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TSM Taiwan Semiconductor Manufacturing

Participants
Jeff Su Director, IR
C. C. Wei CEO
Wendell Huang VP, Finance and CFO
Mark Liu Chairman
Gokul Hariharan JPMorgan
Randy Abrams Credit Suisse
Sebastian Hou CLSA
Bruce Lu Goldman Sachs
Charlie Chan Morgan Stanley
Brett Simpson Arete Research
Roland Shu Citigroup
Sunny Lin UBS
Laura Chen KGI
Robert Sanders Deutsche Bank
Rick Hsu Daiwa Securities
Andrew Lu Sinolink Securities
Mehdi Hosseini SIG
Krish Sankar Cowen and Company
Call transcript
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Jeff Su

[Foreign Language] Good afternoon, everyone. And welcome to TSMC's Fourth Quarter 2020 Earnings Conference Call. This is Jeff Su, TSMC's Director of Investor Relations and your host for today. To prevent the spread of COVID-19, TSMC is hosting our earnings conference call via live audio webcast through the company's website at www.tsmc.com, where you can also download the earnings release materials.

If you are joining us through the conference call, your dialing lines are in listen-only mode. event as today's for format will follows. be The

quarter will CFO, Huang fourth Mark all the TMSC's executives will TMSC's the XXXX, Vice provide our CEO, Dr. Wendell company's and President first for Wei questions. guidance session the Q&A your three First, Dr. summarize C. Huang will Chairman Mr. operations host key by where messages. our Liu Afterwards, entertain TMSC's C. will XXXX. Mr. followed jointly and quarter the in Then

appears As may would contained uncertainties, those to like significant are I today's to usual, results And to current press I and that from refer and Huang quarter remind in Mr. our contain would subject in that operations to over call to the the now everybody which risks that the TSMC's actual materially the CFO, discussions could forward-looking cause forward-looking for the guidance. statements. turn Wendell release. Harbor of like statements differ to Safe Please summary notice

Wendell Huang

exchange dilution HPC-related nanometer smartphone sequentially and saw by thanks After and we the point Jeff. margin year, from first our quarter or maybe cost a launches technology My Gross highlights I of everyone. today. X.X as for by us unfavorable with US ramp strong joining start increased year will partially demand to revenue for provide the sequentially XXXX. presentation X.X% XG terms, X the new offset you, full XXXX. of XX%, terms, X.X% an fourth will quarter dollar in X for nanometer Happy recap guidance Thank margin and the NT for you Thank rate. Fourth to driven that, quarter financial in improvement, percentage applications. increased

decreased Total of XX.X%. by at EPS shipped slightly quarter. was Overall, level, our and the in utilization NTX.XX operating Therefore margins quarter of some first due XX.X%. NTX.X was X.X which production extremely increased percentage quarter high in fourth fourth the to operating wafers partially ROE sequentially the will to by Our more an expenses output rate billion. was be points

X to revenue process technology of contributed XX respectively. the while revenue. a nanometre On nanometer move fourth XX% X contributed XX% by are was the technology. XX revenue X% and nanometre Advanced quarter, year let's at in nanometer revenue and of and total defined XX% nanometre accounted accounted wafer Now envelope X on which revenue, XX% Advanced XX% wafer technologies in XX%. of for up revenue. XX as XX% XX% from nanometre in contribution for basis, nanometre full of wafer XXXX XXXX. came was wafer Technologies X

decreased strong our increased accounted XX% HPC to X% decreased XX% Overall, to Now, moving IoT On X%. accounted to HPC increased by of respectively. quarter-over-quarter XX% DCE auto increased account XX% for our X%, and accounted and for IoT XX% to to XX% fourth account of decreased platform. XX% XX% the XX%. Digital for quarter increased to revenue XX% contribution revenue. consumer for electronics for account account on Smartphone Automotive X%. X%. smartphone, XXXX X%. for also XX% basis, in growth saw for and a account year IoT revenue. XX%, for of while HPC full XXXX. smartphone

Moving marketable and ended to of with We securities on balance cash the quarter fourth the sheet. billion. NTXXX

increase primarily accounts On XX one corporate Days day bonds of due XX payable billion the leading by in raise turnover nodes. others, we XX accounts decrease accrued billion increased ramp the during NTXX of liabilities to inventory and in loan. to NTXX by mainly by NTXX current side, ratios, liability the liabilities increased financial offset the NTXX days. NTXX to increase of increased bearing billion days, of the short NTXX.X interest billion, term decreased debt Long as in due receivable of and quarter. the billion, of days mainly term On days billion to

Now, let few flow me make a comments on and cash CapEx.

During from spent for NTXX.X the quarter quarter. billion CapEx term to NTXX dividend. in first billion increased In we the by our fourth while dollar NTXX cash billion. cash bond due billion billion XX issuances. billion, of capital payable NTXX Short quarter our operations, fourth about bonds totaled decreased Overall, $X.X increased distributed and the US in at NTXXX NTXXX terms, NTXX billion to balance quarter, the cash billion expenditures generated end by loans

as saw mega Now, capture let's trends leadership XXXX position growth XG look HPC. a enabled at the recap in performance us and We of in technology strong XXXX. to industry our of our the

We dollar Our NTXXX percentage generated cost improvement. we Operating flow terms X.X Gross NT terms dollar billion increased On operating free spent margin flow. full trillion. utilization EPS while to point to increased Overall, X.X XX.X%, billion percentage billion due and high NTXX.XX. capacity CapEx, revenue to to cash year margin XX% US increased reach level a and cash and NTXXX NTX.XX XX.X% increased primarily NTXXX to flow. in of in XX.X% points XX.X%. cash in in

NTXXX in I dividends cash paid in billion have XXXX. summary. financial also finished We my

expect at the an unfavorable which albeit in the first as let's high between to and increase margin well be decline on X.X% mainly first the lower and Now gross level, foreign as to Operating is slightly billion be XX.X%. sequential Based represents US$XX.X exchange and midpoint. expected is rate margin to of XX.X% gross NTXX.XX, XX.X% on the The billion, due quarter, at rate the a our sequential US$XX guidance. current to it staying a exchange first rate. margin XX.X%. turn US$X quarter is to our business first Based still assumption between quarter between utilization in we quarter outlook, revenue

would I to like about rate. tax talk Now the

the expect year. my of of XX% to quarters This be range financial in to to We XXXX all this be XX%. will tax concludes presentation. rate four our the applied equally And

for would will invested our the of next our growth I key on by making the Now in start I few start the will follow year, comments anticipation the XXXX. and XXXX budget some that in in like quarter. to years. capital CapEx messages with Every is

be are strong capital customer’s spent flexible trust needs. billion demand of nanometre, our for US$XX our meet advanced four about manufacturing, for About US$XX allocated decisions capital and for disciplines, X budget for and XXXX the advanced to budget technologies technologies, return. needs, Out spent our our the billion. In X billion we on our will of nanometer proper be and to Our increasing be between capital about US$XX to for for and XXXX, US$XX In responsive further technology technologies, is XXXX, including earning customers XX% customer’s order expected and nanometer. advanced capture the and and and support demand packaging process retaining and technologies. investment to XX% based be specialty capacity US$XX.X support will the capacity X XX% leadership, advanced the making specialty spent mask will CapEx

