Q3 2023 Taiwan Semiconductor Manufacturing Co Ltd Earnings Call
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Good afternoon everyone, I am Su Zhikai from TSMC's Investor Relations Department. Welcome to TSMC's 2023 third quarter investor conference. Since this conference is being broadcasted simultaneously to global investors, we will be using English throughout. Please understand. I am Su Zhikai from TSMC's Investor Relations Department, and I will be your host today. TSMC's Investor Relations Department is broadcasting through the company's website www.tsnc.com, where you can download the available materials. If you are joining via conference call, your call will be in listen-only mode. Today's agenda will be as follows: First, Mr. Wendao Huang, Vice President of TSMC's Investor Relations Department, will summarize the actions of the third quarter of 2023 and provide guidance for the fourth quarter of 2023. Following that, Mr. Wendao Huang and Dr. C.C. Wei, CEO of TSMC, will jointly provide key company information. Then we will open the Q&A session. As usual, I would like to remind everyone that today's discussion may include forward-looking statements involving significant risks and uncertainties that could cause actual results to differ from those contained in the forward-looking statements. Please refer to our published Safe Harbor Notice. Now, I will turn it over to Mr. Wendao Huang, Vice President of TSMC's Investor Relations Department, to summarize the actions and current fourth-quarter guidance. Thank you, Jeff. Good afternoon everyone, thank you for joining today. My presentation will summarize the third quarter of 2023, followed by guidance for the fourth quarter of 2023. Third-quarter profits increased by 13.7% or 10.2% in USD. The third-quarter business was strongly impacted by our industry-leading 3nm technology and higher demand for 5nm technology, partly due to ongoing inventory adjustments by customers. The growth range increased by 0.2% and continued to grow to 54.3%, mainly reflecting higher energy usage, partly due to delays in N3 magnets. Total operating expenses had a profit of 12.6% compared to 12.1% in the second quarter, mainly due to higher R&D expenses to support our 3nm and 2nm development. The operating range was 41.7%, down 0.3% from the previous quarter.
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Good afternoon, everyone and welcome to Tsmc's third quarter 2023 earnings Conference call.
Speaker 1: Good afternoon, everyone, and welcome to TSMC's third quarter 2023 earnings conference call.
Speaker 1: This is Jeff Slooh, TSNC's Director of Investor Relations and your host for today.
This is Jeff Sue Tsmc's director of Investor Relations and your host for today.
Speaker 1: TSNC is hosting our earnings conference call via live audio webcast through the company's website at www.tsnc.com where you can also download the earnings release materials.
He has since he is hosting our earnings conference call via live audio webcast through the company's website at Triple W. Dot P. S N C dot com.
You can also download the earnings release materials.
Speaker 1: If you are joining us through the conference call, your dial-in lines are in listen-only mode. The format for...
If you are joining us through the conference call. Your dial in lines are in listen only mode.
The format for today's event will be as follows.
Speaker 1: First, TSMC's Vice President and CFO , Mr. Wendell Huang, will summarize our operations in the third quarter 2023, followed by our guidance for the fourth quarter 2023.
First Tsmc's, Vice President and CFO , Mr. Wendell Huang will.
I will summarize our operations in the third quarter 2023, followed by our guidance for the fourth quarter of 2023.
Speaker 1: Afterwards, Mr. Huang and TSMC's CEO , Dr. C.C. Wei, will jointly provide the company's key messages. Then we will open the floor for questions.
Afterwards, Mr Huang and Tsmc's CEO Dr. C C Wei will.
We will jointly provide the company's key messages.
Then we will open the line for the Q&A.
Speaker 1: 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 statement.
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.
Speaker 1: Please refer to the Safe Harbor notice that appears in our press release.
These refer to the safe Harbor notice that appears in our press release.
Speaker 1: And now, I would like to turn the call over to TSMC CFO , Mr. Wendell Huang, for the summary of operations and the current corridor guidance.
And now I would like to turn the call over to Tsmc's CFO , Mr. Wendell Huang for the summary of operations in the current quarter guidance.
Speaker 2: Thank you, Jeff. Good afternoon, everyone. Thank you for joining us today.
Thank you Jeff Good afternoon, everyone. Thank you for joining us today.
Speaker 2: My presentation will start with financial highlights for the third quarter, 2023. After that, I will provide the guidance for the fourth quarter, 2023.
My presentation will start with financial highlights for the third quarter 2023 after that I will provide the guidance for the fourth quarter 2023.
Speaker 2: Third quarter revenue increased 13.7% sequentially in NT dollars or 10.2% in US dollars.
Third quarter revenue increased 13, 7% sequentially in NT dollars or 10, 2% in U S dollars as our third quarter business was supported by the strong ramp of our industry, leading three nanometer technology and higher demand for five nanometer.
Speaker 2: as our third quarter business was supported by the strong ramp of our industry leading three nanometer technology and higher demand for five nanometer technologies, partially offset by customers ongoing inventory adjustment.
Geez, partially offset by customers ongoing inventory adjustment.
Speaker 2: Growth margin increased 0.2 percentage points sequentially to 54.3%, mainly reflecting higher capacity utilization, partially offset by the margin dilution from N3 rep.
Gross margin increased 0.2 percentage points sequentially to 54, 3%, mainly reflecting higher capacity utilization, partially offset by the margin dilution from entry ramp.
Speaker 2: Total operating expenses accounted for 12.6% of net revenue as compared to 12.1% in the second quarter, mainly due to higher R&D expenses to support our 3nm and 2nm developments.
Total operating expenses accounted for 12, 6% of net revenue as compared to 12.1% in the second quarter, mainly due to higher R&D expenses to support our three nanometer and tuned nanometer development.
Speaker 2: Operating margin was 41.7%, down 0.3%...
Operating margin was 41, 7%.
<unk> 0.3 percentage point from the previous quarter.
Speaker 2: Overall, our EPS for the third quarter is 8.14 NTD, and ROE is 25.8%. Next, let's look at the revenue from technology. The 3nm processing technology contributed 6% to the revenue in the third quarter. The 5nm and 7nm processing technologies contributed 37% and 16% to the revenue in the third quarter. Advanced technologies below 7nm contributed 59% to the revenue. Next is the revenue contribution from platforms. HPC increased by 6%. The currency liability rate increased by 42%. Mobile increased by 33%. The currency liability rate increased by 39%. IoT increased by 24%. The currency liability rate increased by 9%. Automation increased by 24%. The currency liability rate increased by 5%. DCE increased by 1%. The currency liability rate increased by 2%. Next is the platform revenue. The third quarter provided 1.55 trillion NTD in currency and market security guarantees, which is 48 billion USD. In terms of liabilities, the current liability increased by 159 billion NTD, mainly due to a 95 billion NTD increase in account expenditures and a 59 billion NTD increase in investment liabilities and other liabilities. Long-term liabilities increased by 30 billion NTD, with 10 billion NTD from new issuance and 20 billion NTD from currency transaction movements. In financial terms, the revenue liability rate increased by 3 days to 35 days. The revenue liability rate decreased by 3 days to 96 days. The third quarter provided 295 billion NTD in currency transaction movements. In financial terms, the revenue liability rate increased by 227 billion NTD and provided 71 billion NTD in liabilities in the fourth quarter. Overall, the revenue liability rate increased by 35 billion NTD to 1.31 billion NTD in the fourth quarter. In terms of USD, the third quarter investment liability rate increased by 7.1 billion USD. I have completed my financial summary. Now let's look at our current liability indicators. Based on our current operating experience, we expect the revenue for the fourth quarter to be in the mid-range of 18.8 billion to 19.6 billion USD, representing a mid-range growth of 11.1% based on a 1 billion USD transaction revenue indicator.
Speaker 2: Overall, our third quarter EPS was 8.14 NT dollars and ROE was 25.8 percent.
Overall, our third quarter EPS was 8.1 for NT dollars and <unk> was 25, 8%.
Now, let's move on to the revenue by technology.
Speaker 2: 3nm process technology contributed 6% of wafer revenue in the third quarter, while 5nm and 7nm accounted for 37% and 16% respectively.
Three nanometer process technology contributed 6% of wafer revenue in the third quarter.
While five nanometer and seven nanometer accounted for 37% and 16% respectively.
Speaker 2: Advanced technologies, defined as 7nm and below, accounted for 59% of wafer revenue.
Advanced technologies defined as seven nanometer and below accounted for 59% of wafer revenue.
Moving onto revenue contribution by platform.
Speaker 2: HPC increased 6% quarter over quarter to account for 42% of our third quarter revenue.
H P C increased 6% quarter over quarter to account for 42% of our third quarter revenue.
Speaker 2: Smartphone increased 33% to account for 39%.
Smartphone increased 33% to account for 39% Iot increased 24% to account for 9% automotive decreased 24% to account for 5%.
Speaker 2: IoT increased 24% to account for 9%
Speaker 2: Automotive decreased 24% to account for 5%
Speaker 2: And DCE decreased 1% to account for two.
In D C E decreased 1% to account for 2%.
Speaker 2: Moving on to the balance sheet, we ended the third quarter with cash and marketable securities of 1.55 trillion NT or 48 billion US dollars.
Moving onto the balance sheet, we ended the third quarter with cash and marketable securities of 1.55 trillion N T or 48 billion U S dollars.
Speaker 2: On the liability side, current liabilities increase by 159 billion NT, mainly due to the increase of 95 billion in accounts payable and the increase of 59 billion in accrued liabilities and others.
On the liability side current liabilities increased by 159 billion N T mainly due to the increase of 95 billion and accounts payable and the increase of 15 $9 billion in accrued liabilities and others.
Speaker 2: Long-term interest-bearing debt increased by 30 billion NT, of which 10 billion from new issuance and 20 billion from foreign exchange rate move.
Long term interest bearing debt increased by 30 billion NT of which 10 billion from new issuers and 20 billion from foreign exchange rate movement.
Speaker 2: On financial ratio, accounts receivable turnover days increased three days to 35 days, while days of inventory decreased three days to 96 days.
On financial ratios.
Accounts receivable turnover days increased three days to 35 days, while days of inventory decreased three days.
296 days.
Speaker 2: Regarding cash flow and KPACs, during the third quarter, we generated about $295 billion in cash from Operation
Regarding cash flow and Capex during the third quarter, we generated about 295 billion and teething cash from operations spent 227 billion NK vacs and distribute at 71 billion for fourth quarter 'twenty two cash dividend.
Speaker 2: spent $227 billion in KPACs and distributed $71 billion for Q22 cash divisibility.
Speaker 2: Overall, our cash balance increased $35 billion to $1.31 trillion NT at the end of the quarter.
Overall, our cash balance increased 35 billion to 1.31 Chilean empty at the end of the quarter.
Speaker 2: In U.S. solar terms, our third quarter capital expenditures total $7.1 billion.
In U S dollar terms, our third quarter capital expenditures totaled $7 1 billion.
Speaker 2: I have finished my financial summary. Now let's turn to our current quarter guide.
I have finished my financial summary, now, let's turn to our current quarter guidance.
Speaker 2: Based on current business outlook, we expect our fourth quarter revenue to be between $18.8 billion and $19.6 billion U.S. dollars.
Based on current business outlook, we expect our fourth quarter revenue to be between $18 8 billion and 19.6 billion U S dollars.
Speaker 2: which represents a 11.1% sequential increase at the midpoint.
Each represents a 11, 1% sequential increase at the midpoint.
Speaker 2: Based on the exchange rate assumption of one US dollar to 32 NT, gross margin is expected to be between 51.5% and 53.5%.
Based on the exchange rate assumption of one U S. Dollar to 32 N T. Gross margin is expected to be between 51, 5% and 53, 5% operating margin between 39, 5% and 41, 5%.
Speaker 2: 39.5% and 41.5% of the business scope. This concludes my financial presentation. Let me move on to our key messages. I will first make some comments about our third quarter 23% and fourth quarter 23% profit compared to the second quarter. Our third quarter growth range increased from 20 basis points to 54.3%, mainly due to higher energy utilization and better trade exchange rates. The initial growth of our 3nm technology led to currency gains. Compared to our third quarter guidance, our actual growth range exceeded by 80 basis points from three months ago, mainly due to better trade exchange rates. We have just guided our fourth quarter growth range to decrease from 1.8 basis points to 52.5% at the midpoint, mainly due to the continued growth gains of our 3nm technology. Let me remind everyone that six factors determine TSMC's advantages: leading technology development and upgrades, pricing, cost reduction, energy utilization, technology mix, and trade exchange rates. To maintain our advantages in the coming years, we will work hard on internal cost growth and continue to actively promote value. Apart from the impact of trade exchange rates, which we cannot control, we are also forecasting a long-term growth margin of over 53% as achievable. Next, let me talk about our 2023 baseline and reduction. The baseline and reduction for each year in the coming years are forecasted below due to recent uncertainties. We continue to actively manage our business and have increased our capital expenditure for the year where appropriate. We now expect our 2023 baseline to be approximately $32 billion. Apart from the approximately $32 billion baseline for 2023, about 70% of the capital budget will be allocated to further processing technology, about 20% will be allocated to specialty technology, and about 10% will be allocated to further packaging testing, mask manufacturing, and others. Our reduction expenses are now expected to decrease by 20% annually in 2023 compared to our forecast of approximately 30% annual growth this month. Despite the recent capital cycle, our commitment to supporting customer growth remains unchanged. Our governance foundation and capacity planning remain based on long-term structural market demand ranges.
Speaker 2: Operating margin between 39.5% and 41.5%. This concludes my financial presentation.
This concludes my financial presentation.
Now, let me turn to our key messages.
Speaker 2: I will start by making some comments on our third quarter 23 and fourth quarter 23 profitability.
I will start by making some comments on our third quarter 'twenty three in fourth quarter twenty-three profitability.
Compared to the second quarter, our third quarter gross margin increased by 20 basis points sequentially to 54, 3%, primarily due to a higher capacity utilization rate and a more favorable foreign exchange rate, partially offset by the margin dilution from the initial ramp up.
Speaker 2: Compared to the second quarter, our third quarter gross margin increased by 20 basis point sequentially to 54.3%.
Speaker 2: primarily due to a higher capacity utilization rate and a more favorable foreign exchange rate, partially offset by the margin dilution from the initial ramp up of our 3 nanometer technology.
Of our three nanometer technology.
Speaker 2: Compared to our third quarter guidance, our actual gross margin exceeded the high end of the range provided three months ago by 80 basis points, mainly due to a more favorable foreign exchange.
Compared to our third quarter guidance, our actual gross margin exceeded the high end of the range provided three months ago by 80 basis points, mainly due to a more favorable foreign exchange rate.
Speaker 2: We have just guided our fourth quarter gross margin to decline by 1.8 percentage points to 52.5% at the midpoint.
We have just guided our fourth quarter gross margin declined by one eight percentage points to 52.5% at the midpoint.
Speaker 2: primarily due to the continued margin dilution from this steep ramp of our 3 nanometer technology.
Primarily due to the continued margin dilution from this steep ramp.
Of our three nanometer technology.
Speaker 2: As a reminder, six factors determine TSMC's profitability. Leadership, technology development and ramp up, pricing, cost reduction, capacity utilization, technology mix and foreign exchange...
As a reminder, six factors determining tsmc's profitability leadership technology development and ramp up pricing cost reduction capacity utilization technology mix and foreign exchange rates.
Speaker 2: To manage our profitability in the next several years, we will work diligently on our internal cost improvement while continuing to strategically sell our value.
Manage our profitability in the next several years, we will work diligently on our internal cost improvement, while continuing to strategically sell our value.
Speaker 2: Excluding the impact of foreign exchange rate of which we have no control over, we continue to forecast a long-term growth margin of 53% higher is achievable.
