Taiwan Semiconductor Manufacturing
Company Limited
Financial Statements for the
Years Ended December 31, 2011 and 2010 and
Independent Auditors’ Report
D R A F T
INDEPENDENT AUDITORS’ REPORT
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, 2011 and 2010, 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, 2011 and 2010, 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.
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, 2011 and 2010 on which we have issued an unqualified opinion.
February 14, 2012
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 jurisdictions. 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.
- 1 -
Taiwan Semiconductor Manufacturing Company Limited
BALANCE SHEETS
DECEMBER 31, 2011 AND 2010
(In Thousands of New Taiwan Dollars, Except Par Value)
ASSETS
CURRENT ASSETS
Cash and cash equivalents (Notes 2 and 4)
Financial assets at fair value through profit or loss (Notes 2, 5
and 24)
Available-for-sale financial assets (Notes 2, 6 and 24)
Held-to-maturity financial assets (Notes 2, 7 and 24)
Receivables from related parties (Notes 3 and 25)
Notes and accounts receivable (Note 3)
Allowance for doubtful receivables (Notes 2, 3 and 8)
Allowance for sales returns and others (Notes 2 and 8)
Other receivables from related parties (Notes 3 and 25)
Other financial assets (Note 26)
Inventories (Notes 2 and 9)
Deferred income tax assets (Notes 2 and 18)
Prepaid expenses and other current assets
2011
2010
2011
2010
Amount
%
Amount
%
LIABILITIES AND SHAREHOLDERS’ EQUITY
Amount
%
Amount
%
$
85,262,521
11
$ 109,511,130
15
14,925
2,617,134
701,136
24,777,534
19,894,386
(485,120)
(4,887,879)
188,028
122,010
22,853,397
5,779,544
1,725,736
-
-
-
3
3
-
-
-
-
3
1
-
-
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
-
-
1
4
3
-
(1)
-
-
4
1
-
CURRENT LIABILITIES
Short-term loans (Note 14)
Financial liabilities at fair value through profit or loss (Notes 2, 5
and 24)
Accounts payable
Payables to related parties (Note 25)
Income tax payable (Notes 2 and 18)
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, 24 and 25)
Current portion of bonds payable (Notes 15 and 24)
$
25,926,528
3
$
30,908,637
-
9,522,688
2,992,582
10,647,797
9,055,704
33,811,970
13,057,161
4,500,000
-
1
-
1
1
5
2
1
7,834
10,559,283
2,574,450
7,108,869
10,959,469
41,992,198
13,911,520
-
4
-
2
-
1
2
6
2
-
Total current liabilities
109,514,430
14
118,022,260
17
Total current assets
158,563,352
21
192,234,282
27
LONG-TERM INVESTMENTS (Notes 2, 6, 7, 10, 11 and 24)
Investments accounted for using equity method
Available-for-sale financial assets
Held-to-maturity financial assets
Financial assets carried at cost
128,200,718
-
702,291
497,835
17
-
-
-
114,977,174
1,033,049
1,405,698
497,835
17
-
-
-
LONG-TERM LIABILITIES
Bonds payable (Notes 15 and 24)
OTHER LIABILITIES
Accrued pension cost (Notes 2 and 17)
Guarantee deposits (Note 28)
Total other liabilities
18,000,000
3,860,898
439,032
4,299,930
2
1
-
1
4,500,000
3,824,601
747,887
4,572,488
-
1
-
1
Total long-term investments
129,400,844
17
117,913,756
17
Total liabilities
131,814,360
17
127,094,748
18
PROPERTY, PLANT AND EQUIPMENT (Notes 2, 12 and 25)
Cost
Buildings
Machinery and equipment
Office equipment
Accumulated depreciation
Advance payments and construction in progress
149,495,478
984,978,666
13,824,434
1,148,298,578
(804,740,797)
110,815,752
20
129
2
151
(106)
14
128,646,942
852,733,592
11,730,537
993,111,071
(706,605,445)
80,348,673
18
122
2
142
(101)
11
Net property, plant and equipment
454,373,533
59
366,854,299
52
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 25)
Total other assets
TOTAL
The accompanying notes are an integral part of the financial statements.
1,567,756
4,719,244
6,287,000
7,221,824
4,491,735
1,069,586
12,783,145
-
1
1
1
1
-
2
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
CAPITAL STOCK - NT$10 PAR VALUE (Note 20)
Authorized: 28,050,000 thousand shares
Issued:
25,916,222 thousand shares in 2011
25,910,078 thousand shares in 2010
259,162,226
34
259,100,787
37
CAPITAL SURPLUS (Notes 2 and 20)
55,846,357
8
55,698,434
8
RETAINED EARNINGS (Note 20)
Appropriated as legal capital reserve
Appropriated as special capital reserve
Unappropriated earnings
OTHERS (Notes 2, 22 and 24)
Cumulative translation adjustments
Unrealized gain (loss) on financial instruments
102,399,995
6,433,874
213,357,286
13
1
28
86,239,494
1,313,047
178,227,030
12
-
26
322,191,155
42
265,779,571
38
(6,433,369)
(1,172,855)
(1)
-
(6,543,163)
109,289
(7,606,224)
(1)
(6,433,874)
(1)
-
(1)
Total shareholders’ equity
629,593,514
83
574,144,918
82
$ 761,407,874
100
$ 701,239,666
100
TOTAL
$ 761,407,874
100
$ 701,239,666
100
- 2 -
Taiwan Semiconductor Manufacturing Company Limited
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)
2011
2010
Amount
%
Amount
%
GROSS SALES (Notes 2 and 25)
$ 421,472,087
$ 418,666,448
SALES RETURNS AND ALLOWANCES
(Notes 2 and 8)
NET SALES
3,226,594
11,703,136
418,245,493
100
406,963,312
100
COST OF SALES (Notes 9, 19 and 25)
233,083,068
56
209,921,268
52
GROSS PROFIT BEFORE AFFILIATES
ELIMINATION
185,162,425
44
197,042,044
48
REALIZED (UNREALIZED) GROSS PROFIT FROM
AFFILIATES (Note 2)
398,440
-
(52,742)
-
GROSS PROFIT
185,560,865
44
196,989,302
48
OPERATING EXPENSES (Notes 19 and 25)
Research and development
General and administrative
Marketing
31,594,034
12,715,339
2,345,729
7
3
1
27,623,299
11,681,756
2,837,739
7
3
-
Total operating expenses
46,655,102
11
42,142,794
10
INCOME FROM OPERATIONS
138,905,763
33
154,846,508
38
NON-OPERATING INCOME AND GAINS
Equity in earnings of equity method investees, net
(Notes 2 and 10)
Settlement income (Note 28)
Valuation gain on financial instruments, net
(Notes 2, 5 and 24)
Interest income
Technical service income (Note 25)
Others (Notes 2 and 25)
3,778,083
947,340
801,195
697,196
408,153
655,079
Total non-operating income and gains
7,287,046
1
1
-
-
-
-
2
7,111,443
6,939,764
312,862
764,027
446,746
333,126
15,907,968
2
2
-
-
-
-
4
(Continued)
- 3 -
Taiwan Semiconductor Manufacturing Company Limited
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)
2011
2010
Amount
%
Amount
%
NON-OPERATING EXPENSES AND LOSSES
Foreign exchange loss, net (Note 2)
Interest expense (Note 25)
Loss on disposal of property, plant and equipment
$
(Note 2)
Casualty loss (Note 9)
Others
673,085
445,887
202,901
-
163,092
Total non-operating expenses and losses
1,484,965
$
-
-
-
-
-
-
58,737
214,641
838,750
190,992
161,152
1,464,272
-
-
-
-
-
-
INCOME BEFORE INCOME TAX
144,707,844
35
169,290,204
42
INCOME TAX EXPENSE (Notes 2 and 18)
10,506,565
3
7,685,195
2
NET INCOME
$ 134,201,279
32
$ 161,605,009
40
2011
2010
Before
Income
Tax
After
Income
Tax
Before
Income
Tax
After
Income
Tax
EARNINGS PER SHARE (NT$, Note 23)
Basic earnings per share
Diluted earnings per share
$ 5.58
$ 5.58
$ 5.18
$ 5.18
$ 6.53
$ 6.53
$ 6.24
$ 6.23
The accompanying notes are an integral part of the financial statements.
(Concluded)
- 4 -
Taiwan Semiconductor Manufacturing Company Limited
STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010
(In Thousands of New Taiwan Dollars, Except Dividends Per Share)
Capital Stock - Common Stock
Shares
(In Thousands)
Amount
Capital Surplus
Reserve
Legal Capital
Retained Earnings
Special Capital
Reserve
Unappropriated
Earnings
Total
Cumulative
Translation
Adjustments
Others
Unrealized
Gain (Loss) on
Financial
Instruments
Total
Shareholders’
Treasury Stock
Equity
BALANCE, JANUARY 1, 2010
25,902,706
$ 259,027,066
$ 55,486,010
$ 77,317,710
$
-
$ 104,564,972
$ 181,882,682
$
(1,766,667) $
453,621
$
-
$ 495,082,712
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
Net changes of valuation gain/loss on
available-for-sale financial assets
Net change in shareholders’ equity from equity
method investees
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(17,885)
-
7,372
73,721
171,103
-
-
-
-
-
59,206
8,921,784
-
-
1,313,047
(8,921,784)
(1,313,047)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(77,708,120)
(77,708,120)
161,605,009
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
Appropriations of prior year’s earnings
Legal capital reserve
Special capital reserve
Cash dividends to shareholders - NT$3.00 per
share
Net income in 2011
Adjustment arising from changes in percentage of
ownership in equity method investees
Translation adjustments
Issuance of stock from exercising employee stock
options
Net changes of valuation gain/loss on
available-for-sale financial assets
Net change in shareholders’ equity from equity
method investees
Acquisition of treasury stock - shareholders
executed the appraisal right
Retirement of treasury stock
Effect of spin-off
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
59,898
-
7,144
71,439
146,258
-
-
-
-
-
-
-
(1,000)
-
-
(10,000)
-
-
(2,139)
(56,094)
16,160,501
-
-
5,120,827
(16,160,501)
(5,120,827)
-
-
(77,730,236)
(77,730,236)
134,201,279
134,201,279
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(112,326)
-
-
-
-
-
-
-
-
-
-
(1,112,995)
(165,851)
-
-
-
-
-
-
-
-
-
-
-
(77,730,236)
134,201,279
59,898
(112,326)
217,697
(1,112,995)
(165,851)
(71,598)
-
162,728
-
(59,459)
-
-
(59,459)
-
-
-
222,120
-
-
(3,298)
(71,598)
71,598
-
BALANCE, DECEMBER 31, 2011
25,916,222
$ 259,162,226
$ 55,846,357
$ 102,399,995
$
6,433,874
$ 213,357,286
$ 322,191,155
$
(6,433,369) $
(1,172,855) $
-
$ 629,593,514
The accompanying notes are an integral part of the financial statements.
- 5 -
Taiwan Semiconductor Manufacturing Company Limited
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010
(In Thousands of New Taiwan Dollars)
2011
2010
CASH FLOWS FROM OPERATING ACTIVITIES
Net income
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization
Unrealized (realized) gross profit from affiliates
Amortization of premium/discount of financial assets
Gain on disposal of available-for-sale financial assets, net
Loss on disposal of financial assets carried at cost
Equity in earnings of equity method investees, net
Cash dividends received from equity method investees
Loss on disposal of property, plant and equipment and other assets,
$ 134,201,279 $ 161,605,009
102,925,423
(398,440)
9,860
(35,151)
-
(3,778,083)
2,941,548
83,366,121
52,742
18,611
-
1,263
(7,111,443)
422,490
net
Settlement income from receiving equity securities
Deferred income tax
Changes in operating assets and liabilities:
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
Accounts payable
Payables to related parties
Income tax payable
Accrued profit sharing to employees and bonus to directors
Accrued expenses and other current liabilities
Accrued pension cost
Deferred credits
99,884
-
(493,026)
761,298
(4,434,364)
(373,253)
(22,759)
956,440
2,356,519
(2,880)
(2,453,565)
(38,049)
138,196
2,775,646
(382,852)
(1,805,422)
418,132
3,538,928
(1,903,765)
(410,047)
96,880
-
189,577
(3,192,201)
(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)
4,188,131
(3,124,307)
17,425
(47,873)
Net cash provided by operating activities
238,734,696
222,023,176
CASH FLOWS FROM INVESTING ACTIVITIES
Cash contributed related to spin-off
Acquisitions of:
Property, plant and equipment
Investments accounted for using equity method
Financial assets carried at cost
- 6 -
(1,270,340)
-
(7,390,883)
(202,757,541) (182,335,032)
(8,262,519)
(480)
(Continued)
(8,262,519)
-
Taiwan Semiconductor Manufacturing Company Limited
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010
(In Thousands of New Taiwan Dollars)
Proceeds from disposal or redemption of:
Available-for-sale financial assets
Held-to-maturity financial assets
Financial assets carried at cost
Property, plant and equipment and other assets
Proceeds from return of capital by investees
Increase in deferred charges
Decrease (increase) in refundable deposits
Decrease (increase) in other assets
2011
2010
$
$
1,035,151
4,789,000
-
4,650,078
320,013
(1,658,296)
4,147,014
27,600
-
15,943,000
3,370
387,735
-
(1,538,301)
(5,940,633)
(1,004,581)
Net cash used in investing activities
(198,108,204) (182,747,441)
(182,747,441)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in short-term loans
Proceeds from issuance of bonds
Decrease in guarantee deposits
Proceeds from exercise of employee stock options
Acquisition of treasury stock
Cash dividends
(4,982,109)
18,000,000
(308,855)
217,697
(71,598)
(77,730,236)
30,908,637
-
(253,489)
(253,489)
244,824
-
(77,708,120)
(77,708,120)
Net cash used in financing activities
(64,875,101)
(46,808,148)
(46,808,148)
NET DECREASE IN CASH AND CASH EQUIVALENTS
(24,248,609)
(7,532,413)
(7,532,413)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
109,511,130
117,043,543
CASH AND CASH EQUIVALENTS, END OF YEAR
$ 85,262,521
$ 109,511,130
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid
Income tax paid
$
$
369,085
7,454,386
$
$
200,892
9,640,396
INVESTING ACTIVITIES AFFECTING BOTH CASH AND
NON-CASH ITEMS
Acquisition of property, plant and equipment
Decrease (increase) in payables to contractors and equipment suppliers
Nonmonetary exchange trade-out price
Cash paid
$ 195,932,728
6,827,106
(2,293)
$ 202,757,541
$ 195,950,918
(13,491,140)
(124,746)
$ 182,335,032
Disposal of property, plant and equipment and other assets
Decrease (increase) in other receivables from related parties
Decrease (increase) in other financial assets
Nonmonetary exchange trade-out price
Cash received
$ 3,370,165
$
1,124,206
158,000
(2,293)
$ 4,650,078
$
1,872,880
(1,142,108)
(218,291)
(218,291)
(124,746)
387,735
(Continued)
- 7 -
Taiwan Semiconductor Manufacturing Company Limited
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010
(In Thousands of New Taiwan Dollars)
2011
2010
NON-CASH FINANCING ACTIVITIES
Current portion of bonds payable
Current portion of other long-term payables (under accrued expenses
$
4,500,000
$
-
and other current liabilities)
$
-
$
718,637
SUPPLEMENTAL INFORMATION FOR SPIN-OFF BUSINESSES
In August 2011, the Company transferred the solid state lighting and solar businesses into its wholly-owned,
newly incorporated subsidiaries, TSMC Solid State Lighting Ltd. (TSMC SSL) and TSMC Solar Ltd. (TSMC
Solar), respectively. The relevant information about spin-off was as follows:
Acquired investments accounted for using equity
method
Non-cash items transferred
Current assets
Long-term investments
Property, plant and equipment
Other assets
Current liabilities
Other liabilities
Capital surplus
Unrealized gain (loss) on financial instruments
Cumulative translation adjustments
TSMC SSL
TSMC Solar
Total
$ 2,270,000
$ 11,180,000
$ 13,450,000
36,050
2,872
1,929,563
234,696
(292,728)
(36,272)
-
-
256
54,857
7,915,582
4,301,777
436,373
(630,167)
(61,490)
(56,094)
(3,298)
222,120
221,864
(1,874,437) (10,305,223) (12,179,660)
18,807
7,912,710
2,372,214
201,677
(337,439)
(25,218)
(56,094)
(3,298)
Cash contributed related to spin-off
$
395,563
$
874,777
$ 1,270,340
The accompanying notes are an integral part of the financial statements.
