Thread by @dnystedt

TSMC 2nd Quarter Earnings

Revenue -13.7% year-on-year to US$15.68 billion, at high end of guidance: US$15.2-$16 billion

NT$ Revenue NT$480.84 bln, market expected NT$476.2 bln

Gross Margin 54.1% vs guidance 52%-54%

Operating Margin 42% vs guide 39.5%-41.5%

Net Profit -23.3%… twitter.com/i/web/status/1…

2/x TSMC 2nd Quarter (Q2) $TSM

Q2 wafer shipments fell 9.6% to 2.916 million wafers from 3.227 million in the 1st quarter (Q1).

$TSM #semiconductors

3/x TSMC Q2 $TSM

Q2 revenue fell due to weak end demand and ongoing inventory adjustments among customers, TSMC said.

Q2 gross margin fell vs Q1 due to lower capacity utilization and higher electricity costs, partly offset by stricter cost controls & a favorable exchange rate.

4/x TSMC Q2 $TSM

Advanced technologies (7nm and finer) were 53% of total wafer revenue.

5nm process technology accounted for 30%, down from 31% in Q1.

7nm accounted for 23%, up from 20% in Q1.

4/x TSMC Q2 $TSM

High Performance Computing (HPC) accounted for 44% of TSMC’s revenue, while Smartphones accounted for 33%.

Revenue from HPC -5% vs Q1, from smartphones -9%, IoT -11%, Others -5%

Revenue from Automotive rose 3% vs Q1 and digital consumer electronics rose 25%

5/x TSMC Q2 $TSM

North America continued to be the top customer for TSMC's semiconductor manufacturing services, at 66% of revenue in the 2nd quarter.

China's share fell to 12% from 15% in the 1st quarter.

6/x TSMC Q2 $TSM

TSMC 3rd Quarter Outlook

Revenue seen US$16.7 billion to $17.5 billion, up 9.1% at midpoint vs Q2
(Market expected up 10%-13%)

GM seen 51.5% to 53.5%

OM seen 38% to 40%

7/x TSMC Q2 $TSM

TSMC sees 2023 Capex at the low end of guidance provided earlier this year of US$32-$36 billion

8/x TSMC Outlook $TSM

TSMC CEO C.C. Wei:

Reiterates mid-single digit year over year drop for chip industry revenue.

But now expects foundry industry to decline by mid-teens percent.

TSMC full year 2023 revenue to decline 10% in US dollar terms

9/x TSMC Outlook $TSM
Question: Why such a big change in full year guidance, to a 10% drop from previously low-mid single digit?

TSMC CEO C.C. Wei (paraphrased)
The macro situation is weaker than we thought. Global macroeconomic factors such as high interest rates, high… twitter.com/i/web/status/1…

10/x TSMC CoWoS advanced packaging $TSM

TSMC CEO C.C. Wei
For CoWoS we do have a very tight capacity for a customer and, “we are increasing our capacity as quickly as possible” and this tightness will ease near the end of next year.

11/x TSMC Arizona Fab $TSM

TSMC says there aren’t enough workers able to install specialized fab equipment in Arizona, so Taiwan workers have been sent to train them.

Arizona fab N4 production will be delayed to 2025

12/x TSMC working to lower costs $TSM

TSMC is working with all geographies on cost issues

Overall higher costs overseas compared to mature supply chain in Taiwan

US, for example, agreed to offer subsidies to TSMC suppliers, so that helps.

TSMC will be able to absorb higher… twitter.com/i/web/status/1…

13/x TSMC Japan, Germany, China Fabs $TSM

Japan: Volume production in late 2024: 12nm, 16nm, 22/28nm

Germany: TSMC looking to build specialty automotive chip fab

China: Expanding 28nm production in line with all regulations.

14/ TSMC 2-nanometer process

CEO C.C. Wei
-N2 is progressing well for volume production in 2025

-N2 2nd generation: N2 with backside power rail solution for HPC will be available in 2nd half 2025 for customers, production in 2026.