TSMC(US:TSM) Tai Ping Yang·2024-10-25 09:43Investment Rating - The investment rating for the company is "Buy," indicating an expected relative increase of over 15% compared to the CSI 300 index in the next six months [3][4]. Core Insights - The company reported Q3 2024 revenue of $23.5 billion, a year-on-year increase of 36%, and a gross margin of 57.8%, up 3.5 percentage points year-on-year, driven by strong demand in smartphones and AI [1]. - The Q3 net profit attributable to shareholders was $10.1 billion, reflecting a 51% year-on-year growth [1]. - The company exceeded its previous revenue guidance of $22.4-23.2 billion, primarily due to increased demand for 3nm and 5nm processes [1]. - The company expects Q4 revenue to be between $26.1-26.9 billion, with a gross margin of 57-59%, indicating continued strong demand in the AI and smartphone markets [1]. Revenue and Profitability - Q3 revenue was $23.5 billion, a 36% increase year-on-year and a 12.9% increase quarter-on-quarter [1]. - Gross margin for Q3 was 57.8%, up 3.5 percentage points year-on-year and 4.6 percentage points quarter-on-quarter [1]. - The net profit for Q3 was $10.1 billion, representing a 51% year-on-year increase [1]. Capital Expenditure and Capacity Expansion - The company has guided for a capital expenditure of over $30 billion for 2024, with 70-80% allocated to advanced processes [1]. - Q3 capital expenditure was $6.4 billion, a 10% decrease year-on-year but a 1% increase quarter-on-quarter [1]. - The company is expanding capacity in various regions, including a wafer fab in Arizona expected to start production in 2025 [1]. Market Demand and Product Mix - In Q3, the high-performance computing (HPC) segment accounted for 51% of revenue, while smartphones contributed 34% [1]. - The 3nm process accounted for 20% of total revenue, an increase of 5 percentage points quarter-on-quarter [1]. - The company anticipates continued strong demand from AI and smartphones, which is expected to drive revenue growth in Q4 [1].