Taiwan Semiconductor Manufacturing Company Limited Q1 FY2023 Earnings Call

· Earnings call transcript and AI-powered summary

Financial Performance (Q1 2023)

  • Revenue declined 18.7% quarter-over-quarter in NT terms (16.1% in USD) due to macroeconomic softness and customer inventory adjustments.
  • Gross margin fell to 56.3%, down 5.9 percentage points from Q4 2022, driven by lower utilization and FX headwinds but partially offset by tight cost controls.
  • Operating margin was 45.5%, down from 52% in Q4 2022.
  • EPS reached TWD 7.98; ROE was 27.5%.
  • Advanced technologies (7 nm and below) made up 51% of wafer revenue.
  • Platform revenue declines QoQ:
    • HPC down 14%, to 44% of total revenue
    • Smartphones down 27%, to 34%
    • IoT down 19%, to 9%
    • Automotive up 5%, to 7%
    • DCE down 5%, to 2%
  • Cash from operations: TWD 385 billion; CapEx: TWD 302 billion.
  • Cash balance increased to TWD 1.39 trillion.

Guidance for Q2 2023

  • Revenue forecast: USD 15.2–16.0 billion (midpoint implies -6.7% QoQ).
  • Gross margin expected between 52%–54%.
  • Operating margin expected between 39.5%–41.5%.
  • Higher electricity cost in Taiwan (17% increase effective April 1) reduces gross margin by ~60 bps in Q2 and ~50 bps for full-year 2023.

Key Corporate Commentary

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Jeff Su: Good afternoon, everyone, and welcome to TSMC's First Quarter 2023 Earnings Conference Call. This is Jeff Su, TSMC's Director of Investor Relations and your host for today. 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. [Operator Instructions]. The format for today's event will be as follows: first, TSMC's Vice President and CFO, Mr. Wendell Huang, will summarize our operations in the first quarter 2023, followed by our guidance for the second quarter 2023. Afterwards, Mr. Huang, and TSMC's CEO, Dr. C.C. Wei, will jointly provide the company's key messages. Then we will open the line for questions and answers. 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 in our press release. And now I would like to turn the call over to TSMC's CFO, Mr. Wendell Huang, for the summary of operations and the current quarter guidance. Wendell Huang: Thank you, Jeff. Good afternoon, everyone. Thank you for joining us today. My presentation will start with the financial highlights for the first quarter 2023. After that, I will provide the guidance for the second quarter 2023. First qua

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