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TSMC Reports First Quarter EPS of NT$7.98

Daniel Nenni

Daniel Nenni

Admin
Staff member
HSINCHU, Taiwan, R.O.C., Apr. 20, 2023 -- TSMC (TWSE: 2330, NYSE: TSM) today
announced consolidated revenue of NT$508.63 billion, net income of NT$206.99 billion, and
diluted earnings per share of NT$7.98 (US$1.31 per ADR unit) for the first quarter ended March
31, 2023.

Year-over-year, first quarter revenue increased 3.6% while net income and diluted EPS both
increased 2.1%. Compared to fourth quarter 2022, first quarter results represented an 18.7%
decrease in revenue and a 30.0% decrease in net income. All figures were prepared in accordance
with TIFRS on a consolidated basis.

In US dollars, first quarter revenue was $16.72 billion, which decreased 4.8% year-over-year and
decreased 16.1% from the previous quarter.

Gross margin for the quarter was 56.3%, operating margin was 45.5%, and net profit margin was
40.7%.

In the first quarter, shipments of 5-nanometer accounted for 31% of total wafer revenue; 7-
nanometer accounted for 20%. Advanced technologies, defined as 7-nanometer and more advanced
technologies, accounted for 51% of total wafer revenue.

“Our first quarter business was impacted by weakening macroeconomic conditions and softening
end market demand, which led customers to adjust their demand accordingly” said Wendell Huang,
VP and Chief Financial Officer of TSMC. “Moving into second quarter 2023, we expect our
business to continue to be impacted by customers’ further inventory adjustment.”

Based on the Company’s current business outlook, management expects the overall performance
for second quarter 2023 to be as follows:

• Revenue is expected to be between US$15.2 billion and US$16.0 billion; And, based on
the exchange rate assumption of 1 US dollar to 30.4 NT dollars,
• Gross profit margin is expected to be between 52% and 54%;
• Operating profit margin is expected to be between 39.5% and 41.5%.

TSMC 2023 Q1 Results.jpg


About TSMC
TSMC pioneered the pure-play foundry business model when it was founded in 1987, and has been
the world’s leading dedicated semiconductor foundry ever since. The Company supports a thriving
ecosystem of global customers and partners with the industry’s leading process technologies and
portfolio of design enablement solutions to unleash innovation for the global semiconductor
industry. With global operations spanning Asia, Europe, and North America, TSMC serves as a
committed corporate citizen around the world.

TSMC deployed 288 distinct process technologies, and manufactured 12,698 products for 532
customers in 2022 by providing broadest range of advanced, specialty and advanced packaging
technology services. TSMC is the first foundry to provide 5-nanometer production capabilities, the
most advanced semiconductor process technology available in the world. The Company is
headquartered in Hsinchu, Taiwan. For more information please visit https://www.tsmc.com.

# # #

TSMC Spokesperson:
Wendell Huang
Vice President and CFO
Tel: 886-3-505-5901

Media Contacts:
Nina Kao
Head of Public Relations
Tel: 886-3-563-6688 ext.7125036
Mobile: 886-988-239-163
E-Mail: nina_kao@tsmc.com

Ulric Kelly
Public Relations
Tel: 886-3-563-6688 ext. 7126541
Mobile: 886-978-111-503
E-Mail: ukelly@tsmc.com
 

Attachments

  • TSMC 2023 Q1 Results.jpg
    TSMC 2023 Q1 Results.jpg
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Notable points:

Wendell Huang
Thus we expect our 2023 capital budget to be between USD 32 billion and USD 36 billion.

C. C. Wei
Therefore, the fabless semiconductor inventory adjustment in first half '23 is taking longer than our prior expectation. It may extend into third quarter this year before rebalancing to a healthier level.

We now expect our full year 2023 revenue to decline low to mid-single-digit percent

Moving into second quarter 2023, we expect our business to continue to be impacted by customers for the inventory adjustment. We now expect our revenue in the first half of 2023 to decline by about 10% over the same period last year in U.S. dollar terms as compared to mid- to high single-digit percent decline previously.

TSMC's business in the second half of this year is expected to be stronger than the first half, supported by customers' new product launches.

Next, let me talk about our N3 and N3E status. Our 3-nanometer technology is the first in the semiconductor industry to high-volume production with good yield. As our customers' demand for N3 exceeds our ability to supply, we expect N3 to be fully utilized in 2023 supported by both HPC and smartphone applications. Sizable N3 revenue contribution is expected to start in third quarter and N3 will contribute mid-single-digit percentage of our total wafer revenue in 2023. N3 will further extend our N3 family with enhanced performance, power and yield and offer complete platform support for both HPC and smartphone applications.

