Taiwan Semiconductor Manufacturing Company Limited Q2 FY2023 Earnings Call

· Earnings call transcript and AI-powered summary

Quarterly Financial Highlights
  • Q2 revenue: USD 15.7B, down 6.2% QoQ due to macroeconomic softness and customer inventory adjustments.
  • Gross margin: 54.1%, down 2.2 ppts QoQ, mainly due to lower utilization and higher electricity costs, partly offset by tighter cost controls and FX tailwinds.
  • Operating margin: 42%, down 3.5 ppts QoQ.
  • EPS: NT$7.01; ROE: 23.2%.
Technology & Platform Revenue Mix
  • 5nm: 30% of wafer revenue.
  • 7nm: 23% of wafer revenue.
  • Advanced nodes (7nm and below): 53% of wafer revenue.
  • Platform:
    • HPC: 44% (-5% QoQ)
    • Smartphone: 33% (-9% QoQ)
    • IoT: 8% (-11% QoQ)
    • Automotive: 8% (+3% QoQ)
    • DCE: 3% (+25% QoQ)
Balance Sheet & Cash Flow
  • Cash & marketable securities: NT$1.5T (USD 48B).
  • CapEx Q2: NT$251B; 2023 full-year now expected at the low end of USD 32–36B.
  • Free cash flow: negative NT$83B driven by high CapEx and NT$120B tax payment.

Q3 2023 Guidance

  • Revenue: USD 16.7B–17.5B (midpoint +9.1% QoQ).
  • Gross margin: 51.5%–53.5% (midpoint 52.5%).
  • Operating margin: 38%–40%.

Key Strategic Updates

Gross Margin Outlook

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Jeff Su: [Foreign Language] Good afternoon, everyone, and welcome to TSMC's Second 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. 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 2023, followed by our guidance for the third quarter 2023. Afterwards, Mr. Huang, TSMC's CEO, Dr. C. C. Wei; and TSMC's Chairman, Dr. Mark Liu, will jointly provide the company's key messages. Then we will open the line for a question-and-answer session. 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, and thank you for joining us today. My presentation will start with

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