Taiwan Semiconductor Manufacturing Company Limited Q2 FY2022 Earnings Call

· Earnings call transcript and AI-powered summary

Quarterly Performance Highlights (Q2 2022)

  • Revenue: TWD 534B (USD 18.2B), up 8.8% QoQ in TWD terms and 3.4% in USD terms, driven by strong HPC, IoT, and automotive demand.
  • Gross Margin: 59.1%, up 3.5 percentage points QoQ, ahead of guidance due to favorable FX, cost improvements, and value selling.
  • Operating Margin: 49.1%, also up 3.5 percentage points QoQ.
  • EPS: TWD 9.14; ROE: 39.4%.
  • Advanced Technologies (7nm and below): 51% of wafer revenue.

Platform Revenue Mix (Q2 2022)

  • HPC: 43% of revenue, up 13% QoQ.
  • Smartphone: 38%, up 3% QoQ.
  • IoT: 8%, up 14% QoQ.
  • Automotive: 5%, up 14% QoQ.
  • DCE: 3%, up 5% QoQ.

Balance Sheet and Cash Flow

  • Cash & Marketable Securities: TWD 1.4T.
  • Accounts Payable: Up TWD 47B QoQ.
  • Long-term Debt: Up TWD 124B due to TWD 109B in new corporate bonds.
  • Inventory Days: Up to 95 days (from 88), primarily due to prebuilds and raw material increases.
  • Q2 Cash From Operations: TWD 339B; CapEx: TWD 218B; Cash Dividend Payout: TWD 71B.
  • 2022 CapEx expected near lower end of USD 40–44B guidance.

Q3 2022 Guidance

  • Revenue: USD 19.8B–20.6B (midpoint +11.2% QoQ).
  • Gross Margin: 57.5%–59.5%.
  • Operating Margin: 47%–49%.

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Jeff Su: Good afternoon, everyone, and welcome to TSMC's Second Quarter 2022 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. 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 second quarter 2022, followed by our guidance for the third quarter 2022. Afterwards, Mr. Huang and TSMC's CEO, Dr. C.C. Wei, will jointly provide the company's key messages. Then TSMC's Chairman, Dr. Mark Liu, will host the 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 CFO, Mr. Wendell Huang, for the summary of operations and the current quarter guidance. Wendell Huang: Thank you, Jeff. Good afternoon, everyone, and thank you for joining u

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