N3E has passed the qualification and achieve performance and yield targets and volume production is scheduled for second half '23. Despite the ongoing inventory correction, we continue to observe a high level of customer engagement at both N3 and N3E with a number of tape-outs more than 2x that of N5 in the first and second half year -- in the second year, I'm sorry.

Our 3-nanometer technology is the most advanced semiconductor technology in both PPA and transistor technology. Thus we expect customers a strong multi-yield demand for our N3 technologies and are confident that our 3-nanometer family will be another large and long-lasting node for TSMC.

Our 2-nanometer technology will be the most advanced semiconductor technology in the industry in both density and energy efficiency when it is introduced, and will further extend our technology leadership well into the future.

Question-and-Answer Session
C. C. Wei
Bruce, let me answer this question. We certainly, we have observed an incremental increase in AI-related demand. It will also help the ongoing inventory digestion. The trend is very positive for TSMC. But today, if you ask me to quantitatively to say that how much of the amount increase or what is the dollar content in the server, it's too early to say. It still continue to be developed. And ChatGPT right now reinforce the already stronger conviction that we have in HPC and AI as a structurally megatrend for TSMC's business growth in the future.

C. C. Wei
Randy, let me answer the question. 2-nanometer technology definitely will start to ramp in 2025. And you asked about the volume. The volume in 2023 certainly is much higher than 2025 because 2025 is the year. But saying that, I mean that we are having HPC customer and the smartphone customer now engaged with N2 and what we'll be ramping up in 2025. Now whether it's related to CHIPS Act or not, it depends on customers' product and their plan. And today, I don't have -- I cannot share with you all those kind of minor details because it's related to customer's product plan.

Wendell Huang
US CHIPs Act: Okay, Charlie, let me make a few comments on this one. We are currently in the application process and, therefore, we're not able to comment on specific details. However, we are in close and constant communication with the U.S. government so that we fully understand all the details and provide our feedback and comments to them. At the end, all the decisions that we make will be based on the best interest of TSMC.

Wendell Huang
Okay. Brett, let me reply this matter. In Japan, we will -- our total CapEx is about $8 billion, and we expect about 50% to receive from the government. And we will be production -- stop production at the end of next year. So the incentives from the government will be according -- will be based on the progress that we are building our fabs. So that gives you some idea of how much we can receive this year and next year. How do we account for it? Basically, we will be -- that will be accounted for as an offset of depreciation. Okay?

C. C. Wei
N3 Capacity expansion: Well, I can answer the question. Actually, the demand is higher than we thought a year ago, and that's why that we need to work very hard to meet customer's demand.

C. C. Wei
Computational Litho Nvidia ASML: Okay. That's a good question. It is initiative invented by TSMC's customer NVIDIA. And actually, we are working with them. And this, particularly the software and the hardware, together will help speed up computational lithography by moving expensive operation to GPU, which will help us deploy lithography solution like inverse lithography technology, deeper learning more broadly or et cetera. And because of this one, we got involved with our customer and our supplier. And we expect that this will give us some advantage over our cost improvement and also competition.

 
My favorite quote:

Wendell Huang
US CHIPs Act: Okay, Charlie, let me make a few comments on this one. We are currently in the application process and, therefore, we're not able to comment on specific details. However, we are in close and constant communication with the U.S. government so that we fully understand all the details and provide our feedback and comments to them. At the end, all the decisions that we make will be based on the best interest of TSMC.
Click to expand...
I like the "provide our feedback and comments" part best. I wonder what TSMC thinks their negotiating position is? I have wondered if TSMC would agree to stop stock buybacks. I doubt it. Letting the USG audit their financials looks like a non-starter too. I like to read a good mystery novel, but the CHIPS Act plot reminds me of a formulaic television show where you can predict the next scene in the script much of the time.
 
blueone said:
My favorite quote:


I like the "provide our feedback and comments" part best. I wonder what TSMC thinks their negotiating position is? I have wondered if TSMC would agree to stop stock buybacks. I doubt it. Letting the USG audit their financials looks like a non-starter too. I like to read a good mystery novel, but the CHIPS Act plot reminds me of a formulaic television show where you can predict the next scene in the script much of the time.
Click to expand...
Agreed. The commerce dept wants to look at practically everything. It’s a non starter.
 
blueone said:
My favorite quote:
I like the "provide our feedback and comments" part best. I wonder what TSMC thinks their negotiating position is? I have wondered if TSMC would agree to stop stock buybacks. I doubt it. Letting the USG audit their financials looks like a non-starter too. I like to read a good mystery novel, but the CHIPS Act plot reminds me of a formulaic television show where you can predict the next scene in the script much of the time.
Click to expand...

