NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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, TSMCs 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 TSMCs subsidiaries are described in Note 5.
2.
|
THE AUTHORIZATION OF FINANCIAL STATEMENTS
|
The accompanying consolidated financial
statements were authorized for issue by the management on April 19, 2018.
TSMC and its subsidiaries (collectively as the Company)
maintain its accounts and express its consolidated financial statements in New Taiwan dollars. For convenience only, U.S. dollar amounts presented in the accompanying consolidated financial statements have been translated from New Taiwan dollars at
the exchange rate as set forth in the statistical release of the Federal Reserve Board of the Unites States, which was NT$29.64 to US$1.00 as of December 31, 2017. The convenience translations should not be construed as representations that the
New Taiwan dollar amounts have been, could have been, or could in the future be, converted into U.S. dollars at this or any other rate of exchange.
4.
|
APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS), INTERNATIONAL ACCOUNTING STANDARDS (IAS), IFRIC INTERPRETATIONS (IFRIC), AND SIC INTERPRETATIONS (SIC) ISSUED BY THE INTERNATIONAL
ACCOUNTING STANDARDS BOARD (IASB) (collectively, IFRSs).
|
|
a.
|
Amendments to IFRSs and the new interpretation that are mandatorily effective for the current year
|
|
|
|
New, Revised or Amended Standards and
Interpretations
|
|
Effective Date Issued
by IASB
|
Annual Improvements to IFRSs 2014-2016 Cycle
|
|
Note
|
Amendment to IAS 7 Disclosure Initiative
|
|
January 1, 2017
|
Amendment to IAS 12 Recognition of Deferred Tax Assets for Unrealized Losses
|
|
January 1, 2017
|
|
Note:
|
The amendment to IFRS 12 is retrospectively applied for annual periods beginning on or after January 1, 2017; the amendment to IAS 28 is retrospectively applied for annual periods beginning on or after
January 1, 2018.
|
F - 12
The Company believes that the adoption of aforementioned standards or interpretations did not
have a significant effect on the Companys accounting policies. For additional disclosures required under amendment to IAS 7, please refer to Note 35.
|
b.
|
New and revised standards, amendments and interpretations in issue but not yet effective
|
As of
the date that the accompanying consolidated financial statements were authorized for issue, the new, revised or amended IFRSs in issue but not yet adopted by the Company as well as the effective dates issued by the IASB are stated as follows.
|
|
|
New, Revised or Amended Standards and
Interpretations
|
|
Effective Date Issued
by IASB
|
Annual Improvements to IFRSs 2014-2016 Cycle
|
|
Note
|
Annual Improvements to IFRSs 2015-2017 Cycle
|
|
January 1, 2019
|
Amendment to IFRS 2 Classification and Measurement of Share-based Payment
Transactions
|
|
January 1, 2018
|
IFRS 9 Financial Instruments
|
|
January 1, 2018
|
Amendments to IFRS 9 and IFRS 7 Mandatory Effective Date of IFRS 9 and Transition
Disclosure
|
|
January 1, 2018
|
Amendments to IFRS 9 Prepayment Features with Negative Compensation
|
|
January 1, 2019
|
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
|
IFRS 15 Revenue from Contracts with Customers
|
|
January 1, 2018
|
Amendment to IFRS 15 Clarifications to IFRS 15
|
|
January 1, 2018
|
IFRS 16 Leases
|
|
January 1, 2019
|
Amendments to IAS 19 Plan Amendment, Curtailment or Settlement
|
|
January 1, 2019
|
Amendments to IAS 28 Long-term Interests in Associates and Joint Ventures
|
|
January 1, 2019
|
IFRIC 22 Foreign Currency Transactions and Advance Consideration
|
|
January 1, 2018
|
IFRIC 23 Uncertainty over Income Tax Treatments
|
|
January 1, 2019
|
|
Note:
|
The amendment to IFRS 12 is retrospectively applied for annual periods beginning on or after January 1, 2017; the amendment to IAS 28 is retrospectively applied for annual periods beginning on or after
January 1, 2018.
|
Except for the following items, the Company believes that the adoption of aforementioned standards or
interpretations will not have a significant effect on the Companys accounting policies.
|
1)
|
IFRS 9 Financial Instruments and related amendments
|
Classification,
measurement and impairment of financial assets
All recognized financial assets currently in the scope of IAS 39, Financial
Instruments: Recognition and Measurement, will be subsequently measured at either the amortized cost or the fair value. The classification and measurement requirements in IFRS 9 are stated as follows:
For the invested debt instruments, if the contractual cash flows that are solely for payments of principal and interest on the principal
amount outstanding, the classification and measurement requirements are stated as follows:
F - 13
|
a)
|
If the objective of business model is to hold the financial asset to collect the contractual cash flows, such assets are measured at the amortized cost. Interest revenue should be recognized in profit or loss by using
the effective interest method, continuously assessed for impairment and the impairment loss or reversal of impairment loss should be recognized in profit and loss.
|
|
b)
|
If the objective of business model is to hold the financial asset both to collect the contractual cash flows and to sell the financial assets, such assets are measured at fair value through other comprehensive income
(FVTOCI) and are continuously assessed for impairment. Interest revenue should be recognized in profit or loss by using the effective interest method. A gain or loss on a financial asset measured at fair value through other comprehensive income
should be recognized in other comprehensive income, except for impairment gains or losses and foreign exchange gains and losses. When such financial asset is derecognized or reclassified, the cumulative gain or loss previously recognized in other
comprehensive income is reclassified from equity to profit or loss.
|
The other financial assets which do not meet the
aforementioned criteria should be measured at the fair value through profit or loss (FVTPL). However, the Company may irrevocably designate an investment in equity instruments that is not held for trading as measured at FVTOCI. All relevant gains
and losses shall be recognized in other comprehensive income, except for dividends which are recognized in profit or loss. No subsequent impairment assessment is required, and the cumulative gain or loss previously recognized in other comprehensive
income cannot be reclassified from equity to profit or loss.
IFRS 9 adds a new expected loss impairment model to measure the impairment
of financial assets. A loss allowance for expected credit losses should be recognized on financial assets measured at amortized cost and investments in debt instruments measured at fair value through other comprehensive income. If the credit risk on
a financial instrument has not increased significantly since initial recognition, the loss allowance for that financial instrument should be measured at an amount equal to
12-month
expected credit losses. If
the credit risk on a financial instrument has increased significantly since initial recognition and is not deemed to be a low credit risk, the loss allowance for that financial instrument should be measured at an amount equal to the lifetime
expected credit losses. A simplified approach is allowed for accounts receivables and the loss allowance could be measured at an amount equal to lifetime expected credit losses.
The Company elects not to restate prior reporting period when applying the requirements for the classification, measurement and impairment of
financial assets and financial liabilities under IFRS 9 with the cumulative effect of the initial application recognized at the date of initial application.
The anticipated impact on measurement categories, carrying amount and related reconciliation for each class of the Companys financial
assets and financial liabilities when retrospectively applying IFRS 9 on January 1, 2018 is detailed below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Measurement Category
|
|
Carrying Amount
NT$ (In Millions)
|
|
|
|
|
|
|
IAS 39
|
|
IFRS 9
|
|
IAS 39
|
|
|
IFRS 9
|
|
|
Note
|
|
Financial Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
Loans and receivables
|
|
Amortized cost
|
|
$
|
553,391.7
|
|
|
$
|
553,391.7
|
|
|
|
(1
|
)
|
Derivatives
|
|
Held for trading
|
|
Mandatorily at FVTPL
|
|
|
569.8
|
|
|
|
569.8
|
|
|
|
|
|
|
|
Hedging instruments
|
|
Hedging instruments
|
|
|
34.4
|
|
|
|
34.4
|
|
|
|
|
|
Equity securities
|
|
Available-for-sale
|
|
FVTOCI
|
|
|
7,422.4
|
|
|
|
8,389.5
|
|
|
|
(2
|
)
|
Debt securities
|
|
Available-for-sale
|
|
Mandatorily at FVTPL
|
|
|
|
|
|
|
779.5
|
|
|
|
(3
|
)
|
|
|
|
|
FVTOCI
|
|
|
90,826.1
|
|
|
|
90,046.6
|
|
|
|
(3
|
)
|
|
|
Held-to-maturity
|
|
Amortized cost
|
|
|
20,821.7
|
|
|
|
20,813.4
|
|
|
|
(4
|
)
|
Notes and accounts receivable (including related parties), other receivables and refundable
deposits
|
|
Loans and receivables
|
|
Amortized cost
|
|
|
131,024.9
|
|
|
|
131,269.7
|
|
|
|
(1
|
)
|
(Continued)
F - 14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Measurement Category
|
|
Carrying Amount
NT$ (In Millions)
|
|
|
|
|
|
|
IAS 39
|
|
IFRS 9
|
|
IAS 39
|
|
|
IFRS 9
|
|
|
Note
|
|
Financial Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives
|
|
Held for trading
|
|
Held for trading
|
|
$
|
26.7
|
|
|
$
|
26.7
|
|
|
|
|
|
|
|
Hedging instruments
|
|
Hedging instruments
|
|
|
15.6
|
|
|
|
15.6
|
|
|
|
|
|
Short-term loans, accounts payable (including related parties), payables to contractors and
equipment suppliers, accrued expenses and other current liabilities, bonds payable and guarantee deposits
|
|
Amortized cost
|
|
Amortized cost
|
|
|
340,501.2
|
|
|
|
340,501.2
|
|
|
|
|
|
(Concluded)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Assets
|
|
Carrying
Amount as of
December 31,
2017 (IAS 39)
|
|
|
Reclassifi-
cations
|
|
|
Remea-
surements
|
|
|
Carrying
Amount as of
January 1, 2018
(IFRS 9)
|
|
|
Retained
Earnings
Effect on
January 1,
2018
|
|
|
Other Equity
Effect on
January 1,
2018
|
|
|
Note
|
|
|
|
NT$
(In Millions)
|
|
|
NT$
(In Millions)
|
|
|
NT$
(In Millions)
|
|
|
NT$
(In Millions)
|
|
|
NT$
(In Millions)
|
|
|
NT$
(In Millions)
|
|
|
|
|
FVTPL
|
|
$
|
569.8
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
569.8
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
- Debt instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add: From available for sale
|
|
|
|
|
|
|
779.5
|
|
|
|
|
|
|
|
779.5
|
|
|
|
(10.1
|
)
|
|
|
10.1
|
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
569.8
|
|
|
|
779.5
|
|
|
|
|
|
|
|
1,349.3
|
|
|
|
(10.1
|
)
|
|
|
10.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FVTOCI
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Equity instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add: From available for sale
|
|
|
|
|
|
|
7,422.4
|
|
|
|
967.1
|
|
|
|
8,389.5
|
|
|
|
1,294.6
|
|
|
|
(325.9
|
)
|
|
|
(2
|
)
|
- Debt instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add: From available for sale
|
|
|
|
|
|
|
90,046.6
|
|
|
|
|
|
|
|
90,046.6
|
|
|
|
(30.7
|
)
|
|
|
30.7
|
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
97,469.0
|
|
|
|
967.1
|
|
|
|
98,436.1
|
|
|
|
1,263.9
|
|
|
|
(295.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortized cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add: From held to maturity
|
|
|
|
|
|
|
20,821.7
|
|
|
|
(8.3
|
)
|
|
|
20,813.4
|
|
|
|
(8.3
|
)
|
|
|
|
|
|
|
(4
|
)
|
Add: From loans and receivables
|
|
|
|
|
|
|
684,416.6
|
|
|
|
244.8
|
|
|
|
684,661.4
|
|
|
|
244.8
|
|
|
|
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
705,238.3
|
|
|
|
236.5
|
|
|
|
705,474.8
|
|
|
|
236.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hedging instruments
|
|
|
34.4
|
|
|
|
|
|
|
|
|
|
|
|
34.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
604.2
|
|
|
$
|
803,486.8
|
|
|
$
|
1,203.6
|
|
|
$
|
805,294.6
|
|
|
$
|
1,490.3
|
|
|
$
|
(285.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying
Amount as of
December 31,
2017
(IAS 39)
|
|
|
Adjustments
Arising
from Initial
Application
|
|
|
Carrying
Amount as of
January 1, 2018
(IFRS 9)
|
|
|
Retained
Earnings
Effect on
January 1,
2018
|
|
|
Other Equity
Effect on
January 1,
2018
|
|
|
Note
|
|
|
|
|
|
|
NT$
(In Millions)
|
|
|
NT$
(In Millions)
|
|
|
NT$
(In Millions)
|
|
|
NT$
(In Millions)
|
|
|
NT$
(In Millions)
|
|
|
|
|
Investments accounted for using equity method
|
|
|
$
|
17,731.8
|
|
|
$
|
8.3
|
|
|
$
|
17,740.1
|
|
|
$
|
34.0
|
|
|
$
|
(25.7
|
)
|
|
|
(5
|
)
|
|
(1)
|
Cash and cash equivalents, notes and accounts receivable (including related parties), other receivables and refundable deposits were classified as loans and receivables under IAS 39 are now classified at amortized cost
with assessment of future
12-month
or lifetime expected credit loss under IFRS 9. As a result of retrospective application, the adjustments for accounts receivable would result in a decrease in loss of
allowance of NT$244.8 million and an increase in retained earnings of NT$244.8 million on January 1, 2018.
|
|
(2)
|
As equity investments that were previously classified as
available-for-sale
financial assets under IAS 39 are not held for trading, the
Company elected to designate all of these investments as at FVTOCI under IFRS 9. As a result, the related other equity-unrealized gain/loss on
available-for-sale
financial assets of NT$228.3 million is reclassified to increase other equity - unrealized gain/loss on financial assets at FVTOCI.
|
F - 15
As equity investments previously measured at cost under IAS 39 are remeasured at fair value
under IFRS 9, the adjustments would result in an increase in financial assets at FVTOCI of NT$967.1 million, an increase in other equity-unrealized gain/loss on financial assets at FVTOCI of NT$968.7 million and a decrease in
non-controlling interests of NT$1.6 million on January 1, 2018.
For those equity investments previously classified as
available-for-sale
financial assets under IAS 39, the impairment losses that the Company had recognized have been accumulated in retained earnings. Since these investments
were designated as at FVTOCI under IFRS 9 and no impairment assessment is required, the adjustments would result in a decrease in other equity - unrealized gain/loss on financial assets at FVTOCI of NT$1,294.6 million and an increase in
retained earnings of NT$1,294.6 million on January 1, 2018.
|
(3)
|
Debt investments were previously classified as
available-for-sale
financial assets under IAS 39. Under IFRS 9, except for debt instruments
of NT$779.5 million whose contractual cash flows are not solely payments of principal and interest on the principal outstanding and therefore are classified as at FVTPL with the related other equity-unrealized gain/loss on
available-for-sale
financial assets of NT$10.1 million being consequently reclassified to decrease retained earnings, the remaining debt investments are classified as at
FVTOCI with assessment of future
12-month
expected credit loss because these investments are held within a business model whose objective is both to collect the contractual cash flows and sell the financial
assets. The related other equity-unrealized gain/loss on
available-for-sale
financial assets of NT$434.4 million is reclassified to decrease other equity-unrealized
gain/loss on financial assets at FVTOCI. As a result of retrospective application of future
12-month
expected credit loss, the adjustments would result in an increase in other equity - unrealized gain/loss on
financial assets at FVTOCI of NT$30.7 million and a decrease in retained earnings of NT$30.7 million on January 1, 2018.
|
|
(4)
|
Debt investments previously classified as
held-to-maturity
financial assets and measured at amortized cost under IAS 39 are classified as
measured at amortized cost with assessment of future
12-month
expected credit loss under IFRS 9 because the contractual cash flows are solely payments of principal and interest on the principal outstanding and
these investments are held within a business model whose objective is to collect the contractual cash flows. As a result of retrospective application of future
12-month
expected credit loss, the adjustments
would result in an increase in loss allowance of NT$8.3 million and a decrease in retained earnings of NT$8.3 million on January 1, 2018.
|
|
(5)
|
With the retrospective adoption of IFRS 9 by associates accounted for using equity method, the corresponding adjustments made by the Company would result in an increase in investments accounted for using equity method
of NT$8.3 million, a decrease in other equity- unrealized gain/loss on financial assets at FVTOCI of NT$23.6 million, a decrease in other equity- unrealized gain/loss on
available-for-sale
financial assets of NT$2.1 million and an increase in retained earnings of NT$34.0 million on January 1, 2018.
|
Hedge accounting
The
main changes in hedge accounting amended the application requirements for hedge accounting to better reflect the entitys risk management activities. Compared with IAS 39, the main changes include: (1) enhancing types of transactions
eligible for hedge accounting, specifically broadening the risks eligible for hedge accounting of
non-financial
items; (2) changing the way the hedging cost of derivative instruments are accounted for to
reduce profit or loss volatility; and (3) replacing retrospective effectiveness assessment with the principle of economic relationship between the hedging instrument and the hedged item.
F - 16
A preliminary assessment of the Companys current hedging relationships indicates that they
will qualify as continuing hedging relationships under IFRS 9. The Company will prospectively apply the requirements for hedge accounting upon initial application of IFRS 9.
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2)
|
IFRS 15 Revenue from Contracts with Customers and related amendments
|
IFRS 15
establishes principles for recognizing revenue that apply to all contracts with customers, and will supersede IAS 18 Revenue, IAS 11 Construction Contracts, and a number of revenue-related interpretations.
When applying IFRS 15, the Company shall recognize revenue by applying the following steps:
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|
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Identify the contract with the customer;
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|
|
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Identify the performance obligations in the contract;
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|
|
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Determine the transaction price;
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Allocate the transaction price to the performance obligations in the contract; and
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|
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Recognize revenue when the entity satisfies a performance obligation.
|
The Company elects only
to retrospectively apply IFRS 15 to contracts that were not completed on January 1, 2018 and elects not to restate prior reporting period with the cumulative effect of the initial application recognized at the date of initial application.
The anticipated impact on assets, liabilities and equity when retrospectively applying IFRS 15 on January 1, 2018 is detailed below:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying
Amount as of
December 31,
2017
(IAS 18
and
Revenue-related
Interpretations)
|
|
|
Adjustments
Arising from
Initial
Application
|
|
|
Carrying
Amount as of
January 1, 2018
(IFRS 15)
|
|
|
Note
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|
|
|
NT$
(In Millions)
|
|
|
NT$
(In Millions)
|
|
|
NT$
(In Millions)
|
|
|
|
|
Inventories
|
|
$
|
73,880.7
|
|
|
$
|
(19.7
|
)
|
|
$
|
73,861.0
|
|
|
|
(1)
|
|
Other financial assets-current
|
|
|
7,253.1
|
|
|
|
34.1
|
|
|
|
7,287.2
|
|
|
|
(1)
|
|
Investments accounted for using equity method
|
|
|
17,731.8
|
|
|
|
19.5
|
|
|
|
17,751.3
|
|
|
|
(1)
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total effect on assets
|
|
|
|
|
|
$
|
33.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provisions - current
|
|
|
13,961.8
|
|
|
$
|
(13,961.8
|
)
|
|
|
|
|
|
|
(2)
|
|
Accrued expenses and other current liabilities
|
|
|
65,588.4
|
|
|
|
13,961.8
|
|
|
|
79,550.2
|
|
|
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total effect on liabilities
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retained earnings
|
|
|
1,205,051.3
|
|
|
$
|
32.0
|
|
|
|
1,205,083.3
|
|
|
|
(1)
|
|
Non-controlling
interests
|
|
|
699.7
|
|
|
|
1.9
|
|
|
|
701.6
|
|
|
|
(1)
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total effect on equity
|
|
|
|
|
|
$
|
33.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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F - 17
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(1)
|
Prior to the application of IFRS 15, the Company recognizes revenue based on the accounting treatment of the sales of goods. Under IFRS 15, certain subsidiaries and associates accounted for using equity method will
change to recognize revenue over time because customers are deemed to have control over the products when the products are manufactured. As a result, the Company will recognize contract assets (classified under other financial assets) and adjust
related assets and equity accordingly.
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(2)
|
Prior to the application of IFRS 15, the Company recognized the estimation of sales returns and allowance as provisions. Under IFRS 15, the Company recognizes such estimation as refund liability (classified under
accrued expenses and other current liabilities).
|
IFRS 16 sets out the accounting standards for leases that will
supersede IAS 17 and a number of related interpretations.
Under IFRS 16, if the Company is a lessee, it shall recognize
right-of-use
assets and lease liabilities for all leases on the consolidated statements of financial position except for
low-value
and
short-term leases. The Company may elect to apply the accounting method similar to the accounting for operating lease under IAS 17 to the
low-value
and short-term leases. On the consolidated statements of
profit or loss and other comprehensive income, the Company should present the depreciation expense charged on the
right-of-use
asset separately from interest expense
accrued on the lease liability; interest is computed by using effective interest method. On the consolidated statements of cash flows, cash payments for both the principal and interest portion of the lease liability are classified within financing
activities.
When IFRS 16 becomes effective, the Company may elect to apply this standard either retrospectively to each prior reporting
period presented or retrospectively with the cumulative effect of the initial application of this standard recognized at the date of initial application.
Except for the aforementioned impact, as of the date the accompanying consolidated financial statements were authorized for issue, the Company
continues in evaluating the impact on its financial position and financial performance as a result of the initial adoption of the other standards or interpretations. The related impact will be disclosed when the Company completes the evaluation.
5.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
Significant accounting policies are
summarized as follows:
Statement of Compliance
The accompanying consolidated financial statements have been prepared in accordance with IFRSs.
Basis of Preparation
The
accompanying consolidated financial statements have been prepared on the historical cost basis except for financial instruments that are measured at fair values, as explained in the accounting policies below. Historical cost is generally based on
the fair value of the consideration given in exchange for the assets.
F - 18
Basis of Consolidation
The basis for the consolidated financial statements
The consolidated financial statements incorporate the financial statements of TSMC and entities controlled by TSMC (its subsidiaries).
Income and expenses of subsidiaries acquired or disposed of are included in the consolidated statement of profit or loss and other
comprehensive income from the effective date of acquisition and up to the effective date of disposal, as appropriate. Total comprehensive income of subsidiaries is attributed to the shareholders of the parent and to the non-controlling interests
even if this results in the non-controlling interests having a deficit balance.
When necessary, adjustments are made to the financial
statements of subsidiaries to bring their accounting policies into line with those used by the Company.
All intra-group transactions,
balances, income and expenses are eliminated in full on consolidation.
Changes in the Companys ownership interests in subsidiaries
that do not result in the Company losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Companys interests and the non-controlling interests are adjusted to reflect the changes in their
relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to shareholders of
the parent.
When the Company loses control of a subsidiary, a gain or loss is recognized in profit or loss and is calculated as the
difference between:
|
a.
|
the aggregate of the fair value of consideration received and the fair value of any retained interest at the date when control is lost; and
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|
b.
|
the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interest.
|
The Company shall account for all amounts recognized in other comprehensive income in relation to the subsidiary on the same basis as would be
required if the Company had directly disposed of the related assets and liabilities.
The fair value of any investment retained in the
former subsidiary at the date when control is lost is regarded as the cost on initial recognition of an investment in an associate.
The subsidiaries in the consolidated financial statements
The detail information of the subsidiaries at the end of reporting period was as follows:
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Establishment
and Operating
Location
|
|
Percentage of Ownership
|
|
|
Name of Investor
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|
Name of Investee
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Main Businesses and Products
|
|
|
December 31,
2016
|
|
December 31,
2017
|
|
Note
|
TSMC
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|
TSMC North America
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|
Selling and marketing of integrated circuits and other semiconductor devices
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|
San Jose, California, U.S.A.
