TSMC(TSM) - 2024 Q3 - Quarterly Report

Financial Statements and Audits - Consolidated financial statements for the nine months ended September 30, 2024 and 2023 have been reviewed by independent auditors[2] - The review was conducted in accordance with the Standards on Review Engagements of the Republic of China 2410[3] - No significant issues were identified that would indicate the financial statements do not present fairly the company's financial position and performance[4] - The financial statements are prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34[4] - The engagement partners for the review are Shih Tsung Wu and Shang Chih Lin[6] - The financial statements are presented in thousands of New Taiwan Dollars[10] Cash and Cash Equivalents - Cash and cash equivalents increased to $1,886,780,555 as of September 30, 2024, up from $1,465,427,753 on December 31, 2023, representing a 29% increase[11] - Cash and cash equivalents at the end of the period on September 30, 2024, were $1,886,780,555, a 43.8% increase from $1,311,806,535 on September 30, 2023[27] - Cash and cash equivalents increased to $1,886,780,555 as of September 30, 2024, compared to $1,465,427,753 on December 31, 2023[43] Assets and Liabilities - Total current assets grew to $2,773,913,863 as of September 30, 2024, compared to $2,194,032,910 on December 31, 2023, a 26% increase[11] - Property, plant and equipment remained stable at $3,071,599,327 as of September 30, 2024, slightly down from $3,064,474,984 on December 31, 2023[11] - Total noncurrent assets increased to $3,391,744,313 as of September 30, 2024, up from $3,338,338,305 on December 31, 2023[11] - Total liabilities rose to $2,143,735,885 as of September 30, 2024, compared to $2,049,108,368 on December 31, 2023[11] - Equity attributable to shareholders of the parent increased to $3,990,019,153 as of September 30, 2024, up from $3,458,913,627 on December 31, 2023[11] - Unappropriated earnings grew to $3,346,232,342 as of September 30, 2024, up from $2,846,883,893 on December 31, 2023, a 17.5% increase[11] - Total equity increased to $4,021,922,291 as of September 30, 2024, compared to $3,483,262,847 on December 31, 2023[11] - Total assets used by the company increased to $3,071,599,327 as of September 30, 2024, compared to $3,064,474,984 at the end of 2023[74] - The company's total property, plant, and equipment increased to $7,686,316,414 as of September 30, 2024, from $7,218,545,455 at the start of the year[74] - Accumulated depreciation and impairment for property, plant, and equipment reached $4,614,924,786 as of September 30, 2024[74] - The carrying amount of land and land improvements increased to $12,557,340 as of September 30, 2024, from $7,063,923 at the start of the year[74] - The company's buildings carrying amount rose to $441,530,615 as of September 30, 2024, from $430,809,064 at the start of the year[74] - Machinery and equipment carrying amounts decreased slightly to $1,627,385,995 as of September 30, 2024, from $1,685,977,156 at the start of the year[74] - Total liabilities arising from financing activities as of September 30, 2024, were $1,026,076,753, up from $1,003,982,676 in 2023[137] - Total non-derivative financial liabilities amounted to $1,886,618,951 as of September 30, 2024, with $640,886,544 due in less than one year[155] - Bonds payable totaled $1,176,813,823 as of September 30, 2024, with $74,901,590 due in less than one year and $580,737,650 due in more than five years[155] - Long-term bank loans amounted to $29,967,928 as of September 30, 2024, with $2,968,389 due in less than one year and $3,351,665 due in more than five years[155] - Total non-derivative financial liabilities as of December 31, 2023, amounted to $1,849,122,784, with bonds payable being the largest component at $1,135,842,880[156] - Lease liabilities as of December 31, 2023, totaled $34,847,231, with $21,754,375 due in more than 5 years[156] - Forward exchange contracts outflows as of December 31, 2023, were $64,826,427, with inflows of $65,384,000, resulting in a net outflow of $557,573[156] - Lease liabilities carrying amounts as of September 30, 2024, were $31,108,505, slightly down from $31,492,386 at the end of 2023[82] - Lease liabilities as of September 30, 2024, are projected to be $20,497,138, with $10,174,011 due in 5-10 years[157] Revenue and Profit - Net revenue for the three months ended September 10 was $759.68 million, representing a 100% increase compared to the same period last year[15] - Gross profit for the three months ended September 10 was $479.35 million, with a gross margin of 42%[15] - Operating expenses for the three months ended September 10 were $79.08 million, accounting for 