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TSM Taiwan Semiconductor Manufacturing

Filed: 13 Nov 20, 7:10am

English Translation of Financial Statements Originally Issued in Chinese

 

Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries

 

Consolidated Financial Statements for the

Nine Months Ended September 30, 2020 and 2019 and

Independent Auditors’ Review Report

 

 

- 0 -


 

 

 

勤業眾信

勤業眾信聯合會計師事務所

11073 台北市信義區松仁路100號20樓

 

Deloitte & Touche

20F, Taipei Nan Shan Plaza

No. 100, Songren Rd.,

Xinyi Dist., Taipei 11073, Taiwan

 

Tel :+886 (2) 2725-9988

Fax:+886 (2) 4051-6888

www.deloitte.com.tw

INDEPENDENT AUDITORS’ REVIEW REPORT

 

 

The Board of Directors and Shareholders

Taiwan Semiconductor Manufacturing Company Limited

 

Introduction

 

We have reviewed the accompanying consolidated balance sheets of Taiwan Semiconductor Manufacturing Company Limited and its subsidiaries (collectively, the “Company”) as of September 30, 2020 and 2019, the related consolidated statements of comprehensive income for the three months ended September 30, 2020 and 2019 and for the nine months ended September 30, 2020 and 2019, the consolidated statements of changes in equity and cash flows for the nine months then ended, and the related notes to the consolidated financial statements, including a summary of significant accounting policies (collectively referred to as the “consolidated financial statements”). Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34 “Interim Financial Reporting” endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China. Our responsibility is to express a conclusion on the consolidated financial statements based on our reviews.

 

Scope of Review

 

We conducted our reviews in accordance with Statement of Auditing Standards No. 65 “Review of Financial Information Performed by the Independent Auditor of the Entity”. A review of consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

 

Conclusion

Based on our reviews, nothing has come to our attention that caused us to believe that the accompanying consolidated financial statements do not present fairly, in all material respects the consolidated financial position of the Company as of September 30, 2020 and 2019, its consolidated financial performance for the three months ended September 30, 2020 and 2019, and its consolidated financial performance and its consolidated cash flows for the nine months ended September 30, 2020 and 2019 in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34 “Interim Financial Reporting” endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.


1

 


 

 

 

The engagement partners on the reviews resulting in this independent auditors’ review report are Mei Yen Chiang and Yu Feng Huang.

 

 

Deloitte & Touche

Taipei, Taiwan

Republic of China

 

November 10, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notice to Readers

 

The accompanying consolidated financial statements are intended only to present the consolidated financial position, financial performance 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 review such consolidated financial statements are those generally applied in the Republic of China.

 

For the convenience of readers, the independent auditors’ review report and the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ review report and consolidated financial statements shall prevail.

 

2

 


 

 

 

Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries

 

CONSOLIDATED BALANCE SHEETS

(In Thousands of New Taiwan Dollars)

 

 

 

 

September 30, 2020

(Reviewed)

 

December 31, 2019

(Audited)

 

September 30, 2019

(Reviewed)

ASSETS

 

Amount

 

%

 

Amount

 

%

 

Amount

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents (Note 6)

 

$

604,195,113

 

 

 

23

 

 

$

455,399,336

 

 

 

20

 

 

$

452,430,300

 

 

 

21

 

Financial assets at fair value through profit or loss (Note 7)

 

 

2,526,481

 

 

 

-

 

 

 

326,839

 

 

 

-

 

 

 

322,089

 

 

 

-

 

Financial assets at fair value through other comprehensive income (Note 8)

 

 

128,608,752

 

 

 

5

 

 

 

127,396,577

 

 

 

6

 

 

 

132,133,452

 

 

 

6

 

Financial assets at amortized cost (Note 9)

 

 

7,090,162

 

 

 

-

 

 

 

299,884

 

 

 

-

 

 

 

-

 

 

 

-

 

Hedging financial assets (Note 10)

 

 

-

 

 

 

-

 

 

 

25,884

 

 

 

-

 

 

 

37,003

 

 

 

-

 

Notes and accounts receivable, net (Note 11)

 

 

161,700,332

 

 

 

6

 

 

 

138,908,589

 

 

 

6

 

 

 

144,240,857

 

 

 

7

 

Receivables from related parties (Note 31)

 

 

877,765

 

 

 

-

 

 

 

862,070

 

 

 

-

 

 

 

1,180,780

 

 

 

-

 

Other receivables from related parties (Note 31)

 

 

40,773

 

 

 

-

 

 

 

51,653

 

 

 

-

 

 

 

56,581

 

 

 

-

 

Inventories (Note 12)

 

 

109,509,486

 

 

 

4

 

 

 

82,981,196

 

 

 

4

 

 

 

96,685,730

 

 

 

5

 

Other financial assets (Note 32)

 

 

9,647,119

 

 

 

1

 

 

 

11,041,091

 

 

 

-

 

 

 

17,714,646

 

 

 

1

 

Other current assets

 

 

5,477,935

 

 

 

-

 

 

 

5,320,795

 

 

 

-

 

 

 

4,625,998

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total current assets

 

 

1,029,673,918

 

 

 

39

 

 

 

822,613,914

 

 

 

36

 

 

 

849,427,436

 

 

 

40

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NONCURRENT ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial assets at fair value through other comprehensive income (Note 8)

 

 

4,305,357

 

 

 

-

 

 

 

4,124,337

 

 

 

-

 

 

 

4,026,516

 

 

 

-

 

Financial assets at amortized cost (Note 9)

 

 

4,508,201

 

 

 

-

 

 

 

7,348,914

 

 

 

-

 

 

 

7,914,087

 

 

 

-

 

Investments accounted for using equity method (Note 13)

 

 

17,701,081

 

 

 

1

 

 

 

18,698,788

 

 

 

1

 

 

 

18,193,969

 

 

 

1

 

Property, plant and equipment (Note 14)

 

 

1,504,438,119

 

 

 

57

 

 

 

1,352,377,405

 

 

 

60

 

 

 

1,197,955,298

 

 

 

56

 

Right-of-use assets (Note 15)

 

 

20,824,081

 

 

 

1

 

 

 

17,232,402

 

 

 

1

 

 

 

17,506,826

 

 

 

1

 

Intangible assets (Note 16)

 

 

26,339,513

 

 

 

1

 

 

 

20,653,028

 

 

 

1

 

 

 

18,093,573

 

 

 

1

 

Deferred income tax assets (Note 4)

 

 

22,505,789

 

 

 

1

 

 

 

17,928,358

 

 

 

1

 

 

 

17,179,511

 

 

 

1

 

Refundable deposits

 

 

1,274,044

 

 

 

-

 

 

 

2,084,968

 

 

 

-

 

 

 

2,256,399

 

 

 

-

 

Other noncurrent assets

 

 

4,002,111

 

 

 

-

 

 

 

1,742,918

 

 

 

-

 

 

 

1,680,835

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total noncurrent assets

 

 

1,605,898,296

 

 

 

61

 

 

 

1,442,191,118

 

 

 

64

 

 

 

1,284,807,014

 

 

 

60

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL

 

$

2,635,572,214

 

 

 

100

 

 

$

2,264,805,032

 

 

 

100

 

 

$

2,134,234,450

 

 

 

100

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Short-term loans (Notes 17 and 29)

 

$

155,377,630

 

 

 

6

 

 

$

118,522,290

 

 

 

5

 

 

$

85,573,710

 

 

 

4

 

Financial liabilities at fair value through profit or loss (Note 7)

 

 

1,445,911

 

 

 

-

 

 

 

982,349

 

 

 

-

 

 

 

497,911

 

 

 

-

 

Hedging financial liabilities (Note 10)

 

 

11,839

 

 

 

-

 

 

 

1,798

 

 

 

-

 

 

 

23,852

 

 

 

-

 

Accounts payable

 

 

38,909,171

 

 

 

1

 

 

 

38,771,066

 

 

 

2

 

 

 

35,320,208

 

 

 

2

 

Payables to related parties (Note 31)

 

 

1,983,175

 

 

 

-

 

 

 

1,434,900

 

 

 

-

 

 

 

1,638,009

 

 

 

-

 

Salary and bonus payable

 

 

17,511,612

 

 

 

1

 

 

 

16,272,353

 

 

 

1

 

 

 

13,573,620

 

 

 

1

 

Accrued profit sharing bonus to employees and compensation to directors and supervisors (Note 28)

 

 

26,584,817

 

 

 

1

 

 

 

23,648,903

 

 

 

1

 

 

 

16,271,091

 

 

 

1

 

Payables to contractors and equipment suppliers

 

 

100,637,031

 

 

 

4

 

 

 

140,810,703

 

 

 

6

 

 

 

93,441,774

 

 

 

4

 

Cash dividends payable (Note 21)

 

 

129,651,902

 

 

 

5

 

 

 

129,651,902

 

 

 

6

 

 

 

116,686,712

 

 

 

5

 

Income tax payable (Note 4)

 

 

33,705,272

 

 

 

1

 

 

 

32,466,156

 

 

 

1

 

 

 

33,205,431

 

 

 

2

 

Long-term liabilities - current portion (Notes 18 and 29)

 

 

2,600,000

 

 

 

-

 

 

 

31,800,000

 

 

 

1

 

 

 

31,800,000

 

 

 

1

 

Accrued expenses and other current liabilities (Notes 15, 20, 22 and 29)

 

 

79,823,363

 

 

 

3

 

 

 

56,373,281

 

 

 

3

 

 

 

66,748,807

 

 

 

3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total current liabilities

 

 

588,241,723

 

 

 

22

 

 

 

590,735,701

 

 

 

26

 

 

 

494,781,125

 

 

 

23

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NONCURRENT LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bonds payable (Notes 18 and 29)

 

 

227,045,434

 

 

 

9

 

 

 

25,100,000

 

 

 

1

 

 

 

25,100,000

 

 

 

1

 

Long-term bank loans (Notes 19 and 29)

 

 

982,449

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Deferred income tax liabilities (Note 4)

 

 

1,022,263

 

 

 

-

 

 

 

344,393

 

 

 

-

 

 

 

115,856

 

 

 

-

 

Lease liabilities (Notes 15 and 29)

 

 

19,180,809

 

 

 

1

 

 

 

15,041,833

 

 

 

1

 

 

 

15,031,539

 

 

 

1

 

Net defined benefit liability (Note 4)

 

 

8,384,974

 

 

 

-

 

 

 

9,182,496

 

 

 

-

 

 

 

9,417,475

 

 

 

1

 

Guarantee deposits (Notes 20 and 29)

 

 

167,727

 

 

 

-

 

 

 

176,904

 

 

 

-

 

 

 

210,198

 

 

 

-

 

Others

 

 

2,280,460

 

 

 

-

 

 

 

2,128,279

 

 

 

-

 

 

 

2,081,256

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total noncurrent liabilities

 

 

259,064,116

 

 

 

10

 

 

 

51,973,905

 

 

 

2

 

 

 

51,956,324

 

 

 

3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

847,305,839

 

 

 

32

 

 

 

642,709,606

 

 

 

28

 

 

 

546,737,449

 

 

 

26

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF THE PARENT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital stock (Note 21)

 

 

259,303,805

 

 

 

10

 

 

 

259,303,805

 

 

 

11

 

 

 

259,303,805

 

 

 

12

 

Capital surplus (Note 21)

 

 

56,339,982

 

 

 

2

 

 

 

56,339,709

 

 

 

3

 

 

 

56,320,929

 

 

 

3

 

Retained earnings (Note 21)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Appropriated as legal capital reserve

 

 

311,146,899

 

 

 

12

 

 

 

311,146,899

 

 

 

14

 

 

 

311,146,899

 

 

 

15

 

Appropriated as special capital reserve

 

 

36,757,795

 

 

 

1

 

 

 

10,675,106

 

 

 

-

 

 

 

7,385,940

 

 

 

-

 

Unappropriated earnings

 

 

1,166,071,694

 

 

 

44

 

 

 

1,011,512,974

 

 

 

45

 

 

 

963,373,599

 

 

 

45

 

 

 

 

1,513,976,388

 

 

 

57

 

 

 

1,333,334,979

 

 

 

59

 

 

 

1,281,906,438

 

 

 

60

 

Others (Note 21)

 

 

(42,259,146

)

 

 

(1

)

 

 

(27,568,369

)

 

 

(1

)

 

 

(10,675,106

)

 

 

(1

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity attributable to shareholders of the parent

 

 

1,787,361,029

 

 

 

68

 

 

 

1,621,410,124

 

 

 

72

 

 

 

1,586,856,066

 

 

 

74

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NON - CONTROLLING INTERESTS

 

 

905,346

 

 

 

-

 

 

 

685,302

 

 

 

-

 

 

 

640,935

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total equity

 

 

1,788,266,375

 

 

 

68

 

 

 

1,622,095,426

 

 

 

72

 

 

 

1,587,497,001

 

 

 

74

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL

 

$

2,635,572,214

 

 

 

100

 

 

$

2,264,805,032

 

 

 

100

 

 

$

2,134,234,450

 

 

 

100

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of the consolidated financial statements.