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|
100%
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|
100%
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|
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TSMC Japan Limited (TSMC Japan)
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|
Customer service and supporting activities
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Yokohama, Japan
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|
100%
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|
100%
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|
a)
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TSMC Partners, Ltd. (TSMC Partners)
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|
Investing in companies involved in the design, manufacture, and other related business in the
semiconductor industry and other investment activities
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|
Tortola, British Virgin Islands
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|
100%
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|
100%
|
|
a)
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|
|
TSMC Korea Limited (TSMC Korea)
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Customer service and supporting activities
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Seoul, Korea
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|
100%
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|
100%
|
|
a)
|
|
|
TSMC Europe B.V. (TSMC Europe)
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|
Customer service and supporting activities
|
|
Amsterdam, the Netherlands
|
|
100%
|
|
100%
|
|
a)
|
(Continued)
F - 19
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|
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|
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|
|
|
|
Establishment
and Operating
Location
|
|
Percentage of Ownership
|
|
|
Name of Investor
|
|
Name of Investee
|
|
Main Businesses and Products
|
|
|
December 31,
2016
|
|
December 31,
2017
|
|
Note
|
TSMC
|
|
TSMC Global, Ltd. (TSMC Global)
|
|
Investment activities
|
|
Tortola, British Virgin Islands
|
|
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%
|
|
|
|
|
TSMC Nanjing Company Limited (TSMC Nanjing)
|
|
Manufacturing, selling, testing and computer-aided design of integrated circuits and other
semiconductor devices
|
|
Nanjing, China
|
|
100%
|
|
100%
|
|
b)
|
|
|
VentureTech Alliance Fund III, L.P. (VTAF III)
|
|
Investing in new
start-up
technology companies
|
|
Cayman Islands
|
|
98%
|
|
98%
|
|
a)
|
|
|
VentureTech Alliance Fund II, L.P. (VTAF II)
|
|
Investing in new
start-up
technology companies
|
|
Cayman Islands
|
|
98%
|
|
98%
|
|
a)
|
|
|
TSMC Solar Europe GmbH
|
|
Selling of solar related products and providing customer service
|
|
Hamburg, Germany
|
|
100%
|
|
100%
|
|
a), 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
|
|
Hsinchu, Taiwan
|
|
87%
|
|
87%
|
|
d)
|
TSMC Partners
|
|
TSMC Design Technology Canada Inc. (TSMC Canada)
|
|
Engineering support activities
|
|
Ontario, Canada
|
|
100%
|
|
100%
|
|
a)
|
|
|
TSMC Technology, Inc. (TSMC Technology)
|
|
Engineering support activities
|
|
Delaware, U.S.A.
|
|
100%
|
|
100%
|
|
a)
|
|
|
TSMC Development, Inc. (TSMC Development)
|
|
Investing in companies involved in the manufacturing related business in the semiconductor
industry
|
|
Delaware, U.S.A.
|
|
100%
|
|
100%
|
|
|
|
|
InveStar Semiconductor Development Fund, Inc. (ISDF)
|
|
Investing in new
start-up
technology companies
|
|
Cayman Islands
|
|
97%
|
|
97%
|
|
a), e)
|
|
|
InveStar Semiconductor Development Fund, Inc. (II) LDC. (ISDF II)
|
|
Investing in new
start-up
technology companies
|
|
Cayman Islands
|
|
97%
|
|
97%
|
|
a), e)
|
TSMC Development
|
|
WaferTech, LLC (WaferTech)
|
|
Manufacturing, selling and testing of integrated circuits and other semiconductor devices
|
|
Washington, U.S.A.
|
|
100%
|
|
100%
|
|
|
VTAF III
|
|
Mutual-Pak
Technology Co., Ltd.
(Mutual-Pak)
|
|
Manufacturing of electronic parts, wholesaling and retailing of electronic materials, and
researching, developing and testing of RFID
|
|
New Taipei, Taiwan
|
|
58%
|
|
39%
|
|
a), f)
|
|
|
Growth Fund Limited (Growth Fund)
|
|
Investing in new
start-up
technology companies
|
|
Cayman Islands
|
|
100%
|
|
100%
|
|
a)
|
VTAF III, VTAF II and TSMC
|
|
VentureTech Alliance Holdings, LLC (VTA Holdings)
|
|
Investing in new
start-up
technology companies
|
|
Delaware, U.S.A.
|
|
100%
|
|
|
|
a), g)
|
(Concluded)
|
Note a:
|
This is an immaterial subsidiary for which the consolidated financial statements are not audited by the Companys independent accountants.
|
|
Note b:
|
Under the investment agreement entered into with the municipal government of Nanjing, China on March 28, 2016, the Company will make an investment in Nanjing in the amount of approximately US$3 billion to
establish a subsidiary operating a 300mm wafer fab with the capacity of 20,000
12-inch
wafers per month, and a design service center. TSMC Nanjing was established in May 2016.
|
|
Note c:
|
TSMC Solar Europe GmbH is under liquidation procedures.
|
|
Note d:
|
To simplify investment structure, VisEra Tech owned by VisEra Holding Company (VisEra Holding) was transferred to TSMC in the third quarter of 2016. In October 2016, VisEra Holding was incorporated into TSMC Partners,
the subsidiary of TSMC.
|
|
Note e:
|
ISDF and ISDF II are under liquidation procedures.
|
|
Note f:
|
Starting December 2017, the Company no longer had the majority of voting power and control over
Mutual-Pak.
As a result,
Mutual-Pak
is no
longer consolidated and is accounted for using the equity method.
|
|
Note g:
|
VTA Holdings completed the liquidation procedures in April 2017.
|
F - 20
Foreign Currencies
The financial statements of each individual consolidated entity were expressed in the currency which reflected its primary economic environment
(functional currency). The functional currency of TSMC and presentation currency of the consolidated financial statements are both New Taiwan Dollars (NT$). In preparing the consolidated financial statements, the operating results and financial
positions of each consolidated entity are translated into NT$.
In preparing the financial statements of each individual consolidated
entity, transactions in currencies other than the entitys functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items
denominated in foreign currencies are retranslated at the rates prevailing at that date. Such exchange differences are recognized in profit or loss in the year in which they arise.
Non-monetary
items measured
at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Exchange differences arising on the retranslation of
non-monetary
items are included in profit or loss for the year except for exchange differences arising on the retranslation of
non-monetary
items in respect of which
gains and losses are recognized directly in other comprehensive income, in which case, the exchange differences are also recognized directly in other comprehensive income.
Non-monetary
items that are measured
in terms of historical cost in foreign currencies are not retranslated.
For the purposes of presenting consolidated financial statements,
the assets and liabilities of the Companys foreign operations are translated into NT$ using exchange rates prevailing at the end of each reporting period. Income and expense items are translated at the average exchange rates for the period.
Exchange differences arising, if any, are recognized in other comprehensive income and accumulated in equity (attributed to non-controlling interests as appropriate).
Classification of Current and Noncurrent Assets and Liabilities
Current assets are assets held for trading purposes and assets expected to be converted to cash, sold or consumed within one year from the end
of the reporting period. Current liabilities are obligations incurred for trading purposes and obligations expected to be settled within one year from the end of the reporting period. Assets and liabilities that are not classified as current are
noncurrent assets and liabilities, respectively.
Cash Equivalents
Cash equivalents, for the purpose of meeting short-term cash commitments, consist of highly liquid time deposits and investments that are
readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
Financial Instruments
Financial assets and liabilities shall be recognized when the Company becomes a party to the contractual provisions of the
instruments.
Financial assets and liabilities are initially recognized at fair values. Transaction costs that are directly attributable to
the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial
liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.
Financial Assets
Financial assets are classified into the following specified categories: Financial assets at FVTPL,
held-to-maturity
financial assets,
available-for-sale
financial
assets and loans and receivables. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. Regular way purchases or sales of financial assets are recognized and
derecognized on a trade date or settlement date basis for which financial assets were classified in the same way, respectively. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time
frame established by regulation or convention in the marketplace.
Financial assets at fair value through profit or loss
Financial assets are classified as at fair value through profit or loss when the financial asset is either held for trading or it is designated
as at fair value through profit or loss.
Financial assets at fair value through profit or loss are stated at fair value, with any gains or
losses arising on remeasurement recognized in profit or loss.
F - 21
Held-to-maturity
financial assets
Held-to-maturity
investments are
non-derivative
financial assets with fixed or determinable payments and fixed maturity dates that the Company has the positive intent and ability to hold to maturity. Subsequent to initial recognition,
held-to-maturity
financial assets are measured at amortized cost using the effective interest method less any impairment.
Available-for-sale
financial assets
Available-for-sale
financial assets are
non-derivative
financial assets that are either designated as
available-for-sale
or are not classified as (a) loans and
receivables,
(b) held-to-maturity
financial assets or (c) financial assets at fair value through profit or loss.
Available-for-sale
financial assets are measured at fair value.
Interest income from
available-for-sale
monetary financial assets and dividends on
available-for-sale
equity investments are recognized in profit or loss. Other changes in the carrying amount of
available-for-sale
financial assets are recognized in other comprehensive income. When the investment is disposed of or is determined to be impaired, the cumulative gain or loss previously recognized in other
comprehensive income is reclassified to profit or loss.
Dividends on
available-for-sale
equity instruments are recognized in profit or loss when the Companys right to receive the dividends is established.
Available-for-sale
equity instruments that do not have a quoted
market price in an active market and whose fair value cannot be reliably measured are measured at cost less any identified impairment losses at the end of each reporting period. Such equity instruments are subsequently remeasured at fair value when
their fair value can be reliably measured, and the difference between the carrying amount and fair value is recognized in profit or loss or other comprehensive income.
Loans and receivables
Loans and receivables are
non-derivative
financial assets with fixed or determinable payments that are
not quoted in an active market. Loans and receivables including cash and cash equivalents, notes and accounts receivable and other receivables are measured at amortized cost using the effective interest method, less any impairment, except for those
loans and receivables with immaterial discounted effect.
Impairment of financial assets
Financial assets, other than those carried at FVTPL, are assessed for indicators of impairment at the end of each reporting period. Those
financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial assets, their estimated future cash flows have been affected.
For financial assets carried at amortized cost, such as trade receivables, assets that are assessed not to be impaired individually are, in
addition, assessed for impairment on a collective basis. The Company assesses the collectability of receivables by performing the account aging analysis and examining current trends in the credit quality of its customers.
For financial assets carried at amortized cost, the amount of the impairment loss is the difference between the assets carrying amount
and the present value of estimated future cash flows, discounted at the financial assets original effective interest rate.
F - 22
For financial assets measured at amortized cost, if, in a subsequent period, the amount of the
impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount
of the financial assets at the date the impairment loss is reversed does not exceed what the amortized cost would have been had the impairment loss not been recognized.
When an
available-for-sale
financial asset is considered to be
impaired, cumulative gains or losses previously recognized in other comprehensive income are reclassified to profit or loss in the year.
In respect of
available-for-sale
equity instruments, impairment
losses previously recognized in profit or loss are not reversed through profit or loss. Any increase in fair value subsequent to the recognition of an impairment loss is recognized in other comprehensive income and accumulated under the heading of
unrealized gains or losses from
available-for-sale
financial assets.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade
receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off
are credited against the allowance account.
Derecognition of financial assets
The Company derecognizes a financial asset only when the contractual rights to the cash flows from the financial asset expire, or when it
transfers the financial asset and substantially all the risks and rewards of ownership of the financial asset to another entity.
On
derecognition of a financial asset in its entirety, the difference between the financial assets carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized in other
comprehensive income and accumulated in equity is recognized in profit or loss.
Financial Liabilities and Equity Instruments
Classification as debt or equity
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance
of the contractual arrangements and the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.
Equity instruments issued by the Company are recognized at the proceeds received, net of direct issue costs.
Financial liabilities
Financial liabilities are subsequently measured either at amortized cost using effective interest method or at FVTPL.
Financial liabilities are classified as at fair value through profit or loss when the financial liability is either held for trading or is
designated as at fair value through profit or loss.
Financial liabilities at fair value through profit or loss are stated at fair value,
with any gains or losses arising on remeasurement recognized in profit or loss.
F - 23
Financial liabilities other than those held for trading purposes and designated as at FVTPL are
subsequently measured at amortized cost at the end of each reporting period.
Derecognition of financial liabilities
The Company derecognizes financial liabilities when, and only when, the Companys obligations are discharged, cancelled or they expire.
The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable is recognized in profit or loss.
Derivative Financial Instruments
Derivative financial instruments are initially recognized at fair value at the date the derivative contracts are entered into and are
subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognized in profit or loss immediately unless the derivative financial instrument is designated and effective as a hedging instrument,
in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.
Financial Instruments
Designated as at Fair Value through Profit or Loss
A financial instrument may be designated as at FVTPL upon initial recognition. The
financial instrument forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Companys documented risk management or
investment strategy, and information about the grouping is provided internally on that basis.
Hedge Accounting
Fair Value Hedge
The
Company designates certain hedging instruments, such as interest rate futures contracts, to partially hedge against the price risk caused by changes in interest rates in the Companys investments in fixed income securities as fair value hedge.
Changes in the fair value of hedging instrument that are designated and qualify as fair value hedges are recognized in profit or loss immediately, together with any changes in the fair value of the hedged asset that are attributable to the hedged
risk.
Cash Flow Hedge
The Company designates certain hedging instruments, such as forward exchange contracts, to partially hedge its foreign exchange rate risks
associated with certain highly probable forecast transactions, such as capital expenditures. The effective portion of changes in the fair value of hedging instruments is recognized in other comprehensive income. When the forecast transactions
actually take place, the associated gains or losses that were recognized in other comprehensive income are removed from equity and included in the initial cost of the hedged items. The gains or losses from hedging instruments relating to the
ineffective portion are recognized immediately in profit or loss.
For the aforementioned fair value hedge and cash flow hedge, hedge
accounting is discontinued prospectively when the Company revokes the designated hedging relationship, or when the hedging instruments expire or are sold, terminated, or exercised, or no longer meet the criteria for hedge accounting.
Inventories
Inventories
are stated at the lower of cost or net realizable value. Inventories are recorded at standard cost and adjusted to approximate weighted-average cost at the end of the reporting period. Net realizable value represents the estimated selling price of
inventories less all estimated costs of completion and costs necessary to make the sale.
F - 24
Investments Accounted for Using Equity Method
Investments accounted for using the equity method include investments in associates and interests in joint venture.
An associate is an entity over which the Company has significant influence and that is neither a subsidiary nor a joint venture. Significant
influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.
A joint venture is a joint arrangement whereby the Company and other parties that have joint control of the arrangement have rights to the net
assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.
The operating results and assets and liabilities of associates and joint venture are incorporated in these consolidated financial statements
using the equity method of accounting. Under the equity method, an investment in an associate or a joint venture is initially recognized in the consolidated statement of financial position at cost and adjusted thereafter to recognize the
Companys share of profit or loss and other comprehensive income of the associate and joint venture as well as the distribution received. The Company also recognizes its share in the changes in the equities of associates and joint venture.
Any excess of the cost of acquisition over the Companys share of the net fair value of the identifiable assets, liabilities and
contingent liabilities of an associate or a joint venture recognized at the date of acquisition is recognized as goodwill, which is included within the carrying amount of the investment. Any excess of the Companys share of the net fair value
of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition, after reassessment, is recognized immediately in profit or loss.
When necessary, the entire carrying amount of the investment (including goodwill) is tested for impairment as a single asset by comparing its
recoverable amount (higher of value in use and fair value less costs to sell) with its carrying amount. Any impairment loss recognized forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognized to the
extent that the recoverable amount of the investment subsequently increases.
The Company discontinues the use of the equity method from
the date when the Company ceases to have significant influence over an associate. When the Company retains an interest in the former associate, the Company measures the retained interest at fair value at that date. The difference between the
carrying amount of the associate at the date the equity method was discontinued, and the fair value of any retained interest and any proceeds from disposing of a part interest in the associate is included in the determination of the gain or loss on
disposal of the associate. In addition, the Company shall account for all amounts recognized in other comprehensive income in relation to that associate on the same basis as would be required if the associate had directly disposed of the related
assets or liabilities. If the Companys ownership interest in an associate is reduced as a result of disposal, but the investment continues to be an associate, the Company should reclassify to profit or loss only a proportionate amount of the
gain or loss previously recognized in other comprehensive income.
When the Company subscribes to additional shares in an associate or a
joint venture at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment differs from the amount of the Companys proportionate interest in the net assets of the associate or joint venture.
The Company records such a difference as an adjustment to investments with the corresponding amount charged or credited to capital surplus. If the Companys ownership interest is reduced due to the additional subscription to the shares of
associate or joint venture by other investors, the proportionate amount of the gains or losses previously recognized in other comprehensive income in relation to that associate or joint venture shall be reclassified to profit or loss on the same
basis as would be required if the associate or joint venture had directly disposed of the related assets or liabilities.
F - 25
When a consolidated entity transacts with an associate or a joint venture, profits and losses
resulting from the transactions with the associate or joint venture are recognized in the Companys consolidated financial statements only to the extent of interests in the associate or joint venture that are not owned by the Company.
Property, Plant and Equipment
Property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment. Costs include any incremental
costs that are directly attributable to the construction or acquisition of the item of property, plant and equipment.
Properties in the
course of construction for production, supply or administrative purposes are carried at cost, less any recognized impairment loss. Such properties are classified to the appropriate categories of property, plant and equipment when completed and ready
for intended use. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use.
Depreciation is recognized so as to write off the cost of the assets less their residual values over their useful lives, and it is computed
using the straight-line method over the following estimated useful lives: land improvements20 years; buildings10 to 20 years; machinery and equipment2 to 5 years; office equipment3 to 5 years; and leased assets20 years.
The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimates accounted for on a prospective basis. Land is not depreciated.
Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets. However, when there is no
reasonable certainty that ownership will be obtained by the end of the lease term, assets are depreciated over the shorter of the lease term and their useful lives.
An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the
continued use of the assets. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in
profit or loss.
Leases
Leases are classified as finance lease whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the
lessee. All other leases are classified as operating leases.
The Company as lessor
Rental income from operating leases is recognized on a straight-line basis over the term of the relevant lease.
The Company as lessee
Assets held under finance lease are initially recognized as assets of the Company at the fair value at the inception of the lease or, if lower,
at the present value of the minimum lease payments. The corresponding liability to the lessor is recognized as an obligation under finance lease.
Lease payments are apportioned between finance expense and reduction of the lease obligation so as to achieve a constant rate of interest on
the remaining balance of the liability.
Operating lease payments are recognized as an expense on a straight-line basis over the lease
term.
F - 26
Intangible Assets
Goodwill
Goodwill arising
on an acquisition of a business is carried at cost as established at the date of acquisition of the business less accumulated impairment losses, if any.
Other intangible assets
Other separately acquired intangible assets with finite useful lives are carried at cost less accumulated amortization and accumulated
impairment losses. Amortization is recognized using the straight-line method over the following estimated useful lives: Technology license fees - the estimated life of the technology or the term of the technology transfer contract; software and
system design costs - 3 years or contract period; patent and others - the economic life or contract period. The estimated useful life and amortization method are reviewed at the end of each reporting period, with the effect of any changes in
estimate being accounted for on a prospective basis.
Impairment of Tangible and Intangible Assets
Goodwill
Goodwill is not
amortized and instead is tested for impairment annually, or more frequently when there is an indication that the cash generating unit may be impaired. For the purpose of impairment testing, goodwill is allocated to each of the Companys
cash-generating units or groups of cash-generating units that are expected to benefit from the synergies of the combination. If the recoverable amount of a cash-generating unit is less than its carrying amount, the difference is allocated first to
reduce the carrying amount of any goodwill allocated to such cash generating unit and then to the other assets of the cash generating unit pro rata based on the carrying amount of each asset in the cash generating unit. Any impairment loss for
goodwill is recognized directly in profit or loss. An impairment loss recognized for goodwill is not reversed in subsequent periods.
Other tangible and intangible assets
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there
is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. When it is not possible to estimate the
recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also
allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows
are discounted to their present value using a
pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future
cash flows have not been adjusted.
If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying
amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount. An impairment loss is recognized immediately in profit or loss.
When an impairment loss subsequently reverses, the carrying amount of the asset or a cash-generating unit is increased to the revised estimate
of its recoverable amount, but the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset or cash-generating unit in prior years. A reversal of an impairment
loss is recognized immediately in profit or loss.
F - 27
Provision
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that
the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount
recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is
measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.
Guarantee Deposit
Guarantee deposit mainly consists of cash received under deposit agreements with customers to ensure they have access to the Companys
specified capacity; and as guarantee of accounts receivable to ensure payment from customers. Cash received from customers is recorded as guarantee deposit upon receipt. Guarantee deposits are refunded to customers when terms and conditions set
forth in the deposit agreements have been satisfied.
Revenue Recognition
Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates
and other similar allowances.
Sale of goods
Revenue from the sale of goods is recognized when the goods are delivered and titles have passed, at which time all the following conditions
are satisfied:
|
|
|
The Company has transferred to the buyer the significant risks and rewards of ownership of the goods;
|
|
|
|
The Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
|
|
|
|
The amount of revenue can be measured reliably;
|
|
|
|
It is probable that the economic benefits associated with the transaction will flow to the Company; and
|
|
|
|
The costs incurred or to be incurred in respect of the transaction can be measured reliably.
|
In principle, payment term granted to customers is due 30 days from the invoice date or 30 days from the end of the month of when the invoice
is issued. Due to the short term nature of the receivables from sale of goods with the immaterial discounted effect, the Company measures them at the original invoice amounts without discounting.
Royalties, dividend and interest income
Revenue from royalties is recognized on an accrual basis in accordance with the substance of the relevant agreement, provided that it is
probable that the economic benefits will flow to the Company and the amount of revenue can be measured reliably.
Dividend income from
investments is recognized when the shareholders right to receive payment has been established, provided that it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably.
Interest income from a financial asset is recognized when it is probable that the economic benefits will flow to the Company and the amount of
income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable.
F - 28
Employee Benefits
Short-term employee benefits
Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid
in exchange for service rendered by employees.
Retirement benefits
For defined contribution retirement benefit plans, payments to the benefit plan are recognized as an expense when the employees have rendered
service entitling them to the contribution. For defined benefit retirement benefit plans, the cost of providing benefit is recognized based on actuarial calculations.
Defined benefit costs (including service cost, net interest and remeasurement) under the defined benefit retirement benefit plans are
determined using the Projected Unit Credit Method. Service cost (including current service cost), and net interest on the net defined benefit liability (asset) are recognized as employee benefits expense in the period they occur. Remeasurement,
comprising actuarial gains and losses and the return on plan assets (excluding interest), is recognized in other comprehensive income in the period in which they occur. Remeasurement recognized in other comprehensive income is reflected immediately
in retained earnings and will not be reclassified to profit or loss.
Net defined benefit liability represents the actual deficit in the
Companys defined benefit plan.
Share-based Payment Arrangements
The Company elected to take the optional exemption under IFRS 1 for the share-based payment transactions granted and vested before
January 1, 2012, the date of transition to IFRSs. There were no stock options granted prior to but unvested at the date of transition.
The compensation costs of employee stock options that were granted after January 1, 2012 are measured at the fair value of the stock
options at the grant date. The fair value of the stock option granted determined at the grant date of the stock options is expensed on a straight-line basis over the vesting period, based on the Companys estimate of the number of stock options
that will eventually vest, with a corresponding increase in capital surplusemployee stock option. The estimate is revised if subsequent information indicates that the number of stock options expected to vest differs from original estimates.
Taxation
Income tax
expense represents the sum of the tax currently payable and deferred tax.
Current tax
Income tax on unappropriated earnings (excluding earnings from foreign consolidated subsidiaries) is expensed in the year the earnings arise
and adjusted to the extent that distributions are approved by the shareholders in the following year.
Adjustments of prior years tax
liabilities are added to or deducted from the current years tax provision.
Deferred tax
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial
statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary
differences, net operating loss carryforwards and tax credits for research and development expenses to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized.
F - 29
Deferred tax liabilities are recognized for taxable temporary differences associated with
investments in subsidiaries and associates, and interests in joint venture, except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable
future. Deferred tax assets arising from deductible temporary differences associated with such investments are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of
the temporary differences and they are expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is
reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the deferred tax asset to be recovered. The deferred tax assets which
originally not recognized is also reviewed at the end of each reporting period and recognized to the extent that it is probable that sufficient taxable profits will be available to allow all or part of the deferred tax asset to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the year in which the liability is settled or
the asset is realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from
the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Current and deferred tax for the year
Current and deferred tax are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income
or directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income or directly in equity, respectively.
Business Combinations
Acquisitions of businesses are accounted for using the acquisition method. Acquisition-related costs are generally recognized in profit or loss
as incurred.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests
in the acquiree, and the fair value of the acquirers previously held equity interest in the acquiree over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed.
Non-controlling interests are initially measured at the non-controlling interests proportionate share of the fair value of the
acquirees identifiable net assets.
When a business combination is achieved in stages, the Companys previously held equity
interest in the acquiree is remeasured to fair value at the acquisition date, and the resulting gain or loss is recognized in profit or loss.