(Concluded)
- 8 -
Taiwan Semiconductor Manufacturing Company Limited
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010
(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 solid state lighting devices and related applications products and systems, and
renewable energy and efficiency related technologies and products. In August 2011, the Company
transferred its solid state lighting and solar businesses into its wholly-owned, newly incorporated
subsidiaries, TSMC SSL and TSMC Solar, respectively.
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, 2011 and 2010, the Company had 30,113 and 29,929 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:
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.
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.
- 9 -
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.
- 10 -
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.
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.
Allowance for Doubtful Receivables
An allowance for doubtful receivables is provided based on a review of the collectability of receivables.
The Company assesses the collectability of receivables by performing the account aging analysis and
examining current trends in the credit quality of its customers.
The Company’s provision was originally set at 1% of the amount of outstanding receivables. On January
1, 2011, the Company adopted the third revision of Statement of Financial Accounting Standards (SFAS)
No. 34, “Financial Instruments: Recognition and Measurement (SFAS No. 34).” One of the main
revisions is that the impairment of receivables originated by the Company is subject to the provisions of
SFAS No. 34. Accordingly, the Company evaluates for indication of impairment of accounts receivable
based on an individual and collective basis at the end of each reporting period. When objective evidence
indicates that the estimated future cash flow of accounts receivable decreases as a result of one or more
events that occurred after the initial recognition of the accounts receivable, such accounts receivable are
deemed to be impaired.
Because of the Company’s short average collection period, the amount of the impairment loss recognized is
the difference between the carrying amount of accounts receivable and estimated future cash flows without
considering the discounting effect. Changes in the carrying amount of the allowance account are
recognized as bad debt expense which is recorded in the operating expenses - general and administrative.
When accounts receivable are considered uncollectable, the amount is written off against the allowance
account.
Inventories
Inventories are recorded at standard cost and adjusted to approximate weighted-average cost on the balance
sheet date.
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.
- 11 -
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.
Cash dividends received from an investee shall reduce the carrying amount of the investment. Stock
dividends are recorded as an increase in the number of shares held and do not affect investment income.
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 deferred 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.
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.
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.
- 12 -
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, or
more frequently if events or changes in circumstances suggest that the carrying amount may not be
recoverable. 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 and equipment, research and development
expenditures and personnel training expenditures are recognized using the flow-through method.
Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.
Income tax on unappropriated earnings at a rate of 10% is expensed in the year of shareholder approval
which is the year subsequent to the year the earnings are generated.
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 SFAS No. 39, “Accounting for Share-based
Payment.” The Company did not grant or modify any employee stock options since January 1, 2008.
- 13 -
Treasury Stock
Treasury stock represents the outstanding shares that the Company buys back from market, which is stated
at cost and shown as a deduction in shareholders’ equity. When the Company retires treasury stock, the
treasury stock account is reduced and the common stock as well as the capital surplus - additional paid-in
capital are reversed on a pro rata basis. When the book value of the treasury stock exceeds the sum of the
par value and additional paid-in capital, the difference is charged to capital surplus - treasury stock
transactions and to retained earnings for any remaining amount. When the Company resells the treasury
stock, the treasury stock shall be reversed, and if the selling price is greater than the book value, the amount
in excess of the book value shall be credited to additional paid-in capital - treasury stock.
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 collectable 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.
Spin-off
In accordance with the Company’s organization realignment, the Company contributed net assets, including
cash, to the newly formed subsidiaries in exchange for all of the shares of those subsidiaries. The net
assets transferred are reflected at their net book value without recognizing any gain or loss.
3. ACCOUNTING CHANGES
On January 1, 2011, the Company prospectively adopted the newly revised SFAS No. 34, “Financial
Instruments: Recognition and Measurement.” The main revisions include (1) finance lease receivables
are now covered by SFAS No. 34; (2) the scope of the applicability of SFAS No. 34 to insurance contracts
is amended; (3) loans and receivables originated by the Company are now covered by SFAS No. 34; (4)
additional guidelines on impairment testing of financial assets carried at amortized cost when the debtor has
financial difficulties and the terms of obligations have been modified; and (5) accounting treatment by a
debtor for modifications in the terms of obligations. This accounting change did not have a significant
effect on the Company’s financial statements as of and for the year ended December 31, 2011.
On January 1, 2011, the Company adopted the newly issued SFAS No. 41, “Operating Segments.” The
statement requires identification and disclosure of operating segments on the basis of how the Company’s
chief operating decision maker regularly reviews information in order to allocate resources and assess
performance. This statement supersedes SFAS No. 20, “Segment Reporting.” The Company conformed
to the disclosure requirements as of and for the year ended December 31, 2011. The information for the
year ended December 31, 2010 has been recast to reflect the new segment reporting requirement.
- 14 -
4. CASH AND CASH EQUIVALENTS
December 31
2011
2010
Cash and deposits in banks
Repurchase agreements collateralized by government bonds
$ 81,467,607
3,794,914
$ 108,735,942
775,188
$ 85,262,521
$ 109,511,130
5. FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS
Trading financial assets
Forward exchange contracts
Trading financial liabilities
Forward exchange contracts
December 31
2011
2010
$ 14,925
$
-
$
-
$ 7,834
The Company entered into derivative contracts during the years ended December 31, 2011 and 2010 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.
Outstanding forward exchange contracts consisted of the following:
December 31, 2011
Sell EUR/Buy NT$
December 31, 2010
Maturity Date
Contract Amount
(In Thousands)
January 2012
EUR38,600/NT$1,528,206
Sell NT$/Buy JPY
January 2011 to February 2011
NT$814,882/JPY2,278,420
Net gains on derivative financial instruments for the years ended December 31, 2011 and 2010 were
NT$801,195 thousand and NT$312,862 thousand, respectively.
6. AVAILABLE-FOR-SALE FINANCIAL ASSETS
Overseas publicly traded stock
Corporate bonds
Current portion
December 31
2011
2010
$ 2,617,134
-
2,617,134
(2,617,134)
$ 3,918,274
1,033,049
4,951,323
(3,918,274)
$
-
$ 1,033,049
- 15 -
7. HELD-TO-MATURITY FINANCIAL ASSETS
Corporate bonds
Current portion
December 31
2011
2010
$ 1,403,427
(701,136)
$ 6,202,287
(4,796,589)
$
702,291
$ 1,405,698
8. ALLOWANCES FOR DOUBTFUL RECEIVABLES, SALES RETURNS AND OTHERS
Movements of the allowance for doubtful receivables were as follows:
Balance, beginning of year
Provision
Write-off
Balance, end of year
Years Ended December 31
2011
2010
$ 488,000
-
(2,880)
$ 431,000
59,268
(2,268)
(2,268)
$ 485,120
$ 488,000
Movements of the allowance for sales returns and others were as follows:
Balance, beginning of year
Provision
Write-off
Balance, end of year
9. INVENTORIES
Finished goods
Work in process
Raw materials
Supplies and spare parts
Years Ended December 31
2011
2010
$ 7,341,444
3,226,594
(5,680,159)
$ 8,583,632
11,703,136
(12,945,324)
$ 4,887,879
$ 7,341,444
December 31
2011
2010
$ 3,250,637
16,971,209
1,593,393
1,038,158
$ 4,623,812
18,128,677
1,681,525
1,212,334
$ 22,853,397
$ 25,646,348
The reserve for inventory write-downs in the amount of NT$74,861 thousand was reversed in the cost of
sales for the year ended December 31, 2011 when the related inventory items were scrapped or sold.
Write-down of inventories to net realizable value in the amount of NT$792,951 thousand was included in
the cost of sales for the year ended December 31, 2010. Inventory losses related to earthquake in the
amount of NT$190,992 thousand were classified under non-operating expenses and losses for the year
ended December 31, 2010.
- 16 -
10. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD
December 31
2011
2010
Carrying
Amount
% of
Owner-
ship
Carrying
Amount
% of
Owner-
ship
$ 44,071,845
34,986,964
13,542,181
10,153,244
100
100
100
100
$ 43,710,543
33,565,775
4,252,270
-
100
100
100
-
8,988,007
39
9,422,452
38
6,289,429
2,981,639
1,746,893
1,606,694
1,311,044
1,157,188
762,135
213,235
205,171
161,601
23,448
-
-
-
-
39
100
100
40
53
35
98
99
100
100
100
-
-
-
-
7,120,714
2,873,888
-
1,645,201
2,769,423
1,113,516
1,063,057
304,310
177,784
150,312
20,929
6,733,369
39
100
-
41
99
35
98
99
100
100
100
20
26,527
100
23,971
100
3,133
100
TSMC Global Ltd. (TSMC Global)
TSMC Partners, Ltd. (TSMC Partners)
TSMC China Company Limited (TSMC
China)
TSMC Solar
Vanguard International Semiconductor
Corporation (VIS)
Systems on Silicon Manufacturing Company
Pte Ltd. (SSMC)
TSMC North America
TSMC SSL
Xintec Inc. (Xintec)
VentureTech Alliance Fund III, L.P. (VTAF
III)
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 Korea Limited (TSMC Korea)
Motech Industries Inc. (Motech)
TSMC Solar North America, Inc. (TSMC Solar
NA)
TSMC Solar Europe B.V. (TSMC Solar
Europe)
TSMC Lighting North America, Inc. (TSMC
Lighting NA)
$ 128,200,718
$ 114,977,174
In the second half year of 2011, the Company continually increased its investment in TSMC China for the
amount of NT$6,759,300 thousand, and the Company has received the approval from the Investment
Commission of Ministry of Economic Affairs.
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. In addition, to foster a stronger sense of corporate entrepreneurship and facilitate
business specializations in order to strengthen overall profitability and operational efficiency, the Company
transferred its solid state lighting and solar businesses into its wholly-owned, newly incorporated
subsidiaries, TSMC SSL and TSMC Solar, in August 2011. Furthermore, the Company adjusted its
investment structure by transferring TSMC Lighting NA to TSMC SSL and transferring Motech, TSMC
Solar Europe, TSMC Solar NA and part of VTAF III to TSMC Solar. As of August 1, 2011, the net book
values of the Company’s certain assets, liabilities and shareholders’ equity, including cash, contributed to
TSMC SSL and TSMC Solar in exchange for all the shares of TSMC SSL and TSMC Solar amounted to
NT$2,270,000 thousand and NT$11,180,000 thousand, respectively.
- 17 -
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%. Due to the aforementioned transfer and the effect of the subsequent cash injection of NT$135,297
thousand, the Company’s percentage of ownership further decreased to 53%.
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 unless
permitted by other related regulations.
For the years ended December 31, 2011 and 2010, equity in earnings/losses of equity method investees was
a net gain of NT$3,778,083 thousand and NT$7,111,443 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 years ended
December 31, 2011 and 2010. The Company believes that, had the aforementioned equity method
investees’ financial statements been audited, any adjustments arising would have no material effect on the
Company’s financial statements.