7% of net revenue[15] - Income from operations for the three months ended September 10 was $260.77 million, representing a 47% operating margin[15] - Net income for the three months ended September 10 was $325.08 million, a 43% increase compared to the same period last year[15] - Total comprehensive income for the three months ended September 10 was $201.60 million, a 41% increase compared to the same period last year[15] - Basic earnings per share for the three months ended September 10 was $12.55[15] - Diluted earnings per share for the three months ended September 10 was $12.54[15] - Net revenue for the nine months ended September 30 was $2.03 billion, a 100% increase compared to the same period last year[15] - Net income for the nine months ended September 30 was $797.96 million, a 20% increase compared to the same period last year[15] - Net income for the period ending September 30, 2023, was NT$599,785,521 thousand[17] - Total comprehensive income for the period ending September 30, 2023, was NT$627,873,872 thousand[17] - Net income for the period ending January 1, 2024, was NT$798,587,976 thousand[17] - Total comprehensive income for the period ending January 1, 2024, was NT$831,645,140 thousand[17] - Income before income tax for the nine months ended September 30, 2024, was $957,040,631, compared to $700,890,335 for the same period in 2023, representing a 36.5% increase[23] - Net cash generated by operating activities for the nine months ended September 30, 2024, was $1,205,971,785, a 42.3% increase from $847,138,000 in the same period in 2023[23] - Net revenue for the nine months ended September 30, 2024, reached $2,025,846,521, a significant increase from $1,536,206,985 in the same period in 2023[109] - Wafer revenue for the nine months ended September 30, 2024, was $1,763,258,801, up from $1,342,457,631 in 2023[109] - Revenue from the United States for the nine months ended September 30, 2024, was $1,310,631,705, compared to $969,078,250 in 2023[111] - High Performance Computing revenue for the nine months ended September 30, 2024, was $1,015,474,913, up from $667,707,961 in 2023[111] - 3-nanometer technology revenue for the nine months ended September 30, 2024, was $265,482,929, a substantial increase from $29,478,462 in 2023[111] - 5-nanometer technology revenue for the nine months ended September 30, 2024, was $605,528,724, compared to $440,305,826 in 2023[111] - 7-nanometer technology revenue for the nine months ended September 30, 2024, was $311,614,860, up from $264,328,384 in 2023[111] - Smartphone revenue for the nine months ended September 30, 2024, was $705,071,120, compared to $545,740,324 in 2023[111] - Automotive revenue for the nine months ended September 30, 2024, was $101,556,018, slightly down from $101,636,345 in 2023[111] - Net income available to common shareholders for the nine months ended September 30, 2024, was $798,587,976, up from $599,785,521 in the same period of 2023[120] - Basic EPS for the nine months ended September 30, 2024, was $30.80, compared to $23.13 in the same period of 2023[120] - Net revenue from associates for the three months ended September 30, 2024, was $3,729,245, and for the nine months ended September 30, 2024, it was $11,394,850[179] - Purchases from associates for the three months ended September 30, 2024, were $1,282,865, and for the nine months ended September 30, 2024, they were $3,545,858[180] Cash Flow and Dividends - Cash dividends to shareholders for the period ending September 30, 2023, amounted to NT$226,900,972 thousand[17] - Cash dividends to shareholders for the period ending January 1, 2024, amounted to NT$298,218,286 thousand[17] - Cash dividends paid for the nine months ended September 30, 2024, were $259,320,708, a 21.2% increase from $213,925,639 in the same period in 2023[26] - Net increase in cash and cash equivalents for the nine months ended September 30, 2024, was $421,352,802, compared to a net decrease of $31,007,548 in the same period in 2023[27] - TSMC's cash dividends per share for Q3 2024 were NT$4.50, compared to NT$4.00 in Q2 2024 and Q1 2024[101] - TSMC's cash dividends to shareholders for Q3 2024 were $116,697,300, compared to $103,721,521 in Q2 2024 and $103,734,517 in Q1 2024[101] - Special capital reserve for Q3 2024 was -$28,020,822, compared to -$17,228,363 in Q3 2023 and $17,166,163 in Q4 2022[101] - Foreign currency translation reserve showed a loss of $25,316,769 for the nine months ended September 30, 2024[101] - Unrealized gain (loss) on financial assets at FVTOCI for equity instruments was $4,604,652 for the nine months ended September 30, 2024[101] - Cumulative unrealized gain (loss) of equity instruments transferred to retained