,765
693,743,886
34,154,365
$ 273,674,787
The Company entered into agreements to lease buildings that qualify as capital leases. The term of the leases
is from December 2003 to December 2013. The future minimum lease payments as of December 31, 2010
were NT$773,172 thousand.
59
14. DEFERRED CHARGES, NET
Balance, Beginning of Year
Additions
Amortization
Disposals
Reclassification
Year Ended December 31, 2010
Technology license fees
Software and system design costs
Patent and others
$ 3,230,624
1,834,528
1,393,402
$ 8,300
1,547,605
245,823
$ (783,557)
(1,054,194)
(398,965)
$ -
(173)
-
$ -
5,542
-
Effect of Exchange Rate
Changes
$ (19)
(37)
(1,794)
Balance, End of Year
$ 2,455,348
2,333,271
1,238,466
$ 6,458,554
$ 1,801,728
$ (2,236,716)
$ (173)
$ 5,542
$ (1,850)
$ 6,027,085
Balance, Beginning of Year
Additions
Amortization
Disposals
Reclassification
Year Ended December 31, 2009
Technology license fees
Software and system design costs
Patent and others
$ 4,125,212
1,801,831
1,198,785
$ 2,000
965,230
502,601
$ (902,061)
(928,583)
(299,731)
$ -
-
-
$ 378
(3,864)
(5,502)
Effect of Exchange Rate
Changes
$ 5,095
(86)
(2,751)
Balance, End of Year
$ 3,230,624
1,834,528
1,393,402
$ 7,125,828
$ 1,469,831
$ (2,130,375)
$ -
$ (8,988)
$ 2,258
$ 6,458,554
15. SHORT-TERM LOANS
17. LONG-TERM BANK LOANS
December 31, 2010
$ 31,213,944
Secured loans:
Repayable from August 2009 in 17 quarterly installments, annual interest at 0.66% -
1.24% in 2010 and 0.67% - 2.70% in 2009
$ 542,968
$ 788,263
December 31
2010
2009
US$20,000 thousand, repayable in full in one lump sum payment in November 2010,
annual interest at 0.68% - 0.97% in 2009
Repayable from December 2007 in 8 semi-annual installments, fully repaid in June
2010, annual interest at 1.10% - 2.42%
2009
Current portion
December 31
2010
-
-
542,968
(241,407)
640,895
98,700
1,527,858
(949,298)
$ 301,561
$ 578,560
Pursuant to the loan agreements, financial ratios calculated based on semi-annual and annual audited
financial statements of Xintec must comply with predetermined financial covenants. As of December 31,
2010, Xintec was in compliance with all such financial covenants.
Unsecured loans:
US$874,000 thousand and EUR114,900 thousand, due from January 2011 to
February 2011, annual interest at 0.38% - 1.84%
16. BONDS PAYABLE
Domestic unsecured bonds:
Issued in January 2002 and repayable in January 2012, 3.00% interest payable annually
$ 4,500,000
$ 4,500,000
60
As of December 31, 2010, future principal repayments for the long-term bank loans were as follows:
Pension information on the defined benefit plans is summarized as follows:
Year of Repayment
2011
2012
2013
18. OTHER LONG-TERM PAYABLES
Amount
$ 241,407
241,407
60,154
$ 542,968
a. Components of net periodic pension cost for the year
Service cost
Interest cost
Projected return on plan assets
Amortization
Net periodic pension cost
2010
2009
$ 129,722
146,625
(40,967)
2,196
$ 166,480
150,647
(57,382)
29,924
$ 237,576
$ 289,669
December 31
2010
2009
b. Reconciliation of funded status of the plans and accrued pension cost at December 31, 2010 and 2009
Payables for acquisition of property, plant and equipment (Note 29j)
Payables for royalties
Cu rrent portion (classified under accrued expenses and other current
liabilities)
$ 7,112,172
848,637
7,960,809
$ 8,355,395
1,252,332
9,607,727
(1,406,601)
(4,005,307)
$ 6,554,208
$ 5,602,420
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, 2010, future payments for other long-term payables were as follows:
Year of Payment
2011
2012
2013
2014
19. PENSION PLANS
Amount
$ 1,406,601
675,672
569,659
5,308,877
$ 7,960,809
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, TSMC Canada and TSMC Solar NA 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$1,121,650 thousand and NT$748,071 thousand
for the years ended December 31, 2010 and 2009, 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.
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, 2010 and 2009
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
2010
2009
$ 189,047
5,432,624
5,621,671
3,667,087
9,288,758
(2,907,156)
6,381,602
(84,230)
154,738
(2,639,759)
$ 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)
$ 3,812,351
$ 3,797,032
$ 208,176
$ 135,501
2010
1.75% - 2.25%
3.00%
2.00% - 2.50%
2009
2.25%
3.00%
1.50% - 2.00%
2010
2009
$ 212,248
$ 194,221
2010
2009
$ 19,991
$ 37,801
61
20. INCOME TAX
a. A reconciliation of income tax expense based on “income before income tax” at the statutory rates and
income tax currently payable was as follows:
Income tax expense based on “income before income tax” at statutory
rates
Tax 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
2010
2009
$ 30,456,361
$ 24,182,953
(17,410,223)
(827,033)
-
138,243
(529,347)
(4,887,947)
(8,652,030)
3,136,013
247,050
30,707
(66,135)
(9,984,616)
Effective in May 2009 and June 2010, the Article 5 of the Income Tax Law of the Republic of China was
amended, in which the income tax rate of profit-seeking enterprises would be reduced from 25% to 20%
and from 20% to 17%, respectively. The last amended income tax rate of 17% is retroactively applied
on January 1, 2010. TSMC and its domestic subsidiaries which are subject to the Income Tax Law of the
Republic of China recalculated their deferred tax assets in accordance with the new amended Article and
adjusted the resulting difference as an income tax expense in 2010 and 2009, respectively.
Under Article 10 of the Statute for Industrial Innovation (SII) legislated and effective in May 2010, a
profit-seeking enterprise may deduct up to 15% of its research and development expenditures from its
income tax payable for the year in which these expenditures are incurred, but this deduction should not
exceed 30% of the income tax payable for that year. This incentive is retroactive to January 1, 2010 and
effective until December 31, 2019.
Income tax currently payable
$ 6,940,054
$ 8,893,942
As of December 31, 2010, the net operating loss carryforwards generated by WaferTech, TSMC
Development and Mutual-Pak would expire on various dates through 2026.
b. Income tax expense consisted of the following:
d. Integrated income tax information:
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
2010
2009
$ 6,940,054
977,876
373,051
$ 8,893,942
(1,159,353)
23,023
(7,129,517)
546,234
(78,187)
6,358,954
(1,291,102)
59,940
(1,042,295)
512,269
Income tax expense
$ 7,988,465
$ 5,996,424
The balance of the imputation credit account (ICA) of TSMC as of December 31, 2010 and 2009 was
NT$1,669,533 thousand and NT$369,265 thousand, respectively.
The estimated and actual creditable ratios for distribution of TSMC’s earnings of 2010 and 2009 were
4.70% and 9.85%, 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.
c. Net deferred income tax assets consisted of the following:
e. All of TSMC’s earnings generated prior to December 31, 1997 have been appropriated.
December 31
2010
2009
f. As of December 31, 2010, investment tax credits of TSMC, GUC, Xintec and Mutual-Pak consisted of the
Current deferred income tax assets
Investment tax credits
Temporary differences
Allowance for sales returns and others
Unrealized gain/loss on financial instruments
Others
Valuation allowance
Noncurrent deferred income tax assets
Investment tax credits
Net operating loss carryforwards
Temporary differences
Depreciation
Others
Valuation allowance
62
$ 4,282,132
$ 3,304,092
following:
653,452
87,735
488,806
(139,049)
814,557
-
394,890
(143,230)
Law/Statute
Item
Statute for Upgrading
Purchase of machinery and
Industries
equipment
$ 5,373,076
$ 4,370,309
$ 18,336,101
2,735,278
$ 12,184,624
3,440,825
2,160,248
414,830
(16,283,673)
1,986,421
481,866
(10,105,433)
$ 7,362,784
$ 7,988,303
Statute for Upgrading
Research and development
Industries
expenditures
Total
Creditable Amount
Remaining
Creditable Amount
Expiry Year
$ 114,677
66,368
3,220,393
6,052,758
6,369,512
$ -
66,368
2,519,887
6,052,758
6,369,512
$ 15,823,708
$ 15,008,525
$ 1,020,212
1,192,759
2,921,041
4,523,367
$ -
114,431
2,921,041
4,523,367
$ 9,657,379
$ 7,558,839
2010
2011
2012
2013
2014
2010
2011
2012
2013
(Continued)
Law/Statute
Item
Statute for Upgrading
Personnel training expenditures
Industries
Total
Creditable Amount
Remaining
Creditable Amount
Expiry Year
$ 759
20,081
32,286
17,795
$ -
788
32,286
17,795
2010
2011
2012
2013
$ 70,921
$ 50,869
Statute for Industrial
Innovation
Research and development
$ 2,049,996
$ -
2010
expenditures
(Concluded)
g. The profits generated from the following projects of TSMC, GUC and Xintec are exempt from income tax
for a five-year period:
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
Construction and expansion of 2001 by TSMC
Construction and expansion of 2003 by TSMC
Construction and expansion of 2004 by TSMC
Construction and expansion of 2005 by TSMC
Construction and expansion of 2003 by GUC
Construction and expansion of 2005 and 2006 by GUC
Construction and expansion of 2003 by Xintec
Construction and expansion of 2002, 2003 and 2006 by Xintec
Tax-Exemption Period
2006 to 2010
2007 to 2011
2008 to 2012
2010 to 2014
2007 to 2011
To be determined
2007 to 2011
2010 to 2014
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.
21. LABOR COST, DEPRECIATION AND AMORTIZATION
Labor cost
Salary and bonus
Labor and health insurance
Pension
Meal
Welfare
Others
Depreciation
Amortization
Year Ended December 31, 2010
Classified as
Cost of Sales
Classified as
Operating
Expenses
Total
$ 27,246,876
1,054,566
819,775
613,870
704,494
115,109
$ 22,053,062
780,384
539,367
247,672
273,722
270,739
$ 49,299,938
1,834,950
1,359,142
861,542
978,216
385,848
$ 30,554,690
$ 24,164,946
$ 54,719,636
$ 80,123,895
$ 1,309,257
$ 5,427,488
$ 927,459
$ 85,551,383
$ 2,236,716
22. SHAREHOLDERS’ EQUITY
As of December 31, 2010, 1,096,448 thousand ADSs of TSMC were traded on the NYSE. The number
of common shares represented by the ADSs was 5,482,242 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.
In addition, the capital surplus from long-term investment may not be used for any purpose.
Capital surplus consisted of the following:
Additional paid-in capital
From merger
From convertible bonds
From long-term investments
Donations
December 31
2010
$ 23,628,908
22,805,390
8,893,190
370,891
55
2009
$ 23,457,805
22,805,390
8,893,190
329,570
55
$ 55,698,434
$ 55,486,010
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;
63
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 accrued profit sharing to employees as a charge to earnings of certain percentage of net income
during the year amounted to NT$10,908,338 thousand and NT$6,691,338 thousand for the years ended
December 2010 and 2009, 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.
TSMC 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 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 2009 and 2008 had been approved in the TSMC’s shareholders meetings
held on June 15, 2010 and June 10, 2009, respectively. The appropriations and dividends per share were as
follows:
64
Appropriation of Earnings
Dividends Per Share (NT$)
For FiscalYear
2009
For Fiscal
Year 2008
For Fiscal
Year 2009
For Fiscal
Year 2008
Legal capital reserve
Special capital reserve
Cash dividends to shareholders
Stock dividends to shareholders
$ 8,921,784
1,313,047
77,708,120
-
$ 9,993,317
(391,857)
76,876,312
512,509
$ 87,942,951
$ 86,990,281
$ 3.00
-
$ 3.00
0.02
TSMC’s profit sharing to employees to be paid in cash and bonus to directors in the amounts of
NT$6,691,338 thousand and NT$67,692 thousand for 2009, respectively, and profit sharing to employees
to be 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 15, 2010 and June 10, 2009, respectively. The profit sharing to
employees in stock of 141,870 thousand shares for 2008 was determined by the closing price of the
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 9, 2010 and February 10, 2009 and same amount had been charged against earnings of 2009 and
2008, respectively.
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.
As of January 24 2011, the Board of Directors of TSMC has not resolved the appropriation for earnings of
2010.
The information about the appropriations of TSMC’s profit sharing to employees and bonus to directors is
available at the Market Observation Post System website.
Under the Integrated Income Tax System that became effective on January 1, 1998, the 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.
23. 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 exercised. 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, 2010.
Information about TSMC’s outstanding options for the years ended December 31, 2010 and 2009 was as
follows:
when exercised. 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.
Number of Options
(In Thousands)
Weighted-average
Exercise Price (NT$)
Information about GUC’s outstanding options for the years ended December 31, 2010 and 2009 was as
follows:
Year ended December 31, 2010
Balance, beginning of year
Options exercised
Options canceled
Balance, end of year
Year ended December 31, 2009
Balance, beginning of year
Options granted
Options exercised
Options canceled
Balance, end of year
28,810
(7,372)
(1)
21,437
36,234
175
(7,272)
(327)
28,810
$ 32.4
33.2
50.1
32.3
34.0
34.0
35.8
46.5
33.5
The number of outstanding options and exercise prices have been adjusted to reflect the distribution of
earnings by TSMC in accordance with the plans.
As of December 31, 2010, information about TSMC’s outstanding options was as follows:
Range of Exercise Price (NT$)
$21.7 - $30.5
38.0 - 50.1
Options Outstanding
Number of Options
(In Thousands)
Weighted-average Remaining
Contractual Life (Years)
16,438
4,999
21,437
2.20
3.91
2.60
Weighted-average
Exercise Price (NT$)
$ 28.2
45.6
32.3
As of December 31, 2010, 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 exercised.