talk let capital intensity outlook. about Next, me our

previously, said capital percentage long-term the our have intensity mid-XXs in is range. we As

spent However, when growth CapEx follow. we will our enter of be a period that of ahead higher needs revenue the growth, to

will So be capital intensity higher. our

And which from to as XXXX growth we driven another level our the compared growth Because and appropriate as period capital increase For the XXXX, growth opportunities will three-fold investment, we our years. XXXX. the to increased CAGR were capacity, spending few few of enter XX%. previous a of and to to example, deliver of intensity industry in to between about CAGR CapEx capture by believe to capture C. next future we detail. growth, now We the XX% trends XX% able discuss capital Today, higher in XXXX intensity range XG a expect more higher the years, C. during the of applications, mega is related growth opportunities. HPC higher

higher responsive trust. technology We enable this level capital also investment to to customers drive expect manufacturing continue and and leadership, flexible of our earn

that CapEx a due remains process XXXX, capacity expected improvement. this TSMC While our our continuing sustainable includes value, complexities, annual working costs support, of and to is increase nodes to leading value an committed service, compensated the our cash on it diligently to technology, and cost and basis. level in we of by quality on both spending which reiterate increasing continuously be sell to capital quarterly With dividend

turn to over C. C. Now let microphone the me

C. C. Wei

you, This C.C. afternoon. Good and hope safe staying Wei. Hi, is Thank everybody healthy is Wendell. during We everyone. this time.

smartphone We and in industry year-over-year let inventory. start our grew and NTXXX.X the XG year-over-year. XXXX, excluding applications. in memory concluded quarter launches Now, mainly demand HPC-related fourth about our driven while technology, foundry with about with was strong XX.X% to line Concluding billion term. near-term was revenue TSMC’s XX%, revenue of XX% our guidance, by recourse, semiconductor dollar increased US X-nanometer industry, which due demand me with US$XX.X for billion, our or

and continues the XXXX, segment, seasonality, quarter be recovery milder HPC-related demand, first into Moving supported our a business shrunk, in again, to smartphone in by recent years. automotive

fabless overall exiting amidst the that chains better inventory front, customers inventory historical inventory the We changing to observe digested supply than their On approaches X ago. season the was expect fourth now the uncertainties. our quarter. the to We XXXX forecast approach months it our throughout are lingering management macro

compared prepare expect ensure of given security. a we the of customer longer a to our historical inventory season ahead, the industry’s chain level supply to Looking period for continued and higher level need to supply time, the

recovery The automotive quarter. since XXXX, market COVID-XX impacted talk Next, the soft about automotive the tightness. let decrease was fourth in market. demand and Entering further supply to began supply auto continued their customers see We quarter. only chain me to our The the sudden throughout the affected year the automotive has XXXX. been in third

automotive the is in other automotive resolve top supply nodes become In been and this obvious. strong many issue. chain chain XXXX where supply our tight our the are Therefore, capacity priority in the working is customers. from closely long to as throughout rebounding, demand with and supply customer term, more complex, technology due is demand our support of near automotive the However, shortage TSMC, to the has our we has automotive from

Now, about talk XXXX I outlook. our will

the is of foundry to For about X%, XX%. overall grow XXXX, forecast be growth to while excluding forecast full year the about market, memory semiconductor we industry

growth are US outperform XXXX confident term. the foundry dollar revenue we percentage grow and by TSMC, in in we For mid-teens can

Our technologies, platforms, strong interest XXXX business from see IoT. strong specialty where advanced will automotive our HPC, by four demand we supported and smartphone, and industry-leading for which are all be growth

growth long-term about outlook. let talk TSMC’s Next, me

multi-year a growth the technologies fuel We for years. of as advanced strong XG expected are are HPC-related entering and several the trend of in applications next our period to demand mega higher

units forecast rate the in smartphone to more to global of market We to XX% XX% XXXX. rise than XXXX expect XXXX. smartphone smartphone year-over-year in for We from XX% XG total in grow the penetration

to of XG a to XG content compared as silicon the expect We smartphone. a increase to smartphone continue

smartphone world XG benefit faster continue that services. cloud the and believe We our multi-year to more XG several as all a XG is expect of mega which to is years. to We ubiquitous, significant penetration XG the performance XG will trend where the of from improvement will fuel increasingly in computation the smartphone latency as network digital growth more four and platforms compared several next a a of applications over next with drive AI growth years, of enable

As We and revenue With growth now to we of power TSMC’s computation the and long-term for increasingly from more in are dollar we enter to require largest terms CAGR and long-term XXXX revenue in a in computing, growth intelligent our capture technology and the trend. the smarter growth. US be XXXX of well world contributor leadership, XX% XX% an era, from require driver positioned Thus, HPC energy-efficient XG to greater leading-edge will to industry is favorable terms. expect growth our our technologies. mega need incremental therefore, the massive important increases

the XX% as status. reduction performance node will about density up I NX X compared with to XX% and up full our from up NX gain, gain be nanometer. to with Now, stride to talk another NX logic will XX% power

technology FinFET our structure to cost will best and NX maturity, Our deliver customers. technology use for transistor performance the

Our NX with good technology development is progress. on track

stage. similar scheduled and in higher compared customer HPC smartphone half and production at production for at in NX of level of engagement We are targeted NX both is a seeing as Risk NX application volume with XXXX XXXX. and second is a much

when node Our be our will be TSMC. it Thus, another technology transistor are we X large the confident and in technology nanometer nanometer advanced is long-lasting most will foundry both for X introduced. technology PPA and

developed Finally, comprehensive I to system-level XDIC has wafer-level technology fabric. an TSMC talk XD enhance industry-leading will TSMC’s roadmap and performance. about

such well integration technologies packaging heterogeneous in for while including as smaller Our differentiated chiplets as as and We factor as to advanced observe InFO chiplet our market. industry efficiency, trend. becoming such their better benefit shortening customer, power solution, our This SoIC, drive time CHIPS an solutions, form as CoWoS. technology, stake are and

XD on several are with working We fabric chiplet enable architecture. to customers

is in volume XXXX. production full targeted SoIC’s

first be efficiency and applications, HPC to expected are pursued. power aggressively performance, is form SoIC where by adopted bandwidth factor

InFO’s This concluding Thank back-end We you testing rate at revenue our and higher from attention. in the expect a grow average services, few years. corporate to than advanced which our your include for key message. next packaging

Jeff Su

Thank you, C.C. prepared concludes our This statements.

start to the all everybody caller to to the will your you at to our remind session, into limit the [Operator Operator, Q&A session. the on management let’s translate the to would question. wish proceed question Instructions] a raise we before - raise questions answers like allow I participants opportunity line. to Before English Chinese, begin your two in with first please Now, questions. an to their ask Should Q&A I time please your