earnings due to disposal was $4,888,979 for the nine months ended September 30, 2024[101] Investments and Financial Instruments - Financial assets at fair value through profit or loss totaled $15,566,035 as of September 30, 2024, up from $14,342,093 on December 31, 2023[44] - TSMC's subsidiaries, including TSMC North America, TSMC Europe, and TSMC Japan, maintain 100% ownership as of September 30, 2024[37] - VisEra Technologies Company Ltd. ownership decreased slightly from 68% to 67% as of September 30, 2024[37] - Japan Advanced Semiconductor Manufacturing, Inc. (JASM) ownership increased from 71% to 73% as of September 30, 2024[37] - TSMC's financial liabilities include forward exchange contracts, with current liabilities at $971,386 as of September 30, 2024[44] - The initial application of IFRS Accounting Standards amendments did not materially impact TSMC's accounting policies[30] - IFRS 18, effective January 1, 2027, will require reclassification of income and expenses into operating, investing, financing, income taxes, and discontinued operations categories[31] - Outstanding forward exchange contracts as of September 30, 2024 include NT$5,984,214 thousand and US$2,608,500 thousand, with maturities from October 2024 to December 2024[47] - Investments in debt instruments at FVTOCI as of September 30, 2024 total $197,152,287, with corporate bonds accounting for $106,675,983[47] - Equity investments designated at FVTOCI were divested for NT$3,486,190 thousand in the nine months ended September 30, 2024[48] - Cumulative loss allowance for expected credit loss on debt instruments at FVTOCI recognized as NT$61,721 thousand as of September 30, 2024[48] - Financial assets at amortized cost as of September 30, 2024 total $164,464,159, with corporate bonds accounting for $137,366,565[49] - Interest rate futures contracts used for fair value hedging as of September 30, 2024 have a contract amount of US$48,300 thousand[53] - Forward exchange contracts used for cash flow hedging as of September 30, 2024 show a change in value of $5,042 for ineffectiveness calculation[58] - Bank loans denominated in foreign currency designated as hedges of net investments in foreign operations total $27,290,400 as of December 31, 2023[51] - Financial assets at FVTOCI as of September 30, 2024 include $14,354,908 in equity instruments, with $7,502,973 in non-publicly traded equity investments[47] - The hedge ratio for interest rate futures contracts is adjusted in response to financial market changes and capped at 100%[52] - Bank loans hedging instruments contract amount is JPY 124,500,000 with an annual interest rate of 0% and matures by April 2024, with a balance in other equity of $618,180[61] - The change in value used for calculating hedge ineffectiveness for bank loans was $793,830 for the nine months ended September 30, 2024, compared to $1,029,030 for the same period in 2023[62] - The change in value used for calculating hedge ineffectiveness resulted in a loss of $5,042 for the nine months ended September 30, 2024, compared to a loss of $39,898 for the same period in 2023[63] - Notes and accounts receivable, net, increased to $249,570,573 as of September 30, 2024, from $201,313,914 as of December 31, 2023[65] - The loss allowance for accounts receivable decreased to $496,026 as of September 30, 2024, from $531,554 as of December 31, 2023[67] - Inventories increased to $292,883,930 as of September 30, 2024, from $250,997,088 as of December 31, 2023[69] - Net inventory losses (reversal of write-down of inventories) were $137,620 for the three months ended September 30, 2024, compared to a reversal of $1,090,783 for the same period in 2023[70] - The carrying amount of investments accounted for using the equity method in Vanguard International Semiconductor Corporation (VIS) was $13,105,023 as of September 30, 2024[71] - The carrying amount of investments accounted for using the equity method in Systems on Silicon Manufacturing Company Pte Ltd. (SSMC) was $10,713,507 as of September 30, 2024[71] - The carrying amount of investments accounted for using the equity method in Xintec Inc. (Xintec) was $4,028,681 as of September 30, 2024[71] - Total financial assets grew to $2,601,831,244 as of September 30, 2024, up from $2,023,905,526 in December 2023 and $1,897,225,822 in September 2023[138] - Financial assets at FVTPL increased to $15,566,035 as of September 30, 2024, compared to $14,342,093 in December 2023 and $490,163 in September 2023[138] - Total financial assets measured at fair value on a recurring basis as of December 31, 2023, were $203,123,752, with Level 2 assets contributing $168,054,016[161] - Corporate bonds held as financial assets at FVTOCI