Excluding the impact of foreign exchange rate of which we have no control over we continue to forecast our long term gross margin of 53% or higher is achievable.
Speaker 2: Next, let me talk about our 2023 kPaX and depreciation.
Next let me talk about our 'twenty to 'twenty, three capex and depreciation.
Speaker 2: Every year our CAPEX is spent in anticipation of the growth that will follow in future.
Every year, our Capex is spent in anticipation of the growth that will follow in future years.
Speaker 2: Given the near-term uncertainties, we continue to manage our business prudently and have tightened up our capital spending throughout the year where appropriate.
Given the near term uncertainties, we continue to manage our business prudently and have tightened up our capital spending throughout the year where appropriate.
Speaker 2: We now expect our 2023 KPEX to be approximately 32 billion U.S. dollars.
We now expect our 'twenty to 'twenty three capex to be approximately 32 billion U S dollars.
Speaker 2: Out of the approximately 32 billion KPACs for 2023,
Out of the approximately 32 billion Capex for 2023.
Speaker 2: About 70% of the capital budget will be allocated for advanced process technology.
About 70% of the capital budget will be allocated for advanced process technologies of.
Speaker 2: About 20% will be spent for specialty technologies and about 10% will be spent for advanced packaging, testing, mask making and others.
About 20% will be spent for specialty technologies and about 10% will be spent for advanced packaging testing matchmaking and others.
Speaker 2: Our depreciation expense is now expected to increase by low 20s percentage year over year in 2023.
Our depreciation expense is now expected to increase by low twenties percentage year over year in 'twenty two 'twenty three.
Speaker 2: as compared to our January forecast of approximately 30% year-over-year increases.
As compared to our January forecast of approximately 30% year over year increase.
Speaker 2: Despite the near-term inventory cycle, our commitment to support customers' growth remains unchanged, and our disciplined KPEX and capacity planning remains based on the long-term structure market demand profile.
Despite the near term the inventory cycle, our commitment to support customers growth remains unchanged and our disciplined capex and capacity planning remains based on the long term structure market demand profile.
Speaker 2: We will continue to work closely with our customers to plan long-term capabilities and invest in leading specialties and further packaging technologies to support their growth and provide favorable growth for our investors. Let me hand the microphone over to CC. Thank you, Window. Good afternoon, everyone. First, let me introduce our recent demand and data. However, due to the persistently weak global economic conditions, as well as sluggish demand and recovery in China, customers remain cautious in controlling production. Therefore, we expect production consumption in the fourth quarter to continue. That said, we are observing some early demand stabilization, including in the computer and smartphone markets. With this level of production control, we predict that the production volume of 5-nanometer production will continue to decrease and reach a better level in the fourth quarter of 2023. Next, let me talk about our global production risk update. TSMC's goal is to provide trusted enterprises for global production technology and energy in the coming years. As we have said before, our strategy is to expand our global production risk, increase customer trust, expand our future development potential, and seek more global talent. Our regulatory decisions are based on the needs of customers and the necessary level of government support. This is to achieve value for our investors. In Europe, after extensive responsibility, we announced our plan to build a special technology facility in Germany, focusing on automation and industrial applications.
Speaker 2: We will continue to work closely with our customers to plan our long-term capacity and invest in leading-edge, specialty, and advanced packaging technologies to support their growth while delivering profitable growth to our shareholders. Now let me turn the microphone on.
We will continue to work closely with our customers to plan, our long term capacity and invest in leading edge specialty and advanced packaging technologies to support their growth, while delivering profitable growth to our shareholders now.
Now, let me turn the microphone over to C C.
Speaker 3: Thank you, Window. Good afternoon, everyone. First, let me start with our near-term demand and inventory.
Thank you window.
Afternoon, everyone first let me start with our near term demand and inventory.
Speaker 3: We concluded our third quarter with revenue of US $17.3 billion in line with our guidance in US data.
We concluded our third quarter with revenue of our U S 17 point suite billing data.
With our guidance in U S dollar terms.
Speaker 3: Our business in the third quarter was supported by the strong ramp of our industry leading 3 nanometer technology and higher demand for 5 nanometer technology.
Our business in the third quarter was supported by a strong ramp of our industry, leading <unk> nanometer technology.
And higher demand for five nanometer technologies.
Speaker 3: partially offset by customers' ongoing inventory adjustment.
Partially offset by customers our ongoing inventory adjustment.
Speaker 3: Moving into fourth quarter 2023, while AI-related demand continues to be strong, it is not enough to offset the overall secretarity of our business.
Moving into fourth quarter 2023.
AI related demand continues to be strong.
It is not enough to offset the overall cyclicality of our business.
Speaker 3: We expect our business in the fourth quarter to be supported.
We have a spare to our business in the fourth quarter to be supported.
Speaker 3: at the continuous swing ramp of our three nanometer technology.
The continued strong ramp of our suite nanometer technology has.
Speaker 3: partially offset by customers' continued inventory Let's have some what yachts
Partially offset by customers continue inventory adjustment.
Speaker 3: On the inventory side, we expect the fibrous semiconductor inventory to have continuously reduced in the third quarter.
On the inventory side, we expect a five day semiconductor inventory too we have continuously reduced in the third quarter.
Speaker 3: However, due to the persistent weaker overall macroeconomic conditions and slow demand recovery in China, customers have remained cautious in their inventory conditions.
However, due to the persistent weaker our raw macroeconomic condition.
And throat demand recovery in China customers have remained cautious in their inventory control.
Speaker 3: Thus, we expect the inventory digestion to continue in the fourth quad.
We expect the inventory digestion to continue in the fourth quarter.
Speaker 3: Having said that, we are observing some early signs of demand stabilization in the PC and smartphone end market. Together with such leverages to ensure that the security even deals with China's recent recoveries. Together, we Koh-iin HU strategic With manymatchit In?
Having said that we are observing some early sign of demand stabilization in the PC and smartphone end market.
Together with such a level of inventory control.
Speaker 3: We forecast the 5-lesson conductor inventory to further reduce and exit 4Q23 at a hair-hair level.
Forecasted fabless semiconductor inventory to further reduce and actually for Q3 at a healthier level.
Speaker 3: Next, let me talk about our global manufacturing footprint epidemic.
Next let me talk about our global manufacturing footprint to update.
Speaker 3: TSMC's mission is to be the trusted technology and capacity provider.
<unk> mission is to be the trusted technology and capacity poor writer.
Speaker 3: of the global logic IC industry for years to come.
The large global logic IC industry for years to come.
Speaker 3: As we have said before, our strategy is to expand our global manufacturing footprint to increase customer trust.
As we have said before our strategy is to expand our global manufacturing footprint to increase customers' trust.
Speaker 3: expand our future growth potential, and reach for more global talent.
Expand our future growth potential and reach for more global tenants.
Speaker 3: Our overseas decisions are based on our customers' needs and the necessary level of government support. This is to maximize the value for our shareholders.
Our overseas decision are based on our customer side lead and the necessary level of government support.
This is to maximize or where do you for our shareholders.
Speaker 3: In Europe , after conducting extensive due diligence, we announced our plan to build a specialty technology lab in Dresden, Germany, focusing on automotive and industrial application of fossiluj
In Europe after conducting extensive due diligence.
We announced our plan to pure specialty technology fab in Dresden, Germany, focusing on automotive and industrial applications.
Speaker 3: We have received a strong commitment to support this project from our JRE partners.
We have received a strong commitment to support this project from our JV partners.
Speaker 3: The European Commission government, the German Presidential Office, and the city government. This battery uses 22 and 28 nanometer and 12 and 16 nanometer technology to create a semiconductor atmosphere. Battery construction will begin in early February 2024, and production will start in early August 2027 in Arizona. We are receiving strong support from cities in the Philippines, the government of Arizona, and the U.S. government. We continue to build positive relationships and work closely with our local trade and union partners. We are making good progress in the first wave of development. We have also started early preparations for trade in Arizona. Currently, we have hired nearly 11,000 local trade partners. Many have already arrived in Taiwan to provide extensive technical experience in Arizona to enhance their technical skills. They have integrated into Arizona's operational environment and culture. We continue to target mass production of N4 processing technology in early 2025. We believe that once operations begin, we will be able to provide the same factory quality and reliability in Arizona as we have established in Taiwan. In Japan, we have established a special technology factory using 12 and 16 nanometer and 22 and 28 nanometer processing technology. We have hired about 800 local trade partners, most of whom have provided similar technical experience in Taiwan. The operational environment began this month, and mass production has already started by the end of 2024. In China, we recently received an advertisement from the U.S. Bureau of Industry and Security to continue our operations in Nanjing. We are proceeding with the implementation of the end-use certificate and expect to obtain full certification in the future. From a cost perspective, the operational environment cost in Taiwan was originally higher than TSMC-5 because, first, the operational environment is smaller, second, the entire supply chain cost is higher, and third, the early semiconductor environment is more mature than Taiwan's environment. TSMC's responsibility is to manage and reduce the cost gap.
Speaker 3: the European Commission Government and German federal state and city governments.
European Commission cover.
Government.
And German federal state and city governments.
Speaker 3: This lab will utilize 22 and 28 nanometer and 12 16 nanometer technologies for semiconductor wafer fabrication.
This weibo utilized 22 and 28 nanometer.
And took 16 nanometer technologies for semiconductor wafer fabrication.
Speaker 3: Web construction is scheduled to begin in second half 2024, and production is targeted to beginning in late 2027.
Where construction is scheduled to begin in second half 'twenty 'twenty four and production is targeted to begin in late 2027.
In our Resona.
Speaker 3: We are receiving strong support from the City of Phoenix, State of Arizona, and U.S. federal government and continue to develop positive relationships and work closely with our local trade and union partners.
We are receiving strong support from the city of Phoenix State of Arizona, and U S. Federal government and continue to give her a pastille relationship and work closely with our local trade and Union partners.
Speaker 3: We are making good progress on the fab infrastructure, utilities, and equipment installation issues in our first fab. The situation is improving.
We are making good progress on the fab infrastructure.
Utilities in equipment and installation issues in our fourth fab and the situation is improving.
Speaker 3: We have also begun early preparation for our Arizona FAB operations and hired close to 11 HANDSU O'Rourke TSNC employees so far.
We have also begun early preparation for our original no fab operations and higher close to 1100 Loco TSMC employees so far.
Speaker 3: Many of them have been brought to Taiwan for extensive hands-on experience in our lab so that they can further their technical skills while being immersed in TSMC operation environment and car safety.
Many of Jim has been brought to Taiwan for extra 10-Q hang Seng has fevers in our fab. So that they can further their technical skills, who aren't being emerged in TSMC operation environment and culture.
Speaker 3: We continue to target volume production of N4 process technology in fourth half 2025 and are confident that once we begin operations, we will be able to deliver the same level of manufacturing.
We continue to target a volume production of light and for process technology in first half 2025 and are confident that once we begin.
Operations.
Might be able to deliver the same level of manufacturing.
Speaker 3: quality and reliability in Arizona as form of FAFSA in Taiwan.
Quality and reliability in Arizona as form our fab in Taiwan.
Speaker 3: In Japan, we build a specialty technology lab, which will utilize 12 and 16 nanometer and 22 and 28 nanometer process technology.
In Japan, we build our specialty technology, fab, which white utilized 12, and 16 nanometer and 22 and 28 nanometer process technologies.
Speaker 3: We have hired approximately 800 local TSMC employees so far, with the majority having similar being brought to Taiwan for hands-on experience.
We have hired approximately in Hangzhou local TSMC employees so far.
With a majority having similar appeal brought to Taiwan for hang Seng experience.
Speaker 3: The equipment move-in has begun this month, and volume production is on track for late 20 funny
Kumar moving has begun this month.
And volume production is on track for late 2024.
Speaker 3: In China, we have recently received an extension from the US Bureau of Industry and Security to continue our operation in Nanjing.
In China.
We have recently received an extension from the U S Bureau of industry and security too.
To continue our operation in 19.
Speaker 3: We are currently in the process of applying for validated end user authorization and expect to receive a permanent authorization in the near future.
We're currently in the process of pricing for validated and user of authorization and.
And there's work to reshape our public also radiation in the near future.
From a cost perspective.
Speaker 3: The initial cost of oversea flaps are higher than TSMC flaps in Taiwan due to first, smaller flaps scale.
In each of course of oversea fabs are higher than TSMC fab in Taiwan due to force.
Tomorrow Fab scale.
Speaker 3: Second, higher costs throughout the supply chain. And third, the early stage of semiconducting ecosystem overseas as compared to a mature ecosystem in Taiwan.
Second higher costs throughout the supply chain and third the early stage your semiconductor ecosystem overseas as compared to a mature ecosystem in Taiwan.
Speaker 3: TSMC's responsibility is to manage and minimize the cost gap to maximize the return for our shareholders.
TSMC is our responsibility to manage and minimize our cost gap to maximize the return for our shareholders.
Speaker 3: Large-scale economic growth continues to drive prices down. Through such actions, TSMCY is able to absorb the high prices of overseas assets and still offer more than 53% long-term pricing and more than 25% maintenance pricing. We are determined to maintain pricing. Now let me talk about the upgrades and advancements of N3 and N3e. Our 3nm technology is the most advanced semiconductor technology in PPA and circuit technology. N3 is already in high-priced production, and we have seen strong upgrades in the second half of this year, supporting applications for HPC and smart computers. We are determined to maintain the upgrade of N3, and in 2023 we expect to provide higher upgrades in 2024 to support the expanding needs of multiple customers. N3e will use the strong foundation of N3 to extend our N3 family and enhance the performance, power, and pricing of N3, providing complete platform support for HPC and smart computer applications. N3e has already passed upgrades and achieved performance and pricing targets. We will start production in the fourth quarter of this year. We will also continue to provide further enhancements to N3 technology, including N3P and N3X. We see a continuous improvement strategy in our 3nm engineering technology. We anticipate strong multi-customer demand and are confident that our 3nm family will become a sustained advantage for TSMC. Finally, I will talk about the status of N2. The recent growth in AI-related demand has given us confidence. Our continuous improvement strategy in 3nm engineering technology gives us confidence that our 3nm engineering technology will become a sustained advantage for TSMC. Finally, I will talk about the status of N2. The recent growth in AI-related demand has given us confidence that our 3nm engineering technology will become a sustained advantage for TSMC. Finally, I will talk about the status of N2. The recent growth in AI-related demand has given us confidence that our 3nm engineering technology will become a sustained advantage for TSMC. Finally, I will talk about the status of N2. The recent growth in AI-related demand has given us confidence that our 3nm engineering technology will become a sustained advantage for TSMC. Finally, I will talk about the status of N2.
Speaker 3: Our pricing will also remain strategic to reflect our value, which includes the value of geographic flexibility.
Our pricing will also remain strategically to reflect our value, which includes a variety of geographic flexibility.
Speaker 3: We'll also work closely with government to secure their support.
We are also work closely with government to secure their support.
Speaker 3: At the same time, we leverage our fundamental competitive advantage of manufacturing technology leadership, large volume economies of scale to continuously drive our costs up.
At the same time, who are leveraging our fundamental competitive advantage of our manufacturing.
Manufacturing technology leadership the.
Large volume economies of scale to continuously drive our costs down.
Speaker 3: By taking such actions, TSMC-Y have the ability to absorb the higher causal of oversea fat.
By taking such X genes TSMC why have the ability to absorb the higher cost of oversea facts.
Speaker 3: and still deliver the long-term gross margin of 53% and higher, is sustainable are we up with...
And still deliver the long term gross margin of 43% in higher.
And sustainable Roe of greater than 25%.
Speaker 3: We remain firm in our commitment to maximize the value for our shareholders.
We remain firm in our commitment to maximize value for our shareholders.
Speaker 3: Now let me talk about the N3 and N3e rhombop end program.
