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TSMC Q1 2024 Discussion

Daniel Nenni

Admin
Staff member
TSMC Reports First Quarter EPS of NT$8.70

HSINCHU, Taiwan, R.O.C., Apr. 18, 2024 -- TSMC (TWSE: 2330, NYSE: TSM) today
announced consolidated revenue of NT$592.64 billion, net income of NT$225.49 billion, and
diluted earnings per share of NT$8.70 (US$1.38 per ADR unit) for the first quarter ended March
31, 2024.

Year-over-year, first quarter revenue increased 16.5% while net income and diluted EPS both
increased 8.9%. Compared to fourth quarter 2023, first quarter results represented a 5.3%
decrease in revenue and a 5.5% decrease in net income. All figures were prepared in accordance
with TIFRS on a consolidated basis.

In US dollars, first quarter revenue was $18.87 billion, which increased 12.9% year-over-year but
decreased 3.8% from the previous quarter.

Gross margin for the quarter was 53.1%, operating margin was 42.0%, and net profit margin was
38.0%.

In the first quarter, shipments of 3-nanometer accounted for 9% of total wafer revenue; 5-
nanometer accounted for 37%; 7-nanometer accounted for 19%. Advanced technologies, defined
as 7-nanometer and more advanced technologies, accounted for 65% of total wafer revenue.

“Our business in the first quarter was impacted by smartphone seasonality, partially offset by
continued HPC-related demand,” said Wendell Huang, Senior VP and Chief Financial Officer of
TSMC. “Moving into second quarter 2024, we expect our business to be supported by strong
demand for our industry-leading 3nm and 5nm technologies, partially offset by continued
smartphone seasonality.”

Based on the Company’s current business outlook, management expects the overall performance
for second quarter 2024 to be as follows:
• Revenue is expected to be between US$19.6 billion and US$20.4 billion;
And, based on the exchange rate assumption of 1 US dollar to 32.3 NT dollars,
• Gross profit margin is expected to be between 51% and 53%;
• Operating profit margin is expected to be between 40% and 42%.

2Q24 Guidance
◼ Revenue to be between US$19.6 billion and US$20.4 billion
Based on our current business outlook, management expects: And, based on the exchange rate assumption of 1 US dollar to 32.3 NT dollars, management expects:
◼ Gross profit margin to be between 51% and 53%
◼ Operating profit margin to be between 40% and 42%
◼ TSMC maintained its 2024 CapEx target at $28-32B
◼ TSMC expects the 50%+ AI revenue CAGR to be sustained through 2028
◼ TSMC hints at price hikes
◼ TSMC maintains its own outlook for 2024 (AI fueled)

RECAP OF MAJOR EVENTS
• TSMC Announces Candidates for Board of Directors (2024/04/12)
• TSMC Arizona and U.S. Department of Commerce Announce up to US$6.6 Billion in Proposed CHIPS Act Direct Funding, the Company Plans Third Leading-Edge Fab in Phoenix (2024/04/08)
• TSMC Board of Directors Hold a Special Meeting and Approve the Appointment of Senior Vice President of R&D Dr. Y.J. Mii and Senior Vice President of Operations Mr. Y.P. Chyn as Executive Vice Presidents and Co-Chief Operating Officers of TSMC (2024/02/29)
• TSMC Celebrates the Opening of JASM in Kumamoto, Japan (2024/02/24)
• JASM Set to Expand in Kumamoto, Japan (2024/02/06)
• TSMC Board of Directors Approved NT$3.50 Cash Dividend for the Fourth Quarter of 2023 and Set June13, 2024 as Ex-Dividend Date, June 19, 2024 as the Record Date, and July 11, 2024 as the Distribution Date (2024/02/06)
• TSMC Board of Directors Approved the Convening of the 2024 Annual Shareholders’ Meeting on June 4,2024, at Which an Election for its Ten-Member Board of Directors Will Be Held (2024/02/06)
......
 