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
Year ended December 31, 2010
Balance, beginning of year
Options exercised
Options canceled
Balance, end of year
Year ended December 31, 2009
Balance, beginning of year
Options granted
Options exercised
Options canceled
Balance, end of year
Number of Options
Weighted-average
Exercise Prices (NT$)
3,810
(1,592)
(431)
1,787
5,557
87
(1,475)
(359)
3,810
$ 83.4
13.7
143.3
130.9
$ 63.8
13.6
10.5
62.2
83.4
The number of outstanding options and exercise prices have been adjusted to reflect the distribution of
earnings by GUC in accordance with the plans.
As of December 31, 2010, information about GUC’s outstanding and exercisable options was as follows:
Range of
Exercise Price (NT$)
$ 15.3
175.0
Options Outstanding
Weighted-average
Remaining
Contractual Life
(Years)
Options Exercisable
Weighted-average
Exercise Price
(NT$)
Number of
Options
Weighted-average
Exercise Price
(NT$)
0.67
3.00
2.36
$ 15.3
175.0
130.9
493
646
1,139
$ 15.3
175.0
105.9
Number of
Options
493
1,294
1,787
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 exercised. 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.
65
Information about Xintec’s outstanding options for the years ended December 31, 2010 and 2009 was as
follows:
Number of Options
(In Thousands)
Weighted-average
Exercise Price (NT$)
Year ended December 31, 2010
Balance, beginning of year
Options exercised
Options canceled
Balance, end of year
Year ended December 31, 2009
Balance, beginning of year
Options exercised
Options canceled
Balance, end of year
3,960
(1,856)
(272)
1,832
7,442
(2,552)
(930)
3,960
$14.7
13.9
17.3
15.1
14.8
13.9
16.6
14.7
The exercise prices have been adjusted to reflect the distribution of earnings by Xintec in accordance with
the plans.
Net income attributable to shareholders of the parent:
As reported
Pro forma
Earnings per share (EPS) - after income tax (NT$):
Basic EPS as reported
Pro forma basic EPS
Diluted EPS as reported
Pro forma diluted EPS
24. EARNINGS PER SHARE
EPS is computed as follows:
Year ended December 31, 2010
Basic EPS
Earnings available to common shareholders of the
As of December 31, 2010, information about Xintec’s outstanding and exercisable options was as follows:
parent
Range of
Exercise Price (NT$)
Number of
Options
(In Thousands)
$12.1 - $14.0
15.2 - $19.1
793
1,039
1,832
Options Outstanding
Weighted-average
Remaining
Contractual Life
(Years)
5.75 - 6.04
6.50 - 6.69
Options Exercisable
Weighted-average
Exercise Price
(NT$)
Number of
Options
(In Thousands)
Weighted-average
Exercise Price
(NT$)
$ 12.5
17.0
15.1
664
497
1,161
$ 12.5
17.0
14.4
Effect of dilutive potential common shares
Diluted EPS
Earnings available to common shareholders of
the parent (including effect of dilutive potential
common shares)
Year ended December 31, 2009
Basic EPS
Earnings available to common shareholders of the
Years Ended December 31
2010
2009
$ 161,605,009
161,470,030
$ 89,217,836
88,838,182
$ 6.24
6.23
6.23
6.23
$ 3.45
3.44
3.44
3.43
Amounts (Numerator)
Before
Income Tax
After
Income Tax
Number of
Shares
(Denominator)
(In Thousands)
EPS (NT$)
Before
Income Tax
After
Income Tax
$ 169,520,145
-
$ 161,605,009
-
25,905,832
14,262
$ 6.54
$ 6.24
$ 169,520,145
$ 161,605,009
25,920,094
$ 6.54
$ 6.23
No compensation cost was recognized under the intrinsic value method for the years ended December 31,
2010 and 2009. Had the Company used the fair value based method to evaluate the options using the
Black-Scholes model, the assumptions at the various grant dates and pro forma results of the Company for
the years ended December 31, 2010 and 2009 would have been as follows:
Assumptions:
TSMC
GUC
Xintec
66
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
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
parent
Effect of dilutive potential common shares
$ 95,189,766
-
$ 89,217,836
-
25,835,802
77,319
$ 3.68
$ 3.45
Diluted EPS
Earnings available to common shareholders of
the parent (including effect of dilutive potential
common shares)
$ 95,189,766
$ 89,217,836
25,913,121
$ 3.67
$ 3.44
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 considered for the effect of
retroactive adjustments. This adjustment caused each the basic and diluted after income tax EPS for the year
ended December 31, 2009 to remain at NT$3.45 and NT$3.44, respectively.
c. The changes in fair value of derivatives contracts which were outstanding as of December 31, 2010 and
2009 estimated using valuation techniques were recognized as a net loss of NT$12,116 thousand and a
net gain of NT$186,056 thousand, respectively.
25. DISCLOSURES FOR FINANCIAL INSTRUMENTS
a. Fair values of financial instruments were as follows:
Assets
Financial assets at fair value through profit or
loss
Available-for-sale financial assets
Held-to-maturity financial assets
Financial assets carried at cost
Liabilities
Financial liabilities at fair value through profit or
loss
Hedging derivative financial liabilities
Bonds payable
Long-term bank loans (including current portion)
Other long-term payables (including current
portion)
Obligations under capital leases
December 31
2010
2009
Carrying Amount
Fair Value
Carrying Amount
Fair Value
$ 6,886
29,916,777
13,299,476
4,424,207
$ 6,886
29,916,777
13,457,742
-
$ 186,081
15,747,995
25,498,085
3,063,004
$ 186,081
15,747,995
25,671,664
-
19,002
814
4,500,000
542,968
7,960,809
694,986
19,002
814
4,538,660
542,968
7,960,809
694,986
25
-
4,500,000
1,527,858
9,607,727
707,499
25
-
4,574,979
1,527,858
9,607,727
707,499
b. Methods and assumptions used in estimating fair values of financial instruments
1) The aforementioned financial instruments do not include cash and cash equivalents, receivables, other
financial assets, refundable deposits, short-term loans, payables and guarantee deposits. The carrying
amounts of these financial instruments approximate their fair values due to their short maturities.
d. As of December 31, 2010 and 2009, financial assets exposed to fair value interest rate risk were
NT$38,588,969 thousand and NT$40,857,296 thousand, respectively; financial liabilities exposed to fair
value interest rate risk were NT$43,235,611 thousand and NT$13,542,919 thousand, respectively, and
financial liabilities exposed to cash flow interest rate risk were NT$848,275 thousand and NT$1,527,858
thousand, respectively.
e. Movements of the unrealized gains or losses on financial instruments for the years ended December 31,
2010 and 2009 were as follows:
Balance, beginning of year
Recognized directly in shareholders’ equity
Removed from shareholders’ equity and
recognized in earnings
Year Ended December 31, 2010
From Available-
for-sale Financial
Assets
Equity Method
Investments
Gain (Loss) on
Cash Flow Hedges
Total
$ 424,128
250,475
$ 29,493
(6,031)
$ -
(331)
$ 453,621
244,113
(588,445)
-
-
(588,445)
Balance, end of year
$ 86,158
$ 23,462
$ (331)
$ 109,289
Balance, beginning of year
Recognized directly in shareholders’ equity
Removed from shareholders’ equity and
recognized in earnings
Year Ended December 31, 2009
From Available-
for-sale Financial
Assets
Equity Method
Investments
Gain (Loss) on
Cash Flow Hedges
Total
$ (198,413)
391,801
$ (88,929)
118,422
$ -
-
$ (287,342)
510,223
230,740
-
-
230,740
Balance, end of year
$ 424,128
$ 29,493
$ -
$ 453,621
2) Except for derivatives and structured time deposits, available-for-sale and held-to-maturity financial
f. Information about financial risk
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) Financial assets carried at cost have no quoted prices in an active market and entail an unreasonably
high cost to obtain verifiable fair values. Therefore, no fair value is presented.
5) Fair value of the bonds payable was based on their quoted market price.
6) 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.
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 market exchange rate fluctuations of
foreign-currency assets and liabilities; therefore, the market exchange rate 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 and
publicly traded stock; therefore, the fluctuations in market interest rates and market price will result in
changes in fair values of these debt securities.
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. The Company evaluated whether the financial
instruments for any possible counter-parties or third-parties are reputable financial institutions, business
67
enterprises, and government agencies and accordingly, the Company believed that the Company’s
exposure to credit risk was not significant.
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. A portion
of the short-term loans and the long-term bank loans were floating-rate loans. Therefore, changes in
the market interest rates will result in changes in the interest rate of the long-term bank loans, which
will affect future cash flows.
g. The Company seeks to reduce the effects of future cash flow related interest rate changes by primarily
using derivative financial instruments.
The Company’s long-term bank loans bear floating interest rates; therefore, changes in the market
interest rate may cause future cash flows to be volatile. Accordingly, the Company entered into an interest
rate swap contract in order to hedge cash flow risk caused by floating interest rates. Information about
outstanding interest rate swap contract consisted of the following:
Hedged Item
Hedging Financial
Instrument
Fair Value
December 31, 2010
Expected
Cash Flow
Generated Period
Expected Timing for the
Recognition of Gains
or Losses from Hedge
Long-term bank loans
Interest rate swap
$ (814)
2010 to 2012
2010 to 2012
contract
26. RELATED PARTY TRANSACTIONS
Except as disclosed in the consolidated financial statements and other notes, the following is a summary of
significant related party transactions:
a. Investees of TSMC
VIS (accounted for using equity method)
SSMC (accounted for using equity method)
For the year
Sales
VIS
VisEra
Others
Purchases
VIS
SSMC
Others
Manufacturing expenses
VisEra (primarily outsourcing and rent)
VIS (primarily rent)
Research and development expenses
VisEra
VIS (primarily rent)
Others
Sales of property, plant and equipment
VIS
VisEra
SSMC
Purchase of property, plant and equipment and intangible assets
VIS
Non-operating income and gains
VIS (primarily technical service income; see Note 29e)
SSMC (primarily technical service income; see Note 29d)
Others
b. VisEra Technology Company, Ltd. (VisEra), an indirect investee accounted for using equity method by
TSMC.
c. Others
Related parties over which the Company has significant influence but with which the Company had no
material transactions.
As of December 31
Other receivables
VIS
SSMC
Payables
SSMC
VIS
Others
2010
2009
Amount
%
Amount
%
$ 223,584
82,595
11,397
$ 317,576
$ 4,959,050
4,521,046
39,099
$ 9,519,195
$ 102,188
10,161
$ 112,349
$ 12,053
12,017
133
$ 24,203
$ 37,011
4,418
2,401
$ 43,830
$ 109,855
$ 267,370
198,218
-
$ 465,588
-
-
-
-
2
2
-
4
-
-
-
-
-
-
-
11
1
1
13
-
2
2
-
4
$ 139,496
15,569
240
$ 155,305
$ 3,330,288
3,537,659
-
$ 6,867,947
$ 82,586
-
$ 82,586
$ 388
1,264
-
$ 1,652
$ -
1,050
-
$ 1,050
$ -
$ 224,740
141,488
129
$ 366,357
-
-
-
-
2
2
-
4
-
-
-
-
-
-
-
-
4
-
4
-
4
2
-
6
$ 70,798
53,788
57
43
$ 81,663
39,629
67
33
$ 124,586
100
$ 121,292
100
$ 430,235
428,797
8,053
50
49
1
$ 238,741
531,459
12,807
31
68
1
$ 867,085
100
$ 783,007
100
68
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 office space and facilities from VIS. The lease terms and prices were determined
in accordance with mutual agreements. The office rental was prepaid by the Company and the facilities
rental was paid quarterly. The related rental expenses were classified under research and development
expenses and manufacturing expenses.
28. SIGNIFICANT LONG-TERM LEASES
The Company leases several parcels of land, factory and office premises from the Science Park Administration
and Jhongli Industrial Park Service Center. These operating leases expire on various dates from April 2011 to
July 2030 and can be renewed upon expiration.
The Company entered into lease agreements for its office premises and certain office equipment located in
the United States, Europe, Japan, Shanghai and Taiwan. These operating leases expire between 2011 and
2018 and can be renewed upon expiration.
The Company leased certain factory building from VisEra. The lease terms and prices were determined
in accordance with mutual agreements. The rental expense was paid monthly and classified under
manufacturing expenses.
Compensation of directors and management personnel:
Salaries, incentives and special compensation
Bonus
Years Ended December 31
2010
2009
$ 883,119
578,343
$ 657,234
395,313
$ 1,461,462
$ 1,052,547
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, 2010
includes estimated profit sharing to employees and bonus to directors of the Company that relate to
2010 but will be paid in the following year. The actual amount will be finalized and approved upon the
resolution of the shareholders’ meeting in 2011. The total compensation for the year ended December 31,
2009 included the bonuses appropriated from earnings of 2009 which was approved by the shareholders’
meeting held in 2010.
27. PLEDGED OR MORTGAGED ASSETS
The Company provided certain assets as collateral mainly for long-term bank loans, land lease agreements
and customs duty guarantee, which were as follows:
Other financial assets
Property, plant and equipment, net
Others assets
December 31
2010
$ 163,531
1,109,249
40,000
2009
$ 949,368
2,808,057
20,000
$ 1,312,780
$ 3,777,425
As of December 31, 2010, future lease payments were as follows:
Year
2011
2012
2013
2014
2015
2016 and thereafter
Amount
$ 612,361
568,683
537,150
515,335
483,034
3,422,460
$ 6,139,023
29. SIGNIFICANT COMMITMENTS AND CONTINGENCIES
Significant commitments and contingencies of the Company as of December 31, 2010, 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 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, 2010 TSMC had a total of
US$22,653 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.
69
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.
i. In December 2010, Ziptronix, Inc. filed a complaint in the U.S. District Court for the Northern District
of California accusing TSMC, TSMC North America and one other company of allegedly infringing six
U.S. patents. This litigation is in its very early stages and therefore the outcome of the case cannot be
determined at this time.