Now, let me talk about our industry and entry ramp up and progress.
Speaker 3: Our 3 nanometer technology, the most advanced semiconductor technology in both PPA and transistor technologies.
Our three nanometer technology, the most out of one semiconductor technology in both PPA and transistor technology.
Speaker 3: N3 is already in voting production with good yields.
And three is already in volume production with good yield.
Speaker 3: And we are seeing a strong ramp in the second half of this year supported by both HPC and smartphone applications.
And we are seeing a strong ramp in the second half of this year supported by both PC and smartphone applications.
Speaker 3: We reaffirm NCWAC contributed a single digit percentage of our total wafer revenue in 2023, and we expect a much higher percentage in 2024, supported by robust demand for multiple customers.
We reaffirm entry walk contribute mid single digit percentage of our total wafer revenue in 2023, and we expect a much higher percentage, even 'twenty 'twenty four supported by robust demand for multiple customers.
Speaker 3: N3e will leverage the strong foundation of N3e to further extend our N3e family, which enhances performance, power, and yield, and provide complete platform support for both SPC and smartphone applications.
<unk> leverage as a strong foundation of industry to further extend our industry firmly wuxi and highest performance power and yield and provide compete preformed support for both <unk> and the smartphone applications.
Speaker 3: N3E has passed qualification and achieved performance and yield targets, and will start volume production in fourth quarter of this year.
Industry has passed quantification and achieved performance in your pocket and worst start volume production in fourth quarter of this year.
Speaker 3: We also continue to provide further enhancement of N3 technology, including N3P and N3X.
We also continue to provide a fully enhanced minerva elsewhere technology in.
Including entry P and the injury acts.
Speaker 3: With our strategy of continuous enhancement of our 3-millimeter process technology
With our strategy of continuous in huntsman of hours three nanometer process technologies.
Speaker 3: We expect strong multi-year demand from our customers, and we are confident that our three-dental-vital family will be another large and long-lasting node for TSMC. Finally, our talk is about the
We expect strong multiyear demand from our customers and we are complicated and there are three there will be two family will be another large and long lasting node for TSMC.
Finally, our taco about it in two stages.
Speaker 3: The recent surge in AI-related demand supports our already strong conviction that demand for energy-efficient computing will accelerate in an intelligent and connected world.
The recent surge in AI related demand suppose our already strong conviction that demand for energy efficient computing, what accelerate England, encouraging and connected to war.
Speaker 3: Thus, the value of a technology platform is expanding beyond the scope of geometry shrink alone and increasing toward greater power efficiency.
Just so value of our technology platform is expanding beyond the scope of geometries shrink alone and increasingly toward greater power efficiency.
Speaker 3: In addition, as process technology complexity increases,
In a tissue.
As process technology complexity increases.
Speaker 3: The lead time and engagement with customers also started much earlier. As a result, we are observing a strong level of customer interest and engagement at our end tool, similar to or higher than N3 at a similar stage from both HPC and smartphone applications.
The lead time and engagement with customer also started much earlier.
As a result, we are observing a strong level of customer interest and engagement at our end tool similar to or higher again entry at a similar stage for impulse SPG and smartphone applications.
Speaker 3: N2 will provide the capability of four columns of efficiency and energy benefits to meet the enhanced needs of energy efficiency calculations. As part of the N2 technology, we have also developed the backend energy line processing of N2, which is the best choice for HPC applications. Our targeted backend energy line will be available to customers for production in the second half of 2025 for 2026. With our continuous improvement strategy, N2 technology will extend into future technology fields. This concludes our key information, thank you for your attention. Thank you, C.C. This concludes our prepared remarks. Before we begin the Q&A session, I would like to remind everyone to limit your questions to two to allow all participants the opportunity to ask their questions. If you would like to ask a question in Chinese, I will translate it into English before our management answers your question. If you would like to ask a question, please press ** and then 1 on your telephone keypad. If you would like to remove yourself at any time, please press ** and then 2. Now we will begin the Q&A session. Operator, can we please have the first participant connect with us? Thank you. Yes, the first question we have is from Gokul Harihara of J.P. Morgan. Hi, congratulations on your achievements, and thank you for the detailed description of N3 and N2. My first question is about technology leadership. We have heard a lot of competitive information from your U.S. IDM competitors and customers in recent months. Intel seems to believe they will achieve technology leadership by 2025. I would like to hear TSMC's response to Intel's claims. What is TSMC's view on customer investment? Do you think Intel will lose some market share to N2 or the first generation of pure chip foundries, or do you think the market share of N3 will continue into N2? That's my first question. Okay, thank you, Gokul. Let me summarize your first question. Gokul's first question is about technology leadership and competition, particularly IDM. He emphasized that IDM has strong information about TSMC's technology leadership. So Gokul's question is, how do we view this? Are we concerned about losing market share in N2 or the first generation of pure chip foundries, especially with IDM having strong information about TSMC's technology leadership? Is that correct, Gokul?
Speaker 3: 2 nanometer technology will be the most relevant semiconductor technology in the industry in both density and energy efficiency.
Two nanometer technology will be the most advanced semiconductor technology in the industry in both density and energy appreciation when.
Speaker 3: when it is introduced in 2025.
When it is introduced in 2025.
Speaker 3: Our end-to-technology development is progressing well and on track for volume production in 2024.
Our <unk> technology development is progressing well.
On track for volume production in 2020 fly.
Speaker 3: Our N2 were adopt narrow-sheet transistor structure, which has demonstrated excellent power efficiency.
Our into our top naval sheet tranches of structure, which has demonstrated excellent power efficiency.
Speaker 3: and to deliver full load performance and power benefits to address the increasing need for energy efficient compute.
And to what deliver for Noah pro forma in Seattle, PA benefit towards choice, the increasing need for energy efficient computing.
Speaker 3: As part of the N2 technology platform, we also developed N2 with backside power rail solution, which is best suited for HPC applications.
As part of it into technology platform. We also developed into respects high power rail solution, which is a peso shoot it for HPE.
A brief cashews.
Speaker 3: We are targeting backside power rail to be available in the second half of 2025 to customers with production in 2026. With our strategy of continuing to develop
We are packaging backside power rail to be available in the second half of 2020 fly to customers, which for taxi in political this year.
With our strategy of continuously at Huntsman.
Speaker 3: N2N is derivative of further extended technology leadership way into the
And to win is derivative will further extend our technology leadership while into the future.
Speaker 3: This concludes our key meshes, and thank you for your attention.
This concludes the our key measures and thank you for your attention.
Speaker 1: Thank you. This concludes our prepared statement.
Thank you C C.
This concludes our prepared statements.
Speaker 1: Before we begin the Q&A session, I would like to remind everybody to please limit your questions to two at a time to allow all participants an opportunity to ask their questions.
Before we begin the Q&A session I would like to remind everybody to please limit your questions to two at a time to allow all participants an opportunity to ask their questions should you wish to raise your questions in Chinese I will translate it to English before our management answers your question.
Speaker 1: Should you wish to raise your questions in Chinese, I will translate it to English before management answers your question.
Speaker 1: For those of you on the call, if you would like to ask a question, please press the star, then 1 on your telephone keypad now.
For those of you on the call. If you would like to ask a question. Please press. The Star then one on your telephone keypad now.
Speaker 1: If at any time you would like to remove yourself from the questioning queue, please press star then 2.
If at any time, you would like to remove yourself from the questioning queue. Please press Star then two.
Speaker 1: Now let's begin the Q&A session. Operator, can we please proceed with the first caller on the line? Thank you.
Now, let's begin the Q&A session.
Operator can we please proceed with the first caller on the line. Thank you.
Speaker 4: Yes, the first one to ask question, go go harihara from JP Morgan.
Yes, that's what I wanted to ask a question Oh cool hotter from J P. Morgan.
Speaker 5: Yeah, hi. Congratulations on the great result and thanks for the details on N3 and N2. My first question is on the technology leadership. Given we are hearing a lot of competitive messaging from your USIDM competitors slash customer in the last few months, Intel seems to think that they will be getting into technology or process technology leadership in 2025.
Yeah, Hi.
Congratulations on a great result, and thanks for the details on entry it into my first question is on the technology leadership, given we are hearing a lot of.
Competitive messaging from the.
USA IDIOM competitor flash customer in the last few months in.
Delta seems to think that they will be getting into technology partner strategy leadership in 2025.
Speaker 5: Just wanted to hear what does TSMC think of Intel's claim.
Wanted to hear what else do you typically think of in those claim.
Speaker 5: When TSMC thinks about customer engagement, do you feel you will lose a little bit of market share to Intel when it comes to the N2 or the first generation of nanosheet transistors or you think your very high market share in N3 will continue into N2?
And when TSMC thinks about customer engagement.
Do you feel you will lose.
<unk> is a little bit of market share to endorse when it comes to the end to the first generation of nano sheets and sisters or do you think you are very high market share in entry will continue into and do.
That's my first question. Okay. Thank you go call. Please allow me to summarize your first question. So Cocos first question is about technology leadership and competition.
Speaker 1: Okay, thank you, Gokul. Please allow me to summarize your first question. So Gokul's first question is about technology leadership and competition with, I think, particularly IDM. He notes-
With I think particularly IDM. He notes this IBM is a very messaging about.
Speaker 1: This IDM is very messaging about
Taking over process technology leadership from TSMC and so Cocos question is how do we see this are we concerned that we will lose market share at nano sheet are into this IDM given their claims of Prost regaining process technology leadership is that correct cocoa.
Speaker 1: taking over process technology leadership from TSMC. And so, Gokul's question is how do we see this? Are we concerned that we will lose market share at nanosheet or N2 to this IDM given their claims of regaining process technology leadership? Is that correct, Gokul?
Speaker 1: Yes, that's right, thank you. Okay, Gokul, this is CCY. Let me answer your question with a very simple answer, and the answer is no. However, I was a little bit wrong. Actually, we do not underestimate any of our competitors or attack them lightly. That's not the case. Our internal tests show that our N3P, I repeat, N3P technology shows similar PPA to the 18A competitor. However, with better early market, technology maturity, and pricing. In fact, I repeat again, our 2-nanometer technology, without the power behind it, is more advanced than N3P and 18A. NYP semiconductor industry is the most advanced technology when it launches in 2025. Does this answer your question, Gokul? Okay, that's clear. Thank you very much. My second question is, can we talk about the demand for AI? You have seen strong demand in digital information. You also mentioned that AI has about a 6% profit this year, mainly in digital information. Are we starting to see more focus on AI demand based on TSMC's expectations? Will this become a major engine for TSMC in the leading field of AI in the next year or two? Do you think this will become your major engine? Okay, thank you, Gokul. Gokul's second question is about AI demand. He also mentioned that we discussed AI demand last time, especially what we call server AI processors, which Gokul referred to as digital information centers. So the question is about Edge products. Are we starting to see AI demand for Edge products? Do we expect this to become a major engine in our leading field in the next year or two? The answer is also simple. Yes, we also see some customers transferring ultimate devices with AI capabilities, such as smartphones and computers, to virtual engines and AI processors. We hope this will add to TSMC's strength in the AI field. Do you think this will happen next year or in the long-term future? I want to understand this growth cycle. Okay, let me answer simply. It has already started now.
Yes, that's right. Thanks.
Okay.
Speaker 3: Well, Goku, this is CC Wei. Let me answer your question with a very simple answer. I said no. But while I was there a little bit long, actually, we do not underestimate any of our competitors or Tech Jam Lite.
Well <unk>. This is <unk>, let me answer your question with a very simple.
The answer is no.
But.
While our state or would it be wrong.
Actually we do not underestimate any of our competitors.
Our tax them lightly.
Speaker 3: Having said that, our internal assessments show that our N3P, now I repeat again, N3P technology demonstrated comparable PPA to 18A, my competitors.
Having said that our internal assessment showed that our <unk> now.
I repeat again as repeat technology demonstrated comparable PPA.
288.
My competitors have technology.
Speaker 3: but with an earlier time to market, better technology maturity, and much better cost.
But we saw earlier time to market.
Better technology maturity and much better cost.
In fact.
Let me repeat it again.
Speaker 3: Our two-millimeter technology without backside power is more advanced than both N3P and 18A. And what the semiconductor industry is a most advanced technology when it is introduced in 2025.
Our two nanometer technology with Opex that power is more in a bind stem, both <unk> and <unk> and what the semiconductor industries of both of our advanced technology. When it is introduced it in 'twenty, you're trying to fly.
Does that answer your question Kaku.
Speaker 5: Okay, that's quite clear. Thank you very much.
Okay, that's that's quite clear.
Thank you very much.
Speaker 5: Could you also talk about, my second question is, could we talk a little bit about the AI related demand?
Could you talk also talk about my second question is could we talk a little bit about the AI related demand.
Speaker 5: You've seen a pretty strong demand on the data center side, and you talked about AI being about six percent of revenues this year, mostly on the data center side. Are we starting to see more engagement on AI demand on edge devices?
You've seen a pretty strong demand on the datacenter side and you talked about AI being about 6% of revenues. This year are mostly on the data center side.
What are we starting to see more engagement on AI demand on edge devices.
Speaker 5: Based on TSMC's expectations, is this going to be a big screwdriver in the next one to two years for TSMC's leading edge AI devices? Do you think that is a bigger driver for you?
Based on Tsmc's expectations is this going to be a big growth driver in the next one to two years for Tsmc's, leading edge AI devices. So the AI on the edge devices do you think that that is.
Bigger driver for you.
Speaker 1: Okay, thank you, Goku. So Goku's second question is on AI-related demand. He notes, of course, that we have talked last time also about our AI-related demand outlook and particularly focused on what we call server AI processes, or Goku referring to data centers. So this question is really more about on the edge devices.
Okay. Thank you cocoa. So cocoa second question is on AI related demand. He notes of course that we have talked last time also about our AI related demand outlook, and particularly focused on what we call server AI processors, or a coke or referring to data centers. So his question is really more about on the edge devices are we starting to see.
Speaker 1: Are we starting to see AI related demand for edge devices? Do we expect this to be a big growth driver in the next one to two years for our leading edge technologies as well?
See AI related demand for edge devices.
Do we expect this to be a big growth driver in the next one to two years.
For our leading edge technologies as well.
Speaker 3: Well, the answer is also very simple, yes. We do see some activities from customers who add AI capability in end devices, such as a smartphone and PCs, through neural engine, and AI on PC, whatever. And we certainly hope that this one will add to the course, help TSMC more strengthen under our AI.
Well the answer is also very simple yes.
We do see some activities from our customers, who are AI capability and devices, such as smartphones and Pcs, So Leroy engine and the <unk> piece yet.
Every.
And we certainly hope that this wasn't why add to that.
Of course.
TSMC more strength than under our ASR.
<unk>.
Yeah.
Speaker 5: So do you see that happen in the next one year or is it something that will happen in a more longer term horizon? I just wanted to understand when to think about the cadence of this growth.
So this is do you do you will see that happen in the next one year or is it something that will happen in a more longer term horizon just wanted to understand when do think about the cadence of this growth.
Okay.
Speaker 3: Okay, let me answer briefly. It started right now.
Let me answer.
Briefly.
<unk> right now.