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Stock is down 6%. I've never seen a stock for such a good company trade as irrationally as TSM does. It really makes no sense
This is why I no longer hold TSMC stock. I got tired of the irrational roller coaster. ASML too. Both are critical global semiconductor industry companies with little or no real competition global, yet they trade like General Motors. I'm also tired of the foreign dividend taxes. I said adios to these two after the last run-up.
 
This is why I no longer hold TSMC stock. I got tired of the irrational roller coaster. ASML too. Both are critical global semiconductor industry companies with little or no real competition global, yet they trade like General Motors. I'm also tired of the foreign dividend taxes. I said adios to these two after the last run-up.
it's so infuriating. TSM trades like a vastly inferior company for no reason. It gets kneecapped on the way up and down. I really cannot see the logic in its price action. Does anyone really think TSM should trade at a P/E below the semi space average? A P/E in the 20's is insanity and the company is held to a standard no other company is
 
Stock is down 6%. I've never seen a stock for such a good company trade as irrationally as TSM does. It really makes no sense
My guess is they were expecting more. Being up double digits is kind of the expectation for a firm that has grown every year since it’s inception with the exception of 2023. A similar deal happened with NVIDIA’s last call where they were up a good bit but stock stayed flat because the expectation is that “every quarter will be the biggest quarter ever”. NVIDIA and AI have everything out of whack because I guess investors think if NVIDIA can sell B100 for whatever comical price they sell for, then surely that means COWS and N4P can sell for comically high prices. Obviously that isn’t how it works since NVIDIA’s volume isn’t very big (relative to an Apple, intel, QCOM, or broadcomm) and the price they pay is no more than the price those other firms pay. Kind of sucks for TSMC, but I guess Wall street will always do its thing.
 
Here is the opening remark from CC Wei:

C. C. Wei

Thank you, Wendell. Good afternoon, everyone. Before I start, I would like to take a moment and make a few remarks.

On April 3, TSMC experienced a major-scale earthquake of 7.2 magnitude. Our deepest sympathies and heart go out to all those who are affected by this tragedy. I also want to recognize and deeply thank all of our employees and our suppliers for their dedication and hard effort during this time.

Although it was largest earthquake in Taiwan in the last 25 years, we worked together tirelessly and were able to resume for operation at all our fab within 3 days with minimal disruptions, demonstrating the resilience of our operation in Taiwan.

Lastly, I would also like to extend our great appreciation to our customers with their understanding and support as we work to recover the lost production during the second quarter.

Now let me start my prepared remarks with our near-term demand outlook. We concluded our first quarter with revenue of USD 18.9 billion, slightly above our guidance in U.S. dollar terms. Our business in the first quarter was impacted by smartphone seasonality, partially offset by continued HPC-related demand.

Moving into second quarter 2024, we expect our business to be supported by strong demand for our industry-leading 3-nanometer and 5-nanometer technologies, partially offset by continued smartphone seasonality.

Looking at the full year 2024, macroeconomic and geopolitical uncertainty persists, potentially further weighing on consumer sentiment and end-market demand. We thus expect the overall semiconductor market, excluding memory, to experience a more mild and gradual recovery in 2024.

We lowered our forecast for the 2024 overall semiconductor market, excluding memory, to increase by approximately 10% year-over-year, while foundry industry growth is now forecast to be mid- to high-teens percent, both are coming off the steep inventory correction and/or base of 2023. Having said that, we continue to expect 2024 to be a healthy growth year for TSMC.

Supported by our technology leadership and broader customer base, we expect that our business to grow quarter-over-quarter throughout 2024 and reaffirm our full year revenue to increase by low to mid-20% in U.S. dollar terms.

Next, I will talk about the strong AI-related demand outlook. The continued surge in AI-related demand supports our already strong conviction that structural demand for energy-efficient computing is accelerating in an intelligent and connected world. TSMC is a key enabler of AI applications.

AI technology is evolving to use ever increasingly complex AI models, which needs to be supported by more powerful semiconductor hardware. No matter which approach is taken, it requires use of the most advanced semiconductor process technologies. Thus, the value of our technology position is increasing as customers rely on TSMC to provide the most advanced process and packaging technology at scale with a dependable and predictable cadence of technology offering.