 

- 3 -


 

 

 

Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries

 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In Thousands of New Taiwan Dollars, Except Earnings Per Share)

(Reviewed, Not Audited)

 

 

 

 

For the Three Months Ended September 30

 

For the Nine Months Ended September 30

 

 

2020

 

2019

 

2020

 

2019

 

 

Amount

 

%

 

Amount

 

%

 

Amount

 

%

 

Amount

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET REVENUE (Notes 22, 31 and 37)

 

$

356,426,204

 

 

 

100

 

 

$

293,045,439

 

 

 

100

 

 

$

977,721,754

 

 

 

100

 

 

$

752,748,383

 

 

 

100

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COST OF REVENUE (Notes 12, 28, 31 and 35)

 

 

165,945,534

 

 

 

47

 

 

 

153,613,278

 

 

 

52

 

 

 

461,764,078

 

 

 

47

 

 

 

419,290,867

 

 

 

56

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GROSS PROFIT BEFORE REALIZED (UNREALIZED) GROSS PROFIT ON SALES TO ASSOCIATES

 

 

190,480,670

 

 

 

53

 

 

 

139,432,161

 

 

 

48

 

 

 

515,957,676

 

 

 

53

 

 

 

333,457,516

 

 

 

44

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REALIZED (UNREALIZED) GROSS PROFIT ON SALES TO ASSOCIATES

 

 

12,826

 

 

 

-

 

 

 

(19,727

)

 

 

-

 

 

 

(63,881

)

 

 

-

 

 

 

42,535

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GROSS PROFIT

 

 

190,493,496

 

 

 

53

 

 

 

139,412,434

 

 

 

48

 

 

 

515,893,795

 

 

 

53

 

 

 

333,500,051

 

 

 

44

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES (Notes 28 and 31)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

29,683,751

 

 

 

8

 

 

 

23,972,076

 

 

 

8

 

 

 

79,545,677

 

 

 

8

 

 

 

65,783,115

 

 

 

9

 

General and administrative

 

 

9,272,555

 

 

 

2

 

 

 

5,810,048

 

 

 

2

 

 

 

22,070,021

 

 

 

2

 

 

 

14,239,040

 

 

 

2

 

Marketing

 

 

1,935,049

 

 

 

1

 

 

 

1,596,829

 

 

 

1

 

 

 

5,119,412

 

 

 

1

 

 

 

4,539,806

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

 

 

40,891,355

 

 

 

11

 

 

 

31,378,953

 

 

 

11

 

 

 

106,735,110

 

 

 

11

 

 

 

84,561,961

 

 

 

11

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER OPERATING INCOME AND EXPENSES, NET (Notes 14, 15 and 28)

 

 

445,208

 

 

 

-

 

 

 

(146,189

)

 

 

-

 

 

 

504,839

 

 

 

-

 

 

 

(480,722

)

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME FROM OPERATIONS (Note 37)

 

 

150,047,349

 

 

 

42

 

 

 

107,887,292

 

 

 

37

 

 

 

409,663,524

 

 

 

42

 

 

 

248,457,368

 

 

 

33

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NON-OPERATING INCOME AND EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share of profits of associates

 

 

833,165

 

 

 

-

 

 

 

915,714

 

 

 

-

 

 

 

2,237,890

 

 

 

-

 

 

 

1,977,740

 

 

 

-

 

Interest income (Note 23)

 

 

1,897,963

 

 

 

1

 

 

 

3,916,098

 

 

 

1

 

 

 

7,365,394

 

 

 

1

 

 

 

12,871,791

 

 

 

2

 

Other income

 

 

117,634

 

 

 

-

 

 

 

2,025

 

 

 

-

 

 

 

461,558

 

 

 

-

 

 

 

246,455

 

 

 

-

 

Foreign exchange gain (loss), net (Note 34)

 

 

(3,549,939

)

 

 

(1

)

 

 

1,038,425

 

 

 

-

 

 

 

(394,836

)

 

 

-

 

 

 

530,496

 

 

 

-

 

Finance costs (Note 24)

 

 

(373,164

)

 

 

-

 

 

 

(843,434

)

 

 

-

 

 

 

(1,312,873

)

 

 

-

 

 

 

(2,607,250

)

 

 

-

 

Other gains and losses, net (Note 25)

 

 

6,150,995

 

 

 

2

 

 

 

(579,849

)

 

 

-

 

 

 

5,649,162

 

 

 

-

 

 

 

(413,237

)

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total non-operating income and expenses

 

 

5,076,654

 

 

 

2

 

 

 

4,448,979

 

 

 

1

 

 

 

14,006,295

 

 

 

1

 

 

 

12,605,995

 

 

 

2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME BEFORE INCOME TAX

 

 

155,124,003

 

 

 

44

 

 

 

112,336,271

 

 

 

38

 

 

 

423,669,819

 

 

 

43

 

 

 

261,063,363

 

 

 

35

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME TAX EXPENSE (Notes 4 and 26)

 

 

17,745,852

 

 

 

5

 

 

 

11,233,817

 

 

 

3

 

 

 

48,336,261

 

 

 

5

 

 

 

31,797,748

 

 

 

5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME

 

 

137,378,151

 

 

 

39

 

 

 

101,102,454

 

 

 

35

 

 

 

375,333,558

 

 

 

38

 

 

 

229,265,615

 

 

 

30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER COMPREHENSIVE INCOME (LOSS) (Notes 21 and 26)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Items that will not be reclassified subsequently to profit or loss:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain/(loss) on investments in equity instruments at fair value through other comprehensive income

 

 

100,021

 

 

 

-

 

 

 

(9,015

)

 

 

-

 

 

 

78,311

 

 

 

-

 

 

 

219,784

 

 

 

-

 

Gain (loss) on hedging instruments

 

 

65,691

 

 

 

-

 

 

 

(87,427

)

 

 

-

 

 

 

22,942

 

 

 

-

 

 

 

(75,421

)

 

 

-

 

Share of other comprehensive income (loss) of associates

 

 

6,680

 

 

 

-

 

 

 

(3,333

)

 

 

-

 

 

 

3,211

 

 

 

-

 

 

 

(14,219

)

 

 

-

 

Income tax benefit related to items that will not be reclassified subsequently

 

 

161

 

 

 

-

 

 

 

15,080

 

 

 

-

 

 

 

627

 

 

 

-

 

 

 

9,586

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

172,553

 

 

 

-

 

 

 

(84,695

)

 

 

-

 

 

 

105,091

 

 

 

-

 

 

 

139,730

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Items that may be reclassified subsequently to profit or loss:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exchange differences arising on translation of foreign operations

 

 

(5,473,167

)

 

 

(2

)

 

 

(3,286,794

)

 

 

(2

)

 

 

(17,163,363

)

 

 

(2

)

 

 

2,221,268

 

 

 

-

 

Unrealized gain/(loss) on investments in debt instruments at fair value through other comprehensive income

 

 

(97,724

)

 

 

-

 

 

 

192,177

 

 

 

-

 

 

 

2,600,675

 

 

 

1

 

 

 

2,576,461

 

 

 

1

 

Share of other comprehensive loss of associates

 

 

(37,064

)

 

 

-

 

 

 

(45,563

)

 

 

-

 

 

 

(213,373

)

 

 

-

 

 

 

(20,328

)

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,607,955

)

 

 

(2

)

 

 

(3,140,180

)

 

 

(2

)

 

 

(14,776,061

)

 

 

(1

)

 

 

4,777,401

 

 

 

1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss) for the period, net of income tax

 

 

(5,435,402

)

 

 

(2

)

 

 

(3,224,875

)

 

 

(2

)

 

 

(14,670,970

)

 

 

(1

)

 

 

4,917,131

 

 

 

1

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD

 

$

131,942,749

 

 

 

37

 

 

$

97,877,579

 

 

 

33

 

 

$

360,662,588

 

 

 

37

 

 

$

234,182,746

 

 

 

31

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME ATTRIBUTABLE TO:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders of the parent

 

$

137,310,040

 

 

 

39

 

 

$

101,069,886

 

 

 

34

 

 

$

375,118,953

 

 

 

38

 

 

$

229,228,587

 

 

 

30

 

Non-controlling interests

 

 

68,111

 

 

 

-

 

 

 

32,568

 

 

 

1

 

 

 

214,605

 

 

 

-

 

 

 

37,028

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

137,378,151

 

 

 

39

 

 

$

101,102,454

 

 

 

35

 

 

$

375,333,558

 

 

 

38

 

 

$

229,265,615

 

 

 

30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders of the parent

 

$

131,874,689

 

 

 

37

 

 

$

97,844,981

 

 

 

33

 

 

$

360,447,417

 

 

 

37

 

 

$

234,145,635

 

 

 

31

 

Non-controlling interests

 

 

68,060

 

 

 

-

 

 

 

32,598

 

 

 

-

 

 

 

215,171

 

 

 

-

 

 

 

37,111

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

131,942,749

 

 

 

37

 

 

$

97,877,579

 

 

 

33

 

 

$

360,662,588

 

 

 

37

 

 

$

234,182,746

 

 

 

31

 

(Continued)


- 4 -


 

 

 

Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries

 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In Thousands of New Taiwan Dollars, Except Earnings Per Share)

(Reviewed, Not Audited)

 

 

 

 

For the Three Months Ended September 30

 

For the Nine Months Ended September 30

 

 

2020

 

2019

 

2020

 

2019

 

 

Income Attributable to Shareholders of

the Parent

 

Income Attributable to Shareholders of

the Parent

 

Income Attributable to Shareholders of

the Parent

 

Income Attributable to

Shareholders of

the Parent

 

 

 

 

 

 

 

 

 

EARNINGS PER SHARE (NT$, Note 27)

 

 

 

 

 

 

 

 

Basic earnings per share

 

$

5.30

 

 

$

3.90

 

 

$

14.47

 

 

$

8.84

 

Diluted earnings per share

 

$

5.30

 

 

$

3.90

 

 

$

14.47

 

 

$

8.84

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of the consolidated financial statements.

(Concluded)

 

- 5 -


 

 

 

 

 

Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries

 

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In Thousands of New Taiwan Dollars)

(Reviewed, Not Audited)

 

 

 

 

Equity Attributable to Shareholders of the Parent

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Others

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain (Loss) on

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets at Fair

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign

 

Value Through

 

 

 

Unearned

 

 

 

 

 

 

 

 

 

 

Capital Stock - Common Stock

 

 

 

Retained Earnings

 

Currency

 

Other

 

Gain (Loss) on

 

Stock-Based

 

 

 

 

 

 

 

 

 

 

Shares

 

 

 

 

 

Legal Capital

 

Special Capital

 

Unappropriated

 

 

 

Translation

 

Comprehensive

 

Hedging

 

Employee

 

 

 

 

 

Non-controlling

 

Total

 

 

(In Thousands)

 

Amount

 

Capital Surplus

 

Reserve

 

Reserve

 

Earnings

 

Total

 

Reserve

 

Income

 

Instruments

 

Compensation

 

Total

 

Total

 

Interests

 

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE, JANUARY 1, 2020

 

 

25,930,380

 

 

$

259,303,805

 

 

$

56,339,709

 

 

$

311,146,899

 

 

$

10,675,106

 

 

$

1,011,512,974

 

 

$

1,333,334,979

 

 

$

(26,871,400

)

 

$

(692,959

)

 

$

(3,820

)

 

$

(190

)

 

$

(27,568,369

)

 

$

1,621,410,124

 

 

$

685,302

 

 

$

1,622,095,426

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Appropriations of earnings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Special capital reserve

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

26,082,689

 

 

 

(26,082,689

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Cash dividends to shareholders

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(194,477,853

)

 

 

(194,477,853

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(194,477,853

)

 

 

-

 

 

 

(194,477,853

)

Total

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

26,082,689

 

 

 

(220,560,542

)

 

 

(194,477,853

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(194,477,853

)

 

 

-

 

 

 

(194,477,853

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income for the nine months ended September 30, 2020

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

375,118,953

 

 

 

375,118,953

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

375,118,953

 

 

 

214,605

 

 

 

375,333,558

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss) for the nine months ended September 30, 2020, net of income tax

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(17,376,530

)

 

 

2,682,052

 

 

 

22,942

 

 

 

-

 

 

 

(14,671,536

)

 

 

(14,671,536

)

 

 

566

 

 

 

(14,670,970

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive income (loss) for the nine months ended September 30, 2020

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

375,118,953

 

 

 

375,118,953

 

 

 

(17,376,530

)

 

 

2,682,052

 

 

 

22,942

 

 

 

-

 

 

 

(14,671,536

)

 

 

360,447,417

 

 

 

215,171

 

 

 

360,662,588

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Disposal of investments in equity instruments at fair value through other comprehensive income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

309

 

 

 

309

 

 

 

-

 

 

 

(309

)

 

 

-

 

 

 

-

 

 

 

(309

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basis adjustment for loss on hedging instruments

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(19,122

)

 

 

-

 

 

 

(19,122

)

 

 

(19,122

)

 

 

-

 

 

 

(19,122

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments to share of changes in equities of associates

 

 

-

 

 

 

-

 

 

 

273

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

190

 

 

 

190

 

 

 

463

 

 

 

-

 

 

 

