TSMC(US:TSM) Xinda Securities·2025-04-18 09:19Investment Rating - The investment rating for the company is "Positive" [2] Core Insights - The company reported Q1 2025 revenue of $25.53 billion, a year-on-year increase of 35.3%, and a quarter-on-quarter decrease of 5.1%, aligning with previous guidance [2][3] - The gross margin for Q1 2025 was 58.8%, up 5.7 percentage points year-on-year, and down 0.2 percentage points quarter-on-quarter, with guidance previously set at 57.0%-59.0% [2][3] - The company expects Q2 2025 revenue to be between $28.4 billion and $29.2 billion, with a midpoint of $28.8 billion, representing a quarter-on-quarter increase of 12.8% [2] - The company anticipates a sales growth rate of 20%-30% in 2025, with a long-term gross margin of 53% or higher and a return on equity (ROE) greater than 25% throughout the cycle [2] Revenue and Profitability - In Q1 2025, the operating margin was 48.5%, an increase of 6.5 percentage points year-on-year, and a decrease of 0.5 percentage points quarter-on-quarter [2][3] - The net profit margin stood at 43.1%, unchanged from the previous quarter and up 5.1 percentage points year-on-year [2][3] Advanced Process and Demand Distribution - Advanced processes accounted for over 70% of revenue, with high-performance computing (HPC) demand remaining strong [2] - In Q1 2025, revenue from 7nm and below processes made up 73% of total revenue, with 3nm, 5nm, and 7nm accounting for 22%, 36%, and 15% respectively [2][4] Capital Expenditure - Capital expenditure (CapEx) for Q1 2025 was $10.06 billion, a decrease of $1.17 billion from Q4 2024 [2] - The company expects total capital expenditure for 2025 to reach $38-42 billion, with 70% allocated to advanced processes [2] AI Business Growth - The company anticipates that AI business revenue will double in 2025, driven by strong demand and the need for advanced chips [2] Global Capacity Planning - The company is investing $100 billion in Arizona, with the first factory expected to start production in Q4 2024 [2] - Plans include building 11 wafer fabs and 4 advanced packaging plants in Taiwan over the next few years [2]