TSMC(TSM) - 2025 Q1 - Quarterly Report

Independent Auditors' Review Report This section presents the independent auditors' review report, concluding on the fair presentation of the consolidated financial statements Auditors' Conclusion The independent auditors, Deloitte & Touche, have reviewed the consolidated financial statements for the three months ended March 31, 2025, and 2024, concluding they are fairly presented in all material respects - The auditors conducted a review, which is substantially less in scope than an audit, and did not express an audit opinion[3] - The auditors' conclusion states that nothing has come to their attention that would cause them to believe the financial statements do not present fairly the company's financial position, performance, and cash flows[4] Consolidated Financial Statements This section presents the company's consolidated balance sheets, statements of comprehensive income, changes in equity, and cash flows for the reported periods Consolidated Balance Sheets As of March 31, 2025, total assets increased to NT$7.13 trillion from NT$5.79 trillion year-over-year, driven by cash and PP&E, while total equity significantly grew to NT$4.60 trillion Key Balance Sheet Items (In Thousands of New Taiwan Dollars) | Account | March 31, 2025 | March 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $ 3,345,663,882 | $ 2,452,767,394 | | Total Noncurrent Assets | $ 3,787,623,538 | $ 3,335,123,688 | | Total Assets | $ 7,133,287,420 | $ 5,787,891,082 | | Total Current Liabilities | $ 1,399,802,998 | $ 1,026,180,079 | | Total Noncurrent Liabilities | $ 1,131,859,965 | $ 1,095,994,749 | | Total Liabilities | $ 2,531,662,963 | $ 2,122,174,828 | | Total Equity | $ 4,601,624,457 | $ 3,665,716,254 | Consolidated Statements of Comprehensive Income For Q1 2025, net revenue increased by 41.6% to NT$839.3 billion, gross margin improved to 59%, and net income attributable to shareholders surged by 60.4% to NT$361.6 billion, with basic EPS at NT$13.95 Key Income Statement Items (In Thousands of New Taiwan Dollars) | Account | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net Revenue | $ 839,253,664 | $ 592,644,201 | | Gross Profit | $ 493,395,076 | $ 314,505,269 | | Income from Operations | $ 407,080,808 | $ 249,018,306 | | Net Income | $ 360,732,661 | $ 225,221,263 | | Net Income (Parent) | $ 361,564,128 | $ 225,484,877 | Earnings Per Share (NT$) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Basic EPS | $ 13.95 | $ 8.70 | | Diluted EPS | $ 13.94 | $ 8.70 | Consolidated Statements of Changes in Equity Total equity increased to NT$4.60 trillion by March 31, 2025, primarily due to NT$361.6 billion in net income and NT$30.2 billion in other comprehensive income, partially offset by NT$116.7 billion in cash dividends - For the three months ended March 31, 2025, the key changes in equity attributable to shareholders of the parent were: Net income: +NT$361.6 billion, Cash dividends: -NT$116.7 billion, Other comprehensive income: +NT$30.2 billion[15] Consolidated Statements of Cash Flows In Q1 2025, net cash from operating activities significantly increased to NT$625.6 billion, while investing activities used NT$290.2 billion and financing activities used NT$84.7 billion, resulting in a NT$267.2 billion net increase in cash Summary of Cash Flows (In Thousands of New Taiwan Dollars) | Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $ 625,573,672 | $ 436,311,108 | | Net Cash used in Investing Activities | $ (290,192,426) | $ (159,806,991) | | Net Cash used in Financing Activities | $ (84,665,592) | $ (71,685,617) | | Net Increase in Cash | $ 267,177,207 | $ 232,767,951 | Notes to Consolidated Financial Statements This section provides detailed notes to the consolidated financial statements, covering accounting policies, financial assets, liabilities, equity, revenue, expenses, risk management, and other disclosures Note 1-5. General Information and Accounting Policies These notes cover general company information, authorization of financial statements, application of new IFRS standards, a summary of material accounting policies, and key sources of estimation uncertainty - TSMC is a dedicated semiconductor foundry incorporated in 1987, with shares listed on the TWSE and NYSE (as ADSs)[22][23] - The initial application of new and amended IFRS Accounting Standards did not have a material impact on the company's accounting policies[25] - The consolidated financial statements have been prepared in conformity with IAS 34, "Interim Financial Reporting," as endorsed by the FSC of the R.O.C[30] Note 6-13. Financial Assets and Investments This section details the composition of various financial assets, with cash and cash equivalents at NT$2.4 trillion and investments in associates like VIS and SSMC at NT$38.8 billion as of March 31, 2025 Cash and Cash Equivalents (In Thousands of NT$) | Category | March 31, 2025 | March 31, 2024 | | :--- | :--- | :--- | | Cash and deposits in banks | 2,373,616,720 | 1,691,973,216 | | Money market funds | 17,984,089 | 2,979,055 | | Total | 2,394,804,250 | 1,698,195,704 | Inventories (In Thousands of NT$) | Category | March 31, 2025 | March 31, 2024 | | :--- | :--- | :--- | | Work in process | 187,068,666 | 168,204,862 | | Raw materials | 46,880,887 | 39,860,657 | | Finished goods | 34,263,618 | 36,548,899 | | Total | 293,387,615 | 267,123,339 | - The company's main investments accounted for using the equity method include Vanguard International Semiconductor (VIS), Systems on Silicon Manufacturing Company (SSMC), Xintec Inc., and Global Unichip Corporation (GUC)[68][69] Note 14-18. Non-Financial Assets