TSMC(US:TSM) AVIC Securities·2024-04-26 13:32Investment Rating - The report maintains a positive outlook on TSMC, with a focus on AI demand and advanced packaging technology as key growth drivers [2][9][10]. Core Insights - TSMC's Q1 2024 revenue was USD 18.87 billion, showing a year-over-year increase of 16.5% but a quarter-over-quarter decrease of 3.8%, slightly exceeding guidance [9][11]. - The company has adjusted its semiconductor growth forecast for 2024, now expecting a 3% increase in the global semiconductor market (excluding memory), down from previous expectations of over 5% [10][17]. - AI demand is highlighted as a standout area, with expectations for server AI processor revenue to more than double in 2024, contributing to over 20% of total revenue [10][18]. Financial Performance - TSMC's gross margin for Q1 2024 was 53.1%, which is a year-over-year decrease of 3.2 percentage points but an increase of 1.4 percentage points from the previous quarter [11][12]. - The company shipped 3,030 thousand wafers in Q1 2024, reflecting a year-over-year decrease of 6.1% but a quarter-over-quarter increase of 25.4% [30][32]. Market Demand - Smartphone revenue saw a seasonal decline of 8% quarter-over-quarter, accounting for 40% of Q1 revenue, while high-performance computing (HPC) revenue increased by 10% [10][13]. - TSMC has lowered its automotive electronics demand forecast, now expecting a decline in this segment for the year [10][17]. Technology and Capacity Expansion - TSMC is expanding its global manufacturing footprint, particularly in Arizona, to support AI-related demand and enhance customer trust [20][21]. - The company plans to maintain its capital expenditure (CAPEX) forecast for 2024 at USD 32-36 billion, with a significant portion allocated to advanced processes [16][26]. Future Outlook - The report anticipates a gradual recovery in the semiconductor market, with TSMC's business expected to grow sequentially throughout 2024, with an overall growth slightly exceeding 5% for the year [17][18]. - The N3 technology is projected to begin mass production in 2025, with significant customer interest and expected revenue contributions [19][25].