Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) Q1 2024 Earnings Call Transcript

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) Q1 2024 Earnings Call Transcript April 18, 2024

Operator:

Jeff Su: Good afternoon, everyone, and welcome to TSMC's First Quarter 2024 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 shortly. [Operator Instructions]. The format for today's event will be as follows: first, TSMC's Senior Vice President and CFO, Mr. Wendell Huang, will summarize our operations in the first quarter 2024, followed by our guidance for the second quarter 2024. Afterwards, Mr. Huang and TSMC's CEO, Dr. C. C. Wei, will jointly provide the company's key messages. Then we will open the lines for the question-and-answer session.

A close-up of a complex network of integrated circuits used in logic semiconductors.

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. Thank you for joining us today. My presentation will start with the financial highlights for the first quarter 2024. After that, I will provide the guidance for the second quarter 2024. First quarter revenue decreased 5.3% sequentially in NT dollars or 3.8% in U.S. dollars as our business was impacted by smartphone seasonality, partially offset by continued HPC-related demand. Gross margin increased 0.1 percentage point sequentially to 53.1%, mainly reflecting product mix changes due to smartphone seasonality, partially offset by a less favorable foreign exchange rate. Total operating expenses accounted for 11.1% of net revenue, which is lower than the 12% implied in our first quarter guidance, mainly due to tighter expense controls.

Thus, operating margin increased 0.4 percentage points sequentially to 42%. Overall, our first quarter EPS was TWD8.7 and ROE was 25.4%. Now let's move on to revenue by technology. 3-nanometer process technology contributed 9% of wafer revenue in the first quarter, whilst 5-nanometer and 7-nanometer accounted for 37% and 19%, respectively. Advanced technologies, defined as 7-nanometer and below, accounted for 65% of wafer revenue. Moving on to revenue contribution by platform. HPC increased 3% quarter-over-quarter to account for 46% of our first quarter revenue. Smartphone decreased 16% to account for 38%. IoT increased 5% to account for 6%. Automotive remained flat and accounted for 6%, and DCE increased 33% to account for 2%. Moving on to the balance sheet.

See also

15 Best Low Cost ETFs and

14 Best Large Cap Dividend Growth Stocks To Buy Now.

To continue reading the Q&A session, please click here.