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.
j. 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$7,112,172 thousand and NT$8,355,395
thousand as of December 31, 2010 and 2009, respectively, which is included in other long-term payables.
f. In August 2006, TSMC filed a lawsuit against Semiconductor Manufacturing International Corporation,
k. Amounts available under unused letters of credit as of December 31, 2010 were NT$94,764 thousand.
SMIC (Shanghai) and SMIC Americas (aggregately referred to as “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 TSMC in
the same court alleging breach of settlement agreement, implied covenant of good faith and fair dealing.
SMIC also filed a civil action against TSMC in November 2006 with the Beijing People’s High Court alleging
defamation and breach of good faith. On June 10, 2009, the Beijing People’s High Court 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. TSMC has 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 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, conditional upon relevant government
regulatory approvals, to issue to TSMC a total of 1,789,493,218 common shares of Semiconductor
Manufacturing International Corporation and a three-year warrant to purchase 695,914,030 common
shares (subject to adjustment) of Semiconductor Manufacturing International Corporation at HK$1.30 per
share (subject to adjustment). TSMC has received the approval from the Investment Commission of Ministry
of Economic Affairs and acquired the above mentioned common shares on July 5, 2010, representing
approximately 7.37% of Semiconductor Manufacturing International Corporation’s total shares outstanding,
and recognized settlement income amounting to NT$4,434,364 thousand.
g. In June 2010, STC.UNM, the technology transfer arm of the University of New Mexico, filed a complaint
in the U.S. International Trade Commission (“USITC”) accusing TSMC and one other company of allegedly
infringing a single U.S. patent. Based on this complaint, the USITC initiated an investigation in July 2010.
TSMC and STC.UNM have subsequently reached a settlement agreement and, on November 15, 2010,
filed a joint motion to terminate the investigation based on the settlement agreement. As a result, the
Administrative Law Judge (“ALJ”) assigned to the investigation has made an initial determination to
terminate the investigation based on the settlement agreement. The USITC, on December 21, 2010,
decided not to review the ALJ’s initial determination, which officially terminates this investigation.
h. In June 2010, Keranos, LLC. filed a lawsuit in the U.S. District Court for the Eastern District of Texas
alleging that TSMC, TSMC North America, and several other leading technology companies infringe three
expired U.S. patents. The outcome of this litigation cannot be determined at this time.
30. OTHERS
The significant financial assets and liabilities denominated in foreign currencies were as follows:
December 31
2010
2009
Foreign Currency
(In Thousands)
Exchange Rate
(Note)
Foreign Currency
(In Thousands)
Exchange Rate
(Note)
$ 3,944,765
233,213
29,779,663
251,319
29.13-30.368
38.92-40.65
0.3582-0.3735
4.3985-4.61
$ 3,649,645
62,667
32,431,007
207,901
31.99-32.03
46.10-46.25
0.3472-0.3484
4.693
189,327
1,002,116
306,102
30.368
3.91
30.368
133,238
-
249,227
32.03
-
32.03
2,021,729
265,360
31,561,576
566,778
29.13-30.368
38.92-40.65
0.3582-0.3735
4.3985-4.61
886,730
74,595
34,661,538
772,935
31.99-32.03
46.10-46.25
0.3472-0.3484
4.693
Financial assets
Monetary assets
USD
EUR
JPY
RMB
Non-monetary assets
USD
HKD
Investments accounted for using equity method
USD
Financial liabilities
Monetary liabilities
USD
EUR
JPY
RMB
Note:Exchange rate represents the number of N.T. dollars for which one foreign currency could be exchanged.
31. 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: Please see Table 1 attached;
b. Endorsement/guarantee provided: None;
c. Marketable securities held: Please see Table 2 attached;
70
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 3 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 4 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 5 attached;
h. Receivable from related parties amounting to at least NT$100 million or 20% of the paid-in capital: Please
see Table 6 attached;
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
2009
North America and
Others
Taiwan
Adjustments and
Elimination
$ 8,776,155
$ 199,903,278
$ (1,625,842)
$ 118,440,175
$ 593,558,520
$ (32,845,319)
Consolidated
$ 207,053,591
(47,878,256)
13,136,072
(2,041,012)
$ 170,270,395
$ 679,153,376
39,775,528
$ 718,928,904
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
-
i. Names, locations, and related information of investees over which TSMC exercises significant influence:
Total sales
$ 174,674,762
$ 296,366,106
$ (175,298,629)
$ 295,742,239
Please see Table 7 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 8 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 9 attached.
k. Intercompany relationships and significant intercompany transactions: Please see Table 9 attached.
32. 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.
b. Geographic information:
2010
North America and
Others
Taiwan
Adjustments and
Elimination
Consolidated
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
c. Export sales
Area
Asia
Europe and others
$ 2,004,734
$ 128,456,453
$ (1,132,576)
$ 113,023,501
$ 468,112,330
$ (24,285,114)
$ 129,328,611
(37,366,725)
5,653,548
(2,152,787)
$ 95,462,647
$ 556,850,717
37,845,503
$ 594,696,220
(Concluded)
Years Ended December 31
2010
2009
$ 164,650,948
65,879,672
$ 65,491,264
44,602,706
$ 230,530,620
$ 110,093,970
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
Sales to other than consolidated entities
Sales among consolidated entities
$ 222,048,091
19,158,150
$ 197,489,820
223,707,136
$ -
(242,865,286)
$ 419,537,911
-
Total sales
$ 241,206,241
$ 421,196,956
$ (242,865,286)
$ 419,537,911
Customer A
Customer B
(Continued)
Years Ended December 31
2010
Amount
$ 41,022,200
37,962,026
2009
Amount
$ 33,025,488
31,994,983
%
10
9
%
11
10
71
TABLE 1
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
FINANCINGS PROVIDED
FOR THE YEAR ENDED DECEMBER 31, 2010
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)
No.
Financing Name
Financial statement
Account
Counter-party
Financing Limit for
Each Borrowing
Company
Maximum Balance
for the Period
(US$ in Thousands)
Ending Balance
(US$ in Thousands)
Interest Rate
Reason for
Financing
Allowance for Bad
Debt
Collateral
Item
Value
Transaction
Amounts
Financing Company’s
Financing Amount Limits
(US$ in Thousands)
(Note 2)
1
TSMC Partners
Lo ng-term receivables from
related parties
TSMC China
(Note 1)
$ 3,644,160
(US$ 120,000)
$ 3,644,160
(US$ 120,000)
0.25% - 0.26%
Purchase equipment
$ -
-
$ -
$ -
$ 33,565,775
Note 1: The total amount for lending to a company for funding for a short-term period shall not exceed ten percent (10%) of the net worth of TSMC Partners. In addition, the total amount lendable to any one borrower shall be no more than thirty percent (30%) of the borrower’s net worth. While offshore subsidiaries whose voting shares
are 100% owned, directly or indirectly, by TSMC will not subjected to this restriction.
Note 2: The total amount available for lending purpose shall not exceed the net worth of TSMC Partners.
72
TABLE 2
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
MARKETABLE SECURITIES HELD
DECEMBER 31, 2010
(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
TSMC
Corporate bond
Taiwan Mobile Co., Ltd.
China Steel Corporation
Formosa Petrochemical Corporation
Taiwan Power Company
Nan Ya Plastics Corporation
Formosa Plastics Corporation
-
-
-
-
-
-
Stock
Semiconductor Manufacturing International Corporation
TSMC Global
-
Subsidiary
Available-for-sale financial assets
Held-to-maturity financial assets
〃
〃
〃
〃
Available-for-sale financial assets
Investments accounted for using
equity method
TSMC Partners
VIS
SSMC
Motech
TSMC North America
Xintec
GUC
TSMC Europe
TSMC Japan
TSMC Solar NA
TSMC Solar Europe
TSMC Korea
TSMC Lighting NA
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
Investee accounted for using equity
method
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
Subsidiary
Subsidiary
Subsidiary
-
-
〃
〃
〃
〃
〃
〃
Financial assets carried at cost
〃
〃
Financial assets carried at cost
〃
Investments accounted for using
equity method
〃
〃
〃
Held-to-maturity financial assets
〃
TSMC Partners
December 31, 2010
Shares/Units
(In Thousands)
Carrying Value
(US$ in Thousands)
Percentage of
Ownership (%)
Market Value or Net
Asset Value
(US$ in Thousands)
Note
-
-
-
-
-
-
$ 1,033,049
1,507,400
1,463,791
1,352,022
1,303,298
575,776
1,789,493
1
988,268
628,223
314
76,069
11,000
93,081
46,688
-
6
1
-
80
1
16,783
10,500
4,000
-
-
-
-
-
-
-
-
3,918,274
43,710,543
33,565,775
9,422,452
7,120,714
6,733,369
2,873,888
1,645,201
1,113,516
177,784
150,312
26,527
23,971
20,929
3,133
193,584
105,000
40,000
103,992
55,259
4,252,270
2,769,423
1,063,057
304,310
US$ 20,283
US$ 20,141
N/A
N/A
N/A
N/A
N/A
N/A
7
100
100
38
39
20
100
41
35
100
100
100
100
100
100
10
7
2
12
1
100
99
98
99
N/A
N/A
$ 1,033,049
1,516,479
1,472,381
1,360,403
1,347,296
581,495
3,918,274
43,710,543
33,565,775
9,297,707
6,742,565
4,685,200
2,873,888
1,632,596
5,695,919
177,784
150,312
26,527
23,971
20,929
3,133
321,548
356,893
43,977
103,992
55,259
4,278,014
2,749,807
1,057,288
304,310
US$ 21,065
US$ 21,391
(Continued)
73
Held Company Name
Marketable Securities Type and Name
Relationship with the Company
Financial Statement Account
Common stock
TSMC Development, Inc. (TSMC Development)
Subsidiary
Investments accounted for using
equity method
VisEra Holding Company
InveStar Semiconductor Development Fund, Inc. (ISDF)
InveStar Semiconductor Development Fund, Inc. (II) LDC. (ISDF II)
TSMC Technology
TSMC Canada
Mcube Inc.
Investee accounted for using equity
method
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Investee accounted for using equity
method
〃
〃
〃
〃
〃
〃
December 31, 2010
Shares/Units
(In Thousands)
Carrying Value
(US$ in Thousands)
Percentage of
Ownership (%)
Market Value or Net
Asset Value
(US$ in Thousands)
Note
1
US$ 403,257
100
US$ 403,257
43,000
US$ 83,057
49
US$ 83,057
4,088
16,532
1
2,300
5,333
US$ 21,523
US$ 13,660
US$ 9,878
US$ 3,714
-
97
97
100
100
70
10
US$ 21,523
US$ 13,660
US$ 9,878
US$ 3,714
-
-
Investee accounted for using equity
Investments accounted for using
1,000
-
method
equity method
-
-
Held-to-maturity financial assets
〃
-
-
US$ 20,215
US$ 15,000
N/A
N/A
US$ 21,391
US$ 15,075
Subsidiary
Investments accounted for using
293,637
US$ 165,211
100
US$ 165,211
Preferred stock
Mcube Inc.
Corporate bond
GE Capital Corp.
JP Morgan Chase & Co.
Stock
WaferTech
Corporate bond
Beal Bk
Beal Bk Ssb
Cd Ally Bank
Cd Banco Popular De P R
H&R Block Bank
Common stock
RichWave Technology Corp.
Global Investment Holding Inc.
Preferred stock
Audience, Inc.
Next IO, Inc.
Optichron, Inc.
Pixim, Inc.
QST Holdings, LLC
-
-
-
-
-
-
-
-
-
-
-
-
Capital
VentureTech Alliance Holdings, LLC (VTA Holdings)
Subsidiary
Corporate bond
Beal Bk
Beal Bk Ssb
Cd Ally Bank
Cd Banco Popular De P R
H&R Block Bank
Common stock
Leadtrend
Aether Systems, Inc.
RichWave Technology Corp.
Sentelic
-
-
-
-
-
-
-
-
-
TSMC Development
Emerging Alliance
VTAF II
74
equity method
Available-for-sale financial assets
〃
〃
〃
〃
249
249
249
249
249
US$ 249
US$ 249
US$ 249
US$ 249
US$ 249
N/A
N/A
N/A
N/A
N/A
US$ 249
US$ 249
US$ 249
US$ 249
US$ 249
Financial assets carried at cost
〃
4,074
11,124
US$ 1,545
US$ 3,065
10
6
US$ 1,545
US$ 3,065
Financial assets carried at cost
〃
〃
〃
〃
Investments accounted for using
equity method
Available-for-sale financial assets
〃
〃
〃
〃
Available-for-sale financial assets
Financial assets carried at cost
〃
〃
1,654
800
1,276
4,641
-
US$ 250
US$ 500
US$ 1,145
US$ 1,137
US$ 142
-
249
249
249
249
249
-
US$ 249
US$ 249
US$ 249
US$ 249
US$ 249
738
1,600
1,267
1,806
US$ 3,159
US$ 1,503
US$ 1,036
US$ 2,607
-
1
2
2
4
7
N/A
N/A
N/A
N/A
N/A
2
25
3
9
US$ 250
US$ 500
US$ 1,145
US$ 1,137
US$ 142
-
US$ 249
US$ 249
US$ 249
US$ 249
US$ 249
US$ 3,159
US$ 1,503
US$ 1,036
US$ 2,607
(Continued)
Held Company Name
Marketable Securities Type and Name
Relationship with the Company
Financial Statement Account
December 31, 2010
Shares/Units
(In Thousands)
Carrying Value
(US$ in Thousands)
Percentage of
Ownership (%)
Market Value or Net
Asset Value
(US$ in Thousands)
Note
Preferred stock
5V Technologies, Inc.
Aquantia
Audience, Inc.
Beceem Communications
Impinj, Inc.
Next IO, Inc.
Optichron, Inc.
Pixim, Inc.
Power Analog Microelectronics
QST Holdings, LLC
Xceive
Capital
VTA Holdings
Common stock
Mutual-Pak Technology Co., Ltd.
