Taiwan Semiconductor 1Q17 Earnings Call Notes

Mark Liu – President and co-CEO

Fabless inventory high

“We now estimate fabless DOI is still high, high above seasonal exiting first quarter ‘17. Our second quarter revenue guidance that reflects a quite severe inventory adjustment by our customers, particularly in smartphone and PC markets. However, the overall end market smartphone demand appears stable in second quarter ‘17.”

ARM and accelerator use in data centers driven by AI

“Artificial intelligence application and services and five key infrastructures are the major driving force with leading edge technology behind this HPC growth. For example, more than half of our customer product tape-outs with our 7-nanometer today we see our HPC products. Recently we are also very encouraged by the support of a major AI service provider on ARM-based processor or datacenter in Open Compute Project Summit this year. Accelerators used in datacenter are also increasing, adopting the GPUs, FPGAs and ASICS, we expect HPC to become our major growth engine from 2020. The trend of ubiquitous AI also shows up in many IoT and consumer devices such as robot, drones, surveillance devices, smart TV and set-top box. Ubiquitous AI will also be widely used in the fast developing autonomous car market.”

Weakness in smartphone and PC but most because of inventory

“Second quarter weakenings, smartphone is one. We think PC is another one. Mostly because of inventory though and industrial, I don’t see the weakness at all and to come to your question about the, what is your second question.”

Industrial is heating up

“I don’t typically noticed particularly the strengths that are in pocket. Industrial is considered heating up. We have – that’s the number. So showing the overall second quarter. Okay, automotive although a small percentage is heating up.”