and Liabilities This section covers property, plant, and equipment (PP&E) which increased to NT$3.4 trillion, total bonds payable at NT$948.3 billion, and an NT$1.3 billion impairment loss on machinery due to an earthquake in Q1 2025 - The carrying amount of Property, Plant and Equipment increased from NT$3.05 trillion on March 31, 2024, to NT$3.40 trillion on March 31, 2025[72] - An impairment loss of NT$1.3 billion was recognized in Q1 2025 on machinery and equipment due to earthquake damage[74][75] Bonds Payable (In Thousands of NT$) | Category | March 31, 2025 | March 31, 2024 | | :--- | :--- | :--- | | Domestic unsecured bonds | 495,610,000 | 472,494,000 | | Overseas unsecured bonds | 514,677,500 | 495,953,500 | | Total (Net of discounts & current portion) | 948,256,974 | 955,540,142 | Note 19. Equity Details on equity components are provided, with the dividend policy prioritizing cash dividends, and the Board approving a NT$5.00 per share cash dividend for Q1 2025 - The company's dividend policy prioritizes cash dividends, with stock dividends not to exceed 50% of the total distribution[91] Quarterly Cash Dividends Per Share (NT$) | Quarter | Resolution Date | Dividend Per Share | | :--- | :--- | :--- | | Q1 2025 | May 13, 2025 | $5.00 | | Q4 2024 | Feb 12, 2025 | $4.50 | | Q3 2024 | Nov 12, 2024 | $4.50 | | Q2 2024 | Aug 13, 2024 | $4.00 | | Q1 2024 | May 10, 2024 | $4.00 | - In Q2 2024, the company completed a share buyback program of 3,249 thousand shares, which were subsequently cancelled[98] Note 20. Net Revenue Revenue is disaggregated by product, geography, platform, and technology node, with High Performance Computing as the largest platform and advanced technologies contributing significantly to wafer revenue Revenue by Platform (In Thousands of NT$) | Platform | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | High Performance Computing | 493,223,146 | 274,772,974 | | Smartphone | 233,611,388 | 225,032,139 | | Internet of Things | 38,723,190 | 35,320,950 | | Automotive | 43,028,245 | 32,136,633 | Wafer Revenue by Technology (In Thousands of NT$) | Technology | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | 3-nanometer | 160,180,187 | 45,448,960 | | 5-nanometer | 254,408,255 | 190,695,754 | | 7-nanometer | 108,196,547 | 100,389,587 | Revenue by Geography (In Thousands of NT$) | Geography | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | United States | 632,438,786 | 396,182,105 | | Taiwan | 66,493,510 | 68,315,426 | | China | 62,222,351 | 55,235,649 | Note 21-27. Income, Expenses, and EPS This section details income statement components, including NT$24.9 billion in interest income, NT$70.2 billion in income tax expense, and NT$13.95 basic EPS for Q1 2025 Earnings Per Share Calculation (Q1 2025) | Item | Amount (NT$) | | :--- | :--- | | Net income available to common shareholders | 361,564,128 thousand | | Weighted average common shares (thousands) | 25,926,789 | | Basic EPS | 13.95 | | Weighted average diluted shares (thousands) | 25,928,799 | | Diluted EPS | 13.94 | - Total employee benefits expense for Q1 2025 was NT$88.3 billion, up from NT$63.5 billion in Q1 2024[116] Note 28-30. Financial Instruments and Risk Management The company received NT$35.1 billion in government grants and manages financial risks including foreign currency, interest rate, and credit risk, with 84% of accounts receivable concentrated among its ten largest customers - In Q1 2025, the company received NT$35.1 billion in government grants for plant setups in the United States, Germany, Japan, and China[120] - The company manages market risks including foreign currency, interest rate, and equity price risk, where a hypothetical 10% adverse foreign currency exchange rate change would have decreased Q1 2025 net income by NT$889.4 million[129][131] - As of March 31, 2025, the company's ten largest customers accounted for 84% of its accounts receivable, indicating a concentration of credit risk[141] Note 31-37. Other Disclosures This section covers related party transactions, pledged assets, contingent liabilities, disaster losses, and segment information, including a NT$5.3 billion net loss from earthquakes and a patent infringement lawsuit - In Q1 2025, the company recognized approximately NT$5.3 billion in losses, net of insurance claims, from earthquakes that struck Taiwan in January 2025[172] - In February 2025, Longitude Licensing Ltd. and Marlin Semiconductor Limited filed complaints alleging infringement of five U.S. patents, with the outcome currently undetermined[171] - The company operates as a single operating segment, the foundry segment, which engages in the manufacturing, sales, packaging, and testing of integrated circuits[180] Additional Disclosures This section provides supplementary disclosures, including detailed tables on financings, guarantees, related party transactions, and investments in mainland China Additional Disclosures Tables This section provides detailed tables on financings provided, endorsements and guarantees, significant related party transactions, and investments in mainland China, highlighting key intercompany activities - TSMC China provides financing to TSMC Nanjing for operating capital, with an ending balance of NT$37.8 billion approved by the board[183] - TSMC provides significant guarantees for its subsidiaries, including up to US$7.5 billion for TSMC Global and US$14.7 billion for TSMC Arizona[186] - The company's investments in mainland China include TSMC China (Shanghai) and TSMC Nanjing, with a total investment of US$1.6 billion as of March 31, 2025, against an authorized limit of US$3.6 billion[201]