So many strings attached. Just wait until China bans companies that accept US CHIPS Act money. Politics...
 
Daniel Nenni said:
So many strings attached. Just wait until China bans companies that accept US CHIPS Act money. Politics...
Click to expand...
With the current rules for getting funding, I'm still not convinced any of the big fabrication companies will accept it. I have a bet with a friend that even Intel ultimately won't, unless the rules change.
 
blueone said:
With the current rules for getting funding, I'm still not convinced any of the big fabrication companies will accept it. I have a bet with a friend that even Intel ultimately won't, unless the rules change.
Click to expand...

And they rush to claim that CHIPS act is huge success already，a score for Biden

CHIPS for America's Strong Start!

Department Received 200 Statements of Interest for Semiconductor Projects Across 35 States April 14, 2023 Since releasing the first CHIPS for America funding opportunity in February 2023, the Department of Commerce’s CHIPS Program Office has received widespread interest and enthusiasm from the...
semiwiki.com
 
tonyget said:
And they rush to claim that CHIPS act is huge success already，a score for Biden

CHIPS for America's Strong Start!

Department Received 200 Statements of Interest for Semiconductor Projects Across 35 States April 14, 2023 Since releasing the first CHIPS for America funding opportunity in February 2023, the Department of Commerce’s CHIPS Program Office has received widespread interest and enthusiasm from the...
semiwiki.com
Click to expand...
I read that. A statement of interest isn't the same as a signed final application, it's only the first of five steps.

 
I wish TSMC would buy back some of their stock. Raise that dividend while they’re at it. Maybe after all this 3nm build out who knows. Also sounds like you were right on the money with 3nm Daniel. C.C mentioned how demand is exceeding their already high expectations for the node. 2x 5NM at the same stage in its life cycle. Most impressive. Now onto the symposium to get some nice technical details. Looking forward to the sites write ups.
 
Mooredaddy said:
I wish TSMC would buy back some of their stock. Raise that dividend while they’re at it. Maybe after all this 3nm build out who knows. Also sounds like you were right on the money with 3nm Daniel. C.C mentioned how demand is exceeding their already high expectations for the node. 2x 5NM at the same stage in its life cycle. Most impressive. Now onto the symposium to get some nice technical details. Looking forward to the sites write ups.
Click to expand...
The dividend is pretty good already, at 2%. The stock is cheap, technically, with a PE of about 14, but we all know that's mostly geopolitical risk influencing it. Just my thinking, but every time China makes threats, rattles sabers and sends TSM down for a bit, I'd be doing buybacks.
 
blueone said:
The dividend is pretty good already, at 2%. The stock is cheap, technically, with a PE of about 14, but we all know that's mostly geopolitical risk influencing it. Just my thinking, but every time China makes threats, rattles sabers and sends TSM down for a bit, I'd be doing buybacks.
Click to expand...
Same. Stock is very cheap IMO. Like i've said before, I cant understand why people think they can derisk their portfolios from an invasion of Taiwan. Not owning TSMC isnt going to spare you from economic armageddon.
 
Mooredaddy said:
Same. Stock is very cheap IMO. Like i've said before, I cant understand why people think they can derisk their portfolios from an invasion of Taiwan. Not owning TSMC isnt going to spare you from economic armageddon.
Click to expand...
I agree, but the geopolitical risk factor in TSM's valuation is real, and and makes the stock sort of annoying to hold. Also, TSMC executives, for its shareholders' sakes need to stop the rhetoric about how high cost the AZ fabs will be in production. The non-technical press is buying it, and that's affecting future earnings projections by people smart enough to know better, if they knew anything. Even the New York Times is in on it:

www.nytimes.com

Inside Taiwanese Chip Giant, a U.S. Expansion Stokes Tensions

Employee doubts are rising about Taiwan Semiconductor Manufacturing Company’s $40 billion investment in an Arizona factory.
www.nytimes.com www.nytimes.com

(I think I've linked to this article once before, but I'm too lazy to search.)
 
Randy Abrams: "...So for 2-nanometer, if you could clarify the ramp, do you expect this steep ramp to be in 2025? Or is it more 2026?.."
Click to expand...
C. C. Wei: "...2-nanometer technology definitely will start to ramp in 2025. And you asked about the volume. The volume in 2026 certainly is much higher than 2025 because 2025 is the first year. But saying that, I mean that we are having HPC customer and the smartphone customer now engaged with N2 and what we'll be ramping up in 2025..."
Click to expand...
I think that statement makes it clear there is significant N2 volume shipping in 2025.
 
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