Operator

question, JPMorgan. first one ask from Hariharan the to Yes, Gokul

Gokul Hariharan

taking Happy and New for Year results question. Thank fantastic you guidance. my and

bit you peak think on X with also you a customers. What first Wei, revenue, be how up nanometer should of But about over nanometer think kind should think terms we CapEx we let big the revenues? seen about ask you in. X a node. XX node, - given this of opportunities Right size ramps Just already very should be last once in you big now X How applications out process the you about coming engaged was came could have size wondering, little multiple it of roughly nanometer? HPC? that talk think nanometer a within XX% So, if could the to the bit And HPC years, as peak you are is X how think new the to exposed mind. xXX talk that the would about nanometer. little X XX-nanometer outlining, of than CPU, had bigger, do plan you compared everybody's nanometer it about we era? also a Dr. be to talk X fully, something little substantially this is, a on how bigger you bit Could into CPU, me we well nanometer, are about as question when would obviously, we X go market which

Jeff Su

Okay. Gokul, this sorry, is Jeff.

size notes that questions nanometer. past - nodes, nanometer first take our in X Let me had one Gokul's please such is nanometer one. as and to nanometer. X your and have two - XX regards big about we'll questions, summarize the question by we the them the then of with very X He in

revenue be NX. So, Gokul NX wants do to know in should terms of or question. we bigger than That's first the contribution, substantially peak his expect Correct?

Gokul Hariharan

Yeah. as Thank you. the step-up in Especially well. considering CapEx

C.C. Wei

me applications do will your in smartphones. widely Well, nanometer to the question that addition we let HPC-related saying be Gokul, X by expect used in the answer

no with expect engagement be So, do with customer, of we it. will this kind certainly. our bigger, There's our revenue about doubt

next what the is question? So,

Jeff Su

that part of we progress second the Gokul the in think the HPC? in notes engaged. or and particular, what your have CPU he about opportunities we I at our as Gokul, computing. then, are high-performance of customers what drivers asking status But opportunity is of see do is the question And looking multiple

C.C. Wei

Did specifically the of networking don't area that our HPC's the be you that accelerator such the in question? rate. we But and to one HPC your applications, applications. let is as Gokul, CPU main CPU, will say me growth what that, tell growth AI name answer

Gokul Hariharan

xXX into a on had that Could good in X you xXX? as we market. think say be to nanometer more penetrating the should already we continues I little move X success - lot get we nanometer? bit Should specific market a mean, share up xXX the you

Jeff Su

Okay.

X our And into nanometer, looking as at get is So, question Gokul, X xXX well, continue really guess, has increase? to done we will on exposure the I nanometer xXX. your to

C.C. Wei

to specific Again, work we technology with and don't supply very to specifically our area. good their support the We comment on business. customer very continuously

Jeff Su

Okay?

Gokul Hariharan

I'll the go you. Thank Thank you. into back queue.

Jeff Su

on to next the right. the All move on we Gokul. Thank Operator, person please? line, can you,

Operator

ask Next Randy question, Suisse. Credit one to Abrams,

Randy Abrams

I to got Okay. - you. have two I questions Yes. ask. Thank

and mature - you very your talked nodes tight. the the on First are also I about automotive assume

you you nodes add both some you're for revenue, capacity X% those a much that, could X-inch. that that a capacity about - at vertical, EV you nodes? And only of mature added on what's seeing we has haven't and in how traditionally the ADAS? in to and been have mature meaningful and from of auto also You mix because expect Could also look this should pickup applications like discuss areas strategy new

Jeff Su

me summarize question. let Okay. Randy, your

first pickup automotive at Do nodes, mature nodes? our a also will we side. asking looking then, the ADAS benefit And And the other supply do tight. You're on in the He our automotive and comments auto see? in expect in how automotive notes vertical? we automotive, trends then mature that is

C.C. Wei

industry leading-edge little Well, semiconductor ADAS the a technology some system automotive that, lot now let for technology say of that's see the like and component, we IC. sensor, a of lot see mature to me this the the to management right need including do We and customer also for show the with now technology bit working a on mature power are we applications and the mitigate automotive, impact. supply shortage like of

Jeff Su

asking And then also part mature our Randy nodes. is on second

consider add mature we the for tightness, Given capacity nodes? the will to

C.C. Wei

with technologies, our capacity, pin to of always thing. [ph] kind We those all customer work our

large same. node, capacity For stays to into we mature trend used some now, convert the specialties. the of Right the

Randy Abrams

my And question, second Great. parts. it's two Okay.

points ask X XX% you points. also inventory. of depreciation margins to gross to utilization, up gross get was Part The but and want year-over-year. margin Just improved X on you've that dollar NT

about a said XX%, if what and if cost Was And seen But was you days? do a now, inventory. you've in on I'll have just reduction better? could if XX%. but cost better coming up - on you side? quarter continue trend reduction think the on So, into early then the discuss the you you've ask last within could off breakthrough margin, draw down could I it the quarter, had to year. inventory And maybe quick you Historically, on confidence rising wise XX fourth given

Jeff Su

summarize let your Randy, Okay. two me parts. questions,

side gross margin, notes the First that still there throughout margin or breakthrough the XX% Randy is long-term margin. our He the to is on for therefore, if wants our gross gross cost it And a on know is improved year. outlook the not? and

Wendell Huang

Right. Randy, this Wendell. is

increased You just mentioned our XX% depreciation that year-over-year.

year-over-year. XX% the number I be should think

Randy Abrams

think Okay. I I to quarter. was fourth QX, looking QX quarter-over-fourth the - that just

Wendell Huang

Right, right.

exchange the is reasonable of believe our terms There achievable. XX.XX. affecting foreign long-term, margin appreciation was exchange the X% to mix, rate. XX. and between against margin X Take dollar for ramp XX% of in the Now, foreign price, It example, trading gross leading-edge and average is gross profitabilities: rate, XXXX, is cost, we already now utilization NT. rate in are NT factors a technology, in XX.XX of That

XX So, will gross affect every point. basis X% appreciation a margin of NT of by our

the we The utilization a we other sustain. utilization at rate as high abnormal the and is level quarter, will level. believe of rate bit, rate little still of utilization in extremely that's high, high Therefore, mentioned, thing was fourth the - is the - year, cannot the this high, in last quarter down very a albeit come very

still third margins the in will XXXX in NX ramp our by X point. by mentioned technologies. utilization And gross every we expect we Now, ramp XX that think will to the be of to rate affect the We X be A last percentage point margin point. leading-edge impact case. change our example that time will basis

if of considerations, we all long-term. XX% those believe margin the and in So, achievable reasonable is gross you into take

Jeff Su

our had days Randy asked of then about And inventory. also

Wendell Huang

Right.

Jeff Su

Increasing in fourth quarter.