Speaker 3: and we were expected that the more and more customer will put that AI capability into the end devices into your product. So my first question is about the cycle recovery. So budget appreciate about your comments about end demand. So my question is about when do you expect that there would be an uptake of the fab utilization assuming demand is stabilizing and also inventory get back to the healthy level. Because it's just very hard to believe your fab utilization outside of the drainage will stay at only, you know, 70%, 80%. So first question is about do you see that overall fab utilization to pick up at any time soon. Thank you. Okay, so Charlie, I think your first question is sort of if I'm correct around the cycle and in terms of how do we see the cycle and the recovery when, you know, do we see the fab utilization picking up, which really is a function of, I guess, do we see the cycle bottoming out and when do we expect the recovery is that correct. Yes, thank you. Well, Charlie, this is here again. Let me answer your question. As I said, we do observe some early signs of demand stabilization in PC and smartphone and market. Those two segments are the biggest segment for KSMC's business. We want to say that 2024 will be a very hearsay course, but right now did we see the pattern very close, very close. We want to, I cannot give you a number, but it's because it's too early to call it a sharp rebound. But even with the main core environment, remain uncertain, weighing customers are inventory, controlling first half of 2024. Having said that, we already said that we are strong technology leadership and the broad customer base. And those two are unique and specific to KSMC and never our customer to win business in their end market and KSMC to continue to deliver hearsay course. And that's why we can do better than overall industry. And that's why we have a confidence that we will have hearsay course next year. Okay, okay, thank you. Yeah, so just want to kind of verify because we do see some green shoots and some rush orders to wait for foundry sector. Thank you, but second question is also about AI. My question is about your over the past three months. Do you see any other revision of the forecast, I know may found the GPU or the constant chip. And I know it's a very, very recent, right? That's a two days ago. I use a US that put some additional export control on the AI cemented China. Do you think that is going to have any kind of near term or long time impact to your AI semi-dremio growth assumption? I think so.
Speaker 3: And we were expected that the more and more customers will put that AI's capability into their end devices, into their product.
And we expected that the more and more customer wall put that a ISR capability into the end devices into their product.
Got it thank you very much.
Speaker 1: Okay, thank you Gokul. Operator, can we move on to the next participant?
Okay. Thank you go call operator can we move on to the next participant please.
Speaker 4: Next one to ask question, Charlie John from Morgan Stanley .
Next I want to ask question, Charlie Chan from Morgan Stanley .
Speaker 4: Hi, good afternoon, C.C., Mark and Jeff.
Hi, good afternoon.
<unk> Mark and Jeff.
Speaker 6: So my first question is about the cycle recovery. So much appreciated about your comments about in-demand.
My first question is that.
Yes.
Cycle recovery.
Much appreciate about your comment about end demand.
Speaker 6: So my question is about when do you expect there will be an uptick of the
So my question is when do you expect there will be an uptake of the <unk>.
Speaker 6: fab utilization, assuming demand is stabilizing and also inventory get back to the healthy level. It is very hard to believe you are fab utilizing.
Fab utilization assuming.
Is that stabilizing and also inventory capex at the healthy level, because it's very hard to believe.
Our fab utilization.
Speaker 6: outside of DDNEG will stay at only 70%, 80%. So first question is about do you see that overall stabilization to pick up at any time?
Outside of leading edge well stay at only 70%, 80%. So first question is about do you see that.
Overall debit agent to pick up.
Anytime soon thank you.
Speaker 1: Okay, so Charlie, I think your first question is sort of, if I'm correct, around the cycle and in terms of how do we see the cycle and the recovery? When do we see the fab utilization picking up, which really is a function of, I guess, do we see the cycle bottoming out and when do we expect the recovery? Is that correct? Yeah, it's good to begin? You okay?
Okay. So Charlie I think your first question is sort of a if I'm correct around the cycle and in terms of how do we see the cycle and the recovery.
Do we see the fab utilization picking up which really is a function of I guess do we see the cycle bottoming out and when do we expect a recovery is that correct.
Yes. Thank you.
Yeah.
Speaker 3: Well, Charlie, this is Si Si Wei again. Let me answer your question.
Well Charlie.
The city, where again, let me answer your question.
Speaker 3: As I said, we do observe some early signs of demand stabilization in PCs and smartphones and Macs.
As I said, we do of Joe's some early signs of demand stabilization in PC and smartphone end market.
Speaker 3: Those two segments are the biggest segment for TSMC's business.
To segment, the Pts segment for TSMC as a business.
Speaker 3: We want to say that 2024 will be a very healthy growth. But right now, did we see the bottom? Very close, very close. We want to, I cannot give you a number, but because it's too early to call it a sharp rebound. But even with a...
We want to say that.
Our 2024 would be a very healthy <unk>.
But right now did we see the pattern.
Very close very close one.
I cannot give you a number but.
Because it is too early to call it a sharp rebound.
Even with <unk>.
Macquarie environment remain uncertain.
Speaker 3: Weighing customers inventory control in the first half of 2024. Having said that, we already say that we are strong technology leadership and...
<unk> customers say inventory control.
First half of 2024, having said that we already say that we are strong technology leadership.
And the broader customer base.
Speaker 3: And those two are unique and specific to TSMC.
And those two are unique and specific to TSMC.
Speaker 3: and never our customer to win business in market. And TSMC continues to deliver healthy growth. And that's why we can do better than overall industry. And that's why we have confidence that we will have here course next year.
Whenever our customer to win business in India and market and TSMC to continues to deliver healthy growth and that's why we can do better than overall industry and that's why we have confidence that we are halfway here's here.
Course next year.
Speaker 6: OK, OK, thank you. Yeah, so just want to kind of verify, because we do see some green shoes and some rush orders to wafer foundry sector. Thank you. But second question is also about AI. My question is that over the past three months,
Okay. Okay. Thank you yeah. So just the one.
Wanted to kind.
Kind of a.
Verify because we do see some green shoots and semi rush orders.
Wafer foundry sector. Thank you.
Second question is also about AI.
My question is about over the past three months.
Speaker 6: Do you see any upper revision of the forecast, an domain from the GPU or the custom chip? And I know it's very, very recent, right? Just two days ago, the US had put some additional export control on the AI shipment to China. Do you think that is going to have any kind of near-term or long-term impact to your AI semi-removed growth assumption? I think.
Do you see any upward revision of our forecast and our marathon, the GPU or does that cost and chip and I know, it's a very very recent sorry, just two days ago.
That put us additional export control on the AIA shipment to China.
Do you think that that is going to have any.
Near term or long term impact to your AI semi revenue growth assumption.
Speaker 6: Okay, thank you, Charlie. So Charlie's second question is about AI, and it's a two-part question. First, we have seen in the past three months, I believe what he mentioned is that AI has provided the highest demand modification in the past three months. Second, he wants to know what the impact of AI demand on TSMC will be according to the recently announced updated rules. This is just the current situation. Now, the U.S. government has introduced new rules, and some products cannot be shipped to Beijing and China. However, this is just a matter of days, and we are still evaluating. We are still evaluating, but for now, we can tell everyone that the impact on TSMC is limited and manageable, at least in the short and long term. We are still evaluating to see what the consequences will be. Understood. Actually, there is a hidden question about Custom Chip. What is your view on Custom Chip in the long term, Genshare or Outgrow GPU products? What is your view on Custom Chip's contribution to AI and TSMC? Can I follow up on that? Okay, let me answer that. When customers develop CPUs, GPUs, AI Accelerators, or ACLs, all AI applications have in common that they all need to use leading technology for stable delivery to support size and strong infrastructure. These are TSMC's strengths. Therefore, we are able to capture and dominate most of the market in semiconductor components in AI. Okay, thank you. Okay, thank you, Charlie. Operator, can we move to the next participant? The next question is from Bruce Liu, Gold Tech. Okay, thank you for taking my question. I think this question is about expectations two years from now. I remember it will align with the company's average growth. We will see stronger growth in the background industry in the next two years.
Speaker 1: Okay, thank you, Charlie. So Charlie's second question is related to AI, two-parter, first, do we see over the last three months, I think his words were an upper revision in the demand from AI in the last three months. And then he wants to know, given the recent additional regulations announced, what would the impact to the AI demand be to TSMC, both for the short term and the long term?
Okay. Thank you Charlie So charges second question is related to AI, a two parter first do we see over the last three months I think his words were an upward revision in the demand.
From AI in the last three months.
And then he wants to know given the recent.
Additional regulations announced what would the impact to the AIA demand beef to TSMC, both for the short term and the long term.
Charlie.
Speaker 3: The AI demand continues to grow stronger and stronger.
The AI demand continues to grow stronger and stronger.
Speaker 3: So from TS&G point of view, now we have a capacity limitation to support them, to support the demand. We are working hard to increase the capacity to meet their demand. That's for one team.
So <unk>.
TSMC point of view now we have about we have a capacity limitation to support again to support the demand.
We're working hard to.
To increase our capacity to meet demand that's for one thing.
Speaker 3: Now US government put a new regulation and...
Now U S government put a new regulation and.
Speaker 3: to for some of the product cannot be shipped to mainland China. However, it is just for a couple of days, we are still in evaluation. We are still doing our assessment. But so far, we can tell you that the impact to TSMC is limited and manageable.
Two.
Or some of the product cannot be shipped it to mainland China.
Ever.
M E T. So.
No just a for a couple of days. So we are still in evaluation.
We are still doing our assessment.
But so far we can tell you that the impact to TSMC is limited and manageable.
Speaker 3: At least for the short term, for the long term, we are still evaluating what is the potential.
Sure.
So for the short term for the long term, we are still evaluating what is the pension ways.
Got it.
Speaker 6: Got it. So actually, there was a one embedded question about the custom chip. So may I know your perspective about this custom chip?
Actually there was a.
One embedded question about the custom chip.
So may.
I know your perspective about Theres a constant chip.
Speaker 6: long-term gain share or outgrow the GPU.
Long term may.
Kind of a gain share or outgrow the GPU.
Speaker 3: products. So what was your assumption for this cost and ship in terms of the real contribution within AI or to TSMC? May I ask you to follow up? Okay, let me answer. Where the customer develop the CPU, GPU, AI accelerators or AC for all the type of AI applications?
Products.
What's your assumption is a custom chip in terms of the railcar.
<unk> contribution within AI or two to TSMC as he said follow up Okay. Let me answer it.
Whereas our customer develop the CPU GPU.
It accelerates or ASU for all the time for AI applications.
Speaker 3: The commonality is that they all require usage of leading edge technology with stable yield delivery to support larger die sites.
The commonality is R J or required usage of our leading edge technology, we stable yield delivery to support larger die size.
Speaker 3: and a strong, fun, great design ecosystem. All of those are TSMC's strengths.
And a stronger country designed the ecosystem.
All of those are Tsmc's our strengths.
Speaker 3: So we are able to address and capture a major portion of the market in terms of a semiconductor component in air.
So we.
We are able to address and capture a major portion of the market in terms of a semiconductor component in AI.
Speaker 1: Okay, okay, thank you. Okay, thank you, Charlie. Operator, can we move on to the next participant?
Okay. Okay. Thank you okay. Thank you Charlie operator can we move on to the next participant please.
Speaker 4: Next one to ask questions, Bruce Lou from GlobalTechs.
That's the one to ask question Bruce Lu from Goldman Sachs.
Speaker 2: OK, thank you for taking my question. I think the question is try to ask about the outlook for the next two years. I do recall that manager mentioned about 15% to 20% revenue taken from 21% to 26%. The smartphone business supposed to be in line or slightly below the corporate average in terms of the growth rate. But the smartphone business was down meaningfully in 2023. Do we expect to see a sharp rebound for the smartphone business to get back to the corporate average in terms of cost rate?
Okay. Thank you for taking my question I think the question.
Try to ask about the outlook for next two years I think I do recall that.
Management mentioned about 15% to 20% revenue cake as from 'twenty, one to 26. The smartphone this is supposed to be.
Inline or slightly below the corporate average in terms of the country, but the smartphone business was down meaningfully in 2000.
We expect to see a shovel rebound.
For the smartphone business to get back to the corporate average in terms of close rates also but the medical I also mentioned that the back end business will grow in line with the corporate average.
Speaker 4: Also, the management also mentioned that the backend business will grow in line with the corporate average. We see a much stronger growth from the backend business in the coming two years.
Well, we see a much stronger growth from our bacon business in the coming two years.
Speaker 4: Bruce's question, indeed you are right, we said we will grow domestic profit tax revenue by 15% to 20% between 2021 and 2026. So Bruce's question wants to analyze these elements, especially smartphones, as the growth of the smartphone market has slowed down in recent years. How do we view the growth of the smartphone market in these years? I think Bruce also wants to ask, we previously said that the growth of the smartphone market would be faster than the growth of domestic profit tax revenue. What are your expectations for this? This is your first question, regarding the growth of domestic profit tax revenue, we still expect the overall growth of domestic profit tax revenue to be faster than the growth of domestic profit tax revenue over five years. Understood, thank you. The next question is about technology growth, I mean TSMC. Therefore, it seems that the growth of 3nm is longer than that of 5nm and 7nm. Can we see the domestic profit tax revenue of 2nm in two or three years in the future? I think the growth of technology mobility is an important indicator. Okay, thank you Bruce, Bruce's second question, as he said, is about technology growth. He noticed that 5nm started providing profits in 3Q20, but I think you are saying that the profits of 3nm are provided in 3Q23. Therefore, the growth of mobility between 5 and 3 over the three years. So, what will the growth of technology mobility be in the future? Therefore, for 2nm, when should we expect meaningful profits? Is that correct? Yes, that is correct. Okay, Bruce, let me answer your question. I think we develop technology to meet customer needs, which is our primary advantage. But different customers may have different product plans. Some people think that technological complexity is becoming more complex. Our customers will design their products and then respond to the market.
Okay, So Bruce as quest.
Speaker 1: this question really is looking at, we have indeed you're right Bruce, we had said we will grow between 15 to 20 percent revenue CAGR and US dollar terms from 2021 to 2026
Question.
Really is looking at we have indeed, you are right. Bruce we had said we will grow between 15% to 20% revenue CAGR and U S. Dollar terms from 2021 to 2026. So Bruce's question wants to break down the components here to look at smartphone in particular given that it is.
Speaker 1: So Bruce's question wants to break down the components here to look at smartphone in particular, given that it has been a slower going market these last few years. How do we see the growth of the smartphone market the next one to two years in the context of this CAGR? And then also, I think Bruce is also asking about the backend growth. We have said previously, it will grow slightly faster than the corporate average. What is the current expectation now also for the next one to two years?
It's been a slower growing market desires for years, how do we see the growth of the smartphone market. The next one to two years in the context of this CAGR and then also I think Bruce is also asking about the backend growth. We have said previously what goes slightly faster than the corporate average what is the current expectation now also for the.
The next one to two years.
Is that correct Bruce.
Speaker 7: Yes, thank you.
Yes, Thank you right.
Speaker 2: Right, Bruce, this is Wendell. Yeah, in the next two to three years, backing up to 21 to 26, we still expect that the smartphone as a whole will grow slightly slower than the corporate app.
Bruce This is wendell.
Yeah in the next two to three years.
Backing up to 21% to 26, we're still expect that the smartphone is.
As a whole will grow slightly slower than the corporate average.
Speaker 2: We still think that HPC will be the strongest one and will be the major growth contributor to our multi-year growth.
We still think that <unk> will be the strongest one and will be the major growth contributor.
Two our multiyear growth. This is your first question as to the growth of <unk>.
Speaker 2: This is your first question. As to the growth of back-end business, we still expect that the back-end business as a whole will grow slightly faster than the corporate average in the five-year time period.
The backend business we.
We still expect that the backend business as a whole will grow slightly faster than the corporate average in the five year time period.
Thank you.
Speaker 5: So the next question is for the technology cadence. I mean, for TSMC, for revenue contribution for 5 nanometer, we start to see the meaningful revenue contribution for 5 nanometer starting at third quarter 2020. And 3 nanometer is third quarter 2023. So the cadence, it looks like, is longer for 3 nanometers versus 5 nanometer and 7 nanometers. What is the technology cadence moving forward? Are we able to see a meaningful revenue contribution on 2 nanometers in two years' time frame or three years' time frame? I think the technology migration cadence is an important indicator.
So the next question is for the Technologic Cadiz I mean for TSMC.