Aiconn Technology Corporation
Preferred stock
Auramicro, Inc.
BridgeLux, Inc.
Exclara, Inc.
GTBF, Inc.
InvenSense, Inc.
LiquidLeds Lighting Corp.
Neoconix, Inc.
Powervation, Ltd.
Quellan, Inc.
Silicon Technical Services, LLC
Stion Corp.
Tilera, Inc.
Validity Sensors, Inc.
Capital
Growth Fund Limited (Growth Fund)
VTA Holdings
Common stock
SiliconBlue Technologies, Inc.
Veebeam
Common stock
Integrated Memory Logic, Inc.
Memsic, Inc.
Preferred stock
IP Unity, Inc.
Sonics, Inc.
Common stock
Memsic, Inc.
Alchip Technologies Limited
VTAF III
Growth Fund
ISDF
ISDF II
-
-
-
-
-
-
-
-
-
-
-
Financial assets carried at cost
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
2,890
3,974
12,378
797
475
3,795
2,847
33,347
7,027
-
4,210
US$ 2,168
US$ 3,816
US$ 2,378
US$ 1,701
US$ 1,000
US$ 953
US$ 2,825
US$ 1,878
US$ 3,383
US$ 593
US$ 1,554
Subsidiary
Investments accounted for using
equity method
-
-
Subsidiary
Investments accounted for using
11,868
US$ 2,058
Investee accounted for using equity
〃
method
equity method
5,623
US$ 546
-
-
-
-
-
-
-
-
-
-
-
-
-
Financial assets carried at cost
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
Subsidiary
Subsidiary
Investments accounted for using
equity method
〃
4,694
6,113
59,695
1,154
816
1,600
3,686
380
3,106
1,055
7,347
3,890
9,340
-
-
US$ 1,408
US$ 7,781
US$ 5,897
US$ 1,500
US$ 1,000
US$ 800
US$ 4,717
US$ 5,797
US$ 369
US$ 1,208
US$ 50,000
US$ 3,025
US$ 3,456
-
Financial assets carried at cost
〃
5,107
10
US$ 762
US$ 25
Available-for-sale financial assets
〃
3,541
1,286
US$ 12,400
US$ 4,371
Financial assets carried at cost
〃
1,008
230
US$ 290
US$ 497
-
-
-
-
-
-
-
-
4
3
3
1
-
2
4
2
19
13
3
31
57
43
20
4
15
N/A
1
11
4
16
N/A
-
23
2
4
US$ 2,168
US$ 3,816
US$ 2,378
US$ 1,701
US$ 1,000
US$ 953
US$ 2,825
US$ 1,878
US$ 3,383
US$ 593
US$ 1,554
-
US$ 2,058
US$ 546
US$ 1,408
US$ 7,781
US$ 5,897
US$ 1,500
US$ 1,000
US$ 800
US$ 4,717
US$ 5,797
US$ 369
US$ 1,208
US$ 50,000
US$ 3,025
US$ 3,456
62
1
-
5
5
1
2
-
US$ 762
US$ 25
US$ 12,400
US$ 4,371
US$ 290
US$ 497
US$ 846
100
US$ 846
Available-for-sale financial assets
Financial assets carried at cost
1,072
7,520
US$ 3,645
US$ 3,664
5
14
US$ 3,645
US$ 3,664
(Continued)
75
Held Company Name
Marketable Securities Type and Name
Relationship with the Company
Financial Statement Account
December 31, 2010
Shares/Units
(In Thousands)
Carrying Value
(US$ in Thousands)
Percentage of
Ownership (%)
Sonics, Inc.
Goyatek Technology, Corp.
Auden Technology MFG. Co., Ltd.
Preferred stock
FangTek, Inc.
Sonics, Inc.
Common stock
GUC-NA
GUC-Japan
GUC-BVI
GUC-Europe
Capital
Global Unichip (Shanghai) Company, Limited (GUC-Shanghai)
Capital
Compositech Ltd.
Stock
TSMC Solar Europe GmbH
Corporate bond
African Development Bank
Allstate Life Gbl Fdg Secd
Alltel Corp.
American Honda Fin Corp. Mtn
Anz National Intl Ltd.
Asian Development Bank
Astrazeneca Plc
AT+T Wireless
Australia + New Zealand Bkg
Banco Bilbao Vizcaya P R
Bank New York Inc.
Bank New York Inc. Medium
Bank of America Corp.
Bank of New York Mellon
Bank of Nova Scotia
Barclays Bank Plc
Barclays Bank Plc NY
Bbva US Senior SA Uniper
Bear Stearns Cos Inc.
Bear Stearns Cos Inc.
Bear Stearns Cos Inc. Med Term
Berkshire Hathaway Inc. Del
Bhp Billiton Fin USA Ltd.
Bk Tokyo Mitsubishi Ufj
Bmw US Capital LLC
Bnp Paribas SA
Boeing Cap Corp.
Boeing Co.
Bp Captial Markets Plc
Caterpillar Financial Se
Cellco Part/Veri Wireless
-
-
-
-
-
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
-
Subsidiary
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
GUC
GUC-BVI
Xintec
TSMC Solar Europe
TSMC Global
76
Financial assets carried at cost
〃
〃
278
932
1,049
US$ 10
US$ 545
US$ 223
Financial assets carried at cost
〃
1,032
264
US$ 686
US$ 456
3
6
3
6
3
Note
Market Value or Net
Asset Value
(US$ in Thousands)
US$ 10
US$ 545
US$ 223
US$ 686
US$ 456
Investments accounted for using
equity method
〃
〃
〃
Investments accounted for using
equity method
Financial assets carried at cost
Investments accounted for using
equity method
Available-for-sale financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
800
$ 58,045
100
$ 58,045
1
550
-
-
587
1
2,600
4,430
100
4,000
3,500
2,500
3,150
3,500
2,000
3,250
1,615
2,100
2,100
2,200
5,000
12,000
400
2,645
2,200
3,500
2,400
3,500
2,000
2,000
1,600
3,810
2,925
450
3,900
900
1,000
14,706
8,761
3,747
7,468
-
3,658
US$ 2,622
US$ 4,824
US$ 108
US$ 3,995
US$ 3,554
US$ 2,501
US$ 3,397
US$ 3,823
US$ 2,047
US$ 3,249
US$ 1,613
US$ 2,253
US$ 2,154
US$ 2,206
US$ 5,000
US$ 11,997
US$ 400
US$ 2,638
US$ 2,199
US$ 3,494
US$ 2,618
US$ 3,517
US$ 2,104
US$ 2,042
US$ 1,602
US$ 3,844
US$ 3,192
US$ 458
US$ 3,988
US$ 901
US$ 1,159
100
100
100
100
3
100
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
14,706
8,761
3,747
7,468
-
3,658
US$ 2,622
US$ 4,824
US$ 108
US$ 3,995
US$ 3,554
US$ 2,501
US$ 3,397
US$ 3,823
US$ 2,047
US$ 3,249
US$ 1,613
US$ 2,253
US$ 2,154
US$ 2,206
US$ 5,000
US$ 11,997
US$ 400
US$ 2,638
US$ 2,199
US$ 3,494
US$ 2,618
US$ 3,517
US$ 2,104
US$ 2,042
US$ 1,602
US$ 3,844
US$ 3,192
US$ 458
US$ 3,988
US$ 901
US$ 1,159
(Continued)
Held Company Name
Marketable Securities Type and Name
Relationship with the Company
Financial Statement Account
December 31, 2010
Shares/Units
(In Thousands)
Carrying Value
(US$ in Thousands)
Percentage of
Ownership (%)
Market Value or Net
Asset Value
(US$ in Thousands)
Note
Cello Part/Veri Wirelss
Cie Financement Foncier
Cie Financement Foncier
Citigroup Funding Inc.
Citigroup Funding Inc.
Citigroup Inc.
Citigroup Inc.
Citigroup Inc.
Citigroup Inc.
Coca Cola Co.
Commonwealth Bank Aust
Countrywide Finl Corp.
Credit Suisse First Boston USA
Credit Suisse New York
Deutsche Bank AG NY
Dexia Credit Local
Dexia Credit Local
Dexia Credit Local S.A
Dexia Credit Local SA NY
Du Pont E I De Nemours + Co.
Ebay Inc.
Eog Resources Inc.
Finance for Danish Ind
General Elec Cap Corp.
General Elec Cap Corp.
General Elec Cap Corp.
General Elec Cap Corp.
General Electric Capital Corp.
Georgia Pwr Co.
Georgia Pwr Co.
Gmac LLC
Goldman Sachs Group Inc.
Groupe Bpce
Hewlett Packard Co.
Hewlett Packard Co.
Household Fin Corp.
HSBC Bank Plc
HSBC Fin Corp.
HSBC Fin Corp.
IBM Corp.
IBM Corp.
IBM Corp.
Intl Bk Recon + Develop
Intl Bk Recon + Develop
John Deer Capital Corp. Fdic GT
JP Morgan Chase + Co.
JP Morgan Chase + Co.
Kfw Medium Term Nts Book Entry
Kreditanstalt Fur Wiederaufbau
Lilly Eli + Co.
Lloyds Tsb Bank Plc Ser 144A
Lloyds Tsb Bank Plc Ser 144A
Macquarie Bk Ltd. Sr
Massmutual Global Fdg II Mediu
Mellon Fdg Corp.
Merck + Co. Inc.
Merck + Co. Inc.
Merrill Lynch + Co. Inc.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Available-for-sale financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
2,000
200
4,000
16,000
7,300
1,400
800
400
5,000
4,000
2,800
4,000
2,150
3,945
2,500
6,000
4,000
4,000
5,000
825
1,375
1,500
3,800
1,000
7,000
1,000
4,000
2,000
1,000
4,000
4,600
2,000
1,150
3,000
2,030
4,330
3,400
2,315
2,900
2,300
6,800
1,500
5,000
2,000
3,500
2,500
5,000
1,950
650
1,500
4,850
5,950
3,900
4,000
3,500
4,000
2,000
4,691
US$ 2,020
US$ 200
US$ 4,019
US$ 16,323
US$ 7,446
US$ 1,390
US$ 814
US$ 426
US$ 5,490
US$ 4,002
US$ 2,806
US$ 4,208
US$ 2,253
US$ 4,090
US$ 2,487
US$ 5,976
US$ 3,984
US$ 3,992
US$ 4,983
US$ 886
US$ 1,361
US$ 1,501
US$ 3,799
US$ 999
US$ 7,002
US$ 1,001
US$ 4,110
US$ 1,967
US$ 1,005
US$ 4,006
US$ 4,731
US$ 1,956
US$ 1,140
US$ 3,003
US$ 2,032
US$ 4,694
US$ 3,405
US$ 2,304
US$ 3,074
US$ 2,301
US$ 6,775
US$ 1,500
US$ 5,002
US$ 2,046
US$ 3,616
US$ 2,513
US$ 5,021
US$ 1,950
US$ 664
US$ 1,548
US$ 4,857
US$ 6,009
US$ 3,975
US$ 3,955
US$ 3,475
US$ 4,032
US$ 2,077
US$ 4,647
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
N/A
US$ 2,020
US$ 200
US$ 4,019
US$ 16,323
US$ 7,446
US$ 1,390
US$ 814
US$ 426
US$ 5,490
US$ 4,002
US$ 2,806
US$ 4,208
US$ 2,253
US$ 4,090
US$ 2,487
US$ 5,976
US$ 3,984
US$ 3,992
US$ 4,983
US$ 886
US$ 1,361
US$ 1,501
US$ 3,799
US$ 999
US$ 7,002
US$ 1,001
US$ 4,110
US$ 1,967
US$ 1,005
US$ 4,006
US$ 4,731
US$ 1,956
US$ 1,140
US$ 3,003
US$ 2,032
US$ 4,694
US$ 3,405
US$ 2,304
US$ 3,074
US$ 2,301
US$ 6,775
US$ 1,500
US$ 5,002
US$ 2,046
US$ 3,616
US$ 2,513
US$ 5,021
US$ 1,950
US$ 664
US$ 1,548
US$ 4,857
US$ 6,009
US$ 3,975
US$ 3,955
US$ 3,475
US$ 4,032
US$ 2,077
US$ 4,647
(Continued)
77
Held Company Name
Marketable Securities Type and Name
Relationship with the Company
Financial Statement Account
December 31, 2010
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.
Metlife Inc.
Microsoft Corp.
Monumental Global Fdg II
Monumental Global Fdg III
Morgan Stanley
Morgan Stanley Dean Witter
Morgan Stanley for Equity
National Australia Bank
New York Life Global Fdg
Nordea Bank Fld Plc
Occidental Pete Corp.
Occidental Petroleum Cor
Ontario (Province of)
Pacific Gas + Electric
Pnc Funding Corp.
Pricoa Global Fdg I Med Term
Principal Life Income Fundings
Princoa Global Fdg I Medium
Rabobank Nederland
Royal Bk of Scotland Plc
Royal Bk of Scotland Plc
Royal Bk Scotland Plc
Royal Bk Scotlnd Grp Plc 144A
Sbc Communications Inc.
Shell International Fin
Shell International Fin
Sovereign Bancorp Fdic Gtd Tlg
State Str Corp.
Sun Life Finl Global
Sun Life Finl Global Fdg II Lp
Suncorp Metway Ltd.
Svenska Handelsbanken AB
Swedbank AB
Swedbank Foreningssparbanken A
Swedbank Hypotek AB
Teva Pharma Fin III LLC
Tiaa Global Mkts Inc.
Tiaa Global Mkts Inc. Mtn
Ubs Ag Stamford CT
Ubs Ag Stamford CT
US Central Federal Cred
Verizon Communications Inc.
Wachovia Corp.
Wachovia Corp. Global Medium
Wachovia Corp. New
Wal Mart Stores Inc.
Wal Mart Stores Inc.
Wells Fargo + Company
Westpac Banking Corp.
Westpac Banking Corp.
Westpac Banking Corp.