463

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase in non-controlling interests

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

4,873

 

 

 

4,873

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE, SEPTEMBER 30, 2020

 

 

25,930,380

 

 

$

259,303,805

 

 

$

56,339,982

 

 

$

311,146,899

 

 

$

36,757,795

 

 

$

1,166,071,694

 

 

$

1,513,976,388

 

 

$

(44,247,930

)

 

$

1,988,784

 

 

$

-

 

 

$

-

 

 

$

(42,259,146

)

 

$

1,787,361,029

 

 

$

905,346

 

 

$

1,788,266,375

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE, JANUARY 1, 2019

 

 

25,930,380

 

 

$

259,303,805

 

 

$

56,315,932

 

 

$

276,033,811

 

 

$

26,907,527

 

 

$

1,073,706,503

 

 

$

1,376,647,841

 

 

$

(12,042,347

)

 

$

(3,429,324

)

 

$

23,601

 

 

$

(1,843

)

 

$

(15,449,913

)

 

$

1,676,817,665

 

 

$

678,731

 

 

$

1,677,496,396

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Appropriations of prior year’s earnings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Legal capital reserve

 

 

-

 

 

 

-

 

 

 

-

 

 

 

35,113,088

 

 

 

-

 

 

 

(35,113,088

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Special capital reserve

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(19,521,587

)

 

 

19,521,587

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Cash dividends to shareholders

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(324,129,756

)

 

 

(324,129,756

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(324,129,756

)

 

 

-

 

 

 

(324,129,756

)

Total

 

 

-

 

 

 

-

 

 

 

-

 

 

 

35,113,088

 

 

 

(19,521,587

)

 

 

(339,721,257

)

 

 

(324,129,756

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(324,129,756

)

 

 

-

 

 

 

(324,129,756

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income for the nine months ended September 30, 2019

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

229,228,587

 

 

 

229,228,587

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

229,228,587

 

 

 

37,028

 

 

 

229,265,615

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss) for the nine months ended September 30, 2019, net of income tax

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,200,994

 

 

 

2,791,580

 

 

 

(75,526

)

 

 

-

 

 

 

4,917,048

 

 

 

4,917,048

 

 

 

83

 

 

 

4,917,131

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive income (loss) for the nine months ended September 30, 2019

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

229,228,587

 

 

 

229,228,587

 

 

 

2,200,994

 

 

 

2,791,580

 

 

 

(75,526

)

 

 

-

 

 

 

4,917,048

 

 

 

234,145,635

 

 

 

37,111

 

 

 

234,182,746

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Disposal of investments in equity instruments at fair value through other comprehensive income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

159,766

 

 

 

159,766

 

 

 

-

 

 

 

(159,766

)

 

 

-

 

 

 

-

 

 

 

(159,766

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basis adjustment for gain on hedging instruments

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

15,682

 

 

 

-

 

 

 

15,682

 

 

 

15,682

 

 

 

-

 

 

 

15,682

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments to share of changes in equities of associates

 

 

-

 

 

 

-

 

 

 

4,627

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,843

 

 

 

1,843

 

 

 

6,470

 

 

 

110

 

 

 

6,580

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

From share of changes in equities of subsidiaries

 

 

-

 

 

 

-

 

 

 

370

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

370

 

 

 

(370

)

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Decrease in non-controlling interests

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(74,647

)

 

 

(74,647

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE, SEPTEMBER 30, 2019

 

 

25,930,380

 

 

$

259,303,805

 

 

$

56,320,929

 

 

$

311,146,899

 

 

$

7,385,940

 

 

$

963,373,599

 

 

$

1,281,906,438

 

 

$

(9,841,353

)

 

$

(797,510

)

 

$

(36,243

)

 

$

-

 

 

$

(10,675,106

)

 

$

1,586,856,066

 

 

$

640,935

 

 

$

1,587,497,001

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of the consolidated financial statements.

 

- 6 -


 

 

 

 

 

Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

(Reviewed, Not Audited)

 

 

 

 

Nine Months Ended September 30

 

 

2020

 

2019

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

Income before income tax

 

$

423,669,819

 

 

$

261,063,363

 

Adjustments for:

 

 

 

 

 

 

 

 

Depreciation expense

 

 

228,890,246

 

 

 

215,274,524

 

Amortization expense

 

 

5,272,559

 

 

 

4,077,932

 

Expected credit losses recognized on investments in debt instruments

 

 

4,219

 

 

 

2,651

 

Finance costs

 

 

1,312,873

 

 

 

2,607,250

 

Share of profits of associates

 

 

(2,237,890

)

 

 

(1,977,740

)

Interest income

 

 

(7,365,394

)

 

 

(12,871,791

)

Share-based compensation

 

 

4,873

 

 

 

1,406

 

Loss (gain) on disposal or retirement of property, plant and equipment, net

 

 

(152,305

)

 

 

866,235

 

Loss on disposal of intangible assets, net

 

 

599

 

 

 

2,377

 

Impairment loss (reversal of impairment loss) on property, plant and equipment

 

 

10,159

 

 

 

(301,384

)

Loss (gain) on financial instruments at fair value through profit or loss, net

 

 

(2,360

)

 

 

958,084

 

Gain on disposal of investments in debt instruments at fair value through other comprehensive income, net

 

 

(1,327,251

)

 

 

(499,147

)

Loss from disposal of subsidiaries

 

 

-

 

 

 

4,598

 

Unrealized (realized) gross profit on sales to associates

 

 

63,881

 

 

 

(42,535

)

Loss (gain) on foreign exchange, net

 

 

(741,378

)

 

 

737,001

 

Dividend income

 

 

(452,570

)

 

 

(246,455

)

Gain arising from fair value hedges, net

 

 

-

 

 

 

(12,976

)

Loss (gain) on lease modification

 

 

(461

)

 

 

344

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Financial instruments at fair value through profit or loss

 

 

(1,852,218

)

 

 

386,157

 

Notes and accounts receivable, net

 

 

(24,302,814

)

 

 

(21,531,168

)

Receivables from related parties

 

 

(15,695

)

 

 

(596,368

)

Other receivables from related parties

 

 

16,779

 

 

 

8,447

 

Inventories

 

 

(26,528,290

)

 

 

6,545,246

 

Other financial assets

 

 

2,432,568

 

 

 

627,837

 

Other current assets

 

 

(287,297

)

 

 

570,899

 

Accounts payable

 

 

329,534

 

 

 

1,603,615

 

Payables to related parties

 

 

548,275

 

 

 

261,510

 

Salary and bonus payable

 

 

1,239,259

 

 

 

(897,752

)

Accrued profit sharing bonus to employees and compensation to directors and supervisors

 

 

2,935,914

 

 

 

(7,710,063

)

Accrued expenses and other current liabilities

 

 

13,765,279

 

 

 

1,476,118

 

Net defined benefit liability

 

 

(797,522

)

 

 

(233,930

)

Cash generated from operations

 

 

614,433,391

 

 

 

450,154,285

 

Income taxes paid

 

 

(50,897,763

)

 

 

(37,969,958

)

 

 

 

 

 

 

 

 

 

Net cash generated by operating activities

 

 

563,535,628

 

 

 

412,184,327

 

(Continued)

- 7 -


 

 

 

 

 

Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

(Reviewed, Not Audited)

 

 

 

 

Nine Months Ended September 30

 

 

2020

 

2019

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

Acquisitions of:

 

 

 

 

Financial instruments at fair value through profit or loss

 

$

-

 

 

$

(124,748

)

Financial assets at fair value through other comprehensive income

 

 

(185,627,184

)

 

 

(200,490,462

)

Financial assets at amortized cost

 

 

(4,302,770

)

 

 

(313,958

)

Property, plant and equipment

 

 

(418,563,711

)

 

 

(290,412,611

)

Intangible assets

 

 

(8,704,239

)

 

 

(4,424,453

)

Proceeds from disposal or redemption of:

 

 

 

 

 

 

 

 

Financial instruments at fair value through profit or loss - debt instruments

 

 

-

 

 

 

2,418,153

 

Financial assets at fair value through other comprehensive income

 

 

191,760,590

 

 

 

173,955,646

 

Financial assets at amortized cost

 

 

-

 

 

 

14,349,190

 

Property, plant and equipment

 

 

405,716

 

 

 

218,362

 

Proceeds from return of capital of investments in equity instruments at fair value through other comprehensive income

 

 

51,045

 

 

 

-

 

Derecognition of hedging financial instruments

 

 

(322,035

)

 

 

(452,455

)

Interest received

 

 

7,966,157

 

 

 

13,254,770

 

Proceeds from government grants - property, plant and equipment

 

 

606,038

 

 

 

2,565,338

 

Proceeds from government grants - land use right and others

 

 

22,005

 

 

 

850,623

 

Other dividends received

 

 

550,076

 

 

 

246,455

 

Dividends received from investments accounted for using equity method

 

 

2,746,144

 

 

 

1,718,954

 

Increase in prepayments for leases

 

 

(2,198,000

)

 

 

-

 

Refundable deposits paid

 

 

(313,291

)

 

 

(1,337,227

)

Refundable deposits refunded

 

 

1,100,358

 

 

 

781,882

 

 

 

 

 

 

 

 

 

 

Net cash used in investing activities

 

 

(414,823,101

)

 

 

(287,196,541

)

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Increase (decrease) in short-term loans

 

 

35,775,039

 

 

 

(3,872,065

)

Proceeds from short-term bills payable

 

 

7,485,303

 

 

 

-

 

Repayments of short-term bills payable

 

 

(7,500,000

)

 

 

-

 

Proceeds from issuance of bonds

 

 

206,225,675

 

 

 

-

 

Repayment of bonds

 

 

(31,800,000

)

 

 

(34,900,000

)

Increase in long-term bank loans

 

 

1,000,000

 

 

 

-

 

Payments for transaction costs attributable to the issuance of bonds

 

 

(358,053

)

 

 

-

 

Repayment of the principal portion of lease liabilities

 

 

(2,155,626

)

 

 

(2,457,970

)

Interest paid

 

 

(1,625,276

)

 

 

(3,058,107

)

Guarantee deposits received

 

 

29,973

 

 

 

52,151

 

Guarantee deposits refunded

 

 

(10,474

)

 

 

(700,302

)

Cash dividends

 

 

(194,477,853

)

 

 

(207,443,044

)

Decrease in non-controlling interests

 

 

-

 

 

 

(76,053

)

 

 

 

 

 

 

 

 

 

Net cash generated (used) in financing activities

 

 

12,588,708

 

 

 

(252,455,390

)

(Continued)

- 8 -


 

 

 

 

 

Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

(Reviewed, Not Audited)

 

 

 

 

Nine Months Ended September 30

 

 

2020

 

2019

 

 

 

 

 

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

 

$

(12,505,458

)

 

$

2,083,303

 

 

 

 

 

 

 

 

 

 

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

 

 

148,795,777

 

 

 

(125,384,301

)

 

 

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

 

 

455,399,336

 

 

 

577,814,601

 

 

 

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS, END OF PERIOD

 

$

604,195,113

 

 

$

452,430,300

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of the consolidated financial statements.

(Concluded)

 

 

- 9 -


 

 

 

 

 

Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)

(Reviewed, Not Audited)

 

 

1.

GENERAL

 

Taiwan Semiconductor Manufacturing Company Limited (TSMC), a Republic of China (R.O.C.) corporation, was incorporated on February 21, 1987. TSMC is a dedicated foundry in the semiconductor industry which engages mainly in the manufacturing, selling, packaging, testing and computer-aided design of integrated circuits and other semiconductor devices and the manufacturing of masks.

 

On September 5, 1994, TSMC’s shares were listed on the Taiwan Stock Exchange (TWSE). 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).

 

The address of its registered office and principal place of business is No. 8, Li-Hsin Rd. 6, Hsinchu Science Park, Taiwan. The principal operating activities of TSMC’s subsidiaries are described in Note 4.

 

 

2.

THE AUTHORIZATION OF FINANCIAL STATEMENTS

 

The accompanying consolidated financial statements were reported to the Board of Directors and issued on November 10, 2020.

 

 

3.

APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS

 

 

a.

Initial application of the amendments to the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) (collectively, “IFRSs”) endorsed and issued into effect by the Financial Supervisory Commission (FSC)

 

The initial application of the amendments to the IFRSs endorsed and issued into effect by the FSC did not have a significant effect on TSMC and its subsidiaries’ (collectively as the “Company”) accounting policies.

 

 

b.

The IFRSs issued by International Accounting Standards Board (IASB) but not yet endorsed and issued into effect by the FSC

 

New, Revised or Amended Standards and Interpretations

 

Effective Date Issued
by IASB

 

 

 

Annual Improvements to IFRS Standards 2018–2020

 

January 1, 2022

Amendments to IFRS 3 “Reference to the Conceptual Framework”

 

January 1, 2022

Amendments to IFRS 9, IAS 39, IFRS 7 and IFRS 16 “Interest Rate Benchmark Reform - Phase 2”

 

January 1, 2021

Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between an Investor and its Associate or Joint Venture”

 

To be determined by IASB

Amendments to IAS 1 “Classification of Liabilities as Current or Non-current”

 

January 1, 2023

(Continued)

- 10 -


 

 

 

 

 

 

New, Revised or Amended Standards and Interpretations

 

Effective Date Issued
by IASB

 

 

 

Amendments to IAS 16 “Property, Plant and Equipment - Proceeds before Intended Use”

 

January 1, 2022

Amendments to IAS 37 “Onerous Contracts–Cost of Fulfilling a Contract”

 

January 1, 2022

(Concluded)

 

As of the date the accompanying consolidated financial statements were issued, the Company continues in evaluating the impact on its financial position and financial performance as a result of the initial adoption of the aforementioned standards or interpretations and related applicable period. The related impact will be disclosed when the Company completes the evaluation.