As of December 31, 2011 and 2010, the quoted market price of publicly traded stocks in unrestricted
investments accounted for using the equity method (VIS and GUC) were NT$11,273,200 thousand and
NT$14,993,626 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
Amortizations
Effect of spin-off
Balance, end of year
Movements of the difference allocated to goodwill were as follows:
Balance, beginning of year
Additions
Effect of spin-off
Balance, end of year
11. FINANCIAL ASSETS CARRIED AT COST
Non-publicly traded stocks
Mutual funds
- 18 -
Years Ended December 31
2011
2010
$ 2,504,496
-
(721,482)
(1,507,430)
$ 1,429,118
2,055,660
(980,282)
(980,282)
-
$
275,584
$ 2,504,496
Years Ended December 31
2011
2010
$ 1,415,565
-
(353,680)
$ 1,061,885
353,680
-
$ 1,061,885
$ 1,415,565
December 31
2011
2010
$ 338,584
159,251
$ 338,584
159,251
$ 497,835
$ 497,835
12. PROPERTY, PLANT AND EQUIPMENT
Balance,
Beginning of
Year
Additions
Disposals
Reclassification
Effect of
Spin-off
Balance,
End of Year
Year Ended December 31, 2011
Cost
Buildings
Machinery and equipment
Office equipment
Accumulated depreciation
Buildings
Machinery and equipment
Office equipment
Advance payments and construction in
progress
$ 128,646,942
852,733,592
11,730,537
993,111,071
$ 22,343,302
135,641,295
2,495,001
$ 160,479,598
81,347,877
616,495,207
8,762,361
706,605,445
$
8,966,377
90,613,430
1,184,310
$ 100,764,117
$
$
$
$
(36,929 )
(2,079,115 )
(362,032 )
(2,478,076 )
(14,293 )
(2,025,728 )
(362,031 )
(2,402,052 )
$
$
$
$
$
(388 )
(17,225 )
-
(17,613 )
$
(1,457,449 )
(1,299,881 )
(39,072 )
(2,796,402 )
$ 149,495,478
984,978,666
13,824,434
1,148,298,578
(55 )
(5,569 )
-
(5,624 )
$
$
(25,639 )
(192,323 )
(3,127 )
(221,089 )
90,274,267
704,885,017
9,581,513
804,740,797
80,348,673
$ 35,453,130
$
(3,259,587 )
$
-
$
(1,726,464 )
110,815,752
$ 366,854,299
Balance,
Beginning of
Year
Year Ended December 31, 2010
Additions
Disposals
Reclassification
$ 454,373,533
Balance,
End of Year
Cost
Buildings
Machinery and equipment
Office equipment
Accumulated depreciation
Buildings
Machinery and equipment
Office equipment
Advance payments and
construction in progress
$ 124,522,047
713,426,126
10,781,099
848,729,272
$
4,262,592
141,033,304
1,639,082
$ 146,934,978
73,525,160
545,693,910
8,545,253
627,764,323
$
$
7,951,678
72,528,436
906,714
81,386,828
$
$
$
$
(135,497) $
(1,867,880)
(689,202)
(2,692,579) $
(128,466) $
(1,867,476)
(689,164)
(2,685,106) $
142,042
(2,200) $ 128,646,942
852,733,592
11,730,537
993,111,071
(442)
139,400
(495)
140,337
(442)
139,400
81,347,877
616,495,207
8,762,361
706,605,445
33,786,577
$
49,015,940 $
(2,453,844) $
-
80,348,673
$ 254,751,526
$ 366,854,299
No interest was capitalized during the years ended December 31, 2011 and 2010.
13. DEFERRED CHARGES, NET
Balance,
Beginning of
Year
Additions
Amortization Disposals
Effect of
Spin-off
Balance,
End of Year
Year Ended December 31, 2011
Technology license fees
Software and system design costs
Patent and others
$ 2,277,832
2,075,935
1,102,660
$
10,308
1,324,958
323,030
$ (670,830 ) $
(1,064,884 )
(416,630 )
-
$
(46 )
-
- $ 1,617,310
(19,392 ) 2,316,571
785,363
(223,697 )
$ 5,456,427
$ 1,658,296
$ (2,152,344 ) $
(46 ) $ (243,089 ) $ 4,719,244
Balance,
Beginning of
Year
Year Ended December 31, 2010
Additions
Amortization
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)
Balance,
End of Year
$ 2,277,832
2,075,935
1,102,660
()
$ 5,891,685
$ 1,538,301
$(1,973,559)
$ 5,456,427
- 19 -
14. SHORT-TERM LOANS
Unsecured loans:
US$856,000 thousand, due by February 2012, and annual interest
at 0.45%-1.00% in 2011; US$864,000 thousand and
EUR114,900 thousand, due in January 2011, and annual interest
at 0.38%-0.65% in 2010
$ 25,926,528 $ 30,908,637
December 31
2011
2010
15. BONDS PAYABLE
Domestic unsecured bonds:
Issued in September 2011 and repayable in September 2016,
1.40% interest payable annually
$ 10,500,000
$
December 31
2011
2010
Issued in September 2011 and repayable in September 2018,
1.63% interest payable annually
Issued in January 2002 and repayable in January 2012, 3.00%
interest payable annually
Current portion
-
-
7,500,000
4,500,000
22,500,000
(4,500,000)
4,500,000
4,500,000
-
$ 18,000,000 $ 4,500,000
With the approval from the Financial Supervisory Commission, the Company issued domestic unsecured
bonds in the amount of NT$17,000,000 thousand in January 2012.
16. OTHER LONG-TERM PAYABLES
The Company’s other long-term payables mainly resulted from license agreements for certain
semiconductor-related patents.
As of December 31, 2011, other long-term payables due within one year were already paid.
17. PENSION PLANS
The pension mechanism under the Labor Pension Act (the “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$1,119,717 thousand
and NT$964,063 thousand for the years ended December 31, 2011 and 2010, 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.
- 20 -
Due to the spin-off, the Company transferred the pension fund and the accrued pension cost in the amount
of NT$46,884 thousand and NT$60,583 thousand, respectively, to TSMC SSL and TSMC Solar in August
2011.
Pension information on the defined benefit plan is summarized as follows:
a. Components of net periodic pension cost for the year
Service cost
Interest cost
Projected return on plan assets
Amortization
Net periodic pension cost
2011
2010
$ 131,975
164,372
(67,051)
73,306
$ 129,552
145,151
(39,939)
(39,939)
1,061
$ 302,602
$ 235,825
b. Reconciliation of funded status of the plans and accrued pension cost at December 31, 2011 and 2010
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
2011
2010
$
280,629
5,356,405
5,637,034
3,389,649
9,026,683
(3,039,871)
5,986,812
(73,599)
145,259
(2,197,574)
$
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)
$ 3,860,898
$ 3,824,601
$
312,213
$
208,176
2011
2010
c. Actuarial assumptions at December 31, 2011 and 2010
Discount rate used in determining present values
Future salary increase rate
Expected rate of return on plan assets
1.75%
3.00%
2.00%
1.75%
3.00%
2.50%
d. Contributions to the Fund for the year
$ 209,260
$ 209,459
e. Payments from the Fund for the year
$
7,339
$ 19,991
- 21 -
18. INCOME TAX
a. A reconciliation of income tax expense based on “income before income tax” at the statutory rate and
income tax currently payable was as follows:
Years Ended December 31
2011
2010
Income tax expense based on “income before income tax” at
statutory rate (17%)
Tax effect of the following:
Tax-exempt income
Temporary and permanent differences
Additional income tax under Alternative Minimum Tax Act
Additional tax at 10% on unappropriated earnings
Income tax credits used
$ 24,600,334 $ 28,779,335
(13,231,821) (16,669,784)
(704,252)
(12,295,454)
-
127,489
(4,823,988)
(1,429,188)
286,827
6,259,344
(6,259,344)
Income tax currently payable
$ 10,226,152 $ 6,708,800
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
Effect of spin-off
Years Ended December 31
2011
2010
$ 10,226,152 $ 6,708,800
980,428
369,220
464,078
309,361
1,795,254
27,284
(2,314,671)
(893)
(7,243,473)
16,790
6,853,430
-
Income tax expense
$ 10,506,565 $ 7,685,195
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
- 22 -
December 31
2011
2010
$ 4,892,158 $ 4,182,893
488,788
308,929
89,669
624,023
87,735
239,124
$ 5,779,544 $ 5,133,775
$ 15,287,802 $ 17,792,321
2,044,680
227,433
(12,652,762)
1,981,915
32,792
(10,338,091) (12,652,762)
$ 7,221,824 $ 7,154,266
Effective in May 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 20% to 17%. 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. The Company evaluated the effect of
Alternative Minimum Tax and applicable year of the profits generated from projects exempt from
income tax for a five-year period. As the Company plans to apply the tax-exempt income in later
years, income tax payable is anticipated to increase and the Company will utilize available investment
tax credits as an offset against income taxes. Since more investment tax credits can be utilized,
valuation allowance has been adjusted down accordingly.
Under the Article 10 of the Statute for Industrial Innovation (SII) legislated, 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.
d. Integrated income tax information:
The balance of the imputation credit account as of December 31, 2011 and 2010 was NT$4,003,228
thousand and NT$1,669,533 thousand, respectively.
The estimated and actual creditable ratios for distribution of earnings of 2011 and 2010 were 6.67% and
4.96%, 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 the imputation
credit is made.
e. All earnings generated prior to December 31, 1997 have been appropriated.
f. As of December 31, 2011, 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
$ 3,202,253 $ 1,165,765
6,513,605
7,006,655
482,351
6,513,605
7,006,655
482,351
2012
2013
2014
2015
$ 17,204,864 $ 15,168,376
Statute for Upgrading
Industries
Research and development
expenditures
$ 1,772,824 $
4,994,463
-
4,994,463
2012
2013
$ 6,767,287 $ 4,994,463
Statute for Upgrading
Industries
Personnel training expenditures $
17,391 $
17,121
-
17,121
2012
2013
Statute for Industrial
Innovation
Research and development
expenditures
$ 2,432,641 $
-
2011
$
34,512 $
17,121
- 23 -
g. The profits generated from the following projects are exempt from income tax for a five-year period:
Construction and expansion of 2003
Construction and expansion of 2004
Construction and expansion of 2005
Construction and expansion of 2006
Tax-exemption Period
2007 to 2011
2008 to 2012
2010 to 2014
2011 to 2015
h. The tax authorities have examined income tax returns of the Company through 2008. All investment
tax credit adjustments assessed by the tax authorities have been recognized accordingly.
19. LABOR COST, DEPRECIATION AND AMORTIZATION
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, 2011
Classified as
Cost of Sales
Classified as
Operating
Expenses
Total
$ 23,511,116
1,225,757
899,039
640,257
230,762
294,010
$ 16,780,285
713,298
523,178
273,002
137,019
143,151
$ 40,291,401
1,939,055
1,422,217
913,259
367,781
437,161
$ 26,800,941
$ 18,569,933
$ 45,370,874
$ 93,898,048
$ 1,407,787
$ 6,858,236
744,557
$
$ 100,756,284
$ 2,152,344
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
- 24 -
20. SHAREHOLDERS’ EQUITY
As of December 31, 2011, 1,092,313 thousand ADSs of the Company were traded on the NYSE. The
number of common shares represented by the ADSs was 5,461,567 thousand (one ADS represents five
common shares).
Capital surplus can be used to offset a deficit under the Company Law. However, the capital surplus
generated from donations and the excess of the issuance price over the par value of capital stock (including
the stock issued for new capital, mergers, convertible bonds and the surplus from treasury stock transactions)
may be appropriated as stock dividends, which are limited to a certain percentage of the Company’s paid-in
capital. In addition, the capital surplus from long-term investments may not be used for any purpose.
However, according to the revised Company Law, effective January 2012, the aforementioned capital
surplus generated from donations and the excess of the issuance price over the par value of capital stock can
also be used to distribute cash in proportion to original shareholders’ holding.
Capital surplus consisted of the following:
Additional paid-in capital
From merger
From convertible bonds
From long-term investments
Donations
December 31
2011
2010
$ 23,774,250 $ 23,628,908
22,805,390
22,804,510
8,893,190
8,892,847
370,891
374,695
55
55
$ 55,846,357 $ 55,698,434
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 shareholders’ approval in the following year.
- 25 -
The Company accrued profit sharing to employees based on certain percentage of net income during the
year, which amounted to NT$8,990,026 thousand and NT$10,908,338 thousand for the years ended
December 2011 and 2010, respectively. Bonuses to directors were expensed based on estimated amount
of payment. If the actual amounts subsequently resolved by the shareholders differ from the estimated
amounts, the differences are recorded in the year of shareholders’ resolution as a change in accounting
estimate. If profit sharing is resolved to be distributed to employees in stock, the number of shares is
determined by dividing the amount of profit sharing by the closing price (after considering the effect of
dividends) of the shares on the day preceding the shareholders’ meeting.
The Company no longer has supervisors since January 1, 2007. The required duties of supervisors are
being fulfilled by the Audit Committee.
According to the revised Company Law, effective January 2012, the appropriation for legal capital reserve
shall be made until the reserve equals the Company’s paid-in capital. The reserve may be used to offset a
deficit, or be distributed as dividends in cash or stocks for the portion in excess of 25% of the paid-in
capital if the Company incurs no loss.
A special capital reserve equivalent to the net debit balance of the other components of shareholders’ equity
(for example, cumulative translation adjustments and unrealized loss on financial instruments, but
excluding treasury stock) shall be made from unappropriated earnings pursuant to existing regulations
promulgated by the Securities and Futures Bureau (SFB). Any special reserve appropriated may be
reversed to the extent that the net debit balance reverses.
The appropriations of earnings for 2010 and 2009 had been approved in the shareholders’ meetings held on
June 9, 2011 and June 15, 2010, respectively. The appropriations and dividends per share were as follows:
Appropriation of Earnings
For Fiscal
For Fiscal
Year 2009
Year 2010
Dividends Per Share
(NT$)
For Fiscal For Fiscal
Year 2010 Year 2009
Legal capital reserve
Special capital reserve
Cash dividends to shareholders
$ 16,160,501
5,120,827
77,730,236
$ 8,921,784
1,313,047
77,708,120
$3.00
$3.00
$ 99,011,564
$ 87,942,951
TSMC’s profit sharing to employees to be paid in cash and bonus to directors in the amounts of
NT$10,908,338 thousand and NT$51,131 thousand for 2010, respectively, and profit sharing to employees
to be paid in cash and bonus to directors in the amounts of NT$6,691,338 thousand and NT$67,692
thousand for 2009, respectively, had been approved in the shareholders’ meeting held on June 9, 2011 and
June 15, 2010, respectively. The resolved amounts of the profit sharing to employees and bonus to
directors were consistent with the resolutions of meeting of the Board of Directors held on February 15,
2011 and February 9, 2010 and same amount had been charged against earnings of 2010 and 2009,
respectively.