Wyeth
Aust + Nz Banking Group
Commonwealth Bank of Australia
Commonwealth Bank of Australia
JP Morgan Chase + Co.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Available-for-sale financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
Held-to-maturity financial assets
〃
〃
〃
500
6,500
2,000
3,250
1,500
750
1,000
8,000
2,000
1,000
2,000
2,250
3,200
1,000
2,000
2,000
2,000
1,750
1,500
5,050
5,000
4,000
5,000
2,550
9,450
2,000
4,515
3,200
2,200
6,420
4,400
1,500
8,800
2,200
2,000
1,500
4,000
4,000
2,000
1,500
2,200
800
4,000
1,500
550
5,000
1,400
4,000
3,770
2,000
3,500
2,100
4,000
3,345
20,000
25,000
25,000
35,000
US$ 508
US$ 6,600
US$ 2,013
US$ 3,232
US$ 1,446
US$ 729
US$ 1,036
US$ 8,524
US$ 1,996
US$ 1,019
US$ 2,049
US$ 2,241
US$ 3,700
US$ 1,004
US$ 2,038
US$ 1,999
US$ 2,000
US$ 1,724
US$ 1,483
US$ 5,011
US$ 5,000
US$ 4,002
US$ 5,052
US$ 2,589
US$ 9,516
US$ 2,106
US$ 4,536
US$ 3,248
US$ 2,260
US$ 6,417
US$ 4,332
US$ 1,496
US$ 8,982
US$ 2,253
US$ 1,998
US$ 1,536
US$ 3,993
US$ 4,016
US$ 2,141
US$ 1,631
US$ 2,199
US$ 807
US$ 4,084
US$ 1,631
US$ 545
US$ 5,141
US$ 1,398
US$ 3,964
US$ 4,325
US$ 2,007
US$ 3,514
US$ 2,110
US$ 4,005
US$ 3,657
US$ 20,000
US$ 25,000
US$ 25,000
US$ 35,067
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
N/A
US$ 508
US$ 6,600
US$ 2,013
US$ 3,232
US$ 1,446
US$ 729
US$ 1,036
US$ 8,524
US$ 1,996
US$ 1,019
US$ 2,049
US$ 2,241
US$ 3,700
US$ 1,004
US$ 2,038
US$ 1,999
US$ 2,000
US$ 1,724
US$ 1,483
US$ 5,011
US$ 5,000
US$ 4,002
US$ 5,052
US$ 2,589
US$ 9,516
US$ 2,106
US$ 4,536
US$ 3,248
US$ 2,260
US$ 6,417
US$ 4,332
US$ 1,496
US$ 8,982
US$ 2,253
US$ 1,998
US$ 1,536
US$ 3,993
US$ 4,016
US$ 2,141
US$ 1,631
US$ 2,199
US$ 807
US$ 4,084
US$ 1,631
US$ 545
US$ 5,141
US$ 1,398
US$ 3,964
US$ 4,325
US$ 2,007
US$ 3,514
US$ 2,110
US$ 4,005
US$ 3,657
US$ 20,146
US$ 24,888
US$ 24,730
US$ 35,148
78
(Continued)
Held Company Name
Marketable Securities Type and Name
Relationship with the Company
Financial Statement Account
December 31, 2010
Shares/Units
(In Thousands)
Carrying Value
(US$ in Thousands)
Percentage of
Ownership (%)
Nationwide Building Society-UK Government Guarantee
Westpac Banking Corp.
Westpac Banking Corp. 12/12 Frn
Agency bond
Fannie Mae
Fannie Mae
Fannie Mae
Fannie Mae
Fannie Mae
Fannie Mae
Fannie Mae
Fed Hm Ln Pc Pool 1b2830
Fed Hm Ln Pc Pool 1g0115
Fed Hm Ln Pc Pool 1g1114
Fed Hm Ln Pc Pool 1k1210
Fed Hm Ln Pc Pool 780741
Federal Farm Credit Bank
Federal Farm Credit Bank
Federal Farm Credit Bank
Federal Farm Credit Bank
Federal Home Ln Bks
Federal Home Ln Mtg Assn
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 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 Mtg Corp.
Federal Home Loan Mtg Corp.
Federal National Mort Assoc
Federal Natl Mtg Assn
Federal Natl Mtg Assn Gtd
Federal Natl Mtg Assn Gtd Remi
Federal Natl Mtg Assn Gtd Remi
Federal Natl Mtg Assn Mtn
Federal Natl Mtg Assn Remic
Federal Natl Mtge Assn
Fhr 2647 Pb
Fhr 2953 Da
Fhr 3087 Jb
Fhr 3184 Fa
Fnma Pool 745131
Fnma Pool 745688
Fnma Pool 775852
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Held-to-maturity financial assets
〃
〃
8,000
25,000
5,000
US$ 8,000
US$ 25,000
US$ 5,000
Available-for-sale financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
11,100
3,900
16,104
8,765
4,600
3,000
4,000
1,836
2,023
799
1,550
1,800
4,000
4,000
5,000
5,000
5,000
2,768
3,732
1,443
2,664
1,915
1,778
422
246
1,298
3,324
2,450
5,000
6,800
8,000
1,400
1,400
10,000
8,400
5,000
5,183
710
535
471
2,346
1,917
436
1,276
1,080
1,428
2,561
3,284
1,520
4,096
1,743
1,384
340
US$ 11,096
US$ 3,861
US$ 16,102
US$ 8,763
US$ 4,589
US$ 2,994
US$ 4,003
US$ 1,922
US$ 2,086
US$ 837
US$ 1,613
US$ 1,879
US$ 3,984
US$ 3,994
US$ 5,004
US$ 5,008
US$ 5,046
US$ 2,810
US$ 3,727
US$ 1,505
US$ 2,793
US$ 1,969
US$ 1,849
US$ 423
US$ 247
US$ 1,341
US$ 3,453
US$ 2,491
US$ 5,007
US$ 6,817
US$ 8,040
US$ 1,399
US$ 1,399
US$ 9,998
US$ 8,397
US$ 4,998
US$ 5,168
US$ 718
US$ 539
US$ 471
US$ 2,425
US$ 1,988
US$ 437
US$ 1,304
US$ 1,094
US$ 1,506
US$ 2,595
US$ 3,466
US$ 1,602
US$ 4,084
US$ 1,803
US$ 1,440
US$ 343
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
Note
Market Value or Net
Asset Value
(US$ in Thousands)
US$ 7,996
US$ 24,555
US$ 5,009
US$ 11,096
US$ 3,861
US$ 16,102
US$ 8,763
US$ 4,589
US$ 2,994
US$ 4,003
US$ 1,922
US$ 2,086
US$ 837
US$ 1,613
US$ 1,879
US$ 3,984
US$ 3,994
US$ 5,004
US$ 5,008
US$ 5,046
US$ 2,810
US$ 3,727
US$ 1,505
US$ 2,793
US$ 1,969
US$ 1,849
US$ 423
US$ 247
US$ 1,341
US$ 3,453
US$ 2,491
US$ 5,007
US$ 6,817
US$ 8,040
US$ 1,399
US$ 1,399
US$ 9,998
US$ 8,397
US$ 4,998
US$ 5,168
US$ 718
US$ 539
US$ 471
US$ 2,425
US$ 1,988
US$ 437
US$ 1,304
US$ 1,094
US$ 1,506
US$ 2,595
US$ 3,466
US$ 1,602
US$ 4,084
US$ 1,803
US$ 1,440
US$ 343
(Continued)
79
Held Company Name
Marketable Securities Type and Name
Relationship with the Company
Financial Statement Account
December 31, 2010
Shares/Units
(In Thousands)
Carrying Value
(US$ in Thousands)
Percentage of
Ownership (%)
Market Value or Net
Asset Value
(US$ in Thousands)
Note
Fnma Pool 790772
Fnma Pool 819649
Fnma Pool 829989
Fnma Pool 841068
Fnma Pool 846233
Fnma Pool 870884
Fnma Pool 879908
Fnma Pool AB0035
Fnma Pool AC9580
Fnr 2005 47 HA
Fnr 2006 60 CO
Fnr 2006 60 CO
Fnr 2009 116 A
Fnr 2009 70 NT
Freddie Mac
Freddie Mac
Freddie Mac
Freddie Mac
Freddie Mac
Freddie Mac
Gnma II Pool 082431
Gnr 2008 9 SA
Gnr 2009 45 AB
Government Natl Mtg Assn
Government Natl Mtg Assn Gtd
Ngn 2010 C1 A1
Ngn 2010 R2 1A
Government bond
US Treasury N/B
US Treasury N/B
US Treasury N/B
Wi Treasury N/B
Wi Treasury Sec
Societe De Financement De Lec
Money market fund
Ssga Cash Mgmt Global Offshore
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Available-for-sale financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
Available-for-sale financial assets
〃
〃
〃
〃
Held-to-maturity financial assets
1,162
1,876
1,626
482
1,729
1,609
1,349
2,000
100
1,785
3,485
1,009
4,271
1,890
10,420
4,500
5,750
7,855
4,300
4,010
1,897
2,259
4,417
3,050
1,692
1,968
3,732
41,700
7,000
1,000
5,250
11,100
15,000
US$ 1,215
US$ 1,950
US$ 1,695
US$ 505
US$ 1,800
US$ 1,684
US$ 1,417
US$ 2,055
US$ 103
US$ 1,875
US$ 3,483
US$ 1,016
US$ 4,640
US$ 1,965
US$ 10,411
US$ 4,502
US$ 5,764
US$ 7,859
US$ 4,316
US$ 4,014
US$ 1,943
US$ 2,274
US$ 4,496
US$ 3,285
US$ 1,780
US$ 1,928
US$ 3,731
US$ 42,042
US$ 7,079
US$ 1,015
US$ 5,212
US$ 10,976
US$ 15,000
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$ 1,215
US$ 1,950
US$ 1,695
US$ 505
US$ 1,800
US$ 1,684
US$ 1,417
US$ 2,055
US$ 103
US$ 1,875
US$ 3,483
US$ 1,016
US$ 4,640
US$ 1,965
US$ 10,411
US$ 4,502
US$ 5,764
US$ 7,859
US$ 4,316
US$ 4,014
US$ 1,943
US$ 2,274
US$ 4,496
US$ 3,285
US$ 1,780
US$ 1,928
US$ 3,731
US$ 42,042
US$ 7,079
US$ 1,015
US$ 5,212
US$ 10,976
US$ 15,030
Available-for-sale financial assets
12,387
US$ 12,387
N/A
US$ 12,387
(Concluded)
80
TABLE 3
Taiwan Semiconductor Manufacturing Company Limited and Investees and Subsidiaries
MARKETABLE SECURITIES ACQUIRED AND DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 2010
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)
Company
Name
Marketable Securities Type and
Name
Financial Statement
Account
Counter-party
Nature of
Relationship
Beginning Balance
Acquisition
Disposal (Note 2)
Ending Balance (Note 3)
Shares/Units
(In Thousands)
Amount
(US$ 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
Stock
Motech
Capital
VTAF III
VTAF III
Preferred stock
Stion Corp.
GUC
Open-end mutual fund
Jih Sun Bond Fund
PCA Well Pool Fund
TSMC Global
Corporate bond
Allstate Life Gbl Fdg Secd
American Honda Fin Corp. Mtn
Anz National Intl Ltd.
AT+T Wireless
Bank of America
Bank of America Corp. Fdic Gtd
Bank of Nova Scotia
Bank of Scotland Plc
Barclays Bank Plc
Barclays Bank Plc NY
Bbva US Senior SA Uniper
Berkshire Hathaway Inc. Del
Boeing Cap Corp.
Bp Capital Markets Plc
Cie Financement Foncier
Citibank NA
Citibank NA
Citibank NA
Citigroup Funding Inc.
Citigroup Funding Inc.
Citigroup Inc.
Citigroup Inc.
Citigroup Inc.
Coca Cola Co.
Countrywide Finl Corp.
Dexia Credit Local
Investments
accounted for
using equity
method
Investments
accounted for
using equity
method
Financial assets
carried at cost
-
-
-
Available-for-sale
financial assets
〃
Jih Sun Investment Trust Co.,
Ltd.
PCA Securities Investment Trust
Co., Ltd.
Available-for-sale
financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Investee
accounted for
using equity
method
Investee
accounted for
using equity
method
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,668
80,008
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 4,996
-
-
-
-
-
-
-
-
-
$ -
$ -
$ -
76,069
$ 6,733,369
-
-
-
$ -
75,316
$ 6,228,661
1,309,615
-
1,862,278
-
7,347
US$ 50,000
-
-
-
-
-
-
-
-
-
192
75
-
2,769,423
7,347
US$ 50,000
-
-
-
-
7,072
7,692
100,000
12,740
180,192
180,000
100,000
7,692
100,075
100,000
4,430
US$ 4,834
4,000
3,500
3,500
2,900
3,400
5,000
4,000
12,000
5,000
4,745
3,500
2,925
3,900
4,000
4,020
-
10,000
16,000
7,300
4,165
4,800
5,000
4,000
4,000
6,000
US$ 3,985
US$ 3,515
US$ 3,979
US$ 3,121
US$ 3,548
US$ 5,000
US$ 3,984
US$ 12,035
US$ 5,000
US$ 4,744
US$ 3,500
US$ 3,235
US$ 3,969
US$ 4,029
US$ 4,021
-
US$ 10,094
US$ 16,262
US$ 7,448
US$ 4,167
US$ 4,768
US$ 5,360
US$ 4,000
US$ 4,291
US$ 6,000
-
-
-
-
2,900
3,400
-
-
-
5,000
2,100
-
-
-
-
4,020
5,000
10,000
-
-
4,165
4,800
-
-
-
-
-
-
-
4,430
US$ 4,824
-
-
-
US$ 3,086
US$ 3,539
-
-
-
US$ 5,036
US$ 2,084
-
-
-
-
US$ 4,016
US$ 5,023
US$ 10,104
-
-
US$ 4,167
US$ 4,761
-
-
-
-
-
-
-
US$ 3,121
US$ 3,548
-
-
-
US$ 5,000
US$ 2,100
-
-
-
-
US$ 4,021
US$ 4,995
US$ 10,094
-
-
US$ 4,167
US$ 4,768
-
-
-
-
-
-
-
US$ (35)
US$ (9)
-
-
-
US$ 36
US$ (16)
-
-
-
-
US$ (5)
US$ 28
US$ 10
-
-
-
US$ (7)
-
-
-
-
4,000
3,500
3,500
-
-
5,000
-
12,000
-
2,645
3,500
2,925
3,900
4,000
-
-
-
16,000
7,300
-
-
5,000
4,000
4,000
6,000
US$ 3,995
US$ 3,554
US$ 3,823
-
-
US$ 5,000
-
US$ 11,997
-
US$ 2,638
US$ 3,517
US$ 3,192
US$ 3,988
US$ 4,019
-
-
-
US$ 16,323
US$ 7,446
-
-
US$ 5,490
US$ 4,002
US$ 4,208
US$ 5,976
(Continued)
81
Company
Name
Marketable Securities Type and
Name
Financial
Statement
Account
Counter-party
Nature of
Relationship
Dexia Credit Local
Available-for-sale
financial assets
〃
Dexia Credit Local S.A
〃
Dexia Credit Local SA NY
〃
General Elec Cap Corp.