Wendell Huang

will that's high a fourth some but the shipped the to quarter, some opposed be we - the quarter. first in partially as the fourth of quarter as shipped And in in because have very wafers Right. utilization

Jeff Su

can you, you. Randy. the please? move next caller, Thank Thank we on Okay. to Operator,

Operator

CLSA. one Next from we Hou have Sebastian

Sebastian Hou

Thanks gentlemen Happy questions. for my New Year. taking

gross First question is, I margin on to want the follow side.

surprise actual that the at be original So, guidance. turn alluded past the to either margin, quarters - upside to your the result your out two or the to high in you've at end the gross

while of guidance, much While last end dollars year's. continue revenue appreciated Taiwan the to the high second half of the is on

So guided to be two which result better that margin originally means what the you quarters consecutively. for than

again? as need is, whether margin that up is whether you. second, growth question is too just revenue revise profitability Thank up been will the officially? our X my So, outlook, or our to revised the has conservative year And not structural just XQ

Jeff Su

your right. summarize first let Sebastian, me question. All

of past in above appreciation has our in end quarters margin at Revenue that there. currency high and the is come observation the slightly Your the high at gross end or two end the our the guidance. high

margin be it question too the - outlook structural is conservative? And for first revised need is, is Sebastian Does quarter the first, longer guidance what term gross up? to about So, profitability? our

Wendell Huang

to is well the of Okay. quarter for and from we our fourth difference, compare point quarter guidance mid the utilization, X.X XX% Sebastian, if mainly as first XX.X%. actually in term first The come unfavorable quarter, rates. as the the fourth percentage exchange quarter foreign

this work at obviously, margins. continue we still sticking the will moment, guidance, to we improve although So, hard to this are gross to

as I - that reasonable, to our on long-term As XX% the that margin just margin, about. gross of factors the X gross Each in are - the talked profitability we the those affect maintaining based elements long-term. just growth reported will be factors I for achievable earlier

Jeff Su

question? do Sebastian, second a you have Okay.

Sebastian Hou

upside to Jeff. Thanks, consensus at do. and me question My that - estimate. your least that's Wendell. a on Apparently the is to second think also significant thanks, I Yes, And I outlook. CapEx surprise

this another or to - XXXX. that with CapEx represent last - not the you. of the $XX in a billion revenue level CapEx Thank a that, growth, billion And billion to billion XXXX time resulted to whether the acceleration in $XX to raised $XX from the this $XX I growth an the then in So, so question CapEx I growth $XX -- will like think billion to $XX is step-up then billion like think the year's, for the when the so future my ‘XX? or invest we - company XX% to level,

Jeff Su

Okay.

year, $XX at looking guidance question is billion expectations. his to Sebastian's it our above CapEx billion, this is, $XX for So

we to $XX So $XX growing increase to have time, the looking us this year CapEx to from last in billion at he - acceleration billion XX% year. resulted an this in billion $XX $XX XX% is billion to

So future the what growth our for years? is the or in outlook XXXX

Wendell Huang

Okay. years CAGR the - next specifically to Sebastian, is target X XX% as early too our it's between to about in XXXX. about talk mentioned, But C.C. XX%.

that's capital the in call. we underpin target are used already XX% So because higher the that's that than the investment original to higher we mega have to higher the that conference to trends CAGR that of capture opportunities of before the last by the And multi-year X% also ready industry. to make growth

C.C. Wei

This add is on very me This a let of Well, XXXX. high something. to Wei. is number CAGR C.C. XX% XX% based

XX% forecast invest. CAGR. we to you how that So, we a much to need XX% tell of That CapEx will still

Jeff Su

Sebastian. you. Thank you, Okay. Thank

Sebastian Hou

Thank you.

Jeff Su

we can Operator, to please? the on move caller, next

Operator

have we Lu Goldman one Sachs. Bruce from Next

Bruce Lu

Hi. Great Thank my result you guidance. taking question. for and great

that? XXXX. think smartphone terms XX%. to long-term I growth in CAGRs of kind XX% tell this already you how from HPC XG percent for this coming of X% you the much is And in changes, drivers XX% is and that think the in terms something to the big from the other like to that, are XX raised time that difference what revenue penetration the growth, of is Can us I is, incremental

growth? is growth you much can forward, coming or on dollar the content you the shipment or growth, growth the for provide more from Moving color how

Jeff Su

Bruce. Okay,

really XX%. our XX% is with outlook, CAGR our growth about growth to target long-term of question your So

unit such looking HPC, different what smartphone, and how basically is the at Your platforms is dollar as the by growth is contribution? much in much content, how is question contribution

C.C. Wei

Well, corporate And to also corporate the the average. average, is application IoT automotive close your corporate that answer than higher answer question? is the and let - Did the is that by to from smartphone very rate HPC me question average. the than the higher growth actually, corporate close

Bruce Lu

you. Thank Yes. you. Thank

unchanged. question want profitability all structural that structural I that's profitability assumption these My ask factors based the about remain to understand profitability. is X Okay. but that next - for on the I

especially structural technology up because move company structural So, structural profitability do current we node? the growth the consider of legacy or tightness, for - to the supply the with

Jeff Su

Okay. question second structural Bruce, profitability. is on the your

supply Given to technologies. we also the Will the nodes legacy up higher tightness the structural profitability and target? growth or in outlook, consider at legacy move

Bruce Lu

Yes.

Wendell Huang

Bruce, profitability of we profitability. them can the as one financial gross the factors, XX% And every maintaining i.e., I goal those X affect the are objective, of just mentioned, structural margin. of

the an And, For of example the It's also utilization the example, increases expensive in and nodes. just rate, exchange leading-edge example than before. CapEx ramp leading-edge more use foreign per - for I'll technologies, K. complexities the

So nodes. very work proper improve to to maintain a our capacity value up to can with value continue At few we technology altogether are the value, the also that suppliers working our with and we wafer same also the very customer service value, we closely sell the earn leading the return the and previous firm our to pricing. the time, in hard so and cost, nodes compared those the of

As a gross margin. are as we XX% profitability goal structural of our result, maintaining

Jeff Su

Okay.

Bruce Lu

understand. So,

profitability clarify and whatever me it you cost that, of customer XX% to maintain saving your Let terms return your target? gain you will still in your

Wendell Huang

together, all factors, all It's - there them add - are so you it's... X of

Bruce Lu

Understand.

Wendell Huang

Yeah.

Bruce Lu

you. Thank understand. I

Jeff Su

can Bruce. Thank Operator, the on you, we caller on the next you. Okay. line, please? to Thank move

Operator

to Next Stanley. Chan, Morgan one ask question, Charlie

You're on now.

Charlie Chan

Happy question. New Year. my taking for Thanks

first So, is CapEx. also question about the

for to So user in the huge leading-edge the past the you Apple. for is that given on is spend application smartphone CapEx key usually

does to the This first Thanks. CapEx a time almost level, is means significant question. doubled outsourcing? CPU that this the at you there Intel upside your it So, is

Jeff Su

Okay, Charlie.

large basically. much been of platform, leading-edge on higher. this past our in our that has course, the Charlie is historically your So number year, CapEx on notes smartphone for is CapEx question our CapEx

intended on particular side? customer for it's whether wondering a the is he therefore, So, CPU

C.C. Wei

question. Well, Charlie, answer let me the

or customer don't specific specific we on fact, comment In area.

by on industry's the Our CapEx trend. current mega guidance is the long-term underpinned profile based demand

Jeff Su

Charlie? Okay,

Charlie Chan

Yeah.

