TSMC's Q1 2023 Financial Report: Advanced Technologies and Stringent Cost Controls Drive Impressive Performance Despite Decrease in Revenue

TSMC explained that the decrease in revenue was due to weakening macroeconomic conditions, continued end-market demand softness, and customers' inventory adjustment. In terms of technology, 5nm process technology contributed 31% of total wafer revenue in Q1, while 7nm accounted for 20%. Advanced technologies (7nm and below) accounted for 51% of total wafer revenue. By platform, HPC and Smartphone represented 44% and 34% of net revenue respectively, while IoT, Automotive, DCE, and Others each represented 9%, 7%, 2%, and 4%.

Sequentially, revenue from HPC, Smartphone, IoT, DCE, and Others decreased 14%, 27%, 19%, 5%, and 18% respectively, while Automotive increased 5%. Despite the decrease in revenue, TSMC's gross margin was still impressive at 56.3%, 5.9 percentage points lower than the previous quarter and 0.7 percentage points higher than the same quarter last year. This mainly reflected lower capacity utilisation and a less favourable foreign exchange rate, partially offset by more stringent cost controls.

During the first quarter, TSMC generated NT$385.24 billion from operating activities, including NT$244.28 billion from income before tax, NT$110.32 billion from depreciation & amortization expenses, and NT$30.64 billion from other operating sources. The decrease of other operating sources compared to the previous quarter was mainly attributable to changes in working capital.

TSMC is optimistic about the future, as it expects the demand for chips to recover in the second half of 2023. The company plans to increase its capital expenditure this year to meet the growing demand for advanced technologies. TSMC is also investing in research and development to stay ahead of its competitors in the industry.

In conclusion, despite the decrease in revenue, TSMC's financial performance in the first quarter of 2023 was still impressive, thanks to its advanced technologies and stringent cost controls. The company remains optimistic about the future and is committed to maintaining its leadership position in the contract chipmaking industry.