〃
Georgia Pwr Co.
〃
Georgia Pwr Co.
〃
Gmac LLC
〃
Goldman Sachs Group Incser 2
〃
Household Fin Corp.
〃
HSBC Bank Plc
〃
HSBC Fin Corp.
〃
IBM Corp.
〃
IBM Corp.
〃
IBM Corp.
〃
Intl Bk Recon + Develop
〃
John Deer Capital Corp. Fdic GT
〃
JP Morgan Chase + Co.
JP Morgan Chase + Co. Fdic Gtd Tlg 〃
〃
Landwirtsch Rentenbank
〃
Lloyds Tsb Bank Plc Ser 144A
〃
Macquarie Bk Ltd. Sr
〃
Massmutual Global Fdg II Mediu
〃
Merck + Co. Inc.
〃
Merrill Lynch + Co. Inc.
〃
Met Life Glob Funding I
〃
Met Life Glob Funding I
〃
Metlife Inc.
〃
Metropolitan Life Global Fdg I
〃
Microsoft Corp.
〃
Morgan Stanley Dean Witter
〃
Occidental Pete Corp.
〃
Pepsico Inc.
〃
Rabobank Nederland
〃
Regions Bank Fdic Gtd Tlgp
〃
Royal Bk of Scotland Plc
〃
Shell International Fin
〃
Shell International Fin
〃
State Str Corp.
〃
State Street Corp.
〃
Sun Life Finl Global
〃
Suncorp Metway Ltd.
〃
Swedbank Hypotek AB
〃
Teva Pharma Fin III LLC
〃
US Central Federal Cred
〃
US Central Federal Cred
〃
Wachovia Corp. Global Medium
〃
Wachovia Corp. New
〃
Wal Mart Stores Inc.
〃
Wal Mart Stores Inc.
〃
Westpac Banking Corp.
〃
Westpac Banking Corp.
〃
Wyeth
Held-to-maturity
Aust + Nz Banking Group
financial assets
〃
〃
〃
Commonwealth Bank of Australia
Commonwealth Bank of Australia
JP Morgan Chase + Co.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Beginning Balance
Acquisition
Disposal (Note 2)
Ending Balance (Note 3)
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)
-
US$ -
4,000
US$ 4,000
-
US$ -
US$ -
US$ -
4,000
US$ 3,984
-
-
-
-
-
-
3,000
-
-
-
1,800
3,000
-
-
-
-
3,000
-
-
-
-
-
-
-
2,100
-
3,340
-
-
-
-
-
-
-
-
-
1,940
-
-
5,000
-
-
4,800
-
-
4,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 3,012
-
-
-
US$ 1,796
US$ 3,027
-
-
-
-
US$ 3,030
-
-
-
-
-
-
-
US$ 2,142
-
US$ 3,278
-
-
-
-
-
-
-
-
-
US$ 1,920
-
-
US$ 5,170
-
-
US$ 4,799
-
-
US$ 4,246
-
-
-
-
-
-
-
-
-
4,000
5,000
4,000
6,000
4,000
4,600
-
4,330
3,400
2,900
4,300
-
6,800
5,000
3,500
5,000
-
3,800
4,850
3,900
4,000
4,000
4,691
5,000
2,575
6,500
-
3,250
8,000
3,200
3,000
5,000
10,000
4,000
4,515
3,200
5,080
5,500
4,400
3,800
4,000
4,000
8,000
4,000
5,000
-
4,000
3,770
3,500
4,000
3,345
20,000
25,000
25,000
35,000
US$ 4,000
US$ 5,000
US$ 4,117
US$ 6,000
US$ 4,024
US$ 4,727
-
US$ 4,781
US$ 3,407
US$ 3,142
US$ 4,302
-
US$ 6,772
US$ 5,014
US$ 3,634
US$ 5,000
-
US$ 3,800
US$ 4,895
US$ 3,984
US$ 3,926
US$ 4,066
US$ 4,603
US$ 5,004
US$ 2,623
US$ 6,527
-
US$ 3,249
US$ 8,796
US$ 3,752
US$ 3,000
US$ 4,997
US$ 10,372
US$ 4,015
US$ 4,528
US$ 3,227
US$ 5,065
US$ 5,585
US$ 4,304
US$ 3,933
US$ 4,002
US$ 4,000
US$ 8,074
US$ 4,093
US$ 5,138
-
US$ 3,986
US$ 4,383
US$ 3,500
US$ 4,044
US$ 3,699
US$ 20,000
US$ 25,000
US$ 25,000
US$ 35,103
-
-
-
5,000
-
-
3,000
-
-
-
3,800
3,000
-
-
-
-
3,000
3,800
-
-
-
-
-
5,000
4,675
-
3,340
-
-
-
3,000
-
10,000
-
-
-
600
5,500
-
-
-
-
12,800
-
-
4,000
-
-
-
-
-
-
-
-
-
-
-
-
US$ 5,015
-
-
US$ 3,012
-
-
-
US$ 3,804
US$ 3,020
-
-
-
-
US$ 3,028
US$ 3,801
-
-
-
-
-
US$ 5,003
US$ 4,757
-
US$ 3,327
-
-
-
US$ 3,001
-
US$ 10,347
-
-
-
US$ 597
US$ 5,559
-
-
-
-
US$ 12,899
-
-
US$ 4,205
-
-
-
-
-
-
-
-
-
US$ 5,000
-
-
US$ 3,016
-
-
-
US$ 3,801
US$ 3,029
-
-
-
-
US$ 3,030
US$ 3,800
-
-
-
-
-
US$ 5,004
US$ 4,755
-
US$ 3,245
-
-
-
US$ 3,000
-
US$ 10,372
-
-
-
US$ 596
US$ 5,585
-
-
-
-
US$ 12,873
-
-
US$ 4,239
-
-
-
-
-
-
-
-
-
US$ 15
-
-
US$ (4)
-
-
-
US$ 3
US$ (9)
-
-
-
-
US$ (2)
US$ 1
-
-
-
-
-
US$ (1)
US$ 2
-
US$ 82
-
-
-
US$ 1
-
US$ (25)
-
-
-
US$ 1
US$ (26)
-
-
-
-
US$ 26
-
-
US$ (34)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,000
5,000
4,000
1,000
4,000
4,600
-
4,330
3,400
2,900
2,300
-
6,800
5,000
3,500
5,000
-
-
4,850
3,900
4,000
4,000
4,691
-
-
6,500
-
3,250
8,000
3,200
-
5,000
-
4,000
4,515
3,200
6,420
-
4,400
8,800
4,000
4,000
-
4,000
5,000
-
4,000
3,770
3,500
4,000
3,345
20,000
25,000
25,000
35,000
US$ 3,992
US$ 4,983
US$ 4,110
US$ 1,005
US$ 4,006
US$ 4,731
-
US$ 4,694
US$ 3,405
US$ 3,074
US$ 2,301
-
US$ 6,775
US$ 5,002
US$ 3,616
US$ 5,021
-
-
US$ 4,857
US$ 3,975
US$ 3,955
US$ 4,032
US$ 4,647
-
-
US$ 6,600
-
US$ 3,232
US$ 8,524
US$ 3,700
-
US$ 5,000
-
US$ 4,002
US$ 4,536
US$ 3,248
US$ 6,417
-
US$ 4,332
US$ 8,982
US$ 3,993
US$ 4,016
-
US$ 4,084
US$ 5,141
-
US$ 3,964
US$ 4,325
US$ 3,514
US$ 4,005
US$ 3,657
US$ 20,000
US$ 25,000
US$ 25,000
US$ 35,067
(Continued)
82
Company
Name
Marketable Securities Type and
Name
Westpac Banking Corp.
Agency bond
Fannie Mae
Fannie Mae
Fannie Mae
Fannie Mae
Fannie Mae
Fannie Mae
Fannie Mae
Fannie Mae
Fannie Mae
Fannie Mae
Fannie Mae
Fannie Mae
Federal Farm Credit Bank
Federal Farm Credit Bank
Federal Farm Credit Bank
Federal Farm Credit Bank
Federal Farm Credit Bank
Federal Farm Credit Bank
Federal Home Ln Bank
Federal Home Ln Bks
Federal Home Ln Mtg Assn
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 Ln Mtg Corp. Multi
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 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 Mortg
Federal Home Loan Mtg Corp.
Federal Natl Mtg Assn
Federal Natl Mtg Assn
Federal Natl Mtg Assn Gtd
Fhr 2647 Pb
Fhr 2953 Da
Financial
Statement
Account
Held-to-maturity
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)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
11,000
-
-
1,350
-
-
-
-
-
-
-
-
-
-
10,000
-
8,000
-
-
-
-
10,000
4,700
-
11,200
-
-
3,000
-
-
4,000
-
-
-
-
US$ -
25,000
US$ 25,000
-
US$ -
US$ -
US$ -
25,000
US$ 25,000
-
8,000
US$ 7,995
8,000
US$ 7,999
US$ 7,995
US$ 4
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 11,028
-
-
US$ 1,352
-
-
-
-
-
-
-
-
-
-
US$ 9,987
-
US$ 7,992
-
-
-
-
US$ 10,012
US$ 4,715
-
US$ 11,186
-
-
US$ 2,989
-
-
US$ 4,228
-
-
-
-
8,765
11,100
3,900
16,104
4,600
3,000
3,770
4,000
4,000
4,000
5,900
4,020
4,000
4,000
5,000
3,100
5,000
-
5,000
4,634
2,300
4,289
4,717
3,840
3,720
4,121
4,197
10,000
8,000
5,000
4,000
-
10,000
-
6,050
5,000
6,800
8,000
-
-
4,500
1,500
4,000
8,000
-
8,000
6,397
-
3,426
3,343
4,000
3,638
US$ 8,760
US$ 11,096
US$ 3,899
US$ 16,097
US$ 4,598
US$ 3,009
US$ 3,770
US$ 4,014
US$ 4,007
US$ 4,011
US$ 5,975
US$ 4,017
US$ 3,997
US$ 3,995
US$ 4,997
US$ 3,100
US$ 5,049
-
US$ 5,098
US$ 4,726
US$ 2,304
US$ 4,282
US$ 4,719
US$ 4,027
US$ 3,953
US$ 4,261
US$ 4,261
US$ 9,985
US$ 7,996
US$ 4,996
US$ 3,999
-
US$ 9,998
-
US$ 6,050
US$ 5,009
US$ 6,811
US$ 7,990
-
-
US$ 4,497
US$ 1,498
US$ 4,012
US$ 8,082
US$ -
US$ 8,193
US$ 6,394
-
US$ 3,494
US$ 3,466
US$ 4,149
US$ 3,827
-
-
-
-
-
-
-
-
-
-
-
4,020
-
-
-
3,100
-
11,000
-
-
3,650
4,289
-
-
-
-
-
-
8,000
5,000
4,000
10,000
10,000
8,000
6,050
-
-
-
10,000
4,700
3,100
4,300
4,000
8,000
3,000
8,000
-
4,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 4,023
-
-
-
US$ 3,100
-
US$ 11,049
-
-
US$ 3,653
US$ 4,292
-
-
-
-
-
-
US$ 7,996
US$ 5,001
US$ 3,999
US$ 10,007
US$ 10,010
US$ 8,009
US$ 6,060
-
-
-
US$ 10,047
US$ 4,716
US$ 3,098
US$ 4,294
US$ 4,002
US$ 8,057
US$ 3,001
US$ 8,123
-
US$ 4,205
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 4,017
-
-
-
US$ 3,100
-
US$ 11,038
-
-
US$ 3,656
US$ 4,282
-
-
-
-
-
-
US$ 7,996
US$ 4,996
US$ 3,999
US$ 9,996
US$ 9,998
US$ 8,002
US$ 6,050
-
-
-
US$ 10,035
US$ 4,723
US$ 3,098
US$ 4,299
US$ 4,012
US$ 8,082
US$ 2,992
US$ 8,192
-
US$ 4,261
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 6
-
-
-
-
-
US$ 11
-
-
US$ (3)
US$ 10
-
-
-
-
-
-
-
US$ 5
-
US$ 11
US$ 12
US$ 7
US$ 10
-
-
-
US$ 12
US$ (7)
-
US$ (5)
US$ (10)
US$ (25)
US$ 9
US$ (69)
-
US$ (56)
-
-
-
-
-
8,765
11,100
3,900
16,104
4,600
3,000
-
-
-
4,000
-
-
4,000
4,000
5,000
-
5,000
-
5,000
2,768
-
-
3,732
2,664
3,324
2,450
-
10,000
-
-
-
-
-
-
-
5,000
6,800
8,000
-
-
1,400
8,400
-
-
-
-
5,183
-
471
2,346
2,561
3,284
-
US$ 8,763
US$ 11,096
US$ 3,861
US$ 16,102
US$ 4,589
US$ 2,994
-
-
-
US$ 4,003
-
-
US$ 3,984
US$ 3,994
US$ 5,004
-
US$ 5,008
-
US$ 5,046
US$ 2,810
-
-
US$ 3,727
US$ 2,793
US$ 3,453
US$ 2,491
-
US$ 9,998
-
-
-
-
-
-
-
US$ 5,007
US$ 6,817
US$ 8,040
-
-
US$ 1,399
US$ 8,397
-
-
-
-
US$ 5,168
-
US$ 471
US$ 2,425
US$ 2,595
US$ 3,466
(Continued)
83
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
Fhr 3184 Fa
Fnma Pool 745131
Fnma Pool 995672
Fnma Pool AD9843
Fnma Tba Dec 30 Single Fam
Fnma Tba Nov 30 Single Fam
Fnma Tba Oct 30 Single Fam
Fnr 2006 60 CO
Fnr 2009 116 A
Freddie Mac
Freddie Mac
Freddie Mac
Freddie Mac
Freddie Mac
Freddie Mac
Freddie Mac
Freddie Mac
Freddie Mac
Gnr 2009 45 AB
Government Natl Mtg Assn
Ngn 2010 R2 1A
Government bond
United States Treas Nts
United States Treas Nts
US Treasury N/B
US Treasury N/B
US Treasury N/B
US Treasury N/B
US Treasury N/B
US Treasury N/B
US Treasury Nts
US Treasury Sec
US Treasury Sec.