Insurance Claim
The
Company recognizes insurance claim reimbursement for losses incurred related to disaster damages. Insurance claim reimbursements are recorded, net of any deductible amounts, at the time while there is evidence that the claim reimbursement is
virtually certain to be received.
F - 30
Government Grants
Government grants are not recognized until there is reasonable assurance that the Company will comply with the conditions attaching to them and
that the grants will be received.
Government grants whose primary condition is that the Company should purchase, construct or otherwise
acquire
non-current
assets (mainly including land use right and depreciable assets) are recognized as a deduction from the carrying amount of the related assets and recognized as a reduced depreciation or
amortization charge in profit or loss over the contract period or useful lives of the related assets. Government grants that are receivables as compensation for expenses already incurred are deducted from incurred expenses in the period in which
they become receivables.
6.
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CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION AND UNCERTAINTY
|
In the
application of the aforementioned Companys accounting policies, the Company is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The
estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the year in
which the estimate is revised if the revision affects only that year, or in the year of the revision and future years if the revision affects both current and future years.
Revenue Recognition
The
Company recognizes revenue when the conditions described in Note 5 are satisfied. The Company also records a provision for estimated future returns and other allowances in the same period the related revenue is recorded. Provision for
estimated sales returns and other allowances is generally made and adjusted based on historical experience and the consideration of varying contractual terms, and the Company periodically reviews the adequacy of the estimation used.
Impairment of Tangible and Intangible Assets Other than Goodwill
In the process of evaluating the potential impairment of tangible and intangible assets other than goodwill, the Company is required to make
subjective judgments in determining the independent cash flows, useful lives, expected future revenue and expenses related to the specific asset groups with the consideration of the nature of semiconductor industry. Any changes in these estimates
based on changed economic conditions or business strategies could result in significant impairment charges or reversal in future years.
Impairment of Goodwill
The assessment of impairment of goodwill requires the Company to make subjective judgment to determine the identified cash-generating units,
allocate the goodwill to relevant cash-generating units and estimate the recoverable amount of relevant cash-generating units.
Impairment Assessment on Investment Using Equity Method
The Company assesses the impairment of investments accounted for using the equity method whenever triggering events or changes in circumstances
indicate that an investment may be impaired and carrying value may not be recoverable. The Company measures the impairment based on a projected future cash flow of the investees, including the underlying assumptions of sales growth rate and capacity
utilization rate formulated by such investees internal management team. The Company also takes into account market conditions and the relevant industry trends to ensure the reasonableness of such assumptions.
F - 31
Realization of Deferred Income Tax Assets
Deferred tax assets are recognized to the extent that it is probable that future taxable profits will be available against which those deferred
tax assets can be utilized. Assessment of the realization of the deferred tax assets requires the Companys subjective judgment and estimate, including the future revenue growth and profitability, tax holidays, the amount of tax credits can be
utilized and feasible tax planning strategies. Any changes in the global economic environment, the industry trends and relevant laws and regulations could result in significant adjustments to the deferred tax assets.
Valuation of Inventory
Inventories are stated at the lower of cost or net realizable value, and the Company uses judgment and estimate to determine the net realizable
value of inventory at the end of each reporting period.
Due to the rapid technological changes, the Company estimates the net realizable
value of inventory for obsolescence and unmarketable items at the end of reporting period and then writes down the cost of inventories to net realizable value. The net realizable value of the inventory is mainly determined based on assumptions of
future demand within a specific time horizon.
Recognition and Measurement of Defined Benefit Plans
Net defined benefit liability and the resulting defined benefit costs under defined benefit pension plans are calculated using the Projected
Unit Credit Method. Actuarial assumptions comprise the discount rate, rate of employee turnover, and future salary increase rate. Changes in economic circumstances and market conditions will affect these assumptions and may have a material impact on
the amount of the expense and the liability.
7.
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CASH AND CASH EQUIVALENTS
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December 31,
2016
|
|
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December 31,
2017
|
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NT$
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|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Cash and deposits in banks
|
|
$
|
536,895.3
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|
|
$
|
551,919.8
|
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Agency bonds
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776.0
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Commercial paper
|
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|
1,997.2
|
|
|
|
695.9
|
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Repurchase agreements collateralized by corporate bonds
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2,361.3
|
|
|
|
|
|
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|
|
|
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|
|
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|
$
|
541,253.8
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|
|
$
|
553,391.7
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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.
F - 32
8.
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FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS
|
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|
|
December 31,
2016
|
|
|
December 31,
2017
|
|
|
|
NT$
|
|
|
NT$
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|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Financial assets
|
|
|
|
|
|
|
|
|
|
|
|
Held for trading
|
|
|
|
|
|
|
|
|
Forward exchange contracts
|
|
$
|
142.4
|
|
|
$
|
569.8
|
|
Cross currency swap contracts
|
|
|
11.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
153.4
|
|
|
|
569.8
|
|
|
|
|
|
|
|
|
|
|
Designated as at FVTPL
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|
|
|
|
|
|
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Time deposit
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|
6,297.7
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
$
|
6,451.1
|
|
|
$
|
569.8
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|
|
|
|
|
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Financial liabilities
|
|
|
|
|
|
|
|
|
|
|
|
Held for trading
|
|
|
|
|
|
|
|
|
Forward exchange contracts
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|
$
|
91.6
|
|
|
$
|
26.7
|
|
Designated as at FVTPL
|
|
|
|
|
|
|
|
|
Forward exchange contracts
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|
|
99.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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$
|
191.1
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|
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$
|
26.7
|
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|
|
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The Company entered into derivative contracts to manage exposures due to fluctuations of foreign exchange
rates. These derivative contracts did not meet the criteria for hedge accounting. Therefore, the Company did not apply hedge accounting treatment for these derivative contracts.
Outstanding forward exchange contracts consisted of the following:
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|
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|
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|
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Contract Amount
|
|
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Maturity Date
|
|
(In Millions)
|
December 31, 2016
|
|
|
|
|
|
|
|
Sell NT$/Buy EUR
|
|
January 2017
|
|
NT$5,393.3/EUR159.4
|
Sell NT$/Buy JPY
|
|
January 2017
|
|
NT$7,314.8/JPY26,501.8
|
Sell US$/Buy EUR
|
|
January 2017
|
|
US$4.2/EUR4.0
|
Sell US$/Buy JPY
|
|
January 2017
|
|
US$0.4/JPY50.0
|
Sell US$/Buy NT$
|
|
January 2017 to February 2017
|
|
US$439.0/NT$14,138.2
|
Sell US$/Buy RMB
|
|
January 2017 to June 2017
|
|
US$421.8/RMB2,908.4
|
|
|
|
December 31, 2017
|
|
|
|
|
|
|
|
Sell NT$/Buy EUR
|
|
January 2018 to February 2018
|
|
NT$6,002.8/EUR169.0
|
Sell NT$/Buy JPY
|
|
February 2018
|
|
NT$996.3/JPY3,800.0
|
Sell US$/Buy JPY
|
|
January 2018
|
|
US$2.2/JPY246.7
|
Sell US$/Buy RMB
|
|
January 2018
|
|
US$558.0/RMB3,679.6
|
Sell US$/Buy NT$
|
|
January 2018 to February 2018
|
|
US$1,661.5/NT$49,673.3
|
Sell RMB /Buy EUR
|
|
January 2018
|
|
RMB39.0/EUR5.0
|
Sell RMB/Buy JPY
|
|
January 2018
|
|
RMB409.7/JPY7,062.5
|
Sell RMB/Buy GBP
|
|
January 2018
|
|
RMB3.6/GBP0.4
|
F - 33
Outstanding cross currency swap contracts consisted of the following:
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|
|
|
|
|
|
|
|
|
|
|
|
Maturity Date
|
|
Contract Amount
(In Millions)
|
|
|
Range of
Interest Rates
Paid
|
|
|
Range of
Interest Rates
Received
|
|
December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 2017
|
|
|
US$170.0/ NT$5,487.6
|
|
|
|
3.98%
|
|
|
|
|
|
9.
|
AVAILABLE-FOR-SALE
FINANCIAL ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2016
|
|
|
December 31,
2017
|
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Corporate bonds
|
|
$
|
29,999.5
|
|
|
$
|
40,165.2
|
|
Agency bonds/Agency mortgage-backed securities
|
|
|
14,880.5
|
|
|
|
29,235.4
|
|
Asset-backed securities
|
|
|
11,254.7
|
|
|
|
13,459.5
|
|
Government bonds
|
|
|
8,457.4
|
|
|
|
7,817.7
|
|
Publicly traded stocks
|
|
|
3,196.7
|
|
|
|
2,548.1
|
|
Non-publicly
traded stocks
|
|
|
2,944.9
|
|
|
|
2,532.3
|
|
Mutual funds
|
|
|
1,157.6
|
|
|
|
2,342.0
|
|
Commercial paper
|
|
|
|
|
|
|
148.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
71,891.3
|
|
|
$
|
98,248.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion
|
|
$
|
67,788.8
|
|
|
$
|
93,374.2
|
|
Noncurrent portion
|
|
|
4,102.5
|
|
|
|
4,874.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
71,891.3
|
|
|
$
|
98,248.5
|
|
|
|
|
|
|
|
|
|
|
Since there is a wide range of estimated fair values of the Companys investments in
non-publicly
traded stocks, the Company concludes that the fair value cannot be reliably measured and therefore should be measured at the cost less any impairment.
10.
|
HELD-TO-MATURITY
FINANCIAL ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2016
|
|
|
December 31,
2017
|
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Corporate bonds
|
|
$
|
23,849.7
|
|
|
$
|
19,338.8
|
|
Structured product
|
|
|
1,609.9
|
|
|
|
1,482.9
|
|
Commercial paper
|
|
|
8,628.2
|
|
|
|
|
|
Negotiable certificate of deposit
|
|
|
4,829.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
38,917.7
|
|
|
$
|
20,821.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion
|
|
$
|
16,610.1
|
|
|
$
|
1,988.4
|
|
Noncurrent portion
|
|
|
22,307.6
|
|
|
|
18,833.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
38,917.7
|
|
|
$
|
20,821.7
|
|
|
|
|
|
|
|
|
|
|
F - 34
11.
|
HEDGING DERIVATIVE FINANCIAL INSTRUMENTS
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2016
|
|
|
December 31,
2017
|
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Financial assets - current
|
|
|
|
|
|
|
|
|
Fair value hedges
|
|
|
|
|
|
|
|
|
Interest rate futures contracts
|
|
$
|
5.6
|
|
|
$
|
27.0
|
|
Cash flow hedges
|
|
|
|
|
|
|
|
|
Forward exchange contracts
|
|
|
|
|
|
|
7.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
5.6
|
|
|
$
|
34.4
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities- current
|
|
|
|
|
|
|
|
|
Cash flow hedges
|
|
|
|
|
|
|
|
|
Forward exchange contracts
|
|
$
|
|
|
|
$
|
15.6
|
|
|
|
|
|
|
|
|
|
|
The Company entered into interest rate futures contracts, which are used to hedge against the price risk
caused by changes in interest rates in the Companys investments in fixed income securities.
The outstanding interest rate futures
contracts consisted of the following:
|
|
|
|
|
Maturity Period
|
|
Contract Amount
(US$ in Millions)
|
|
December 31, 2016
|
|
|
|
|
March 2017
|
|
US$
|
53.6
|
|
|
|
December 31, 2017
|
|
|
|
|
March 2018
|
|
US$
|
169.4
|
|
The Company entered into forward exchange contracts to partially hedge foreign exchange rate risks
associated with certain highly probable forecast transactions, such as capital expenditures. These contracts have maturities of 12 months or less.
Outstanding forward exchange contracts consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
Contract Amount
|
|
|
|
Maturity Date
|
|
(In Millions)
|
|
December 31, 2017
|
|
|
|
|
|
|
Sell NT$/Buy EUR
|
|
February 2018 to May 2018
|
|
|
NT$2,649.1/EUR75.0
|
|
F - 35
12.
|
NOTES AND ACCOUNTS RECEIVABLE, NET
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2016
|
|
|
December 31,
2017
|
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Notes and accounts receivable
|
|
$
|
128,815.4
|
|
|
$
|
121,605.0
|
|
Allowance for doubtful receivables
|
|
|
(480.1
|
)
|
|
|
(471.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes and accounts receivable, net
|
|
$
|
128,335.3
|
|
|
$
|
121,133.2
|
|
|
|
|
|
|
|
|
|
|
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 of when the invoice is issued. The allowance for doubtful receivables is assessed by reference to the collectability of receivables by performing the account aging analysis, historical experience and current financial condition
of customers.
Except for those impaired, for the rest of the notes and accounts receivable, the account aging analysis at the end of the
reporting period is summarized in the following table. There was no impairment concern for the accounts receivable that were past due without recognizing a specific allowance for doubtful receivables since there was no significant change in the
credit quality of its customers after the assessment. In addition, the Company has obtained guarantee against certain receivables.
Aging analysis of notes and accounts receivable, net
|
|
|
|
|
|
|
|
|
|
|
December 31,
2016
|
|
|
December 31,
2017
|
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Neither past due nor impaired
|
|
$
|
108,411.4
|
|
|
$
|
105,295.2
|
|
Past due but not impaired
|
|
|
|
|
|
|
|
|
Past due within 30 days
|
|
|
15,017.8
|
|
|
|
13,984.1
|
|
Past due
31-60
days
|
|
|
1,844.8
|
|
|
|
929.7
|
|
Past due
61-120
days
|
|
|
3,061.3
|
|
|
|
582.8
|
|
Past due over 121 days
|
|
|
|
|
|
|
341.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
128,335.3
|
|
|
$
|
121,133.2
|
|
|
|
|
|
|
|
|
|
|
Movements of the allowance for doubtful receivables
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individually
Assessed for
Impairment
|
|
|
Collectively
Assessed for
Impairment
|
|
|
Total
|
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Balance at January 1, 2015
|
|
$
|
8.1
|
|
|
$
|
478.6
|
|
|
$
|
486.7
|
|
Provision
|
|
|
28.6
|
|
|
|
4.8
|
|
|
|
33.4
|
|
Reversal/Write-off
|
|
|
(29.1
|
)
|
|
|
(4.7
|
)
|
|
|
(33.8
|
)
|
Effect of acquisition of subsidiary
|
|
|
1.8
|
|
|
|
|
|
|
|
1.8
|
|
Effect of exchange rate changes
|
|
|
0.8
|
|
|
|
(0.7
|
)
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2015
|
|
$
|
10.2
|
|
|
$
|
478.0
|
|
|
$
|
488.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Continued)
F - 36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individually
Assessed for
Impairment
|
|
|
Collectively
Assessed for
Impairment
|
|
|
Total
|
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Balance at January 1, 2016
|
|
$
|
10.2
|
|
|
$
|
478.0
|
|
|
$
|
488.2
|
|
Provision
|
|
|
|
|
|
|
0.3
|
|
|
|
0.3
|
|
Reversal/Write-off
|
|
|
(8.4
|
)
|
|
|
|
|
|
|
(8.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2016
|
|
$
|
1.8
|
|
|
$
|
478.3
|
|
|
$
|
480.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1, 2017
|
|
$
|
1.8
|
|
|
$
|
478.3
|
|
|
$
|
480.1
|
|
Reversal/Write-off
|
|
|
(1.8
|
)
|
|
|
(6.3
|
)
|
|
|
(8.1
|
)
|
Effect of exchange rate changes
|
|
|
|
|
|
|
(0.2
|
)
|
|
|
(0.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2017
|
|
$
|
|
|
|
$
|
471.8
|
|
|
$
|
471.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Concluded)
Aging analysis of accounts receivable that is individually determined as impaired
|
|
|
|
|
|
|
|
|
|
|
December 31,
2016
|
|
|
December 31,
2017
|
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Past due over 121 days
|
|
$
|
1.8
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2016
|
|
|
December 31,
2017
|
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Finished goods
|
|
$
|
8,521.9
|
|
|
$
|
9,923.3
|
|
Work in process
|
|
|
33,330.8
|
|
|
|
53,362.2
|
|
Raw materials
|
|
|
4,012.2
|
|
|
|
7,143.8
|
|
Supplies and spare parts
|
|
|
2,817.3
|
|
|
|
3,451.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
48,682.2
|
|
|
$
|
73,880.7
|
|
|
|
|
|
|
|
|
|
|
Write-down of inventories to net realizable value in the amount of NT$464.4 million and
NT$1,542.8 million (excluding earthquake losses), respectively, were included in the cost of revenue for the years ended December 31, 2015 and 2016. Reversal of write-down of inventories resulting from the increase in net realizable value
(excluding earthquake losses) in the amount of NT$840.9 million was included in the cost of revenue for the year ended December 31, 2017. Please refer to related earthquake losses in Note 42.
F - 37
14.
|
INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD
|
|
a.
|
Investments in associates
|
Associates consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Place of
|
|
Carrying Amount
|
|
|
% of Ownership and Voting Rights
Held by the Company
|
|
Name of Associate
|
|
Principal Activities
|
|
Incorporation
and Operation
|
|
December 31,
2016
|
|
|
December 31,
2017
|
|
|
December 31,
2016
|
|
|
December 31,
2017
|
|
|
|
|
|
|
|
NT$
|
|
|
NT$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
|
|
|
|
|
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
|
|
$
|
8,665.0
|
|
|
$
|
8,465.0
|
|
|
|
28%
|
|
|
|
28%
|
|
Systems on Silicon Manufacturing Company Pte Ltd. (SSMC)
|
|
Manufacturing and selling of integrated circuits and other semiconductor devices
|
|
Singapore
|
|
|
7,163.5
|
|
|
|
5,677.6
|
|
|
|
39%
|
|
|
|
39%
|
|
Xintec Inc. (Xintec)
|
|
Wafer level chip size packaging and wafer level post passivation interconnection service
|
|
Taoyuan, Taiwan
|
|
|
2,599.8
|
|
|
|
2,292.1
|
|
|
|
41%
|
|
|
|
41%
|
|
Global Unichip Corporation (GUC)
|
|
Researching, developing, manufacturing, testing and marketing of integrated circuits
|
|
Hsinchu, Taiwan
|
|
|
1,157.0
|
|
|
|
1,273.9
|
|
|
|
35%
|
|
|
|
35%
|
|
Mutual-Pak
|
|
Manufacturing of electronic parts, wholesaling and retailing of electronic materials, and
researching, developing and testing of RFID
|
|
New Taipei, Taiwan
|
|
|
|
|
|
|
23.2
|
|
|
|
|
|
|
|
39%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
19,585.3
|
|
|
$
|
17,731.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F - 38
In the second quarter of 2015, the Company sold 82.0 million common shares of VIS and
recognized a disposal gain of NT$2,273.2 million. After the sale, the Company owned approximately 28.3% of the equity interest in VIS.
In March 2015, Xintec listed its shares on the R.O.C.
Over-the-Counter
(Taipei Exchange). Consequently, the Companys percentage of ownership over Xintec was diluted to approximately 35.4%. In April 2015, the Company
sold 2.2 million common shares of Xintec and recognized a disposal gain of NT$43.6 million.
The Company acquired OVTs
49.1% ownership in VisEra Holding on November 20, 2015. As a result, the Company has obtained control of VisEra Holding and consolidated VisEra Holding since November 20, 2015. The Company included the Xintec shares held by VisEra Holding
and total percentage of ownership over Xintec increased to 41.4%. To simplify investment structure, Xintec owned by VisEra Holding was transferred to TSMC in the third quarter of 2016.
In June 2015, Motech merged with Topcell Solar International Co., Ltd with exchange of shares. As a result, the Companys percentage of
ownership over Motech decreased to 18.0%. In the fourth quarter of 2015, the Company sold 29.2 million common shares of Motech and recognized a disposal gain of NT$202.4 million. After the sale, the Companys percentage of ownership
over Motech decreased to 12.0%. Motech continues to be accounted for using equity method as the Company still retains significant influence over Motech.
Starting June 2016, the Company has no longer served as Motechs board of director. As a result, the Company exercises no significant
influence over Motech. Therefore, Motech is no longer accounted for using the equity method. Further, such investment was reclassified to
available-for-sale
financial
assets and the Company recognized a disposal loss of NT$260.0 million.
Starting December 2017, the Company no longer had the majority
of voting power and control over
Mutual-Pak.
As a result,
Mutual-Pak
is no longer consolidated and is accounted for using the equity method.
The summarized financial information in respect of each of the Companys material associates is set out below. The summarized financial
information below represents amounts shown in the associates financial statements prepared in accordance with IFRSs adjusted by the Company using the equity method of accounting. As of December 31, 2017, no investments in associates are
individually material to the Company.
F - 39
|
|
|
|
|
|
|
December 31,
2016
|
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
Current assets
|
|
$
|
25,662.9
|
|
|
|
|
|
|
Noncurrent assets
|
|
$
|
9,501.4
|
|
|
|
|
|
|
Current liabilities
|
|
$
|
5,975.7
|
|
|
|
|
|
|
Noncurrent liabilities
|
|
$
|
804.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31
|
|
|
|
2015
|
|
|
2016
|
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Net revenue
|
|
$
|
23,319.7
|
|
|
$
|
25,828.6
|
|
|
|
|
|
|
|
|
|
|
Income from operations
|
|
$
|
4,593.4
|
|
|
$
|
6,083.6
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
4,253.9
|
|
|
$
|
5,389.6
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss)
|
|
$
|
(61.9
|
)
|
|
$
|
5.6
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income
|
|
$
|
4,192.0
|
|
|
$
|
5,395.2
|
|
|
|
|
|
|
|
|
|
|
Cash dividends received
|
|
$
|
1,206.4
|
|
|
$
|
1,207.0
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of the above summarized financial information to the carrying amount of the interest in
the associate was as follows:
|
|
|
|
|
|
|
December 31,
2016
|
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
Net assets
|
|
$
|
28,384.5
|
|
Percentage of ownership
|
|
|
28%
|
|
|
|
|
|
|
The Companys share of net assets of the associate
|
|
|
8,038.5
|
|
Goodwill
|
|
|
626.5
|
|
|
|
|
|
|
|
|
Carrying amount of the investment
|
|
$
|
8,665.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2016
|
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
Current assets
|
|
$
|
14,585.1
|
|
|
|
|
|
|
Noncurrent assets
|
|
$
|
5,360.1
|
|
|
|
|
|
|
Current liabilities
|
|
$
|
1,746.6
|
|
|
|
|
|
|
Noncurrent liabilities
|
|
$
|
286.3
|
|
|
|
|
|
|
F - 40
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31
|
|
|
|
2015
|
|
|
2016
|
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Net revenue
|
|
$
|
15,026.0
|
|
|
$
|
14,045.9
|
|
|
|
|
|
|
|
|
|
|
Income from operations
|
|
$
|
5,802.3
|
|
|
$
|
4,921.7
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
5,904.6
|
|
|
$
|
4,918.1
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income
|
|
$
|
5,904.6
|
|
|
$
|
4,918.1
|
|
|
|
|
|
|
|
|
|
|
Cash dividends received
|
|
$
|
1,556.6
|
|
|
$
|
4,076.2
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of the above summarized financial information to the carrying amount of the interest in
the associate was as follows:
|
|
|
|
|
|
|
December 31,
2016
|
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
Net assets
|
|
$
|
17,912.3
|
|
Percentage of ownership
|
|
|
39%
|
|
|
|
|
|
|
The Companys share of net assets of the associate
|
|
|
6,948.2
|
|
Goodwill
|
|
|
214.0
|
|
Other adjustments
|
|
|
1.3
|
|
|
|
|
|
|
|
|
Carrying amount of the investment
|
|
$
|
7,163.5
|
|
|
|
|
|
|
Aggregate information of associates that are not individually material was summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31
|
|
|
|
2015
|
|
|
2016
|
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
The Companys share of profits (losses) of associates
|
|
$
|
(154.2
|
)
|
|
$
|
22.5
|
|
|
|
|
|
|
|
|
|
|
The Companys share of other comprehensive income (loss) of associates
|
|
$
|
7.9
|
|
|
$
|
(5.2
|
)
|
|
|
|
|
|
|
|
|
|
The Companys share of total comprehensive income (loss) of associates
|
|
$
|
(146.3
|
)
|
|
$
|
17.3
|
|
|
|
|
|
|
|
|
|
|
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.
|
|
|
|
|
|
|
|
|
|
|
December 31,
2016
|
|
|
December 31,
2017
|
|
|
|
NT$
|
|
|
NT$
|
|
Name of Associate
|
|
(In Millions)
|
|
|
(In Millions)
|
|
VIS
|
|
$
|
26,089.4
|
|
|
$
|
30,638.8
|
|
|
|
|
|
|
|
|
|
|
GUC
|
|
$
|
3,665.0
|
|
|
$
|
11,905.4
|
|
|
|
|
|
|
|
|
|
|
Xintec
|
|
$
|
3,622.2
|
|
|
$
|
9,180.8
|
|
|
|
|
|
|
|
|
|
|
F - 41
|
b.
|
Investments in joint venture
|
The Company and OVT entered into a joint agreement to invest in
VisEra Holding. The Company acquired OVTs 49.1% ownership in VisEra Holding on November 20, 2015. As a result, the Company has obtained control of VisEra Holding and consolidated VisEra Holding since November 20, 2015. Please refer
to Note 33 for related disclosures.