 

 

4.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Except for the following, the accounting policies applied in these consolidated financial statements are consistent with those applied in the consolidated financial statements for the year ended December 31, 2019.

 

For the convenience of readers, the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the R.O.C. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language consolidated financial statements shall prevail.

 

Statement of Compliance

 

The accompanying consolidated financial statements have been prepared in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IAS 34, “Interim Financial Reporting,” endorsed and issued into effect by the FSC. The consolidated financial statements do not present all the disclosures required for a complete set of annual consolidated financial statements prepared under the IFRSs endorsed and issued into effect by the FSC (collectively, “Taiwan-IFRSs”).

 

Basis of Consolidation

 

The basis of preparation and the basis for the consolidated financial statements

 

The basis of preparation and the basis for the consolidated financial statements applied in these consolidated financial statements are consistent with those applied in the consolidated financial statements for the year ended December 31, 2019.

 

The subsidiaries in the consolidated financial statements

 

The detail information of the subsidiaries at the end of reporting period was as follows:

 

 

 

 

 

 

 

Establishment

 

Percentage of Ownership

 

 

Name of Investor

 

Name of Investee

 

Main Businesses and Products

 

and Operating

Location

 

September 30,

2020

 

December 31,

2019

 

September 30,

2019

 

Note

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TSMC

 

TSMC North America

 

Selling and marketing of integrated circuits and other semiconductor devices

 

San Jose, California, U.S.A.

 

100%

 

100%

 

100%

 

-

 

 

TSMC Europe B.V. (TSMC Europe)

 

Customer service and supporting activities

 

Amsterdam, the Netherlands

 

100%

 

100%

 

100%

 

a)

 

 

TSMC Japan Limited (TSMC Japan)

 

Customer service and supporting activities

 

Yokohama, Japan

 

100%

 

100%

 

100%

 

a)

 

 

TSMC Design Technology Japan, Inc. (TSMC JDC)

 

Engineering support activities

 

Yokohama, Japan

 

100%

 

-

 

-

 

a), b)

 

 

TSMC Korea Limited (TSMC Korea)

 

Customer service and supporting activities

 

Seoul, Korea

 

100%

 

100%

 

100%

 

a)

(Continued)


- 11 -


 

 

 

 

 

 

 

 

 

 

 

 

Establishment

 

Percentage of Ownership

 

 

Name of Investor

 

Name of Investee

 

Main Businesses and Products

 

and Operating

Location

 

September 30,

2020

 

December 31,

2019

 

September 30,

2019

 

Note

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TSMC

 

TSMC Partners, Ltd. (TSMC Partners)

 

Investing in companies involved in the design, manufacture, and other related business in the semiconductor industry and other investment activities

 

Tortola, British Virgin Islands

 

100%

 

100%

 

100%

 

a)

 

 

TSMC Global, Ltd. (TSMC Global)

 

Investment activities

 

Tortola, British Virgin Islands

 

100%

 

100%

 

100%

 

-

 

 

TSMC China Company Limited (TSMC China)

 

Manufacturing, selling, testing and computer-aided design of integrated circuits and other semiconductor devices

 

Shanghai, China

 

100%

 

100%

 

100%

 

-

 

 

TSMC Nanjing Company Limited (TSMC Nanjing)

 

Manufacturing, selling, testing and computer-aided design of integrated circuits and other semiconductor devices

 

Nanjing, China

 

100%

 

100%

 

100%

 

c)

 

 

VisEra Technologies Company Ltd. (VisEra Tech)

 

Engaged in manufacturing electronic spare parts and in researching, developing, designing, manufacturing, selling, packaging and testing of color filter

 

Hsin-Chu, Taiwan

 

87%

 

87%

 

87%

 

-

 

 

VentureTech Alliance Fund II, L.P. (VTAF II)

 

Investing in new start-up technology companies

 

Cayman Islands

 

98%

 

98%

 

98%

 

a)

 

 

VentureTech Alliance Fund III, L.P. (VTAF III)

 

Investing in new start-up technology companies

 

Cayman Islands

 

98%

 

98%

 

98%

 

a)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TSMC Partners

 

TSMC Development, Inc. (TSMC Development)

 

Investing in companies involved in the manufacturing related business in the semiconductor industry

 

Delaware, U.S.A.

 

100%

 

100%

 

100%

 

-

 

 

TSMC Technology, Inc. (TSMC Technology)

 

Engineering support activities

 

Delaware, U.S.A.

 

100%

 

100%

 

100%

 

a)

 

 

TSMC Design Technology Canada Inc. (TSMC Canada)

 

Engineering support activities

 

Ontario, Canada

 

100%

 

100%

 

100%

 

a)

 

 

InveStar Semiconductor Development Fund, Inc. (ISDF)

 

Investing in new start-up technology companies

 

Cayman Islands

 

97%

 

97%

 

97%

 

a), d)

 

 

InveStar Semiconductor Development Fund, Inc. (II) LDC. (ISDF II)

 

Investing in new start-up technology companies

 

Cayman Islands

 

97%

 

97%

 

97%

 

a), d)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TSMC Development

 

WaferTech, LLC (WaferTech)

 

Manufacturing, selling and testing of integrated circuits and other semiconductor devices

 

Washington, U.S.A.

 

100%

 

100%

 

100%

 

-

VTAF III

 

Growth Fund Limited (Growth Fund)

 

Investing in new start-up technology companies

 

Cayman Islands

 

100%

 

100%

 

100%

 

a)

(Concluded)

 

 

Note a:

This is an immaterial subsidiary for which the consolidated financial statements are not reviewed by the Company’s independent auditors.

 

 

Note b:

The Company established a subsidiary in Japan in January 2020 to expand the design service center for providing engineering support services to customers.

 

 

Note c:

Under the investment agreement entered into with the municipal government of Nanjing, China, the Company will make an investment in Nanjing in the amount of approximately US$3 billion to establish a subsidiary operating a 300mm wafer fab with the capacity of 20,000 12-inch wafers per month, and a design service center.

 

 

Note d:

The subsidiary is under liquidation procedures.

 

Retirement Benefits

 

Pension cost for an interim period is calculated on a year-to-date basis by using the actuarially determined pension cost rate at the end of the prior financial year.

 

Taxation

 

Income tax expense represents the sum of the tax currently payable and deferred tax. The interim period income tax expense is accrued using the tax rate that would be applicable to expected total annual earnings, that is, the estimated average annual effective income tax rate applied to the pre-tax income of the interim period.

 

 

5.

CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION AND UNCERTAINTY

 

The Company has considered the economic implications of COVID-19 on critical accounting estimates and will continue evaluating the impact on its financial position and financial performance as a result of the pandemic. In addition, the same critical accounting judgments and key sources of estimates and uncertainty

- 12 -


 

 

 

 

 

have been followed in these consolidated financial statements as were applied in the preparation of the Company’s consolidated financial statements for the year ended December 31, 2019.

 

 

6.

CASH AND CASH EQUIVALENTS

 

 

 

September 30,

2020

 

December 31,

2019

 

September 30,

2019

 

 

 

 

 

 

 

Cash and deposits in banks

 

$

597,060,269

 

 

$

452,734,378

 

 

$

446,819,726

 

Government bonds

 

 

4,647,731

 

 

 

2,188,149

 

 

 

2,418,554

 

Repurchase agreements

 

 

1,265,552

 

 

 

-

 

 

 

1,595,882

 

Commercial paper

 

 

1,221,561

 

 

 

476,809

 

 

 

1,596,138

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

$

604,195,113

 

 

$

455,399,336

 

 

$

452,430,300

 

 

Deposits in banks consisted of highly liquid time deposits that were readily convertible to known amounts of cash and were subject to an insignificant risk of changes in value.

 

 

7.

FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS

 

 

 

September 30,

2020

 

December 31,

2019

 

September 30,

2019

 

 

 

 

 

 

 

Financial assets

 

 

 

 

 

 

 

 

 

 

 

 

 

Mandatorily measured at FVTPL

 

 

 

 

 

 

Forward exchange contracts

 

$

2,496,103

 

 

$

162,155

 

 

$

152,332

 

Agency mortgage-backed securities

 

 

30,378

 

 

 

40,925

 

 

 

45,649

 

Convertible bonds

 

 

-

 

 

 

123,759

 

 

 

124,108

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

$

2,526,481

 

 

$

326,839

 

 

$

322,089

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Held for trading

 

 

 

 

 

 

 

 

 

 

 

 

Forward exchange contracts

 

$

1,445,911

 

 

$

982,349

 

 

$

497,911

 

 

The Company entered into forward exchange contracts to manage exposures due to fluctuations of foreign exchange rates. These forward exchange contracts did not meet the criteria for hedge accounting. Therefore, the Company did not apply hedge accounting treatment for these forward exchange contracts.

 

Outstanding forward exchange contracts consisted of the following:

 

 

 

 

 

Contract Amount

 

 

Maturity Date

 

(In Thousands)

 

 

 

 

 

September 30, 2020

 

 

 

 

 

 

 

 

 

Sell NT$

 

October 2020 to March 2021

 

NT$165,325,463

Sell JPY

 

October 2020 to November 2020

 

JPY100,765,250

Sell US$

 

October 2020 to December 2020

 

US$838,405

(Continued)


- 13 -


 

 

 

 

 

 

 

 

 

 

Contract Amount

 

 

Maturity Date

 

(In Thousands)

 

 

 

 

 

December 31, 2019

 

 

 

 

 

 

 

 

 

Sell NT$

 

January 2020 to June 2020

 

NT$108,428,027

Sell JPY

 

January 2020 to February 2020

 

JPY57,471,581

Sell US$

 

January 2020 to March 2020

 

US$529,209

 

September 30, 2019

 

 

 

 

 

 

 

 

 

Sell NT$

 

October 2019 to March 2020

 

NT$52,528,054

Sell JPY

 

October 2019 to November 2019

 

JPY48,640,406

Sell US$

 

October 2019 to December 2019

 

US$416,513

(Concluded)

 

 

8.

FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

 

 

 

September 30,

2020

 

December 31,

2019

 

September 30,

2019

 

 

 

 

 

 

 

Investments in debt instruments at FVTOCI

 

 

 

 

 

 

Corporate bonds

 

$

58,950,049

 

 

$

51,790,045

 

 

$

54,113,016

 

Agency bonds/Agency mortgage-backed securities

 

 

48,699,955

 

 

 

51,966,460

 

 

 

52,743,788

 

Government bonds

 

 

11,806,156

 

 

 

12,824,223

 

 

 

15,260,645

 

Asset-backed securities

 

 

9,152,592

 

 

 

10,815,849

 

 

 

9,923,553

 

Commercial paper

 

 

-

 

 

 

-

 

 

 

92,450

 

    

 

 

128,608,752

 

 

 

127,396,577

 

 

 

132,133,452

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments in equity instruments at FVTOCI

 

 

 

 

 

 

 

 

 

 

 

 

Non-publicly traded equity investments

 

 

4,305,357

 

 

 

4,124,337

 

 

 

4,026,516

 

 

 

 

 

 

 

 

 

 

 

 

 

 

        

 

$

132,914,109

 

 

$

131,520,914

 

 

$

136,159,968

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current

 

$

128,608,752

 

 

$

127,396,577

 

 

$

132,133,452

 

Noncurrent

 

 

4,305,357

 

 

 

4,124,337

 

 

 

4,026,516

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

$

132,914,109

 

 

$

131,520,914

 

 

$

136,159,968

 

 

These investments in equity instruments are held for medium to long-term purposes and therefore are accounted for as FVTOCI. For dividends recognized from these investments, please refer to consolidated statements of cash flows. All the dividends are from investments held at the end of the reporting period.

 

For the nine months ended September 30, 2020, the Company did not divest any equity investments designated at FVTOCI. For the nine months ended September 30, 2019, as the Company adjusted its investment portfolio, equity investments designated at FVTOCI were divested for NT$873,470 thousand. The related other equity-unrealized gain/loss on financial assets at FVTOCI of NT$159,766 thousand were transferred to increase retained earnings.

 

As of September 30, 2020 and 2019, the cumulative loss allowance for expected credit loss of NT$33,932 thousand and NT$37,781 thousand was recognized under investments in debt instruments at FVTOCI, respectively. Refer to Note 30 for information relating to the credit risk management and expected credit loss.


- 14 -


 

 

 

 

 

9.