For revenue contribution for five nanometer, we start to see the meaningful revenue contribution for our five nanometer start as third quarter 2000.
23.
So in all of its third quarter two onto IP, so that the cadence it looks like as a longer for three nanometers versus five nanometer seven nanometers.
What is that technology is moving forward are we able to see meaningful revenue contribution of our two nanometer in two year timeframe or three years' timeframe, though that I think the technology migration.
Kate This is an important indicators.
Speaker 1: Okay, thank you Bruce. So Bruce's second question again, as he said, is around the technology cadence. He notes that five nanometers started contributing revenue in 3Q20, but I think you're saying three nanometers revenue is contribution 3Q23. So the cadence is growing longer to kind of three years between five and three. So what will be the technology cadence in the future and thus for two nanometer, when should we expect meaningful revenue as well? Is that correct, Bruce?
Okay. Thank you Bruce Bruce second question again, as he said is around the technology cadence. He notes that are <unk>.
Five nanometer started contributing revenue in <unk>, 'twenty, but I think youre, saying three nanometers revenue is contribution in <unk> 'twenty three so the cadence is going longer to kind of three years between five and three so what will be the technology cadence in the future and thus for two nanometer when should we.
Meaningful revenue as well is that correct Bruce.
That's correct okay. Thank you.
Speaker 3: Okay, Bruce, let me answer the question.
Okay Bruce.
Let me answer the question.
I think that.
Speaker 3: We developed the technology to meet the customers' demands. That's a first priority to us.
We develop the technology to meet the customers' demand.
That's our first priority to us.
Speaker 3: But then different customer may have a different product schedule consideration.
But then different customer may have a different product schedule consideration.
Speaker 3: And as time goes by, the technology complexity actually becomes more and more complicated. And our customers design their products and react to the market situation.
And.
A sum cost by the technology complexity actually become a.
More and more complicated and our customer what these andrea product and react to the market situation.
Speaker 3: Let me answer a very simple question. TSMC's technological process has been continuously evolving to support our customers' growth. However, whether we receive the same amount or the same profit depends on the customers' product plans. If customers do not need rapid technological advancement, we might slow down the increase in profit. If customers do not need rapid technological advancement, slowing down the increase in profit means we will have better profits. We are not reducing technological development; we might reduce the growth in customer demand. Did I answer your question? This is what we are doing. I understand, thank you. Okay, thank you. CEO, please let the next participant begin. The next one is Laura Chang from City. Hello, good morning. Thank you for taking my question. I think my question is similar to what Bruce mentioned, regarding the energy growth plan. We are now seeing a healthier reserve situation, and at the same time, the most advanced methods still depend on customer demand. There might be double the cost between N2 and N3. So my question is just about the future energy growth plan. Thank you. Okay, Laura's first question is again about the energy growth plan. She noted that, of course, the reserve situation is becoming healthier, but also between N3 and N2. So she really wants to know about the energy growth plan and the energy growth plan in the next one to two years. Yes. Hi, Laura, this is Wendell. CeCe just mentioned that the energy growth plan really depends on the customers' product plans. From the perspective of the energy growth plan, we can now see that in the past few years, we have worked hard to invest in growth for the coming years. As we start to take on investments, we expect the growth of the energy growth plan to decrease in the coming years. This does not mean the amount in dollars will decrease, but the surge in capital is expected to decrease.
Speaker 3: So let me answer the question that's in a very simple way. TSMC's technology cadence remain constant.
So let me answer the question that some.
Oh Boy simple way Tsmc's technology cadence remained constant.
Speaker 3: and to support our customers' growth. But whether we got the same amount or same percentage of the revenue, it will depend on customers or products.
And to support our customers across Parkways have we got the same amount or some percentage of that revenue what depend on customer support out of schedule.
Speaker 2: But the follow-up question is that if the customer doesn't really need the advanced technology as fast as before, maybe we slow it down a bit, which will make a better return.
But but the follow up question is if the customer doesn't really need the FES pet a lot in the us.
As fast as before maybe it was slowed down a bit which will make a better returns right.
Speaker 1: So Bruce's follow-up is, so if the customers do not need the Lini node as fast or as soon as before, then slow down the cadence, but that means we will see better returns.
So Bruce as all others saw with the customers do not need the leading node as fast or as soon as before.
Then slow down the cadence does that mean, we will see better returns.
Well we.
Speaker 3: Well, we don't slow down our technology development per se. We might slow down our capacity expansion according to customers' demands.
We don't slow down our technology development per se, we might slow down our capacity expansion according to customers' demand.
Speaker 3: Did I answer your question, Bruce? That's it. That's what we are doing right now.
Did I answer your question Bruce that's it that's what we're doing right now.
Thank you.
Speaker 1: Okay, thank you. Operator, can we move on to the next participant?
Okay. Thank you operator can we move on to the next participant please.
Speaker 4: Yes, the next one we have Laura Chang from Citi.
Yes, and that's why we have Laura Chen from Citi.
Speaker 8: Hello, hi, good afternoon. Thank you for taking my question. I think my question is also similar to what Bruce mentioned about the capacity expansion plan. As we see that healthier inventory situation right now, at the same time the most advanced process now depends on customers' demand. So I just want to get your feeling about the overall capacity outlook.
Hello, Hi, good afternoon, and thank you for taking my question I think my question is also similar to what Bruce mentioned about a capacity expansion, Paul that's where you see that healthier inventory situation right now.
At the same time, the most advanced process now let depends on customers below so just wanted to get your feeling about the overall the capex outlook our capacity outlook.
Speaker 8: into the next two years. I do feel that it will be better to resume the year-on-year car parks.
Into the next two years I still feel that will be a better to uncertainty yeah, yeah, Capex next year or later.
Speaker 1: next year or later. Considering there's still quite strong demand on N3, N2, RANBAP, at the same time, the most advanced now seems you will see maybe two times more expensive on N2 versus N3. So my question is just about the future capacity expansion plan. Yeah, thank you. So Laura's first question again is on the capacity expansion plan.
So anywhere in there is still a long.
Quite a strong demand on entry into ramp up at the same time.
The most advanced node.
Well see.
B to trying to sound more expensive for NCR versus okay. So my.
My question is just about a future capacity expansions.
Thank you Okay. So lowest first question again is on the capacity expansion plan.
Speaker 1: She notes that, of course, the inventory, as we said, is becoming healthier.
She notes that of course, the inventory as we said is becoming healthier.
Speaker 1: But also with N3 and N2, so she really wants to know what is the CAPEX and capacity outlook plan for the next...
But also with entering into associated really wants to know what is the capex and capacity outlook plan for the next one to two years right Hi, Laura Swindle.
Speaker 2: Hi, Laura. This is Wendell. C.C. just mentioned a capacity plan which really depends on the customer's product plan. Now in terms of K-PEX, what we can see now...
<unk> just mentioned our capacity plan, we're really depends on the customer's product flat now in terms of Capex, while we can see now.
Speaker 2: that we in the past few years have invested very heavily to capture the growth in the next few years.
Is that we in the past few years have invested very heavily to capture the growth in the next few years.
Speaker 2: And as we begin to harvest those investments, we expect the increase of our KPEX to be leveling off in the next few years. That doesn't mean the dollar amount is going to reduce. The capital intensity is expected to decline in the next few years.
As we begin to harvest those investments we expect our.
The increase of our capex to be leveling off in the next few years that doesn't mean, the dollar amount is going to reduce the capital intensity.
It is expected that.
Speaker 2: In the coming years, this is what we are currently seeing. Thank you, Wendell. I remember we mentioned earlier that we plan to enhance our development in the long term, returning to the mid-30s. So, is there any possibility of achieving this goal next year? First, this is not a goal; it is a forecast based on customer requirements. Second, this is three to five years later, not next year. Okay, thank you, very clear. And my second question is about N2 progress. Thanks for the previous sharing on CC progress and the timeline for Backside Power. I was just wondering, if we move to Backside Power, the circuit density will be completely different. So, I was just thinking about the challenges from a technical perspective if customers move or intend to adopt the earliest timeline in the next two to three years. Thank you. Okay, Laura, let me confirm your second question is about N2. You want to know what the most challenging aspect of moving to Backside Power is from a technical perspective, and how we view customer movement. Yes, correct, thank you. Laura, my answer is, you know, as technology advances, the challenges become greater. The complexity of technology is significantly increasing, but we can do it without a doubt. We are still the technology leader in this industry. If you ask me what the biggest challenge is, I would say it's cost. I mean, looking at the currency today, everything, tools, are increasing. Although we can meet customer requirements in time, our current challenge, actually, I would say, is cost first. I want to reduce costs so that more customers can afford it. But even so, we actually have many customers who need more tools. Even to this point, we have many customers who are interested and invested in today's TSMC, and they might be higher than N3 at a similar stage. Did I answer your question? Yes, very clear, thank you very much. Thank you, Laura. Executive Director, let's have the next participant. Now we have Brett Simpson from MSA Research. Thank you very much. I have a question about CC, regarding hyperscalers. Many U.S. hyperscalers are currently hiring a lot of chip designers, looking to develop their own AI chips directly with TSMC, similar to what Apple has done in recent years. Does TSMC support this trend or not? Can you give us an insight into whether hyperscalers having in-house chips and technology can cut out ASIC suppliers and go directly to TSMC? Thank you.
Client in the next few years.
That's why we can see at this moment.
Speaker 8: Thank you, Wendell. I recall that previously we mentioned about like we target longer term to back to like mid 30s for our cat-ax intensity. So, is there any possibility we see which we achieve that target next year?
Thank you Linda.
I recall that Premier yesterday, we announced about a likely target longer channel to back to like need therapy.
Four hours cut back or so.
Any I'll pass it back to you when you see what we have achieved that target for next year.
Speaker 2: First of all, it's not a target. It's a forecast based on the customer's demand. And secondly, it's like three or five years out. It's not the immediate next year.
It.
First of all it's not a target it's a forecast based on the customers' demand.
And secondly, it's like a three or five years out it's not the immediate next year.
Okay. Thank you.
Speaker 8: And also my second question is about end-to-progress. I appreciate CC's previous sharing on the progress and also the backside power timeline. I'm just wondering that what would be the most challenging part if we migrate to a backside power? And also since the transistor density will become totally different on nanosheet, so I'm just wondering that the kinds of...
And also my second question.
It's about <unk>.
Hello, guys I appreciate it she came to play this sharing.
And also the power of timeline.
I'm, just wondering that what would be the most challenging part if we might.
Go ahead to like a collar.
And I always tell of course.
Transistor densities, well become a priority for them.
So I'm just wondering that the clients are.
Speaker 8: migration or intention to adapt the most advanced nodes into the next two or three years.
Languish in our intention to establish the lowest at the wrong flowed into an extra day, Oh, that's what will be the most challenging.
Speaker 8: and what will be the most challenging in technology perspective.
Perfect. Thank you Okay. So Laura let me make sure I got this right. So your second question is about end to end you want to know with the adoption of backside power rail are what is the most challenging part from a technology perspective, and then how do we see the customer adoption.
Speaker 1: Okay, so Laura, let me make sure I got this right. So your second question is about N2, and you want to know, with the adoption of backside power rail, what is the most challenging part from a technology perspective? And then how do we see the customer adoption?
Okay. Thank you.
Speaker 9: No, Rob, I answer that. You know.
Nora.
I'll answer that.
Sure.
Speaker 3: As technology moves into more and more advanced nodes, the challenge is always there. Technology complexity increases dramatically.
Yes.
As a technology moving into more and more of the wines are known.
Challenge, you always fear technology complexity increase dramatically.
Speaker 3: But we can do it, no doubt about it. And we still remain the technology leadership in this industry.
But we can do it no doubt about it.
And we are still remain the technology leadership in this industry if.
Speaker 3: If you ask me what is the most challenging part, I would say it's cost.
If you asked me what is the most.
The challenge part I will say is cost.
Speaker 3: I mean, you look at it today, inflation, everything, and the tools have become more and more expensive.
So you look at it today inflation, everything and tour and become more and more space here.
Speaker 3: Although we can do it on time to meet customers' requirements, our challenge right now, actually, I would say, number one, cost.
Although we can do it.
And time.
To meet customers.
Requirement our challenge right now actually I would say number one cost.
Speaker 3: I want to reduce the cost so more customers can afford it. But even with that actually, we have a lot of customers interested and engaged with the TSMC today.
I want to reduce our costs or.
More customer can afford it.
Even with that actually.
We have a lot of customer.
Interested and engaged.
We said TSMC today.
Speaker 10: actually is probably higher than the N3 at a similar stage. Okay. Did I answer your question? Okay, thank you. Yeah. Thank you very much.
Actually is probably higher than the industry at a similar stage.
Hey.
Did I answer your question, yes, yes, very clear thank you very much.
Okay. Thank you Laura operator can we move on to the next participant please.
Speaker 4: Right now we have Brett Simpson from Cara T research.
Right now we have Brett Simpson from Arete research.
Speaker 11: Thanks very much. I had a question for CC regarding the hyperscalers, major US hyperscalers are hiring a lot of chip designers at the moment and looking to make their own AI silicon going direct to TSMC, much like Apple has done over the years.
Thanks, very much I had a question for C C.
Regarding the.
The hyperscale theirs.
Our U S hyperscale or are hiring a lot of chip designers at the moment and looking to make their own AI silicon.
Going direct with TSMC much like Apple has done over the years.
Speaker 11: Are you, is TSMC generally supportive of this trend or not? And can you give us your perspective as to whether hyperscalers have the in-house IP and skills?
TSMC is generally supportive of this trend or not and can you give us your perspective as to whether hyperscale.
In house, IP and skills to cut out the ASX suppliers are not and go direct with TSMC. Thank you.
Speaker 11: cut out the ASIC suppliers or not and go direct to TSMC.
Speaker 11: Okay, thank you Brett. Brett's first question is that he observed that super companies in the United States are hiring many people to manufacture AI chips and are directly collaborating with TSMC. His question is whether TSMC supports such efforts and how we view such customers. Is that your question, Brett? Yes, in summary, please share your views on TSMC's development in this area. Thank you. Hi, Brett. Okay, those are super companies. I can't specify particular customers, but the basic rule we know is to let customers manufacture CPUs, GPUs, AI, or ASIC chips for their own applications or any needs in the AI field. We support them because our technological leadership and precise manufacturing allow us to track and grasp most of the market. So you ask if we support, we support every customer around the world. Thank you, that's clear. Let me add something. I want to ask about some sectors being weaker than expected, such as 7nm, which I think is a year and a half, and automation, thus continuing to decline meaningfully. Can you help us explain how you establish 7nm, what causes the weakness, what happened with automation, and how you assess the prospects of automation in the next 6-9 months? Thank you. Okay, two parts to answer Brett's question. Maybe I'll start. Anyway, looking at the demand for automation and the weakness over the past four months, how do we view the demand for automation, and his question is about 7nm, which is a year and a half of continuous decline. How do we view the prospects of 7nm? I'll first answer the question about the demand for automation. Actually, in the past three years, the demand for automation has been very strong. We met their requirements. Today, I think the demand for automation has entered a reserve adjustment mode in the second half of 2023. However, we still expect the demand for automation to grow again in 2024. The demand for automation will increase with more and more EVs and more functions being added to automation. That's what we see. Now talking about N7, the 7nm technology, why do we have such low utilization or revenue decrease.
Speaker 1: Okay, Brett, thank you. So Brett's first question is...
Okay.
All right. Thank you so perhaps first question is.
Speaker 1: Looking at his observation, US hyperscale companies are hiring a lot of people to do AI custom chips silicon and working directly or coming directly to work with TSMC. So his question is, is TSMC support such efforts and how do we see such type of customers? Is that your question Brett?
