Taiwan Semiconductor Manufacturing Company Limited Q3 FY2020 Earnings Call

· Earnings call transcript and AI-powered summary

Financial Performance (Q3 2020)

  • Revenue grew 14.7% quarter-over-quarter in NT dollars (16.9% in USD), driven by strong demand for advanced technologies and specialty solutions supporting 5G smartphones, HPC, and IoT.
  • Gross margin rose to 53.4%, up 0.4 percentage points from Q2 2020 due to higher utilization, partially offset by 5nm ramp dilution and FX effects.
  • Operating margin declined slightly to 42.1% (down 0.1 percentage points) due to increased R&D and facility expansion expenses.
  • EPS reached NT$5.3 and ROE was 31.3%.

Revenue Mix

  • Advanced nodes (16nm and below) accounted for 61% of wafer revenue.
  • 5nm contributed 8%, 7nm 35%, and 16nm 18%.
  • Platform contributions:
    • Smartphone: 46% of revenue (+12% QoQ)
    • HPC: 37% (+25% QoQ)
    • IoT: 9% (+24% QoQ)
    • Automotive: 2% (-23% QoQ)
    • DCE: 3% (-24% QoQ)

Balance Sheet and Cash Flow

  • Cash and marketable securities: NT$742B.
  • Long-term debt increased by NT$146B due to bond issuance.
  • Cash from operations: NT$190B; CapEx: NT$99B; dividends paid: NT$65B.
  • Cash balance rose by NT$137B to NT$604B.

Q4 2020 Guidance

  • Revenue expected between USD $12.4B–$12.7B (+3.4% QoQ at midpoint).

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Jeff Su: Good afternoon, everyone. Welcome to TSMC's Third Quarter 2020 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 dialing lines are in listen-only mode. The format for today's event will be as follows. First, TMSC's Vice President and CFO, Mr. Wendell Huang will summarize our operations in the third quarter 2020, followed by our guidance for the fourth quarter 2020. Afterwards, TMSC's CEO, Dr. C. C. Wei and Mr. Huang will jointly provide the company's key messages. Then we will open the line for Q&A. 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. Third quarter revenue increased 14.7% sequentially in NT dollars, or 16.9% in U.S. dollars, as we saw strong demand for

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