- 26 -
The appropriations of earnings for 2011 had been resolved in the meeting of the Board of Directors held on
February 14, 2012. The appropriations and dividends per share were as follows:
Legal capital reserve
Special capital reserve
Cash dividends to shareholders
Appropriation
of Earnings
For Fiscal
Year 2011
Dividends Per
Share (NT$)
For Fiscal
Year 2011
$ 13,420,128
1,172,350
77,748,668
$ 92,341,146
$3.00
The Board of Directors also resolved to appropriate profit sharing to employees to be paid in cash and
bonus to directors in the amounts of NT$8,990,026 thousand and NT$62,324 thousand for 2011,
respectively. There is no significant difference between the aforementioned resolved amounts and the
amounts charged against earnings of 2011.
The appropriations of earnings, profit sharing to employees and bonus to directors for 2011 are to be
resolved in the shareholders’ meeting held on June 12, 2012 (expected).
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, 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, 2011.
- 27 -
Information about outstanding options for the years ended December 31, 2011 and 2010 was as follows:
Year ended December 31, 2011
Balance, beginning of year
Options exercised
Balance, end of year
Year ended December 31, 2010
Balance, beginning of year
Options exercised
Options canceled
Balance, end of year
Number of
Options
(In Thousands)
Weighted-
average
Exercise Price
(NT$)
21,437
(7,144)
14,293
28,810
(7,372)
(1)
21,437
$31.4
30.5
32.1
32.4
33.2
50.1
32.3
The number of outstanding options and exercise prices have been adjusted to reflect the distribution of
earnings in accordance with the plans.
As of December 31, 2011, information about outstanding options was as follows:
Range of Exercise Price
(NT$)
Number of Options
(In Thousands)
Options Outstanding
Weighted-average
Remaining
Contractual Life
(Years)
Weighted-average
Exercise Price
(NT$)
$20.9-$ 29.3
38.0- 50.1
10,584
3,709
14,293
1.2
2.9
1.7
$ 27.4
45.7
32.1
As of December 31, 2011, all of the above outstanding options were exercisable.
No compensation cost was recognized under the intrinsic value method for the years ended December 31,
2011 and 2010. 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, 2011 and 2010 would have been as follows:
Assumptions:
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
- 28 -
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. TREASURY STOCK
Years Ended December 31
2010
2011
$ 134,201,279
134,146,490
$ 161,605,009
161,470,030
$5.18
5.18
5.18
5.17
$6.24
6.23
6.23
6.23
(Shares in Thousands)
Purpose of Treasury Stock
Year ended December 31, 2011
Number of
Shares,
Beginning
of Year
Addition Retirement
Number of
Shares, End
of Year
Shareholders executed the appraisal right
-
1,000
(1,000)
-
In August 2011, pursuant to the Company Law and at the option of the shareholders of the Company,
certain shareholders requested the Company to buy back their shares at the current market price, which
shares were subsequently retired in November 2011.
23. EARNINGS PER SHARE
EPS is computed as follows:
Year ended December 31, 2011
Basic EPS
Number of
EPS (NT$)
Amounts (Numerator)
After
Before
Income Tax
Income Tax
Shares
(Denominator)
(In Thousands)
Before
Income
Tax
After
Income
Tax
Earnings available to common shareholders
Effect of dilutive potential common shares
$ 144,707,844
-
$ 134,201,279
-
25,914,076
10,606
$ 5.58
$ 5.18
Diluted EPS
Earnings available to common shareholders
(including effect of dilutive potential
common shares)
Year ended December 31, 2010
Basic EPS
$ 144,707,844
$ 134,201,279
25,924,682
$ 5.58
$ 5.18
Earnings available to common shareholders
Effect of dilutive potential common shares
$ 169,290,204
-
$ 161,605,009
-
25,905,832
13,982
$ 6.53
$ 6.24
Diluted EPS
Earnings available to common shareholders
(including effect of dilutive potential
common shares)
$ 169,290,204
$ 161,605,009
25,919,814
$ 6.53
$ 6.23
- 29 -
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
retrospective adjustments. This adjustment caused each of the basic and diluted after income tax EPS for
the year ended December 31, 2010 to remain at NT$6.24 and NT$6.23, respectively.
24. 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
Bonds payable (including current portion)
Other long-term payables (including current
portion)
December 31
2011
Carrying
Amount
Fair Value
2010
Carrying
Amount
Fair Value
$
14,925
2,617,134
1,403,427
497,835
$
14,925
2,617,134
1,426,474
-
$
-
4,951,323
6,202,287
497,835
$
-
4,951,323
6,278,054
-
-
22,500,000
-
22,597,115
7,834
4,500,000
7,834
4,538,660
-
-
718,637
718,637
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, available-for-sale and held-to-maturity financial assets were based on their
quoted market prices.
3) The fair values of those derivatives 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 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.
- 30 -
c. Valuation gains (losses) arising from changes in fair value of derivatives contracts determined using
valuation techniques were recognized as a net gain of NT$14,925 thousand and a net loss of NT$7,834
thousand for the years ended December 31, 2011 and 2010, respectively.
d. As of December 31, 2011 and 2010, financial assets exposed to fair value interest rate risk were
NT$1,418,352 thousand and NT$7,235,336 thousand, respectively, financial liabilities exposed to fair
value interest rate risk were NT$48,426,528 thousand and NT$35,416,471 thousand, respectively.
e. Movements of the unrealized gains or losses on financial instruments for the years ended December 31,
2011 and 2010 were as follows:
Year Ended December 31, 2011
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
Effect of spin-off
$
(395,306)
(1,077,844)
$
504,595
(165,851)
$
109,289
(1,243,695)
(35,151)
(3,298)
-
-
(35,151)
(3,298)
Balance, end of year
$ (1,511,599)
$
338,744
$ (1,172,855)
Year Ended December 31, 2010
From
Available-
for-sale
Financial Assets
Equity-
method
Investments
Total
Balance, beginning of year
Recognized directly in shareholders’ equity
$
46,672
(441,978)
$
406,949
97,646
$
453,621
(344,332)
Balance, end of year
$
(395,306)
$
504,595
$
109,289
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
prices 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 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 and bank facilities to meet cash
needs upon settlement of derivative financial instruments and bonds payable. Therefore, the
liquidity risk is low.
- 31 -
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.
25. RELATED PARTY TRANSACTIONS
The Company engages in business transactions with the following related parties:
a. Subsidiaries
TSMC North America
TSMC China
TSMC Europe
TSMC Japan
TSMC Global
b. Investees
Xintec (holding a controlling financial interest)
GUC (accounted for using the equity method, as the Company had no controlling interest in GUC since
July 2011)
VIS (accounted for using the equity method)
SSMC (accounted for using the equity method)
c. Indirect subsidiaries
WaferTech, LLC (WaferTech)
TSMC Technology, Inc. (TSMC Technology)
TSMC Design Technology Canada, Inc. (TSMC Canada)
d. Indirect investee
VisEra Technology Company, Ltd. (VisEra), an indirect investee accounted for using the equity
method.
e. Others
Related parties over which the Company has control or exercises significant influence but with which
the Company had no material transactions.
Transactions with the aforementioned parties, other than those disclosed in other notes, are summarized as
follows:
2011
2010
Amount
%
Amount
%
For the year
Sales
TSMC North America
Others
$ 234,902,043
3,882,801
56
1
$ 220,529,792
3,071,549
53
1
$ 238,784,844
57
$ 223,601,341
54
- 32 -
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)
TSMC Europe
VIS (primarily rent)
Others
Sales of property, plant and equipment and other
assets
TSMC China
Others
Purchases of property, plant and equipment and
other assets
TSMC China
VIS
WaferTech
Others
2011
2010
Amount
%
Amount
%
$
$ 10,392,189
7,305,879
5,577,762
3,949,176
124,673
21
15
12
8
-
7,878,261
7,878,261
8,748,101
7,878,260
4,937,617
4,521,046
39,099
18
16
10
10
-
$ 27,349,679
56
$ 26,124,123
54
$
260,250
14,588
5,902
$
-
-
-
313,397
44,488
9,845
$
280,740
-
$
367,730
-
-
-
-
$
$
357,582
284,644
64,907
22,049
15
12
3
1
415,765
266,194
59,180
19,318
15
9
2
1
$
729,182
31
$
760,457
27
$
534,804
192,616
45,489
1,984
30,605
$
2
1
-
-
-
547,838
181,943
33,907
12,017
32,167
$
805,498
3
$
807,872
2
1
-
-
-
3
$
2,885,847
109,141
86
3
$
1,409,862
84,336
75
5
$
2,994,988
89
$
1,494,198
80
$
70,491
45,473
-
1,812
$
-
-
-
-
66,337
109,855
9,624
-
$
117,776
-
$
185,816
-
-
-
-
-
- 33 -
2011
2010
Amount
%
Amount
%
Non-operating income and gains
VIS (primarily technical service income)
SSMC (primarily technical service income)
TSMC China (primary gains on disposal from
property, plant and equipment)
VisEra (primarily rent)
Others
$
227,024
193,781
$
3
3
267,370
198,218
96,050
4,054
7,157
1
-
-
49,738
-
9,655
$
528,066
7
$
524,981
Non-operating expenses and losses
Xintec (settlement loss)
$
19,686
1
$
-
2
1
-
-
-
3
-
As of December 31
Receivables
TSMC North America
Others
Other receivables
VIS
SSMC
TSMC North America
TSMC China
WaferTech
Others
Payables
VIS
TSMC China
WaferTech
SSMC
Others
Other assets
TSMC China
$ 24,661,104
116,430
99
1
$ 25,579,259
154,715
99
1
$ 24,777,534
100
$ 25,733,974
100
$
$
87,507
34,260
23,887
23,688
14,196
4,490
46
18
13
13
8
2
70,798
53,788
3,673
1,170,407
3,543
72
5
4
1
90
-
-
$
188,028
100
$
1,302,281
100
$
$
987,937
946,826
420,459
336,037
301,323
33
32
14
11
10
428,797
895,193
568,685
430,235
251,540
17
35
22
17
9
$
2,992,582
100
$
2,574,450
100
$
1,493
-
$
27,327
2
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.
- 34 -
The Company leased certain office space and facilities from VIS. 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 research and development expenses and manufacturing expenses.
The Company leased certain machinery and equipment to VisEra. The lease terms and prices were
determined in accordance with mutual agreements. The rental income was received monthly and the
related income was classified under non-operating income and gains.
The Company deferred the disposal losses (classified under other assets) derived from sales of property,
plant and equipment to TSMC China, and then recognized such losses (classified under non-operating gains
and losses) over the depreciable lives of the disposed assets.
The Company borrowed funds from related parties in July 2011. Additional disclosures consisted of the
following:
Financing
Company
Maximum
Balance
Date
Ending
Balance
Interest
Rate
Interest
Expense
Interest
Payable
Year Ended December 31, 2011
TSMC Global
$ 24,684,000
July 2011 to December 2011
$
-
0.3544%
$
22,293
$
-
Compensation of directors and management personnel:
Salaries, incentives and special compensation
Bonus
Years Ended December 31
2011
2010
$
654,972
445,681
$
774,181
593,967
$ 1,100,653
$ 1,368,148
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, 2011
includes estimated profit sharing to employees and bonus to directors of the Company that relate to 2011
but will be paid in the following year. The actual amount will be finalized and approved upon the
resolution of the shareholders’ meeting in 2012. The total compensation for the year ended December 31,
2010 included the bonuses appropriated from earnings of 2010 which was approved by the shareholders’
meeting held in 2011.
26. PLEDGED OR MORTGAGED ASSETS
As of December 31, 2011, the Company had no assets set aside as collateral. As of December 31, 2010,
the Company had pledged time deposits of NT$25,864 thousand (classified as other financial assets) as
collateral for land lease agreements and customs duty guarantee.
27. SIGNIFICANT LONG-TERM LEASES
The Company leases several parcels of land from the Science Park Administration. These operating leases
expire on various dates from December 2012 to September 2030 and can be renewed upon expiration.
- 35 -
As of December 31, 2011, future lease payments were as follows:
Year
2012
2013
2014
2015
2016
2017 and thereafter
Amount
$
453,868
429,130
414,786
404,465
394,302
3,255,047
$ 5,351,598
28. SIGNIFICANT COMMITMENTS AND CONTINGENCIES
Significant commitments and contingencies of the Company as of December 31, 2011, excluding those
disclosed in other notes, were as follows:
a. Under a technical cooperation agreement with Industrial Technology Research Institute, 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, 2011,
the Company had a total of US$13,039 thousand of guarantee deposits.
c. Under a Shareholders Agreement entered into with Philips and EDB Investments Pte Ltd. on March 30,
1999, the parties formed a joint venture company, SSMC, which is an integrated circuit foundry in
Singapore. The Company’s equity interest in SSMC was 32%. Nevertheless, Philips parted with its
semiconductor company which was renamed as NXP B.V. in September 2006. The Company and
NXP B.V. purchased all the SSMC shares owned by EDB Investments Pte Ltd. pro rata according to
the Shareholders Agreement on November 15, 2006. After the purchase, the Company and NXP B.V.
currently own approximately 39% and 61% of the SSMC shares respectively. The Company and
Philips (now NXP B.V.) are required, in the aggregate, to purchase at least 70% of SSMC’s capacity,
but the Company alone is not required to purchase more than 28% of the capacity. If any party
defaults on the commitment and the capacity utilization of SSMC fall below a specific percentage of its
capacity, the defaulting party is required to compensate SSMC for all related unavoidable costs.
d. 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
- 36 -
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 in July 2010, which are recorded within available for sale financial assets, and obtained the
subsequent cash settlement income in accordance with the agreement.
e. 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. In response, TSMC, TSMC North America, and several co-defendants in
the Texas case filed a lawsuit against Keranos in the U.S. District Court for the Northern District of
California in November 2010, seeking a judgment declaring that they did not infringe the asserted
patents, and that those patents are invalid. These two litigations have been consolidated into a single
case in the U.S. District Court for the Eastern District of Texas. The outcome cannot be determined at
this time.
f.
