TSMC Reports Second Quarter EPS of NT$2.79

Hsinchu, Taiwan, R.O.C., July 19, 2018 -- TSMC today announced consolidated revenue of NT$233.28 billion, net income of NT$72.29 billion, and diluted earnings per share of NT$2.79 (US$0.47 per ADR unit) for the second quarter ended June 30, 2018.

Year-over-year, second quarter revenue, net income and diluted EPS all increased 9.1%. Compared to first quarter 2018, second quarter results represented a 6.0% decrease in revenue and a 19.5% decrease in net income. All figures were prepared in accordance with TIFRS on a consolidated basis.

In US dollars, second quarter revenue was $7.85 billion, which decreased 7.2% from the previous quarter but increased 11.2% year-over-year.

Gross margin for the quarter was 47.8%, operating margin was 36.2%, and net profit margin was 31.0%.

In the second quarter, shipments of 10-nanometer accounted for 13% of total wafer revenue; 16/20-nanometer process technology accounted for 25% of total wafer revenue; and advanced technologies, defined as 28-nanometer and more advanced technologies, accounted for 61% of total wafer revenue.

"Our second quarter business was mainly impacted by the mobile product seasonality, while the continuing strong demand from cryptocurrency mining and a more favorable currency exchange rate moderated the mobile softness," said Lora Ho, SVP and Chief Financial Officer of TSMC. "Moving into third quarter 2018, we anticipate our business will benefit from new product launches using TSMC 7-nanometer technology while cryptocurrency mining demand will decrease from second quarter. Based on our current business outlook, management expects the overall performance for third quarter 2018 to be as follows":

• Revenue is expected to be between US$8.45 billion and US$8.55 billion;

And, based on the exchange rate assumption of 1 US dollar to 30.5 NT dollars,

• Gross profit margin is expected to be between 48% and 50%;
• Operating profit margin is expected to be between 36.5% and 38.5%.

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

	2Q18 Amount a	2Q17 Amount	YoY Inc. (Dec.) %	1Q18 Amount	QoQ Inc. (Dec.) %
Net Sales	233,276	213,856	9.1	248,079	(6.0)
Gross profit	11,530	108,708	2.6	124,858	(10.7)
Income from operations	84,428	83,256	1.4	96,827	(12.8)
Income before tax	87,587	86,118	1.7	99,944	(12.4)
Net income	72,290	66,271	9.1	89,785	(19.5)
EPS (NTS)	2.79b	2.56b	9.1	3.46b	(19.5)

a: 2Q2018 figures have not bee approved by Board of Directors
b: Based on 25,930 million weighted average outstanding shares