Table:
|  |  | Years Ended December 31, |  |
| --- | --- | --- | --- |
|  | 2017 | 2018 | 2019 |
|  | % | % | % |
| Operating revenues | 100.0 | 100.0 | 100.0 |
| Operating costs | (81.9) | (84.9) | (85.6) |
| Gross profit | 18.1 | 15.1 | 14.4 |
| Operating expenses |  |  |  |
| Sales and marketing | (2.8) | (2.6) | (2.6) |
| General and administrative | (2.8) | (3.2) | (3.6) |
| Research and development | (9.2) | (8.6) | (8.0) |
| Expected credit losses | — | (0.3) | (0.4) |
| Subtotal | (14.8) | (14.7) | (14.6) |
| Net other operating income and expenses | 1.1 | 3.4 | 3.5 |
| Operating income | 4.4 | 3.8 | 3.3 |
| Non-operating income and expenses | 0.7 | (2.4) | (0.1) |
| Income from continuing operations before income tax | 5.1 | 1.4 | 3.2 |
| Income tax benefit (expense) | (0.6) | 0.7 | (0.1) |
| Net income | 4.5 | 2.1 | 3.1 |
| Total other comprehensive income (loss), net of tax | (3.2) | 0.6 | 1.9 |
| Total comprehensive income | 1.3 | 2.7 | 5.0 |
| Net income attributable to: |  |  |  |
| Stockholders of the parent | 6.5 | 5.1 | 5.5 |
| Non-controlling interests | (2.0) | (3.0) | (2.4) |
| Total comprehensive income attributable to: |  |  |  |
| Stockholders of the parent | 3.3 | 5.7 | 7.4 |
| Non-controlling interests | (2.0) | (3.0) | (2.4) |
Paragraphs:
Year Ended December 31, 2019 Compared to Year Ended December 31, 2018
Operating revenues. Operating revenues decreased by 2.0% from NT$151,253 million in 2018 to NT$148,202 million (US$4,955 million) in
2019, primarily due to decreased other operating revenues, decreased foundry wafer sale, and 2.5% depreciation of the NTD in 2019 from 2018. The decreased foundry wafer sale came from a decline of 2.9% in average selling price from 2018 to 2019, partially offset by a 1.1% increase in foundry wafer shipment from 7,108 thousand 8-inch equivalent wafers in 2018 to 7,189 thousand 8-inch equivalent wafers in 2019.
Operating costs. Operating costs decreased by 1.2% from NT$128,413 million in 2018 to NT$126,887 million (US$4,242 million) in 2019, primarily due to the decreased depreciation expense and other operating costs, which was partially offset by the increased direct material costs.
Gross profit and gross margin. Gross profit decreased from NT$22,840 million in 2018 to NT$21,315 million (US$713 million) in 2019. Our gross margin decreased from 15.1% in 2018 to 14.4% in 2019, primarily due to an annual decline of 2.9% in average selling price.
Question:
Why did the gross margin decreased from 2018 to 2019?
Answer: primarily due to an annual decline of 2.9% in average selling price.