15.
|
PROPERTY, PLANT AND EQUIPMENT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land and Land
Improvements
|
|
|
Buildings
|
|
|
Machinery and
Equipment
|
|
|
Office Equipment
|
|
|
Assets under Finance
Leases
|
|
|
Equipment under
Installation and
Construction in
Progress
|
|
|
Total
|
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1, 2015
|
|
$
|
4,036.8
|
|
|
$
|
269,163.9
|
|
|
$
|
1,754,170.2
|
|
|
$
|
27,960.8
|
|
|
$
|
841.2
|
|
|
$
|
109,334.7
|
|
|
$
|
2,165,507.6
|
|
Additions
|
|
|
|
|
|
|
26,960.5
|
|
|
|
142,090.4
|
|
|
|
3,428.6
|
|
|
|
|
|
|
|
82,595.3
|
|
|
|
255,074.8
|
|
Disposals or retirements
|
|
|
|
|
|
|
(75.0
|
)
|
|
|
(5,923.0
|
)
|
|
|
(1,170.0
|
)
|
|
|
|
|
|
|
|
|
|
|
(7,168.0
|
)
|
Lease agreement modification
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(824.1
|
)
|
|
|
|
|
|
|
(824.1
|
)
|
Effect of acquisition of subsidiary
|
|
|
|
|
|
|
624.7
|
|
|
|
1,402.0
|
|
|
|
447.9
|
|
|
|
|
|
|
|
176.6
|
|
|
|
2,651.2
|
|
Effect of exchange rate changes
|
|
|
30.6
|
|
|
|
127.8
|
|
|
|
1,750.0
|
|
|
|
32.7
|
|
|
|
(10.0
|
)
|
|
|
4.9
|
|
|
|
1,936.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2015
|
|
$
|
4,067.4
|
|
|
$
|
296,801.9
|
|
|
$
|
1,893,489.6
|
|
|
$
|
30,700.0
|
|
|
$
|
7.1
|
|
|
$
|
192,111.5
|
|
|
$
|
2,417,177.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated depreciation and impairment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1, 2015
|
|
$
|
459.2
|
|
|
$
|
141,245.9
|
|
|
$
|
1,188,388.4
|
|
|
$
|
16,767.9
|
|
|
$
|
447.4
|
|
|
$
|
|
|
|
$
|
1,347,308.8
|
|
Additions
|
|
|
28.9
|
|
|
|
16,312.6
|
|
|
|
199,185.0
|
|
|
|
3,751.7
|
|
|
|
25.2
|
|
|
|
|
|
|
|
219,303.4
|
|
Disposals or retirements
|
|
|
|
|
|
|
(74.0
|
)
|
|
|
(5,585.4
|
)
|
|
|
(1,125.2
|
)
|
|
|
|
|
|
|
|
|
|
|
(6,784.6
|
)
|
Lease agreement modification
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(460.4
|
)
|
|
|
|
|
|
|
(460.4
|
)
|
Impairment
|
|
|
|
|
|
|
278.1
|
|
|
|
2,256.8
|
|
|
|
10.7
|
|
|
|
|
|
|
|
|
|
|
|
2,545.6
|
|
Effect of exchange rate changes
|
|
|
18.1
|
|
|
|
147.6
|
|
|
|
1,612.9
|
|
|
|
20.9
|
|
|
|
(5.1
|
)
|
|
|
|
|
|
|
1,794.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2015
|
|
$
|
506.2
|
|
|
$
|
157,910.2
|
|
|
$
|
1,385,857.7
|
|
|
$
|
19,426.0
|
|
|
$
|
7.1
|
|
|
$
|
|
|
|
$
|
1,563,707.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying amounts at December 31, 2015
|
|
$
|
3,561.2
|
|
|
$
|
138,891.7
|
|
|
$
|
507,631.9
|
|
|
$
|
11,274.0
|
|
|
$
|
|
|
|
$
|
192,111.5
|
|
|
$
|
853,470.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1, 2016
|
|
$
|
4,067.4
|
|
|
$
|
296,801.9
|
|
|
$
|
1,893,489.6
|
|
|
$
|
30,700.0
|
|
|
$
|
7.1
|
|
|
$
|
192,111.5
|
|
|
$
|
2,417,177.5
|
|
Additions
|
|
|
|
|
|
|
9,113.3
|
|
|
|
156,874.2
|
|
|
|
4,584.1
|
|
|
|
|
|
|
|
195,256.0
|
|
|
|
365,827.6
|
|
Disposals or retirements
|
|
|
|
|
|
|
(13.4
|
)
|
|
|
(3,094.2
|
)
|
|
|
(469.2
|
)
|
|
|
|
|
|
|
|
|
|
|
(3,576.8
|
)
|
Reclassification
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7.1
|
|
|
|
(7.1
|
)
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes
|
|
|
(18.1
|
)
|
|
|
(1,497.3
|
)
|
|
|
(4,401.9
|
)
|
|
|
(92.4
|
)
|
|
|
|
|
|
|
(167.8
|
)
|
|
|
(6,177.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2016
|
|
$
|
4,049.3
|
|
|
$
|
304,404.5
|
|
|
$
|
2,042,867.7
|
|
|
$
|
34,729.6
|
|
|
$
|
|
|
|
$
|
387,199.7
|
|
|
$
|
2,773,250.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated depreciation and impairment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1, 2016
|
|
$
|
506.2
|
|
|
$
|
157,910.2
|
|
|
$
|
1,385,857.7
|
|
|
$
|
19,426.0
|
|
|
$
|
7.1
|
|
|
$
|
|
|
|
$
|
1,563,707.2
|
|
Additions
|
|
|
29.4
|
|
|
|
17,540.5
|
|
|
|
198,189.4
|
|
|
|
4,325.7
|
|
|
|
|
|
|
|
|
|
|
|
220,085.0
|
|
Disposals or retirements
|
|
|
|
|
|
|
(7.3
|
)
|
|
|
(3,049.5
|
)
|
|
|
(468.4
|
)
|
|
|
|
|
|
|
|
|
|
|
(3,525.2
|
)
|
Reclassification
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7.1
|
|
|
|
(7.1
|
)
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes
|
|
|
(10.8
|
)
|
|
|
(1,094.3
|
)
|
|
|
(3,620.1
|
)
|
|
|
(68.7
|
)
|
|
|
|
|
|
|
|
|
|
|
(4,793.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2016
|
|
$
|
524.8
|
|
|
$
|
174,349.1
|
|
|
$
|
1,577,377.5
|
|
|
$
|
23,221.7
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
1,775,473.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying amounts at December 31, 2016
|
|
$
|
3,524.5
|
|
|
$
|
130,055.4
|
|
|
$
|
465,490.2
|
|
|
$
|
11,507.9
|
|
|
$
|
|
|
|
$
|
387,199.7
|
|
|
$
|
997,777.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F - 42
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land and Land
Improvements
|
|
|
Buildings
|
|
|
Machinery and
Equipment
|
|
|
Office Equipment
|
|
|
Assets under Finance
Leases
|
|
|
Equipment under
Installation and
Construction in
Progress
|
|
|
Total
|
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1, 2017
|
|
$
|
4,049.3
|
|
|
$
|
304,404.5
|
|
|
$
|
2,042,867.7
|
|
|
$
|
34,729.6
|
|
|
$
|
|
|
|
$
|
387,199.7
|
|
|
$
|
2,773,250.8
|
|
Additions (Deductions)
|
|
|
|
|
|
|
75,594.7
|
|
|
|
458,605.8
|
|
|
|
8,195.9
|
|
|
|
|
|
|
|
(219,902.5
|
)
|
|
|
322,493.9
|
|
Disposals or retirements
|
|
|
|
|
|
|
(37.0
|
)
|
|
|
(9,553.0
|
)
|
|
|
(377.8
|
)
|
|
|
|
|
|
|
|
|
|
|
(9,967.8
|
)
|
Reclassification
|
|
|
|
|
|
|
|
|
|
|
8.8
|
|
|
|
1.5
|
|
|
|
|
|
|
|
|
|
|
|
10.3
|
|
Effect of disposal of subsidiary
|
|
|
|
|
|
|
|
|
|
|
(51.2
|
)
|
|
|
(14.8
|
)
|
|
|
|
|
|
|
(0.5
|
)
|
|
|
(66.5
|
)
|
Effect of exchange rate changes
|
|
|
(66.1
|
)
|
|
|
(827.6
|
)
|
|
|
(4,125.8
|
)
|
|
|
(142.9
|
)
|
|
|
|
|
|
|
56.8
|
|
|
|
(5,105.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2017
|
|
$
|
3,983.2
|
|
|
$
|
379,134.6
|
|
|
$
|
2,487,752.3
|
|
|
$
|
42,391.5
|
|
|
$
|
|
|
|
$
|
167,353.5
|
|
|
$
|
3,080,615.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated depreciation and impairment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1, 2017
|
|
$
|
524.8
|
|
|
$
|
174,349.1
|
|
|
$
|
1,577,377.5
|
|
|
$
|
23,221.7
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
1,775,473.1
|
|
Additions
|
|
|
27.8
|
|
|
|
20,844.6
|
|
|
|
229,985.6
|
|
|
|
4,938.0
|
|
|
|
|
|
|
|
|
|
|
|
255,796.0
|
|
Disposals or retirements
|
|
|
|
|
|
|
(28.8
|
)
|
|
|
(8,114.3
|
)
|
|
|
(377.5
|
)
|
|
|
|
|
|
|
|
|
|
|
(8,520.6
|
)
|
Reclassification
|
|
|
|
|
|
|
|
|
|
|
8.2
|
|
|
|
1.5
|
|
|
|
|
|
|
|
|
|
|
|
9.7
|
|
Effect of disposal of subsidiary
|
|
|
|
|
|
|
|
|
|
|
(42.8
|
)
|
|
|
(13.9
|
)
|
|
|
|
|
|
|
|
|
|
|
(56.7
|
)
|
Effect of exchange rate changes
|
|
|
(42.1
|
)
|
|
|
(718.4
|
)
|
|
|
(3,765.3
|
)
|
|
|
(102.9
|
)
|
|
|
|
|
|
|
|
|
|
|
(4,628.7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2017
|
|
$
|
510.5
|
|
|
$
|
194,446.5
|
|
|
$
|
1,795,448.9
|
|
|
$
|
27,666.9
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
2,018,072.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying amounts at December 31, 2017
|
|
$
|
3,472.7
|
|
|
$
|
184,688.1
|
|
|
$
|
692,303.4
|
|
|
$
|
14,724.6
|
|
|
$
|
|
|
|
$
|
167,353.5
|
|
|
$
|
1,062,542.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The significant part of the Companys 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 August 2015, TSMC Solar Ltd. (TSMC Solar) ceased its manufacturing operations. In the third quarter of 2015, the Company recognized an
impairment loss of NT$2,286.0 million since the carrying amounts of certain machinery and equipment, office equipment and mechanical and electrical power equipment were not expected to be recoverable. The recoverable amount determined on the
basis of value in use is nil. Such impairment loss was included in other operating income and expenses.
F - 43
For the year ended December 31, 2015, the Company recognized an impairment loss of
NT$259.6 million under foundry segment since the carrying amount of some of property, plant and equipment, mostly from termination of a project, was expected to be unrecoverable. Their recoverable amount determined on the basis of value in use
was nil. Such impairment loss was included in other operating income and expenses.
The Company had a building lease agreement with leasing
terms from December 2003 to November 2018 and such lease was accounted for as a finance lease. In August 2015, the lease was determined to be an operating lease due to a modification on lease conditions; as such, the Company recognized a gain of
NT$430.0 million from the modification. Such gain was included in other operating income and expenses.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
|
Technology
License Fees
|
|
|
Software and
System Design
Costs
|
|
|
Patent and
Others
|
|
|
Total
|
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1, 2015
|
|
$
|
5,888.8
|
|
|
$
|
6,350.3
|
|
|
$
|
18,697.1
|
|
|
$
|
4,292.5
|
|
|
$
|
35,228.7
|
|
Additions
|
|
|
|
|
|
|
2,112.5
|
|
|
|
867.8
|
|
|
|
587.8
|
|
|
|
3,568.1
|
|
Retirements
|
|
|
|
|
|
|
|
|
|
|
(101.4
|
)
|
|
|
|
|
|
|
(101.4
|
)
|
Effect of acquisition of subsidiary
|
|
|
52.7
|
|
|
|
|
|
|
|
12.1
|
|
|
|
|
|
|
|
64.8
|
|
Effect of exchange rate changes
|
|
|
163.3
|
|
|
|
(8.5
|
)
|
|
|
(1.2
|
)
|
|
|
(1.3
|
)
|
|
|
152.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2015
|
|
$
|
6,104.8
|
|
|
$
|
8,454.3
|
|
|
$
|
19,474.4
|
|
|
$
|
4,879.0
|
|
|
$
|
38,912.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated amortization and impairment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1, 2015
|
|
$
|
|
|
|
$
|
3,778.9
|
|
|
$
|
14,861.1
|
|
|
$
|
3,057.2
|
|
|
$
|
21,697.2
|
|
Additions
|
|
|
|
|
|
|
950.9
|
|
|
|
1,672.6
|
|
|
|
578.7
|
|
|
|
3,202.2
|
|
Retirements
|
|
|
|
|
|
|
|
|
|
|
(101.4
|
)
|
|
|
|
|
|
|
(101.4
|
)
|
Impairment
|
|
|
|
|
|
|
58.1
|
|
|
|
0.4
|
|
|
|
|
|
|
|
58.5
|
|
Effect of exchange rate changes
|
|
|
|
|
|
|
(8.5
|
)
|
|
|
(1.1
|
)
|
|
|
(0.3
|
)
|
|
|
(9.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2015
|
|
$
|
|
|
|
$
|
4,779.4
|
|
|
$
|
16,431.6
|
|
|
$
|
3,635.6
|
|
|
$
|
24,846.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying amounts at December 31, 2015
|
|
$
|
6,104.8
|
|
|
$
|
3,674.9
|
|
|
$
|
3,042.8
|
|
|
$
|
1,243.4
|
|
|
$
|
14,065.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1, 2016
|
|
$
|
6,104.8
|
|
|
$
|
8,454.3
|
|
|
$
|
19,474.4
|
|
|
$
|
4,879.0
|
|
|
$
|
38,912.5
|
|
Additions
|
|
|
|
|
|
|
1,091.3
|
|
|
|
2,788.5
|
|
|
|
519.3
|
|
|
|
4,399.1
|
|
Retirements
|
|
|
|
|
|
|
|
|
|
|
(5.2
|
)
|
|
|
|
|
|
|
(5.2
|
)
|
Effect of exchange rate changes
|
|
|
(96.8
|
)
|
|
|
0.4
|
|
|
|
(14.1
|
)
|
|
|
(11.9
|
)
|
|
|
(122.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2016
|
|
$
|
6,008.0
|
|
|
$
|
9,546.0
|
|
|
$
|
22,243.6
|
|
|
$
|
5,386.4
|
|
|
$
|
43,184.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated amortization and impairment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1, 2016
|
|
$
|
|
|
|
$
|
4,779.4
|
|
|
$
|
16,431.6
|
|
|
$
|
3,635.6
|
|
|
$
|
24,846.6
|
|
Additions
|
|
|
|
|
|
|
1,367.4
|
|
|
|
1,730.8
|
|
|
|
645.2
|
|
|
|
3,743.4
|
|
Retirements
|
|
|
|
|
|
|
|
|
|
|
(5.2
|
)
|
|
|
|
|
|
|
(5.2
|
)
|
Effect of exchange rate changes
|
|
|
|
|
|
|
0.4
|
|
|
|
(12.7
|
)
|
|
|
(3.3
|
)
|
|
|
(15.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2016
|
|
$
|
|
|
|
$
|
6,147.2
|
|
|
$
|
18,144.5
|
|
|
$
|
4,277.5
|
|
|
$
|
28,569.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying amounts at December 31, 2016
|
|
$
|
6,008.0
|
|
|
$
|
3,398.8
|
|
|
$
|
4,099.1
|
|
|
$
|
1,108.9
|
|
|
$
|
14,614.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Continued)
F - 44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
|
Technology
License Fees
|
|
|
Software and
System Design
Costs
|
|
|
Patent and
Others
|
|
|
Total
|
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1, 2017
|
|
$
|
6,008.0
|
|
|
$
|
9,546.0
|
|
|
$
|
22,243.6
|
|
|
$
|
5,386.4
|
|
|
$
|
43,184.0
|
|
Additions
|
|
|
|
|
|
|
897.9
|
|
|
|
3,021.1
|
|
|
|
349.2
|
|
|
|
4,268.2
|
|
Retirements
|
|
|
|
|
|
|
|
|
|
|
(75.2
|
)
|
|
|
|
|
|
|
(75.2
|
)
|
Reclassification
|
|
|
|
|
|
|
|
|
|
|
7.7
|
|
|
|
(18.0
|
)
|
|
|
(10.3
|
)
|
Effect of disposal of subsidiary
|
|
|
(13.5
|
)
|
|
|
|
|
|
|
(7.7
|
)
|
|
|
|
|
|
|
(21.2
|
)
|
Effect of exchange rate changes
|
|
|
(345.8
|
)
|
|
|
(0.6
|
)
|
|
|
(3.2
|
)
|
|
|
(1.6
|
)
|
|
|
(351.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2017
|
|
$
|
5,648.7
|
|
|
$
|
10,443.3
|
|
|
$
|
25,186.3
|
|
|
$
|
5,716.0
|
|
|
$
|
46,994.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated amortization and impairment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1, 2017
|
|
$
|
|
|
|
$
|
6,147.2
|
|
|
$
|
18,144.5
|
|
|
$
|
4,277.5
|
|
|
$
|
28,569.2
|
|
Additions
|
|
|
|
|
|
|
1,548.3
|
|
|
|
2,310.7
|
|
|
|
487.7
|
|
|
|
4,346.7
|
|
Retirements
|
|
|
|
|
|
|
|
|
|
|
(75.2
|
)
|
|
|
|
|
|
|
(75.2
|
)
|
Reclassification
|
|
|
|
|
|
|
|
|
|
|
7.4
|
|
|
|
(17.1
|
)
|
|
|
(9.7
|
)
|
Impairment
|
|
|
13.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13.5
|
|
Effect of disposal of subsidiary
|
|
|
(13.5
|
)
|
|
|
|
|
|
|
(7.6
|
)
|
|
|
|
|
|
|
(21.1
|
)
|
Effect of exchange rate changes
|
|
|
|
|
|
|
(0.6
|
)
|
|
|
(3.1
|
)
|
|
|
(0.6
|
)
|
|
|
(4.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2017
|
|
$
|
|
|
|
$
|
7,694.9
|
|
|
$
|
20,376.7
|
|
|
$
|
4,747.5
|
|
|
$
|
32,819.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying amounts at December 31, 2017
|
|
$
|
5,648.7
|
|
|
$
|
2,748.4
|
|
|
$
|
4,809.6
|
|
|
$
|
968.5
|
|
|
$
|
14,175.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Concluded)
The Companys 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 rates of
8.4% and 8.5% in its test of impairment as of December 31, 2016 and 2017, respectively, to reflect the relevant specific risk in the cash-generating unit.
For the years ended December 31, 2015 and 2016, the Company did not recognize any impairment loss on goodwill. For the year ended
December 31, 2017, the Company assessed goodwill impairment and recognized an impairment loss of NT$13.5 million related to a subsidiary since the operating result of this cash generating unit was not as expected and the recoverable amount
of goodwill was nil. Such impairment loss was recognized in other operating income and expenses.
In August 2015, TSMC Solar ceased its
manufacturing operation and the Company recognized an impairment loss of NT$58.5 million in the third quarter of 2015 since the carrying amounts of technology license fees, software and system design costs were expected to be unrecoverable.
Their recoverable amount determined on the basis of value in use is nil. Such impairment loss was included in other operating income and expenses.
|
|
|
|
|
|
|
|
|
|
|
December 31,
2016
|
|
|
December 31,
2017
|
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Tax receivable
|
|
$
|
2,325.8
|
|
|
$
|
4,021.6
|
|
Prepaid expenses
|
|
|
1,007.0
|
|
|
|
1,559.9
|
|
Others
|
|
|
1,553.0
|
|
|
|
1,624.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4,885.8
|
|
|
$
|
7,205.5
|
|
|
|
|
|
|
|
|
|
|
(Continued)
F - 45
|
|
|
|
|
|
|
|
|
|
|
December 31,
2016
|
|
|
December 31,
2017
|
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Current portion
|
|
$
|
3,385.4
|
|
|
$
|
4,222.4
|
|
Noncurrent portion
|
|
|
1,500.4
|
|
|
|
2,983.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4,885.8
|
|
|
$
|
7,205.5
|
|
|
|
|
|
|
|
|
|
|
(Concluded)
|
|
|
|
|
|
|
|
|
|
|
December 31,
2016
|
|
|
December 31,
2017
|
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Unsecured loans
|
|
|
|
|
|
|
|
|
Amount
|
|
$
|
57,958.2
|
|
|
$
|
63,766.8
|
|
|
|
|
|
|
|
|
|
|
Original loan content
|
|
|
|
|
|
|
|
|
US$ (in millions)
|
|
$
|
1,800.0
|
|
|
$
|
2,150.0
|
|
Annual interest rate
|
|
|
0.87%-1.07%
|
|
|
|
1.54%-1.82%
|
|
Maturity date
|
|
|
Due by
January 2017
|
|
|
|
Due by
February 2018
|
|
The Companys current provisions were provisions for sales returns and
allowances.
|
|
|
|
|
|
|
Sales Returns
and Allowances
|
|
|
|
NT$
(In Millions)
|
|
Year ended December 31, 2015
|
|
|
|
|
Balance, beginning of year
|
|
$
|
10,445.5
|
|
Provision
|
|
|
17,723.2
|
|
Payment
|
|
|
(18,133.1
|
)
|
Effect of acquisition of subsidiary
|
|
|
126.0
|
|
Effect of exchange rate changes
|
|
|
1.9
|
|
|
|
|
|
|
|
|
Balance, end of year
|
|
$
|
10,163.5
|
|
|
|
|
|
|
(Continued)
F - 46
|
|
|
|
|
|
|
Sales Returns
and Allowances
|
|
|
|
NT$
(In Millions)
|
|
Year ended December 31, 2016
|
|
|
|
|
Balance, beginning of year
|
|
$
|
10,163.5
|
|
Provision
|
|
|
36,519.3
|
|
Payment
|
|
|
(28,569.3
|
)
|
Effect of exchange rate changes
|
|
|
(75.7
|
)
|
|
|
|
|
|
|
|
Balance, end of year
|
|
$
|
18,037.8
|
|
|
|
|
|
|
|
|
Year ended December 31, 2017
|
|
|
|
|
Balance, beginning of year
|
|
$
|
18,037.8
|
|
Provision
|
|
|
44,833.6
|
|
Payment
|
|
|
(48,884.7
|
)
|
Effect of exchange rate changes
|
|
|
(24.9
|
)
|
|
|
|
|
|
|
|
Balance, end of year
|
|
$
|
13,961.8
|
|
|
|
|
|
|
(Concluded)
Provisions for sales returns and allowances are estimated based on historical experience and
the consideration of varying contractual terms, and are recognized as a reduction of revenue in the same year of the related product sales.