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.
29. SPIN-OFF BUSINESS INFORMATION
To foster a stronger sense of corporate entrepreneurship and facilitate business specializations in order to
strengthen overall profitability and operational efficiency, the Company transferred its solid state lighting
and solar businesses into its wholly-owned, newly incorporated subsidiaries, TSMC SSL and TSMC Solar,
on August 1, 2011. As of August 1, 2011, the net book values transferred to TSMC SSL and TSMC Solar
amounted to NT$2,270,000 thousand and NT$11,180,000 thousand, respectively.
The book values of transferred assets and liabilities were as follows:
TSMC SSL
TSMC Solar
Total
Current assets
Long-term investments
Property, plant and equipment
Other assets
Current liabilities
Other liabilities
Capital surplus
Unrealized gain (loss) on financial instruments
Cumulative translation adjustments
$
$
431,613
2,872
1,929,563
234,696
(292,728)
(36,272)
-
-
256
893,584
7,912,710
2,372,214
201,677
(337,439)
(25,218)
(56,094)
(3,298)
$ 1,325,197
7,915,582
4,301,777
436,373
(630,167)
(61,490)
(56,094)
(3,298)
222,120
221,864
$ 2,270,000
$ 11,180,000
$ 13,450,000
- 37 -
30. OTHERS
The significant financial assets and liabilities denominated in foreign currencies were as follows:
December 31
2011
2010
Foreign
Currency
(In Thousands)
Exchange Rate
(Note)
Foreign
Currency
(In Thousands)
Exchange Rate
(Note)
Financial assets
Monetary items
USD
EUR
JPY
Non-monetary items
HKD
Investments accounted for
using equity method
USD
EUR
JPY
RMB
Financial liabilities
Monetary items
USD
EUR
JPY
$ 1,566,212
124,425
33,073,336
30.288
39.27
0.3897
$ 1,732,529
224,363
28,580,962
671,060
3.90
1,002,116
2,983,866
5,225
414,680
2,823,953
30.288
39.27
0.3897
4.81
2,997,686
4,963
402,441
927,986
1,626,129
106,931
34,942,421
30.288
39.27
0.3897
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
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 the Company and its investees:
a. Financings provided: Please see Table 1 attached;
b. Endorsement/guarantee provided: None;
c. Marketable securities held: Please see Table 2 attached;
d. Marketable securities acquired or disposed of at costs or prices of at least NT$100 million or 20% of the
paid-in capital: Please see Table 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;
- 38 -
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;
h. Receivable from related parties amounting to at least NT$100 million or 20% of the paid-in capital:
Please see Table 6 attached;
i. Names, locations, and related information of investees over which the Company exercises significant
influence: Please see Table 7 attached;
j.
Information about derivatives of investees over which the Company has a controlling interest:
Do not meet the criteria for hedge accounting
1) TSMC China
TSMC China entered into forward exchange contracts during the year ended December 31, 2011 to
manage exposures due to foreign exchange rate fluctuations. Outstanding forward exchange
contracts as of December 31, 2011 consisted of the following:
Maturity Date
Contract Amount
(In Thousands)
Sell US$/Buy EUR
Sell US$/Buy JPY
January 2012
January 2012
US$2,082/EUR1,591
US$3,335/JPY259,830
For the year ended December 31, 2011, net losses arising from forward exchange contracts of
TSMC China amounted to NT$56,819 thousand.
2) Xintec
Xintec entered into forward exchange contracts during the year ended December 31, 2011 to
manage exposures due to foreign exchange rate fluctuations. Outstanding forward exchange
contracts as of December 31, 2011 consisted of the following:
Maturity Date
Contract Amount
(In Thousands)
Sell US$/Buy NT$
January 2012 to February 2012
US$16,900/NT$510,122
For the year ended December 31, 2011, net losses arising from forward exchange contracts of
Xintec amounted to NT$21,784 thousand.
3) TSMC Partners
TSMC Partners entered into forward exchange contracts during the year ended December 31, 2011
to manage exposures due to foreign exchange rate fluctuations. Outstanding forward exchange
contracts as of December 31, 2011 consisted of the following:
Maturity Date
Contract Amount
(In Thousands)
Sell RMB/Buy US$
January 2012
RMB1,118,705/US$177,000
For the year ended December 31, 2011, net losses arising from forward exchange contracts of
TSMC Partners amounted to NT$224,638 thousand.
- 39 -
4) TSMC Solar
TSMC Solar entered into derivative contracts during the year ended December 31, 2011 to manage
exposures due to foreign exchange rate fluctuations. Outstanding forward exchange contracts as
of December 31, 2011 consisted of the following:
Maturity Date
Contract Amount
(In Thousands)
Sell NT$/Buy US$
January 2012 to February 2012
NT$130,205/US$4,300
Outstanding cross currency swap contracts as of December 31, 2011 consisted of the following:
Maturity Date
Contract Amount
(In Thousands)
Range of
Interest Rates
Paid
Range of
Interest Rates
Received
January 2012
NT$208,398/US$6,800
0.00%
0.48%
For the year ended December 31, 2011, net gains arising from derivative financial instruments of
TSMC Solar amounted to NT$3,112 thousand.
5) TSMC SSL
TSMC SSL entered into derivative contracts during the year ended December 31, 2011 to manage
exposures due to foreign exchange rate fluctuations. Outstanding forward exchange contracts as
of December 31, 2011 consisted of the following:
Maturity Date
Contract Amount
(In Thousands)
Sell NT$/Buy US$
January 2012 to February 2012
NT$33,286/US$1,100
Outstanding cross currency swap contracts as of December 31, 2011 consisted of the following:
Maturity Date
Contract Amount
(In Thousands)
Range of
Interest Rates
Paid
Range of
Interest Rates
Received
January 2012
NT$212,033/US$7,000
0.00%
0.48%
For the year ended December 31, 2011, net gains arising from derivative financial instruments of
TSMC SSL amounted to NT$6,365 thousand.
Meet the criteria for hedge accounting
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.
- 40 -
Xintec is exposed to interest rate risk because its long-term bank loans bear floating interest rates.
Accordingly, Xintec enters into interest rate swap contract to hedge such a cash flow interest rate risk.
As of December 31, 2011, the outstanding interest rate swap contract of Xintec consisted of the
following:
Hedged Item
Instrument
Hedging Financial
Fair Value
December 31,
2011
Expected
Cash Flow
Generated Period
Expected Timing for the
Recognition of Gains
or Losses from Hedge
Long-term bank
Interest rate swap
$(232)
2011 to 2012
2011 to 2012
loans
contract
For the year ended December 31, 2011, the adjustment for current period to shareholders’ equity
amounted to a loss of NT$98 thousand for the above Xintec’s interest rate swap contract. The amount
removed from shareholders’ equity and recognized as a loss amounted to NT$680 thousand.
k. Information on investment in Mainland China
1) The name of the investee in Mainland China, the main businesses and products, its issued capital,
method of investment, information on inflow or outflow of capital, percentage of ownership, equity
in the net gain or net loss, ending balance, amount received as dividends from the investee, and the
limitation on investee: Please see Table 8 attached.
2) Significant direct or indirect transactions with the investee, its prices and terms of payment,
unrealized gain or loss, and other related information which is helpful to understand the impact of
investment in Mainland China on financial reports: Please see Note 25.
32. OPERATING SEGMENTS INFORMATION
The Company has provided the operating segments disclosure in the consolidated financial statements.
33. THE AUTHORIZATION OF FINANCIAL STATEMENTS
The financial statements were approved by the board of directors and authorized for issue on February 14, 2012.
- 41 -
TABLE 1
Taiwan Semiconductor Manufacturing Company Limited and Investees
FINANCINGS PROVIDED
FOR THE YEAR ENDED DECEMBER 31, 2011
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)
No.
Financing
Company
Counter-party
Financial Statement
Account
Maximum
Balance for the
Period (US$ in
Thousands)
(Note 4)
Ending Balance
(US$ in
Thousands)
(Note 4)
Amount Actually
Drawn
(US$ in
Thousands)
Interest Rate Nature for Financing
Transaction
Amounts
Reason for Financing
Allowance for
Bad Debt
Item
Value
Collateral
Financing Limits
for Each
Borrowing
Company
(Notes 1 and 2)
Financing
Company’s Total
Financing
Amount Limits
(Note 3)
1
TSMC Partners
TSMC China
TSMC Solar
Long-term receivables
from related parties
Other receivables from
related parties
TSMC SSL
Other receivables from
related parties
$
(US$
(US$
(US$
7,572,000
250,000)
1,211,520
40,000)
908,640
30,000)
$
(US$
(US$
(US$
7,572,000
250,000)
1,211,520
40,000)
908,640
30,000)
$
(US$
(US$
(US$
7,572,000
250,000)
454,320
15,000)
348,312
11,500)
0.25%-0.26% The need for
$
- Purchase equipment
$
short-term financing
0.4017%-0.4651% The need for
- Operating capital
short-term financing
0.4545%
The need for
- Operating capital
short-term financing
2
TSMC Global
TSMC
Other receivables from
related parties
25,744,800
850,000)
(US$
-
-
0.3544%
The need for
- Support the parent
short-term financing
company’s short-term
operation
requirement
-
-
-
-
-
$
-
$
34,986,964
$
34,986,964
-
-
-
-
-
-
3,498,696
3,498,696
44,071,845
44,071,845
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 are not subject to the above restrictions. The restriction of thirty percent (30%) of the borrower’s net worth will not apply to subsidiaries whose voting shares are 90% or more owned, directly or
indirectly, by TSMC.
Note 2: 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 Global. In addition, the total amount lendable to any one borrower shall be no more than thirty percent (30%) of the borrower’s net worth. TSMC or
offshore subsidiaries whose voting shares are 100% owned, directly or indirectly, by TSMC are not subject to the above restrictions.
Note 3: The total amount available for lending purpose shall not exceed the net worth of TSMC Partners and TSMC Global, respectively.
Note 4: The maximum balance for the period and ending balance represents the amounts approved by Board of Directors.
- 42 -
Taiwan Semiconductor Manufacturing Company Limited and Investees
MARKETABLE SECURITIES HELD
DECEMBER 31, 2011
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)
Held Company Name
Marketable Securities Type and Name
Relationship with the Company
Financial Statement Account
December 31, 2011
Shares/Units
(In Thousands)
Carrying Value
(Foreign Currencies
in Thousands)
Percentage of
Ownership (%)
Market Value or Net
Asset Value
(Foreign Currencies
in Thousands)
Note
TABLE 2
TSMC
Corporate bond
Nan Ya Plastics Corporation
China Steel Corporation
Stock
Semiconductor Manufacturing International Corporation
TSMC Global
Subsidiary
-
-
-
Held-to-maturity financial assets
〃
-
-
$ 1,099,629
303,798
N/A
N/A
$ 1,120,808
305,666
TSMC Partners
TSMC Solar
VIS
SSMC
TSMC North America
TSMC SSL
Xintec
GUC
TSMC Europe
TSMC Japan
TSMC Korea
United Industrial Gases Co., Ltd.
Shin-Etsu Handotai Taiwan Co., Ltd.
W.K. Technology Fund IV
Fund
Horizon Ventures Fund
Crimson Asia Capital
Capital
TSMC China
VTAF III
VTAF II
Emerging Alliance
Stock
Motech
TSMC Solar Europe
TSMC Solar NA
Capital
VTAF III
Stock
TSMC Lighting NA
TSMC Solar
TSMC SSL
Available-for-sale financial assets
Investments accounted for using
equity method
Subsidiary
Subsidiary
Investee accounted for using equity method
Investee accounted for using equity method
Subsidiary
Subsidiary
Investee with a controlling financial interest
Investee accounted for using equity method
Subsidiary
Subsidiary
Subsidiary
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
-
-
-
-
-
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Financial assets carried at cost
〃
〃
Financial assets carried at cost
〃
Investments accounted for using
equity method
〃
〃
〃
1,789,493
1
988,268
1,118,000
628,223
314
11,000
227,000
94,011
46,688
-
6
80
16,783
10,500
4,000
-
-
-
-
-
-
2,617,134
44,071,845
34,986,964
10,153,244
8,988,007
6,289,429
2,981,639
1,746,893
1,606,694
1,157,188
205,171
161,601
23,448
193,584
105,000
40,000
103,992
55,259
13,542,181
1,311,044
762,135
213,235
204,163
52,187
1,681,719
7
100
100
100
39
39
100
100
40
35
100
100
100
10
7
2
12
1
100
53
98
99
20
100
100
46
2,617,134
44,071,845
34,986,964
10,153,244
6,627,758
6,075,445
2,981,639
1,746,893
1,606,694
4,645,442
205,171
161,601
23,448
350,060
351,996
41,372
103,992
55,259
13,583,214
1,290,093
756,125
213,235
3,849,382
204,163
52,187
1,681,719
Investee accounted for using equity method
Investments accounted for using
87,480
5,612,344
Subsidiary
Subsidiary
equity method
〃
〃
Investee accounted for using equity method
Investments accounted for using
equity method
Subsidiary
Investments accounted for using
equity method
-
1
-
1
- 43 -
2,994
100
2,994
(Continued)
December 31, 2011
Shares/Units
(In Thousands)
Carrying Value
(Foreign Currencies
in Thousands)
Percentage of
Ownership (%)
Market Value or Net
Asset Value
(Foreign Currencies
in Thousands)
Note
Held Company Name
Marketable Securities Type and Name
Relationship with the Company
Financial Statement Account
TSMC Partners
Corporate bond
General Elec Cap Corp. Mtn
General Elec Cap Corp. Mtn
Common stock
TSMC Development, Inc. (TSMC Development)
Subsidiary
-
-
Held-to-maturity financial assets
〃
Investments accounted for using
equity method
VisEra Holding Company
InveStar Semiconductor Development Fund, Inc. (ISDF)
TSMC Technology
InveStar Semiconductor Development Fund, Inc. (II) LDC.