In summary, our technology leadership enable TSMC to win business and enables our customer to win business in their end market. Almost all the AI innovators are working with TSMC to address the insatiable AI-related demand for energy-efficient computing power. We forecast the revenue contribution from several AI processors to more than double this year and account for low-teens percent of our total revenue in 2024.

For the next 5 years, we forecast it to grow at 50% CAGR and increase to higher than 20% of our revenue by 2028. Several AI processors are narrowly defined as GPUs, AI accelerators and CPU's performing, training and inference functions and do not include the networking edge or on-device AI. We expect several AI processors to be the strongest driver of our HPC platform growth and the largest contributor in terms of our overall incremental revenue growth in the next several years.

Now let me talk about our global manufacturing footprint update. TSMC's mission is to be the trusted technology and capacity provider of the global IC -- logic IC industry for years to come. Given the strong HPC and AI-related demand, it is strategically important for TSMC to expand our global manufacturing footprint to continue to support our U.S. customers' growth, increase customers' trust and expand our future growth potential.

In Arizona, we have received the strong commitment and support from our U.S. customers and plan to build 3 fabs, which help to create greater economies of scale. Each of our fab in Arizona will have a clean-room area that is approximately double the size of a typical logical fab. We have made significant progress in our first fab, which has already entered engineering wafer production in April with the N4 process technology. We are well on track for volume production in first half 2025.

Our second fab has been upgraded to utilize 2-nanometer technologies to support a strong AI-related demand in addition to the previously announced 3-nanometer. We recently completed the , in which the last steel construction beam was raised into place, and volume production is scheduled to begin in 2028.

We also recently announced plans to build a third fab in Arizona using 2-nanometer or more advanced technologies, with production beginning by the end of the decade. We are confident that once we begin volume production, we will be able to deliver the same level of manufacturing quality and reliability in each of our fab in Arizona as from our fab in Taiwan.

In Japan, we held an opening ceremony in February in Kumamoto for our first specialty technology fab. This fab will utilize the 12/16 and the 22/28-nanometer process technologies and is on track for volume production in the fourth quarter of this year.

Together with our JV partners, we also announced a plan to build a second specialty fab in Japan with 40, 12/16 and the 6/7-nanometer process technologies to support a strategic customer for consumer, automotive, industrial and HPC-related applications. Construction is scheduled to begin in second half '24 with production target by the end 2027.

In Europe, we plan to build a specialty technology fab in Dresden, Germany, focusing on automotive and industrial applications with our JV partners where construction is scheduled to begin in fourth quarter this year. Our overseas decision are based on our customers' need and the necessary level of government support. This is to maximize the value for our shareholders.

In today's fragmented globalization environment, cost will be higher of everyone, including TSMC, our customers, our competitors and the entire semiconductor industry. We plan to manage and minimize the overseas cost gap by, first, pricing strategically to reflect the value of geographic flexibility; second, working closely with government to secure their support; and third, leveraging our fundamental advantage of manufacturing technology leadership and our large-scale manufacturing base, which no other manufacturer in this industry can match.

Thus, even after factoring in the higher cost of overseas fab, we are confident to deliver a long-term gross margin of 53% and higher and sustainable ROE of greater than 25% that we have committed to our shareholders. At the same time, TSMC will be the most efficient and cost-effective manufacturer in the region that we operate. We are continuing to provide our customers with the most advanced technology at scale to support their growth.

Finally, I will talk about our N2 status. Our N2 technology leads our industry in addressing the insatiable need for energy-efficient computing, and almost all AI innovators are working with TSMC. We are observing a high level of customer interest and engagement at N2 and expect the number of the new tape-outs from 2-nanometer technology in its first 2 years to be higher than both 3-nanometer and 5-nanometer in their first 2 years.

Our 2-nanometer technology will adopt the nanosheet transistors structure and be the most advanced semiconductor industry technology in both density and energy efficiency. N2 technology development is progressing well with device performance and yield on track or ahead of plan. N2 is on track for volume production in 2025 with a ramp profile similar to N3. With our strategy of continuous enhancement, N2 and its derivative will further extend our technology leadership position and enable TSMC to capture the AI-related growth opportunities well into future.
 
