TSMC held an analyst meeting on the 18th. In addition to expressing a very positive view on the century-long settlement of two heavyweight customers Apple and Qualcomm, believing that such development will accelerate the arrival of the global 5G era, it also declared that the operating lows only remained in the first quarter. In the second quarter, it has seen a significant digestion of inventory, high-end mobile phone orders recovered, and the market share of large customers increased. The next third and fourth quarters of operations rose quarter by quarter, giving the global chip industry a reassurance.
Due to the turbulent global economic situation in the first quarter and the serious inventory problems of the industrial chain, especially the inventory of the high-end mobile phone industry chain, the accident that made the industry fall into a large number of scrapped wafers, TSMC's operations once fell into a "low".
TSMC President Wei Zhejia officially announced on the 18th that the first quarter of 2019 is the bottom of the year, and customer inventory has seen signs of gradual digestion. The second quarter should start to warm up for the traditional peak season in the second half of the year. Benefiting from the new Android phones, including the Huawei annual flagship phone P30 series, the silicon content of high-end mobile phones has increased significantly, and the market share of the company's major customers has expanded successfully. TSMC has felt the rebound in demand for high-end smartphones.
Furthermore, the company also expects inventory to drop to normal seasonal water level in the second quarter, and the problem of excessive inventory is gradually solved. TSMC has a clear view that "the low point has passed" and there is only an uphill road in the future.
After the announcement of this analyst meeting, the company is confident that this year's operating conditions will maintain the tone of growth and present a slight growth pattern, sweeping away the gloom of the market's previous worries that the growth target may not be achieved this year.
(Source: DeepTech)
Indicators for measuring the future growth of a semiconductor company, capital expenditure is a very critical figure, especially for a company of such a size as TSMC. At every analyst meeting, analysts present have to repeatedly confirm whether the company's future capital expenditure will remain high? Even keep increasing the investment? If the answer is yes, it also means that the company is optimistic about the future operation prospects and industrial prosperity.
For the above capital expenditure indicators, TSMC used high expenditure numbers to prove its views on future growth. The company said that capital expenditure in 2019 was about US$10 billion to US$11 billion, and 80% of the expenditure was spent on high-end process technologies including 7nm, 5nm, and 3nm. The other 10% was spent on high-end packaging technology, and the remaining 10% was spent on special process technologies. According to TSMC's internal plan, annual capital expenditure will remain at 10 billion to 12 billion US dollars, and such figures will also give analysts, suppliers, etc. a reassurance.
A few days ago, TSMC announced the launch of the world's first 5nm wafer factory trial production. DeepTech reported that due to the global economic situation, the 5nm production schedule may slow down.
Nowadays, TSMC has also confirmed that since the demand for 7nm in the first half of this year is lower than expected, the company will be more cautious about the planning of mass production of 5nm, first considering the inventory sales status of 7nm, and then conducting capacity planning. It will not rush too quickly from the beginning, resulting in overcapacity.
However, Wei Zhejia emphasized that in the long run, the 5nm customer and product portfolio will be very large, and will definitely exceed 7nm. Therefore, the starting point of 5nm wafer factories seems to slow down, but in the middle and late stages, the breadth and speed of capacity increase and expansion will definitely not be inferior to 7nm.
The ASML extreme ultraviolet EUV machine that has been very "hot" recently, TSMC believes that in the process of evolution from 7nm technology to 5nm, the cost reduction rate of transistor has slowed down. After importing the EUV machine, when the technology develops to a stable stage, the cycle speed of the transistor decline will return to the previous level, which is equivalent to the continued Moore's Law.
In addition to the layout of 7nm and 5nm, TSMC specially chose to reveal the new 6nm process the day before the analyst meeting, and expressed high hopes for the future development of 6nm.
Since 6nm is the next generation of 7nm and 7nm plus miniature versions, the industry believes that TSMC intends to build 6nm into the second 28nm process node. As we all know, the 28nm process is the longest-lived, most profitable and most successful TSMC has even improved its position as a global semiconductor. 6nm has the strength to replicate the "28nm legend".
TSMC stated that the logic density of 6nm chips increases by 18% compared with 7nm, and the design rules are completely compatible with 7nm technology. Due to the complexity of the 7nm ecosystem, the advantage of customers who switch from 7nm to 6nm in the future is that the design ecosystem can be reused is equivalent to greatly simplifying the process and shortening the design cycle. Just use very limited engineering resources to achieve the path of seamless technology upgrade.
The company expects 6nm to enter trial production in the first quarter of 2020, and can be widely used in advanced to intermediate-level mobile products, consumer applications, artificial intelligence, Netcom, 5G infrastructure, drawing processors and high-performance computing.
(Source: DeepTech)
Wei Zhejia once again emphasized that the biggest driving force for operating growth in the next five years is high-performance computing (HPC). If we look at the growth of the second quarter based on the four major operating platforms, smartphones, Internet of Things, and automotive electronics will have single-digit growth, and high-performance computing (HPC) will enjoy double-digit growth.
Furthermore, if the four major platforms are extended to the whole year, smartphones and HPC (excluding cryptocurrencies) will grow by nearly 20%, while the Internet of Things has the strongest growth force and will have double-digit growth. In fact, it is also a low revenue base period, but the only thing will be a slight decline.
TSMC released its first quarter financial report. The operating performance in the first quarter of 2019 was interfered with by many factors, including low capacity utilization, sluggish terminal demand, customer inventory adjustments, lower than expected sales of high-end mobile phones, and wafer scrapping events generated by photoresist. The revenue in the first quarter was US$7.1 billion, a decrease of 16.1% from the same period in 2018 and a decrease of 24.5% from the previous quarter, a gross profit margin of 41.3% in a single quarter, an operating profit rate of 29.4%, and a pure after-tax profit approaching US$2 billion.
Entering the second quarter of 2019, TSMC released a lot of reassuring industrial information, fully declaring that the "low tide has passed". The second quarter will start to warm up deeply to welcome the industry prosperity that has rebounded significantly in the second half of the year.
According to the second quarter operating outlook proposed by TSMC, the combined revenue is expected to be between US$7.55 billion and US$7.65 billion, the gross profit margin is between 43% and 45%, and the operating profit rate is between 31% and 33%.
TSMC's first quarter 7nm process accounted for 22% of revenue, 10nm process revenue accounted for 4% and 16nm process revenue accounted for 16nm. Overall, the revenue of high-end processes including 16nm and more advanced processes reached 42% of the total quarter.
After TSMC entered the second season, its operation showed that it had come out of the bottom, and 7nm customers also added orders. After the newly launched secret weapon miniaturization process 6nm process technology was officially unveiled, it is equivalent to building a connection bridge between 7nm and 5nm technologies. The overall layout blueprint of the three high-end technologies, 7nm, 6nm and 5nm, is very clear, and it is also planning the launch of 3nm wafer fabs. In the future, TSMC's operations will climb seasonally, just like walking at the end of the tunnel. The light has appeared before us, which also gives the supply chain a reassurance.