Wi Treasury N/B
Wi Treasury Sec
Wi Treasury Sec
Wi Treasury Sec
Money market fund
Ssga Cash Mgmt Global Offshore
Corporate issued note
Barclays U.S. Fdg LLC
Financial
Statement
Account
Available-for-sale
financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
Available-for-sale
financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
Available-for-sale
financial assets
Available-for-sale
financial assets
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ -
4,686
US$ 4,681
-
US$ -
US$ -
US$ -
4,096
US$ 4,084
-
-
-
-
-
-
-
-
-
4,500
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
21,400
-
37,700
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 4,491
-
-
-
-
-
-
-
-
-
-
3,123
3,000
3,252
24,000
14,200
14,200
4,092
4,390
10,420
-
8,000
7,000
4,500
5,750
7,855
4,300
4,010
7,004
3,050
3,800
US$ 3,261
US$ 3,141
US$ 3,405
US$ 25,241
US$ 14,863
US$ 14,790
US$ 4,090
US$ 4,712
US$ 10,412
-
US$ 8,002
US$ 6,994
US$ 4,507
US$ 5,771
US$ 7,869
US$ 4,308
US$ 4,024
US$ 7,305
US$ 3,278
US$ 3,800
-
3,000
3,252
24,000
14,200
14,200
-
-
-
4,500
8,000
7,000
-
-
-
-
-
-
-
-
-
US$ 3,134
US$ 3,397
US$ 25,233
US$ 14,981
US$ 14,901
-
-
-
US$ 4,496
US$ 7,997
US$ 6,995
-
-
-
-
-
-
-
-
-
US$ 3,141
US$ 3,405
US$ 25,241
US$ 14,863
US$ 14,790
-
-
-
US$ 4,490
US$ 8,001
US$ 6,994
-
-
-
-
-
-
-
-
-
US$ (7)
US$ (8)
US$ (8)
US$ 118
US$ 111
-
-
-
US$ 6
US$ (4)
US$ 1
-
-
-
-
-
-
-
-
-
24,000
US$ 24,116
24,000
US$ 24,105
US$ 24,116
US$ (11)
-
-
-
-
-
US$ 21,394
-
US$ 39,012
-
-
-
-
-
-
45,070
43,900
53,000
16,800
49,700
-
7,000
-
8,000
10,000
5,250
11,100
4,400
5,000
US$ 45,309
US$ 43,832
US$ 53,069
US$ 16,889
US$ 49,742
-
US$ 7,078
-
US$ 8,040
US$ 10,040
US$ 5,195
US$ 11,084
US$ 4,380
US$ 5,009
45,070
43,900
53,000
16,800
8,000
21,400
-
37,700
8,000
10,000
-
-
4,400
5,000
US$ 45,258
US$ 44,134
US$ 53,316
US$ 16,897
US$ 8,066
US$ 21,487
-
US$ 38,784
US$ 8,028
US$ 10,045
-
-
US$ 4,464
US$ 4,977
US$ 45,309
US$ 43,831
US$ 53,069
US$ 16,889
US$ 8,013
US$ 21,416
-
US$ 39,346
US$ 8,040
US$ 10,040
-
-
US$ 4,380
US$ 5,009
US$ (51)
US$ 303
US$ 247
US$ 8
US$ 53
US$ 71
-
US$ (562)
US$ (12)
US$ 5
-
-
US$ 84
US$ (32)
1,743
-
-
-
-
-
3,485
4,271
10,420
-
-
-
4,500
5,750
7,855
4,300
4,010
4,417
3,050
3,732
-
-
-
-
-
41,700
-
7,000
-
-
-
5,250
11,100
-
-
US$ 1,803
-
-
-
-
-
US$ 3,483
US$ 4,640
US$ 10,411
-
-
-
US$ 4,502
US$ 5,764
US$ 7,859
US$ 4,316
US$ 4,014
US$ 4,496
US$ 3,285
US$ 3,731
-
-
-
-
-
US$ 42,042
-
US$ 7,079
-
-
-
US$ 5,212
US$ 10,976
-
-
8,858
US$ 8,858
337,008
US$ 337,008
333,479
US$ 333,479
US$ 333,479
4,500
US$ 4,489
-
-
4,500
US$ 4,489
US$ 4,489
-
-
12,387
US$ 12,387
-
-
(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 redemption by the issuer.
Note 3: The ending balance includes the amortization of premium/discount on bonds investments, unrealized valuation gains/losses on financial assets, translation adjustments, equity in earnings/losses of equity method investees and other adjustments to long-term investment using equity method.
84
TABLE 4
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, 2010
(Amounts in Thousands of New Taiwan Dollars)
Company Name
Types of
Property
Transaction Date
Transaction
Amount
Payment Term
Counter-party
Nature of
Relationships
Prior Transaction of Related Counter-party
Owner
Relationships
Transfer
Date
Price Reference
Amount
Purpose of
Acquisition
Other
Terms
TSMC
Fab
Fab
Fab
Fab
Fab
Fab
Fab
January 28, 2010 to
December 27, 2010
January 28, 2010 to
December 29, 2010
February 19, 2010 to
December 29, 2010
February 25, 2010 to
December 30, 2010
April 1, 2010 to
December 30, 2010
December 26, 2010 to
December 28, 2010
December 30, 2010
$ 1,169,132
By the construction
progress
1,959,787
By the construction
progress
2,800,940
By the construction
progress
493,403
By the construction
progress
125,277
By the construction
progress
195,831
By the construction
progress
2,900,000
Based on the agreement
China Steel Structure
Co., Ltd.
Fu Tsu Construction
Co., Ltd.
Da Cin Constructure
Co., Ltd.
Tasa Construction
Corporation
I-Domain Industrial
Co., Ltd.
Mirle Automation
Corporation
Powerchip Technology
Corporation
-
-
-
-
-
-
-
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
Public bidding
N/A
Public bidding
N/A
Public bidding
N/A
Public bidding
N/A
Public bidding
N/A
Public bidding
N/A
Pricing report
Ma nufacturing
purpose
Ma nufacturing
purpose
Ma nufacturing
purpose
Ma nufacturing
purpose
Ma nufacturing
purpose
Ma nufacturing
purpose
Ma nufacturing
purpose
None
None
None
None
None
None
None
85
TABLE 5
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, 2010
(Amounts in Thousands of New Taiwan Dollars)
Company Name
Related Party
Nature of Relationships
TSMC
TSMC North America
GUC
VIS
TSMC China
WaferTech
VIS
SSMC
Subsidiary
Investee with a controlling financial interest
Investee accounted for using equity method
Subsidiary
Indirect subsidiary
Investee accounted for using equity method
Investee accounted for using equity method
GUC
TSMC North America
Same parent company
Purchases/
Sales
Sales
Sales
Sales
Purchases
Purchases
Purchases
Purchases
Purchases
Transaction Details
Abnormal Transaction
Notes/Accounts Payable or Receivable
Amount
% to Total
Payment Terms
Unit Price
(Note)
Payment Terms
(Note)
Ending Balance
% to Total
Note
$ 220,529,792
2,818,499
223,433
8,748,101
7,878,260
4,937,617
4,521,046
780,070
53
1
-
18
16
10
10
18
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
Net 30 days after monthly closing
Net 30 days after monthly closing
Ne t 30 days after invoice date/net
30 days after monthly closing
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$ 25,579,259
154,589
-
(895,193)
(568,685)
(428,797)
(430,235)
(102,302)
118,933
53
-
-
7
4
3
3
14
62
Xintec
OmniVision
Pa rent company of director (represented for
Sales
2,252,522
57
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.
TABLE 6
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, 2010
(Amounts in Thousands of New Taiwan Dollars)
Company Name
Related Party
Nature of Relationships
Ending Balance
TSMC
TSMC North America
TSMC China
GUC
Subsidiary
Subsidiary
Investee with a controlling financial interest
$ 25,582,932
1,170,407
154,589
Xintec
OmniVision
Pa rent company of director (represented for
118,933
Xintec)
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)
40
(Note 2)
32
42
Overdue
Amounts
Action Taken
$ 8,255,062
-
7,415
-
-
-
-
-
Amounts Received in Subsequent
Period
$ 11,282,114
-
-
Allowance for Bad Debts
$ -
-
-
-
-
86
TABLE 7
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
NAMES, LOCATIONS, AND RELATED INFORMATION OF INVESTEES OVER WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCE
DECEMBER 31, 2010
(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
Original Investment Amount
Balance as of December 31, 2010
December 31,
2010
(Foreign
Currencies in
Thousands)
December 31,
2009
(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
$ 43,710,543
33,565,775
$ 660,931
2,313,657
$ 660,931
2,313,657
Subsidiary
Subsidiary
VIS
SSMC
Motech
Hsin-Chu, Taiwan
13,232,288
13,232,288
628,223
Singapore
Fabrication and supply of integrated circuits
5,120,028
5,120,028
314
Taipei, Taiwan
6,228,661
-
76,069
38
39
20
9,422,452
1,952,385
343,252
7,120,714
3,881,067
1,308,468
6,733,369
4,584,720
542,218
Investee accounted for
using equity method
Investee accounted for
using equity method
Investee accounted for
using equity method
12,180,367
12,180,367
-
100
4,252,270
1,386,574
1,358,492
Subsidiary
Investment activities
Investing 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
Manufacturing and sales of solar cells, crystalline
silicon solar cell, and test and measurement
instruments and design and construction of solar
power systems
Manufacturing and selling of integrated circuits
at the order of and pursuant to product design
specifications provided by customers
Selling and marketing of integrated circuits and
semiconductor devices
Investing in new start-up technology companies
Wafer level chip size packaging service
Researching, developing, manufacturing, testing and
marketing of integrated circuits
Investing in new start-up technology companies
Investing in new start-up technology companies
Marketing and engineering supporting activities
Marketing activities
Engaged in selling and marketing of solar related
products
Engaged in investing activities of solar related
business
Customer service and technical supporting activities
Engaged in selling and marketing of LED related
products
333,718
333,718
3,565,441
1,357,890
1,703,163
1,357,890
386,568
386,568
1,166,470
971,785
15,749
83,760
60,962
25,350
13,656
3,133
1,093,943
959,044
15,749
83,760
-
-
13,656
-
TSMC China
Shanghai, China
TSMC North America
San Jose, California, U.S.A.
VTAF III
Xintec
GUC
VTAF II
Emerging Alliance
TSMC Europe
TSMC Japan
TSMC Solar NA
Cayman Islands
Taoyuan, Taiwan
Hsin-Chu, Taiwan
Cayman Islands
Cayman Islands
Amsterdam, the Netherlands
Yokohama, Japan
Delaware, U.S.A.
TSMC Solar Europe
Amsterdam, the Netherlands
TSMC Korea
TSMC Lighting NA
Seoul, Korea
Delaware, U.S.A.
TSMC Partners
TSMC Development
VisEra Holding Company
Delaware, U.S.A.
Cayman Islands
ISDF
ISDF II
TSMC Technology
TSMC Canada
Cayman Islands
Cayman Islands
Delaware, U.S.A.
Ontario, Canada
Investment activities
Investing in companies involved in the design,
manufacturing, and other related businesses in
the semiconductor industry
Investing in new start-up technology companies
Investing in new start-up technology companies
Engineering support activities
Engineering support activities
US$ 0.001
US$ 43,000
US$ 0.001
US$ 43,000
US$ 4,088
US$ 16,532
US$ 0.001
US$ 2,300
US$ 7,680
US$ 21,415
US$ 0.001
US$ 2,300
100
2,873,888
302,598
302,598
Subsidiary
2,769,423
1,645,201
(247,274)
505,260
(241,178)
180,912
1,113,516
604,501
211,199
11,000
-
93,081
46,688
-
-
-
6
1
-
80
1
1
43,000
4,088
16,532
1
2,300
99
41
35
98
99
100
100
100
100
100
100
100
49
97
97
100
100
1,063,057
304,310
177,784
150,312
26,527
23,971
20,929
3,133
120,612
2,345
38,893
4,704
(35,512)
(433)
2,709
-
US$ 403,257
US$ 83,057
US$ 62,870
US$ 11,321
US$ 21,523
US$ 13,660
US$ 9,878
US$ 3,714
US$ 8,934
US$ 4,957
US$ 807
US$ 348
Subsidiary
Investee with a controlling
financial interest
Investee with a controlling
financial interest
Subsidiary
Subsidiary (Note 3)
Subsidiary (Note 3)
Subsidiary (Note 3)
Subsidiary
118,200
2,333
38,893
4,704
(35,512)
(433)
Subsidiary
2,709
-
Subsidiary (Note 3)
Subsidiary
Note 2
Note 2
Note 2
Note 2
Note 2
Note 2
Subsidiary
Investee accounted for
using equity method
Subsidiary
Subsidiary
Subsidiary (Note 3)
Subsidiary (Note 3)
(Continued)
87
Investor Company
Investee Company
Location
Main Businesses and Products
Mcube Inc. (Common Stock)
Delaware, U.S.A.
