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The logo for Taiwan Semiconductor Manufacturing Company is displayed on a screen on the floor of the New York Stock Exchange on Sept. 26, 2023. Taiwan Semiconductor Manufacturing Company has denied that the U.S. was investigating its dealings with Chinese tech company Huawei, following reports that its chips were found in the Shenzhen-based firm's products. "TSMC is a law-abiding company and we are committed to complying with all applicable rules and regulations, including applicable export controls," a com ...

Investment Rating - The report maintains a "Buy" rating for TSMC (2330.TT) and TSM (TSM.US) with target prices of NT$1,273.5 and US$228.8 respectively, indicating potential upside of 17% and 13% [5][14]. Core Insights - TSMC's third-quarter gross margin exceeded market expectations, driven by strong AI demand, which is expected to boost gross margins further in the fourth quarter [5][6]. - The company has raised its revenue growth guidance for the year to nearly 30% and increased its capital expenditure forecast to slightly above US$32 billion, indicating it is still in an upward semiconductor cycle [6]. - TSMC's sales revenue for Q3 was NT$759.69 billion, a 39% year-on-year increase and a 13% quarter-on-quarter increase, surpassing market consensus [10]. - The gross margin for Q3 was 57.8%, up 3.6 percentage points year-on-year and 4.7 percentage points quarter-on-quarter, significantly above market expectations [10]. Financial Performance Summary - **Revenue and Growth**: TSMC's revenue for 2023 is projected at NT$2,161.736 million, with a year-on-year decline of 5%. However, revenue is expected to rebound with a growth of 33% in 2024 and 28% in 2025 [7]. - **Profitability Metrics**: The gross margin is expected to improve to 55.8% in 2024 and 57.8% in 2025, with net profit projected to grow by 36% in 2024 and 33% in 2025 [7][13]. - **Earnings Per Share**: Basic earnings per share are forecasted to be NT$44.6 in 2024 and NT$59.3 in 2025, reflecting a strong recovery [7][13]. Earnings Guidance - For Q4, TSMC expects revenue to reach NT$848 billion, a 36% year-on-year increase and a 12% quarter-on-quarter increase, driven by sustained AI-related demand [10][12]. - The gross margin guidance for Q4 is set at 58.0%, indicating a 5.0 percentage point year-on-year increase [10][12]. Valuation - The report employs an EV/EBITDA valuation method, assigning TSMC a target EV/EBITDA of 16.5x under a base case scenario for 2024, leading to a target price of NT$1,273.5 [14][15]. - The valuation reflects a premium over TSMC's historical averages, suggesting a favorable investment outlook [14][15].

Investment Rating - The report indicates a strong performance with revenue exceeding guidance, suggesting a positive investment outlook for the company [1][2]. Core Insights - The company reported Q3 2024 revenue of NT$759.69 billion (US$23.5 billion), a year-over-year increase of 36% and a quarter-over-quarter increase of 12.9%, driven by strong demand in the smartphone and AI sectors for advanced processes [2][7]. - Gross margin for Q3 2024 was 57.8%, up 4.6 percentage points quarter-over-quarter and 3.5 percentage points year-over-year, benefiting from improved capacity utilization and cost optimization [2][7]. - Net profit attributable to shareholders reached NT$325.26 billion, reflecting a quarter-over-quarter increase of 31.2% and a year-over-year increase of 54.2% [2][7]. - The company expects Q4 2024 revenue to be between US$26.1 billion and US$26.9 billion, with a gross margin forecast of 57% to 59% [2][18]. Summary by Relevant Sections Overall Revenue Situation - Q3 2024 revenue was NT$759.69 billion (US$23.5 billion), exceeding the upper guidance of US$22.4-23.2 billion, driven by strong demand for 3nm and 5nm processes [2][7]. - Gross margin was 57.8%, surpassing the previous guidance of 53.5%-55.5% [2][7]. - Net profit margin was 42.8%, with a significant increase in earnings per share to NT$12.54 [2][7]. Revenue Breakdown by Market - Revenue by platform: Smartphones accounted for 34% (QoQ +16%), HPC 51% (QoQ +11%), IoT 7% (QoQ +35%), Automotive 5% (QoQ +6%), Digital Consumer Electronics 1% (QoQ -19%) [2][14]. Revenue Breakdown by Process Technology - Revenue from 3nm process accounted for 20% (QoQ +5 percentage points), 5nm for 32% (QoQ -3 percentage points), and 7nm for 17% [2][14]. - Advanced processes (7nm and below) contributed to 69% of total wafer revenue [2][14]. Capital Expenditure - Capital expenditure for Q3 2024 was approximately US$6.4 billion, with a full-year budget expected to exceed US$30 billion, focusing on advanced process technologies [2][12][20]. Inventory - Inventory days at the end of Q3 2024 were 87 days, an increase of 4 days, primarily due to stocking for 3nm and 5nm wafers [2][13]. Company Guidance - For Q4 2024, the company projects revenue between US$26.1 billion and US$26.9 billion, with a gross margin of 57%-59% [2][18].

I last discussed Taiwan Semiconductor Manufacturing (NYSE: TSM ), also known as TSMC, on November 28, 2023, giving it a strong buy. My reason for making that recommendation at the time was a belief that its largest end markets would bounce backI have been a Merchant Seaman that has traveled the world for over 30 years. Within the last 15 years, I developed a very intense interest in investing. I learned a lot of what I know about investing from The MF. Also because I have a engineering background, I often t ...

The GPU market is projected to eclipse $1 trillion by the next decade, according to Precedence Research.You may have heard that semiconductor stocks such as Nvidia have ballooned in value over the last couple of years, and do you know why? The answer is actually quite simple. Nvidia develops chipsets known as graphics processing units (GPUs), which are a critical piece of infrastructure used in generative AI. Nvidia is widely regarded as one of AI's most influential players, and has amassed an estimated 88% ...

The stock's valuation has risen, but its outlook remains bright.Shares of Taiwan Semiconductor Manufacturing (TSM 0.58%), or TSMC for short, climbed higher after the semiconductor contract manufacturer reported strong third-quarter results and offered an upbeat outlook. The stock has now about doubled year to date.With its strong performance this year and recent jump in share price, investors may be wondering if it is too late to buy the stock.Let's take a closer look at TSMC's most recent quarter and deter ...

TSMC just crossed the trillion-dollar mark. You can't talk about artificial intelligence or chip stocks without talking about Taiwan Semiconductor Manufacturing (TSM 0.58%), or TSMC as it's also known. The company invented the pure-play foundry business model in 1987, meaning it manufactures chips only for other chip companies rather than its own designs, and it's the dominant player in that industry today. Its market share of contract chip manufacturing is estimated at around 60%, and it makes roughly 90% ...

Taiwan Semiconductor Manufacturing Company Limited aka TSMC (NYSE: TSM ) reported earnings last week to great fanfare, as the stock added a 5+% rally on top of a share price that has already more than doubled over the To follow me click the "Follow" button! (Easy right?) Hi there, thanks for coming to my profile page! My name is Kumquat Research (but you can call me Jeremy) and I've been writing for Seeking Alpha on and off for going on ten years now, beginning with my inaugural published piece during my fi ...

Taiwan Semiconductor Manufacturing Company (TSM) , the world's largest semiconductor foundry and also known as TSMC, last week delivered another stellar earnings report for the third quarter of 2024. Beating expectations yet again, TSMC continues to solidify its leadership in the advanced chip industry, cementing its position as a long-term winner.With solid growth across key financial metrics and increasing demand for its cutting-edge technology, the question remains: Should you buy TSM stock?The answer le ...