And here is the interesting Q&A:

1713451861334.png


C. C. Wei
Well, Gokul, this is C. C. Wei. Let me answer your questions and some of your comment also. Yes, smartphone end-market demand is seeing gradual recovery and not a steep recovery, of course. PC has been bottomed out and the recovery is slower. However, AI-related data center demand is very, very strong. And the traditional server demand is slow, lukewarm. IoT and consumer remain sluggish. Automotive inventory continue to correct, okay?

What does that mean to TSMC? The budget for a hyperscale player, their wallet share shifted from traditional server to AI server is favorable for TSMC. And we are able to capture most of the semiconductor content in an AI server's area as we define the GPU, networking processor, et cetera. Well, we have a lower presence in those CPU-only, CPU-centric traditional server. So we expect our growth will be very healthy.

C. C. Wei
Okay. Brett, let me answer this question. First, the mature node demand remains sluggish because of a site. As we just announced it, the whole semiconductor industry is gradually recovering, but not fast enough. So we expect to gradually improve in the second half of 2024.

As you mentioned that you -- do we have a concern on the overcapacity because of some of the companies, they continue to build a lot of mature node capacity. For us, actually, our strategy at a mature node is work closely with our strategic customers to develop specialty technology solution to meet their requirement. And we create and long-lasting value to customers. So we have less exposed to this possible overcapacity environment. And we believe that our utilization and profitability on mature node can be well protected.

C. C. Wei
Randy, the N2's ramp profile we say is very similar to N3 because of, look at the cycle time, we start the N2 production in the second half of 2025, actually in the last quarter of 2025. And because of the cycle time and all the kind of back-end process, and so we expect the meaningful revenue will start from the end of the first quarter or beginning of the second quarter of 2026. That's what we mean that is the profile is very similar to N3.

Now your second question is there have been a lot of engagement and the tape-out will be higher, and do we see a very steep kind of a production? Well, we do expect that, but let me say again, N2 is a very complicated work or a very complex technology node. So my customer, they also take a little bit longer time to prepare for the tape-out. So that's why they all engage with TSMC in the early stage. And -- but for their product ramp-up, they will have their own product road map and their own business consideration. However, we still say that N2 will be a very, very big node for TSMC.

C. C. Wei
Okay, Charlie, this is C. C. Wei. First, I would like to emphasize again this kind of a pricing strategy is very confidential and totally between TSMC and the customer. However, let me expand a little bit, we do encounter some kind of higher cost in the overseas or even recently, the inflation and the electricity. We expect our customers to share some of the higher cost with us, and we already started our discussion with our customers.

And as I said, for the overseas fab, we want to share our value, which also includes the flexibility of location or something like that. If my customer requests to be in some certain area, then definitely, TSMC and the customer had to share the incremental cost.

C. C. Wei
Charlie, let me say it again, the demand is very, very strong, and we have done our best where we put all the effort to increase the capacity. It's probably more than double this year as compared with last year. However, it's still not enough to meet the customers' demand, and we leverage our OSAT partners to complement of TSMC's capacity to fulfill our customers' need.

Still not enough, of course. But in my mind, my first priority is to make our customer to be successful, no matter which one. And of course, the long-term partners will have a better cooperation with TSMC in terms of technology and processing complexity, so much easier to be ramped up.

However, no matter what, let me say again, the demand is very high, extremely high. And we do our best to increase the capacity to alleviate the shortage. We also leverage the OSAT partners. We want to make sure that all our customers get supported, probably not enough this year; but for next year, we try, we try very hard.

And you mentioned about giving up some market share, that's not my consideration. My consideration is to help our customers to be successful in their market.

