TSMC(US:TSM) INDUSTRIAL SECURITIES·2024-10-20 08:18Investment Rating - The report maintains a "Buy" rating for the company [2][4]. Core Insights - Q3 performance exceeded expectations, with revenue guidance for 2024 revised upwards. The company reported Q3 revenue of NT$759.7 billion (YoY +39.0%, QoQ +12.8%), surpassing the consensus estimate of NT$750.6 billion. Net profit attributable to shareholders was NT$325.3 billion (YoY +54.2%, QoQ +31.2%), also exceeding the consensus estimate of NT$298.4 billion. This strong performance was driven by increased wafer shipments and average prices, with Q3 shipments reaching 3,338 thousand equivalent 12-inch wafers (YoY +15.0%, QoQ +6.8%) [1][2]. - Strong demand for AI is driving growth, with the N3 process accounting for 20% of wafer revenue for the first time. High-performance computing contributed 51% of wafer revenue (YoY +9 percentage points, QoQ -1 percentage point). Management estimates that revenue from AI processors (data center GPUs, AI accelerators, CPUs) will triple compared to last year, expected to account for about 15% of total revenue. The company is well-positioned to benefit from the growing demand for advanced process foundry services [1][2]. - Key competitors are facing bottlenecks, solidifying the company's advantages in advanced processes and packaging. Competitors like Intel and Samsung are undergoing strategic adjustments, with Intel reducing its 2024 capital expenditure by over 20% and Samsung considering delays in purchasing lithography machines due to issues at its Texas plant. The company is expected to continue gaining outsourcing orders from competitors and improve bargaining power with upstream and downstream partners [1][2]. Financial Summary - Revenue projections for 2024-2026 are NT$28,757 billion, NT$36,715 billion, and NT$43,580 billion, respectively, with net profits of NT$11,704 billion, NT$15,505 billion, and NT$18,597 billion [3][4]. - Key financial metrics include a projected gross margin of 56% in 2024, increasing to 58% by 2026, and a return on equity (ROE) of 27% in 2024, reaching 28% by 2026 [3][5].