TSMC announced a strong quarterly financial report, the company expects that chip production capacity will continue to be scarce this year, and the industry boom is expected to continue.
On the afternoon of April 14, TSMC released its financial report for the first quarter of 2022. Benefiting from the continued chip shortage, the company's automotive and high-performance computing (HPC) chip business grew strongly, with record quarterly revenue and a 45% year-on-year increase in net profit, exceeding NT$200 billion (US$7 billion) for the first time.
The company's earnings guidance is also strong. TSMC expects gross margin in the second quarter to widen from 55.6% in the first quarter to 56%-58%, the best level in 10 years; full-year revenue guidance has also been revised upwards, and full-year revenue in US dollar terms will exceed the previously expected 20% increase to 25%-29%.
TSMC believes that the prosperity of the chip industry will continue. Wei Zhejia, the company's president, said on a conference call that although demand for PCs, tablets and smartphones is weakening, the demand for microcontrollers, which are the main components of the car, is still strong. Automakers are still struggling to get enough semiconductors, and the company expects chip production to remain tight this year. Even if the economy declines, TSMC will not cut prices.
For the 3nm chip that is concerned by the outside world, TSMC expects that the 3nm chip will be put into production in the second half of 2022 and mass production in 2024; the 2nm process chip will be mass-produced in 2025.
After the strong earnings report, TSMC's U.S. stocks rose nearly 1.5% before market hours.
Gross profit margin reached a new high Net profit exceeded NT$200 billion for the first time
According to the financial report data, TSMC's revenue in the first quarter reached a record high of NT$491.08 billion (US$17 billion), up 36% year-on-year; net profit of NT$202.7 billion (US$7 billion), up 45% year-on-year, far exceeding the market estimate of NT$186.06 billion and exceeding NT$200 billion for the first time; the company's gross profit margin further expanded, reaching a gross profit margin of 55.6% in the first quarter, a record high.
In terms of processes, 5nm process wafer shipments accounted for 20% of the company's revenue (23% in the previous quarter); 7nm process wafer shipments accounted for 30% of the company's revenue (27% in the previous quarter); advanced processes (7nm and more advanced processes) accounted for 50% of the total revenue, unchanged from the previous quarter.
By product type, the high-performance computing (HPC) business grew strongly, accounting for 41% of revenue in the quarter (37% in the previous quarter), up 26% sequentially; the proportion of traditional strong smart phone businesses declined, accounting for 40% of revenue in the quarter (44% in the previous quarter), a slight increase of 1% sequentially; the automotive chip business also grew strongly, accounting for 5% of revenue in the quarter (4% in the previous quarter) and revenue up 26% sequentially.
In terms of financial guidance, TSMC expects sales of $17.6 billion to $18.2 billion in the second quarter; gross margin in the second quarter will reach 56%-58%, further improving from 55.6% in the first quarter, the largest in 10 years; and expected operating profit margin in the second quarter to be 45% to 47%, with an estimated 43.3%.
The lack of core is still serious The industry boom will continue
In response to the chip industry boom, TSMC President Wei Zhejia said on a conference call that although the demand for PCs, tablets and smartphones is weakening, the demand for microcontrollers, which are the main components of the car, is still strong. Automakers are still struggling to get enough semiconductors, and the company expects chip production to remain tight this year. Even if the economy declines, TSMC will not cut prices.
While consumers in key markets in Europe and the United States have withdrawn from the pandemic-era work-from-home arrangement, demand for mobile phones, smart TVs and other products from companies such as Apple and Samsung Electronics remains strong. Meanwhile, chip shortages haven't eased – according to Susquehanna Financial Group, wait times for semiconductor deliveries in March have been extended again due to deliveries affected by the global pandemic and the earthquake in Japan.
In response to the attention of the outside world 3nm chips, TSMC CEO Wei Zhejia admitted that the cost of manufacturing 3nm chips is higher than expected, and it remains to be seen that the company's revenue promotion, the current research and development progress exceeds expectations, and may be put into production ahead of schedule. However, in general, the demand for 3nm processes is strong, and there will be enough production capacity to support, and the demand for high-performance computing (HPC), high-performance smartphones and vehicles is also quite large.
In terms of production date, TSMC expects that the 3nm chip will be put into production in the second half of 2022 and mass production in 2024; the 2nm process chip will be mass-produced in 2025.
Previously, in order to ensure that sufficient 4nm advanced production capacity was obtained, Apple proudly accepted TSMC's price increase and packaged TSMC's 4-nanometer production capacity of about 12-150,000 pieces to meet the company's A16 application processor production requirements.
Maintain $40-44 billion in capital expenditures
Although global chip demand is currently disturbed by the Russian-Ukrainian crisis and the epidemic, TSMC said it will maintain its previous capital expenditure plan of $40 billion to $44 billion.
For the impact of the epidemic, TSMC President Wei Zhejia said that the company knows that suppliers face the huge test brought by the new crown epidemic, whether advanced or mature processes have the same situation, but TSMC took action to respond, and many teams support suppliers on the spot to ensure supply delivery, and do not think that this year's capital expenditure will have any impact. TSMC ensures that capital expenditure expansion meets customer needs and ensures that all materials are supplied smoothly without impacting capacity expansion plans.
TSMC will continue to invest in the construction of factories. The company currently plans to expand Nanjing's 28nm wafer capacity, which is expected to be gradually cashed in the second half of this year. The company's 5nm wafers in Arizona, USA, are expected to be mass-produced in 2024, and the 22-28nm fab in Kumamoto Prefecture, Japan, is expected to be put into operation in 2024.