|
|
|
|
|
|
|
|
|
|
|
December 31,
2016
|
|
|
December 31,
2017
|
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Domestic unsecured bonds
|
|
$
|
154,200.0
|
|
|
$
|
116,100.0
|
|
Overseas unsecured bonds
|
|
|
37,028.9
|
|
|
|
34,107.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
191,228.9
|
|
|
|
150,207.8
|
|
Less: Discounts on bonds payable
|
|
|
(35.3
|
)
|
|
|
(6.7
|
)
|
Less: Current portion
|
|
|
(38,100.0
|
)
|
|
|
(58,401.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
153,093.6
|
|
|
$
|
91,800.0
|
|
|
|
|
|
|
|
|
|
|
F - 47
The major terms of domestic unsecured bonds are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
|
|
Tranche
|
|
Issuance Period
|
|
Total Amount
NT$
(In Millions)
|
|
|
Coupon
Rate
|
|
|
Repayment and Interest Payment
|
100-1
|
|
A
|
|
September 2011 to September 2016
|
|
$
|
10,500.0
|
|
|
|
1.40%
|
|
|
Bullet repayment; interest payable annually
|
|
|
B
|
|
September 2011 to September 2018
|
|
|
7,500.0
|
|
|
|
1.63%
|
|
|
The same as above
|
100-2
|
|
A
|
|
January 2012 to January 2017
|
|
|
10,000.0
|
|
|
|
1.29%
|
|
|
The same as above
|
|
|
B
|
|
January 2012 to January 2019
|
|
|
7,000.0
|
|
|
|
1.46%
|
|
|
The same as above
|
101-1
|
|
A
|
|
August 2012 to August 2017
|
|
|
9,900.0
|
|
|
|
1.28%
|
|
|
The same as above
|
|
|
B
|
|
August 2012 to August 2019
|
|
|
9,000.0
|
|
|
|
1.40%
|
|
|
The same as above
|
101-2
|
|
A
|
|
September 2012 to September 2017
|
|
|
12,700.0
|
|
|
|
1.28%
|
|
|
The same as above
|
|
|
B
|
|
September 2012 to September 2019
|
|
|
9,000.0
|
|
|
|
1.39%
|
|
|
The same as above
|
101-3
|
|
|
|
October 2012 to October 2022
|
|
|
4,400.0
|
|
|
|
1.53%
|
|
|
The same as above
|
101-4
|
|
A
|
|
January 2013 to January 2018
|
|
|
10,600.0
|
|
|
|
1.23%
|
|
|
The same as above
|
|
|
B
|
|
January 2013 to January 2020
|
|
|
10,000.0
|
|
|
|
1.35%
|
|
|
The same as above
|
|
|
C
|
|
January 2013 to January 2023
|
|
|
3,000.0
|
|
|
|
1.49%
|
|
|
The same as above
|
102-1
|
|
A
|
|
February 2013 to February 2018
|
|
|
6,200.0
|
|
|
|
1.23%
|
|
|
The same as above
|
|
|
B
|
|
February 2013 to February 2020
|
|
|
11,600.0
|
|
|
|
1.38%
|
|
|
The same as above
|
|
|
C
|
|
February 2013 to February 2023
|
|
|
3,600.0
|
|
|
|
1.50%
|
|
|
The same as above
|
102-2
|
|
A
|
|
July 2013 to July 2020
|
|
|
10,200.0
|
|
|
|
1.50%
|
|
|
The same as above
|
|
|
B
|
|
July 2013 to July 2023
|
|
|
3,500.0
|
|
|
|
1.70%
|
|
|
The same as above
|
102-3
|
|
A
|
|
August 2013 to August 2017
|
|
|
4,000.0
|
|
|
|
1.34%
|
|
|
The same as above
|
|
|
B
|
|
August 2013 to August 2019
|
|
|
8,500.0
|
|
|
|
1.52%
|
|
|
The same as above
|
102-4
|
|
A
|
|
September 2013 to September 2016
|
|
|
1,500.0
|
|
|
|
1.35%
|
|
|
The same as above
|
|
|
B
|
|
September 2013 to September 2017
|
|
|
1,500.0
|
|
|
|
1.45%
|
|
|
The same as above
|
(Continued)
F - 48
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
|
|
Tranche
|
|
Issuance Period
|
|
Total Amount
NT$
(In Millions)
|
|
|
Coupon
Rate
|
|
|
Repayment and Interest Payment
|
102-4
|
|
C
|
|
September 2013 to March 2019
|
|
$
|
1,400.0
|
|
|
|
1.60%
|
|
|
Bullet repayment; interest payable annually (interest for the six months prior to
maturity will accrue on the basis of actual days and be repayable at maturity)
|
|
|
D
|
|
September 2013 to March 2021
|
|
|
2,600.0
|
|
|
|
1.85%
|
|
|
The same as above
|
|
|
E
|
|
September 2013 to March 2023
|
|
|
5,400.0
|
|
|
|
2.05%
|
|
|
The same as above
|
|
|
F
|
|
September 2013 to September 2023
|
|
|
2,600.0
|
|
|
|
2.10%
|
|
|
Bullet repayment; interest payable annually
|
(Concluded)
The major terms of overseas unsecured bonds are as follows:
|
|
|
|
|
|
|
|
|
|
|
Issuance Period
|
|
Total Amount
US$
(In Millions)
|
|
|
Coupon
Rate
|
|
|
Repayment and Interest Payment
|
April 2013 to April 2016
|
|
$
|
350.0
|
|
|
|
0.95%
|
|
|
Bullet repayment; interest payable semi-annually
|
April 2013 to April 2018
|
|
|
1,150.0
|
|
|
|
1.625%
|
|
|
The same as above
|
21.
|
RETIREMENT BENEFIT PLANS
|
|
a.
|
Defined contribution plans
|
The plan under the R.O.C. Labor Pension Act (the Act)
is deemed a defined contribution plan. Pursuant to the Act, TSMC,
Mutual-Pak,
TSMC Solar and VisEra Tech have made monthly contributions equal to 6% of each employees monthly salary to employees
pension accounts. Furthermore, TSMC North America, TSMC China, TSMC Nanjing, TSMC Europe, TSMC Canada, TSMC Technology, TSMC Solar North America, Inc. (TSMC Solar NA) and TSMC Solar Europe GmbH also make monthly contributions at certain percentages
of the basic salary of their employees. Accordingly, the Company recognized expenses of NT$2,002.6 million, NT$2,164.9 million and NT$2,369.9 million for the years ended December 31, 2015, 2016 and 2017, respectively.
TSMC and TSMC Solar have defined benefit plans under the R.O.C. Labor
Standards Law that provide benefits based on an employees length of service and average monthly salary for the
six-month
period prior to retirement. The aforementioned companies contribute an amount
equal to 2% of salaries paid each month to their respective pension funds (the Funds), which are administered by the Labor Pension Fund Supervisory Committee (the Committee) and deposited in the Committees name in the Bank of Taiwan. Before
the end of each year, the Company assesses the balance in the Funds. If the amount of the balance in the Funds is inadequate to pay retirement benefits for employees who conform to retirement requirements in the next year, the Company is required to
fund the difference in one appropriation that should be made before the end of March of the next year. The Funds are operated and managed by the governments designated authorities; as such, the Company does not have any right to intervene in
the investments of the Funds.
F - 49
Amounts recognized in respect of these defined benefit plans were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31
|
|
|
|
2015
|
|
|
2016
|
|
|
2017
|
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Current service cost
|
|
$
|
134.5
|
|
|
$
|
132.8
|
|
|
$
|
145.0
|
|
Net interest expense
|
|
|
144.4
|
|
|
|
139.4
|
|
|
|
126.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Components of defined benefit costs recognized in profit or loss
|
|
|
278.9
|
|
|
|
272.2
|
|
|
|
271.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Remeasurement on the net defined benefit liability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on plan assets (excluding amounts included in net interest expense)
|
|
|
(13.7
|
)
|
|
|
45.7
|
|
|
|
29.3
|
|
Actuarial loss arising from experience adjustments
|
|
|
297.1
|
|
|
|
38.2
|
|
|
|
483.9
|
|
Actuarial loss (gain) arising from changes in financial assumptions
|
|
|
544.3
|
|
|
|
694.6
|
|
|
|
(258.5
|
)
|
Actuarial loss arising from changes in demographic assumptions
|
|
|
|
|
|
|
278.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Components of defined benefit costs recognized in other comprehensive income
|
|
|
827.7
|
|
|
|
1,057.2
|
|
|
|
254.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,106.6
|
|
|
$
|
1,329.4
|
|
|
$
|
526.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The pension costs of the aforementioned defined benefit plans were recognized in profit or loss by the
following categories:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31
|
|
|
|
2015
|
|
|
2016
|
|
|
2017
|
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Cost of revenue
|
|
$
|
189.5
|
|
|
$
|
177.0
|
|
|
$
|
175.3
|
|
Research and development expenses
|
|
|
81.3
|
|
|
|
73.4
|
|
|
|
75.3
|
|
General and administrative expenses
|
|
|
3.1
|
|
|
|
17.4
|
|
|
|
16.7
|
|
Marketing expenses
|
|
|
5.0
|
|
|
|
4.4
|
|
|
|
4.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
278.9
|
|
|
$
|
272.2
|
|
|
$
|
271.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F - 50
The amounts arising from the defined benefit obligation of the Company were as follows:
|
|
|
|
|
|
|
|
|
|
|
December 31,
2016
|
|
|
December 31,
2017
|
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Present value of defined benefit obligation
|
|
$
|
12,480.5
|
|
|
$
|
12,774.6
|
|
Fair value of plan assets
|
|
|
(3,929.1
|
)
|
|
|
(3,923.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net defined benefit liability
|
|
$
|
8,551.4
|
|
|
$
|
8,850.7
|
|
|
|
|
|
|
|
|
|
|
Movements in the present value of the defined benefit obligation were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31
|
|
|
|
2015
|
|
|
2016
|
|
|
2017
|
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Balance, beginning of year
|
|
$
|
10,265.3
|
|
|
$
|
11,318.1
|
|
|
$
|
12,480.5
|
|
Current service cost
|
|
|
134.5
|
|
|
|
132.8
|
|
|
|
145.0
|
|
Interest expense
|
|
|
228.4
|
|
|
|
213.0
|
|
|
|
185.6
|
|
Remeasurement losses (gains):
|
|
|
|
|
|
|
|
|
|
|
|
|
Actuarial loss arising from experience adjustments
|
|
|
297.1
|
|
|
|
38.2
|
|
|
|
483.9
|
|
Actuarial loss (gain) arising from changes in financial assumptions
|
|
|
544.3
|
|
|
|
694.6
|
|
|
|
(258.5
|
)
|
Actuarial loss arising from changes in demographic assumptions
|
|
|
|
|
|
|
278.7
|
|
|
|
|
|
Benefits paid from plan assets
|
|
|
(146.1
|
)
|
|
|
(194.9
|
)
|
|
|
(261.9
|
)
|
Benefits paid directly by the Company
|
|
|
(5.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, end of year
|
|
$
|
11,318.1
|
|
|
$
|
12,480.5
|
|
|
$
|
12,774.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Movements in the fair value of the plan assets were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31
|
|
|
|
2015
|
|
|
2016
|
|
|
2017
|
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Balance, beginning of year
|
|
$
|
3,697.5
|
|
|
$
|
3,870.1
|
|
|
$
|
3,929.1
|
|
Interest income
|
|
|
84.0
|
|
|
|
73.6
|
|
|
|
59.1
|
|
Remeasurement gains (losses) :
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on plan assets (excluding amounts included in net interest expense)
|
|
|
13.7
|
|
|
|
(45.7
|
)
|
|
|
(29.3
|
)
|
Contributions from employer
|
|
|
221.0
|
|
|
|
226.0
|
|
|
|
226.9
|
|
Benefits paid from plan assets
|
|
|
(146.1
|
)
|
|
|
(194.9
|
)
|
|
|
(261.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, end of year
|
|
$
|
3,870.1
|
|
|
$
|
3,929.1
|
|
|
$
|
3,923.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F - 51
The fair value of the plan assets by major categories at the end of reporting period was as
follows:
|
|
|
|
|
|
|
|
|
|
|
December 31,
2016
|
|
|
December 31,
2017
|
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Cash
|
|
$
|
818.4
|
|
|
$
|
707.5
|
|
Equity instruments
|
|
|
1,853.0
|
|
|
|
1,993.3
|
|
Debt instruments
|
|
|
1,257.7
|
|
|
|
1,223.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
3,929.1
|
|
|
$
|
3,923.9
|
|
|
|
|
|
|
|
|
|
|
The actuarial valuations of the present value of the defined benefit obligation were carried out by
qualified actuaries. The principal assumptions of the actuarial valuation were as follows:
|
|
|
|
|
|
|
|
|
|
|
Measurement Date
|
|
|
|
December 31,
2016
|
|
|
December 31,
2017
|
|
Discount rate
|
|
|
1.50%
|
|
|
|
1.65%
|
|
Future salary increase rate
|
|
|
3.00%
|
|
|
|
3.00%
|
|
Through the defined benefit plans under the R.O.C. Labor Standards Law, the Company is exposed to the
following risks:
|
1)
|
Investment risk: The pension funds are invested in equity and debt securities, bank deposits, etc. The investment is conducted at the discretion of the governments designated authorities or under the mandated
management. However, under the R.O.C. Labor Standards Law, the rate of return on assets shall not be less than the average interest rate on a
two-year
time deposit published by the local banks and the
government is responsible for any shortfall in the event that the rate of return is less than the required rate of return.
|
|
2)
|
Interest risk: A decrease in the government bond interest rate will increase the present value of the defined benefit obligation; however, this will be partially offset by an increase in the return on the debt
investments of the plan assets.
|
Assuming a hypothetical decrease in interest rate at the end of the reporting period
contributed to a decrease of 0.5% in the discount rate and all other assumptions were held constant, the present value of the defined benefit obligation would increase by NT$970.3 million and NT$890.1 million as of December 31, 2016
and 2017, respectively.
|
3)
|
Salary risk: The present value of the defined benefit obligation is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the
present value of the defined benefit obligation.
|
Assuming the expected salary rate increases by 0.5% at the end of the
reporting period and all other assumptions were held constant, the present value of the defined benefit obligation would increase by NT$951.4 million and NT$873.8 million as of December 31, 2016 and 2017, respectively.
The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely
that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.
F - 52
Furthermore, in presenting the above sensitivity analysis, the present value of the defined
benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability.
The Company expects to make contributions of NT$233.7 million to the defined benefit plans in the next year starting from
December 31, 2017. The weighted average duration of the defined benefit obligation is 13 years.
|
|
|
|
|
|
|
|
|
|
|
December 31,
2016
|
|
|
December 31,
2017
|
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Capacity guarantee
|
|
$
|
20,929.3
|
|
|
$
|
13,346.6
|
|
Receivables guarantee
|
|
|
5,560.0
|
|
|
|
2,427.5
|
|
Others
|
|
|
181.3
|
|
|
|
306.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
26,670.6
|
|
|
$
|
16,080.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion (classified under accrued expenses and other current liabilities)
|
|
$
|
12,000.2
|
|
|
$
|
8,493.8
|
|
Noncurrent portion
|
|
|
14,670.4
|
|
|
|
7,586.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
26,670.6
|
|
|
$
|
16,080.6
|
|
|
|
|
|
|
|
|
|
|
Some of guarantee deposits were refunded to customers by offsetting related accounts receivable.
|
|
|
|
|
|
|
|
|
|
|
December 31,
2016
|
|
|
December 31,
2017
|
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Authorized shares
|
|
|
28,050.0
|
|
|
|
28,050.0
|
|
|
|
|
|
|
|
|
|
|
Authorized capital
|
|
$
|
280,500.0
|
|
|
$
|
280,500.0
|
|
|
|
|
|
|
|
|
|
|
Issued and paid shares
|
|
|
25,930.3
|
|
|
|
25,930.3
|
|
|
|
|
|
|
|
|
|
|
Issued capital
|
|
$
|
259,303.8
|
|
|
$
|
259,303.8
|
|
|
|
|
|
|
|
|
|
|
A holder of issued common shares with par value of NT$10 per share is entitled to vote and to receive
dividends.
The authorized shares include 500.0 million shares allocated for the exercise of employee stock options.
As of December 31, 2017, 1,068.2 million ADSs of TSMC were traded on the NYSE. The number of common shares represented by the ADSs
was 5,340.8 million shares (one ADS represents five common shares).
F - 53
|
|
|
|
|
|
|
|
|
|
|
December 31,
2016
|
|
|
December 31,
2017
|
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Additional
paid-in
capital
|
|
$
|
24,185.0
|
|
|
$
|
24,185.0
|
|
From merger
|
|
|
22,804.5
|
|
|
|
22,804.5
|
|
From convertible bonds
|
|
|
8,892.9
|
|
|
|
8,892.9
|
|
From share of changes in equities of subsidiaries
|
|
|
107.8
|
|
|
|
118.8
|
|
From share of changes in equities of associates
|
|
|
282.1
|
|
|
|
289.2
|
|
Donations
|
|
|
|
|
|
|
19.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
56,272.3
|
|
|
$
|
56,309.6
|
|
|
|
|
|
|
|
|
|
|
Under the R.O.C. 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 TSMCs
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
|
In accordance with the amendments to the R.O.C. Company
Act in May 2015, the recipients of dividends and bonuses are limited to shareholders and do not include employees. The amendments to TSMCs Articles of Incorporation on earnings distribution policy had been approved by TSMCs shareholders
in its meeting held on June 7, 2016. For policy about the profit sharing bonus to employees, please refer to Note 32.
TSMCs
amended Articles of Incorporation provide that, when allocating the net profits for each fiscal year, TSMC shall first offset its losses in previous years and then set aside the following items accordingly:
|
1)
|
Legal capital reserve at 10% of the profits left over, until the accumulated legal capital reserve equals TSMCs
paid-in
capital;
|
|
2)
|
Special capital reserve in accordance with relevant laws or regulations or as requested by the authorities in charge;
|
|
3)
|
Any balance left over shall be allocated according to the resolution of the shareholders meeting.
|
TSMCs 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.
F - 54
Any appropriations of the profits are subject to shareholders approval in the following
year.
The appropriation for legal capital reserve shall be made until the reserve equals the Companys
paid-in
capital. The reserve may be used to offset a deficit, or be distributed as dividends in cash or stocks for the portion in excess of 25% of the
paid-in
capital if
the Company incurs no loss.
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/loss from
available-for-sale
financial assets, gain/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 2015 and 2016
earnings have been approved by TSMCs shareholders in its meetings held on June 7, 2016 and on June 8, 2017, respectively. The appropriations and dividends per share were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Appropriation of Earnings
|
|
|
Dividends Per Share
(NT$)
|
|
|
|
For Fiscal
|
|
|
For Fiscal
|
|
|
For Fiscal
|
|
|
For Fiscal
|
|
|
|
Year 2015
|
|
|
Year 2016
|
|
|
Year 2015
|
|
|
Year 2016
|
|
|
|
NT$
|
|
|
NT$
|
|
|
|
|
|
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
|
|
|
|
|
Legal capital reserve
|
|
$
|
30,657.4
|
|
|
$
|
33,424.7
|
|
|
|
|
|
|
|
|
|
Cash dividends to shareholders
|
|
|
155,582.3
|
|
|
|
181,512.7
|
|
|
$
|
6
|
|
|
$
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
186,239.7
|
|
|
$
|
214,937.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TSMCs appropriations of earnings for 2017 had been approved in the meeting of the Board of
Directors held on February 13, 2018. The appropriations and dividends per share were as follows:
|
|
|
|
|
|
|
|
|
|
|
Appropriation
of Earnings
|
|
|
Dividends Per
Share (NT$)
|
|
|
|
For Fiscal Year
2017
|
|
|
For Fiscal Year
2017
|
|
|
|
NT$
|
|
|
|
|
|
|
(In Millions)
|
|
|
|
|
Legal capital reserve
|
|
$
|
34,311.2
|
|
|
|
|
|
Special capital reserve
|
|
|
26,907.5
|
|
|
|
|
|
Cash dividends to shareholders
|
|
|
207,443.0
|
|
|
$
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
268,661.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The appropriations of earnings for 2017 are to be presented for approval in the TSMCs
shareholders meeting to be held on June 5, 2018 (expected).
Under the Integrated Income Tax System that became effective on
January 1, 1998, the R.O.C. resident shareholders are allowed a tax credit for their proportionate share of the income tax paid by TSMC on earnings generated since January 1, 1998.
F - 55
Changes in others were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2015
|
|
|
|
Foreign
Currency
Translation
Reserve
|
|
|
Unrealized
Gain/Loss from
Available-for-
sale Financial
Assets
|
|
|
Cash Flow
Hedges Reserve
|
|
|
Total
|
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Balance, beginning of year
|
|
$
|
4,502.1
|
|
|
$
|
21,247.5
|
|
|
$
|
(0.3
|
)
|
|
$
|
25,749.3
|
|
Exchange differences arising on translation of foreign operations
|
|
|
8,061.8
|
|
|
|
|
|
|
|
|
|
|
|
8,061.8
|
|
Other comprehensive income/losses reclassified to profit or loss upon disposal of
subsidiaries
|
|
|
138.1
|
|
|
|
|
|
|
|
|
|
|
|
138.1
|
|
Changes in fair value of
available-for-sale
financial assets
|
|
|
|
|
|
|
(5.6
|
)
|
|
|
|
|
|
|
(5.6
|
)
|
Cumulative (gain)/loss reclassified to profit or loss upon disposal of
available-for-sale
financial assets
|
|
|
(1,595.4
|
)
|
|
|
(20,475.2
|
)
|
|
|
|
|
|
|
(22,070.6
|
)
|
Share of other comprehensive income/(loss) of associates and joint venture
|
|
|
(60.6
|
)
|
|
|
(18.0
|
)
|
|
|
(0.3
|
)
|
|
|
(78.9
|
)
|
The proportionate share of other comprehensive income/losses reclassified to profit or loss upon
partial disposal of associates
|
|
|
(6.1
|
)
|
|
|
2.1
|
|
|
|
|
|
|
|
(4.0
|
)
|
Income tax effect
|
|
|
|
|
|
|
(16.0
|
)
|
|
|
|
|
|
|
(16.0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, end of year
|
|
$
|
11,039.9
|
|
|
$
|
734.8
|
|
|
$
|
(0.6
|
)
|
|
$
|
11,774.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2016
|
|
|
|
Foreign
Currency
Translation
Reserve
|
|
|
Unrealized
Gain/Loss from
Available-for-
sale Financial
Assets
|
|
|
Cash Flow
Hedges Reserve
|
|
|
Total
|
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Balance, beginning of year
|
|
$
|
11,039.9
|
|
|
$
|
734.8
|
|
|
$
|
(0.6
|
)
|
|
$
|
11,774.1
|
|
Exchange differences arising on translation of foreign operations
|
|
|
(9,409.2
|
)
|
|
|
|
|
|
|
|
|
|
|
(9,409.2
|
)
|
Other comprehensive income reclassified to profit or loss upon disposal of subsidiaries
|
|
|
36.1
|
|
|
|
|
|
|
|
|
|
|
|
36.1
|
|
Changes in fair value of
available-for-sale
financial assets
|
|
|
|
|
|
|
(696.3
|
)
|
|
|
|
|
|
|
(696.3
|
)
|
(Continued)
F - 56
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2016
|
|
|
|
Foreign
Currency
Translation
Reserve
|
|
|
Unrealized
Gain/Loss from
Available-for-
sale Financial
Assets
|
|
|
Cash Flow
Hedges Reserve
|
|
|
Total
|
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Cumulative (gain)/loss reclassified to profit or loss upon disposal of
available-for-sale
financial assets
|
|
$
|
|
|
|
$
|
4.1
|
|
|
$
|
|
|
|
$
|
4.1
|
|
Share of other comprehensive income (loss) of associates
|
|
|
(0.9
|
)
|
|
|
24.7
|
|
|
|
0.7
|
|
|
|
24.5
|
|
Other comprehensive loss reclassified to profit or loss upon disposal of associates
|
|
|
(4.7
|
)
|
|
|
(3.5
|
)
|
|
|
|
|
|
|
(8.2
|
)
|
Income tax effect
|
|
|
|
|
|
|
(61.2
|
)
|
|
|
|
|
|
|
(61.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, end of year
|
|
$
|
1,661.2
|
|
|
$
|
2.6
|
|
|
$
|
0.1
|
|
|
$
|
1,663.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Concluded)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2017
|
|
|
|
Foreign
Currency
Translation
Reserve
|
|
|
Unrealized
Gain/Loss from
Available-for-
sale Financial
Assets
|
|
|
Cash Flow
Hedges Reserve
|
|
|
Unearned
Stock-Based
Employee
Compensation
|
|
|
Total
|
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Balance, beginning of year
|
|
$
|
1,661.2
|
|
|
$
|
2.6
|
|
|
$
|
0.1
|
|
|
$
|
|
|
|
$
|
1,663.9
|
|
Exchange differences arising on translation of foreign operations
|
|
|
(28,257.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(28,257.4
|
)
|
Changes in fair value of
available-for-sale
financial assets
|
|
|
|
|
|
|
(154.7
|
)
|
|
|
|
|
|
|
|
|
|
|
(154.7
|
)
|
Cumulative (gain)/loss reclassified to profit or loss upon disposal of
available-for-sale
financial assets
|
|
|
|
|
|
|
(61.2
|
)
|
|
|
|
|
|
|
|
|
|
|
(61.2
|
)
|
Gain/(loss) arising on changes in the fair value of hedging instruments
|
|
|
|
|
|
|
|
|
|
|
99.6
|
|
|
|
|
|
|
|
99.6
|
|
Transferred to initial carrying amount of hedged items
|
|
|
|
|
|
|
|
|
|
|
(94.9
|
)
|
|
|
|
|
|
|
(94.9
|
)
|
Share of other comprehensive income (loss) of associates
|
|
|
(101.5
|
)
|
|
|
2.1
|
|
|
|
|
|
|
|
|
|
|
|
(99.4
|
)
|
Share of unearned stock-based compensation of associates
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(10.3
|
)
|
|
|
(10.3
|
)
|
Income tax effect
|
|
|
|
|
|
|
(2.9
|
)
|
|
|
(0.6
|
)
|
|
|
|
|
|
|
(3.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, end of year
|
|
$
|
(26,697.7
|
)
|
|
$
|
(214.1
|
)
|
|
$
|
4.2
|
|
|
$
|
(10.3
|
)
|
|
$
|
(26,917.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The aforementioned other equity includes the changes in other equities of TSMC and TSMCs share of
its subsidiaries and associates.