FINANCIAL ASSETS AT AMORTIZED COST

 

 

 

September 30,

2020

 

December 31,

2019

 

September 30,

2019

 

 

 

 

 

 

 

Corporate bonds

 

$

11,605,781

 

 

$

7,651,727

 

 

$

7,917,118

 

Less: Allowance for impairment loss

 

 

(7,418

)

 

 

(2,929

)

 

 

(3,031

)

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

$

11,598,363

 

 

$

7,648,798

 

 

$

7,914,087

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current

 

$

7,090,162

 

 

$

299,884

 

 

$

-

 

Noncurrent

 

 

4,508,201

 

 

 

7,348,914

 

 

 

7,914,087

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

$

11,598,363

 

 

$

7,648,798

 

 

$

7,914,087

 

 

Refer to Note 30 for information relating to credit risk management and expected credit loss for financial assets at amortized cost.

 

 

10.

HEDGING FINANCIAL INSTRUMENTS

 

 

 

September 30,

2020

 

December 31,

2019

 

September 30,

2019

 

 

 

 

 

 

 

Financial assets - current

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair value hedges

 

 

 

 

 

 

Interest rate futures contracts

 

$

-

 

 

$

22,380

 

 

$

30,291

 

Cash flow hedges

 

 

 

 

 

 

 

 

 

 

 

 

Forward exchange contracts

 

 

-

 

 

 

3,504

 

 

 

6,712

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

$

-

 

 

$

25,884

 

 

$

37,003

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial liabilities - current

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair value hedges

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate futures contracts

 

$

11,839

 

 

$

-

 

 

$

653

 

Cash flow hedges

 

 

 

 

 

 

 

 

 

 

 

 

Forward exchange contracts

 

 

-

 

 

 

1,798

 

 

 

23,199

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

$

11,839

 

 

$

1,798

 

 

$

23,852

 

 

Fair value hedge

 

The Company entered into interest rate futures contracts, which are used to partially hedge against the fair value changes caused by interest rate fluctuation in the Company’s fixed income investments. The hedge ratio is adjusted in response to the changes in the financial market and capped at 100%.

 

On the basis of economic relationships, the Company expects that the value of the interest rate futures contracts and the value of the hedged financial assets will change in opposite directions in response to movements in interest rates.

 


- 15 -


 

 

 

 

 

The main source of hedge ineffectiveness in these hedging relationships is the credit risk of the hedged financial assets, which is not reflected in the fair value of the interest rate futures contracts. No other sources of ineffectiveness emerged from these hedging relationships during the hedging period. Amount of hedge ineffectiveness recognized in profit or loss is classified under other gains and losses.

 

The following tables summarize the information relating to the hedges of interest rate risk.

 

September 30, 2020

 

Hedging Instruments

 

Contract Amount

(US$ in Thousands)

 

Maturity

 

 

 

 

 

US treasury bonds interest rate futures contracts

 

US$

113,900

 

 

December 2020

 

Hedged Items

 

Asset Carrying Amount

 

Accumulated Amount of Fair Value Hedge Adjustments

 

 

 

 

 

Financial assets at FVTOCI

 

$

7,748,163

 

 

$

11,839

 

 

December 31, 2019

 

Hedging Instruments

 

Contract Amount

(US$ in Thousands)

 

Maturity

 

 

 

 

 

US treasury bonds interest rate futures contracts

 

US$

122,200

 

 

March 2020

 

Hedged Items

 

Asset Carrying Amount

 

Accumulated Amount of Fair Value Hedge Adjustments

 

 

 

 

 

Financial assets at FVTOCI

 

$

7,364,727

 

 

$

(22,380

)

 

September 30, 2019

 

Hedging Instruments

 

Contract Amount

(US$ in Thousands)

 

Maturity

 

 

 

 

 

US treasury bonds interest rate futures contracts

 

US$

171,500

 

 

December 2019

 

Hedged Items

 

Asset Carrying Amount

 

Accumulated Amount of Fair Value Hedge Adjustments

 

 

 

 

 

Financial assets at FVTOCI

 

$

9,846,834

 

 

$

107,564

 

 


- 16 -


 

 

 

 

 

The effect for the nine months ended September 30, 2020 and 2019 is detailed below:

 

Hedging Instruments/Hedged Items

 

Increase

(Decrease) in Value Used for Calculating Hedge Ineffectiveness

 

 

Nine Months Ended September 30

 

 

2020

 

2019

 

 

 

 

 

Hedging Instruments

 

 

 

 

US treasury bonds interest rate futures contracts

 

$

(377,392

)

 

$

(216,208

)

Hedged Items

 

 

 

 

 

 

 

 

Financial assets at FVTOCI

 

 

377,392

 

 

 

229,184

 

 

 

 

 

 

 

 

 

 

    

 

$

-

 

 

$

12,976

 

 

Cash flow hedge

 

The Company entered into forward exchange contracts to partially hedge foreign exchange rate risks associated with certain highly probable forecast transactions (capital expenditures). The hedge ratio is adjusted in response to the changes in the financial market and capped at 100%. The forward exchange contracts have maturities of 12 months or less.

 

On the basis of economic relationships, the Company expects that the value of forward exchange contracts and the value of hedged transactions will change in opposite directions in response to movements in foreign exchange rates.

 

The main source of hedge ineffectiveness in these hedging relationships is driven by the effect of the counterparty’s own credit risk on the fair value of forward exchange contracts. No other sources of ineffectiveness emerged from these hedging relationships. For the nine months ended September 30, 2020 and 2019, refer to Note 21(d) for gain or loss arising from changes in the fair value of hedging instruments and the amount transferred to initial carrying amount of hedged items.

 

The following tables summarize the information relating to the hedges for foreign currency risk.

 

December 31, 2019

 

Hedging Instruments

 

Contract Amount

(In Thousands)

 

Maturity

 

Balance in

Other Equity (Continuing Hedges)

 

 

 

 

 

 

 

Forward exchange contracts

 

Sell NT$

1,342,392

 

 

January 2020

 

$

(3,820

)

 

September 30, 2019

 

Hedging Instruments

 

Contract Amount

(In Thousands)

 

Maturity

 

Balance in

Other Equity (Continuing Hedges)

 

 

 

 

 

 

 

Forward exchange contracts

 

Sell NT$

3,147,690

 

 

October 2019 to November 2019

 

$

(36,243

)

 


- 17 -


 

 

 

 

 

The effect for the nine months ended September 30, 2020 and 2019 is detailed below:

 

Hedging Instruments/Hedged Items

 

Increase
(Decrease) in Value Used for Calculating Hedge

Ineffectiveness

 

 

Nine Months Ended September 30

 

 

2020

 

2019

 

 

 

 

 

Hedging Instruments

 

 

 

 

Forward exchange contracts

 

$

22,942

 

 

$

(75,421

)

 

 

 

 

 

 

 

 

 

Hedged Items

 

 

 

 

 

 

 

 

Forecast transaction (capital expenditures)

 

$

(22,942

)

 

$

75,421

 

 

 

11.

NOTES AND ACCOUNTS RECEIVABLE, NET

 

 

 

September 30,

2020

 

December 31,

2019

 

September 30,

2019

 

 

 

 

 

 

 

At amortized cost

 

 

 

 

 

 

Notes and accounts receivable

 

$

157,937,980

 

 

$

135,978,049

 

 

$

140,818,053

 

Less: Loss allowance

 

 

(371,352

)

 

 

(325,325

)

 

 

(29,847

)

    

 

 

157,566,628

 

 

 

135,652,724

 

 

 

140,788,206

 

At FVTOCI

 

 

4,133,704

 

 

 

3,255,865

 

 

 

3,452,651

 

 

 

 

 

 

 

 

 

 

 

 

 

 

        

 

$

161,700,332

 

 

$

138,908,589

 

 

$

144,240,857

 

 

The Company signed a contract with the bank to sell certain accounts receivable without recourse and transaction cost required. These accounts receivable are classified as at FVTOCI because they are held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets.

 

In principle, the payment term granted to customers is due 30 days from the invoice date or 30 days from the end of the month when the invoice is issued. Aside from recognizing impairment loss for credit-impaired accounts receivable, the Company recognizes loss allowance based on the expected credit loss ratio of customers by different risk levels with consideration of factors of historical loss ratios and customers’ financial conditions, competitiveness and business outlook. For accounts receivable past due over 90 days without collaterals or guarantees, the Company recognizes loss allowance at full amount.

 

Aging analysis of notes and accounts receivable

 

 

 

September 30,

2020

 

December 31,

2019

 

September 30,

2019

 

 

 

 

 

 

 

Not past due

 

$

152,869,171

 

 

$

126,134,762

 

 

$

133,409,238

 

Past due

 

 

 

 

 

 

 

 

 

 

 

 

Past due within 30 days

 

 

9,198,369

 

 

 

13,082,080

 

 

 

10,705,928

 

Past due 31-60 days

 

 

1,736

 

 

 

12,794

 

 

 

116,283

 

Past due 61-120 days

 

 

2,310

 

 

 

1,033

 

 

 

17,505

 

Past due over 121 days

 

 

98

 

 

 

3,245

 

 

 

21,750

 

Less: Loss allowance

 

 

(371,352

)

 

 

(325,325

)

 

 

(29,847

)

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

$

161,700,332

 

 

$

138,908,589

 

 

$

144,240,857

 


- 18 -


 

 

 

 

 

All of the Company’s accounts receivable classified as at FVTOCI were not past due.

 

Movements of the loss allowance for accounts receivable

 

 

 

Nine Months Ended September 30

 

 

2020

 

2019

 

 

 

 

 

Balance, beginning of period

 

$

325,325

 

 

$

7,253

 

Provision

 

 

46,206

 

 

 

22,722

 

Effect of exchange rate changes

 

 

(179

)

 

 

(128

)

 

 

 

 

 

 

 

 

 

Balance, end of period

 

$

371,352

 

 

$

29,847

 

 

For the nine months ended September 30, 2020 and 2019, the changes in loss allowance were mainly due to the variations in the balance of accounts receivable of different risk levels.

 

 

12.

INVENTORIES

 

 

 

September 30,

2020

 

December 31,

2019

 

September 30,

2019

 

 

 

 

 

 

 

Finished goods

 

$

13,620,691

 

 

$

8,924,541

 

 

$

10,095,240

 

Work in process

 

 

72,578,922

 

 

 

51,969,105

 

 

 

65,154,158

 

Raw materials

 

 

14,790,043

 

 

 

16,552,275

 

 

 

16,388,402

 

Supplies and spare parts

 

 

8,519,830

 

 

 

5,535,275

 

 

 

5,047,930

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

$

109,509,486

 

 

$

82,981,196

 

 

$

96,685,730

 

 

Write-down of inventories to net realizable value was included in the cost of revenue, as illustrated below:

 

 

 

Three Months Ended

September 30

 

Nine Months Ended

September 30

 

 

2020

 

2019

 

2020

 

2019

 

 

 

 

 

 

 

 

 

Inventory losses

 

$

2,182,303

 

 

$

323,620

 

 

$

2,455,986

 

 

$

46,885

 

 

The aforementioned inventory losses exclude wafer contamination losses. Please refer to related losses in Note 35.

 

 

13.

INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD

 

Associates consisted of the following:

 

 

 

 

 

Place of

 

Carrying Amount

 

% of Ownership and Voting Rights

Held by the Company

Name of Associate

 

Principal Activities

 

Incorporation and Operation

 

September 30,

2020

 

December 31,

2019

 

September 30,

2019

 

September 30,

2020

 

December 31,

2019

 

September 30,

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vanguard International Semiconductor Corporation (VIS)

 

Manufacturing, selling, packaging, testing and computer-aided design of integrated circuits and other semiconductor devices and the manufacturing and design service of masks

 

Hsinchu, Taiwan

 

$

8,599,651

 

 

$

9,027,572

 

 

$

8,717,119

 

 

 

28%

 

 

 

28%

 

 

 

28%

 

(Continued)


- 19 -


 

 

 

 

 

 

 

 

 

 

Place of

 

Carrying Amount

 

% of Ownership and Voting Rights

Held by the Company

Name of Associate

 

Principal Activities

 

Incorporation and Operation

 

September 30,

2020

 

December 31,

2019

 

September 30,

2019

 

September 30,

2020

 

December 31,

2019

 

September 30,

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Systems on Silicon Manufacturing Company Pte Ltd. (SSMC)

 

Manufacturing and selling of integrated circuits and other semiconductor devices

 

Singapore

 

$

5,788,458

 

 

$

6,502,174

 

 

$

6,446,678

 

 

 

39%

 

 

 

39%

 

 

 

39%

 

Xintec Inc. (Xintec)

 

Wafer level chip size packaging and wafer level post passivation interconnection service

 

Taoyuan, Taiwan

 

 

2,214,499

 

 

 

1,846,145

 

 

 

1,762,753

 

 

 

41%

 

 

 

41%

 

 

 

41%

 

Global Unichip Corporation (GUC)

 

Researching, developing, manufacturing, testing and marketing of integrated circuits

 

Hsinchu, Taiwan

 

 

1,069,317

 

 

 

1,284,377

 

 

 

1,232,543

 

 

 

35%

 

 

 

35%

 

 

 

35%

 

Mutual-Pak

 

Manufacturing of electronic parts, wholesaling and retailing of electronic materials, and researching, developing and testing of RFID

 

New Taipei, Taiwan

 

 

29,156

 

 

 

38,520

 

 

 

34,876

 

 

 

28%

 

 

 

28%

 

 

 

30%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

 

 

 

$

17,701,081

 

 

$

18,698,788

 

 

$

18,193,969

 

 

 

 

 

 

 

 

 

 

 

 

 

(Concluded)

 

The market prices of the investments accounted for using the equity method in publicly traded stocks calculated by the closing price at the end of the reporting period are summarized as follows. The closing price represents the quoted price in active markets, the level 1 fair value measurement.