Investee accounted for using equity method
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Investee accounted for using equity method
〃
〃
〃
〃
〃
〃
-
-
1
43,000
787
1
14,153
2,300
5,333
US$ 20,012
US$ 20,059
US$ 460,034
US$ 94,208
US$ 11,112
US$ 10,615
9,994
US$
US$
4,059
-
Investee accounted for using equity method
Investments accounted for using
1,000
-
equity method
(ISDF II)
TSMC Canada
Mcube Inc.
Preferred stock
Mcube Inc.
Fund
Shanghai Walden Venture Capital Enterprise
TSMC North America
Stock
Spansion Inc.
TSMC Development
Corporate bond
GE Capital Corp.
JP Morgan Chase & Co.
Stock
WaferTech
Emerging Alliance
Common stock
RichWave Technology Corp.
Global Investment Holding Inc.
Preferred stock
Audience, Inc.
Next IO, Inc.
Pixim, Inc.
QST Holdings, LLC
Subsidiary
Capital
VentureTech Alliance Holdings, LLC (VTA Holdings)
Subsidiary
VTAF II
Common stock
Aether Systems, Inc.
RichWave Technology Corp.
Sentelic
Preferred stock
5V Technologies, Inc.
Aquantia
Audience, Inc.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Financial assets carried at cost
-
US$
5,000
Available-for-sale financial assets
276
US$
2,283
Held-to-maturity financial assets
〃
-
-
US$ 20,090
US$ 15,000
Investments accounted for using
293,640
US$ 220,119
equity method
Financial assets carried at cost
〃
4,074
11,124
US$
US$
1,545
3,065
Financial assets carried at cost
〃
〃
〃
Investments accounted for using
equity method
Financial assets carried at cost
〃
〃
1,654
8
4,641
-
-
1,800
1,267
1,806
US$
US$
US$
US$
250
500
1,137
142
-
US$
US$
US$
1,701
1,036
2,607
Financial assets carried at cost
〃
〃
2,890
4,556
12,378
US$
US$
US$
2,168
4,316
2,378
- 44 -
N/A
N/A
100
49
97
100
97
100
80
5
8
-
N/A
N/A
100
10
6
-
-
2
4
7
23
3
9
4
3
3
US$ 20,100
US$ 20,740
US$ 460,034
US$ 94,208
US$ 11,112
US$ 10,615
9,994
US$
US$
4,059
-
-
US$
5,000
US$
2,283
US$ 20,770
US$ 15,087
US$ 220,119
US$
US$
1,545
3,065
US$
US$
US$
US$
250
500
1,137
142
-
US$
US$
US$
1,701
1,036
2,607
US$
US$
US$
2,168
4,316
2,378
(Continued)
Held Company Name
Marketable Securities Type and Name
Relationship with the Company
Financial Statement Account
December 31, 2011
Shares/Units
(In Thousands)
Carrying Value
(Foreign Currencies
in Thousands)
Percentage of
Ownership (%)
Market Value or Net
Asset Value
(Foreign Currencies
in Thousands)
Note
Impinj, Inc.
Next IO, Inc.
Pixim, Inc.
Power Analog Microelectronics
QST Holdings, LLC
Capital
VTA Holdings
Common stock
Mutual-Pak Technology Co., Ltd.
Accton Wireless Broadband Corp.
Preferred stock
InvenSense, Inc.
BridgeLux, Inc.
Exclara, Inc.
GTBF, Inc.
LiquidLeds Lighting Corp.
Neoconix, Inc.
Powervation, Ltd.
Stion Corp.
Tilera, Inc.
Validity Sensors, Inc.
Capital
Growth Fund Limited (Growth Fund)
VTA Holdings
Common stock
Veebeam
Common stock
Integrated Memory Logic, Inc.
Memsic, Inc.
Preferred stock
Sonics, Inc.
Common stock
Memsic, Inc.
Alchip Technologies Limited
Sonics, Inc.
Goyatek Technology, Corp.
Auden Technology MFG. Co., Ltd.
Preferred stock
Sonics, Inc.
Capital
Compositech Ltd.
VTAF III
Growth Fund
ISDF
ISDF II
Xintec
Subsidiary
Subsidiary
Subsidiary
Subsidiary
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Financial assets carried at cost
〃
〃
〃
〃
475
132
33,347
7,330
-
US$
US$
US$
US$
US$
1,000
1,110
1,878
3,482
593
Investments accounted for using
equity method
-
-
Investments accounted for using
11,868
US$
1,204
equity method
Financial assets carried at cost
2,249
US$
315
Available-for-sale financial assets
Financial assets carried at cost
〃
〃
〃
〃
〃
〃
〃
〃
796
6,771
59,695
1,154
1,600
3,916
449
8,152
3,890
9,340
7,932
US$
8,745
US$
1,812
US$
1,500
US$
800
US$
4,779
US$
US$
7,030
US$ 55,473
3,025
US$
3,456
US$
Investments accounted for using
equity method
〃
-
-
US$
510
-
Financial assets carried at cost
10
US$
25
Available-for-sale financial assets
〃
2,161
1,286
US$
US$
6,289
3,407
Financial assets carried at cost
230
US$
497
Available-for-sale financial assets
Financial assets carried at cost
〃
〃
〃
1,072
7,520
278
745
1,049
US$
US$
US$
US$
US$
2,841
3,664
10
163
223
Financial assets carried at cost
264
US$
455
Financial assets carried at cost
587
-
-
2
2
21
13
31
57
6
1
3
15
N/A
11
4
16
20
2
4
100
62
-
3
5
2
5
14
3
6
3
3
3
US$
US$
US$
US$
US$
1,000
1,110
1,878
3,482
593
-
US$
1,204
US$
315
7,932
US$
8,745
US$
1,812
US$
1,500
US$
800
US$
4,779
US$
US$
7,030
US$ 55,473
3,025
US$
3,456
US$
US$
510
-
US$
25
US$
US$
6,289
3,407
US$
497
US$
US$
US$
US$
US$
2,841
3,664
10
163
223
US$
455
-
TSMC Solar Europe
Stock
TSMC Solar Europe GmbH
Subsidiary
Investments accounted for using
equity method
1
EUR 5,103
100
EUR 5,103
(Continued)
- 45 -
Held Company Name
Marketable Securities Type and Name
Relationship with the Company
Financial Statement Account
December 31, 2011
Shares/Units
(In Thousands)
Carrying Value
(Foreign Currencies
in Thousands)
Percentage of
Ownership (%)
Market Value or Net
Asset Value
(Foreign Currencies
in Thousands)
Note
TSMC Global
Corporate bond
Aust + Nz Banking Group
Commonwealth Bank of Australia
Commonwealth Bank of Australia
Deutsche Bank AG London
JP Morgan Chase + Co.
Nationwide Building Society-UK Government Guarantee
Westpac Banking Corp.
Westpac Banking Corp. 12/12 Frn
Government bond
Societe De Financement De Lec
Money market fund
Ssga Cash Mgmt Global Offshore
-
-
-
-
-
-
-
-
-
-
Held-to-maturity financial assets
〃
〃
〃
〃
〃
〃
〃
20,000
25,000
25,000
20,000
35,000
8,000
25,000
5,000
US$ 20,000
US$ 25,000
US$ 25,000
US$ 19,884
US$ 35,039
US$
8,000
US$ 25,000
5,000
US$
Held-to-maturity financial assets
15,000
US$ 15,000
Available-for-sale financial assets
83
US$
83
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
US$ 19,751
US$ 24,905
US$ 24,991
US$ 20,033
US$ 35,070
US$
8,008
US$ 24,825
5,007
US$
US$ 14,991
US$
83
(Concluded)
- 46 -
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, 2011
(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
(Foreign
Currencies in
Thousands)
Shares/Units
(In Thousands)
(Note 1)
Amount
(Foreign
Currencies in
Thousands)
Shares/Units
(In Thousands)
Amount
(Foreign
Currencies in
Thousands)
Carrying Value
(Foreign
Currencies in
Thousands)
Gain (Loss) on
Disposal
(Foreign
Currencies in
Thousands)
Shares/Units
(In Thousands)
Amount
(Foreign
Currencies in
Thousands)
TABLE 3
TSMC
Stock
TSMC Solar
TSMC SSL
Capital
TSMC China
VTAF III
TSMC Solar
Stock
TSMC Solar Europe
Capital
VTAF III
TSMC Solar
Europe
Stock
TSMC Solar Europe GmbH
TSMC Global Corporate bond
Allstate Life Gbl Fdg Secd
Investments
accounted for using
equity method
〃
Investments
accounted for using
equity method
〃
Investments
accounted for using
equity method
Investments
accounted for using
equity method
Investments
accounted for using
equity method
Available-for-sale
financial assets
American Honda Fin Corp. Mtn
Anz National Intl Ltd.
Archer Daniels Midland Co.
Astrazeneca Plc
AT+T Wireless
Banco Bilbao Vizcaya P R
Bank of Nova Scotia
Barclays Bank Plc
Barclays Bk Plc UK Govt Cr
Bb+T Corporation
Bear Stearns Cos Inc.
Berkshire Hathaway Inc. Del
Bhp Billiton Fin USA Ltd.
Bnp Paribas SA
Boeing Cap Corp.
Bp Capital Markets Plc
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Subsidiary
-
$
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Investee accounted
for using equity
method
-
-
-
-
-
-
-
4,252,270
2,769,423
23,971
-
1,118,000
$ 11,180,000
-
$
-
$
-
$
227,000
2,270,000
-
-
-
-
6,759,300
135,297
385,682
168,548
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Subsidiary
1
EUR
90
-
EUR
9,800
-
EUR
-
EUR
-
EUR
-
-
-
-
-
-
-
1,118,000
$ 10,153,244
227,000
1,746,893
-
13,542,181
-
-
-
1,311,044
204,163
1,681,719
1
EUR
5,103
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,430
US$
4,824
-
US$
-
4,430
US$
4,787
US$
4,834
US$
(47)
-
US$
4,000
3,500
-
3,150
3,500
3,250
5,000
12,000
-
-
3,500
3,500
-
3,810
2,925
3,900
US$
US$
3,995
3,554
-
3,397
US$
3,823
US$
3,249
US$
US$
5,000
US$ 11,997
-
-
3,494
3,517
-
3,844
3,192
3,988
US$
US$
US$
US$
US$
US$
US$
US$
US$
-
-
7,000
-
-
-
-
-
5,000
3,840
-
-
4,000
-
-
-
-
-
7,000
-
-
-
-
-
5,108
3,990
-
-
4,443
-
-
-
4,000
3,500
7,000
3,150
3,500
3,250
5,000
12,000
5,000
3,840
3,500
3,500
4,000
3,810
2,925
3,900
4,005
US$
3,555
US$
7,010
US$
3,356
US$
3,762
US$
3,251
US$
US$
5,012
US$ 12,022
5,099
US$
3,977
US$
3,465
US$
3,521
US$
4,447
US$
3,838
US$
3,180
US$
3,992
US$
3,985
US$
3,515
US$
7,000
US$
3,456
US$
3,979
US$
3,250
US$
US$
5,000
US$ 12,035
5,108
US$
3,990
US$
3,360
US$
3,500
US$
4,443
US$
3,844
US$
3,235
US$
3,969
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
20
40
10
(100)
(217)
1
12
(13)
(9)
(13)
105
21
4
(6)
(55)
23
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- 47 -
(Continued)
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
(Foreign
Currencies in
Thousands)
Shares/Units
(In Thousands)
(Note 1)
Amount
(Foreign
Currencies in
Thousands)
Shares/Units
(In Thousands)
Amount
(Foreign
Currencies in
Thousands)
Carrying Value
(Foreign
Currencies in
Thousands)
Gain (Loss) on
Disposal
(Foreign
Currencies in
Thousands)
Shares/Units
(In Thousands)
Amount
(Foreign
Currencies in
Thousands)
Bp Capital Markets Plc
Available-for-sale
financial assets
Chevron Corp.
Cie Financement Foncier
Cisco Systems Inc.
Citigroup Funding Inc.
Citigroup Funding Inc.
Citigroup Inc.
Coca Cola Co.
Countrywide Finl Corp.
Credit Suisse New York
Credit Suisse New York
Dexia Credit Local
Dexia Credit Local
Dexia Credit Local S.A
Dexia Credit Local SA NY
Finance for Danish Ind
General Elec Cap Corp.
General Elec Cap Corp.
General Elec Cap Corp.
Georgia Pwr Co.
Gmac LLC
Goldman Sachs Group Inc.
Hewlett Packard Co.
Household Fin Corp.
HSBC Bank Plc
HSBC Fin Corp.
IBM Corp.
Inc Bk Nv Neth St Cr Gtee
John Deer Capital Corp. Fdic GT
JP Morgan Chase + Co.
Lloyds Tsb Bank Plc Ser 144A
Macquarie Bk Ltd. Sr
Massmutual Global Fdg II Mediu
Mellon Fdg Corp.
Merck + Co. Inc.
Merrill Lynch + Co. Inc.
Merrill Lynch + Co. Inc.
Met Life Glob Funding I
Metlife Inc.
Microsoft Corp.
Morgan Stanley
Morgan Stanley Dean Witter
National Australia Bank
Pepsiamericas Inc.
Philip Morris Intl Inc.