TSMCs Employee Stock Option Plans, consisting of the TSMC
2002 Plan, TSMC 2003 Plan and TSMC 2004 Plan, were approved by the Securities and Futures Bureau on June 25, 2002, October 29, 2003 and January 6, 2005, respectively. The maximum number of stock options authorized to be granted under
the TSMC 2002 Plan, TSMC 2003 Plan and TSMC 2004 Plan was 100.0 million, 120.0 million and 11.0 million, respectively, with each stock option eligible to subscribe for one common share of TSMC when exercised. The stock options may be
granted to qualified employees of TSMC or any of its domestic or
F - 57
foreign subsidiaries, in which TSMCs shareholding with voting rights, directly or indirectly, is more than fifty percent (50%). The stock options of all the plans are valid for ten years
and exercisable at certain percentages subsequent to the second anniversary of the grant date. Under the terms of the plans, the stock options are granted at an exercise price equal to the closing price of TSMCs common shares quoted on the
TWSE on the grant date.
The Company did not issue employee stock option plans for years ended December 31, 2015, 2016 and 2017.
Information about the TSMCs outstanding employee stock options is described as follows:
|
|
|
|
|
|
|
|
|
|
|
Number of
Stock Options
(In
Millions)
|
|
|
Weighted-
average
Exercise Price
(NT$)
|
|
Year ended December 31, 2015
|
|
|
|
|
|
|
|
|
Balance, beginning of year
|
|
|
0.7
|
|
|
$
|
47.2
|
|
Options exercised
|
|
|
(0.7
|
)
|
|
|
47.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, end of year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance exercisable, end of year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The numbers of outstanding stock options and exercise prices have been adjusted to reflect the
distribution of earnings by TSMC in accordance with the plans.
The employee stock options have been fully exercised in the second quarter
of 2015.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31
|
|
|
|
2015
|
|
|
2016
|
|
|
2017
|
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Net revenue from sale of goods
|
|
$
|
842,997.6
|
|
|
$
|
947,415.9
|
|
|
$
|
976,923.2
|
|
Net revenue from royalties
|
|
|
499.8
|
|
|
|
522.4
|
|
|
|
524.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
843,497.4
|
|
|
$
|
947,938.3
|
|
|
$
|
977,447.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26.
|
OTHER OPERATING INCOME AND EXPENSES, NET
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31
|
|
|
|
2015
|
|
|
2016
|
|
|
2017
|
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Gain (loss) on disposal or retirement of property, plant and equipment, net
|
|
$
|
433.5
|
|
|
$
|
46.5
|
|
|
$
|
(1,097.9
|
)
|
Impairment loss on property, plant and equipment
|
|
|
(2,545.6
|
)
|
|
|
|
|
|
|
|
|
Gain from lease agreement modification
|
|
|
430.0
|
|
|
|
|
|
|
|
|
|
Others
|
|
|
(198.5
|
)
|
|
|
(16.7
|
)
|
|
|
(267.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(1,880.6
|
)
|
|
$
|
29.8
|
|
|
$
|
(1,365.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F - 58
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31
|
|
|
|
2015
|
|
|
2016
|
|
|
2017
|
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Interest income
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank deposits
|
|
$
|
3,928.0
|
|
|
$
|
4,892.6
|
|
|
$
|
6,412.8
|
|
Available-for-sale
financial assets
|
|
|
35.8
|
|
|
|
816.2
|
|
|
|
2,091.4
|
|
Held-to-maturity
financial assets
|
|
|
76.8
|
|
|
|
383.3
|
|
|
|
568.6
|
|
Structured product
|
|
|
88.7
|
|
|
|
225.4
|
|
|
|
391.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,129.3
|
|
|
|
6,317.5
|
|
|
|
9,464.7
|
|
Dividend income
|
|
|
621.5
|
|
|
|
137.4
|
|
|
|
145.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4,750.8
|
|
|
$
|
6,454.9
|
|
|
$
|
9,610.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31
|
|
|
|
2015
|
|
|
2016
|
|
|
2017
|
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Interest expense
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate bonds
|
|
$
|
3,103.7
|
|
|
$
|
3,014.7
|
|
|
$
|
2,563.6
|
|
Bank loans
|
|
|
74.6
|
|
|
|
291.2
|
|
|
|
766.6
|
|
Finance leases
|
|
|
11.7
|
|
|
|
|
|
|
|
|
|
Others
|
|
|
0.3
|
|
|
|
0.2
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
3,190.3
|
|
|
$
|
3,306.1
|
|
|
$
|
3,330.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29.
|
OTHER GAINS AND LOSSES, NET
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31
|
|
|
|
2015
|
|
|
2016
|
|
|
2017
|
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Gain on disposal of financial assets, net
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale
financial assets
|
|
$
|
22,157.9
|
|
|
$
|
33.2
|
|
|
$
|
89.8
|
|
Gain (loss) on disposal of investments accounted for using equity method, net
|
|
|
2,492.1
|
|
|
|
(260.0
|
)
|
|
|
|
|
Gain (loss) from disposal of subsidiaries
|
|
|
(138.2
|
)
|
|
|
(36.1
|
)
|
|
|
17.3
|
|
Other gains
|
|
|
189.3
|
|
|
|
176.8
|
|
|
|
409.9
|
|
Net gain (loss) on financial instruments at FVTPL
|
|
|
|
|
|
|
|
|
|
|
|
|
Held for trading
|
|
|
(1,769.3
|
)
|
|
|
467.1
|
|
|
|
2,253.7
|
|
Designated as at FVTPL
|
|
|
|
|
|
|
(37.4
|
)
|
|
|
131.0
|
|
Gain (loss) arising from fair value hedges, net
|
|
|
(439.7
|
)
|
|
|
16.9
|
|
|
|
(30.3
|
)
|
Impairment loss of financial assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale
financial assets
|
|
|
(154.7
|
)
|
|
|
(122.2
|
)
|
|
|
(29.6
|
)
|
Other losses
|
|
|
(145.9
|
)
|
|
|
(42.4
|
)
|
|
|
(24.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
22,191.5
|
|
|
$
|
195.9
|
|
|
$
|
2,817.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F - 59
|
a.
|
Income tax expense recognized in profit or loss
|
Income tax expense consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31
|
|
|
|
2015
|
|
|
2016
|
|
|
2017
|
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Current income tax expense
|
|
|
|
|
|
|
|
|
|
|
|
|
Current tax expense recognized in the current year
|
|
$
|
61,297.7
|
|
|
$
|
72,405.0
|
|
|
$
|
73,851.4
|
|
Income tax adjustments on prior years
|
|
|
(12,661.2
|
)
|
|
|
(16,628.1
|
)
|
|
|
(19,107.0
|
)
|
Other income tax adjustments
|
|
|
247.8
|
|
|
|
122.5
|
|
|
|
152.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48,884.3
|
|
|
|
55,899.4
|
|
|
|
54,897.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred income tax expense (benefit)
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of tax rate changes
|
|
|
|
|
|
|
|
|
|
|
561.8
|
|
The origination and reversal of temporary differences
|
|
|
(1,542.8
|
)
|
|
|
(1,775.0
|
)
|
|
|
(4,336.1
|
)
|
Investment tax credits and operating loss carryforward
|
|
|
303.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,239.6
|
)
|
|
|
(1,775.0
|
)
|
|
|
(3,774.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense recognized in profit or loss
|
|
$
|
47,644.7
|
|
|
$
|
54,124.4
|
|
|
$
|
51,122.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A reconciliation of income before income tax and income tax expense recognized in profit or loss was as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31
|
|
|
|
2015
|
|
|
2016
|
|
|
2017
|
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Income before tax
|
|
$
|
350,477.6
|
|
|
$
|
385,921.7
|
|
|
$
|
396,161.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense at the statutory rate
|
|
$
|
60,674.4
|
|
|
$
|
66,938.7
|
|
|
$
|
69,613.5
|
|
Tax effect of adjusting items:
|
|
|
|
|
|
|
|
|
|
|
|
|
Deductible items in determining taxable income
|
|
|
(6,340.4
|
)
|
|
|
(44.9
|
)
|
|
|
(1,415.9
|
)
|
Tax-exempt
income
|
|
|
(22,144.3
|
)
|
|
|
(19,595.0
|
)
|
|
|
(16,901.1
|
)
|
Additional income tax under the Alternative Minimum Tax Act
|
|
|
6,041.6
|
|
|
|
|
|
|
|
|
|
Additional income tax on unappropriated earnings
|
|
|
27,543.6
|
|
|
|
30,046.8
|
|
|
|
28,183.5
|
|
Effect of tax rate changes on deferred income tax
|
|
|
|
|
|
|
|
|
|
|
561.8
|
|
(Continued)
F - 60
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31
|
|
|
|
2015
|
|
|
2016
|
|
|
2017
|
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
The origination and reversal of temporary differences
|
|
$
|
(1,542.8
|
)
|
|
$
|
(1,775.0
|
)
|
|
$
|
(4,336.1
|
)
|
Income tax credits
|
|
|
(4,243.6
|
)
|
|
|
(4,940.2
|
)
|
|
|
(5,628.6
|
)
|
Remeasurement of operating loss carryforward
|
|
|
69.6
|
|
|
|
(0.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,058.1
|
|
|
|
70,630.0
|
|
|
|
70,077.1
|
|
Income tax adjustments on prior years
|
|
|
(12,661.2
|
)
|
|
|
(16,628.1
|
)
|
|
|
(19,107.0
|
)
|
Other income tax adjustments
|
|
|
247.8
|
|
|
|
122.5
|
|
|
|
152.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense recognized in profit or loss
|
|
$
|
47,644.7
|
|
|
$
|
54,124.4
|
|
|
$
|
51,122.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Concluded)
For the years ended December 31, 2015, 2016 and 2017, the Company applied a tax rate of
17% for entities subject to the R.O.C. Income Tax Law; for other jurisdictions, the Company measures taxes by using the applicable tax rate for each individual jurisdiction.
Effective from 2018, the R.O.C. Income Tax Law was amended, which raised the corporate income tax rate from 17% to 20% and reduced the rate of
surtax imposed on unappropriated earnings from 10% to 5%. Deferred tax assets and deferred tax liabilities recognized as of December 31, 2017 are expected to be adjusted and would increase by NT$1,473.1 million and NT$15.1 million,
respectively, in 2018.
|
b.
|
Income tax expense recognized in other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31
|
|
|
|
2015
|
|
|
2016
|
|
|
2017
|
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Deferred income tax benefit (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
Related to remeasurement of defined benefit obligation
|
|
$
|
99.3
|
|
|
$
|
126.9
|
|
|
$
|
30.6
|
|
Related to unrealized gain/loss on
available-for-sale
financial assets
|
|
|
(16.0
|
)
|
|
|
(61.2
|
)
|
|
|
(2.9
|
)
|
Related to gain/loss on cash flow hedges
|
|
|
|
|
|
|
|
|
|
|
(0.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
83.3
|
|
|
$
|
65.7
|
|
|
$
|
27.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F - 61
|
c.
|
Deferred income tax balance
|
The analysis of deferred income tax assets and liabilities was as
follows:
|
|
|
|
|
|
|
|
|
|
|
December 31,
2016
|
|
|
December 31,
2017
|
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Deferred income tax assets
|
|
|
|
|
|
|
|
|
Temporary differences
|
|
|
|
|
|
|
|
|
Depreciation
|
|
$
|
4,244.2
|
|
|
$
|
8,401.3
|
|
Provision for sales returns and allowance
|
|
|
1,512.1
|
|
|
|
1,637.7
|
|
Net defined benefit liability
|
|
|
939.5
|
|
|
|
975.3
|
|
Unrealized loss on inventories
|
|
|
737.3
|
|
|
|
629.5
|
|
Deferred compensation cost
|
|
|
378.7
|
|
|
|
266.5
|
|
Others
|
|
|
445.1
|
|
|
|
195.2
|
|
Operating loss carryforward
|
|
|
14.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
8,271.4
|
|
|
$
|
12,105.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred income tax liabilities
|
|
|
|
|
|
|
|
|
Temporary differences
|
|
|
|
|
|
|
|
|
Unrealized exchange gains
|
|
$
|
(48.7
|
)
|
|
$
|
(169.5
|
)
|
Available-for-sale
financial assets
|
|
|
(92.5
|
)
|
|
|
(95.4
|
)
|
Others
|
|
|
|
|
|
|
(37.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(141.2
|
)
|
|
$
|
(302.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2015
|
|
|
|
|
|
|
Recognized in
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
Beginning of
Year
|
|
|
Profit or Loss
|
|
|
Other
Comprehensive
Income
|
|
|
Effect of
Acquisition of
Subsidiary
|
|
|
Effect of
Exchange Rate
Changes
|
|
|
Balance, End of
Year
|
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Deferred income tax assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Temporary differences
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
$
|
1,011.1
|
|
|
$
|
1,808.7
|
|
|
$
|
|
|
|
$
|
11.9
|
|
|
$
|
21.3
|
|
|
$
|
2,853.0
|
|
Provision for sales returns and allowance
|
|
|
1,230.8
|
|
|
|
(104.4
|
)
|
|
|
|
|
|
|
13.8
|
|
|
|
1.3
|
|
|
|
1,141.5
|
|
Net defined benefit liability
|
|
|
787.4
|
|
|
|
8.8
|
|
|
|
99.3
|
|
|
|
|
|
|
|
|
|
|
|
895.5
|
|
Unrealized loss on inventories
|
|
|
591.9
|
|
|
|
25.1
|
|
|
|
|
|
|
|
4.1
|
|
|
|
1.7
|
|
|
|
622.8
|
|
Deferred compensation cost
|
|
|
255.6
|
|
|
|
49.4
|
|
|
|
|
|
|
|
|
|
|
|
11.3
|
|
|
|
316.3
|
|
Goodwill from business combination
|
|
|
195.4
|
|
|
|
(185.8
|
)
|
|
|
|
|
|
|
|
|
|
|
0.4
|
|
|
|
10.0
|
|
Others
|
|
|
749.6
|
|
|
|
(243.4
|
)
|
|
|
|
|
|
|
0.2
|
|
|
|
25.0
|
|
|
|
531.4
|
|
Operating loss carryforward
|
|
|
317.0
|
|
|
|
(303.2
|
)
|
|
|
|
|
|
|
|
|
|
|
0.7
|
|
|
|
14.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
5,138.8
|
|
|
$
|
1,055.2
|
|
|
$
|
99.3
|
|
|
$
|
30.0
|
|
|
$
|
61.7
|
|
|
$
|
6,385.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred income tax liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Temporary differences
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale
financial assets
|
|
$
|
(15.3
|
)
|
|
$
|
|
|
|
$
|
(16.0
|
)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
(31.3
|
)
|
Unrealized exchange gains
|
|
|
(184.4
|
)
|
|
|
184.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(199.7
|
)
|
|
$
|
184.4
|
|
|
$
|
(16.0
|
)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
(31.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F - 62
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2016
|
|
|
|
|
|
|
Recognized in
|
|
|
|
|
|
|
|
|
|
Balance,
Beginning
of Year
|
|
|
Profit or
Loss
|
|
|
Other
Comprehensive
Income
|
|
|
Effect of
Exchange
Rate
Changes
|
|
|
Balance,
End of Year
|
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Deferred income tax assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Temporary differences
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
$
|
2,853.0
|
|
|
$
|
1,437.6
|
|
|
$
|
|
|
|
$
|
(46.4
|
)
|
|
$
|
4,244.2
|
|
Provision for sales returns and allowance
|
|
|
1,141.5
|
|
|
|
371.5
|
|
|
|
|
|
|
|
(0.9
|
)
|
|
|
1,512.1
|
|
Net defined benefit liability
|
|
|
895.5
|
|
|
|
(82.9
|
)
|
|
|
126.9
|
|
|
|
|
|
|
|
939.5
|
|
Unrealized loss on inventories
|
|
|
622.8
|
|
|
|
115.5
|
|
|
|
|
|
|
|
(1.0
|
)
|
|
|
737.3
|
|
Deferred compensation cost
|
|
|
316.3
|
|
|
|
69.3
|
|
|
|
|
|
|
|
(6.9
|
)
|
|
|
378.7
|
|
Goodwill from business combination
|
|
|
10.0
|
|
|
|
(9.8
|
)
|
|
|
|
|
|
|
(0.2
|
)
|
|
|
|
|
Others
|
|
|
531.4
|
|
|
|
(77.5
|
)
|
|
|
|
|
|
|
(8.8
|
)
|
|
|
445.1
|
|
Operating loss carryforward
|
|
|
14.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
6,385.0
|
|
|
$
|
1,823.7
|
|
|
$
|
126.9
|
|
|
$
|
(64.2
|
)
|
|
$
|
8,271.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred income tax liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Temporary differences
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale
financial assets
|
|
$
|
(31.3
|
)
|
|
$
|
|
|
|
$
|
(61.2
|
)
|
|
$
|
|
|
|
$
|
(92.5
|
)
|
Unrealized exchange gains
|
|
|
|
|
|
|
(48.7
|
)
|
|
|
|
|
|
|
|
|
|
|
(48.7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(31.3
|
)
|
|
$
|
(48.7
|
)
|
|
$
|
(61.2
|
)
|
|
$
|
|
|
|
$
|
(141.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2017
|
|
|
|
|
|
|
Recognized in
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
Beginning
of Year
|
|
|
Profit or
Loss
|
|
|
Other
Comprehensive
Income
|
|
|
Effect of
Disposal of
Subsidiary
|
|
|
Effect of
Exchange
Rate
Changes
|
|
|
Balance,
End of Year
|
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Deferred income tax assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Temporary differences
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
$
|
4,244.2
|
|
|
$
|
4,207.2
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
(50.1
|
)
|
|
$
|
8,401.3
|
|
Provision for sales returns and allowance
|
|
|
1,512.1
|
|
|
|
130.0
|
|
|
|
|
|
|
|
|
|
|
|
(4.4
|
)
|
|
|
1,637.7
|
|
Net defined benefit liability
|
|
|
939.5
|
|
|
|
5.2
|
|
|
|
30.6
|
|
|
|
|
|
|
|
|
|
|
|
975.3
|
|
Unrealized loss on inventories
|
|
|
737.3
|
|
|
|
(105.1
|
)
|
|
|
|
|
|
|
|
|
|
|
(2.7
|
)
|
|
|
629.5
|
|
Deferred compensation cost
|
|
|
378.7
|
|
|
|
(83.1
|
)
|
|
|
|
|
|
|
|
|
|
|
(29.1
|
)
|
|
|
266.5
|
|
Others
|
|
|
445.1
|
|
|
|
(222.4
|
)
|
|
|
|
|
|
|
|
|
|
|
(27.5
|
)
|
|
|
195.2
|
|
Operating loss carryforward
|
|
|
14.5
|
|
|
|
|
|
|
|
|
|
|
|
(14.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
8,271.4
|
|
|
$
|
3,931.8
|
|
|
$
|
30.6
|
|
|
$
|
(14.5
|
)
|
|
$
|
(113.8
|
)
|
|
$
|
12,105.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred income tax liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Temporary differences
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized exchange gains
|
|
$
|
(48.7
|
)
|
|
$
|
(120.8
|
)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
(169.5
|
)
|
Available-for-sale
financial assets
|
|
|
(92.5
|
)
|
|
|
|
|
|
|
(2.9
|
)
|
|
|
|
|
|
|
|
|
|
|
(95.4
|
)
|
Others
|
|
|
|
|
|
|
(36.7
|
)
|
|
|
(0.6
|
)
|
|
|
|
|
|
|
|
|
|
|
(37.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(141.2
|
)
|
|
$
|
(157.5
|
)
|
|
$
|
(3.5
|
)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
(302.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F - 63
|
d.
|
The investment operating loss carryforward and deductible temporary differences for which no deferred income tax assets have been recognized
|
The information of the operating loss carryforward for which no deferred tax assets have been recognized was as follows:
|
|
|
|
|
|
|
|
|
|
|
December 31,
2016
|
|
|
December 31,
2017
|
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Expiry period
|
|
|
|
|
|
|
|
|
1 - 4 years
|
|
$
|
136.7
|
|
|
$
|
|
|
5 - 10 years
|
|
|
41.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
178.1
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
F - 64
As of December 31, 2016 and 2017, the aggregate deductible temporary differences for which
no deferred income tax assets have been recognized amounted to NT$1,919.8 million and NT$26,536.3 million, respectively.
|
e.
|
Unused
tax-exemption
information
|
As of
December 31, 2017, the profits generated from the following projects of TSMC are exempt from income tax for a five-year period:
|
|
|
|
|
|
|
Tax-exemption Period
|
|
Construction and expansion of 2007 by TSMC
|
|
|
2014 to 2018
|
|
Construction and expansion of 2008 by TSMC
|
|
|
2015 to 2019
|
|
Construction and expansion of 2009 by TSMC
|
|
|
2018 to 2022
|
|
|
f.
|
The information of unrecognized deferred income tax liabilities associated with investments
|
As
of December 31, 2016 and 2017, the aggregate taxable temporary differences associated with investments in subsidiaries not recognized as deferred income tax liabilities amounted to NT$83,181.4 million and NT$95,003.3 million,
respectively.
|
g.
|
Integrated income tax information
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2016
|
|
|
December 31,
2017
|
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Balance of the Imputation
|
|
|
|
|
|
|
|
|
Credit Account - TSMC
|
|
$
|
82,072.6
|
|
|
$
|
114,264.3
|
|
|
|
|
|
|
|
|
|
|
The actual and estimated creditable ratio for distribution of TSMCs earnings of 2016 and 2017 were
13.90% and 14.69%, respectively; while the creditable ratio for individual shareholders residing in the R.O.C. is half of the original creditable ratio according to the R.O.C. Income Tax Law. Since the amended R.O.C. Income Tax Act announced in
February 2018 abolished the imputation tax system, no creditable ratio for distribution of earnings in 2018 is expected.