Mcube Inc. (Preferred Stock)
Delaware, U.S.A.
TSMC Development
WaferTech
Washington, U.S.A.
VTAF III
Mu tual-Pak Technology Co.,
Taipei, Taiwan
Ltd.
Aiconn Technology Corp.
Taipei, Taiwan
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
researching, developing, and testing of RFID
Wholesaling telecommunication equipments, and
manufacturing wired and wireless communication
equipments
Original Investment Amount
Balance as of December 31, 2010
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
December 31,
2010
(Foreign
Currencies in
Thousands)
December 31,
2009
(Foreign
Currencies in
Thousands)
US$ 800
US$ 800
US$ 1,000
US$ 1,000
5,333
1,000
70
10
US$ -
US$ (6,915)
-
(6,915)
Note 2
Note 2
Investee accounted for using
equity method (Note 3)
Investee accounted for using
equity method (Note 3)
US$ 280,000
US$ 330,000
293,637
100
US$ 165,211
US$ 60,779
Note 2
Subsidiary
US$ 3,937
US$ 3,088
11,868
US$ 2,206
US$ 1,777
5,623
57
43
100
62
31
100
100
100
100
100
7
100
US$ 2,058
US$ (1,879)
Note 2
Subsidiary (Note 3)
US$ 546
US$ (1,030)
Note 2
Investee accounted for using
equity method (Note 3)
US$ 846
-
US$ (127)
-
Note 2
Note 2
Subsidiary (Note 3)
Subsidiary (Note 3)
-
-
Note 2
Subsidiary (Note 3)
$ 58,045
14,706
8,761
3,747
$ 10,599
1,404
(8,021)
(703)
Note 2
Note 2
Note 2
Note 2
Subsidiary
Subsidiary (Note 3)
Subsidiary (Note 3)
Subsidiary (Note 3)
7,468
(7,971)
Note 2
Subsidiary (Note 3)
-
-
Note 2
Subsidiary (Note 3)
3,658
(421)
Note 2
Subsidiary (Note 3)
(Concluded)
VTAF II
GUC
Growth Fund
VTA Holdings
Cayman Islands
Delaware, U.S.A.
Investing in new start-up technology companies
Investing in new start-up technology companies
US$ 1,700
-
US$ 1,550
-
VTA Holdings
Delaware, U.S.A.
Investing in new start-up technology companies
-
-
GUC-NA
GUC-Japan
GUC-BVI
GUC-Europe
U.S.A.
Japan
British Virgin Islands
The Netherlands
Consulting services in main products
Consulting services in main products
Investment activities
Consulting services in main products
US$ 1,249
JPY 30,000
US$ 550
EUR 100
US$ 800
JPY 30,000
US$ 550
EUR 100
GUC-BVI
GUC-Shanghai
Shanghai, China
Consulting services in main products
US$ 500
Emerging Alliance
VTA Holdings
Delaware, U.S.A.
Investing in new start-up technology companies
-
TSMC Solar Europe
TSMC Solar Europe GmbH
Hamburg, Germany
Engaged in the selling and customer service of solar
cell modules and related products
EUR 100
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.
-
-
-
-
-
-
800
1
550
-
-
-
1
88
TABLE 8
Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries
INFORMATION OF INVESTMENT IN MAINLAND CHINA
FOR THE YEAR ENDED DECEMBER 31, 2010
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)
Investor Company
Investee Company
Main Businesses and Products
Total Amount of Paid-in Capital
(Thousand)
Method of Investment
TSMC
GUC
TSMC China
GUC-Shanghai
Ma nufacturing and selling of
integrated circuits at the order
of and pursuant to product
design specifications provided
by customers
Co nsulting services in main
products
$ 12,180,367
(RMB 3,070,623)
(Note 1)
Accumulated Outflow of
Investment from Taiwan as of
January 1, 2010
(US$ in Thousand)
$ 12,180,367
(US$ 371,000)
Investment Flows
Outflow (US$
in Thousand)
Inflow (US$ in
Thousand)
$ -
$ -
Accumulated Outflow of
Investment from Taiwan as of
December 31, 2010 (US$ in
Thousand)
$ 12,180,367
(US$ 371,000)
16,160
(US$ 500)
(Note 2)
-
16,160
(US$ 500)
-
16,160
(US$ 500)
Investor Company
Percentage of Ownership
Equity in the Earnings (Losses)
Carrying Value
as of December 31, 2010
Accumulated Inward
Remittance of Earnings as of
December 31, 2010
Accumulated Investment in
Mainland China as of December
31, 2010 (US$ in Thousand)
Investment Amounts Authorized
by Investment Commission, MOEA
(US$ in Thousand)
Upper Limit on Investment
(US$ in Thousand)
TSMC
GUC
100%
100%
$ 1,358,492
(Note 3)
$ 4,252,270
$ -
$ 12,180,367
(US$ 371,000)
$ 12,180,367
(US$ 371,000)
$ 12,180,367
(US$ 371,000)
(7,971)
(Note 4)
7,468
-
16,160
(US$ 500)
16,160
(US$ 500)
1,909,972
(Note 5)
Note 1: TSMC directly invested US$371,000 thousand in TSMC China.
Note 2: GUC, TSMC’s investee with a controlling financial interest, indirectly invested in GUC-Shanghai through GUC-BVI.
Note 3: Amount was recognized based on the audited financial statements.
Note 4: Amount was determined based on the unaudited financial statements.
Note 5: Subject to 60% of net asset value of GUC according to the revised “Guidelines Governing the Approval of Investment or Technical Cooperation in Mainland China” issued by the Investment Commission.
89
TABLE 9
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, 2010
No.
0
Company Name
Counter Party
TSMC
TSMC North America
TSMC China
TSMC Japan
TSMC Europe
TSMC Korea
GUC
TSMC Technology
Nature of
Relationship
(Note 1)
1
1
1
1
1
1
1
Financial Statements Item
Sales
Receivables from related parties
Other receivables from related parties
Payables to related parties
Sales
Purchases
Marketing expenses - commission
Gain on disposal of property, plant and equipment
Acquisition of property, plant and equipment
Disposal of property, plant and equipment
Technical service income
Other receivables from related parties
Payables to related parties
Deferred debits
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
Payables to related parties
Research and development expenses
Payables to related parties
90
Intercompany Transactions
Amount
Terms (Note 2)
Percentage of Consolidated Total
Gross Sales or Total Assets
$ 220,529,792
25,579,259
3,673
11,475
17,631
8,748,101
59,180
45,251
66,337
1,409,862
4,487
1,170,407
895,193
27,327
266,194
26,115
415,765
33,907
35,530
19,318
2,466
2,818,499
8,390
154,589
2,271
547,838
88,292
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
51%
6%
-
-
-
2%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1%
-
-
-
-
-
(Continued)
Nature of
Relationship
(Note 1)
Financial Statements Item
Amount
Terms (Note 2)
Percentage of Consolidated Total
Gross Sales or Total Assets
Intercompany Transactions
No.
0
Company Name
Counter Party
TSMC
WaferTech
TSMC Canada
Xintec
1
GUC
TSMC North America
TSMC Korea
GUC-NA
GUC-Japan
GUC-Europe
GUC-Shanghai
TSMC China
TSMC Partners
WaferTech
2
3
TSMC Partners
TSMC China
1
1
1
3
3
3
3
3
3
3
3
3
Sales
Purchases
Gain on disposal of other assets
Acquisition of property, plant and equipment
Disposal of property, plant and equipment
Disposal of other assets
Other receivables from related parties
Payables to related parties
Research and development expenses
Payables to related parties
Manufacturing overhead
Research and development expenses
Disposal of property, plant and equipment
Payables to related parties
Purchases
Manufacturing overhead
Payables to related parties
Operating expenses
Operating expenses
Manufacturing overhead
Accrued expenses
Operating expenses
Accrued expenses
Operating expenses
Operating expenses
Accrued expenses
Other long-term receivables
Other long-term payables
Acquisition of property, plant and equipment
$ 9,918
7,878,260
9,655
9,624
27,010
9,655
3,543
568,685
181,943
13,495
313,397
12,652
3,841
69,083
780,070
196,572
102,302
1,156
155,643
54,029
14,353
45,927
9,706
1,778
22,146
1,945
3,644,160
3,663,678
27,104
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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.
-
2%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1%
1%
-
(Continued)
91
B. For the year ended December 31, 2009
No.
0
Company Name
Counter Party
TSMC
TSMC North America
TSMC China
TSMC Japan
TSMC Europe
TSMC Korea
GUC
TSMC Technology
WaferTech
TSMC Canada
Xintec
Nature of
Relationship
(Note 1)
1
1
1
1
1
1
1
1
1
1
Financial Statements Item
Sales
Receivables from related parties
Other receivables from related parties
Payables to related parties
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
Sales of property, plant and equipment and other assets
92
Intercompany Transactions
Amount
Terms (Note 2)
Percentage of Consolidated Total
Gross Sales or Total Assets
$ 161,251,368
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
36,101
37,363
58,450
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
52%
4%
-
-
-
1%
-
-
-
-
-
-
-
-
-
-
-
-
-
1%
-
-
-
-
-
2%
-
-
-
-
-
-
-
(Continued)
No.
3
Company Name
Counter Party
GUC
TSMC North America
GUC-NA
GUC-Japan
GUC-Europe
Nature of
Relationship
(Note 1)
3
3
3
3
Intercompany Transactions
Financial Statements Item
Purchases
Manufacturing overhead
Payables to related parties
Operating expenses
Accrued expenses
Operating expenses
Accrued expenses
Operating expenses
Amount
Terms (Note 2)
Percentage of Consolidated Total
Gross Sales or Total Assets
$ 937,160
303,687
173,789
157,345
14,618
39,755
3,462
7,305
-
-
-
-
-
-
-
-
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.
-
-
-
-
-
-
-
-
(Concluded)
93
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, 2009 and 2010
(In Thousand New Taiwan Dollars)
U.S. GAAP RECONCILIATIONS OF NET INCOME
For the Years Ended December 31, 2009 and 2010
(In Thousand New Taiwan Dollars)
2010
2009
2010
2009
Total shareholders’ equity based on R.O.C. GAAP
$ 578,704,405
$ 499,048,548
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
(516,314)
(9,897,467)
9,897,467
(1,379,606)
52,212,732
(11,499,173)
(27,445)
(2,477,721)
139,349
36,451,822
(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
Total equity based on U.S. GAAP
$ 615,156,227
$ 535,996,368
Attributable to
Shareholders of the parent
Noncontrolling interests
610,596,740
4,559,487
$ 615,156,227
532,042,816
3,953,552
$ 535,996,368
Net income
Consolidated net income based on R.O.C. GAAP
Adjustments
- U.S. GAAP adjustments on equity-method investees
- 10% tax on undistributed earnings
- Profit sharing to employees, directors and supervisors- Fair market
value adjustment of prior year accrual
- Pension expense
- Stock-based compensation
- Income tax effect of U.S. GAAP adjustments
- Net adjustment
$ 162,281,930
$ 89,466,223
(7,020)
2,208,402
-
4,289
(179,784)
12,625
2,038,512
(6,300)
966,889
(648,092)
3,888
(559,078)
69,929
(172,764)
Consolidated net income based on U.S. GAAP
$ 164,320,442
$ 89,293,459
Attributable to
Shareholders of the parent
Noncontrolling interests
163,638,659
681,783
$ 164,320,442
89,102,226
191,233
$ 89,293,459
94
CONTACT INFORMATION
TSMC Design Technology Canada Inc.
535 Legget Dr, Suite 600, Kanata, ON K2K 3B8, Canada
Tel: 1-613-576-1990
Fax: 1-613-576-1999
TSMC Spokesperson
Name: Lora Ho
Title: Senior Vice President & CFO
Tel: 886-3-5054602 Fax: 886-3-5670121
Email: cyhsu@tsmc.com
Deputy Spokesperson/ TSMC Investor Relations
Name: Elizabeth Sun
Title: Director, TSMC Corporate Communication Division
Tel: 886-3-5682080 Fax: 886-3-5797337
Email: elizabeth_sun@tsmc.com
Auditors
Company: Deloitte & Touche
Auditors: Hung-Peng Lin, Shu-Chieh Huang
Address: 12F, 156, Sec. 3, Min-Sheng E. Rd., Taipei 105-96
Taiwan, 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 100-08
Taiwan, 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 300-78, Taiwan, R.O.C.
Tel: 886-3-5636688 Fax: 886-3-5637000
Fab 2, Fab 5
121, Park Ave. 3, Hsinchu Science Park, Hsinchu 300-77, Taiwan, R.O.C.
Tel: 886-3-5636688 Fax: 886-3-5781546
Fab 3
9, Creation Rd. 1, Hsinchu Science Park, Hsinchu 300-77, Taiwan, R.O.C.
Tel: 886-3-5636688 Fax: 886-3-5781548
Fab 6
1, Nan-Ke North Rd., Tainan Science Park, Tainan 741-44, Taiwan, R.O.C.
Tel: 886-6-5056688 Fax: 886-6-5052057
Fab 8
25, Li-Hsin Rd., Hsinchu Science Park, Hsinchu 300-78, Taiwan, R.O.C.
Tel: 886-3-5636688 Fax: 886-3-5662051
Fab 14
1-1, Nan-Ke North Rd., Tainan Science Park, Tainan 741-44, Taiwan, 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
Copyright © 2011 by Taiwan Semiconductor Manufacturing Company, Ltd. All rights reserved.