Looking at his observation U S. Hyperscale companies are hiring a lot of people to do AI custom chips silicon and working directly are coming directly to work with TSMC. So his question is TSMC support.
Such efforts.
And how do we see such type of customers I guess is that your question Brett.
Speaker 11: Yeah, and to generally just share your perspective on how you see this part of the business developing at TSMC. Thank you.
Yeah and into generally.
Share your perspective on how you see this part of the business developing at TSMC. Thank you.
Hi, Brett.
Yeah.
Speaker 3: Okay, those are hyperscalers. I don't comment on the specific customer, but...
Okay. Those are hyperscale errors I don't.
Come in on the specific customer but.
All.
Speaker 3: All we know or our fundamental rule is, when the customer develops the CPU, GPU, AI accelerator or H-
All we know all our fundamental rule is who is our customer develop the CPU GPU AI accelerator or ASIC.
Speaker 3: For their own application or for any purpose in the AI area who are supporting actually
For their own application for any purpose in the AI area, who are support again actually.
Speaker 3: And because of our technology leadership and our good manufacturing, so we are able to address and capture a major portion of the market.
And because of our technology leadership and our co manufacturing. So we are able to address and capture a major portion of the market.
Speaker 3: And so you are asking whether we support it or not, we support every customer all over the world.
And so.
You are asking whether we supported or not we support every customer along for the award.
Okay. Thanks, that's very clear.
Speaker 11: And maybe just as a follow up, I wanted to ask about
And maybe just as a follow up I wanted to ask about.
Speaker 11: some of the areas in the quarter that were weaker than expected, namely 7nm, I think it's half year on year, and also automotive that saw a decline sequentially, a meaningful decline sequentially. Can you just help us understand how you build back up 7nm, you know, what led to the weakness and what's happening in automotive and how do you assess prospects for automotive over the next 6-9 months or so. Thank you.
Some of the areas in the quarter that were weaker than expected, namely seven nanometer I think it's up year on year.
And also automotive that saw a decline sequentially a meaningful decline sequentially.
Can you just help us understand how you build back up seven nanometer what led to the weakness.
What's happening in automotive and how do you assess prospects for automotive over the next.
669 months or so thank you.
Speaker 1: Okay, so two parts to Brett's question. Maybe I'll start with the second. But anyway, looking at automotive demand and the weakness in the past quarter, how do we see the automotive demand? And then also his question is about 7 nanometer also. You know, your sharp revenue decrease. So how do we see the outlook for 7 nanometer?
Okay. So two parts to Brad's question, maybe I'll start with the second buy anyway looking at automotive demand.
And the weakness in the past quarter, how do we see the automotive demand and then also his question is about seven nanometer also.
Year on year sharp revenue decrease so how do we see the outlook for seven nanometer as well.
Speaker 3: Let me answer the question on automotive demand. In fact, in the past three years, automotive demand has very strong. And we deliver whatever they ask.
Well, let me answer the question in automotive demand in fact in the past three years, our automotive coupon has a very strong and we.
We deliver whatever they asked.
And today I think is automotive demand already entered the inventory adjustment mode in the second half of 2023. However.
Speaker 3: Today, I think automotive demand already enters the inventory adjustment mode in the second half of 2023. However, we still expect the automotive demand to be lower.
However, we still expect the automotive.
Speaker 3: demand-wide increase again in 2024 because more and more EV, more and more functionality being added to automotive.
Demand why increase again in 2024 because of more and more.
The more and more functionality being edited to automotive and.
Speaker 3: That's what we saw. Now, talking about the N7, the 7 nanometers technology, why we have such a low utilization, why the revenue decreased.
That's what we saw now talking about the seven to seven nanometers.
Technology, why we have for such a low utilization or the revenue decrease.
Speaker 3: This has exceeded our original plan because we expected N7 to be fully utilized until now, but it hasn't. Let me answer this question because suddenly, over the past decade, the demand for smartphones has significantly decreased from 1.4 trillion to the current 1.1 trillion. So at this point, the usage of N7 has been affected and was rejected by a major customer who declined their product introduction. Therefore, our usage has decreased, but we are also confident in bringing more special demand for N7's 6nm energy from consumer RF connectors and other applications, and usage will return to the highest levels in the coming years. It's like how we are now using 28nm energy, which returned to the highest levels in 2018 and 2019. Initially, our usage decreased for a period, but we worked hard with customers to develop some special technologies. Now we need to use 28nm energy to increase the capability of special technologies. It's the same story. Brett, did I answer your question? Yes, thank you. Okay, thank you very much. Okay, Brett, thank you. Operator, let's have the next participant. The next question is from Brett Lin from Bank of America. Thank you for taking my question. First, congratulations on achieving strong results and impressive growth. I have two questions, one on electronic processes, HAI, and the other on CPU. So I really appreciate the constructive evaluation from management and the development intentions of HAI. Besides interesting collaborations with customers, what impact does the company's maintenance consumption have? Also, from the perspective of the company's power and energy consumption and the terminal devices with AI capabilities, should the software movement of terminal devices be accelerated? That's my first question, thank you. Okay, Brad's first question is about terminal device AI. He wants to know the impact of maintenance consumption, along with the increase in energy efficiency and capability. He wants to know if energy movement is accelerated or increased. I guess he means energy movement or adoption of terminal technology.
Speaker 3: It goes beyond our initial or original plan because we expect the N7 to be fully utilized even now, but it is not. Let me answer the question because we suddenly have in 10 years, you know,
<unk> is a go beyond our initial or original plan because of we we expect seven to be off.
Very fully utilize even even now but.
It is not let me answer the question because of we suddenly heifer in 10 years.
Sure.
Speaker 3: the smartphone demand dropped dramatically from about 1.4 billion units to about 1.1 billion now. So that exactly in this time frame, the N7 utilization has been impacted and followed by one major customer who delays their product introduction. And so that's why we have no utilization. Bye.
The smartphone demand drop.
Dramatically from about a $1 4 billion units to about $1 1 billion now so that exactly in this timeframe and severance.
Utilization has been impact.
And followed by a one major customer.
Who did Asia product introduction and so that's why we have low utilization.
But.
Speaker 3: Seeing that, we are confident to backfill our 7, 6 nanometer capacity with additional wave of specialty demand from a consumer, RF, connectivity, and other applications. And while we turn to a healthy level of utilization over the next several years, this is very similar to a situation that we have a 28 nanometer backing 2018 and 2019 time frame.
Seeing that we are competent to backfill our seven six nanometer capacity with additional wave of specialty demand for consumer.
<unk> connectivity and other applications and what return to a healthy level of utilization over the next several years. This is very similar to.
Situation that we have for 28 nanometer backing a ton.
2018 in 2019 timeframe.
Speaker 9: Okay, in the beginning it was underutilized for a period of time and we worked hard with our customers and then for developing some specialty technologies and now we have to expand 28 nanometers of specialty capacity. That's the same kind of a story.
At the beginning neither wassa and the user is a for a period of time and we work hard to with.
With a customer and then.
<unk> developed some specialty technologies and then now we have to expand 28 nanometer sub specialty capacity. That's a same kind of a story.
Brett did I answer your question. Thank you.
Speaker 1: Okay, thanks a lot. Thanks very much. All right, Brett, thank you. Operator, can we move on to the next participant?
Okay. Thank you Yep Yep. Thank you very much alright, Brad. Thank you operator can we move on to the next participant please.
Speaker 4: Next one to ask questions, Brad Ling from Bank of America.
That's one to ask questions Brett Le <unk> from Bank of America.
Speaker 6: Thank you for taking my questions. So first of all, congrats on the strong result, and then also the impressive gross margin. So I have two questions. One is on the M-Device AI, HAI, and the other is on the CPO.
Thank you for taking my question. So first of all congrats on the strong result, and then also the impressive gross margin. So I have two questions. One is R&D and device AI Hai and the other is on the CPO. So appreciate the mentioned by Scott shattered a constructive I'll comment on the growth outlook.
Speaker 12: So appreciate the management's constructive comments on growth outlook on the HAI. So besides the, well, interesting engagement with the clients, what are the implications for the wafer consumptions for the firm?
Ajay I, so besides the well interesting engagement with our clients what are the implications for the wafer consumption for the firm and also.
Speaker 12: and also on the computing power and energy consumption angle on the end device with additional AI functions, should we expect it to accelerate, reaccelerate the node migration for the end devices? That's my first question. Thank you.
Company empower and energy consumption NGO on the end device with AI.
Additional AI functions should we expect it to a stellar array reaccelerate a node migration for the end devices. That's my first question. Thank you.
Speaker 1: Okay, so Brad's first question is about edge and end device AI. He wants to know what is the implications for wafer consumption and then with the increasing need for energy efficiency and power, he is wondering does this re-accelerate or increase the node for, I guess his words is node migration or adoption of leading edge technology.
Okay. So brands first question is about.
Edge, an end device AI. He wants to know what is the implications for wafer consumption and then with the increasing need for energy efficiency and power. He is wondering does this re accelerate.
Or increase their node for I guess his words is node migration or adoption of leading edge technologies.
Speaker 1: Well, the H-device start to, that's including smartphone and PC, start to incorporate AI functionality inside, you know, we observe some of the new raw engines has been added increasingly. So, the die size was increased, even the unit did not increase dramatically, but the die size, you know, it's in mid-teens, no, I mean, mixing all these is a die size increase so far. And I expect this kind of trend to continue. And so, more and more application of the AI side, what be incorporated into those kind of H-device, and that, that one need have very power-efficient chips to put it into the H-device, especially when it is a mobile. So, I do expect, for my, my own perspective, I do expect that my customer will move into the leading edge node, more and more quickly to compete in the market. Thank you very much, C-V. So, well, so, a bit of a follow-up is that, well, now it accounts for some well-missing-go-digit of the die size increment, so for a chip. So, the stat, or are we seeing that, to enlarge to something like a mid-teens, or, or, well, even bigger, in the well-missed long term? So, bad quick follow-up is if, you know, the AI portion is kind of mid-single digit now. How should we expect, can we expect mid-teens, or what type of percentage in a few years time? Well, I will answer the question. Actually, we see the increase on the size, for we cannot kneel down the, we say, the mid-single digit, but I expect it to increase. And whether that increase our forecast and our growth or something is still too early to say, to, to, at this moment. Yeah, but, yeah, but we're still quantifying the impact from these development. So, we're maintaining the previous statement that we expected to grow to about miss, in five years about mid-single digit. I'm sorry, mid-teens of our revenue. Yeah, I think Brian probably just very simply, as we said, edge AI, we do see some activity. It will drive silicon content, but this will occur over time, okay? And we don't have any quantitative number to share, all right? Got it. Thank you. Okay. What is your second question? Okay, so the second question is on CPO. So, basically, we have learned that DSNC is doing quite well and also leading the industry in CPO, or so-called three council tonics and has introduced a platform to clients with technologies. So, may we learn that the opportunities and implications of the new technology for the industry and for our firm and also show we expect the platform to offer additional competitive advantage for DSNC in the middle of the long run. Thank you. So, bad. Your second question is on silicon photonics. Is that correct?
Speaker 3: Well, the edge device start to, that's including smart phone and PC, start to incorporate the AI functionality inside. You know, we observe some of the newer engines has been added increasingly.
Well the.
The edge device start to.
That's including smartphone and Pcs are start to incorporate AI.
Functionality inside.
We all observe some of the new ROI engines has being added.
Increasingly.
So.
Speaker 3: the die size will increase even the unit did not increase dramatically, but the die size you know It's in meetings. No, no, I mean mix single digits is the die size increase so far
The dice size why increase even the union did not increase dramatically, but the die size.
Sure.
<unk> is in the mid teens or not I mean mixed single digit is a die size increase so far.
Speaker 3: And I expect this kind of trend will continue.
And I expect.
This kind of trend to continue and so more and more application of the on the AI side.
Speaker 3: And so more and more applications on the AI side were incorporated into those edge devices. And that's all for today. Thank you very much.
Got it.
Incorporated into those kind of edge device and done.
Speaker 3: That one need have very power efficient chips to put into the edge device, especially when it is mobile.
That one needs to have very power efficient.
Chiefs.
To put it into the.
H device, especially when it is a mobile.
Speaker 3: So I do expect from my own perspective, I do expect that my customer will move into the leading edge node more and more quickly to compete in the market.
So I do expect for my my own perspective, I do expect that my customer, while moving into the leading edge node more and more.
Quickly to compete in the market.
Okay. Thank you very much.
Speaker 12: Thank you very much, Sisig. So well, so a bit of a follow up is that, well, now it accounts for some missing gold digit of the die size incremental for a chip. So does that, or are we seeing that to enlarge to something like a meetings or well, even bigger in the well meter long term?
So well so.
A bit of a falloff has stood us well now accounts for some or a mid single digit of the die size increments helpful. Chip. So the stat or always seen that to enlarge here someone seem like a mid teens somewhere or even bigger in the mid to long term.
Speaker 1: So, Brad's quick follow up is if the AI portion is kind of mid single digit now, how should we expect? Can we expect mid teens or what type of percentage in a few years?
So bags a quick follow up is if you know the.
AI portion is kind of mid single digit now how should we expect can we expect mid teens or what type of percentage in a few years' time.
Speaker 9: Well, I will answer the question. Actually, we see the increase on the tie size. We cannot note on the, we say the mid-single digit part. I expect it start to increase. And huesed
Well I will answer the question actually we see the increase in the die size, we cannot kneel down the we say the mid single digits, but a steady start to increase.
And whether that ROA.
Speaker 3: increase our forecast and our growth or something, it's still too early to say.
In increase our forecast on our course war or assumption is still too early to say to to.
Speaker 2: at this moment. Yeah, Brad. Yeah, sorry. Yeah, but we're still quantifying the impact from these developments. So we're maintaining the previous.
At this moment, yeah sorry.
Yeah, but we are still quantifying the impact from these develop them. So we're maintaining the previous stated.
Speaker 2: Statement that we expected to grow to about this
Statement that we expect it to grow to about Mrs.
Speaker 2: in five years of our Miss Single Digit. I'm sorry, Miss King.
In five years about mid single digits, I'm, sorry, mid teens of our revenue.
Speaker 1: Yeah, I think probably just very simply, as we said, Edge, AI, we do see some activity. It will drive silicon content, but this will occur over time.
Yeah, I think Brian probably just very simply as we've said edge AI, we do see some activity.
It will drive silicon content, but this will occur overtime, okay, and we don't have any quantitative number to share.
Speaker 1: Got it. Thank you.
Right got it. Thank you Okay. What is your second question.
Speaker 12: Okay, so the second question is on CPO. So basically we have learned that TSMC is doing quite well and also leading the industry in CPO or so-called sleek comfort tonics and has introduced a platform to clients with the technologies. So may we learn that the opportunities and implications of the new technology for the industry and for our firm and also should we expect the platform to offer additional competitive advantage for TSMC in the mid to long run? Thank you.
Okay. So the second such as our CPO. So basically we have learned that Oh TSMC is doing quite well and also leading the industry in CPR or so called Silicon Photonics and has introduced a platform to clients with the technologies. So we have learned that there are opportunities and implications of the new technology for the industry.
And for our firm and Oh, So shall we expect the platform to offer additional competitive advantage for TSMC in the mid to long Ralph. Thank you. So bad your second question is on Silicon Photonics is that correct.
Speaker 1: So, Brad, your second question is on silicon photonics. Is that correct?