Jeff Su

Do question? you have a second

Charlie Chan

I do. Yes,

So, feedback to just some C.C.

understand all we the trend XG HPC. of think I mega and

whether possibility So IDM related the also is the to I I outsourcing think commented of on example, actually next the it because ago, semi ago, strategy customer existing to process the think growth. also Semi. just organic years kind think your their XXXX, in they of Intel top last additional your you there licensing process. be days for driver, growth understand more I my was back should to question of largest foundry But about, out licensed rule XX And two don't National question,

consider And customer? kind for Thanks. so, you kind of option of that mean, your this customer or do years, the consider TSMC, after IDM your license to joint XX operation IDM Does if venture like with I'm not option? your a even foundry sure type this process still some

C.C. Wei

you are specific we the Well, topics our again, on the to - continuously business and don't we working me demand. comment specific with let to our that or and support tell expand customer customers' customer. TSMC's But

Charlie Chan

okay. you. Okay, Got

I get Thanks. to some queue. back I So, will have the follow-up.

Jeff Su

Thanks, Charlie. person on on move Operator, right. let's the All the please. line, next to

Operator

to Simpson from Brett Research. Next Arete question, ask

Brett Simpson

very for Thanks Wendell. Questions maybe Yeah. much. first

terms So, we step-up. reflection growth this CapEx seasonality a there then, I how typical how seasonal just you you are the year? half guess, revenue And a big this see in about this the on But for out. future year is capacity of of is than better guide do expect wondered, with year the obviously, year, you spending And beyond a in XXXX. normally think starting far the guide, second Should QX. year playing I a the

revenue be Thank we growth can year from increase you. will would XXXX than the be this in So, implied your XXXX? that CapEx big - assume in higher

Jeff Su

Okay.

for guided year XXXX. for the revenue So, guidance. two teens growth We mid - for one questions, Brett on has full the

he throughout typical half to play there second know split? seasonality out how the first see second Is we - will half, first half, question. wants That's his So year? the it does

Wendell Huang

than can the we see, what second From half is higher Yeah. still half. first

Jeff Su

second also part the then is CapEx and growth. And

spend know increase we expect we the CapEx to investment CapEx the at in that year a sorry? noting a year XXXX, advance growth will that or typically follow. then in wants big Brett should our XXXX XXXX, large of Looking growth - in in

Wendell Huang

that. And but higher Brett, the it's in opportunity to this C.C. X I too bit details. the future the next spend it's of in CapEx at - the after year over not years, just as looking range next means early we're for also mentioned, just a the CAGR. But year, growth, also, discuss XXXX years said,

are opportunities. looking multiple at of years we So, growth

Jeff Su

Okay?

Brett Simpson

And NX. maybe for one just Wei C.C. on

transistor density the and of wondering you're mentioned we're the X of I'm FinFET with at PPA couple nanometer. a to Intel transistor at in Samsung how you nanometer. You and have but X would at just stick next lot seeing the see planning innovation years, And NX best

I that Samsung, about with potential regard, XXX think NX you've happy transistor square NX Intel NX. seeing the to at innovation mill at about transistors and of in FinFET per million talked How should is of Thank think roadmap? and are the we some we're the you. you relative

Jeff Su

Okay, Brett.

to our regards to to your question at and our So nanometer. NX FinFET transistor continue is decision structure use X second

note nanometer about that square. at millimeter You X we million deliver per XXX can transistors

or in this does So at it of or NX, terms X in you our want out to Samsung know to compare? others, how maybe falls comparison nanometer how

C.C. Wei

transistor you per said Well, my the got XXX the in a to lot on gain, as I addition million square, NX. number density and power what all that's still statement, provide in performance of Whether in depends millimeter X-nanometer NX the XX% reductions. at the that's that gain logic

I think customers lot a on depend design. that

FinFET of performance combination continue serve customer. the offer maturity, are technology the for best that We we the the because our and the to TSMC say to cost,

Jeff Su

you, Brett. Thank Okay.

Brett Simpson

Thanks.

Jeff Su

next on to the caller, can please? move Operator, we

Operator

Next Citigroup. one Shu Roland we from have

Roland Shu

Good very question. afternoon. for two result. My are CapEx my of parts first is good And Congrats there the a question also Hi. on spending.

technology have those a return leading-edge are on to new with ensure you your you CapEx would CapEx expect CapEx first question your investment? on know downside like sharply So based to the of ran So, much this because EUV? adopt is, if you increased lower Thank when for you part in your EUV are the proper second optimized contracts EUV considering how productivity who And ahead level? to after have the of long-term productivity I to customers - you you. EUV customers, especially your spend most sign let spending, to improved to

Jeff Su

Okay. one. Roland, CapEx. relate Both take will of we one your questions by to them

contracts a the of with we wants we that new that signing CapEx we are especially that that, to that ensure know is higher with are one proper customers to consider making to Roland return? with have XXXX, level First long-term TSMC, customers, in would

C.C. Wei

to in according customer our CapEx answer practice. right? always that the Roland, work the your our continuously question? to capacity serve common expanding loading future not contract sign And long-term work demand. We customer a And with all to is our our and put demand with or also did our guarantee current forecast, their we

Roland Shu

Yeah. Yeah. Okay.

I think it did.

Jeff Su

Okay, Roland. And then CapEx. to Roland, related your second question is also summarize. let me

a I TSMC. CapEx for lower your level guidance, of productivity that leading higher think you're the saying our CapEx EUV that in to assumption means

productivity Am in correctly? improves, summering much the the that - will question reduction Is is that, could if of I your how productivity EUV question? that - your then we see? as CapEx So

Roland Shu

Thanks. exactly. Exactly. Yes,

C.C. Wei

Well, let that. me answer

because with We improve EUV's working to productivity the suppliers. continue are we closely

but And is the up to so our still yet. far obvious, expectation not we improvement it's -

be decreased is already. of As improved this because will productivity, for in CapEx the plan our CapEx

Jeff Su

Okay?

Roland Shu

Okay.

will So, high future? going or - CapEx spending you for intensity mean, CapEx even have the the be means I near EUV year, forward, productivity, capital still this higher probably or in

Jeff Su

Okay.

high that, that So, intensity even Roland, capital remain our with his next into is question year. EUV could factoring and CapEx even into our productivity

C.C. Wei

Well, the CapEx than the more because It's complexity. is much of NX, NX is that intensity than high complicated much actually NX or complicated remained NX. technology high CapEx more remained

So, intensity advancement. CapEx technology that from most coming this of

of part it's EUV course, Of one reason. only it, a but the not is

Roland Shu

Okay.

Then my Okay. question… second

Jeff Su

into I can so two the get questions Thank everyone chance. we allow we to people because think ask still queue, the several Thank you. Roland, would you. a have I sorry, kindly that's you back in already, queue.

Roland Shu

you. Thank Okay.

Jeff Su

line, to on All move right. on please. Operator, the caller next let's the

Operator

one Lin next Sunny from have we The UBS. Yeah.

