Live from the TSMC Earnings Call!

Last week I was invited to attend the TSMC earnings call at the Shangri-la Hotel in Taipei which was QUITE the experience. I generally listen in on the calls and/or read the transcripts but this was the first one I attended live. I didn’t really know what to expect but I certainly did NOT expect something out of Hollywood. Seriously, there were photographers everywhere taking hundreds of pictures. I was sitting front row center and as soon as the TSMC executives sat down there was a rush of paparazzi and the clicking sounds were deafening. It was a clear reminder of how important TSMC is in Taiwan, and the rest of the world for that matter.

The most interesting news for the day was that 10nm is progressing as planned with HVM in the second half of this year. In fact, 10nm should account for 10% of TSMC wafer revenue this year (Apple). There had been rumors that foundry 10nm was in trouble (fake news) but clearly that is not the case for TSMC. In fact, according to C. C. Wei:

Although N10 technology is very challenging, the yield learning progression has been the fastest as compared to the previous node such as the 20- and 16-nanometer. Our current N10 yield progress is slightly ahead of schedule. The ramp of N10 will be very fast in the second half of this year.

C.C. also gave an encouraging 7nm update:

TSMC N7 will enter risk production in second quarter this year. So far, we have more than 30 customers actively engaged in N7. And we expect about 15 tape-outs in this year with volume production in 2018. In just 1 year after our launch of N7, we plan to introduce N7+ in 2018. N7+ will leverage EUV technology for a few critical layers to save more immersion layers. In addition to process simplification, our N7+ provides better transistor performance by about 10% and reduces the chip size by up to 10% when compared with the N7. High volume production of N7+ is expected in second half 2018 — I’m sorry, in second half of 2019. Right now, our focus on EUV include power source stability, pellicle for EUV mask and stability of the photoresist. We continue to work with ASML to improve the tool productivity so that it can be ready for mass production on schedule.

And last but not least 5nm:

We have been working with major customers to define 5-nanometer specs and to develop technology to support customers’ risk production schedule in second quarter 2019, with volume ramp in 2020. Functional SRAM in our test vehicle has already been established. We plan to use more layers of EUV in N5 as compared to N7+.

The other interesting technology update was InFO:

First, we expect InFO revenue in 2017 will be about USD 500 million. Now we are engaging with multiple customers to develop next-generation InFO technology for smartphone application for their 2018, 2019 models. We are also developing various InFO technologies to extend the application into high-performance computing area, such as InFO on substrate, and we call it InFOoS; and InFO with memory on substrate, InFO-MS. These technologies will be ready by third quarter this year or first quarter next year.

If I remember correctly, InFO contributed $100M last year (Apple) so this is great progress. By the way, now that I have seen the facial expressions that go with the voices during the Q&A I can tell you that C.C. has a very quick wit. I had pity for the analysts who tried to trip up C.C. and get inappropriate responses from him.

Mark Lui talked about ubiquitous computing and AI which reminded me why TSMC is in the dominant position they are today. As a pure-play foundry TSMC makes chips for all applications and devices. Ubiquitous says that computing can appear anytime and anywhere meaning all of those mobile devices TSMC has enabled over the past 30 years will continue to evolve making the TSMC ecosystem worth its weight in silicon.

I also have a new perspective on the analysts that participate in the Q&A after sitting amongst them. I have no idea how much they get paid for what they do but I’m pretty sure it is too much.

Here is my favorite answer for Q1 2017:

Michael Chou Deutsche Bank AG, Research Division – Semiconductor Analyst Okay, the next question, sir, management mentioned the log scale comparison versus Intel, I think, the 2014, right? So since Intel came out to say that their technology seems to be 3 year ahead of the other competitor, including your company, so do you have any comment on your minimum metal pitch and the gate pitch comparison versus Intel? Or do you have any comment for your 5-nanometer versus Intel 10-nanometer, potential 7-nanometer?

C. C. Wei Taiwan Semiconductor Manufacturing Company Limited – Co-CEO and President Well, that’s a tough question. I think every company, right now, they have their own philosophy developing the next generations of technology. As I reported in the foundry, we work with our customer to define the specs that can fit their product well. So the minimum pitch to define the technology node, we are compatible to the market. But the most important is that we are offering the best solution to our customers’ product roadmap. And that’s what we care for. So I don’t compare that really what is the minimum pitch to define the technology node.

Absolutely!

A PDF of the meeting is HERE. The presentation materials are HERE. I have pages of notes from the event and the trip in general so lets talk more in the comments section and make these analysts green with envy!