TSMC reported impressive results for the third quarter! Their revenue hit NT$759.7 billion, which is the highest ever and shows a 39% increase compared to last year. Their net profit jumped to NT$325.3 billion, raising earnings per share to NT$12.54, a 54.2% increase. The gross margin was an excellent 57.8%, higher than the expected range of 53.5%-55.5%, and the operating margin reached 47.5%, exceeding the guidance of 42.5%-44.5%.
Taiwan Semiconductor Q3 2024 Earnings Summary
Revenue: $23.5 billion (estimated $23.3 billion); up 36% from last year
Gross Margin: 57.8% (estimated 55%); up from 54.3% last year
Operating Margin: 47.5% (estimated 44%)
Net Profit: NT$325.26 billion ($10.06 billion); the highest ever
Q4 2024 Guidance:
Revenue: Expected between $26.1 billion and $26.9 billion (estimated $24.94 billion)
Gross Margin: Expected between 57% and 59% (estimated 54.7%)
Operating Margin: Expected between 46.5% and 48.5% (estimated 44.3%)
Full Year 2024 Outlook:
Revenue Growth: Close to 30% (up from mid-20%)
Capital Expenditure: Slightly over $30 billion (estimated $30-32 billion)
AI Processor Revenue: Expected to triple, making up a mid-teens percentage of total revenue
Segments:
Wafer Shipments: 3.338 million units; up 15% from last year
Average Selling Price per Wafer: $6,131; up 18% from last year
Advanced Technologies (7nm and smaller): 69% of wafer revenue
3nm: 20% of revenue (up from 15% in Q2)
5nm: 32% of revenue (down from 35% in Q2)
7nm: 17% of revenue (unchanged from Q2)
Product Revenue:
High-Performance Computing: 51% of total revenue
Smartphones: 34% of total revenue
Combined (HPC + Smartphones): 85% of total revenue
IOT: 7%
Automotive: 5%
Data Center: 1%
Others: 2%
Revenue by Region:
North America: 71%
China: 11%
Asia Pacific: 10%
Japan: 5%
EMEA: 3%
Operational Highlights:
3nm Technology: 20% of total wafer revenue, performing better than the previous 5nm ramp-up by 30%
Utilization Rates: Increasing due to strong demand for AI
Capital Expenditure: $6.4 billion in Q3; 2025 capital spending expected to be higher than 2024
Expansion Plans:
Arizona Factories: Production expected to start in 2025
Japan Factories: First factory will start production this quarter; second will be operational by 2027
Europe Factory: Production expected by 2027
CEO C.C. Wei’s Comments:
The demand for semiconductors is very high and is just beginning.
They are seeing strong AI-related demand, which is increasing capacity utilization for their 3nm and 5nm technologies.
High gross margins are crucial for sustainable growth in their capital-intensive business.
They expect healthy growth next year and higher spending in 2025.
AI revenue growth is likely to boost long-term growth, but no specific numbers were provided.
Additional Insights:
Intel remains an important customer with significant contributions.
Demand for advanced packaging (CoWoS) is greater than supply, with plans to double capacity by 2025.
Non-wafer revenue now makes up over 10% of total revenue.
Challenges Affecting Gross Margin:
New overseas factories may reduce margins by 2-3% each year.
The ramp-up of 3nm technology could cause a 3-4% reduction.
Converting from 5nm to 3nm will reduce margins by 1-2%.
Inflation, exchange rate changes, and rising electricity costs are also expected to impact gross margins in the coming years.
