TSMC(US:TSM) First Shanghai Securities·2024-10-24 05:40Investment Rating - The report maintains a "Buy" rating for the company with a target price of $260, indicating an upside potential of 28.74% from the current stock price of $201.95 [3][13][15]. Core Insights - The company reported a significant revenue increase of 39% year-on-year for Q3 2024, reaching NT$759.69 billion (approximately $23.5 billion), surpassing both the company's guidance and Bloomberg consensus estimates [5][6]. - The gross margin for Q3 2024 was 57.8%, up 3.5 percentage points year-on-year, driven by strong demand for AI-related products and advanced process technologies [5][9]. - The company is actively preparing for the production of next-generation N2 and A16 processes, with demand for AI computing chips and server chips exceeding expectations [9][10]. Financial Performance Summary - Q3 2024 revenue was NT$759.69 billion, with wafer revenue contributing NT$670 billion, and advanced processes (7nm and below) accounting for 52% of total revenue [5][6]. - Operating profit reached NT$360.77 billion, a 58.2% increase year-on-year, while net profit was NT$325.08 billion, up 54.2% year-on-year, translating to $100.9 million [5][6]. - The company expects a 30% revenue growth for the full year 2024, driven by AI server processor demand [6][8]. Production and Capacity Insights - The company’s advanced packaging capacity is expected to remain in high demand, with a projected compound annual growth rate (CAGR) of 15%-20% for revenue from 2021 to 2026 [11][15]. - The company anticipates a 200% increase in CoWoS capacity by 2025-2026, with monthly production expected to grow significantly over the next three years [11][15]. - The company is also expanding its overseas manufacturing capabilities, with new facilities planned in Taiwan, Germany, and Japan, which will contribute to future production capacity [9][10]. Market Demand and Trends - The report highlights that AI demand is real and sustainable, with the company collaborating with innovators across various AI fields [9][10]. - The demand for advanced process technologies is expected to continue growing, particularly for AI-related applications, which will support the company's revenue growth [9][10]. - The company’s ASP (average selling price) for 12-inch wafers increased by 20.8% year-on-year, reflecting strong pricing power in advanced processes [9][10].