 

  Name of Associate

 

September 30,

2020

 

December 31,

2019

 

September 30,

2019

 

 

 

 

 

 

 

VIS

 

$

44,611,878

 

 

$

36,812,923

 

 

$

29,106,813

 

Xintec

 

$

13,019,985

 

 

$

8,958,195

 

 

$

5,319,276

 

GUC

 

$

12,138,843

 

 

$

11,251,774

 

 

$

11,671,965

 

 

14.

PROPERTY, PLANT AND EQUIPMENT

 

 

 

September 30,

2020

 

December 31,

2019

 

September 30,

2019

 

 

 

 

 

 

 

Assets used by the Company

 

$

1,504,410,142

 

 

$

1,352,313,861

 

 

$

1,197,885,739

 

Assets subject to operating leases

 

 

27,977

 

 

 

63,544

 

 

 

69,559

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

$

1,504,438,119

 

 

$

1,352,377,405

 

 

$

1,197,955,298

 

 

 

a.

Assets used by the Company

 

 

Land and Land Improvements

 

Buildings

 

Machinery and Equipment

 

Office

Equipment

 

Equipment under Installation and Construction in Progress

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at January 1, 2020

 

$

3,991,798

 

 

$

438,075,063

 

 

$

2,886,622,968

 

 

$

54,611,364

 

 

$

528,295,086

 

 

$

3,911,596,279

 

Additions (deductions)

 

 

-

 

 

 

77,864,221

 

 

 

660,847,245

 

 

 

11,947,069

 

 

 

(371,053,563

)

 

 

379,604,972

 

Disposals or retirements

 

 

-

 

 

 

(40,840

)

 

 

(4,575,584

)

 

 

(377,899

)

 

 

-

 

 

 

(4,994,323

)

Transfers from assets subject to operating leases

 

 

-

 

 

 

23,142

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

23,142

 

Effect of exchange rate changes

 

 

(26,732

)

 

 

(598,690

)

 

 

(1,999,085

)

 

 

(100,526

)

 

 

(87,627

)

 

 

(2,812,660

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at September 30, 2020

 

$

3,965,066

 

 

$

515,322,896

 

 

$

3,540,895,544

 

 

$

66,080,008

 

 

$

157,153,896

 

 

$

4,283,417,410

 

(Continued)


- 20 -


 

 

 

 

 

 

 

 

Land and Land Improvements

 

Buildings

 

Machinery and Equipment

 

Office

Equipment

 

Equipment under Installation and Construction in Progress

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated depreciation

  and impairment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at January 1, 2020

 

$

538,690

 

 

$

243,059,390

 

 

$

2,278,265,943

 

 

$

37,418,395

 

 

$

-

 

 

$

2,559,282,418

 

Additions

 

 

1,140

 

 

 

21,082,267

 

 

 

200,520,703

 

 

 

5,135,311

 

 

 

-

 

 

 

226,739,421

 

Disposals or retirements

 

 

-

 

 

 

(27,084

)

 

 

(4,355,884

)

 

 

(376,173

)

 

 

-

 

 

 

(4,759,141

)

Transfers from assets subject to operating leases

 

 

-

 

 

 

8,215

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

8,215

 

Impairment

 

 

-

 

 

 

-

 

 

 

10,159

 

 

 

-

 

 

 

-

 

 

 

10,159

 

Effect of exchange rate changes

 

 

(18,499

)

 

 

(405,913

)

 

 

(1,777,880

)

 

 

(71,512

)

 

 

-

 

 

 

(2,273,804

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at September 30, 2020

 

$

521,331

 

 

$

263,716,875

 

 

$

2,472,663,041

 

 

$

42,106,021

 

 

$

-

 

 

$

2,779,007,268

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Carrying amounts at
January 1, 2020

 

$

3,453,108

 

 

$

195,015,673

 

 

$

608,357,025

 

 

$

17,192,969

 

 

$

528,295,086

 

 

$

1,352,313,861

 

Carrying amounts at

September 30, 2020

 

$

3,443,735

 

 

$

251,606,021

 

 

$

1,068,232,503

 

 

$

23,973,987

 

 

$

157,153,896

 

 

$

1,504,410,142

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at January 1, 2019

 

$

4,011,353

 

 

$

418,151,675

 

 

$

2,728,760,127

 

 

$

48,382,279

 

 

$

172,910,989

 

 

$

3,372,216,423

 

Additions

 

 

-

 

 

 

17,620,955

 

 

 

137,136,089

 

 

 

5,714,221

 

 

 

183,221,480

 

 

 

343,692,745

 

Disposals or retirements

 

 

-

 

 

 

(59,375

)

 

 

(12,767,594

)

 

 

(454,190

)

 

 

-

 

 

 

(13,281,159

)

Transfers from right-of-use assets

 

 

-

 

 

 

-

 

 

 

619,779

 

 

 

-

 

 

 

-

 

 

 

619,779

 

Effect of disposal of subsidiary

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(508

)

 

 

-

 

 

 

(508

)

Effect of exchange rate changes

 

 

7,463

 

 

 

(764,180

)

 

 

(2,486,790

)

 

 

(46,703

)

 

 

(209,042

)

 

 

(3,499,252

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at September 30, 2019

 

$

4,018,816

 

 

$

434,949,075

 

 

$

2,851,261,611

 

 

$

53,595,099

 

 

$

355,923,427

 

 

$

3,699,748,028

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated depreciation

  and impairment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at January 1, 2019

 

$

550,575

 

 

$

217,899,243

 

 

$

2,049,278,908

 

 

$

32,525,129

 

 

$

-

 

 

$

2,300,253,855

 

Additions

 

 

1,230

 

 

 

19,517,434

 

 

 

189,276,534

 

 

 

4,498,925

 

 

 

-

 

 

 

213,294,123

 

Disposals or retirements

 

 

-

 

 

 

(59,331

)

 

 

(8,406,415

)

 

 

(452,988

)

 

 

-

 

 

 

(8,918,734

)

Transfers from right-of-use assets

 

 

-

 

 

 

-

 

 

 

20,659

 

 

 

-

 

 

 

-

 

 

 

20,659

 

Reversal of impairment

 

 

-

 

 

 

-

 

 

 

(301,384

)

 

 

-

 

 

 

-

 

 

 

(301,384

)

Effect of disposal of subsidiary

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(508

)

 

 

-

 

 

 

(508

)

Effect of exchange rate changes

 

 

5,140

 

 

 

(317,164

)

 

 

(2,162,387

)

 

 

(11,311

)

 

 

-

 

 

 

(2,485,722

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at September 30, 2019

 

$

556,945

 

 

$

237,040,182

 

 

$

2,227,705,915

 

 

$

36,559,247

 

 

$

-

 

 

$

2,501,862,289

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Carrying amounts at
January 1, 2019

 

$

3,460,778

 

 

$

200,252,432

 

 

$

679,481,219

 

 

$

15,857,150

 

 

$

172,910,989

 

 

$

1,071,962,568

 

Carrying amounts at September 30, 2019

 

$

3,461,871

 

 

$

197,908,893

 

 

$

623,555,696

 

 

$

17,035,852

 

 

$

355,923,427

 

 

$

1,197,885,739

 

(Concluded)

 

The significant part of the Company’s buildings includes main plants, mechanical and electrical power equipment and clean rooms, and the related depreciation is calculated using the estimated useful lives of 20 years, 10 years and 10 years, respectively.

 

In the first quarter of 2019, the Company recognized a reversal of impairment loss of NT$301,384 thousand due to redeployment of certain idle machinery and equipment. Such reversal of impairment loss was recognized in other operating income and expenses.


- 21 -


 

 

 

 

 

 

b.

Assets subject to operating leases

 

 

 

 

 

Buildings

 

 

 

 

 

Cost

 

 

 

 

 

 

 

 

 

Balance at January 1, 2020

 

 

 

$

562,610

 

Disposals or retirements

 

 

 

 

(311,939

)

Transfers to assets used by the Company

 

 

 

 

(23,142

)

 

 

 

 

 

 

 

Balance at September 30, 2020

 

 

 

$

227,529

 

 

 

 

 

 

 

 

Accumulated depreciation

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at January 1, 2020

 

 

 

$

499,066

 

Additions

 

 

 

 

14,467

 

Disposals or retirements

 

 

 

 

(305,766

)

Transfers to assets used by the Company

 

 

 

 

(8,215

)

 

 

 

 

 

 

 

Balance at September 30, 2020

 

 

 

$

199,552

 

 

 

 

 

 

 

 

Carrying amounts at January 1, 2020

 

 

 

$

63,544

 

Carrying amounts at September 30, 2020

 

 

 

$

27,977

 

 

 

 

 

 

 

 

Cost

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at January 1, 2019

 

 

 

$

562,610

 

 

 

 

 

 

 

 

Balance at September 30, 2019

 

 

 

$

562,610

 

 

 

 

 

 

 

 

Accumulated depreciation

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at January 1, 2019

 

 

 

$

474,899

 

Additions

 

 

 

 

18,152

 

 

 

 

 

 

 

 

Balance at September 30, 2019

 

 

 

$

493,051

 

 

 

 

 

 

 

 

Carrying amounts at January 1, 2019

 

 

 

$

87,711

 

Carrying amounts at September 30, 2019

 

 

 

$

69,559

 

 

Operating leases relate to leases of buildings with lease terms between 1 to 5 years. The lessees do not have purchase options to acquire the assets at the expiry of the lease periods.

 

The maturity analysis of operating lease payments receivable for the buildings is as follows:

 

 

 

September 30,

2020

 

December 31,

2019

 

September 30,

2019

 

 

 

 

 

 

 

Year 1

 

$

17,307

 

 

$

18,450

 

 

$

26,352

 

Year 2

 

 

16,992

 

 

 

16,992

 

 

 

16,992

 

Year 3

 

 

4,248

 

 

 

16,992

 

 

 

16,992

 

Year 4

 

 

-

 

 

 

-

 

 

 

4,248

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

$

38,547

 

 

$

52,434

 

 

$

64,584

 

 

- 22 -


 

 

 

 

 

 

15.

LEASE ARRANGEMENTS

 

 

a.

Right-of-use assets

 

 

 

September 30,

2020

 

December 31,

2019

 

September 30,

2019

 

 

 

 

 

 

 

Carrying amounts

 

 

 

 

 

 

 

 

 

 

 

 

 

Land

 

$

18,193,595

 

 

$

14,064,036

 

 

$

14,028,317

 

Buildings

 

 

2,588,685

 

 

 

2,351,809

 

 

 

2,370,423

 

Machinery and equipment

 

 

-

 

 

 

775,809

 

 

 

1,066,738

 

Office equipment

 

 

41,801

 

 

 

40,748

 

 

 

41,348

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

$

20,824,081

 

 

$

17,232,402

 

 

$

17,506,826

 

 

 

 

Nine Months Ended September 30

 

 

2020

 

2019

 

 

 

 

 

Additions to right-of-use assets

 

$

5,982,843

 

 

$

474,003

 

 

 

 

Three Months Ended

September 30

 

Nine Months Ended

September 30

 

 

2020

 

2019

 

2020

 

2019

 

 

 

 

 

 

 

 

 

Depreciation of right-of-use assets

 

 

 

 

 

 

 

 

Land

 

$

312,218

 

 

$

238,027

 

 

$

918,057

 

 

$

719,588

 

Buildings

 

 

146,343

 

 

 

115,132

 

 

 

424,510

 

 

 

332,575

 

Machinery and equipment

 

 

193,952

 

 

 

290,929

 

 

 

775,809

 

 

 

893,445

 

Office equipment

 

 

5,753

 

 

 

5,602

 

 

 

17,982

 

 

 

16,641

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

$

658,266

 

 

$

649,690

 

 

$

2,136,358

 

 

$

1,962,249

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from subleasing right-of-use assets (classified under other operating income and expenses, net)

 

$

19,969

 

 

$

14,001

 

 

$

57,892

 

 

$

40,899

 

 

 

b.

Lease liabilities

 

 

 

September 30,

2020

 

December 31,

2019

 

September 30,

2019

 

 

 

 

 

 

 

Carrying amounts

 

 

 

 

 

 

 

 

 

 

 

 

 

Current portion (classified under accrued expenses and other current liabilities)

 

$

1,720,886

 

 

$

2,275,084

 

 

$

2,580,646

 

Noncurrent portion

 

 

19,180,809

 

 

 

15,041,833

 

 

 

15,031,539

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

$

20,901,695

 

 

$

17,316,917

 

 

$

17,612,185

 


- 23 -


 

 

 

 

 

Ranges of discount rates for lease liabilities are as follows:

 

 

 

September 30,

2020

 

December 31,

2019

 

September 30,

2019

 

 

 

 

 

 

 

Land

 

0.48%-2.14%

 

0.67%-2.14%

 

0.70%-2.14%

Buildings

 

0.54%-3.88%

 

0.67%-3.88%

 

0.69%-3.88%

Machinery and equipment

 

-

 

3.24%

 

3.24%

Office equipment

 

0.35%-3.88%

 

0.64%-3.88%

 

0.64%-3.88%

 

 

c.

