TSMC Reports Fourth Quarter EPS of NT$3.86

Hsinchu, Taiwan, R.O.C., January 17, 2019 -- TSMC today announced consolidated revenue of NT$289.77 billion, net income of NT$99.98 billion, and diluted earnings per share of NT$3.86 (US$0.63 per ADR unit) for the fourth quarter ended December 31, 2018.

Year-over-year, fourth quarter revenue increased 4.4% while net income and diluted EPS both increased 0.7%. Compared to third quarter 2018, fourth quarter results represented an 11.3% increase in revenue and a 12.3% increase in net income. All figures were prepared in accordance with TIFRS on a consolidated basis.

In US dollars, fourth quarter revenue was $9.40 billion, which increased 10.7% from the previous quarter and 2.0% year-over-year.

Gross margin for the quarter was 47.7%, operating margin was 37.0%, and net profit margin was 34.5%.

In the fourth quarter, shipments of 7-nanometer accounted for 23% of total wafer revenue and 10-nanometer process technology contributed 6% while 16/20-nanometer accounted for 21%. Advanced technologies, defined as 28-nanometer and more advanced technologies, accounted for 67% of total wafer revenue.

"Our fourth quarter business benefited from the strong demand for our 7 nanometer technology covering both mobile and high performance computing applications," said Lora Ho, SVP and Chief Financial Officer of TSMC. "Moving into first quarter 2019, we anticipate our business will be dampened by the overall weakening of the macroeconomic outlook, mobile product seasonality, and high levels of inventory in the semiconductor supply chain. Based on our current business outlook, management expects the overall performance for first quarter 2019 to be as follows":

• Revenue is expected to be between US$7.3 billion and US$7.4 billion; And, based on the exchange rate assumption of 1 US dollar to 30.8 NT dollars,
• Gross profit margin is expected to be between 43% and 45%;
• Operating profit margin is expected to be between 31% and 33%.

The management further expects the 2019 capital budget to be between US$10 billion and US$11 billion.

TSMC's 2018 fourth Quarter Consolidated results:
(Unit: NT$ million, except for EPS)

	4Q18 Amount a	4Q17 Amount	YoY Inc. (Dec.) %	3Q18Amount	QoQ Inc. (Dec.) %
Net Sales	289,771	277,570	4.4	260,348	11.3
Gross profit	138,119	138,748	(0.5)	123,367	12.0
Income from operations	107,124	108,895	(1.6)	95,245	12.5
Income before tax	111,082	111,675	(0.5)	98,897	12.3
Net income	99,984	99,286	0.7	89,072	12.3
EPS (NTS)	3.86b	3.83b	0.7	3.44b	12.3

a: 4Q2018 figures have not bee approved by Board of Directors
b: Based on 25,930 million weighted average outstanding shares