C. C. Wei
Okay. Bruce, let me answer the questions. Yes, your observation is right. Today, all the AI accelerators, most of them are in the 5- or 4-nanometer technology. But my customers are working with TSMC for the next node. Even for the next, next node, they have to move fast because, as I said, the power consumption has to be considered in the AI data center. So the energy-efficient is fairly important. So our 3-nanometer is much better than the 5-nanometer. And again, it will be improved in the 2-nanometer. So all I can say is all my customers are working on this kind of a trend from 4-nanometer to 3 to 2.

C. C. Wei
Okay, Laura. Let me answer the question. The edge AI or the on-device AI, the first order of magnitude is the die size. We saw without the AI -- with the AI for neuroprocessor inside. The die size will be increased, okay? That's the first we observed. And it's happening.

And then for the future, I would think that replacement cycle for smartphone or for those kind of a PC will be accelerated a little bit in the future, at least. It's not happening yet, but we do expect that it will happen soon. And all in all, I would say that on-device AI will be very positive for TSMC because we capture the larger share of the market. Did I answer the question.

C. C. Wei
Okay. Certainly, as I said, we expect to happen at a larger die size. As I said, we already observed that. And for the replacement cycle to be accelerated, it will happen, but I cannot give you a definite number because of -- it's too early to predict in 2025. But it's an upward trend, no doubt about it, and we expect we have a good business.

C. C. Wei
Wow, you asked a very technical question about the TSV and the hybrid bonding. It's all together. The 3DIC's packaging technology is very complicated, and our customers start to adopt it. Not a big volume yet, but we expect it to start to grow from this year. How big it will be? It's hard to say, but I think it is a trend. Whether it is a micro-bumping or it's a hybrid connection, that it depends on the customer's product requirement.

C. C. Wei
Well, let me answer this question. We can convert one technology node capacity to the next one is because of our GI's physical advantage, meaning, let me give you one example, our 3-nanometer and 5-nanometer are adjacent to each other, the fabs, and they are all connected. So it's much easier for TSMC to convert from 5 to 3. And that doesn't mean that every node can do the same. That's one.

And your question about the N7 converted to N5, presumably. No, because we expect the N7 in the next couple of years, it will pick up, the demand will pick up again. And you want repeat -- probably repeat the same kind of experience we have in 28-nanometer. So today, no, we don't have any solid plan to convert the N7 into N5.

C. C. Wei
Well, let me answer this question. It is always customer's decision for where the back-end service are done for their product. So in Arizona, we are happy to see that Amkor's recent announcement to build an advanced packaging facility that's very close to our AZ fab. Actually, we are working with Amkor and try to support all our customers in AZ and for their demand, for their need.


 
Any reason given for the drop in 3nm? Is it just "smartphone seasonality"?

China, which was not mentioned. TSMC must have an embargo on the word. China has a "buy our smarthones first" policy that is killing Apple. Not to mention the new embargos on Intel and AMD. China once consumed 40% of the semiconductors around the world? Now China is making their own so that 40% will be contained in China.
 
Here is the opening remark from CC Wei:

C. C. Wei

Thank you, Wendell. Good afternoon, everyone. Before I start, I would like to take a moment and make a few remarks.

On April 3, TSMC experienced a major-scale earthquake of 7.2 magnitude. Our deepest sympathies and heart go out to all those who are affected by this tragedy. I also want to recognize and deeply thank all of our employees and our suppliers for their dedication and hard effort during this time.

Although it was largest earthquake in Taiwan in the last 25 years, we worked together tirelessly and were able to resume for operation at all our fab within 3 days with minimal disruptions, demonstrating the resilience of our operation in Taiwan.

Lastly, I would also like to extend our great appreciation to our customers with their understanding and support as we work to recover the lost production during the second quarter.

Now let me start my prepared remarks with our near-term demand outlook. We concluded our first quarter with revenue of USD 18.9 billion, slightly above our guidance in U.S. dollar terms. Our business in the first quarter was impacted by smartphone seasonality, partially offset by continued HPC-related demand.

Moving into second quarter 2024, we expect our business to be supported by strong demand for our industry-leading 3-nanometer and 5-nanometer technologies, partially offset by continued smartphone seasonality.