Material terms of right-of-use assets

 

The Company leases land and buildings mainly for the use of plants and offices with lease terms of 1 to 36 years. The lease contracts for land located in the R.O.C. specify that lease payments will be adjusted every 2 years on the basis of changes in announced land value prices. The Company does not have purchase options to acquire the leasehold land and buildings at the end of the lease terms.

 

The Company leases machinery and equipment for use in operation with lease terms of 2 years. The Company has purchase options to acquire leasehold machinery and equipment at the end of the lease terms. As of September 30, 2020, the aforementioned lease contract has been expired.

 

 

d.

Subleases of right-of-use assets

 

The Company subleases its right-of-use assets for buildings under operating leases with lease terms of 1 to 6 years.

 

The maturity analysis of lease payments receivable under operating subleases is as follows:

 

 

 

September 30,

2020

 

December 31,

2019

 

September 30,

2019

 

 

 

 

 

 

 

Year 1

 

$

56,473

 

 

$

58,569

 

 

$

54,160

 

Year 2

 

 

-

 

 

 

1,885

 

 

 

4,086

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

$

56,473

 

 

$

60,454

 

 

$

58,246

 

 

 

e.

Other lease information

 

 

 

Three Months Ended

September 30

 

Nine Months Ended

September 30

 

 

2020

 

2019

 

2020

 

2019

 

 

 

 

 

 

 

 

 

Expenses relating to short-term leases

 

$

636,919

 

 

$

1,137,710

 

 

$

2,391,757

 

 

$

3,931,487

 

Expenses relating to low-value asset leases

 

$

29

 

 

$

132

 

 

$

115

 

 

$

386

 

Expenses relating to variable lease payments not included in the measurement of lease liabilities

 

$

36,751

 

 

$

56,489

 

 

$

133,905

 

 

$

154,132

 

 

 

 

Nine Months Ended September 30

 

 

2020

 

2019

 

 

 

 

 

Total cash outflow for leases

 

$

5,069,674

 

 

$

6,031,057

 

- 24 -


 

 

 

 

 

16.

INTANGIBLE ASSETS

 

 

 

Goodwill

 

Technology License Fees

 

Software and System Design Costs

 

Patent and Others

 

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

Cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at January 1, 2020

 

$

5,693,376

 

 

$

15,854,951

 

 

$

33,024,010

 

 

$

8,302,996

 

 

$

62,875,333

 

Additions

 

 

-

 

 

 

6,263,480

 

 

 

1,863,640

 

 

 

2,974,885

 

 

 

11,102,005

 

Disposals or retirements

 

 

-

 

 

 

-

 

 

 

(60,467

)

 

 

-

 

 

 

(60,467

)

Effect of exchange rate changes

 

 

(139,589

)

 

 

(3,120

)

 

 

(5,930

)

 

 

(485

)

 

 

(149,124

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at September 30, 2020

 

$

5,553,787

 

 

$

22,115,311

 

 

$

34,821,253

 

 

$

11,277,396

 

 

$

73,767,747

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated amortization and

  impairment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at January 1, 2020

 

$

-

 

 

$

9,823,770

 

 

$

26,502,067

 

 

$

5,896,468

 

 

$

42,222,305

 

Additions

 

 

-

 

 

 

1,710,904

 

 

 

2,760,196

 

 

 

801,459

 

 

 

5,272,559

 

Disposals or retirements

 

 

-

 

 

 

-

 

 

 

(59,868

)

 

 

-

 

 

 

(59,868

)

Effect of exchange rate changes

 

 

-

 

 

 

(3,120

)

 

 

(3,308

)

 

 

(334

)

 

 

(6,762

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at September 30, 2020

 

$

-

 

 

$

11,531,554

 

 

$

29,199,087

 

 

$

6,697,593

 

 

$

47,428,234

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Carrying amounts at January 1, 2020

 

$

5,693,376

 

 

$

6,031,181

 

 

$

6,521,943

 

 

$

2,406,528

 

 

$

20,653,028

 

Carrying amounts at September 30, 2020

 

$

5,553,787

 

 

$

10,583,757

 

 

$

5,622,166

 

 

$

4,579,803

 

 

$

26,339,513

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at January 1, 2019

 

$

5,795,488

 

 

$

10,974,458

 

 

$

29,594,483

 

 

$

7,656,524

 

 

$

54,020,953

 

Additions

 

 

-

 

 

 

1,768,377

 

 

 

3,076,909

 

 

 

294,096

 

 

 

5,139,382

 

Disposals or retirements

 

 

-

 

 

 

-

 

 

 

(251,659

)

 

 

-

 

 

 

(251,659

)

Effect of exchange rate changes

 

 

38,971

 

 

 

1,886

 

 

 

(13,641

)

 

 

(794

)

 

 

26,422

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at September 30, 2019

 

$

5,834,459

 

 

$

12,744,721

 

 

$

32,406,092

 

 

$

7,949,826

 

 

$

58,935,098

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated amortization and

  impairment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at January 1, 2019

 

$

-

 

 

$

8,756,005

 

 

$

23,023,498

 

 

$

5,239,313

 

 

$

37,018,816

 

Additions

 

 

-

 

 

 

779,997

 

 

 

2,806,987

 

 

 

490,948

 

 

 

4,077,932

 

Disposals or retirements

 

 

-

 

 

 

-

 

 

 

(249,282

)

 

 

-

 

 

 

(249,282

)

Effect of exchange rate changes

 

 

-

 

 

 

1,886

 

 

 

(7,072

)

 

 

(755

)

 

 

(5,941

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at September 30, 2019

 

$

-

 

 

$

9,537,888

 

 

$

25,574,131

 

 

$

5,729,506

 

 

$

40,841,525

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Carrying amounts at January 1, 2019

 

$

5,795,488

 

 

$

2,218,453

 

 

$

6,570,985

 

 

$

2,417,211

 

 

$

17,002,137

 

Carrying amounts at September 30, 2019

 

$

5,834,459

 

 

$

3,206,833

 

 

$

6,831,961

 

 

$

2,220,320

 

 

$

18,093,573

 

 

The Company’s goodwill has been tested for impairment at the end of the annual reporting period and the recoverable amount is determined based on the value in use. The value in use was calculated based on the cash flow forecast from the financial budgets covering the future five-year period, and the Company used annual discount rate of 8.0% in its test of impairment as of December 31, 2019 to reflect the relevant specific risk in the cash-generating unit.

 

 


- 25 -


 

 

 

 

 

17.

SHORT-TERM LOANS

 

 

 

September 30,

2020

 

December 31,

2019

 

September 30,

2019

 

 

 

 

 

 

 

Unsecured loans

 

 

 

 

 

 

Amount

 

$

155,377,630

 

 

$

118,522,290

 

 

$

85,573,710

 

Original loan content

 

 

 

 

 

 

 

 

 

 

 

 

US$ (in thousands)

 

$

1,225,000

 

 

$

2,370,000

 

 

$

2,440,000

 

EUR (in thousands)

 

 

3,526,000

 

 

 

1,410,000

 

 

 

290,000

 

Annual interest rate

 

 

(0.11)%-0.46%

 

 

 

0.01%-2.22%

 

 

 

0.01%-2.43%

 

Maturity date

 

 

 

Due by February

2021

 

 

 

 

Due by May

2020

 

 

 

 

Due by February

2020

 

 

 

18.

BONDS PAYABLE

 

 

 

September 30,

2020

 

December 31,

2019

 

September 30,

2019

 

 

 

 

 

 

 

Domestic unsecured bonds

 

$

143,560,000

 

 

$

56,900,000

 

 

$

56,900,000

 

Overseas unsecured bonds

 

 

86,880,000

 

 

 

-

 

 

 

-

 

Less: Discounts on bonds payable

 

 

(794,566

)

 

 

-

 

 

 

-

 

Less: Current portion

 

 

(2,600,000

)

 

 

(31,800,000

)

 

 

(31,800,000

)

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

$

227,045,434

 

 

$

25,100,000

 

 

$

25,100,000

 

 

The Company issued domestic unsecured bonds for the nine months ended September 30, 2020. The major terms are as follows:

 

Issuance

 

Tranche

 

Issuance Period

 

Total Amount

 

Coupon Rate

 

Repayment and Interest Payment

 

 

 

 

 

 

 

 

 

 

 

NT$ unsecured bonds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

109-1

 

A

 

March 2020 to

March 2025

 

$

3,000,000

 

 

0.58%

 

Bullet repayment; interest payable annually

 

 

B

 

March 2020 to

March 2027

 

 

10,500,000

 

 

0.62%

 

The same as above

 

 

C

 

March 2020 to

March 2030

 

 

10,500,000

 

 

0.64%

 

The same as above

109-2

 

A

 

April 2020 to

April 2035

 

 

5,900,000

 

 

0.52%

 

The same as above

 

 

B

 

April 2020 to

April 2027

 

 

10,400,000

 

 

0.58%

 

The same as above

 

 

C

 

April 2020 to

April 2030

 

 

5,300,000

 

 

0.60%

 

The same as above

(Continued)


- 26 -


 

 

 

 

 

Issuance

 

Tranche

 

Issuance Period

 

Total Amount

 

Coupon Rate

 

Repayment and Interest Payment

 

 

 

 

 

 

 

 

 

 

 

109-3

 

A

 

May 2020 to
May 2025

 

$

4,500,000

 

 

0.55%

 

Bullet repayment; interest payable annually

 

 

B

 

May 2020 to
May 2027

 

 

7,500,000

 

 

0.60%

 

The same as above

 

 

C

 

May 2020 to
May 2030

 

 

2,400,000

 

 

0.64%

 

The same as above

109-4

 

A

 

July 2020 to

July 2025

 

 

5,700,000

 

 

0.58%

 

Two equal installments in last two years; interest payable annually

 

 

B

 

July 2020 to

July 2027

 

 

6,300,000

 

 

0.65%

 

The same as above

 

 

C

 

July 2020 to

July 2030

 

 

1,900,000

 

 

0.67%

 

The same as above

109-5

 

A

 

September 2020 to September 2025

 

 

4,800,000

 

 

0.50%

 

The same as above

 

 

B

 

September 2020 to September 2027

 

 

8,000,000

 

 

0.58%

 

The same as above

 

 

C

 

September 2020 to September 2030

 

 

2,800,000

 

 

0.60%

 

The same as above

(Concluded)

 

Issuance

 

Tranche

 

Issuance Period

 

Total Amount (US$

in Thousands)

 

Coupon Rate

 

Repayment and Interest Payment

 

 

 

 

 

 

 

 

 

 

 

US$ unsecured bonds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

109-1

 

-

 

September 2020 to September 2060

 

US$

1,000,000

 

 

 

2.70%

 

 

Bullet repayment (callable on the 5th anniversary of the issue date and every anniversary thereafter); interest payable annually

 


- 27 -


 

 

 

 

 

 

The Company issued overseas unsecured bonds for the nine months ended September 30, 2020. The major terms are as follows:

 

Issuance Period

 

Total Amount (US$

in Thousands)

 

Coupon Rate

 

Repayment and Interest Payment

 

 

 

 

 

 

 

September 2020 to September 2025

 

US$

1,000,000

 

 

0.75%

 

Bullet repayment (callable at any time, in whole or in part, at the relevant redemption price according to relevant agreements); interest payable semi-annually

September 2020 to September 2027

 

 

750,000

 

 

1.00%

 

The same as above

September 2020 to September 2030

 

 

1,250,000

 

 

1.375%

 

The same as above

 

19.

LONG-TERM BANK LOANS

 

 

 

 

 

September 30,

2020

 

 

 

 

 

Unsecured loans

 

 

 

$

1,000,000

 

Less: Discounts on government grants

 

 

 

 

(17,551

)

 

 

 

 

 

 

 

 

 

 

 

$

982,449

 

 

 

 

 

 

 

 

Original loan content

 

 

 

 

 

 

Annual interest rate

 

 

 

 

0.4%

 

Maturity date

 

 

 

 

Due by September 2025

 

 

The Company received a preferential interest rate loan from the government, and the loan proceeds are used to fund qualifying capital expenditure.

 

20.

GUARANTEE DEPOSITS

 

 

 

September 30,

2020

 

December 31,

2019

 

September 30,

2019

 

 

 

 

 

 

 

Capacity guarantee

 

$

-

 

 

$

1,499,400

 

 

$

3,481,230

 

Others

 

 

244,809

 

 

 

230,481

 

 

 

255,634

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

$

244,809

 

 

$

1,729,881

 

 

$

3,736,864

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current portion (classified under accrued expenses and other current liabilities)

 

$

77,082

 

 

$

1,552,977

 

 

$

3,526,666

 

Noncurrent portion

 

 

167,727

 

 

 

176,904

 

 

 

210,198

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

$

244,809

 

 

$

1,729,881

 

 

$

3,736,864

 

 

Some of guarantee deposits were refunded to customers by offsetting related accounts receivable.