All of
TSMCs earnings generated prior to December 31, 1997 have been appropriated.
|
h.
|
Income tax examination
|
The tax authorities have examined income tax returns of TSMC through
2014. All investment tax credit adjustments assessed by the tax authorities have been recognized accordingly.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31
|
|
|
|
2015
|
|
|
2016
|
|
|
2017
|
|
|
|
(NT$)
|
|
|
(NT$)
|
|
|
(NT$)
|
|
Basic EPS
|
|
$
|
11.68
|
|
|
$
|
12.79
|
|
|
$
|
13.30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS
|
|
$
|
11.68
|
|
|
$
|
12.79
|
|
|
$
|
13.30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F - 65
EPS is computed as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts
(Numerator)
NT$
(In
Millions)
|
|
|
Number of
Shares
(Denominator)
(In Millions)
|
|
|
EPS (NT$)
|
|
Year ended December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic EPS
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available to common shareholders of the parent
|
|
$
|
302,850.9
|
|
|
|
25,930.3
|
|
|
$
|
11.68
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of dilutive potential common shares
|
|
|
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available to common shareholders of the parent (including effect of dilutive potential
common shares)
|
|
$
|
302,850.9
|
|
|
|
25,930.4
|
|
|
$
|
11.68
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic/Diluted EPS
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available to common shareholders of the parent
|
|
$
|
331,713.7
|
|
|
|
25,930.3
|
|
|
$
|
12.79
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic/Diluted EPS
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income available to common shareholders of the parent
|
|
$
|
344,998.3
|
|
|
|
25,930.3
|
|
|
$
|
13.30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32.
|
ADDITIONAL INFORMATION OF EXPENSES BY NATURE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31
|
|
|
|
2015
|
|
|
2016
|
|
|
2017
|
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
a. Depreciation of property, plant and equipment
|
|
|
|
|
|
|
|
|
|
|
|
|
Recognized in cost of revenue
|
|
$
|
204,126.2
|
|
|
$
|
203,476.8
|
|
|
$
|
235,985.2
|
|
Recognized in operating expenses
|
|
|
15,152.2
|
|
|
|
16,583.1
|
|
|
|
19,746.3
|
|
Recognized in other operating income and expenses
|
|
|
25.0
|
|
|
|
25.1
|
|
|
|
64.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
219,303.4
|
|
|
$
|
220,085.0
|
|
|
$
|
255,796.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
b. Amortization of intangible assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Recognized in cost of revenue
|
|
$
|
1,642.1
|
|
|
$
|
2,028.5
|
|
|
$
|
2,135.5
|
|
Recognized in operating expenses
|
|
|
1,560.1
|
|
|
|
1,714.9
|
|
|
|
2,211.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
3,202.2
|
|
|
$
|
3,743.4
|
|
|
$
|
4,346.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F - 66
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31
|
|
|
|
2015
|
|
|
2016
|
|
|
2017
|
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
c. Research and development expenses
|
|
$
|
65,544.6
|
|
|
$
|
71,207.7
|
|
|
$
|
80,732.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
d. Employee benefits expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Post-employment benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined contribution plans
|
|
$
|
2,002.6
|
|
|
$
|
2,164.9
|
|
|
$
|
2,369.9
|
|
Defined benefit plans
|
|
|
278.9
|
|
|
|
272.2
|
|
|
|
271.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,281.5
|
|
|
|
2,437.1
|
|
|
|
2,641.4
|
|
Other employee benefits
|
|
|
88,929.4
|
|
|
|
97,248.0
|
|
|
|
101,488.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
91,210.9
|
|
|
$
|
99,685.1
|
|
|
$
|
104,130.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee benefits expense summarized by function
|
|
|
|
|
|
|
|
|
|
|
|
|
Recognized in cost of revenue
|
|
$
|
52,983.2
|
|
|
$
|
58,493.5
|
|
|
$
|
61,026.1
|
|
Recognized in operating expenses
|
|
|
38,227.7
|
|
|
|
41,191.6
|
|
|
|
43,104.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
91,210.9
|
|
|
$
|
99,685.1
|
|
|
$
|
104,130.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In accordance with the amendments to the R.O.C. Company Act in May 2015 and the amended TSMCs
Articles of Incorporation approved by TSMCs shareholders in its meeting held on June 7, 2016, TSMC shall allocate compensation to directors and profit sharing bonus to employees of TSMC not more than 0.3% and not less than 1% of annual
profits during the period, respectively. Prior to the amendments, TSMCs Articles of Incorporation provided that, when allocating the net profits for each fiscal year, TSMC shall first set aside legal capital reserve and special capital
reserve, then set aside not more than 0.3% of the balance as compensation to directors and not less than 1% as profit sharing bonus to employees, respectively.
TSMC accrued profit sharing bonus to employees based on a percentage of net income before income tax, profit sharing bonus to employees and
compensation to directors during the period, which amounted to NT$20,556.9 million, NT$22,418.3 million and NT$23,019.1 million for the years ended December 31, 2015, 2016 and 2017, respectively; compensation to directors was
expensed based on estimated amount payable. If there is a change in the proposed amounts after the annual consolidated financial statements are authorized for issue, the differences are recorded as a change in accounting estimate.
TSMCs profit sharing bonus to employees and compensation to directors in the amounts of NT$20,556.9 million and
NT$356.2 million in cash for 2015, respectively, had been approved by the Board of Directors on February 2, 2016. The profit sharing bonus to employees and compensation to directors in cash for 2015 had been reported to TSMCs
shareholders in its meeting held on June 7, 2016, after the amended TSMCs Articles of Incorporation had been approved. The aforementioned approved amount has no difference with the one recognized in the consolidated financial statements
for the year ended December 31, 2015.
TSMCs profit sharing bonus to employees and compensation to directors in the amounts of
NT$22,418.3 million and NT$376.4 million in cash for 2016, respectively, and profit sharing bonus to employees and compensation to directors in the amounts of NT$23,019.1 million and NT$368.9 million in cash for 2017,
respectively, had been approved by the Board of Directors of TSMC held on February 14, 2017 and February 13, 2018, respectively. There is no significant difference between the aforementioned approved amounts and the amounts charged against earnings
of 2016 and 2017, respectively.
F - 67
33.
|
CONSOLIDATION OF SUBSIDIARY
|
Due to a Chinese consortiums acquisition of OVT,
major shareholders of VisEra Holding and OVT Taiwan, the Company acquired OVTs 49.1% ownership in VisEra Holding and 100% ownership in OVT Taiwan on November 20, 2015. The related information is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal Activity
|
|
Date of Acquisition
|
|
Proportion of
Voting Equity
Interests
Acquired (%)
|
|
|
Consideration
Transferred
NT$
(In Millions)
|
|
VisEra Holding
|
|
Investing in companies involved in the design, manufacturing and other related
businesses in the semiconductor industry
|
|
November 20, 2015
|
|
|
49.1
|
|
|
$
|
3,536.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OVT Taiwan
|
|
Investment activities
|
|
November 20, 2015
|
|
|
100
|
|
|
$
|
394.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
b.
|
Considerations transferred
|
|
|
|
|
|
|
|
|
|
|
|
VisEra Holding
|
|
|
OVT Taiwan
|
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Cash
|
|
$
|
3,536.1
|
|
|
$
|
394.7
|
|
|
|
|
|
|
|
|
|
|
|
c.
|
Assets acquired and liabilities assumed at the date of acquisition
|
|
|
|
|
|
|
|
|
|
|
|
VisEra Holding
|
|
|
OVT Taiwan
|
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Current assets
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
3,858.5
|
|
|
$
|
20.7
|
|
Accounts receivable
|
|
|
512.0
|
|
|
|
|
|
Inventories
|
|
|
59.1
|
|
|
|
|
|
Other financial assets
|
|
|
706.5
|
|
|
|
373.8
|
|
Other current assets
|
|
|
26.4
|
|
|
|
0.2
|
|
Noncurrent assets
|
|
|
|
|
|
|
|
|
Investments accounted for using equity method
|
|
|
721.6
|
|
|
|
|
|
Property, plant and equipment
|
|
|
2,651.2
|
|
|
|
|
|
Intangible assets
|
|
|
12.1
|
|
|
|
|
|
Deferred income tax assets
|
|
|
30.0
|
|
|
|
|
|
Refundable deposits
|
|
|
15.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,593.0
|
|
|
|
394.7
|
|
|
|
|
|
|
|
|
|
|
(Continued)
F - 68
|
|
|
|
|
|
|
|
|
|
|
VisEra Holding
|
|
|
OVT Taiwan
|
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
Financial liabilities at fair value through profit or loss
|
|
$
|
1.0
|
|
|
$
|
|
|
Accounts payable
|
|
|
87.5
|
|
|
|
|
|
Salary and bonus payable
|
|
|
183.1
|
|
|
|
|
|
Accrued profit sharing bonus to employees and compensation to directors and supervisors
|
|
|
45.8
|
|
|
|
|
|
Payables to contractors and equipment suppliers
|
|
|
132.3
|
|
|
|
|
|
Income tax payable
|
|
|
47.9
|
|
|
|
|
|
Provisions
|
|
|
126.0
|
|
|
|
|
|
Accrued expenses and other current liabilities
|
|
|
102.8
|
|
|
|
|
|
Noncurrent liabilities
|
|
|
|
|
|
|
|
|
Guarantee deposits
|
|
|
1.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
727.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets
|
|
$
|
7,865.3
|
|
|
$
|
394.7
|
|
|
|
|
|
|
|
|
|
|
(Concluded)
|
d.
|
Goodwill arising on acquisition
|
|
|
|
|
|
|
|
|
|
|
|
VisEra Holding
|
|
|
|
|
|
|
NT$
|
|
|
|
|
|
|
(In Millions)
|
|
|
|
|
Consideration transferred
|
|
$
|
3,536.1
|
|
|
|
|
|
Fair value of investments previously owned
|
|
|
3,458.2
|
|
|
|
|
|
Less: Fair value of identifiable net assets acquired
|
|
|
(7,865.3
|
)
|
|
|
|
|
Non-controlling interests
|
|
|
923.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill arising on acquisition
|
|
$
|
52.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
e.
|
Net cash outflow on acquisition of subsidiaries
|
|
|
|
|
|
|
|
|
|
|
|
VisEra Holding
|
|
|
OVT Taiwan
|
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Consideration paid in cash
|
|
$
|
3,536.1
|
|
|
$
|
394.7
|
|
Less: Cash and cash equivalent balances acquired
|
|
|
(3,858.5
|
)
|
|
|
(20.7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(322.4
|
)
|
|
$
|
374.0
|
|
|
|
|
|
|
|
|
|
|
|
f.
|
Impact of acquisitions on the results of the Company
|
The results of VisEra Holding since the
acquisition date included in the consolidated statements of profit or loss and other comprehensive income for the year ended December 31, 2015 were as follows:
|
|
|
|
|
|
|
|
|
|
|
VisEra Holding
|
|
|
|
|
|
|
NT$
|
|
|
|
|
|
|
(In Millions)
|
|
|
|
|
Net revenue
|
|
$
|
254.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
13.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F - 69
Had the business combination of VisEra Holding been in effect on January 1, 2015, the
Companys net revenue and net income for the year ended December 31, 2015 would have been NT$846,401.8 million and NT$302,964.4 million, respectively. This
pro-forma
information is for
illustrative purposes only and is not necessarily an indication of revenue and results of operations of the Company that actually would have been achieved had the acquisition been completed on January 1, 2015, nor is it intended to be a
projection of future results. The aforementioned
pro-forma
net revenue and net income were calculated based on the fair value of assets acquired and liabilities assumed at the date of acquisition.
34.
|
DISPOSAL OF SUBSIDIARY
|
In January 2015, the Board of Directors of TSMC approved a sale
of TSMC SSL common shares of 565.5 million held by TSMC and TSMC Guang Neng Investment, Ltd. (TSMC GN) to Epistar Corporation. The transaction was completed in February 2015.
|
a.
|
Consideration received from the disposal
|
|
|
|
|
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
Total consideration received
|
|
$
|
825.0
|
|
Expenditure associated with consideration received
|
|
|
(142.5
|
)
|
|
|
|
|
|
|
|
Net consideration received
|
|
$
|
682.5
|
|
|
|
|
|
|
|
b.
|
Analysis of assets and liabilities over which the control was lost
|
|
|
|
|
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
Assets
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
81.5
|
|
Inventories
|
|
|
28.5
|
|
Other current assets
|
|
|
91.3
|
|
Property, plant and equipment
|
|
|
643.7
|
|
Intangible assets
|
|
|
47.4
|
|
Others
|
|
|
51.8
|
|
|
|
|
|
|
|
|
|
944.2
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
Salary and bonus payable
|
|
|
38.2
|
|
Accrued expenses and other current liabilities
|
|
|
68.1
|
|
Net defined benefit liability
|
|
|
35.9
|
|
Others
|
|
|
76.9
|
|
|
|
|
|
|
|
|
|
219.1
|
|
|
|
|
|
|
Net assets disposed of
|
|
$
|
725.1
|
|
|
|
|
|
|
F - 70
|
c.
|
Gain/loss on disposal of subsidiary
|
|
|
|
|
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
Net consideration received
|
|
$
|
682.5
|
|
Net assets disposed of
|
|
|
(725.1
|
)
|
Non-controlling interests
|
|
|
42.6
|
|
|
|
|
|
|
|
|
Gain/loss on disposal of subsidiary
|
|
$
|
|
|
|
|
|
|
|
|
d.
|
Net cash inflow arising from disposal of subsidiary
|
|
|
|
|
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
Net consideration received
|
|
$
|
682.5
|
|
Less: Balance of cash and cash equivalents disposed of
|
|
|
81.5
|
|
|
|
|
|
|
|
|
|
|
$
|
601.0
|
|
|
|
|
|
|
35.
|
RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash
changes
|
|
|
|
|
|
|
Balance as of
January 1, 2017
|
|
|
Financing Cash
Flow
|
|
|
Foreign Exchange
Movement
|
|
|
Other Changes
(Note)
|
|
|
Balance as of
December 31, 2017
|
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Short-term loans
|
|
$
|
57,958.2
|
|
|
$
|
10,394.3
|
|
|
$
|
(4,585.7
|
)
|
|
$
|
|
|
|
$
|
63,766.8
|
|
Bonds payable
|
|
|
191,193.6
|
|
|
|
(38,100.0
|
)
|
|
|
(2,918.9
|
)
|
|
|
26.4
|
|
|
|
150,201.1
|
|
Guarantee deposits
|
|
|
26,670.6
|
|
|
|
(2,872.3
|
)
|
|
|
(1,609.0
|
)
|
|
|
(6,108.7
|
)
|
|
|
16,080.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
275,822.4
|
|
|
$
|
(30,578.0
|
)
|
|
$
|
(9,113.6
|
)
|
|
$
|
(6,082.3
|
)
|
|
$
|
230,048.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note:
|
Other changes includes amortization of bonds payable and guarantee deposits refunded to customers by offsetting related accounts receivable.
|
The Company requires significant amounts of capital to build and
expand its production facilities and acquire additional equipment. In consideration of the industry dynamics, the Company manages its capital in a manner to ensure that it has sufficient and necessary financial resources to fund its working capital
needs, capital asset purchases, research and development activities, dividend payments, debt service requirements and other business requirements associated with its existing operations over the next 12 months.
F - 71
37.
|
FINANCIAL INSTRUMENTS
|
|
a.
|
Categories of financial instruments
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2016
|
|
|
December 31,
2017
|
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Financial assets
|
|
|
|
|
|
|
|
|
FVTPL (Note 1)
|
|
$
|
6,451.1
|
|
|
$
|
569.8
|
|
Available-for-sale
financial assets
|
|
|
71,891.3
|
|
|
|
98,248.5
|
|
Held-to-maturity
financial assets
|
|
|
38,917.7
|
|
|
|
20,821.7
|
|
Hedging derivative financial assets
|
|
|
5.6
|
|
|
|
34.4
|
|
Loans and receivables (Note 2)
|
|
|
673,592.9
|
|
|
|
684,416.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
790,858.6
|
|
|
$
|
804,091.0
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities
|
|
|
|
|
|
|
|
|
FVTPL (Note 1)
|
|
$
|
191.1
|
|
|
$
|
26.7
|
|
Hedging derivative financial liabilities
|
|
|
|
|
|
|
15.6
|
|
Amortized cost (Note 3)
|
|
|
387,046.2
|
|
|
|
340,501.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
387,237.3
|
|
|
$
|
340,543.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 1:
|
|
Including held for trading and designated as at FVTPL.
|
Note 2:
|
|
Including cash and cash equivalents, notes and accounts receivable (including related parties), other receivables and refundable deposits.
|
Note 3:
|
|
Including short-term loans, accounts payable (including related parties), payables to contractors and equipment suppliers, accrued expenses and other current liabilities, bonds payable,
long-term
bank loans, and guarantee deposits.
|
|
b.
|
Financial risk management objectives
|
The Company seeks to ensure sufficient cost-efficient
funding readily available when needed. The Company manages its exposure to foreign currency risk, interest rate risk, equity price risk, credit risk and liquidity risk with the objective to reduce the potentially adverse effects the market
uncertainties may have on its financial performance.
The plans for material treasury activities are reviewed by Audit Committees and/or
Board of Directors in accordance with procedures required by relevant regulations or internal controls. During the implementation of such plans, Corporate Treasury function must comply with certain treasury procedures that provide guiding principles
for overall financial risk management and segregation of duties.
F - 72
The Company is exposed to the financial market risks, primarily changes in foreign
currency exchange rates, interest rates and equity investment prices.
Foreign currency risk
Most of the Companys operating activities are denominated in foreign currencies. Consequently, the Company is exposed to foreign currency
risk. To protect against reductions in value and the volatility of future cash flows caused by changes in foreign exchange rates, the Company utilizes derivative financial instruments, such as forward exchange contracts and cross currency swaps, and
non-derivative
financial instruments, such as foreign currency-denominated debt, to partially hedge its currency exposure.
The Companys sensitivity analysis of foreign currency risk mainly focuses on the foreign currency monetary items and the derivatives
financial instruments at the end of the reporting period. Assuming an unfavorable 10% movement in the levels of foreign exchanges relative to the New Taiwan dollar, the net income for the years ended December 31, 2015, 2016 and 2017 would have
decreased by NT$902.1 million, NT$111.3 million and NT$867.9 million, respectively, and the other comprehensive income for the year ended December 31, 2017 would have decreased by NT$265.9 million.
Interest rate risk
The
Company is exposed to interest rate risk primarily related to its outstanding debt and investments in fixed income securities. All of the Companys bonds payable have fixed interest rates and are measured at amortized cost. As such, changes in
interest rates would not affect the future cash flows. On the other hand, because interest rates of the Companys long-term bank loans are floating, changes in interest rates would affect the future cash flows but not the fair value.
Assuming the amount of the long-term bank loans at the end of the reporting period had been outstanding for the entire period and all other
variables were held constant, a hypothetical 100 basis point (1.00%) increase in interest rates would have resulted in an increase in the interest expense, net of tax, by approximately NT$0.3 million for both the years ended December 31,
2015 and 2016, respectively. As of December 31, 2017, the Company had no outstanding long-term bank loans.
The Company classified its
investments in fixed income securities as
held-to-maturity
and
available-for-sale
financial assets. Because
held-to-maturity
fixed income securities are measured at amortized cost, changes in interest rates would not affect the fair value. On the
other hand,
available-for-sale
fixed income securities are exposed to fair value fluctuations caused by changes in interest rates. The Company utilized interest rate
futures to partially hedge the interest rate risk on its
available-for-sale
fixed income investments. These hedges may offset only a small portion of the financial
impact from movements in interest rates.
Based on a sensitivity analysis performed at the end of the reporting period, a hypothetical 100
basis points (1.00%) increase in interest rates across all maturities would have resulted in a decrease in other comprehensive income by NT$1,600.9 million and NT$2,119.7 million for the years ended December 31, 2016 and 2017,
respectively.
F - 73
Other price risk
The Company is exposed to equity price risk arising from
available-for-sale
equity investments.
Assuming a
hypothetical decrease of 5% in prices of the equity investments at the end of the reporting period for the years ended December 31, 2015, 2016 and 2017, the other comprehensive income would have decreased by NT$260.0 million,
NT$342.6 million and NT$351.5 million, respectively.
|
d.
|
Credit risk management
|
Credit risk refers to the risk that a counterparty will default on its
contractual obligations resulting in financial loss to the Company. The Company is exposed to credit risk from operating activities, primarily trade receivables, and from investing activities, primarily deposits, fixed-income investments and other
financial instruments with banks. Credit risk is managed separately for business related and financial related exposures. As of the end of the reporting period, the Companys maximum credit risk exposure is mainly from the carrying amount of
financial assets.
Business related credit risk
The Company has considerable trade receivables outstanding with its customers worldwide. A substantial majority of the Companys
outstanding trade receivables are not covered by collateral or credit insurance. While the Company has procedures to monitor and limit exposure to credit risk on trade receivables, there can be no assurance such procedures will effectively limit its
credit risk and avoid losses. This risk is heightened during periods when economic conditions worsen.
As of December 31, 2016 and
2017, the Companys ten largest customers accounted for 74% and 70% of accounts receivable, respectively. The Company believes the concentration of credit risk is not material for the remaining accounts receivable.
Financial credit risk
The Company regularly monitors and reviews the concentration limit applied to counterparties and adjusts the concentration limit according to
market conditions and the credit standing of the counterparties. The Company mitigates its exposure by limiting the exposure to any individual counterparty and by selecting counterparties with investment-grade credit ratings.
|
e.
|
Liquidity risk management
|
The objective of liquidity risk management is to ensure the Company
has sufficient liquidity to fund its business requirements associated with existing operations over the next 12 months. The Company manages its liquidity risk by maintaining adequate cash and cash equivalent, short-term
available-for-sale
financial assets and short-term
held-to-maturity
financial assets.