Looking at the full year 2024, macroeconomic and geopolitical uncertainty persists, potentially further weighing on consumer sentiment and end-market demand. We thus expect the overall semiconductor market, excluding memory, to experience a more mild and gradual recovery in 2024.

We lowered our forecast for the 2024 overall semiconductor market, excluding memory, to increase by approximately 10% year-over-year, while foundry industry growth is now forecast to be mid- to high-teens percent, both are coming off the steep inventory correction and/or base of 2023. Having said that, we continue to expect 2024 to be a healthy growth year for TSMC.

Supported by our technology leadership and broader customer base, we expect that our business to grow quarter-over-quarter throughout 2024 and reaffirm our full year revenue to increase by low to mid-20% in U.S. dollar terms.

Next, I will talk about the strong AI-related demand outlook. The continued surge in AI-related demand supports our already strong conviction that structural demand for energy-efficient computing is accelerating in an intelligent and connected world. TSMC is a key enabler of AI applications.

AI technology is evolving to use ever increasingly complex AI models, which needs to be supported by more powerful semiconductor hardware. No matter which approach is taken, it requires use of the most advanced semiconductor process technologies. Thus, the value of our technology position is increasing as customers rely on TSMC to provide the most advanced process and packaging technology at scale with a dependable and predictable cadence of technology offering.

In summary, our technology leadership enable TSMC to win business and enables our customer to win business in their end market. Almost all the AI innovators are working with TSMC to address the insatiable AI-related demand for energy-efficient computing power. We forecast the revenue contribution from several AI processors to more than double this year and account for low-teens percent of our total revenue in 2024.

For the next 5 years, we forecast it to grow at 50% CAGR and increase to higher than 20% of our revenue by 2028. Several AI processors are narrowly defined as GPUs, AI accelerators and CPU's performing, training and inference functions and do not include the networking edge or on-device AI. We expect several AI processors to be the strongest driver of our HPC platform growth and the largest contributor in terms of our overall incremental revenue growth in the next several years.

Now let me talk about our global manufacturing footprint update. TSMC's mission is to be the trusted technology and capacity provider of the global IC -- logic IC industry for years to come. Given the strong HPC and AI-related demand, it is strategically important for TSMC to expand our global manufacturing footprint to continue to support our U.S. customers' growth, increase customers' trust and expand our future growth potential.

In Arizona, we have received the strong commitment and support from our U.S. customers and plan to build 3 fabs, which help to create greater economies of scale. Each of our fab in Arizona will have a clean-room area that is approximately double the size of a typical logical fab. We have made significant progress in our first fab, which has already entered engineering wafer production in April with the N4 process technology. We are well on track for volume production in first half 2025.

Our second fab has been upgraded to utilize 2-nanometer technologies to support a strong AI-related demand in addition to the previously announced 3-nanometer. We recently completed the , in which the last steel construction beam was raised into place, and volume production is scheduled to begin in 2028.

We also recently announced plans to build a third fab in Arizona using 2-nanometer or more advanced technologies, with production beginning by the end of the decade. We are confident that once we begin volume production, we will be able to deliver the same level of manufacturing quality and reliability in each of our fab in Arizona as from our fab in Taiwan.

In Japan, we held an opening ceremony in February in Kumamoto for our first specialty technology fab. This fab will utilize the 12/16 and the 22/28-nanometer process technologies and is on track for volume production in the fourth quarter of this year.

Together with our JV partners, we also announced a plan to build a second specialty fab in Japan with 40, 12/16 and the 6/7-nanometer process technologies to support a strategic customer for consumer, automotive, industrial and HPC-related applications. Construction is scheduled to begin in second half '24 with production target by the end 2027.

In Europe, we plan to build a specialty technology fab in Dresden, Germany, focusing on automotive and industrial applications with our JV partners where construction is scheduled to begin in fourth quarter this year. Our overseas decision are based on our customers' need and the necessary level of government support. This is to maximize the value for our shareholders.

