Taiwan Semiconductor 4Q14 Earnings Call Notes

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This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

Upbeat year in 2015

“Looking forward to 2015, it should be another upbeat year. We forecast the semiconductor industry revenue growth to be 5%. The foundry revenue growth is 12%. For TSMC, we are confident we can outperform the foundry revenue growth by several percentage points in 2015.”

28 nm demand continues to grow

“on the demand side, the demand continue to grow, which are driven by the strong growth of mid and low end 4G smartphone, as well as the technology migration from some second wave segments such as radio frequency, hard disk drive, fast controller connectivity and digital consumers. Second, on the technology improvement, we continue our effort to enhance 28 nanometer technology by improving the speed performance while reducing the power consumption.”

TSMC silicon content increasing in phones

“the TSMC silicon content in the average phone is actually increasing, which is something that is not recognized by another people, because everybody says that the weight, the gravity is shifting to the middle level, lower level priced phones”

Takes 8 quarters to ramp 20nm

“or 20 nanometer, it will take eight quarters so we believe — so 20 nanometer start to sell in second quarter ’14 and we expect by first quarter ’16, last eight quarters you will be at corporate average level. For 16 we are going to mass produce this product.'”

Some companies build capacity before it’s sold. We don’t

” think I have pointed out many times in the past that some companies, some foundries build capacity on speculation, just like builders build houses or condos on speculation. They haven’t sold them yet. Their speculation is that after they build the apartments or houses, they will be sold, but that doesn’t always happen of course. Now we however are different. We build capacity when we know it’s already sold.”

Three strengths

“As I think we have said many times that we really have three major strengths. One is technology, second is manufacturing, and third is customers’ trust and this has been our model ever since we started the Company almost 30 years ago.’

20 will live longer than you think

“2017 the trends is going to continue. We’re not going to lose the leadership on 16 market share once we recapture that in 2016. It’s going to continue 2017, 2018 and also both 20 and 16 are going to live longer than you might think now. Well 28 for that matter also will live longer than you think.’

Cost per transistor does continue to come down

“The cost of transistor continues to go down, and by scaling mostly is — everybody knows. Nobody, nobody I think refuses that statement. We see the cost of transistor continue going down in a constant rate and in going forward, the cost of transistor going down probably at slightly slower rate. That’s the argument. But it really depends on companies, and some companies simply do not have the technology capabilities.'”