Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) Q3 2023 Results Conference Call October 19, 2023 2:00 AM ET
Company Participants
Jeff Su - Director, IR
Wendell Huang - VP & CFO
Dr. C. C. Wei - Vice Chairman & CEO
Conference Call Participants
Gokul Hariharan - JP Morgan
Charlie Chan - Morgan Stanley
Bruce Lu - Goldman Sachs
Laura Chen - Citi
Brett Simpson - Arete
Brad Lin - Bank of America
Sunny Lin - UBS
Mehdi Hosseini - FIG
Krish Sankar - TD Cowen
Charles Shi - Needham
Jeff Su
This is Jeff Su, TSMC's Director of Investor Relations and your host for today. TSMC is hosting our earnings conference call via live audio webcast through the Company's website at www.tsmc.com, where you can also download the earnings release materials. If you are joining us through the conference call, your dial-in lines are in listen-only mode.
The format for today's event will be as follows. First, TSMC's Vice President and CFO, Mr. Wendell Huang, will summarize our operations in the third quarter 2023, followed by our guidance for the fourth quarter 2023. Afterwards, Mr. Huang and TSMC CEO, Dr. C. C. Wei, will jointly provide the Company's key messages. Then, we will open the line for the Q&A.
As usual, I would like to remind everybody that today's discussions may contain forward-looking statements that are subject to significant risks and uncertainties, which could cause actual results to differ materially from those contained in the forward-looking statements. Please refer to the safe harbor notice that appears in our press release.
And now, I would like to turn the call over to TSMC's CFO, Mr. Wendell Huang, for the summary of operations and the current quarter guidance.
Wendell Huang
Thank you, Jeff. Good afternoon, everyone. Thank you for joining us today. My presentation will start with financial highlights for the third quarter 2023. After that, I will provide the guidance for the fourth quarter 2023.
Third quarter revenue increased 13.7% sequentially in NT dollars or 10.2% in U.S. dollars as our third quarter business was supported by the strong ramp of our industry-leading 3-nanometer technology and higher demand for 5-nanometer technologies, partially offset customers' ongoing inventory adjustment. Gross margin increased 0.2 percentage points sequentially to 54.3%, mainly reflecting higher capacity utilization, partially offset by the margin dilution from N3 ramp.
Total operating expenses accounted for 12.6% of net revenue as compared to 12.1% in the second quarter mainly due to higher R&D expenses to support our 3-nanometer and 2-nanometer development. Operating margin was 41.7%, down 0.3 percentage point from the previous quarter. Overall, our third quarter EPS was TWD8.14 and ROE was 25.8%.