Yahoo Finance Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) Q4 2023 Earnings Call Transcript
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) Q4 2023 Earnings Call Transcript January 18, 2024
Taiwan Semiconductor Manufacturing Company Limited beats earnings expectations. Reported EPS is $1.45, expectations were $1.36.
Jeff Su: Good afternoon, everyone, and welcome to TSMC's Fourth Quarter 2023 Earnings Conference and Conference Call. It's great to see everyone in person once again. This is Jeff Su, TSMC's Director of Investor Relations and your host for today. Today's event is being webcast live through TSMC's website at www.tsmc.com, or you can also download the earnings release materials. [Operator Instructions]. The format for today's event will be as follows. First, TSMC's Vice President and CFO, Mr. Wendell Huang, we'll summarize our operations in the fourth quarter 2023 and full year of 2023, followed by our guidance for the first quarter 2024. Afterwards, Mr. Huang, TSMC's CEO, Dr. C. C. Wei, and TSMC's Chairman, Dr. Mark Lu, will jointly provide the company's key messages.
Then TSMC's Chairman, Dr. Mark Lu, will host the Q&A session, where all three of our executives will take your questions. As usual, I'd 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 microphone over to TSMC's CFO, Mr. Wendell Huang for the summary of operations and the current quarter guidance.
Wendell Huang : Thank you, Jeff. Happy New Year, everyone. Thank you for joining us today. My presentation were start with financial highlights for the fourth quarter and a recap of full year 2023. After that, I will provide the guidance for the first quarter 2024. Fourth quarter revenue increased 14.4% sequentially in NT dollar or 13.6% in U.S. dollars. as our fourth quarter business was supported by the continued strong ramp of our industry leading 3-nanometer technology. Gross margin decreased 1.3 percentage points sequentially to 53%, primarily due to margin dilution from 3-nanometer ramp. Operating margin decreased 0.1 percentage points sequentially to 41.6%, slightly ahead of our guidance, mainly due to operating leverage on higher revenue.
Overall, our fourth quarter EPS was NT$9.21 and ROE was 28.1%. Now let me move on to revenue by technology. 3-nanometer process technology contributed 15% of wafer revenue in the fourth quarter, while 5-nanometer and 7-nanometer accounted for 35% and 17%, respectively. Advanced Technologies defined as 7-nanometer and below, accounted for 67% of wafer revenue. On a full-year basis, 3-nanometer revenue contribution came in at 6% of 2023 wafer revenue. 5-nanometer was 33% and 7-nanometer was 19%. Advanced Technologies accounted for 58% of total wafer revenue, up from 53% in 2022. Moving on to revenue contribution by platform. HPC increased 17% quarter-over-quarter to account for 43% of our fourth quarter revenue. Smartphone increased 27% to account for 43%.
IoT decreased 29% to account for 5%. Automotive increased 13% to account for 5% and DCE decreased 35% to account for 2%. On a full-year basis, Smartphone, IoT, DCE decreased 8%, 17%, and 16% respectively. HPC remained flat while automotive increased 15% in 2023. Overall, HPC accounted for 43% of our 2023 revenue. Smartphone, 38%, IoT, 8%, and automotive, 6%. Moving on to the balance sheet. We ended the fourth quarter with cash and marketable securities of NT$1.7 trillion or US$55 billion. On the liabilities side, current liabilities decreased by NT$56 billion mainly due to the decrease in accounts payable. On financial ratios, accounts receivable days decreased four days to 31 days, while days of inventory also declined 11 days to 85 days, primarily due to a higher 3-nanometer wafer shipment.
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