- 28 -


 

 

 

 

 

21.

EQUITY

 

 

a.

Capital stock

 

 

 

September 30,

2020

 

December 31,

2019

 

September 30,

2019

 

 

 

 

 

 

 

Authorized shares (in thousands)

 

 

28,050,000

 

 

 

28,050,000

 

 

 

28,050,000

 

Authorized capital

 

$

280,500,000

 

 

$

280,500,000

 

 

$

280,500,000

 

Issued and paid shares (in thousands)

 

 

25,930,380

 

 

 

25,930,380

 

 

 

25,930,380

 

Issued capital

 

$

259,303,805

 

 

$

259,303,805

 

 

$

259,303,805

 

 

A holder of issued common shares with par value of NT$10 per share is entitled to vote and to receive dividends.

The authorized shares include 500,000 thousand shares allocated for the exercise of employee stock options.

 

As of September 30, 2020, 1,064,373 thousand ADSs of TSMC were traded on the NYSE. The number of common shares represented by the ADSs was 5,321,864 thousand shares (one ADS represents five common shares).

 

 

b.

Capital surplus

 

 

 

September 30,

2020

 

December 31,

2019

 

September 30,

2019

 

 

 

 

 

 

 

Additional paid-in capital

 

$

24,184,939

 

 

$

24,184,939

 

 

$

24,184,939

 

From merger

 

 

22,804,510

 

 

 

22,804,510

 

 

 

22,804,510

 

From convertible bonds

 

 

8,892,847

 

 

 

8,892,847

 

 

 

8,892,847

 

From share of changes in equities of subsidiaries

 

 

121,843

 

 

 

121,843

 

 

 

121,843

 

From share of changes in equities of associates

 

 

302,507

 

 

 

302,234

 

 

 

287,447

 

Donations

 

 

33,336

 

 

 

33,336

 

 

 

29,343

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

$

56,339,982

 

 

$

56,339,709

 

 

$

56,320,929

 

 

Under the relevant laws, 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 and convertible bonds) may be used to offset a deficit; in addition, when the Company has no deficit, such capital surplus may be distributed as cash dividends or stock dividends up to a certain percentage of TSMC’s paid-in capital. The capital surplus from share of changes in equities of subsidiaries and associates and dividend of a claim extinguished by a prescription may be used to offset a deficit; however, when generated from issuance of restricted shares for employees, such capital surplus may not be used for any purpose.

 

 

c.

Retained earnings and dividend policy

 

The amendments to TSMC’s Articles of Incorporation had been approved by TSMC’s shareholders in its meeting held on June 5, 2019, which stipulate that earnings distribution may be made on a quarterly basis after the close of each quarter. Distribution of earnings by way of cash dividends should be approved by TSMC’s Board of Directors and reported to TSMC’s shareholders in its meeting.

 


- 29 -


 

 

 

 

 

 

TSMC’s amended Articles of Incorporation provide that, when allocating earnings, TSMC shall first estimate and reserve the taxes to be paid, offset its losses, set aside a legal capital reserve at 10% of the remaining earnings (until the accumulated legal capital reserve equals TSMC’s paid-in capital), then set aside a special capital reserve in accordance with relevant laws or regulations or as requested by the authorities in charge. Any balance left over shall be allocated according to relevant laws and the TSMC’s Articles of Incorporation.

 

TSMC’s Articles of Incorporation also provide that profits of TSMC may be distributed by way of cash dividend and/or stock dividend. However, distribution of earnings shall be made preferably by way of cash dividend. Distribution of earnings may also be made by way of stock dividend, provided that the ratio for stock dividend shall not exceed 50% of the total distribution.

 

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.

 

Pursuant to existing regulations, the Company is required to set aside additional special capital reserve equivalent to the net debit balance of the other components of stockholders’ equity, such as the accumulated balance of foreign currency translation reserve, unrealized valuation gain or loss from fair value through other comprehensive income financial assets, gain or loss from changes in fair value of hedging instruments in cash flow hedges, etc. For the subsequent decrease in the deduction amount to stockholders’ equity, any special reserve appropriated may be reversed to the extent that the net debit balance reverses.

 

The appropriations of 2020 and 2019 quarterly earnings have been approved by TSMC’s Board of Directors in its meeting, respectively. The appropriations and cash dividends per share were as follows:

 

 

 

Third Quarter

 

Second Quarter

 

First Quarter

Resolution Date of TSMC’s

 

of 2020

 

of 2020

 

of 2020

  Board of Directors in its

 

November 10,

 

August 11,

 

May 12,

  meeting

 

2020

 

2020

 

2020

 

 

 

 

 

 

 

Special capital reserve

 

$

5,501,351

 

 

$

11,884,457

 

 

$

(2,694,841

)

Cash dividends to shareholders

 

$

64,825,951

 

 

$

64,825,951

 

 

$

64,825,951

 

Cash dividends per share (NT$)

 

$

2.5

 

 

$

2.5

 

 

$

2.5

 

 

 

 

Fourth Quarter

 

Third Quarter

 

Second Quarter

 

First Quarter

Resolution Date of TSMC’s

 

of 2019

 

of 2019

 

of 2019

 

of 2019

  Board of Directors in its

meeting

 

February 11,

2020

 

November 12,

2019

 

August 13,

2019

 

June 5,

2019

 

 

 

 

 

 

 

 

 

Special capital reserve

 

$

16,893,073

 

 

$

3,289,166

 

 

$

(3,338,190

)

 

$

(4,723,939

)

Cash dividends to shareholders

 

$

64,825,951

 

 

$

64,825,951

 

 

$

64,825,951

 

 

$

51,860,761

 

Cash dividends per share (NT$)

 

$

2.5

 

 

$

2.5

 

 

$

2.5

 

 

$

2.0

 

 

The appropriation of 2018 earnings has been approved by TSMC’s shareholders in its meeting held on June 5, 2019. The appropriation and cash dividends per share were as follows:

 

 

 

Appropriation of Earnings

 

Cash Dividends Per Share

(NT$)

 

 

 

 

 

Legal capital reserve

 

$

35,113,088

 

 

 

Special capital reserve

 

$

(11,459,458

)

 

 

Cash dividends to shareholders

 

$

207,443,044

 

 

$

8.0

 


- 30 -


 

 

 

 

 

 

d.

Others

 

Changes in others were as follows:

 

 

 

Nine Months Ended September 30, 2020

 

 

Foreign Currency Translation Reserve

 

Unrealized Gain (Loss) on Financial Assets at FVTOCI

 

Gain (Loss) on Hedging Instruments

 

Unearned Stock-Based Employee Compensation

 

Total

 

 

 

 

 

 

 

 

 

 

 

Balance, beginning of period

 

$

(26,871,400

)

 

$

(692,959

)

 

$

(3,820

)

 

$

(190

)

 

$

(27,568,369

)

Exchange differences arising on translation of foreign operations

 

 

(17,163,157

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(17,163,157

)

Unrealized gain (loss) on financial assets at FVTOCI

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity instruments

 

 

-

 

 

 

77,539

 

 

 

-

 

 

 

-

 

 

 

77,539

 

Debt instruments

 

 

-

 

 

 

3,928,369

 

 

 

-

 

 

 

-

 

 

 

3,928,369

 

Cumulative unrealized gain (loss) of equity instruments transferred to retained earnings due to disposal

 

 

-

 

 

 

(309

)

 

 

-

 

 

 

-

 

 

 

(309

)

Cumulative unrealized gain (loss) of debt instruments transferred to profit or loss due to disposal

 

 

-

 

 

 

(1,327,251

)

 

 

-

 

 

 

-

 

 

 

(1,327,251

)

Loss allowance adjustments from debt instruments

 

 

-

 

 

 

(443

)

 

 

-

 

 

 

-

 

 

 

(443

)

Gain (loss) arising on changes in the fair value of hedging instruments

 

 

-

 

 

 

-

 

 

 

22,942

 

 

 

-

 

 

 

22,942

 

Transferred to initial carrying amount of hedged items

 

 

-

 

 

 

-

 

 

 

(19,122

)

 

 

-

 

 

 

(19,122

)

Share of other comprehensive income (loss) of associates

 

 

(213,373

)

 

 

3,211

 

 

 

-

 

 

 

-

 

 

 

(210,162

)

Share of unearned stock-based employee compensation of associates

 

 

-

 

 

 

-

 

 

 

-

 

 

 

190

 

 

 

190

 

Income tax effect

 

 

-

 

 

 

627

 

 

 

-

 

 

 

-

 

 

 

627

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, end of period

 

$

(44,247,930

)

 

$

1,988,784

 

 

$

-

 

 

$

-

 

 

$

(42,259,146

)

 

 

 

Nine Months Ended September 30, 2019

 

 

Foreign Currency Translation Reserve

 

Unrealized Gain (Loss) on Financial Assets at FVTOCI

 

Gain (Loss) on Hedging Instruments

 

Unearned Stock-Based Employee Compensation

 

Total

 

 

 

 

 

 

 

 

 

 

 

Balance, beginning of period

 

$

(12,042,347

)

 

$

(3,429,324

)

 

$

23,601

 

 

$

(1,843

)

 

$

(15,449,913

)

Exchange differences arising on translation of foreign operations

 

 

2,216,619

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,216,619

 

Unrealized gain (loss) on financial assets at FVTOCI

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity instruments

 

 

-

 

 

 

219,752

 

 

 

-

 

 

 

-

 

 

 

219,752

 

Debt instruments

 

 

-

 

 

 

3,067,792

 

 

 

-

 

 

 

-

 

 

 

3,067,792

 

Cumulative unrealized gain (loss) of equity instruments transferred to retained earnings due to disposal

 

 

-

 

 

 

(159,766

)

 

 

-

 

 

 

-

 

 

 

(159,766

)

Cumulative unrealized gain (loss) of debt instruments transferred to profit or loss due to disposal

 

 

-

 

 

 

(499,147

)

 

 

-

 

 

 

-

 

 

 

(499,147

)

Loss allowance adjustments from debt instruments

 

 

-

 

 

 

7,816

 

 

 

-

 

 

 

-

 

 

 

7,816

 

Other comprehensive income transferred to profit or loss due to disposal of subsidiary

 

 

4,598

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

4,598

 

Gain (loss) arising on changes in the fair value of hedging instruments

 

 

-

 

 

 

-

 

 

 

(75,421

)

 

 

-

 

 

 

(75,421

)

Transferred to initial carrying amount of hedged items

 

 

-

 

 

 

-

 

 

 

15,682

 

 

 

-

 

 

 

15,682

 

Share of other comprehensive income (loss) of associates

 

 

(20,223

)

 

 

(14,219

)

 

 

(105

)

 

 

-

 

 

 

(34,547

)

Share of unearned stock-based employee compensation of associates

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,843

 

 

 

1,843

 

Income tax effect

 

 

-

 

 

 

9,586

 

 

 

-

 

 

 

-

 

 

 

9,586

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, end of period

 

$

(9,841,353

)

 

$

(797,510

)

 

$

(36,243

)

 

$

-

 

 

$

(10,675,106

)

- 31 -


 

 

 

 

 

 

The aforementioned other equity includes the changes in other equities of TSMC and TSMC’s share of its subsidiaries and associates.

 

 

22.

NET REVENUE

 

 

a.

Disaggregation of revenue from contracts with customers

 

 

 

Three Months Ended

September 30

 

Nine Months Ended

September 30

   Product

 

2020

 

2019

 

2020

 

2019

 

 

 

 

 

 

 

 

 

Wafer

 

$

316,550,015

 

 

$

253,858,860

 

 

$

863,505,857

 

 

$

654,788,772

 

Others

 

 

39,876,189

 

 

 

39,186,579

 

 

 

114,215,897

 

 

 

97,959,611

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

$

356,426,204

 

 

$

293,045,439

 

 

$

977,721,754

 

 

$

752,748,383

 

 

 

 

Three Months Ended

September 30

 

Nine Months Ended

September 30

   Geography

 

2020

 

2019

 

2020

 

2019

 

 

 

 

 

 

 

 

 

Taiwan

 

$

31,162,816

 

 

$

23,868,865

 

 

$

89,095,694

 

 

$

61,412,025

 

United States

 

 

207,166,135

 

 

 

174,062,231

 

 

 

556,842,220

 

 

 

449,162,468

 

China

 

 

79,045,638

 

 

 

57,798,771

 

 

 

212,605,296

 

 

 

138,796,906

 

Europe, the Middle East and Africa

 

 

17,266,396

 

 

 

17,318,481

 

 

 

51,799,086

 

 

 

48,761,176

 

Japan

 

 

14,951,913

 

 

 

15,442,881

 

 

 

48,918,321

 

 

 

42,042,159

 

Others

 

 

6,833,306

 

 

 

4,554,210

 

 

 

18,461,137

 

 

 

12,573,649

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

$

356,426,204

 

 

$

293,045,439

 

 

$

977,721,754

 

 

$

752,748,383

 

 

The Company categorized the net revenue mainly based on the countries where the customers are headquartered.