Business context and reporting period
TSMC’s Form 20-F is an annual report for the fiscal year ended December 31, 2021, filed April 14, 2022. Although the request references 2021 Q4, the supplied filing reports full-year results; it does not provide a clear standalone Q4 financial summary. TSMC is a dedicated semiconductor foundry, reporting under IFRS as issued by the IASB. Its principal revenue source is wafer fabrication.
Financial performance and position
| Metric | FY2021 | Comparison / context |
|---|---|---|
| Net revenue | NT$1,587.4 billion (US$57.2 billion) | Up 18.5% from FY2020 |
| Gross profit / margin | NT$819.5 billion / 51.6% | Gross profit up 15.2%; margin down from 53.1% |
| Operating income / margin | NT$650.0 billion / 40.9% | Operating income up 14.7%; margin down from 42.3% |
| Net income attributable to parent shareholders | NT$592.4 billion (US$21.4 billion) | Up 16.0%; net margin 37.3%, versus 38.1% |
| Basic and diluted EPS | NT$22.84 per common share; US$4.12 per equivalent ADS | FY2020 common-share EPS was NT$19.70 |
| Operating cash flow | NT$1,112.2 billion (US$40.1 billion) | Up from NT$822.7 billion |
| Capital expenditures | NT$839.2 billion (US$30.3 billion) | Up from NT$507.2 billion; primarily capacity and technology investment |
| Cash and current marketable securities | NT$1,188.5 billion | Up from NT$791.5 billion at year-end 2020 |
| Debt | Short-term loans NT$114.9 billion; aggregate long-term debt NT$617.9 billion | Long-term debt includes NT$4.6 billion current portion; most long-term debt carries fixed rates |
Revenue growth reflected higher wafer shipments and average selling prices, with a greater contribution from advanced nodes, partly offset by NT-dollar appreciation. Wafer shipments rose to 14.2 million 12-inch-equivalent wafers from 12.4 million. Advanced technologies of 7-nanometer and below accounted for 50% of wafer revenue, up from 41%; 5-nanometer alone rose to 19% from 8%.
Material changes and business mix
- High-performance computing revenue increased 34% to NT$587.8 billion and represented 37% of revenue, up from 33% in 2020. Smartphone revenue rose 8% to NT$695.1 billion but declined to 44% of revenue from 48%.
- Automotive revenue grew 51% to NT$67.1 billion; IoT revenue increased 21% to NT$133.0 billion.
- North America accounted for 65% of revenue, compared with 62% in 2020. China revenue fell 30% to NT$164.6 billion, or 10% of total revenue.
- Gross margin declined 1.5 percentage points, primarily due to NT-dollar appreciation and dilution from 5-nanometer products, partly offset by cost improvements. Operating margin fell 1.4 points.
- Research and development spending rose 13.9% to NT$124.7 billion. General and administrative expense increased 29.8%, with management citing vaccine donations and overseas-fab start-up costs.
Liquidity, outlook, risks and unusual items
- Net cash from investing activities was NT$836.4 billion, mainly reflecting capital expenditures. Financing activities generated NT$136.6 billion, principally from bond issuance and higher short-term borrowing, partly offset by dividends. The filing states available operating cash flow, cash, marketable securities and capital-market access should cover operating needs, capex, debt repayments and dividends for the next 12 months.
- Management expected 2022 capital expenditures of US$40–44 billion, subject to market conditions, focused mainly on 5-nanometer and 3-nanometer capacity, specialty technologies, advanced packaging, facilities in Taiwan and Arizona, and R&D. TSMC expected 3-nanometer volume production in the second half of 2022. These are forward-looking expectations, not guarantees.
- Management cited 5G, high-performance computing and accelerated digitalization as drivers of multi-year growth. No specific 2022 revenue or earnings guidance is provided in the supplied text.
- Major risks include semiconductor cyclicality and fixed-cost exposure; customer concentration (the ten largest customers represented 71% of 2021 revenue and the largest 26%); geopolitical tensions and export controls; foreign-exchange exposure; limited availability of manufacturing equipment and materials; and execution, cost and timing risks in large capacity expansions.
- TSMC said COVID-19 had not materially affected current operations as of the report date, but warned that supply-chain, staffing and demand effects could emerge. It also cited Taiwan power and water availability, natural disasters, cyberattacks, environmental regulation and potential carbon costs as risks.
- Unusual items included a NT$274 million impairment loss on machinery with no future use and a NT$13.7 billion net foreign-exchange gain, versus a NT$3.3 billion loss in 2020. No material litigation or material off-balance-sheet arrangements were reported. The auditor gave an unqualified opinion on the IFRS financial statements and internal controls.
Important facts for investors to verify
- Use the full-year 20-F figures for FY2021; this filing does not clearly state standalone Q4 results.
- Track whether planned US$40–44 billion 2022 capex converts into timely capacity, production and returns, and whether 3-nanometer production milestones are achieved.
- Assess the sustainability of margins given currency movements, new-node ramp costs, utilization and rising depreciation.
- Monitor customer concentration, China-related export restrictions, and the geographic diversification of manufacturing and revenue.
- Review debt and cash needs alongside the large capital-purchase commitments; the filing reports NT$1.28 trillion of capital or other purchase obligations, mostly due within one year.