In today's fragmented globalization environment, cost will be higher of everyone, including TSMC, our customers, our competitors and the entire semiconductor industry. We plan to manage and minimize the overseas cost gap by, first, pricing strategically to reflect the value of geographic flexibility; second, working closely with government to secure their support; and third, leveraging our fundamental advantage of manufacturing technology leadership and our large-scale manufacturing base, which no other manufacturer in this industry can match.

Thus, even after factoring in the higher cost of overseas fab, we are confident to deliver a long-term gross margin of 53% and higher and sustainable ROE of greater than 25% that we have committed to our shareholders. At the same time, TSMC will be the most efficient and cost-effective manufacturer in the region that we operate. We are continuing to provide our customers with the most advanced technology at scale to support their growth.

Finally, I will talk about our N2 status. Our N2 technology leads our industry in addressing the insatiable need for energy-efficient computing, and almost all AI innovators are working with TSMC. We are observing a high level of customer interest and engagement at N2 and expect the number of the new tape-outs from 2-nanometer technology in its first 2 years to be higher than both 3-nanometer and 5-nanometer in their first 2 years.

Our 2-nanometer technology will adopt the nanosheet transistors structure and be the most advanced semiconductor industry technology in both density and energy efficiency. N2 technology development is progressing well with device performance and yield on track or ahead of plan. N2 is on track for volume production in 2025 with a ramp profile similar to N3. With our strategy of continuous enhancement, N2 and its derivative will further extend our technology leadership position and enable TSMC to capture the AI-related growth opportunities well into future.

"In Arizona, we have received the strong commitment and support from our U.S. customers and plan to build 3 fabs, which help to create greater economies of scale. Each of our fab in Arizona will have a clean-room area that is approximately double the size of a typical logical fab. We have made significant progress in our first fab, which has already entered engineering wafer production in April with the N4 process technology. We are well on track for volume production in first half 2025."

This is a very good news for the 2025 go-live target.
 
I heard that the “twisted panties” phrase may have been:

From his 1Q24 statement:

C. C. Wei’s “We lowered our forecast for the 2024 overall semiconductor market, excluding memory, to increase by approximately 10% year-over-year”

From his 4Q23 statement:

“Coming off the steep inventory correction and low base of 2023, for the full year of 2024, we forecast the overall semiconductor market excluding memory to increase by more than 10% year-over-year, while foundry industry growth is forecast to be approximately 20%. For TSMC, supported by our technology leadership and broader customer base, we are confident to outperform the foundry industry growth. We expect our business to grow quarter-over-quarter throughout 2024, and our full year revenue is expected to increase by low to mid-20% in U.S. dollar terms.”

If true, it's quite pathetic.
 
China, which was not mentioned. TSMC must have an embargo on the word. China has a "buy our smarthones first" policy that is killing Apple. Not to mention the new embargos on Intel and AMD. China once consumed 40% of the semiconductors around the world? Now China is making their own so that 40% will be contained in China.

It's not a one-to-one replacement situation. A lot of PRC's semiconductor import are used for assembling products for export. The choices of the chip selections are controlled by those foreign companies who use PRC's assembly lines.
 
tsmc also revealed after insurance coverage, the total loss from earthquake is about US$ 93 millions (NT$ 3 billions).
 
Hm..it seems that Intel Arrow Lake and Lunar Lake are not in HVM yet. Maybe we're going to see N3 revenue boost in 2024 2H.
 
Any reason given for the drop in 3nm? Is it just "smartphone seasonality"?

During the conference call TSMC did say the smartphone sector is weak but overall revenue got help from the strong AI/high performance computing orders.

While most TSMC's AI and high performance computing clients are using N7/N5/N4, leading edge smartphone processors are using N3. Weak smartphone orders (due to the slow seasonal factors or market slowdown) will reduce the revenue generated from N3 production.
 
FWIW - Apple’s iPhone business in 2022/2023 dropped from $66B in revenue to $51B from calendar Q4 to Q1, a drop of roughly 23%. Some prior years have been steeper, though many similar (source: Statista).

It looks like TSMC’s revenue drop for N3 is probably just that as (I believe) it’s the vast majority of N3 revenue right now.
 
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