1/ The Basics
The first "pure-play" foundry -> enabled the rise of the "fabless" (i.e. design-only) industry
A foundry ("Fab") manufactures microchips (integrated circuits "IC") for customers such as fabless chip companies.
Fab only = sole focus on better process technologies
2/ First Mover
The leader in chip mfg. is the fab that can get to the next “process node” first
Process Node (“Tech”): Used to indicate feature size of transistor - > now marketing tool for chip generation
As
@GavinSBaker wrote in Jan '19, TSMC passed INTC at the 7nm node
3/ Market Overview
All electronics = powered by semis
3 Types of Companies:
1. Integrated Device Mfgs. (“IDM”): $INTC, KOSE: A005930, $TXN, $MU
2. Fabless: $NVDA, $AMD, $QCOM, $AVGO
3. Fabs: $TSM, $UMC, $SMICY, GF
Market Size: Semis power all electronics…
4/ Technology Advantage
Tech dominance while other foundries can’t keep up (GF dropped out at 7nm)
Tech advantage -> customer additions ($AMD from GF)
1) 5nm already in production
2) Specialty tech (5G)
3) Advanced Packaging
TSM: 52% market share
Manu leader + Ecosystem
5/ Technology Platforms
Automotive Electronics: IP ecosystem & RF tech driven by autonomous & EV
High Performance Computing: Cloud datacenters and communication infrastructures
IoT: Fueled by wearables, smart homes / cities / industries
Smartphone: Mobile proliferation
6/ Q4 2020 Financial Results
Accelerating Rev growth YoY: 16%, 22%, 24.2%
Expanding EBIT %: 35%, 37.7%, 40%, 41.3%
2x FCF YoY
Accelerating EPS Growth YoY: 24.2%, 43.5%, 49.2%
ROA: 10.7%, 12.1%, 13.1%, 14%
ROE: 20.9%, 23.4%, 27.8%, 29.1%
7/ Capital Expenditures
2021 Guidance: $25B-$28B vs. $17B in 2020 (47% - 65% YoY Increase)
LT Capital Intensity: mid-30%
Accelerates CapEx spend to prep for higher growth
2021 Capital Intensity est.: ~48.5%
On conf. call: to support expected higher Revenue CAGR next 5 years
8/ Revenue Composition
5nm shipments accelerated in Q4 – now 20% of Rev
Advanced Tech (< 16nm tech) = 62% vs. 56% Q4 2019
Smartphone continues to dominate
Main HPB growth areas: CPU, networking & AI accelerator
- Could CPU growth be from $INTC?
HPC - main growth driver
9/ Next Step: N3
2021 Rev Driver = HPC & Auto
HPC: “We see a stronger innovation is coming our way on N3 as well as on N5.”
N3: Volume production 2H 2022
N3: 70% logic density gain, up to 15% performance gain & up to 30% power reduction vs. N5 (175MM transistors / mm^2)
10/ Future R&D Leadership
3nm logic tech platform & apps (2021): 6th gen 3D platform
Beyond 3nm by 2023 – 2nm in pipeline
Projects: Beyond-2nm node, 3D transistors, new memory, etc.
Focus: novel materials, processes, devices, nanowires & memories (+8-10 yrs away)
11/ Conclusion
$TSM is fueling the world of ubiquitous computing and interconnected devices
Has overtaken $INTC in mfg. leadership -> economic benefits
Positioned to benefit and capitalize on hyper-growth trends: AI / autonomous driving, 5G, IoT
13/ Bonus Feature
@SahilBloom posted an amazing thread (as always) on TSMC's founder, Morris Chang. It is a great supplement to this thread!
https://t.co/UKngzlUo5m
