Taiwan Semiconductor Manufacturing Company Limited Q2 FY2021 Earnings Call

· Earnings call transcript and AI-powered summary

Financial Performance

  • Q2 revenue grew 2.7% quarter-over-quarter in NT$ terms (2.9% in USD), supported by strength in HPC and automotive.
  • Gross margin declined to 50%, down 2.4 percentage points from Q1, due to N5 dilution, slower cost improvement, and no inventory revaluation benefit.
  • Operating margin fell to 39.1% (down 2.4 percentage points from Q1).
  • EPS was NT$5.18; ROE reached 27.3%.

Technology and Revenue Mix

  • 5nm contributed 18% of wafer revenue; 7nm contributed 31%.
  • Advanced technologies (7nm and below) represented 49% of wafer revenue.
  • Revenue by platform (Q/Q changes):
    • Smartphone: down 3% to 42% of revenue.
    • HPC: up 12% to 39%.
    • IoT: down 2% to 8%.
    • Automotive: up 12% to 4%.
    • DCE: down 12% to 4%.

Balance Sheet and Operational Metrics

  • Cash and marketable securities: NT$871 billion.
  • Long-term debt increased by NT$134 billion from bond issuance.
  • Accounts receivable days increased from 40 to 42; inventory days increased from 83 to 85 due to N5 wafer prebuild.

Management Commentary & Industry Outlook

  • TSMC sees a long-term structural rise in semiconductor demand driven by 5G, HPC, and accelerated digital transformation.
  • Long-term revenue CAGR (2020–2025) expected near the high end of 10–15% range.

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Jeff Su: Good afternoon, everyone. Welcome to TSMC's Second 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 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. Second quarter revenue increased 2.7% sequentially in NT dollar terms or 2.9% in U.S. dollar term. Our second quarter business was supported by continued strength in HPC and automotive-related demand. Gross margin decreased 2.4 percentage points sequentially to 50% mainly due to N5 dilution, the slower rate of cost improvement and the absence of positive inventory revaluation. Total operating expenses slightly increased TWD1.47 billion. Therefore, operating margins decreased 2.4 percentage points sequentially to 39.1%. Overall, our second quarter EPS was TWD5.18 and ROE was 27.3%. Let's move on to revenue by technology. 5-nanometer process technology contributed 18% of wafer revenue in the second quarter, while 7-nanometer accounted for 31%. Advanced technologies, which are defined as 7-nanometer and below, accounted for 49% of wafer revenue. Moving on to revenue contribution by platform. Smartphone decreased 3% quarter-over-quarter to account for 42% of our second

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