Taiwan Semiconductor Manufacturing Company Limited Q1 FY2020 Earnings Call

· Earnings call transcript and AI-powered summary

Quarterly Performance Highlights (Q1 2020 vs Q4 2019)

  • Revenue declined 2.1% sequentially, outperforming typical seasonality due to strong HPC demand and continued 5G smartphone ramp.
  • Gross margin improved to 51.8%, up 1.6 percentage points, supported by higher utilization.
  • Operating margin rose to 41.4%, up 2.2 percentage points.
  • EPS reached TWD 4.51; ROE was 28.4%.
  • Advanced technologies (16nm and below) contributed 55% of wafer revenue.
  • Platform revenue mix:
    • Smartphone: down 9% Q/Q to 49% of revenue.
    • HPC: up 3% Q/Q to 30% of revenue.
    • IoT: up 8% Q/Q to 9% of revenue.
    • Automotive: down 1% Q/Q to 4% of revenue.
    • DCE: up 44% Q/Q to 5% of revenue.

Balance Sheet and Cash Flow

  • Cash and marketable securities: TWD 562 billion.
  • Generated TWD 203 billion from operations; spent TWD 193 billion in CapEx.
  • Cash decreased TWD 25 billion to TWD 431 billion due to CapEx and dividends.
  • Q1 CapEx in USD: $6.4 billion.

Q2 2020 Guidance

  • Revenue: $10.1–$10.4 billion (flattish, midpoint -0.6% Q/Q).
  • Gross margin: 50–52%.
  • Operating margin: 39–41%.

Management Commentary and Outlook

COVID-19 Response

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Jeff Su: Ladies and gentlemen, welcome to TSMC's First Quarter 2020 Earnings Conference Call. This is Jeff Su, TSMC's Director of Investor Relations and your host for today.To prevent the spread of COVID-19, TSMC is hosting our earnings conference call via live audio webcast through the Company's website at www.tsmc.com, where you can also download the earnings release materials. If you’re joining us through the conference call, your dialing lines are listen only mode.The format for today's event will be as follows. First, TSMC's Chairman, Dr. Mark Liu, will provide the opening remarks. Next, TSMC's Vice President and CFO, Mr. Wendell Huang, will summarize our operations in the first quarter 2020, followed by our guidance for the second quarter 2020. Afterwards, Mr. Huang, and TSMC's CEO, Dr. C. C. Wei, will jointly provide the Company's key messages. Then Dr. Liu will host a Q&A session, where all three executives will entertain your questions.As usual, I would like to remind everybody that today's discussions may contain forward-looking statements that are subject to significant risks and uncertainties which could cause actual results to differ materially from those contained in the forward-looking statements. Please refer to the safe harbor notice that appears on our press release.And now I would like to turn the call over to TSMC's Chairman, Dr. Mark Liu, for his opening remarks. Dr. Mark Liu: Good afternoon, everyone. My name is Mark Liu, here.Before we start our financi

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