Sunny Lin

follow-up that, Good Thank question I on taking want to Hi. X nanometer. afternoon. questions. you for first My is my

- and half for of the a it Thank nanometer just X the transistor into historical X second visibility want X on of for adoption year. to of bit nanometer cost get versus next and you. color your X? compare ramp I customer the How does think with also current nanometer, per

Jeff Su

Okay, Sunny.

you second customer of how and X first also nodes, is half question prior the into know still and X the nanometer, it at adoption visibility transistor per your it cost XXXX declining? is on want does into So or to nanometer X nanometer, compare to nanometer X

C.C. Wei

for their answer we HPC your we But engagement, activity lot a customer, actually me see especially the question The start per they of said decrease. about cost that. to with field, - from continue transistor the are with customer engaged TSMC. Let

Jeff Su

a do second you question? Sunny, have Okay.

Sunny Lin

Right.

question. So just the C.C. ramp you to regarding X follow-up very provide second would year. of for first much. any a very if color Wonder quick for my be half Thank nanometer next able to

C.C. Wei

I smartphone related HPC That's customer It's say. the both our is and all applications. from early adoption can in

Sunny Lin

And second for XXXX you. then is Thank it. your my question margin. Got gross

margin? going So, we with depreciation impact growth gross how CapEx you. and think for year should up the significantly, on this Thank about your also

Jeff Su

Okay.

will on to is gross question CapEx what the of margin. With second XXXX Sunny's overall the higher a wants what's depreciation to the and spending, in increase year-on-year margin? gross XXXX know level overall she So, the be impact

Wendell Huang

gross impact the about talk look capacity affect on Sunny, favorable that general also as all be you the those depreciation than are year a is mid ramp may to details margins, said, of gross I the margins. utilization remaining it's to too XXXX. profitability, on to XXXX. the too at XXXX impact high-XXs And the in feeling, of just that foreign NX factors are remaining expected about But our it's exchange I and quarters. talk negative our early to XXXX mentioned, between quarters rate to the the - as higher well, But early

Jeff Su

Okay?

Sunny Lin

helpful. you very Thank it. Got Very much.

Jeff Su

on Sunny. right. the caller, you, All next to Thank please. let's Sure. Operator, move

Operator

we now having Chen ahead, are Go KGI. please. Laura from Right

Laura Chen

taking you I CapEx the have gross question good a Hi. congratulations and result for and also the and for question Thank about margin trend. outlook. my the

your the in high your advanced with major most and must clients. in some the given nodes years, be on strong there believe outlook I think technology CapEx extremely position recent I strong conviction

also first view us expect gross swing might deterioration your for substantially? gross we'll clients IDM first similar side, we rate, be the of year for to revenue production? probably your you margin you share there manage that That's margin NX mass can happen? the will NX be question. year may more for XX% the outsourcing than to So, opportunity, your that And that the contribution with factor how some first Thanks. impact given Can which would on major have my

Jeff Su

or questions. your to position But question Okay, contribution first the year? and first be the it first does compare of I the CapEx also the nodes, as major sort think will X nanometer strong how nanometer the NX, noting to of Laura clients. conviction wants in an the in Laura, of know revenue its of on - advanced higher - what to X indication year in our that's strong similar two is

Wendell Huang

it's nodes talk going Okay. Laura, as about believe we when to that But it's and TSMC. early to too this for said, out, moment. another lasting at really be NX large it's C.C.

Laura Chen

- Got at the swing will probably manage impact the factor for we on Okay. rate also may you look should - potentially trend? it. Thanks. And the node, How the of how particularly on advanced that? margin the the gross that utilization and

Jeff Su

Okay.

opportunities, and Is would gross would for second looking in utilization, correct, we swings example, that how is and Laura's So, at are at our margin? manage then that IDM, also Laura? question impact that how margin in gross the there looking a if particular

Laura Chen

Yes. Thank you.

Wendell Huang

work what say to The comment provide can We or and customers specific continue is, with don't out we closely maintain we ensure to also on don't business this utilization a we and - customers that Laura, we we capacity to - it. outlook. proper good of our them

Jeff Su

Wendell - as And yeah.

Wendell Huang

Laura, colors. some me add let

multiple smartphones. segments. I be driven can we seasonality looking the past think therefore, with year the our also moderated market this multiple wagons. years by And been customer we the looking, has traditional the business in jump forward Starting see from big on, few HPC in - on

So confidence. that's our

X includes CapEx our also is, nanometer. confidence other X nanometer, The

is ago. we X expected nanometer X also very strong, months stronger Our than

So us the give those CapEx. two to confidence to combined increase our

Jeff Su

Okay, Laura?

Laura Chen

very That's helpful. you very very That's helpful. much. Thank Yeah.

Jeff Su

move can we Laura. Operator, caller, Great. please? you, Thank to the on next

Operator

Sanders from Robert Bank. Deutsche have we one Next

Robert Sanders

I've just actually. question got hi. Yeah, one

you. nodes? think it Thank Just is And whatever it of could X.XX, situation nodes these how and most seeing XX - is wafer pricing how you are is? at you booked Which nanometer, of And X.XX, upside please shortage some are comment you out severe essentially do the more acute? at to XX, wafer these present? shortage far on Is the it there nodes? you

Jeff Su

Okay.

short the He particular it at is So, such the and tightness it XX in question how nodes last? is how and wafer. XX asking, or it is is your long X.XX, Robert, on nanometer as nanometer, shortage will

C.C. Wei

most node. It's in X and X mature mature per se. in in XX nanometer node, those X.XX the XX in - X nanometer, the actually of the not Robert, especially the all the is nanometer, or in in micron, shortage areas. not [ph] But

Jeff Su

Okay?

Robert Sanders

just become you short. is part just there, I with the Can traditionally but to if which haven't continuing dependencies are industry for be one they could follow-up, capacity - - they follow-up built

foundries consider building you would industry other that? that actually the greenfield to or help will you handle think So,

Jeff Su

is then, potential given So, expand, of shortage the these some new any we bottleneck at Robert, build on follow-up your capacity nodes consider to alleviate nodes, question mature these or to tightness will risk? mature

C.C. Wei

to support Well, actually, them. more node advanced moving and are have closely mature to customer where working with some capacity better we of their node we

this to manage the this shortage In try shortage. from that, to impact mitigate addition we try also to condition,

Jeff Su

Okay?

Robert Sanders

a Thanks lot.

Jeff Su

Thank you. Operator, let's on caller, the move please. next to

Operator

Next one Daiwa from Rick we Hsu Securities. have

Rick Hsu

you customers happy Rick. historical Year, are now first a higher than your question guys of is that with Happy My the New mentioned because guess, Hi, macro pattern the inventory is, This with uncertainties living guys. Yeah. COVID-XX. I

inventory higher is I a contained. COVID-XX - if than question. my So, with would the This wonder customers still if patterns, your virus if is normal happy historical first living the be

Jeff Su

you, Rick. Thank Okay.

we question if has the attributable will is seeing higher continue? everyone longer that longer is, COVID-XX of an our - is level no no and to What this inventory is your So are partly - vaccine issue, COVID-XX.

