TSMC(US:TSM) Tianfeng Securities·2024-10-27 09:45Investment Rating - The report recommends a "Buy" rating for TSMC, expecting a relative return of over 20% within the next six months [7]. Core Insights - TSMC's Q3 2024 revenue reached $23.5 billion, exceeding the company's guidance and Bloomberg consensus estimates, with a net profit of $10.07 billion, reflecting a year-on-year growth of 54.2% [1][2]. - Strong demand for AI and smartphones has driven the utilization rates of 3nm and 5nm process technologies, with advanced technology accounting for 69% of total wafer revenue [1]. - The company anticipates a significant increase in revenue contribution from AI server processors, projected to grow more than twofold this year and account for approximately 15% of total revenue in 2024 [1]. Revenue and Profitability - TSMC's gross margin for Q3 was 57.8%, surpassing guidance and consensus estimates, while operating margin was 47.5% [1]. - The company expects Q4 revenue to be between $26.1 billion and $26.9 billion, with a gross margin forecast of 57%-59% [1]. Business Segmentation - The revenue breakdown shows that the High-Performance Computing (HPC) platform accounts for 51% of total revenue, followed by smartphones at 34%, IoT at 7%, automotive at 5%, and DCE at 1% [1]. - The demand for CoWoS (Chip on Wafer on Substrate) significantly exceeds TSMC's supply capacity, despite a doubling of production capacity this year [1]. Global Expansion - TSMC has made significant progress in its global strategic layout, including the construction of three large fabs in Arizona, a new fab in Kumamoto, Japan, and a special process plant in Dresden, Germany, set to begin production by the end of 2027 [1].