Taiwan Semiconductor 2Q17 Earnings Call Notes

Mark Liu – Co-CEO, President and Additional Director

AI is getting everywhere

“AI is indeed getting to smartphone. That’s for sure. And that is — actually, AI is going to every segments in our growth sectors. AI is getting to mobile. AI is getting to high-performance computing like deep learning. AI will go into automotive, which is ADAS and so forth. And AI will go to simple IoT, MCU also. So this AI is a general application driver of momentum — put this way, one of the driver — driving momentum, and it is ubiquitous.”

C. C. Wei – Co-CEO, President and Additional Director

Lora Ho

Increasing customer concentration but that’s not all a bad thing

Our top 10 customers account for 64% in 2015. And that number went up to 69%, as you can see from our annual report. This is mainly because there are consolidations among customer base. For this year, we expect the concentration will come down a little bit. But I want to say that people may feel customer concentration is not a good thing. But we feel the other way. It’s not really a bad thing, because when you have a bigger customer, that means the dependency for them to TSMC as the customer and for us to then as the supplier needs to be stronger, the relationship collaboration needs to be stronger, which is in favor of a foundry business model. So we view that as a positive thing.

Analyst Comment:

Increasing semiconductor content in phones

“Google has talked about their next oval leaves, there’s going to be accelerators coming out later this year. I think we hear about Apple Neural Engine. There’s a significant shift happening which would suggest smartphone content is going to rise for — semiconductor content is going to rise in smartphones because of AI. And I don’t know whether you see this accelerating the smartphone growth rates that you see over the next couple of years.”