Rick Hsu

correct. is That

C.C. Wei

Yeah.

the still else for is they it our in important this secure today, than situation. vaccine a supply even then because also but have is it management hope as the of more today's the work, First, customers said, they at really anything time approach we different the - we takes and still say of inventory will that that working,

we to the think So inventory. back really the of don't to historical level it's revert

Rick Hsu

you. Thank Okay. is really also That's year regarding this question My the number CapEx high. because second your is helpful.

CapEx Tai be for leading-edge. this your year to of spent XX% going about is So,

built the of not much of for year. So, this preparation be I wonder is that actually - how for for capacity portion XXXX and

can share idea So, you with your us?

Jeff Su

Okay.

about CapEx. capacity nodes. is XX% advanced - for your spending XXXX He sorry, how is XXXX. the for for know this Rick, is wants So, preparation for advanced nodes of - our question on to XX% in much the

Wendell Huang

this year invest for primarily. year we actually future Rick,

it's So, It the for not following be also may that. for only XXXX. years

with So you. that's think I - would share I to that's something like that

Jeff Su

Okay?

Rick Hsu

Okay. Yeah. you That's helpful. much. you. so Thank Thank

Jeff Su

No problem. Thank you, Rick.

Okay. to Operator, let's caller. move on the next

Operator

Sinolink have Next we Lu Securities. one from Andrew

Andrew Lu

Can question. Good Good Thank for hear my you afternoon. morning. taking you me?

Jeff Su

Yes. We can hear you.

Andrew Lu

with Okay. in it poly your pitch spec design customer in-house My first nanometer rule? customer the same manufacturing metal needs nanometer, TSMC X on X question chip-based if from nodes rule is, redesign design different and a TSMC own its this use foundry or TSMCs design has based one. Can on to the

Jeff Su

to Okay. summarize Andrew, let try your question. me

different customers' about to their has customer foundry rules, with and the TSMCs the Your in-house do If customer use but design question our or use they TSMC could manufacturing, need design or different rules from own TSMCs, this design poly basically? rules. metal use pitch is

C.C. Wei

our design support TSMC's customer work technologies. always with to we Andrew, process their closely into

we TSMC. So, inside manufacture can

Andrew Lu

customer to change own need So design? doesn't its

C.C. Wei

- cooperation. with of to closely I as parties question because this answer And we design. work cannot it's said, I two Okay. them their support

Jeff Su

Okay?

Andrew Lu

something plus like My out Understood. revision this nodes question Will have nanometer work for next year? year? nanometer X or X node Thank you're ramping this What second second our process year. nanometer, since is, you. nanometer X half second in half we about X

Jeff Su

Okay.

for second this have half is then or looking at noting improvement year, node continuous example, new second we of second do NX, any - Andrew, have, half So, will and NX that year of next year, enhancement? question this

C.C. Wei

improve Andrew, year X we improve continue market. we improve we further. always introduced to our technologies. Last next the it the year, nanometer to will This to and continue year, we

So we never stop.

Jeff Su

Okay?

Andrew Lu

So something plus. a X like nanometer

C.C. Wei

are what naming, you That's yes.

Andrew Lu

you. Thank Okay.

Jeff Su

Okay. Thank you, Andrew.

please. caller, move Let's next on the to

Operator

Hosseini SIG. we Mehdi one Next have from

Mehdi Hosseini

Yes. my taking Thanks question. for

you to could would has platform. a color. forecast if technology do question I for the provide It some mix have and follow-up. QX great And revenue by be with First

Jeff Su

Okay.

first revenue wants Mehdi for know by quarter, platform. revenue the to So, by technology and

Wendell Huang

will decline smartphone recent its the HPC, to compared seasonal and while automotive, first seasonalities. will experience sequentially, Okay. in increase milder IoT Mehdi, quarter, a

Jeff Su

a not technology, by do we breakdown guidance And revenue Mehdi. provide of

do have a second question? you Okay? So,

Mehdi Hosseini

Yes.

a $XX US? follow-up your billion $XX for on quick to guide CapEx. Just Does CapEx infrastructure include in investment billion

Jeff Su

any does So, is, investment for fab US CapEx our this Mehdi's guidance year the infrastructure? question include

Wendell Huang

The year. Yes, US construction starts it this does. fab

Jeff Su

Okay?

Mehdi Hosseini

Can how CapEx much of you elaborate the is US? for

Wendell Huang

point, Not at right. this

Jeff Su

Okay. Thank you, Mehdi.

Mehdi Hosseini

Thank you. All right.

Jeff Su

Thanks. to move caller. the Operator, let's on next

Operator

Sankar Cowen one, Company. Next from and Krish

Krish Sankar

fair Number year question. on from it a up last to year CapEx. And I also one, up had to is Yeah. taking then year. year? CapEx last I EUV assume nice my relative two pretty investment also in Is your this Hi, for thanks this follow-up. in step had

Jeff Su

Okay.

also with So CapEx CapEx that versus we increase Krish's in spend EUV? in mean first on - question for XXXX in is an increase the that, guided guidance that an XXXX being increase, does we our

Wendell Huang

No, we disclose do not that details.

Krish Sankar

it. as be C.C., a long-term capital mentioned to then the capital in follow-up, be should you nanometer, that intensity the you high And Got way going how is said all intensity mid-XXs. through X but also

nanometer just Because So - long-term? be the be is next mean higher do by years, high by might I'm what few the intensity trying X you that in it square like than still mid-XXs. if to capital going to looks

to at it So to we mid-XXs? get should expect point what

Jeff Su

Okay.

wants intensity X He to then that know the mid-XXs second and correct, capital Krish's intensity, to of nanometer Is intensity have K we So return Krish? per the we at capital being is intensity question terms will in to capital with mid-XXs. CapEx higher, or level? returning when capital long-term

Krish Sankar

Yes. you, Jeff. Thank Yes.

Wendell Huang

meaning Yeah. to X long-term We years. mean X

I can example. be think XXXX XXXX an to

time, intensity for down During high-XXs rose at of years afterwards. capital XX% of maintaining and came XX%, from a to that period the couple

should Something like that be a reference.

Jeff Su

Okay?

Krish Sankar

Thank you.

Jeff Su

the let's Krish. on right. please. All Thanks, to Operator, move caller, next

Operator

Gokul Hariharan, one, JPMorgan. Next

Gokul Hariharan

this give follow-up CapEx? taking all question with little are should compared bit we having us in of you in should that spend - And in used to CapEx Hi. think about for jump One ahead CapEx little spend X to, ahead CapEx? Is the is my we and function as in to a of Thanks question. EUV months a we maybe think we Wendell, this having guidance the about going immersion of of what how - say, bit depreciation X that depreciation the terms spend in era? could depreciation. let's for how the ahead level to well Yeah. we era? year Do one. and heightened of to on past given That's

Jeff Su

Gokul, me Okay. let summarize.

terms to need the and that that, CapEx, with - CapEx. CapEx first EUV question spend we to in we are Your of we is earlier because to know of wants now are this CapEx having more is He spend earlier?

