Investment Rating - Buy rating with a target price of $260, implying an 18.88% upside from the current price of $218.70 [2] Core Views - Revenue and gross margin exceeded expectations, leading to an upward revision of AI revenue guidance for the next five years [2] - Future 5-year AI revenue CAGR is projected at 45%, driven by ASIC and GPU chip demand [12][14] - First-generation N2 process is expected to enter mass production in H2 2025, with strong demand for AI and server chips [15] - Advanced packaging capacity expansion is ongoing, with CoWoS capacity expected to grow significantly through 2027 [24] - CPO (Co-Packaged Optics) technology is being developed to enhance data center interconnect speeds, potentially reaching 6.4 Tbps [25] Financial Performance - Q4 2024 revenue reached NT$868.46 billion (USD 26.9 billion), up 38.8% YoY, surpassing the guidance midpoint of USD 26.5 billion and Bloomberg consensus of USD 25.8 billion [5] - Gross margin for Q4 2024 was 59%, up 6 percentage points YoY, with operating profit of NT$425.71 billion (USD 13.18 billion), up 63.6% YoY [6] - Net income attributable to shareholders was NT$374.68 billion (USD 11.6 billion), up 57% YoY, with diluted EPS per ADR at USD 2.24, beating consensus of USD 2.16 [7] - 2025 revenue guidance is set at 25% YoY growth in USD terms, driven by AI server processor demand [11] Advanced Process and Packaging - 7nm and below advanced processes contributed 74% of Q4 2024 revenue, with 3nm and 5nm processes accounting for 26% and 34% respectively [13] - CoWoS advanced packaging capacity is expected to grow by 131%/35%/20% in 2025/2026/2027, reaching 85k/115k/138k wafers per month [24] - N2 process is set for mass production in H2 2025, with N2P and A16 processes following in H2 2026 [15] Capital Expenditure and Future Outlook - 2025 capital expenditure is projected at USD 38-42 billion, with 70% allocated to advanced process R&D and fab construction [11] - Overseas fab construction and rising power costs may dilute gross margin by 2-3 percentage points annually over the next 3-5 years, but advanced process premium and capacity utilization improvements are expected to offset this [16] - Long-term gross margin is expected to reach 60%, supported by N2 ramp-up and N5 to N3 capacity conversion [28]
台积电：营收毛利均超预期，上调未来五年AI收入指引