Speaker 1: Yes, he wants to know how important TSMC's competitive advantage will be in the future. Okay, let me answer this question. Silicon Valley Diamond is actually growing in importance because a large amount of data needs to be processed, handled, and converted into energy-efficient ways. Silicon Valley Diamond seems to be the most suitable for this role. TSMC has been working on Silicon Valley Diamond for many years. Most importantly, we collaborate with multiple leading customers to provide innovation in this field. It takes a lot of time to develop technology and build capabilities. As we enhance mass production, we believe TSMC's Silicon Valley Diamond will be the best technology. Thank you very much for accepting my question. The first question I want to ask is, we have been hearing more customers expressing a willingness to move, hoping for better system architecture. I want to know what possible impact you think customers' willingness to move might have. This question also amazes me because we also have many customers. Regarding the willingness to move, we are also hearing many customers expressing a willingness to move. I have been hearing many customers expressing a willingness to move. We are also hearing many customers. We are also hearing many customers. Sunny, sorry, I might have missed the first part, but I think her question is about comprehensive moving. Looking at this trend and more collaboration, what is the price impact? How does moving work from an engineering and technical perspective, and the updates or advancements of SOIC, right, Sunny? I can explain the first part. I suspect customers might rely more on packaging rather than moving because of price increases.
Speaker 1: Yes. So he wants to know our positioning or progress on silicon photonics. How important is this and will this be a competitive advantage for TSMC going forward in the future?
Yes, so he wants to know our positioning or progress on silicon photonics.
How important is this and will this be a competitive advantage for TSMC going forward in the future.
Speaker 3: OK, let me answer that question. Silicon photonics actually is growing its importance because of just a large amount of data need to be collected, the process, and transfer in an energy efficient manner.
Okay. Let me answer that question Silicon Photonics actually is occurring.
It's important because of just a larger amount of data needs to be collected the process and transfer in energy efficient manner.
Speaker 3: Silicon photonics tends to be the best of its role.
Our silicon photonics.
To be the best of breed step that rule.
Speaker 3: And TSMC has been working on silicon photonics for years. And most importantly, we're collaborating with multiple leading customers to support their innovations in this field.
And TSMC had been working on silicon photonics for years, and most importantly, we collaborations with multiple leading customer and to support the innovation in this field.
Speaker 3: It takes a lot of time to develop the technology and to build the CAPPAS.
It takes a lot of time to develop the technology and to build the capacity.
Speaker 3: And when we increase the volume production, we believe that TSMC's silicon photonics will be the best technology. And when customers roll out all their innovations,
And one we increased our volume production, we believe that the th MPS.
Silicon Photonics, what be the best technology.
And the one customer rollout or their innovations.
Speaker 3: But as I said, it's gradually increasing in their activity and gradually increasing their demand. I'll solve today.
But as I said is gradually increasing India activity and gradually increasing Dr demand Asaf.
As of today.
Speaker 1: Got it. Thank you very much. All right. Thank you. Operator, can we move on to the next caller, please?
Got it. Thank you very much alright. Thank you operator can we move on to the next caller. Please.
That's what we have as Donnelly from UBS.
Speaker 13: Good afternoon. Thank you very much for taking my questions. So my first question is on advanced packaging. Incrementally we are hearing more customer interest in the adoption to achieve better heterogeneous integration.
Good afternoon, and thank you very much for taking my questions. So my first question is on advanced packaging.
Incrementally we are hearing Oh boy customer interest.
He adoption.
To achieve better heterogeneous integrations.
Speaker 13: But once you get your thoughts on what could be the potential impact of customers relying a bit more on packaging to improve the system performance and perhaps last on the process migrations given cost considerations.
But love to get your thoughts on what.
What could be the potential impact of customers' lineup and more packaging.
To improve system performance.
And perhaps the last of the process Michael you said.
Given cost considerations.
Speaker 13: Meanwhile, SOIC has been introduced for quite a while, whereas the customer adoption still seems to be limited at this point. And so when should we expect a more meaningful pickup of SOIC and what could be the major catalyst? Thank you.
Meanwhile, Soi see have been introduced for quite a while.
As the customer adoption still seems to be a limited at this point.
When should we expect a more meaningful pickup.
And what could be done major catalyst. Thank you.
Speaker 1: Okay, so Sunny, sorry, I may have missed a little bit of the first part, but I think her question is on overall advanced packaging. Looking at this trend and the move to more, of course, heterogeneous integration. What are the cost implications and how does the advanced packaging work and go together with the process technology standpoint?
So sunny sorry.
May have missed a little bit of the first part, but I think her questions on overall advanced packaging.
Looking at this trend and.
The move to more of course heterogeneous integration.
What are the cost implications and how does the <unk> packaging work and go together with the process technology standpoint, and then also a question about the update.
Speaker 1: And then also a question about the update or progress of SOIC. Is that correct, Sunny?
Or progress of Esso I see is that correct Sonny.
Speaker 13: Well, so maybe if I may clarify, but so for the first part, I wonder if customers may consider relying a bit more on packaging, whereas slowing down a bit on the process migration because of increasing costs.
Well, so maybe if I may clarify it but so far the first part I wonder if customers may cause it I rely up on packaging.
We're as signed out but on the process migration because of increasing cost.
Speaker 13: Due to the increased cost of processing technology, will customers rely more on priority assembly? Let me answer, it's not because of the higher cost of priority assembly. Actually, it's because customers are trying to optimize system performance, which is the main part, including increased speed, reduced power consumption, etc. Cost might also be a part we notice. Therefore, more and more customers are moving into very advanced technology cores, and they are starting to reduce priority assembly. In any case, TSMC provides industry-leading solutions, offering the best system performance for their products in very advanced technology and very advanced assembly technology. Another question is, as SOIC becomes larger in scale, will TSMC's revenue increase? Actually, there are already customers preparing to announce their new products. I expect that from now until next year, SOIC will generate revenue and become the fastest-growing priority assembly solution in the coming years. Okay, thank you very much. If I may do a brief follow-up, three months ago, you had a goal to increase your Cowass capacity. You just mentioned that AI demand is still rising. We want to know if you have any updates on the Cowass capacity? Okay, I will consider this your second question, Sunny. It's about the update on Cowass. We said three months ago that we would increase Cowass capacity. Can we provide an update? Will Cowass capacity and CAPEX capacity be handled together? That's our plan. Sunny, last time we said we would increase Cowass capacity. We are working hard to increase Cowass capacity, but today our suppliers' capacity and capability are still limited. So we still maintain that we will increase Cowass capacity by the end of 2024. But overall efficiency has actually increased from 2023 to 2024 because our customer demand is very high.
Okay. So she's asking will customers because of the increasing cost of the process technologies, where customers rely more on advanced packaging as a result.
Speaker 1: Okay, so she's asking will customers, because of the increasing cost of the process technologies, will customers rely more on advanced packaging as a result?
Let me answer that.
Speaker 3: It's not because of increasing of the cost in the more advice node. It actually, our customers try to maximize.
It's not because of our.
Increasing of the cause in the more advanced node it actually did try to the our customer tried to maximize the system performance that so that's the major portion.
Speaker 3: the system performance. That's the major portion. That including the kind of speed improvement or the power consumption decrease, all those kind of things. Put it all together. And maybe cost is also part of the consideration, which we notice about.
That including kind of a speedy improvement award the power consumption decrease <unk> kind of seen put altogether.
And may be cost is also part of the consideration could you we we notice about.
Speaker 9: And so more and more customers are moving into the very advanced technology node, and they start to adopt the chip-based approaches. And so...
And so more and more customer moving into the very advanced technology node and they start to adopt the chip there.
Approaches and so Uh huh.
You know that no matter what.
Speaker 3: that no matter what, TSMC provides the industry-leading solution in both very leading technology and also where one's packaging technology.
TSMC provide the industry, leading solution impose breeding technology and also where our bonds are packaging technology and tools.
Speaker 3: And to work with a customer for their product, I have a best system performance.
Through our work with a customer for <unk> product I have a burst of system performance.
Speaker 3: And the other one is you are asking about the SYC when it will become...
The other one is you are asking about the soi he when needed what become.
Speaker 3: a high volume and more substantial revenue for TSMC.
Our high volume.
The more substantial revenue for TSMC.
Speaker 3: It's coming. It's coming. Actually, the customer is already ready to announce their new product, which has widely adopted
It's coming it's coming actually the customer already ready to announce it here.
New products, which are widely adopt and I expect.
Speaker 3: And I expect, starting from now and next year, the SOIC will generate revenue and become one of the fastest growing advanced packaging solutions in the next few years.
Starting from now and next year, the Soi EUR generated revenue.
And to become one of the faster growing advanced packaging solution in the next few years.
Speaker 13: Got it. Thank you very much. If I may, a quick follow up. Three months ago you had a target to double your fourteen-year term hugs year.
Got it thank you very much.
Finally, a quick follow up.
So your months ago, he had a target to double your Polish capacities.
Speaker 1: And just now you mentioned AI demand continued to suppress on the upside. So, I wonder if there's any update on your COAS capacity expansion? Okay, so I will take this as your second question, Sunny, but as she's asking about COAS expansion, we had said that we will double the capacity three months ago. Can we provide an update on the overall COAS capacity and I guess capex and capacity go hand in hand? What is our plan? Well, thank you for your attention.
And just now you mentioned.
Demand continued to surprise on the upside.
So wonder if theres any update on your cost capacity expansion. Okay. So I will take this is your second questions Sunny, but she's asking about cobalts expansion.
We had said that we will double the capacity three months ago can we provide an update on the overall cost.
Capacity.
I guess capex and capacity go hand in hand, what is our plan.
Sonny.
Speaker 3: You know, the last time we said that we are double our core worth capacity, we are working very hard to increase the capacity more than double.
You know the last time, we say that double our <unk> capacity.
We're working very hard to increase the capacity more than double but today is limited by my suppliers.
Speaker 3: but today is limited by my supplier's capability or their capacity.
Capability or the capacity.
Speaker 3: So we still maintain that we will double our COWAS capacity by the end of 2024. But the total output actually is more than double from 2023 to 2024 because of a very high demand from our customers.
So we still maintain that we will double our <unk> capacity by the end of 'twenty 'twenty four but the total output. It actually is up more than double from 2023 to 2034 because of a very high demand in the form of our customer.
Speaker 3: Therefore, we will continue to enhance our corporate capabilities to support our customers, even into 2025. Okay, Sunny, is that your answer? Yes, thank you very much. Okay, thank you. CEO, can we proceed with the next call? Next, please welcome Mehdi Hosseini from SIG. Yes, thank you for taking my question. I understand you are advancing new products within a year, including 24 new products in the market. I would like to understand how these new product upgrades affect seasonality? Can we see the impact of new product upgrades in the first half, especially in leading areas, on seasonal factors? What are your thoughts? Okay, Mehdi. Mehdi's first question is about new products. Of course, we do not comment on customer products, but he mentioned that we will upgrade products in the second half, so how about the new product upgrades? We will upgrade 24 new products in the first half, will this affect seasonality? Let me reiterate, how does the contribution of customers' new products affect seasonality? Yes, Mehdi, I don't think we can comment on specific customer products, but I can tell you that we have not yet seen any significant changes in seasonality. Okay, because I looked at your seasonal plan 23 and your Q4 indicators, you actually performed better than your indicators from three months ago. Now the guidance for the fourth indicator is slightly better, so he wants to know what this means. Let me give you a simple reason, because of the N3 ramp-up, due to strong demand for N3, we ramped up quickly to meet customer demand, so the final result was better than we expected three months ago. We also mentioned that the strong ramp-up of N3 will continue next year, which is the seasonal color we can provide. Okay, if I may ask a second question.
Speaker 3: So, at this kind of a trend, we will continue to increase our core capacity to support our customers even in 2020.
So epogen.
This kind of a trend we will continue to increase our cost capacity to support our customer even into 2025.
Speaker 1: Okay, thank you. Operator, can we move on to the next caller?
Okay. So does that answer you may imagine okay. Thank you.
Operator can we move onto the next caller please.
Speaker 4: Next one, please welcome Madheesh Hussain from SIG.
That's one please welcome but did you lose any from that strategy.
Yes, thanks for taking my question.
Speaker 14: Yes, thanks for taking my question. I understand there are a number of new products that you're ramping into year-end and into first half of 2024 for various markets. And I want to understand how the ramp of these new products can be improved.
I understand there are a number of new projects that a rep that youre ramping into year end and into first half of 'twenty four and various.
For various end markets.
To understand how the ramp of these new products are too.
Speaker 14: to impact the seasonality. Could we see a scenario where in the first half,
The impact of seasonality could could we see a scenario where in the first half.
Speaker 9: the ramp of these new products, especially at the leading edge, to somewhat offset the seasonal factors? And any thoughts there? And I have a follow up. All right, Mehdi. Well.
The ramp of these new projects, especially at the leading edge.
To somewhat offset the seasonal factors.
Any thoughts there and I have a follow up.
Alright, and the D well.
When this first question is.
Speaker 1: In terms of new products, which of course customer products we don't comment on, but he said we're ramping products into the second half. And so how will this ramp of new products go into as we go into first half 24 and can this offset or mitigate some of the seasonality?
In terms of new products watch of course customer products, we don't comment on but he said, we're ramping products into the second half and so how will this ramp of new potash go is into as we go into first half 'twenty, four and Kansas offset or mitigate some of the seasonality.
Speaker 14: Let me rephrase that. The contribution of customers' new product, and how would that impact, or how could that offset the wrongdoing in our industry?
Let me, let me rephrase that contribution of.
Contribution of course.
New products and how would that impact.
How could that offsets seasonal factors.
Speaker 2: Yeah, Mehdi, I don't think we can comment on specific customer products, but I can tell you that we're not seeing any dramatic change in the seasonality.
Yeah.
I don't think we can comment on specific customer products, but I can tell you that we are not seeing any dramatic change in the seasonality as of now.
Speaker 14: Okay, because I'm looking at your year calendar 23 and given your Q4 guide, you actually do...
Okay.
So it looks like your year.
Calendar tourists.
And given your Q4 guide.
You are actually doing better than.
Speaker 14: what you guided three months ago, you said revenues could be down 10% US dollar and now it could actually be down by a single digit.
What you guided three months ago for instance, we said revenues could be down 10% U S dollar and now it could actually be.
Single digit.
It.
Speaker 1: Is that a combination of a stronger new product ramp and better pricing? Is that a fair assessment? Okay, so Madi is really looking at, he rightly notes that three months ago, we said this year will decline around 10% in US dollar term. Now with the fourth quarter implied guidance is slightly better. So he wants to know what is the implication or behind.
Is that.
A combination of a stronger new product ramp and better pricing.
Is that a fair assessment.
Okay. So <unk> is really looking at he rightly notes that three months ago. We said this year will decline around 10% in U S. Dollar term now with a fourth quarter implied guidance, it's slightly better. So he wants to know what is the implication or behind us.
Speaker 3: Well, let me give you one simple reason. Because our ramp-up of N3, because of the demand of N3, is strong. So ramp-up quickly to meet customers' demand. So the final result is better than we expected three minutes ahead.
Let me give you one simple reason because our ramp up and three because of the demand of entry Strunk. So will ramp up quickly to meet customers' demand. So the final result is better than we expected three months ago.
Speaker 1: And we have also said that strong ramp of N3 will continue in next year. Okay, that's about all the seasonality color we can...
And we have also said that strong ramp of entry will continue in next year. Okay. That's about all the seasonality color we can give.
Speaker 14: Gotcha. Okay. And then perhaps if I were to ask a second question.
Gotcha Okay.
Then.
Perhaps.
If I were to us.
Good question.
