Revenue Analysis:
3Q09 business saw a continued improvement with demand growing across the board. Sequentially, revenues from computer applications grew the most with 29% quarter-over-quarter growth rate, followed by communication's 25% and consumer's 11%, respectively.
As a result of continued ramp-up of our 40/45nm technology, revenues from 40/45nm were more than quadrupled during the quarter and accounted for 4% of total wafer sales. Meanwhile, revenues from 65nm and 90nm each accounted for 31% and 18% of total wafer sales. Overall, revenues from advanced technologies (0.13-micron and below) represented 67% of total wafer sales, two percentage points up from prior quarter.
Revenues from IDM customers accounted for 20% of total wafer sales in 3Q09, two percentage points increase from 2Q09.
From a geographic perspective, revenues from customers based in North America accounted for 70% of total wafer sales, five percentage points up from prior quarter. Meanwhile, sales from Asia Pacific, China, Europe and Japan accounted for 13%, 3%, 11%, and 3% of total wafer sales, respectively.
II. Profit & Expense Analysis
II - 1. Gross Profit Analysis
(In NT billions) 3Q09 2Q09 3Q08
COGS 47.08 39.91 49.89
Depreciation 18.37 18.54 19.06
Other MFG Cost 28.71 21.37 30.83
Gross Profit 42.86 34.30 43.09
Gross Margin 47.7% 46.2% 46.3%
Gross Profit Analysis:
Gross margin for the third quarter 2009 was 47.7%, up from 46.2% of prior quarter. The 1.5 percentage points improvement in gross margin was primarily due to a higher level of capacity utilization and continued cost improvement, partially offset by a decline in pure price and unfavorable exchange rate.
II - 2. Operating Expenses
(In NT billions) 3Q09 2Q09 3Q08
Total Operating Exp. 10.87 9.17 10.18
SG&A 4.67 4.07 4.20
Research & Development 6.20 5.10 5.98
Total Operating Exp. as a % of Sales 12.1% 12.3% 10.9%
Operating Expenses:
Total operating expenses for 3Q09 increased by NT$1.70 billion to NT$10.87 billion, representing 12.1% of net sales, better than 12.3% of net sales in 2Q09.
SG&A expenses increased by NT$0.60 billion from 2Q09. The increase was mainly due to higher legal fee and a one-time donation.
Research and development expenditures increased by NT$1.1 billion sequentially, primarily due to increased activities in 28nm and 22nm technology development.
II - 3. Non-Operating Items
(In NT billions) 3Q09 2Q09 3Q08
Non-Operating Inc./(Exp.) 0.52 1.15 1.33
Net Interest Income/(Exp.) 0.42 0.56 1.15
Other Non-Operating 0.10 0.59 0.18
L-T Investments 0.45 0.11 0.18
SSMC 0.26 0.19 0.15
Others 0.19 (0.08) 0.03
Total Non-Operating Items 0.97 1.26 1.51
Non-Operating Items:
Combined result from non-operating income and long-term investments was a gain of NT$0.97 billion for third quarter 2009.
Non-operating income was NT$0.52 billion, lower than NT$1.15 billion in 2Q09. The sequential decline was primarily due to the absence of litigation compensation and less interest income.
Net investment gain was NT$0.45 billion, higher than NT$0.11 billion of prior quarter, mainly due to continued business improvement among invested companies.
III. Financial Condition Review
III - 1. Liquidity Analysis
(Selected Balance Sheet Items)
(In NT billions) 3Q09 2Q09 3Q08
Cash & Marketable Securities 180.32 246.77 158.17
Accounts Receivable - Trade 35.88 33.38 45.33
Inventory 19.18 18.97 21.82
Total Current Assets 244.24 309.42 232.35
Accounts Payable 26.30 25.96 17.75
Current Portion of Bonds Payable 0.00 0.00 8.00
Dividends Payable 0.00 77.17 0.00
Accrued Bonus to Employees 8.62 11.49 13.28
Accrued Liabilities and Others 20.09 15.01 23.10
Total Current Liabilities 55.01 129.63 62.13
Current Ratio (x) 4.4 2.4 3.7
Net Working Capital 189.23 179.79 170.22
