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TSMC Q1 2021 Earnings Conference Call

hist78

Active member

Some highlights in my own words:

1. TSMC 2021 Capex has been raised from US$28 billion to $30 billion.

2. The $100 billion investment projection will focus on Capex. It will span across 2021, 2022, and 2023.

3. The huge Capex projection is based on customers' demand and commitment.

4. TSMC had secured equipment vendors' commitment to fullfil TSMC's huge orders, including EUV.

5. No plan for FDSOI.

6. 3nm is progressing very well.

7. TSMC expects no impact on their production operations due to the water shortage in Taiwan.

8. TSMC is buying new equipments for mature nodes in order to meet the demand. It may bring down their profit margin slightly (in terms of percentage) on those mature/specialty nodes.

9. In Q1 2021 revenue by technology, 5nm (14%), 7nm (35%), 16nm (14%), 28nm (11%).
 

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prime007

Active member
I was actually a bit surprised this morning to see TSMC's stock down so much to be honest. I felt TSMC sufficiently addressed their major concerns (Intel and Taiwan's water shortage) during the stockholder's meeting.

Other highlights (my interpretation 😁):

1. TSMC indicated that they believe Intel will INCREASE outsourcing their products in the future to TSMC in order to compete.

"...let me say that in our long-term forecast, we continue to see the IDMs outsourcing continue to increase. And so we prepare the capacity for that also. And we don't think that IDM tried to expand their own capacity will result in overcapacity situation because of we -- technology is the most important thing, let me say that. And we expand our capacity based on the customers' need. And we saw the technology leadership that provided their product to be very competitive in the market. So they are all happy to work with TSMC in developing their product for now, for the future. And so as a result, we continue to see the increased outsourcing from IDMs."

My translation: TSMC does not believe Intel will surpass TSMC in terms of technology. It is TSMC's view that Intel will be a forced to become a captive customer in order to compete against AMD, Nvidia, Qualcomm, etc.. Not exactly what Pat said verbally a few weeks ago.

2. Expanding a bit on hist78's 3rd point...C.C. Wei (TSMC CEO) stated that customer demand in the 5nm/3nm nodes is HUGE! Many different customers.

Compared to three months ago, we have certainly made some progress in engaging with customers to get their commitment to work with TSMC on 5nm and 3nm. Whether this is indication of TSMC’s technology leadership, I’d be happy to say yes.

My speculation:
Qualcomm's business seem very likely to return to TSMC from Samsung Foundry.
Nvidia's HPC business seems likely to expand for TSMC. There's speculation that Nvidia's consumer product business may return as well.
Both AMD's consumer/HPC business is growing.
Amazon seem likely to expand their business partnership with TSMC.
TSMC's (most important) relationship with Apple appears to be solid and growing.

Big questions...will grab TSMC grab Samsung's business from Tesla & Google in the future? What about Microsoft's plans for its custom chips?

3. Customers have stated technology NOT location is the most important criteria when choosing a foundry
Jeff Su (analyst) asked if customers want "geographic diversification" C.C stated customers were happy about the Arizona fab but TSMC's technology, manufacturing and efficiency were the most important factors.
 
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hist78

Active member
I was actually a bit surprised this morning to see TSMC's stock down so much to be honest. I felt TSMC sufficiently addressed their major concerns (Intel and Taiwan's water shortage) during the stockholder's meeting.

Other highlights (my interpretation 😁):

1. TSMC indicated that they believe Intel will INCREASE outsourcing their products in the future to TSMC in order to compete.

"...let me say that in our long-term forecast, we continue to see the IDMs outsourcing continue to increase. And so we prepare the capacity for that also. And we don't think that IDM tried to expand their own capacity will result in overcapacity situation because of we -- technology is the most important thing, let me say that. And we expand our capacity based on the customers' need. And we saw the technology leadership that provided their product to be very competitive in the market. So they are all happy to work with TSMC in developing their product for now, for the future. And so as a result, we continue to see the increased outsourcing from IDMs."

My translation: TSMC does not believe Intel will surpass TSMC in terms of technology. It is TSMC's view that Intel will be a forced to become a captive customer in order to compete against AMD, Nvidia, Qualcomm, etc.. Not exactly what Pat said verbally a few weeks ago.

2. Expanding a bit on hist78's 3rd point...C.C. Wei (TSMC CEO) stated that customer demand in the 5nm/3nm nodes is HUGE! Many different customers.

Compared to three months ago, we have certainly made some progress in engaging with customers to get their commitment to work with TSMC on 5nm and 3nm. Whether this is indication of TSMC’s technology leadership, I’d be happy to say yes.

My speculation:
Qualcomm's business seem very likely to return to TSMC from Samsung Foundry.
Nvidia's HPC business seems likely to expand for TSMC. There's speculation that Nvidia's consumer product business may return as well.
Both AMD's consumer/HPC business is growing.
Amazon seem likely to expand their business partnership with TSMC.
TSMC's (most important) relationship with Apple appears to be solid and growing.

Big questions...will grab TSMC grab Samsung's business from Tesla & Google in the future? What about Microsoft's plans for its custom chips?

3. Customers have stated technology NOT location is the most important criteria when choosing a foundry
Jeff Su (analyst) asked if customers want "geographic diversification" C.C stated customers were happy about the Arizona fab but TSMC's technology, manufacturing and efficiency were the most important factors.
"I was actually a bit surprised this morning to see TSMC's stock down so much to be honest. I felt TSMC sufficiently addressed their major concerns (Intel and Taiwan's water shortage) during the stockholder's meeting."

TSMC is a heavily technical, practical, yet boring company. Because their corporate culture and English is not their primary language among senior management team, they tend to give less BS and less empty words whenever they talk to analysts.

When they deliver good results or forecast good future, they just show it without pumping fists in the air.

Because their good execution year after year, there's less excitement for news media or investment analysts to stir any big news or big stock move.

I think TSMC should be a perfect fit as a key holding for Berkshire Hathaway.
 
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