htmlOn October 13, TSMC announced its third-quarter financial data and fourth-quarter outlook at the third-quarter legal meeting. In addition, TSMC President Wei Zhejia and Finance Minister Huang Renzhao also revealed the supply chain inventory status, the latest developments in Nanjing factory, capital expenditure, expansion and establishment of factories, and advanced processes. From TSMC Dynamics, we can see that the current semiconductor industry has entered a period of adjustment.
Q3 gross profit margin reached 60.4%, and advanced process revenue accounted for more than half of
1 financial report data shows that TSMC's third quarter revenue was 613.14 billion New Taiwan Dollar (about 138.57 billion yuan), a year-on-year increase of 47.9% and a month-on-month increase of 14.8%; among them, net profit performed well, reaching 280.87 billion NT$280.87 billion (about 63.477 billion yuan), a year-on-year increase of 79.7% and a month-on-month increase of 18.5%.
Image source: TSMC's financial report screenshot
Profit margin, TSMC's gross profit margin in the third quarter was 60.4%, setting a new record high, exceeding the market estimate of 58.9%, and its previous quarter was 59.1%; operating profit rate was 50.6%, exceeding the market estimate of 48.7%, and 49.1% in the previous quarter.
Image source: TSMC's financial report screenshot
From the technical node, TSMC's 5-nanometer process shipments account for 28% of the sales of wafer in the third quarter, 7 nanometers account for 26%, 16 nanometers 12%, and 28 nanometers 10%. Overall, the revenue share of advanced processes (including 7nm and more advanced processes) has reached 54% of the total wafer sales, and has continued to rise in recent years, of which the proportion of 5nm and more advanced processes has increased significantly this year.
Image source: TSMC financial report screenshot
Based on the technology platform, TSMC's smartphone revenue accounted for 41% in the third quarter, high-performance computing (HPC) 39%, Internet of Things 10%, automotive electronics 5%, and consumer electronics 2%. Among them, Internet of Things revenue increased by 33%, and smartphones increased by 25%, with the strongest momentum.
Q4 revenue reached US$19.9-20.7 billion. Wei Zhejia estimated that inventory adjustment will continue until the first half of 2023
Looking ahead to the fourth quarter, TSMC estimated revenue will reach US$19.9-20.7 billion (about RMB 142.683-148.419 billion), equivalent to a quarterly decrease of 1.6% to a quarterly increase of 2.3%, and the average value is converted to 0.4%.
Huang Renzhao pointed out that based on the estimated gross profit margin in the fourth quarter, median , it will be the same as the third quarter, mainly due to the favorable factors of exchange rate offset by the decline in capacity utilization. "In order to cope with the rising cost pressure in 2023, TSMC will continue to drive value sales, and the long-term gross profit margin of more than 53% can still be achieved."
Wei Zhejia said that in the fourth quarter, due to the continued increase in demand for 5 nanometers, balancing the impact of customers' continuous inventory adjustments, the performance is expected to remain flat.
In terms of inventory capacity, Wei Zhejia added that the semiconductor supply chain continues to destock, and the inventory level is expected to peak in the third quarter, the inventory level will decline in the fourth quarter, and the inventory adjustment will last for several quarters, which may continue until the first half of 2023.
Wei Zhejia believes that the impact of inventory adjustment will continue. It is estimated that although the overall semiconductor industry may decline in 2023, TSMC will still be a year of growth, driving advanced process demand in high-performance computing (HPC) applications, and it is expected that US dollar revenue will grow by 15% to 20% in the next few years.
Nanjing factory 16/28 nanometers have been granted the US one-year equipment license
According to recent reports from foreign media, TSMC has obtained a one-year license to continue ordering US chip manufacturing equipment for expansion in mainland China, and TSMC also confirmed the news at the third quarter legal meeting.
TSMC stated that it has obtained one year license from the United States to produce products for the 28nm and 16nm process in the Nanjing factory, and TSMC will provide services to all customers without fully complying with all rules and regulations.
In addition, TSMC's factory construction plan is also worth paying attention to.
TSMC President Wei Zhejia said that the demand for 5nm process is strong, and the construction plan of the 5nm plant in Arizona is in line with the progress.