Speaker 14: I want to understand your perspective on your customers' shopping process. We have reached the bottom, but we haven't seen how quickly they recover their shopping. Their recovery speed is still not apparent. Did I understand what you meant? So, Mehdi's second question, we want you to explain. We are saying that the customers' shopping process has reached the bottom, but the shopping process is still not apparent. Is that what we are saying? Okay, let me answer your question. Actually, in these past few months, we have started to see demand stabilize in the computer and smartphone markets. In fact, we see some urgent shopping processors requesting more equipment to be transferred to their locations to meet demand. This gives us a hint that their shopping process has become healthier than we imagined. So, in uncertain situations, we might continue these shopping processes, but our expectations are very close to a durable state. So, that's why we say we can expect 2024 to be a durable shopping president for TSMC. Mehdi, did I answer your question? Very good, thank you. Okay, due to time constraints, thank you Mehdi. Due to time constraints, we will take questions from the last two participants. The next question is from Kris Asanka from TD Cohen. Yes, hello, thank you for taking my question. I have two questions, the first is about the investment line. Do you think N3 will reach the industry's average growth market level? If we look at the next decade, how will the growth energy of the industry's growth market develop? How will the growth energy of the industry's growth market develop? And another question. Okay, Kris's first question is about the growth market's growth. Do we think N3 will reach the industry's average growth market level? Yes, Kris, in the past, our leading investments usually reached one-eighth of the industry's average growth market. But our leading investments are becoming increasingly challenging for several reasons. First, our industry's average growth market is higher than before. Second, our leading investments, as I just mentioned, are becoming more complex. Additionally, in the past few years, the pressure on leading investments was not as expected, which also helped N3's price growth. So there will be significant challenges for future leading investments.
Speaker 14: I just want to better understand your view on your customers inventory correction. We're reaching the bottom where we don't have any visibility on how quickly they are going to refresh inventory. The slope of the recovery is still not clear. Did I understand you correctly?
I just wanted to better understand your view on your customers' inventory correction, we're reaching the bottom what we don't have any visibility on how quickly.
Fleet According to refresh inventory the slope of the recovery is still not.
Clear.
Did I understand you correctly.
Speaker 1: So, Mandy's second question, he would like to clarify, so are we saying that customer's inventory is reaching or approaching a bottom, but the slope of the inventory is not clear? Is that what we are saying?
So <unk> second question you would like to clarify so are we saying that customers inventory is reaching or approaching a bottom.
But the slope of the inventory.
It's not clear is that what we are saying.
Speaker 3: Okay, I'll answer the question. Actually, you know,
Okay.
In terms of question actually.
You know.
Speaker 3: In these couple months, we start to see the demand stabilized in the PC and smartphone end market. And in fact, we see some kind of an urgent PO asking for more device to be shifted to their place to meet the demand. That gave us a hint of their inventory control already become more healthier than we thought.
In the.
These couple of months, we start to see the demand stabilized.
In the PC and smartphone end market and in fact, we see some kind of urging PEO article for more.
Device to be shifted to the a place to meet the demand that will give us a hint of a gi inventory control already become a more healthier than we thought.
Speaker 3: So in terms of uncertain macro, it probably will continue, but our expectation is very close to a healthy condition. So that's why we say we can expect 2024 to be a healthy growth year for THMC.
So in terms of uncertain macro.
You probably wont continue but.
Our expectation is is very close to he or she cut.
Tradition. So that's why we say we can expect 2024 to peer here C Corps CEO for TSMC.
Speaker 4: Okay, in the interest of time, we'll take questions from the last two participants, please. Next one to ask is from
Okay, well, maybe did I answer your question great. Thank you.
Okay in the interest of time. Thank you matti in the interest of time, we'll take questions from the last two participants please.
Yeah.
That's one to ask question is.
Chris Fraser Center from TD Cohen.
Speaker 15: Yeah, hi. Thanks for taking my question. I had two of them. First one is on gross margin. Where do you expect entry to reach corporate average gross margin? And as you look into next year as more mature note capacity comes online across the industry, how to think about mature note gross margins also, not a follow up after that.
Yeah, Hi, Thanks for taking my question. The first one is on gross margin, but and lead to reach corporate average gross margin and.
As you look into next year, the more mature north.
Property comes online across the industry, how do you think about mature node gross margins also another follow up after that.
Speaker 1: Okay, so Chris's first question is on gross margin. When do we expect 3 nanometer or N3, I should say, to reach the corporate average gross margin? And how do we see the gross margin trend for the more mature?
Okay. So Christmas first question is on gross margin.
When do we expect three nanometer our entry I should say to reach the corporate average gross margin and how do we see the gross margin trend for the more mature nodes.
Speaker 2: Yeah, because in the past our leading nodes normally reach gross margins, corporate margins in about eight quarters. But as we progress with more and more leading nodes, it will become more and more challenging because of several reasons. First of all, our corporate margin is higher than before.
Yeah.
In the past.
No.
Normally reached gross margins corporate margin in about eight quarters.
As we progress with more and more leading nodes it will become more and more challenging because of several reasons are first of all our corporate margin is higher than before.
Speaker 2: And secondly, the leading node, as I just said, is becoming more and more complex.
And secondly, the leading notice as I, just said, it's becoming more and more complex.
Speaker 2: And also in the past few years the inflation pressure that was not expected also contributed to the higher cost in the N3. So it's going to be pretty challenging for future leading nodes to reach corporate margin as in before that like before in the same time
And also.
In the past few years, the inflation pressure that was not expected also contribute.
Higher costs in the and three so it's going to be pretty challenging.
For future, leading those to reach corporate margin as.
And before that like before and the same timeframe the.
Speaker 2: Our mature banking industry's cost is on average within a very tight range because we focus on professional skills rather than commercial capabilities. Yes, very good, very helpful, thank you. Next, in Asia, you mentioned that you hired about 1,100 local employees. I'm curious if you have enough critical mass to start 4nm production, or do you have another target level of employees before you can maintain production at the first end before 2025? Okay, thank you, Krish. Krish's second question is about our first end in Asia. He noticed that we said we hired about 1,100 local employees, so his question is whether this is enough critical mass or enough personnel to basically support the first end upgrade as we expect, as we said today, at the first end of 2025. Okay, so Charles's first question is about 5cm. He noticed a very strong random revenue growth in a very close period of three and a half months, so he's wondering what the reason is, and then he's asking what the outlook is for the demand for 5cm in the next 3-6 months.
Speaker 2: the mature nodes, I can tell you that our mature nodes, the gross margins are really congregated around the corporate average in a pretty narrow bank.
The mature nodes.
I can tell you that our mature nodes.
The gross margins are really congregated.
Around the corporate average in a pretty narrow band.
Speaker 2: Because we focus on specialty technology, it's not a commodity.
Because we focus on specialty technology is not a commodity capacity.
Yes.
Speaker 15: That's very helpful. Thank you for that.
Okay.
Helpful and thank you for that.
Speaker 15: I'm going to follow up on Arizona. You mentioned that you hired...
And then as a follow up on I didn't go now you mentioned that you had hired about 1100 local employees I'm kind of curious.
Speaker 1: about 1,100 local employees. I'm kind of curious, is that critical mass enough for you to start four nanometer production or do you have another target level of employees before you can actually start getting this production since you're still maintaining the output to being first half of 2025? Okay, thank you, Krish. So Krish's second question is about our first fab in Arizona. He notes that we have said we hired 1,100 local employees.
Is that critical mass enough for you to start 40 nanometer production or do you have another target level of employees before they could actually start getting the production since you're still maintaining the output to be first half of 2025, okay.
Thank you Krish ASO Christmas second question is about our first fab in Arizona. He notes that we have said we hired.
All 1100 local employees. So his question is this enough critical mass or enough people basically to support.
Speaker 1: So his question is this enough critical mass or enough people basically to support the ramp of the first fab as we plan, as we said today in first half twenty-
Support the ramp of the first fab as we plan.
As we said today in first half 'twenty five.
Speaker 3: Of course, we continue to hire the local talent to join the THMC surviving Arizona. So when we start to have a volume production, we are confident that we will have enough resources to support our rhombus in Arizona.
Of course, we continue to hire.
The local talent to join the TSMC, so far being our <unk> so when we.
Start to have a volume production, we are confident that we will have enough raw.
Resources to support our ramp up in Arizona.
Okay.
Speaker 1: All right. Thank you, Krish. Operator, can we move on to the last participant?
Alright. Thank you thank.
Thank you Krish operator can we move on to the last participant please.
Yes, the last one to ask question Charles C from D. A.
Speaker 4: Yes, the last one to ask a question, Charles C from NEAM.
Speaker 12: Hi, thank you for squeezing me in. First off, I really want to congratulate the TSMC for delivering good results for Q3 and very good guidance for Q4. And I want to really call out the reported revenue for 5 nanometers in the third quarter. Looks like you are showing some really good countercyclical strength. And probably the record high.
Hi, guys. Thank you for squeezing me in a first off I really want to congratulate our TSMC or our deliberate.
Good results for Q3 and.
I recall that guidance for Q4.
Wanted to really call out the reported revenue for five nanometer in the third quarter. It looks like you are showing some really good counter cyclical strength.
Our record high.
Speaker 12: I want to understand the rebound in the 5nm business in Q3. Is that going to be more in the following quarters and what's behind that? And the relative, let's say, your expectation like 3 to 6 months ago when you were reducing your eyelids will come to 3 camera hours.
I want to understand a rebound in our five nanometer SaaS in Q3.
Is that going to be more in the following quarters.
What's behind that and the relative let's say three.
Six months ago, when you were reducing.
The outlook is five nanometer being better than expected and how all of us.
Speaker 16: Is 5 mm doing better than expected? And how has the demand changing in the last few minutes? For 5 minutes.
Demand trends in the last five.
Thank you.
Speaker 1: Okay, so Charles' first question is about 5 nanometer. He's asking in the very near term, he notes that he saw a very strong sequential revenue increase in the third quarter. So he's wondering what is driving this? And then he's asking about what is the outlook for the next three to six months for 5 nanometers specific.
Okay. So Charles' first question is about five nanometer he's asking in the very near term. He notes that he saw a very strong.
Sequential revenue increase in the third quarter. So he was wondering what is driving this and then he is asking about what is the outlook for the next three to six months.
For five nanometer specifically.
Speaker 2: Yeah, Charles, I can share with you the increase in revenue N5 in the third quarter mainly comes from two platforms, HPC and smartphone. HPC also includes the AI related demand.
Yeah, Charles I can share with you the increase in revenue and five in the third quarter, mainly comes from two platforms HBC and our smartphone HBC also includes the AI related demand.
Speaker 2: Smartphones are essentially seasonal products for some customers. At the moment, it seems I won't be sharing with you, but we will tell you in mid-January what the M5 earnings for the next quarter will be. As for total earnings, we do not provide earnings provided by the processor. What was your second question, Charles? Yes, thank you, Charles. Another question is about CAPEX. It sounds like you expect CAPEX to continue growing in total earnings. Looking ahead, I know this is a long-term comment, but I looked at the recent CAPEX, which seems to be between 2.5 to 3 billion dollars per month. If we expect CAPEX total earnings to grow between 2.5 to 3 billion dollars, it seems you expect CAPEX total earnings to grow between 2.5 to 3 billion dollars, or perhaps you expect CAPEX total earnings to grow between 2.5 to 3 billion dollars. Is this the correct idea? CAPEX total earnings at 7 billion dollars is roughly the minimum earnings. CAPEX total earnings at 7 billion dollars is roughly the minimum earnings. Thank you. Okay, Charles's second question is also about CAPEX. Basically, he said that according to the guidance, he is looking at CAPEX total earnings of about 7 billion dollars. So he predicts, although we do not comment on 24, he predicts that if next year's CAPEX total earnings will grow, but if we are at 7 billion dollars in revenue, this means 28 billion dollars. How should he make up for it? Charles, every year's CAPEX is based on future growth opportunities and investments to capture future opportunities. It's too early to talk about 2024. We will discuss it in January. OK, thank you, Charles. Thank you, everyone. This concludes our Q&A. Before ending today's meeting, please note that the replay of the meeting will be available in 30 minutes. The interpretation will be available within 24 hours. You can access it. Thank you all for attending the meeting today. We hope everyone stays healthy. We look forward to seeing you again in January. Have a great day. Thank you.
Speaker 2: Smartphone basically customers, some customers' product seasonality.
Smartphone basically customers some customers' product seasonality.
Speaker 2: Now forward looking wise, I'm not going to share with you, but we will tell you in January what actual next quarter M5 revenue will be.
Now forward looking wise I'm not going to share with you, but we will tell you in January what actual next quarter end.
And five revenue will be.
The overall revenue, yes, we don't provide revenue by process node, Okay. What's your second question Charles.
Speaker 1: the overall revenue. Yes. We don't provide revenue by process node. Okay. What's your second question Charles?
Speaker 16: Yeah, thanks, P.S. The other question is about CapEx. It sounds like that you're expecting CapEx on the absolute dollar. It might still grow going forward. I know that's a long-term comment. But I looked at the near term. P.S. and CapEx seems to be running at $7 billion per quarter in the second half, which is at $28 billion annually.
Yes, Thanks, Jeff the other question is about Capex.
Sounds like that Youre expecting capex on an absolute dollar lifestyle.
<unk>.
Going forward I know Thats, a long term comment.
Bob.
But the near term.
Capex seems to be running almost all of them are long U S dollar per quarter.
For which.
<unk>.
Annualized around rate, but we are expecting total capex for 'twenty for growing up.
Speaker 16: But if we are expecting total capex for 24 to grow in a dollar term over 23.
OLED <unk> three.
Speaker 16: It seems like you're expecting a CapEx ramp in 2024. Maybe that's your planning for some of the CapEx ramp in 2024. Is that the right way to think about the CapEx? Is 7 billion really like a really bottom level run rate for TSMC CapEx at this point? Thank you.
Long cycle Youre expecting capex of lab.
In 2020, or maybe that Youre planning for some of the capex level.
That's the right way to think about.
Capex is 7 billion really like really a bottom level run rate.
Capex at this point thank you.
Speaker 1: All right, so Charles' second question is also on CapEx. Basically, he's saying, given the guidance, he's looking at our CapEx is running at about a US dollar 7 billion run rate. So he's assuming or, you know, although we do not comment on 24, he's assuming if next year's CapEx dollar amount is going to increase, but if we're running at 7 billion run rate, does that imply 28 billion? How should he reconcile?
Alright. So Charles second question is also is on Capex basically he is saying.
Given the guidance. He is looking at our Capex is running at about <unk> dollars 7 billion run rate, so he's assuming or.
Although we do not comment on 24, he's assuming if next year's Capex.
Dollar amount is going to increase but if we're running at $7 billion run rate does that imply 28 billion how should he reconcile this.
Speaker 2: Charles, every year the KPEX is invested based on the future opportunity to growth and we invested to capture those future opportunities. Too early to talk about 2024, really. We will share the guidance with you in January quarterly release.
Charles.
Every year the Capex is invested based on the future opportunity to growth and we invested too.
To capture those future opportunities.
Too early to talk about 'twenty 'twenty four really we will share the guidance with you in January quarterly release.
Okay.
Okay.
Speaker 1: All right. Thank you, Charles. Thank you, everyone. This concludes our Q&A session. Before we conclude today's conference, please take your seats.
Alright, Thank you Charles.
Thank you everyone. This concludes our Q&A session before we conclude today's conference. Please be advised that the replay of the conference will be accessible within 30 minutes from now.
Speaker 1: Please be advised that the replay of the conference will be accessible within 30 minutes from now.
Speaker 1: The transcript will become available 24 hours from now. Both of these are available and you can find through TSMC's website at www.tsmc.com.
Transcript will become available 24 hours from now both of these you will are available and you can find through Tsmc's website at Triple W. Dot Tsmc's dot com. So thank you everyone for taking the time to join US today, We hope everyone continues to be well and we hope to see you.
Speaker 1: So thank you everyone for taking the time to join us today. We hope everyone continues to be well, and we hope to see you join us again in January . Goodbye and have a good day. Thanks.
Joining us again in January Goodbye and have a good day. Thank.