TSM | Taiwan Semiconductor Q3'24 Earnings Highlights

🔹 Revenue: $23.5B (Est. $23.3B) 🟢; UP +36% YoY
🔹 Gross Margin: 57.8% (Est. 55%) 🟢; UP from 54.3% YoY
🔹 Oper. Margin: 47.5% (Est. 44%) 🟢
🔹 Net Profit: NT$325.26B ($10.06B); All-time high
Q4'24 Guidance:
🔹 Revenue: $26.1B - $26.9B (Est. $24.94B) 🟢
🔹 Gross Margin: 57% - 59% (Est. 54.7%) 🟢
🔹 Operating Margin: 46.5% - 48.5% (Est. 44.3%) 🟢
FY'24 Outlook:
🔹 Revenue Growth: Close to 30% (up from mid-20%)
🔹 2024 CapEx: Slightly above $30B (Saw: 30-32B)
🔹 AI Processor Revenue: Expected to triple and reach mid-teens percentage of total revenue
Segment:
🔹 Wafer Shipments: 3.338M units; UP +15% YoY
🔹 ASP per Wafer: $6,131; UP +18% YoY
🔹 Advanced Technologies (7nm and below): 69% of wafer revenue
🔸3nm: 20% of revenue (vs. 15% in Q2)
🔸5nm: 32% of revenue (vs. 35% in Q2)
🔸7nm (N7): 17% of revenue (unchanged from Q2)
Product Revenue:
🔹 High-Performance Computing (HPC): 51% of total revenue
🔹 Smartphone: 34% of total revenue
🔹 HPC + Smartphone Combined: 85% of total revenue
🔹 IOT: 7%
🔹 Automotive: 5%
🔹 DCE: 1%
🔹 Others: 2%
Revenue by Geography:
🔸North America: 71% of Total
🔸China: 11%
🔸Asia Pacific: 10%
🔸Japan: 5%
🔸EMEA: 3%
Operational Highlights:
🔹 N3 (3nm) Technology: 20% of total wafer revenue, outperforming N5 ramp by 30%
🔹 Utilization Rates: Picking up due to strong AI-related demand
🔹 CapEx: $6.4B in Q3; 2025 CapEx to exceed 2024
Expansion Plans:
🔹 Arizona Fabs: Volume production to start in 2025
🔹 Japan Fabs: First fab to start production this quarter, second fab operational by 2027
🔹 Europe Fab: Production expected by 2027
CEO C.C. Wei Commentary:
🔸"The demand is real, and I believe it's just the "beginning." One of my key customers said the demand right now is 'insane'."
🔸"We continue to observe extremely robust AI-related demand from our customers throughout H1 2024, leading to increasing overall capacity utilization rate for our leading-edge three-nanometer and five-nanometer process technologies."
🔸On Margins and Pricing:  "We are in a capital-intensive business, so we need a very high gross margin to survive and to have sustainable and healthy growth—that's why we set up our pricing strategy."
🔸 On Future Growth: "Next year will be healthy, and 2025 CapEx will be higher than 2024...."We expect growth to be very healthy in the next five years."
🔸On AI Revenue Growth: Implies upside potential from AI growth for its long-term CAGR of 15%, but no specific number provided
Additional Insights:
🔸 Intel, $INTC remains a good customer, with sizeable business contributions
🔹 CoWoS (Chip-on-Wafer-on-Substrate): Demand exceeds supply; capacity to double by 2025
🔹 Advanced Packaging: Expected to grow faster than average revenue
🔹 Non-Wafer Revenue: Exceeds 10% of total revenue
Headwinds Impacting Gross Margin:
🔹 Overseas Fabs: 2-3% dilution annually as they come online
🔹 N3 Ramp-Up: 3-4% dilution
🔹 N5 to N3 Conversion Costs: 1-2% dilution
🔹 Inflationary Costs: Approximately 1%
🔹 Exchange Rate Impact: 0.4%
🔹 Electricity Costs: Expected to impact gross margin by at least 1% in 2025 $Taiwan Semiconductor (TSM.US)$