Princoa Global Fdg I Medium
Rabobank Nederland
Royal Bk of Scotland Plc
Royal Bk Scotlnd Grp Plc 144A
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
-
7,160
US$
7,160
7,160
US$
7,201
US$
7,160
US$
41
-
US$
-
4,000
-
16,000
7,300
5,000
4,000
4,000
3,945
-
6,000
4,000
4,000
5,000
3,800
7,000
4,000
-
4,000
4,600
-
3,000
4,330
3,400
2,900
6,800
-
3,500
5,000
5,950
3,900
4,000
3,500
4,000
4,691
-
-
6,500
3,250
-
8,000
-
-
-
5,050
5,000
5,000
9,450
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
-
4,019
-
US$ 16,323
7,446
US$
5,490
US$
4,002
US$
4,208
US$
4,090
US$
-
5,976
3,984
3,992
4,983
3,799
7,002
4,110
-
4,006
4,731
-
3,003
4,694
3,405
3,074
6,775
-
3,616
5,021
6,009
3,975
3,955
3,475
4,032
4,647
-
-
6,600
3,232
-
8,524
-
-
-
5,011
5,000
5,052
9,516
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
4,000
-
7,050
-
-
-
-
-
-
3,200
-
-
-
-
-
-
-
5,000
-
-
3,400
-
-
-
-
-
8,500
-
-
-
9,300
-
-
-
-
4,000
3,000
-
-
9,000
-
3,000
4,000
4,000
-
-
-
-
4,305
-
7,050
-
-
-
-
-
-
3,200
-
-
-
-
-
-
-
5,000
-
-
3,400
-
-
-
-
-
8,668
-
-
-
9,472
-
-
-
-
4,335
3,000
-
-
9,000
-
3,035
4,329
4,640
-
-
-
-
4,000
4,000
7,050
16,000
7,300
5,000
4,000
4,000
3,945
3,200
6,000
4,000
4,000
5,000
3,800
7,000
4,000
5,000
4,000
4,600
3,400
3,000
4,330
3,400
2,900
6,800
8,500
3,500
5,000
5,950
13,200
4,000
3,500
4,000
4,691
4,000
3,000
6,500
3,250
9,000
8,000
3,000
4,000
4,000
5,050
5,000
5,000
9,450
4,286
US$
4,034
US$
US$
7,073
US$ 16,337
7,440
US$
5,478
US$
4,003
US$
4,221
US$
4,069
US$
3,238
US$
5,983
US$
3,927
US$
3,976
US$
4,952
US$
3,808
US$
7,005
US$
4,095
US$
5,037
US$
4,002
US$
4,715
US$
3,425
US$
3,004
US$
4,662
US$
3,407
US$
3,074
US$
6,781
US$
8,655
US$
3,601
US$
5,032
US$
US$
6,007
US$ 13,423
3,991
US$
3,479
US$
4,013
US$
4,669
US$
4,319
US$
3,004
US$
6,584
US$
3,224
US$
9,140
US$
8,513
US$
3,040
US$
4,308
US$
4,591
US$
5,042
US$
5,000
US$
5,045
US$
9,517
US$
4,305
US$
4,029
US$
US$
7,050
US$ 16,262
7,448
US$
5,360
US$
4,000
US$
4,291
US$
4,073
US$
3,200
US$
6,000
US$
4,000
US$
4,000
US$
5,000
US$
3,801
US$
7,002
US$
4,117
US$
5,000
US$
4,024
US$
4,726
US$
3,400
US$
2,995
US$
4,781
US$
3,407
US$
3,142
US$
6,772
US$
8,668
US$
3,634
US$
5,000
US$
US$
6,077
US$ 13,455
3,926
US$
3,404
US$
4,066
US$
4,603
US$
4,335
US$
3,000
US$
6,527
US$
3,249
US$
9,000
US$
8,797
US$
3,034
US$
4,329
US$
4,640
US$
4,921
US$
4,997
US$
5,106
US$
9,596
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
(19)
5
23
75
(8)
118
3
(70)
(4)
38
(17)
(73)
(24)
(48)
7
3
(22)
37
(22)
(11)
25
9
(119)
-
(68)
9
(13)
(33)
32
(70)
(32)
65
75
(53)
66
(16)
4
57
(25)
140
(284)
6
(21)
(49)
121
3
(61)
(79)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- 48 -
(Continued)
Company Name
Marketable Securities Type and
Name
Financial Statement
Account
Counter-party
Nature of
Relationship
Sanofi Aventis
Available-for-sale
financial assets
Sanofi Aventis
Shell International Fin
Shell International Fin
Standard Chartered BK NY
State Str Corp.
Sun Life Finl Global
Suncorp Metway Ltd.
Swedbank Hypotek AB
Swedbank Hypotek AB
Teva Pharm Fin III
Teva Pharma Fin III LLC
Total Capital Canada Ltd.
United Technologies Corp.
US Central Federal Cred
Verizon Communications
Virginia Elec + Pwr Co.
Volkswagen Intl Fin NV
Wachovia Corp. Global Medium
Wal Mart Stores Inc.
Wal Mart Stores Inc.
Westpac Banking Corp.
Westpac Banking Corp.
Wyeth
Deutsche Bank AG London
Government bond
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 N/B
US Treasury N/B
US Treasury N/B
US Treasury N/B
Agency bond
Fannie Mae
Fannie Mae
Fannie Mae
Fannie Mae
Fannie Mae
Fannie Mae
Fannie Mae
Fannie Mae
Fannie Mae
Fannie Mae
Federal Farm Credit Bank
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
Held-to-maturity
financial assets
Available-for-sale
financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
Available-for-sale
financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Beginning Balance
Acquisition
Disposal (Note 2)
Ending Balance (Note 3)
Shares/Units
(In Thousands)
Amount
(Foreign
Currencies in
Thousands)
Shares/Units
(In Thousands)
(Note 1)
Amount
(Foreign
Currencies in
Thousands)
Shares/Units
(In Thousands)
Amount
(Foreign
Currencies in
Thousands)
Carrying Value
(Foreign
Currencies in
Thousands)
Gain (Loss) on
Disposal
(Foreign
Currencies in
Thousands)
Shares/Units
(In Thousands)
Amount
(Foreign
Currencies in
Thousands)
-
US$
-
4,000
US$
4,000
4,000
US$
4,003
US$
4,000
US$
3
-
US$
-
-
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
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
-
4,536
3,248
-
6,417
4,332
8,982
3,993
-
-
4,016
-
-
4,084
-
-
-
5,141
3,964
4,325
3,514
4,005
3,657
-
41,700
US$ 42,042
11,100
7,000
5,250
-
-
-
-
-
-
US$ 10,976
7,079
US$
5,212
US$
-
-
-
-
-
-
16,104
US$ 16,102
11,100
8,765
4,600
3,900
3,000
-
-
-
-
4,000
US$ 11,096
8,763
US$
4,589
US$
3,861
US$
2,994
US$
-
-
-
-
3,994
US$
- 49 -
3,870
-
-
3,000
-
-
-
-
4,100
4,000
-
4,000
4,000
4,500
7,725
3,250
4,000
-
-
-
-
-
638
20,000
-
-
-
30,175
19,900
10,000
10,000
10,000
10,000
3,300
-
-
11,500
-
-
-
20,300
11,045
7,500
3,000
-
US$
US$
US$
US$
3,870
-
-
3,000
-
-
-
-
4,100
4,000
-
4,000
4,265
4,599
7,725
3,489
4,000
-
-
-
-
-
US$
697
US$ 19,884
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
3,870
4,515
3,200
3,000
6,420
4,400
8,800
4,000
4,100
4,000
4,000
4,000
4,000
8,500
7,725
3,250
4,000
5,000
4,000
3,770
3,500
4,000
3,983
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
3,884
4,533
3,256
3,001
6,423
4,351
8,937
3,998
4,086
4,019
4,011
4,013
4,244
8,664
7,785
3,461
4,010
5,142
3,968
4,261
3,511
4,022
4,325
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
3,870
4,527
3,227
3,000
6,382
4,304
9,125
4,002
4,100
4,000
4,000
4,000
4,266
8,692
7,725
3,489
4,000
5,138
3,986
4,383
3,500
4,044
4,397
-
14
6
29
1
41
47
(188)
(4)
(14)
19
11
13
(22)
(28)
60
(28)
10
4
(18)
(122)
11
(22)
(72)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
20,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$ 19,884
-
41,700 US$ 42,042
US$ 41,729 US$
313
-
-
US$ 29,906
US$ 19,872
US$ 10,084
US$ 10,042
US$ 10,024
9,988
US$
3,301
US$
11,100 US$ 10,941
7,000 US$
7,077
35,425 US$ 35,154
US$ 19,888
19,900
US$ 10,073
10,000
US$ 10,046
10,000
US$ 10,035
10,000
9,990
10,000
US$
3,298
3,300 US$
US$ 11,084 US$
US$
7,078 US$
US$ 35,101 US$
US$
US$ 19,872
US$
US$ 10,084
US$
US$ 10,042
US$
US$ 10,024
9,988
US$
US$
3,301 US$
US$
(143)
(1)
53
16
(11)
4
11
2
(3)
-
16,104
US$ 16,116
US$ 16,098
US$
18
-
US$ 11,503
-
-
-
US$ 20,269
US$ 12,104
7,500
US$
3,000
US$
-
11,100
20,265
4,600
3,900
3,000
20,300
11,045
7,500
3,000
4,000
US$ 11,109
US$ 20,280
4,606
US$
3,851
US$
US$
3,000
US$ 20,301
US$ 12,044
7,508
US$
3,008
US$
4,002
US$
US$ 11,096
US$ 20,262
4,598
US$
3,899
US$
US$
3,009
US$ 20,269
US$ 12,104
7,500
US$
3,000
US$
3,995
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
13
18
8
(48)
(9)
32
(60)
8
8
7
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(Continued)
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
(Foreign
Currencies in
Thousands)
Shares/Units
(In Thousands)
(Note 1)
Amount
(Foreign
Currencies in
Thousands)
Shares/Units
(In Thousands)
Amount
(Foreign
Currencies in
Thousands)
Carrying Value
(Foreign
Currencies in
Thousands)
Gain (Loss) on
Disposal
(Foreign
Currencies in
Thousands)
Shares/Units
(In Thousands)
Amount
(Foreign
Currencies in
Thousands)
Federal Farm Credit Bank
Federal Farm Credit Bank
Federal Home Loan Bank
Federal Home Loan Bank
Federal Home Loan Bank
Federal Home Loan Bank
Federal Home Loan Bank
Federal Home Ln Bks
Federal Home Ln Mtg Corp.
Federal Home Ln Mtg Corp.
Federal Home Loan Mtg Corp.
Fhr 2953 Da
Fhr 3184 Fa
Fnma Tba Jan 15 Single Fam
Fnma Tba Feb 15 Single Fam
Fnma Tba Mar 15 Single Fam
Fnma Tba Apr 15 Single Fam
Fnr 2006 60 CO
Fnr 2009 116 A
Freddie Mac
Freddie Mac
Freddie Mac
Freddie Mac
Freddie Mac
Freddie Mac
Gnr 2009 45 AB
Government Natl Mtg Assn
Ngn 2010 R2 1A
Ngn 2011 R4 1A
Available-for-sale
financial assets
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
〃
Money market fund
Ssga Cash Mgmt Global Offshore Available-for-sale
financial assets
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,000
US$
3,984
-
US$
-
4,000
US$
3,986
US$
3,998
US$
(12)
-
US$
-
5,000
6,800
8,000
10,000
8,400
5,000
3,732
3,324
5,183
3,284
4,096
-
-
-
-
3,485
4,271
5,750
4,300
10,420
-
-
-
4,417
3,050
3,732
-
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
-
5,007
6,817
8,040
9,998
8,397
5,046
3,727
3,453
5,168
3,466
4,084
-
-
-
-
3,483
US$
4,640
US$
5,764
US$
US$
4,316
US$ 10,411
-
-
-
4,496
3,285
3,731
-
US$
US$
US$
4,000
-
-
-
-
-
-
-
-
-
-
-
3,000
3,000
3,000
3,000
-
-
-
-
-
19,000
3,550
14,200
-
-
-
4,000
US$
US$
US$
US$
US$
4,002
-
-
-
-
-
-
-
-
-
-
-
3,147
3,138
3,110
3,131
-
-
-
-
-
US$ 18,981
US$
3,549
US$ 14,196
-
-
-
4,000
US$
4,000
5,000
6,800
8,000
10,000
8,400
5,000
3,340
3,161
4,634
2,846
3,810
3,000
3,000
3,000
3,000
3,274
3,841
5,750
4,300
10,420
19,000
3,550
14,200
3,082
3,050
3,490
3,914
4,003
US$
5,007
US$
6,817
US$
US$
8,033
US$ 10,001
8,400
US$
5,043
US$
3,340
US$
3,288
US$
4,634
US$
3,028
US$
3,807
US$
3,142
US$
3,117
US$
3,140
US$
3,164
US$
3,274
US$
4,137
US$
5,761
US$
US$
4,312
US$ 10,414
US$ 18,986
US$
3,553
US$ 14,204
3,129
US$
3,202
US$
3,492
US$
3,914
US$
4,002
US$
5,009
US$
6,811
US$
7,990
US$
9,985
US$
8,399
US$
5,098
US$
3,341
US$
3,360
US$
4,632
US$
2,993
US$
3,806
US$
3,147
US$
3,138
US$
3,110
US$
3,131
US$
3,272
US$
4,122
US$
5,771
US$
US$
4,308
US$ 10,412
US$ 18,981
US$
3,549
US$ 14,196
3,215
US$
3,278
US$
3,490
US$
3,914
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
1
(2)
6
43
16
1
(55)
(1)
(72)
2
35
1
(5)
(21)
30
33
2
15
(10)
4
2
5
4
8
(86)
(76)
2
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
12,387
US$ 12,387
764,155
US$ 764,155
776,459
US$ 776,459
US$ 776,459
-
83
US$
83
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, other adjustments to long-term investment using equity method and
amounts transferred from spin-off.
(Concluded)
- 50 -
TABLE 4
Taiwan Semiconductor Manufacturing Company Limited and Investees
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, 2011
(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
Amount
Price
Reference
Purpose of
Acquisition
Other Terms
TSMC
Fab
January 5, 2011 to
$ 1,018,438 By the construction
China Steel Structure Co., Ltd.
Fab
Fab
Fab
Fab
Fab
Fab
Fab
Fab
November 10, 2011
January 7, 2011 to
December 27, 2011
January 26, 2011 to
December 27, 2011
January 26, 2011 to
December 27, 2011
progress
152,099 By the construction
Lead Fu Industrials Corp.
progress
222,928 By the construction
MandarTech Interiors Inc.
progress
173,899 By the construction
I Domain Industrial Co., Ltd.
progress
January 27, 2011 to
2,425,769 By the construction
Da Cin Construction Co., Ltd.