"The Nanjing factory expansion plan is also carried out according to the plan. Although the demand for 7 nanometers has slowed down, the construction of the Kaohsiung factory is also carried out according to the progress. The Japanese factory is also carried out according to the progress, meeting customer needs." Wei Zhejia said.
In addition, it is worth noting that there have been news in the industry recently that TSMC is considering setting up a factory in Dresden, Germany, and is expected to send a delegation to inspect in October. Regarding the European factory building plan, Wei Zhejia pointed out that TSMC will continue to increase its production expansion layout and does not rule out any possibility. However, it will depend on customer needs, business opportunities, operational efficiency and costs.
again lowered its annual capital expenditure forecast to US$36 billion, a decrease of 20%
TSMC said in the third quarter that it would lower its capital expenditure this year to US$36 billion again. Previously, TSMC expected capital expenditure to be between US$40 billion and US$44 billion this year. In the second quarter, TSMC lowered its capital expenditure to US$40 billion.
Huang Renzhao pointed out that this year's capital expenditure is 70-80% used for advanced processes, 10-20% used for mass production of advanced packaging, and 10-20% used for special processes, and emphasized that it will continue to support the long-term growth of customers' demands and will cooperate with customers to plan production capacity.
Huang Renzhao explained the reasons for the capital expenditure reduction, saying that one reason is to optimize production capacity based on the outlook for the current medium-term operation prospects; the other reason is the challenge of (production) tool delivery. Regarding production tools, the focus of performance is on ASML's lithography machine . In Q2 this year, ASML had already indicated that the order backlog amount exceeded 33 billion euros.
As for capital expenditure in 2023, Huang Renzhao said that he is still cautious in viewing customer needs at present, but will ensure that it can support the long-term structural growth of customers.
In addition to TSMC, recently Microphone and Kioxia are also responding to market changes through emergency measures such as reducing capital expenditures and reducing production. Micron announced that the company's capital expenditure will be cut by 30% next year and the wafer factory equipment expenditure will be reduced by 50%; Kioxia said it will adjust the production of Japan's Yokohiko City and the North Korean NANA Flash fab, and wafer production will be reduced by about 30% starting from October.
Advanced process, the 7-nanometer capacity utilization rate has declined, and the demand for 3-nanometer exceeds the supply
In terms of advanced process, Wei Zhejia said that TSMC's target process product portfolio will continue to increase in 2023, and the capacity utilization rate will continue to be maintained under the increase in value, which will be a year of growth. However, TSMC's 7-nanometer capacity utilization rate has weakened in the short term due to changes in market demand, mainly due to the demand of some mobile phones and PCs. Most of the 6-nanometer/7-nanometer related adjustments have occurred simultaneously (It's just Happened) inventory adjustments.
As the utilization rate of 7-nanometer production capacity declines, TSMC has also adjusted the capacity plan of in Kaohsiung plant. The Kaohsiung plant is expected to start groundbreaking this year and start mass production in 2024. The original plan is mainly 7-nanometer and 28-nanometer processes. However, Wei Zhejia said today that the Kaohsiung Plant's 7-nanometer plan has been adjusted, but the 28-nanometer remains unchanged and is carried out according to the progress.
And in the 3nm process, TSMC has received good news. Wei Zhejia said that customers' demand for 3 nanometers exceeds TSMC's supply, partly due to the ongoing machine delivery problem. It is estimated that the production will be fully loaded next year, with 3 nanometer revenue accounting for about 4-6%.
"TSMC is working closely with equipment suppliers to prepare more production capacity for the 3nm process to support customers' strong demand next year, 2024 and in the future." Wei Zhejia said.
. Regarding the more advanced 2nm technology process, Wei Zhejia revealed that everything has been going well so far, even better than expected, and is still expected to be mass-produced in 2025 as scheduled. Previous data showed that 2 nanosheet technology will be used to improve the efficacy of 2 nanosheet technology compared with 3 nanometer technology.Under the same power consumption, the speed increases by 10~15%, or under the same speed, the power consumption decreases by 25~30%.
