Taiwan Semiconductor Manufacturing Company Limited Q1 FY2021 Earnings Call

· Earnings call transcript and AI-powered summary

Financial Performance (Q1 2021)

  • Revenue grew 0.2 percent quarter-over-quarter in NT dollars and 1.9 percent in U.S. dollars, supported by high-performance computing (HPC) demand despite softer smartphone seasonality.
  • Gross margin declined to 52.4 percent, down 1.6 percentage points from Q4 2020, due to lower capacity utilization and unfavorable foreign exchange rates.
  • Operating expenses increased by TWD 0.8 billion because of higher R&D activity in the 5-nanometer family, resulting in a sequential operating margin decrease to 41.5 percent.
  • EPS was TWD 5.39 with return on equity at 29.5 percent.

Revenue Breakdown

  • 5-nanometer technologies accounted for 14 percent of wafer revenue; 7-nanometer represented 35 percent. Advanced technologies (7-nanometer and below) comprised 49 percent of wafer revenue.
  • Smartphone revenue fell 11 percent and represented 45 percent of total revenue. HPC rose 13 percent to 35 percent of revenue.
  • Internet of Things (IoT) grew 10 percent to 9 percent of revenue, automotive jumped 32 percent to 4 percent, and DCE rose 10 percent to 4 percent.

Balance Sheet Highlights

  • Cash and marketable securities totaled TWD 797 billion.
  • Current liabilities increased by TWD 45 billion, primarily due to an increase in short-term loans and accrued liabilities.

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Jeff Su: Good afternoon, everyone, and welcome to TSMC's First Quarter 2021 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 live via live audio webcast through the company's website at www.tsmc.com, where you can also download the earnings release materials. If you are joining us through the conference call, your dial-in lines are in listen-only mode. Wendell Huang: Thank you, Jeff. Good afternoon, everyone. Thank you for joining us today. My presentation will start with financial highlights for the first quarter 2021. After that, I will provide the guidance for the second quarter 2021. First quarter revenue increased 0.2% sequentially in NT dollars or 1.9% in U.S. dollars. Our first quarter business was supported by HPC-related demand, balanced by a milder smartphone seasonality than in recent years. Gross margin decreased 1.6 percentage points sequentially to 52.4%, mainly due to relatively lower level of capacity utilization and an unfavorable foreign exchange rate. Total operating expenses slightly increased by TWD 0.8 billion, mainly due to higher level of R&D activities for the N5 family. Therefore, operating margin decreased by 2 percentage points sequentially to 41.5%. Overall, our first quarter EPS was TWD 5.39, and ROE was 29.5%. Now let's move on to revenue by technology. 5-nanometer process technology contributed 14% of wafer re

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