December 27, 2011
progress
January 27, 2011 to
2,036,095 By the construction
Fu Tsu Construction Co., Ltd.
December 27, 2011
January 27, 2011 to
July 24, 2011
January 27, 2011 to
December 28, 2011
February 24, 2011 to
December 27, 2011
progress
480,672 By the construction
Tasa Construction Corporation
progress
219,004 By the construction Edg Corporation Ltd.
progress
229,992 By the construction
progress
Yankey Engineering Co., Ltd.
Xintec
Fab
February 17, 2011
1,050,000 Based on the
agreement
Vertex Precision Electronics Inc.
-
-
-
-
-
-
-
-
-
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
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 Manufacturing
None
purpose
N/A
Public bidding Manufacturing
None
purpose
N/A
Public bidding Manufacturing
None
N/A
Public bidding Manufacturing
None
purpose
purpose
N/A
Public bidding Manufacturing
None
purpose
N/A
Public bidding Manufacturing
None
purpose
N/A
Public bidding Manufacturing
None
purpose
N/A
Public bidding Manufacturing
None
N/A
Public bidding Manufacturing
None
purpose
purpose
N/A
N/A
N/A
N/A
Pricing report Manufacturing
None
purpose
- 51 -
TABLE 5
Note
% to
Total
55
-
-
-
8
3
8
3
-
51
4
Taiwan Semiconductor Manufacturing Company Limited and Investees
TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 2011
(Amounts in Thousands of New Taiwan Dollars)
Company Name
Related Party
Nature of Relationships
Transaction Details
Abnormal Transaction
Notes/Accounts Payable or
Receivable
Purchases/
Sales
Amount
% to
Total
Payment Terms
Unit Price
(Note)
Payment Terms
(Note)
Ending Balance
TSMC
TSMC North America
GUC
Subsidiary
Investee accounted for using
Sales
Sales
$ 234,902,043
3,388,912
56 Net 30 days after invoice date
1 Net 30 days after monthly closing
equity method
VIS
Investee accounted for using
Sales
302,844
- Net 30 days after monthly closing
equity method
TSMC Solar Europe GmbH Indirect subsidiary
TSMC China
WaferTech
VIS
Subsidiary
Indirect subsidiary
Investee accounted for using
Sales
Purchases
Purchases
Purchases
148,898
10,392,189
7,305,879
5,577,762
- Net 60 days after invoice date
21 Net 30 days after monthly closing
15 Net 30 days after monthly closing
12 Net 30 days after monthly closing
SSMC
Motech
equity method
Investee accounted for using
Purchases
3,949,176
8 Net 30 days after monthly closing
equity method
Indirect investee accounted for
using the equity method
Purchases
124,673
- Net 30 days after monthly closing
Xintec
OmniVision
TSMC
Parent company of director
(represented for Xintec)
Parent company
Sales
Sales
1,829,969
47 Net 30 days after monthly closing
267,841
7 Net 30 days after monthly closing
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$ 24,661,104
116,218
-
-
(946,826)
(420,459)
(987,937)
(336,037)
-
241,333
17,326
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.
- 52 -
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, 2011
(Amounts in Thousands of New Taiwan Dollars)
Company Name
Related Party
Nature of Relationships
Ending Balance
Turnover Days
(Note 1)
Overdue
Amount
Action Taken
TSMC
TSMC North America
GUC
Subsidiary
Investee accounted for using
$ 24,684,991
116,218
equity method
Xintec
OmniVision
Parent company of director
(represented for Xintec)
241,333
39
15
36
$ 9,115,109
-
-
-
-
-
Amounts Received
in Subsequent
Period
Allowance for
Bad Debts
$ 14,946,365
-
$
-
-
-
-
Note 1: The calculation of turnover days excludes other receivables from related parties.
TABLE 6
- 53 -
Taiwan Semiconductor Manufacturing Company Limited and Investees
NAMES, LOCATIONS, AND RELATED INFORMATION OF INVESTEES OVER WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCE
DECEMBER 31, 2011
(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, 2011
December 31,
2011
(Foreign
Currencies in
Thousands)
December 31,
2010
(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
Tortola, British Virgin Islands
Investment activities
$ 42,327,245
$ 42,327,245
1
Tortola, British Virgin Islands
Investing in companies involved in the design,
31,456,130
31,456,130
988,268
100
100
$ 44,071,845
$
431,368
$
431,368 Subsidiary
34,986,964
1,745,799
1,745,799 Subsidiary
TABLE 7
TSMC China
Shanghai, China
TSMC Solar
Tai-Chung, Taiwan
Hsin-Chu, Taiwan
VIS
SSMC
TSMC SSL
Hsin-Chu, Taiwan
Xintec
VTAF III
GUC
VTAF II
Emerging Alliance
TSMC Europe
TSMC Japan
TSMC Korea
Taoyuan, Taiwan
Hsin-Chu, Taiwan
Cayman Islands
Cayman Islands
Amsterdam, the Netherlands
Yokohama, Japan
Seoul, Korea
TSMC North America
San Jose, California, U.S.A.
Selling and marketing of integrated circuits and
333,718
333,718
11,000
Singapore
Fabrication and supply of integrated circuits
5,120,028
5,120,028
314
Cayman Islands
Investing in new start-up technology companies
manufacture, and other related business in the
semiconductor industry
Manufacturing and selling of integrated circuits at
the order of and pursuant to product design
specifications provided by customers
Engaged in researching, developing, designing,
manufacturing and selling renewable energy
and saving related technologies and products
Research, design, development, manufacture,
packaging, testing and sale of memory
integrated circuits, LSI, VLSI and related parts
18,939,667
12,180,367
-
100
13,542,181
2,113,521
2,098,233 Subsidiary
11,180,000
-
1,118,000
100
10,153,244
(982,868)
(982,868) Subsidiary
13,232,288
13,232,288
628,223
39
8,988,007
882,183
(10,337) Investee accounted for
using equity method
semiconductor devices
Engaged in researching, developing, designing,
manufacturing and selling solid state lighting
devices and related applications products and
systems
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
Customer service and technical supporting
activities
Manufacturing and sales of solar cells, crystalline
silicon solar cell, and test and measurement
instruments and design and construction of
solar power systems
Investing in new start-up technology companies
2,270,000
-
227,000
1,357,890
1,357,890
94,011
2,074,155
(Note 4)
386,568
3,565,441
(Note 4)
386,568
-
46,688
949,267
892,855
15,749
83,760
13,656
1,166,470
971,785
15,749
83,760
13,656
-
-
-
6
80
39
100
100
40
53
35
98
99
100
100
100
6,289,429
3,370,241
1,143,147
Investee accounted for
using equity method
2,981,639
197,493
197,493 Subsidiary
1,746,893
(523,002)
(523,002) Subsidiary
1,606,694
166,603
54,449
Investee with a
1,311,044
(280,045)
controlling financial
interest
(273,038) Subsidiary
1,157,188
527,406
183,843
Investee accounted for
using equity method
762,135
213,235
205,171
161,601
23,448
32,275
(11,185)
34,937
4,523
3,263
31,629 Subsidiary
(11,129) Subsidiary (Note 3)
34,937 Subsidiary (Note 3)
4,523 Subsidiary (Note 3)
3,263 Subsidiary (Note 3)
6,228,661
(Note 4)
6,228,661
(Note 4)
1,795,131
(Note 4)
411,032
(Note 4)
147,686
(Note 4)
3,565,441
(Note 4)
25,350
(Note 4)
60,962
(Note 4)
3,133
(Note 4)
3,133
(Note 4)
87,480
20
5,612,344
(2,193,504)
Note 2
-
-
1
1
46
100
100
100
Investee accounted for
using equity method
Investee accounted for
using equity method
1,681,719
(280,045)
Note 2
204,163
(196,659)
Note 2
Subsidiary
52,187
(63,192)
Note 2
Subsidiary
2,994
(34)
Note 2
Subsidiary
(Continued)
TSMC Solar
Motech
Taipei, Taiwan
VTAF III
Cayman Islands
TSMC Solar Europe
Amsterdam, the Netherlands
Investing in solar related business
TSMC Solar NA
Delaware, U.S.A.
Selling and marketing of solar related products
TSMC SSL
TSMC Lighting NA
Delaware, U.S.A.
Selling and marketing of solid state lighting
related products
- 54 -
Investor Company
Investee Company
Location
Main Businesses and Products
Original Investment Amount
Balance as of December 31, 2011
December 31,
2011
(Foreign
Currencies in
Thousands)
December 31,
2010
(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 Partners
TSMC Development
VisEra Holding Company
Delaware, U.S.A.
Cayman Islands
Investment activities
Investing in companies involved in the design,
US$
0.001
US$ 43,000
US$
0.001
US$ 43,000
ISDF
TSMC Technology
ISDF II
TSMC Canada
Mcube Inc. (common stock)
Cayman Islands
Delaware, U.S.A.
Cayman Islands
Ontario, Canada
Delaware, U.S.A.
Mcube Inc. (preferred stock)
Delaware, U.S.A.
manufacturing, and other related businesses in
the semiconductor industry
Investing in new start-up technology companies
Engineering support activities
Investing in new start-up technology companies
Engineering support activities
Research, development, and sale of
micro-semiconductor device
Research, development, and sale of
micro-semiconductor device
787
US$
US$
0.001
US$ 14,153
2,300
US$
800
US$
4,088
US$
US$
0.001
US$ 16,532
2,300
US$
800
US$
1
43,000
787
1
14,153
2,300
5,333
100
49
97
100
97
100
80
US$ 460,034
US$ 94,208
US$ 56,777
US$ 29,054
Note 2
Note 2
US$ 11,112
US$ 10,615
9,994
US$
4,059
US$
-
3,656
US$
737
US$
(642)
US$
US$
435
US$ (13,586)
Note 2
Note 2
Note 2
Note 2
Note 2
US$
1,000
US$
1,000
1,000
5
-
US$ (13,586)
Note 2
Subsidiary
Investee accounted for
using equity method
Subsidiary
Subsidiary (Note 3)
Subsidiary
Subsidiary (Note 3)
Investee accounted for
using equity method
(Note 3)
Investee accounted for
using equity method
(Note 3)
TSMC Development
WaferTech
Washington, U.S.A.
Manufacturing, selling, testing and
US$ 280,000
US$ 280,000
293,640
100
US$ 220,119
US$ 54,908
Note 2
Subsidiary
VTAF III
Mutual-Pak Technology Co., Ltd.
Taipei, Taiwan
Growth Fund
VTA Holdings
Cayman Islands
Delaware, U.S.A.
computer-aided designing of integrated circuits
and other semiconductor devices
Manufacturing and selling of electronic parts and
researching, developing, and testing of RFID
Investing in new start-up technology companies
Investing in new start-up technology companies
VTAF II
VTA Holdings
Delaware, U.S.A.
Investing in new start-up technology companies
Emerging Alliance
VTA Holdings
Delaware, U.S.A.
Investing in new start-up technology companies
TSMC Solar Europe
TSMC Solar Europe GmbH
Hamburg, Germany
Selling of solar related products and providing
EUR 9,900 EUR
100
customer service
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.
US$
3,937
US$
3,937
11,868
US$
US$
1,830
-
1,700
-
-
-
-
-
57
100
62
31
7
US$
1,204
US$
(1,458)
Note 2
Subsidiary (Note 3)
US$
US$
510
-
(466)
-
Note 2
Note 2
Subsidiary (Note 3)
Subsidiary (Note 3)
-
-
-
-
Note 2
Subsidiary (Note 3)
Note 2
Subsidiary (Note 3)
100
EUR 5,103
EUR (4,787)
Note 2
Subsidiary
-
-
-
-
1
Note 4:
In August 2011, the Company adjusted its investment structure by transferring TSMC Lighting NA to TSMC SSL and transferring Motech, TSMC Solar Europe, TSMC Solar NA and part of VTAF III to TSMC Solar.
(Concluded)
- 55 -
TABLE 8
Taiwan Semiconductor Manufacturing Company Limited and Investees
INFORMATION OF INVESTMENT IN MAINLAND CHINA
FOR THE YEAR ENDED DECEMBER 31, 2011
(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)
Investee Company Main Businesses and Products
Total Amount of
Paid-in Capital
(Foreign
Currencies in
Thousands)
Method of
Investment
Accumulated
Outflow of
Investment from
Taiwan as of
January 1, 2011
(US$ in
Thousand)
Investment Flows
Outflow
(US$ in
Thousands)
Inflow
Accumulated
Outflow of
Investment from
Taiwan as of
December 31,
2011 (US$ in
Thousands)
Percentage of
Ownership
Equity in the
Earnings
(Losses)
Carrying Value
as of
December 31,
2011
(US$ in
Thousands)
Accumulated
Inward
Remittance of
Earnings as of
December 31,
2011
TSMC China
Manufacturing and selling of
integrated circuits at the order of
and pursuant to product design
specifications provided by
customers
$
18,939,667
(RMB 4,502,080)
(Note 1)
$
(US$
12,180,367
371,000)
$
(US$
6,759,300
225,000)
$
Shanghai Walden
Venture Capital
Enterprise
Investing in new start-up
technology companies
(US$
953,709
31,488)
(Note 2)
-
(US$
147,485
5,000)
-
-
$
(US$
18,939,667
596,000)
100%
$
2,098,233
(Note 3)
$
13,542,181
$
(US$
147,485
5,000)
8%
(Note 4)
(US$
151,440
5,000)
-
-
Accumulated Investment in Mainland China
as of December 31, 2011
(US$ in Thousand)
Investment Amounts Authorized by
Investment Commission, MOEA
(US$ in Thousand)
Upper Limit on Investment
(US$ in Thousand)
$ 19,087,152
(US$ 601,000)
$ 19,087,152
(US$ 601,000)
$ 19,087,152
(US$ 601,000)
Note 1: TSMC directly invested US$596,000 thousand in TSMC China.
Note 2: TSMC indirectly invested in China company through third region, TSMC Partners.
Note 3: Amount was recognized based on the audited financial statements.
Note 4: TSMC Partners invested in financial assets carried at cost, equity in the earnings from which was not recognized.
- 56 -