C.C. Wei

normal EUV a question. me Well, for And very TSMC let used complicated answer result, That's EUV The plan there for the it. chain also a is are answer the we and supply to long in tools. longer takes because for the prepare time have. time than tools to The the long advance. the yes, of lead as tools is to had

Jeff Su

Gokul, outlook. looking Okay. the second question And is CapEx, then the with depreciation at higher

Wendell Huang

Right.

over For this by increase XXXX. to high-XX% depreciation XXXX to the expect year, we Gokul, mid-XX% for

Jeff Su

Gokul? Okay,

Gokul Hariharan

yeah. - add just maybe And Okay.

the are we that, XX% margin? with with gross comfortable structural even So

Jeff Su

with even the are growth Gokul So, XX% asking, higher the margin? in is with comfortable we gross depreciation, still

Wendell Huang

gross target and achievable. we margin a Yeah. XX% long-term reasonable it's as think

Gokul Hariharan

Thank you. Thank you.

Jeff Su

Okay? time, think we'll callers. I take two Operator, interest the the of last in

line? with proceed next the on So, can we the caller

Operator

Suisse. Okay. Randy is Abrams, Credit The next caller

Randy Abrams

your Thank you. Okay. follow-up and overseas Yeah. US first My China, on sites.

multi-phase is for the K? China how then your single For to out Huawei, to expansion acres. build Do wafers? China where of XX,XXX of And plans to mega you for digits, site, a fab outlook the US build down business have and bought the for you the China X,XXX or it's out potential also from XX

Jeff Su

Okay.

question first to capacity is and Randy, fab your So, overseas. regards expansion

also build US, will target to know K. out And asking we of the expand in China, you're Is - site? and capacity So, have we I Randy? Randy continue in wants Nanjing, is the we Arizona, fab-type Nanjing? into your to a that to to mega do in we XX Do guess, it in question, correct, plans he referring further

Randy Abrams

China to the That's rebound to mid just contribution. digit post-HiSilicon Yeah. question, single it's down where the just outlook

Mark Liu

This Yeah. Mark. is

land production, recently X,XXX the expect We market government China, continue is we XXXX was economics that piece sites. currently plan Definitely differences have the on with China. to only to of On the a acquired support yes, XX,XXX in business expand next do mega-scale have the we acres. Nanjing. see, condition the China And month. the forward will Phoenix, Let Phase - wafer the will have long-term continue question. according talking But production course, our China reset, I decide me we'll mend but a to I'm plan to - Yeah. in accordingly, But, big work by cost your demand our going take per provided will of in in leading-edge cost do will gradually, we a steps. and plan to the the after we in capacity increase does and

Randy Abrams

Okay.

And for for the great. Okay, back-end? first where the you're give between And investment quarter, outlook growth second - what's my InFO, the could also I but if that for of you think you platforms? CoWoS, each leading question, doubling full-year in CapEx, gave SoIC back-end growth the

Jeff Su

Okay.

platform by growth CoWoS XXXX So, between growth, then, then and first the by and growth outlook back-end, Randy outlook is segment. back-end asking the by InFO, about

C.C. Wei

similar terms. corporate be HPC corporate average the for higher and growth in platform, growth dollar IoT than Randy, think will growth. Smartphone average US we be XXXX by and Okay. automotive will to the

business. terms higher within back-end XXXX. business, We in it details In corporate slightly grow do of we not the disclose to back-end than the our expect

Jeff Su

Okay?

Randy Abrams

lot. Okay. Thank a

Jeff Su

Randy. Thanks, right. All

Randy Abrams

you. Yeah. Thank

Jeff Su

the interest on we Operator, Okay. move time then? - the can in to caller last of

Operator

Hou Okay. from The have we next CLSA. Sebastian one

Sebastian Hou

to I'm again. Yeah. you. lucky follow-up. ask last Thank and the one pretty be you. Thank Two

thought first think months that its has comments - the you that to said demand noted Mark than is, stronger The follow Company ago. I three follow-up X nanometer Mark's also on

give which if us stronger details than you as more [indiscernible] value about So demand? expected applications are you can seeing

C.C. Wei

performance High computing.

Sebastian Hou

electronics is consumer So is HPC or more for performance those typical or computing - typical the high blockchain-related?

C.C. Wei

didn't we I part, the didn't Sebastian. last - Sorry, the hear hear

Your...

Sebastian Hou

sorry. I'm Yeah.

customers the HPC that part, or the more think products? - related it more related to the is your to I for existing blockchain-related

Mark Liu

just of is with growth architectures, on business. Wendell major me will this. know, from bit as field High-performance best changes. under different the just add color be said customers, The striving to is get computing's different a architectures. driver let currently exciting our Oh, little computing everybody performance high-performance as the you And this

is So many, many players getting - more many field. this into

innovation stronger NX, NX, is coming a on well we as So, our yeah. way as on see

Sebastian Hou

Okay.

Okay. you. That's great. Thank

Mark Liu

not Sebastian. that, support on we It's that, yeah. We count cryptocurrency, don't on but

Sebastian Hou

Okay. follow-up Yeah. And fair. second That's comment the for is that. to - Wendell's on

to on CapEx to up think the guidance year's go see XX%. we will - intensity that I the this based

do calculate go, strong on for we means based if we few how the not if pretty but be as this small guidance, be year calculations, which definitely things on be even - will the to will free flat, the likely So, revenue past could some - flow cash or as years. depends growth -

So, my XX% cash that is the flow? question company sticking dividend of to policy free is the that, still

Jeff Su

Okay.

looking may CapEx, our Sebastian, growth question your this around is So, the been then looking then cash capital year year. slow revenue at in about guidance, XX%, intensity at the - this the flow free

formula? XX% the Do use cash as So, free of outlook dividend for we the still flow the what cash dividend? is

Wendell Huang

parts, than of to not XX% has dividend flow, be periods. our Sebastian, Right. but two policy previous lower cash the free

we to dividend. sustainable and committed a steadily remain cash So increasing

will periods investment, higher on will growth, we more focus harvest as the focus the be on And increasing. the sustainable. the of be During steadily

Sebastian Hou

Okay.

So thanks, Wendell.

So, given that the in the investors you're simulation, that quarter. will in the like per you paying months so calculation getting the which calculation that getting a is assumption? which fair this investor earnings we if the next still do probably that and Is earlier, means dividend XX quarters - - NT$X.X the quarter made X

Wendell Huang

at least, It's least. at

Jeff Su

Okay?

Sebastian Hou

Okay.

Jeff Su

Sebastian. All right. Thanks,

Sebastian Hou

Yeah, okay. Thank you.

Jeff Su

our Thank Okay. session. concludes everyone. Q&A you, This

transcript conference will at website now. be through the we available TSMC's which X from now, will the today's that from will both conference, of The hours advised within available accessible be become of hours www.tsmc.com. please Before XX replay be conclude

So, quarter. We us thank a day. next us again you Good-bye, joining great hope healthy and safe everyone join hope today. to for stay continues we and you and have