F - 74
The table below summarizes the maturity profile of the Companys financial liabilities based
on contractual undiscounted payments, including principal and interest.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less Than
1 Year
|
|
|
2-3
Years
|
|
|
4-5 Years
|
|
|
5+ Years
|
|
|
Total
|
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-derivative
financial liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term loans
|
|
$
|
57,974.6
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
57,974.6
|
|
Accounts payable (including related parties)
|
|
|
27,324.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,324.5
|
|
Payables to contractors and equipment suppliers
|
|
|
63,154.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
63,154.5
|
|
Accrued expenses and other current liabilities
|
|
|
20,713.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,713.3
|
|
Bonds payable
|
|
|
40,669.5
|
|
|
|
99,161.5
|
|
|
|
35,340.7
|
|
|
|
22,979.4
|
|
|
|
198,151.1
|
|
Long-term bank loans
|
|
|
10.5
|
|
|
|
20.1
|
|
|
|
2.5
|
|
|
|
|
|
|
|
33.1
|
|
Guarantee deposits (including those classified under accrued expenses and other current
liabilities)
|
|
|
12,000.2
|
|
|
|
13,060.5
|
|
|
|
1,609.9
|
|
|
|
|
|
|
|
26,670.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
221,847.1
|
|
|
|
112,242.1
|
|
|
|
36,953.1
|
|
|
|
22,979.4
|
|
|
|
394,021.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward exchange contracts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outflows
|
|
|
40,571.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,571.8
|
|
Inflows
|
|
|
(40,586.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(40,586.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(14.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(14.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cross currency swap contracts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outflows
|
|
|
5,478.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,478.0
|
|
Inflows
|
|
|
(5,487.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,487.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(9.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(9.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
221,823.0
|
|
|
$
|
112,242.1
|
|
|
$
|
36,953.1
|
|
|
$
|
22,979.4
|
|
|
$
|
393,997.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-derivative
financial liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term loans
|
|
$
|
63,802.0
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
63,802.0
|
|
Accounts payable (including related parties)
|
|
|
30,069.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,069.2
|
|
Payables to contractors and equipment suppliers
|
|
|
55,723.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
55,723.8
|
|
Accrued expenses and other current liabilities
|
|
|
24,659.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,659.7
|
|
Bonds payable
|
|
|
60,176.8
|
|
|
|
68,378.8
|
|
|
|
7,777.7
|
|
|
|
18,203.6
|
|
|
|
154,536.9
|
|
Guarantee deposits (including those classified under accrued expenses and other current
liabilities)
|
|
|
8,493.8
|
|
|
|
7,503.1
|
|
|
|
83.7
|
|
|
|
|
|
|
|
16,080.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
242,925.3
|
|
|
|
75,881.9
|
|
|
|
7,861.4
|
|
|
|
18,203.6
|
|
|
|
344,872.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward exchange contracts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outflows
|
|
|
67,393.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
67,393.5
|
|
Inflows
|
|
|
(67,957.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(67,957.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(564.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(564.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
242,360.9
|
|
|
$
|
75,881.9
|
|
|
$
|
7,861.4
|
|
|
$
|
18,203.6
|
|
|
$
|
344,307.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F - 75
|
f.
|
Fair value of financial instruments
|
|
1)
|
Fair value measurements recognized in the consolidated statements of financial position
|
Fair
value measurements are grouped into Levels 1 to 3 based on the degree to which the fair value is observable:
|
|
Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;
|
|
|
Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly
(i.e. derived from prices); and
|
|
|
Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).
|
|
2)
|
Fair value of financial instruments that are measured at fair value on a recurring basis
|
Fair value hierarchy
The following table presents the Companys financial assets and liabilities measured at fair value on a recurring basis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Financial assets at FVTPL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Held for trading
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward exchange contracts
|
|
$
|
|
|
|
$
|
142.4
|
|
|
$
|
|
|
|
$
|
142.4
|
|
Cross currency swap contracts
|
|
|
|
|
|
|
11.0
|
|
|
|
|
|
|
|
11.0
|
|
Designated as at FVTPL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Time deposit
|
|
|
|
|
|
|
6,297.7
|
|
|
|
|
|
|
|
6,297.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
6,451.1
|
|
|
$
|
|
|
|
$
|
6,451.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale
financial
assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate bonds
|
|
$
|
|
|
|
$
|
29,999.5
|
|
|
$
|
|
|
|
$
|
29,999.5
|
|
Agency bonds/Agency mortgage-backed securities
|
|
|
|
|
|
|
14,880.5
|
|
|
|
|
|
|
|
14,880.5
|
|
Asset-backed securities
|
|
|
|
|
|
|
11,254.7
|
|
|
|
|
|
|
|
11,254.7
|
|
Government bonds
|
|
|
8,347.0
|
|
|
|
110.4
|
|
|
|
|
|
|
|
8,457.4
|
|
Publicly traded stocks
|
|
|
3,196.7
|
|
|
|
|
|
|
|
|
|
|
|
3,196.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
11,543.7
|
|
|
$
|
56,245.1
|
|
|
$
|
|
|
|
$
|
67,788.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hedging derivative financial assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value hedges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate futures contracts
|
|
$
|
5.6
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
5.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities at FVTPL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Held for trading
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward exchange contracts
|
|
$
|
|
|
|
$
|
91.6
|
|
|
$
|
|
|
|
$
|
91.6
|
|
Designated as at FVTPL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward exchange contracts
|
|
|
|
|
|
|
99.5
|
|
|
|
|
|
|
|
99.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
191.1
|
|
|
$
|
|
|
|
$
|
191.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F - 76
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2017
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Financial assets at FVTPL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Held for trading
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward exchange contracts
|
|
$
|
|
|
|
$
|
569.8
|
|
|
$
|
|
|
|
$
|
569.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale
financial
assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate bonds
|
|
$
|
|
|
|
$
|
40,165.2
|
|
|
$
|
|
|
|
$
|
40,165.2
|
|
Agency bonds/Agency mortgage-backed securities
|
|
|
|
|
|
|
29,235.4
|
|
|
|
|
|
|
|
29,235.4
|
|
Asset-backed securities
|
|
|
|
|
|
|
13,459.5
|
|
|
|
|
|
|
|
13,459.5
|
|
Government bonds
|
|
|
7,716.0
|
|
|
|
101.7
|
|
|
|
|
|
|
|
7,817.7
|
|
Publicly traded stocks
|
|
|
2,548.1
|
|
|
|
|
|
|
|
|
|
|
|
2,548.1
|
|
Commercial paper
|
|
|
|
|
|
|
148.3
|
|
|
|
|
|
|
|
148.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
10,264.1
|
|
|
$
|
83,110.1
|
|
|
$
|
|
|
|
$
|
93,374.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hedging derivative financial assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value hedges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate futures contracts
|
|
$
|
27.0
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
27.0
|
|
Cash flow hedges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward exchange contracts
|
|
|
|
|
|
|
7.4
|
|
|
|
|
|
|
|
7.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
27.0
|
|
|
$
|
7.4
|
|
|
$
|
|
|
|
$
|
34.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities at FVTPL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Held for trading
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward exchange contracts
|
|
$
|
|
|
|
$
|
26.7
|
|
|
$
|
|
|
|
$
|
26.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hedging derivative financial liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow hedges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward exchange contracts
|
|
$
|
|
|
|
$
|
15.6
|
|
|
$
|
|
|
|
$
|
15.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In the fourth quarter of 2017, the Company reassessed the
bid-ask
spread and the transaction volume of the fixed income securities in determining whether there were quoted prices in active markets. Accordingly, the Company classified the fair value hierarchy levels
of corporate bonds, agency bonds, agency mortgage-backed securities and some government bonds as level 2. To have consistent comparative basis, the Company had revised prior year classification from level 1 to level 2.
There were no purchases and disposals for assets classified as Level 3 for the years ended December 31, 2015, 2016 and 2017,
respectively.
Valuation techniques and assumptions used in Level
2 fair value measurement
The fair values of financial assets and financial liabilities are determined as follows:
|
|
|
The fair values of corporate bonds, agency bonds, agency mortgage-backed securities, asset-backed securities, and government bonds are determined by quoted market prices provided by third party pricing services.
|
F - 77
|
|
|
Forward exchange contracts and cross currency swap contracts are measured using forward exchange rates and the discounted curves that are derived from quoted market prices. For investments in commercial paper and time
deposit designated as FVTPL, the fair values are determined by the present value of future cash flows based on the discounted curves that are derived from the quoted market prices.
|
|
3)
|
Fair value of financial instruments that are not measured at fair value
|
Except as detailed in
the following table, the Company considers that the carrying amounts of financial instruments in the consolidated financial statements that are not measured at fair value approximate their fair values.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
|
|
December 31, 2017
|
|
|
|
Carrying
Amount
|
|
|
Fair Value
|
|
|
Carrying
Amount
|
|
|
Fair Value
|
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Financial assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Held-to-maturity
financial assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate bonds
|
|
$
|
23,849.7
|
|
|
$
|
23,996.4
|
|
|
$
|
19,338.8
|
|
|
$
|
19,541.4
|
|
Structured product
|
|
|
1,609.9
|
|
|
|
1,609.7
|
|
|
|
1,482.9
|
|
|
|
1,475.4
|
|
Commercial paper
|
|
|
8,628.2
|
|
|
|
8,630.8
|
|
|
|
|
|
|
|
|
|
Negotiable certificate of deposit
|
|
|
4,829.9
|
|
|
|
4,847.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Measured at amortized cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonds payable
|
|
|
191,193.6
|
|
|
|
192,845.3
|
|
|
|
150,201.1
|
|
|
|
152,077.7
|
|
Fair value hierarchy
The table below sets out the fair value hierarchy for the Companys assets and liabilities which are not required to measure at fair
value:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Financial assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Held-to-maturity
securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate bonds
|
|
$
|
|
|
|
$
|
23,996.4
|
|
|
$
|
|
|
|
$
|
23,996.4
|
|
Commercial paper
|
|
|
|
|
|
|
8,630.8
|
|
|
|
|
|
|
|
8,630.8
|
|
Negotiable certificate of deposit
|
|
|
|
|
|
|
4,847.8
|
|
|
|
|
|
|
|
4,847.8
|
|
Structured product
|
|
|
|
|
|
|
1,609.7
|
|
|
|
|
|
|
|
1,609.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
39,084.7
|
|
|
$
|
|
|
|
$
|
39,084.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Measured at amortized cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonds payable
|
|
$
|
|
|
|
$
|
192,845.3
|
|
|
$
|
|
|
|
$
|
192,845.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F - 78
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2017
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Financial assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Held-to-maturity
securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate bonds
|
|
$
|
|
|
|
$
|
19,541.4
|
|
|
$
|
|
|
|
$
|
19,541.4
|
|
Structured product
|
|
|
|
|
|
|
1,475.4
|
|
|
|
|
|
|
|
1,475.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
21,016.8
|
|
|
$
|
|
|
|
$
|
21,016.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Measured at amortized cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonds payable
|
|
$
|
|
|
|
$
|
152,077.7
|
|
|
$
|
|
|
|
$
|
152,077.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In the fourth quarter of 2017, the Company reassessed the
bid-ask
spread and the transaction volume of the fixed income securities in determining whether there were quoted prices in active markets. Accordingly, the Company classified the fair value hierarchy levels
of corporate bonds and bonds payable as level 2. To have consistent comparative basis, the Company had revised prior year classification from level 1 to level 2.
Valuation techniques and assumptions used in Level
2 fair value measurement
The fair values of corporate bonds and negotiable certificate of deposit are determined by quoted market prices provided by third party
pricing services. The fair value of structured products are determined by quoted market prices provided by the counterparty.
The fair
value of commercial paper is determined by the present value of future cash flows based on the discounted curves that are derived from the quoted market prices.
The fair value of the Companys bonds payable is determined by quoted market prices provided by third party pricing services.
38.
|
RELATED PARTY TRANSACTIONS
|
Intercompany balances and transactions between TSMC and its
subsidiaries, which are related parties of TSMC, have been eliminated upon consolidation; therefore those items are not disclosed in this note. The following is a summary of significant transactions between the Company and other related parties:
|
a.
|
Related party name and categories
|
|
|
|
Related Party Name
|
|
Related Party Categories
|
GUC
|
|
Associates
|
VIS
|
|
Associates
|
SSMC
|
|
Associates
|
Xintec
|
|
Associates
|
Mutual-Pak
|
|
Associates
|
VisEra Tech
|
|
Joint venture (Note)
|
TSMC Education and Culture Foundation
|
|
Other related parties
|
TSMC Charity Foundation
|
|
Other related parties
|
|
Note:
|
The Company has obtained control over VisEra Tech and consolidated VisEra Tech since November 20, 2015.
|
F - 79
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31
|
|
|
|
|
|
2015
|
|
|
2016
|
|
|
2017
|
|
|
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Item
|
|
Related Party Categories
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue from sale of goods
|
|
Associates
|
|
$
|
4,254.0
|
|
|
$
|
5,929.1
|
|
|
$
|
8,496.0
|
|
|
|
Other related parties
|
|
|
|
|
|
|
|
|
|
|
0.1
|
|
|
|
Joint venture
|
|
|
1.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4,255.2
|
|
|
$
|
5,929.1
|
|
|
$
|
8,496.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue from royalties
|
|
Associates
|
|
$
|
489.4
|
|
|
$
|
516.7
|
|
|
$
|
482.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31
|
|
|
|
|
|
2015
|
|
|
2016
|
|
|
2017
|
|
|
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Related Party Categories
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Associates
|
|
|
|
$
|
11,126.4
|
|
|
$
|
10,108.2
|
|
|
$
|
9,904.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
d.
|
Receivables from related parties
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2016
|
|
|
December 31,
2017
|
|
|
|
|
|
NT$
|
|
|
NT$
|
|
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Item
|
|
Related Party Name/Categories
|
|
|
|
|
|
|
|
|
Receivables from related parties
|
|
GUC
|
|
$
|
969.1
|
|
|
$
|
1,022.9
|
|
|
|
Xintec
|
|
|
0.4
|
|
|
|
161.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
969.5
|
|
|
$
|
1,184.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other receivables from related parties
|
|
SSMC
|
|
$
|
60.7
|
|
|
$
|
83.1
|
|
|
|
VIS
|
|
|
86.0
|
|
|
|
78.2
|
|
|
|
Other Associates
|
|
|
0.1
|
|
|
|
9.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
146.8
|
|
|
$
|
171.1
|
|
|
|
|
|
|
|
|
|
|
|
|
F - 80
|
e.
|
Payables to related parties
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2016
|
|
|
December 31,
2017
|
|
|
|
|
|
NT$
|
|
|
NT$
|
|
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Item
|
|
Related Party Name/Categories
|
|
|
|
|
|
|
|
|
Payables to related parties
|
|
Xintec
|
|
$
|
124.6
|
|
|
$
|
817.9
|
|
|
|
VIS
|
|
|
587.4
|
|
|
|
410.0
|
|
|
|
SSMC
|
|
|
506.1
|
|
|
|
407.0
|
|
|
|
Other Associates
|
|
|
44.1
|
|
|
|
21.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,262.2
|
|
|
$
|
1,656.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
f.
|
Acquisition of property, plant and equipment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition Price
|
|
|
|
|
|
Years Ended December 31
|
|
|
|
|
|
2015
|
|
|
2016
|
|
|
2017
|
|
|
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Related Party Categories
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Associates
|
|
|
|
$
|
26.2
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31
|
|
|
|
|
|
2015
|
|
|
2016
|
|
|
2017
|
|
|
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Item
|
|
Related Party Categories
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufacturing expenses
|
|
Associates
|
|
$
|
2,321.9
|
|
|
$
|
1,389.2
|
|
|
$
|
2,196.1
|
|
|
|
Joint venture
|
|
|
12.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,334.7
|
|
|
$
|
1,389.2
|
|
|
$
|
2,196.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development expenses
|
|
Associates
|
|
$
|
142.8
|
|
|
$
|
161.7
|
|
|
$
|
69.8
|
|
|
|
Joint venture
|
|
|
1.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
144.2
|
|
|
$
|
161.7
|
|
|
$
|
69.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expenses
|
|
Other related parties
|
|
$
|
60.0
|
|
|
$
|
60.0
|
|
|
$
|
101.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The sales prices and payment terms to related parties were not significantly different from those of
sales to third parties. For other related party transactions, price and terms were determined in accordance with mutual agreements.
F - 81
The Company leased machinery and equipment, factory and office from associates. The lease terms
and prices were both determined in accordance with mutual agreements. The rental expenses were paid to associates quarterly or monthly; the related expenses were both classified under manufacturing expenses.
The Company deferred the disposal gain/loss derived from sales of property, plant and equipment to related parties (transactions with
associates and joint venture), and then recognized such gain/loss over the depreciable lives of the disposed assets.
|
h.
|
Compensation of key management personnel
|
The compensation to directors and other key
management personnel for the years ended December 31, 2015, 2016 and 2017 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31
|
|
|
|
|
|
2015
|
|
|
2016
|
|
|
2017
|
|
|
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Short-term employee benefits
|
|
|
|
$
|
1,883.0
|
|
|
$
|
2,024.0
|
|
|
$
|
2,170.3
|
|
Post-employment benefits
|
|
|
|
|
10.9
|
|
|
|
4.0
|
|
|
|
3.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,893.9
|
|
|
$
|
2,028.0
|
|
|
$
|
2,174.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The compensation to directors and other key management personnel were determined by the Compensation
Committee of TSMC in accordance with the individual performance and the market trends.
The Company provided certificate of deposits recorded in other financial
assets as collateral mainly for building lease agreements. As of December 31, 2016 and 2017, the aforementioned other financial assets amounted to NT$185.7 million and NT$165.6 million, respectively.
40.
|
SIGNIFICANT OPERATING LEASE ARRANGEMENTS
|
The Companys major significant operating
leases are arrangements on several parcels of land, machinery and equipment and office premises.
The Company expensed the lease payments
as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31
|
|
|
|
|
|
2015
|
|
|
2016
|
|
|
2017
|
|
|
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Minimum lease payments
|
|
|
|
$
|
996.0
|
|
|
$
|
1,135.7
|
|
|
$
|
2,178.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F - 82
Future minimum lease payments under the above
non-cancellable
operating leases are as follows:
|
|
|
|
|
|
|
|
|
|
|
December 31,
2016
|
|
|
December 31,
2017
|
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Not later than 1 year
|
|
$
|
1,321.5
|
|
|
$
|
3,116.2
|
|
Later than 1 year and not later than 5 years
|
|
|
3,677.4
|
|
|
|
5,174.7
|
|
Later than 5 years
|
|
|
6,624.0
|
|
|
|
8,905.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
11,622.9
|
|
|
$
|
17,196.8
|
|
|
|
|
|
|
|
|
|
|
41.
|
SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS
|
Significant contingent
liabilities and unrecognized commitments of the Company as of the end of the reporting period, excluding those disclosed in other notes, were as follows:
|
a.
|
Under a technical cooperation agreement with Industrial Technology Research Institute, the R.O.C. Government or its designee approved by TSMC can use up to 35% of TSMCs capacity provided TSMCs outstanding
commitments to its customers are not prejudiced. The term of this agreement is for five years beginning from January 1, 1987 and is automatically renewed for successive periods of five years unless otherwise terminated by either party with one
year prior notice. As of December 31, 2017, the R.O.C. Government did not invoke such right.
|
|
b.
|
Under a Shareholders Agreement entered into with Philips and EDB Investments Pte Ltd. on March 30, 1999, the parties formed a joint venture company, SSMC, which is an integrated circuit foundry in Singapore.
TSMCs equity interest in SSMC was 32%. Nevertheless, in September 2006, Philips
spun-off
its semiconductor subsidiary which was renamed as NXP B.V. Further, TSMC and NXP B.V. purchased all the SSMC
shares owned by EDB Investments Pte Ltd. pro rata according to the Shareholders Agreement on November 15, 2006. After the purchase, TSMC and NXP B.V. currently own approximately 39% and 61% of the SSMC shares, respectively. TSMC and NXP B.V.
are required, in the aggregate, to purchase at least 70% of SSMCs capacity, but TSMC alone is not required to purchase more than 28% of the capacity. If any party defaults on the commitment and the capacity utilization of SSMC falls below a
specific percentage of its capacity, the defaulting party is required to compensate SSMC for all related unavoidable costs. There was no default from the aforementioned commitment as of December 31, 2017.
|
|
c.
|
TSMC joined the Customer
Co-Investment
Program of ASML and entered into the investment agreement in August 2012. The agreement includes an investment of EUR837.8 million by
TSMC Global to acquire 5% of ASMLs equity with a
lock-up
period of 2.5 years. TSMC Global has acquired the aforementioned equity on October 31, 2012. The
lock-up
period expired on May 1, 2015 and as of October 8, 2015, all ASML shares had been disposed.
|
Both parties also signed the research and development funding agreement whereby TSMC shall provide EUR276.0 million to ASMLs
research and development programs from 2013 to 2017. As of September 30, 2017, the amount has been fully paid.
F - 83
|
d.
|
In May 2017, Mr. Uri Cohen filed a complaint in the U.S. District Court for the Eastern District of Texas alleging that TSMC, TSMC North America and other companies infringe four U.S. patents. In response, TSMC and
TSMC North America filed a declaratory judgment complaint against Cohen in the U.S. District Court for the Northern District of California seeking a judgment declaring that there is no infringement of the same four patents. TSMC also filed a motion
to transfer Cohens lawsuit in the U.S. District Court for the Eastern District of Texas to the U.S. District Court for the Northern District of California. Cohen agreed to the transfer, and as of December 2017, the cases are consolidated and
pending in the U.S. District Court for the Northern District of California. The outcome cannot be determined and the Company cannot make a reliable estimate of the contingent liability at this time.
|
|
e.
|
On September 28, 2017, TSMC was contacted by the European Commission (Commission) for information and documents concerning alleged anti-competitive practices of TSMC in relation to semiconductor sales.
This proceeding is still in its preliminary stage, and it is premature to predict how the case will proceed, the outcome of the proceeding or its impact. TSMC will continue to cooperate fully with the Commission.
|
|
f.
|
TSMC entered into long-term purchase agreements of silicon wafer with multiple suppliers. The relative minimum purchase quantity and price are specified in the agreements.
|
|
g.
|
Amounts available under unused letters of credit as of December 31, 2016 and 2017 were NT$122.4 million and NT$94.9 million, respectively.
|
42.
|
SIGNIFICANT LOSS FROM DISASTER
|
On February 6, 2016, an earthquake struck Taiwan.
The resulting damage was mostly to inventories and equipment. The Company recognized earthquake losses of NT$2,492.1 million, net of insurance claim, for the year ended December 31, 2016. Such losses were primarily included in cost of
revenue. The related insurance claim was finalized in the first quarter of 2017, and the accumulated earthquake losses were NT$2,386.8 million, net of insurance claim. The Company recognized a reduction of such losses of NT$105.3 million
for the three months ended March 31, 2017.
43.
|
OPERATING SEGMENTS INFORMATION
|
The Companys only reportable segment is the foundry segment. The
foundry segment engages mainly in the manufacturing, selling, packaging, testing and computer-aided design of integrated circuits and other semiconductor devices and the manufacturing of masks. The Company also had other operating segment that did
not exceed the quantitative threshold for separate reporting. The segment mainly engaged in the researching, developing, designing, manufacturing and selling of renewable energy and efficiency related technologies and products.
From 2016, the Company has only one single operating segment, the segment revenue and operating results were the same as those stated in the
consolidated statements of profit or loss and other comprehensive income for both years ended December 31, 2016, and 2017, respectively.
The Company uses the income from operations as the measurement for the basis of performance assessment. The basis for such measurement is the
same as that for the preparation of financial statements.
F - 84
|
b.
|
Segment revenue and operating results
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foundry
|
|
|
Others
|
|
|
Total
|
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Year ended December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue from external customers
|
|
$
|
842,690.2
|
|
|
$
|
807.2
|
|
|
$
|
843,497.4
|
|
Income (loss) from operations
|
|
|
320,833.2
|
|
|
|
(785.4
|
)
|
|
|
320,047.8
|
|
Share of profits (loss) of associates and joint venture
|
|
|
4,582.0
|
|
|
|
(385.6
|
)
|
|
|
4,196.4
|
|
Income tax expense (benefit)
|
|
|
47,646.5
|
|
|
|
(1.8
|
)
|
|
|
47,644.7
|
|
|
c.
|
Geographic information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenue from External Customers
|
|
|
Non-current
Assets
|
|
|
|
Years Ended December 31
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2015
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Taiwan
|
|
$
|
90,169.5
|
|
|
$
|
127,063.0
|
|
|
$
|
90,129.4
|
|
|
$
|
991,567.9
|
|
|
$
|
1,027,963.2
|
|
United States
|
|
|
566,600.2
|
|
|
|
610,371.1
|
|
|
|
620,948.7
|
|
|
|
8,245.0
|
|
|
|
7,515.9
|
|
Asia
|
|
|
123,705.9
|
|
|
|
146,907.4
|
|
|
|
194,477.1
|
|
|
|
14,071.3
|
|
|
|
44,213.4
|
|
Europe, the Middle East and Africa
|
|
|
57,065.0
|
|
|
|
58,042.3
|
|
|
|
68,538.3
|
|
|
|
8.7
|
|
|
|
8.1
|
|
Others
|
|
|
5,956.8
|
|
|
|
5,554.5
|
|
|
|
3,353.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
843,497.4
|
|
|
$
|
947,938.3
|
|
|
$
|
977,447.2
|
|
|
$
|
1,013,892.9
|
|
|
$
|
1,079,700.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company categorized the net revenue mainly based on the country in which the customer is
headquartered.
Non-current
assets include property, plant and equipment, intangible assets and other noncurrent assets.
|
d.
|
Production information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31
|
|
Production
|
|
2015
|
|
|
2016
|
|
|
2017
|
|
|
|
NT$
|
|
|
NT$
|
|
|
NT$
|
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
|
(In Millions)
|
|
Wafer
|
|
$
|
766,228.8
|
|
|
$
|
861,170.8
|
|
|
$
|
874,572.6
|
|
Others
|
|
|
77,268.6
|
|
|
|
86,767.5
|
|
|
|
102,874.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
843,497.4
|
|
|
$
|
947,938.3
|
|
|
$
|
977,447.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Starting in 2017, revenue from packaging and testing services is reclassified from wafer revenue to other
revenue. To have consistent comparative basis, the Company had revised prior years classification.
|
e.
|
Major customers representing at least 10% of net revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31
|
|
|
|
2015
|
|
|
2016
|
|
|
2017
|
|
|
|
Amount
|
|
|
%
|
|
|
Amount
|
|
|
%
|
|
|
Amount
|
|
|
%
|
|
|
|
NT$
|
|
|
|
|
|
NT$
|
|
|
|
|
|
NT$
|
|
|
|
|
|
|
(In Millions)
|
|
|
|
|
|
(In Millions)
|
|
|
|
|
|
(In Millions)
|
|
|
|
|
Customer A
|
|
$
|
134,117.2
|
|
|
|
16
|
|
|
$
|
157,185.4
|
|
|
|
17
|
|
|
$
|
214,228.8
|
|
|
|
22
|
|
Customer B
|
|
|
134,158.4
|
|
|
|
16
|
|
|
|
107,463.2
|
|
|
|
11
|
|
|
|
64,096.2
|
|
|
|
7
|
|
F - 85