Financial Data and Key Metrics - Q2 2024 revenue increased by 13.6% sequentially in NT, or 10.3% in USD, driven by strong demand for 3nm and 5nm technologies, partially offset by smartphone seasonality [4] - Gross margin increased by 10 basis points sequentially to 53.2%, mainly due to cost improvements and favorable foreign exchange rates, partially offset by N3 ramp dilution [4] - Operating margin increased by 0.5 percentage points sequentially to 42.5%, with operating expenses accounting for 10.5% of net revenue [4] - Q2 EPS was 9.56 NT, and ROE was 26.7% [4] - Q3 2024 revenue guidance is between $22.4 billion and $23.2 billion, representing a 9.5% sequential increase or 32% YoY increase at the midpoint [7] - Q3 gross margin is expected to be between 53.5% and 55.5%, and operating margin between 42.5% and 44.5% [7] Business Line Data and Key Metrics - 3nm process technology contributed 15% of wafer revenue in Q2, while 5nm and 7nm accounted for 35% and 17% respectively [5] - Advanced technology (7nm and below) accounted for 67% of wafer revenue [5] - HPC revenue increased 28% QoQ, accounting for 52% of Q2 revenue, surpassing 50% for the first time [5] - Smartphone revenue decreased 1% to account for 33%, IoT increased 6% to account for 6%, Automotive increased 5% to account for 5%, and DCE increased 20% to account for 2% [5] Market Data and Key Metrics - The company ended Q2 with cash and marketable securities of 2 trillion NT ($63 billion USD) [6] - Current liabilities increased by 23 billion NT, mainly due to a 16 billion NT increase in accounts payable, while long-term interest-bearing debt increased by 9 billion NT due to corporate bond issuance [6] - Accounts receivable turnover days decreased by 3 days to 28 days, and inventory days decreased by 7 days to 83 days, primarily due to higher N3 wafer shipments [6] - Q2 cash flow from operations was 378 billion NT, with 206 billion NT spent on CapEx and 91 billion NT distributed as dividends [6] Company Strategy and Industry Competition - The company is narrowing its 2024 capital budget to $30 billion - $32 billion, with 70%-80% allocated to advanced process technologies, 10%-20% to specialty technologies, and 10% to advanced packaging, testing, and mask making [9] - TSMC is expanding its definition of the foundry industry to include packaging, testing, mask making, and IDM (excluding memory), estimating the market size at $250 billion in 2023, up from $115 billion under the previous definition [11] - The company expects the foundry industry to grow close to 10% YoY in 2024, with TSMC's market share increasing due to strong technology leadership and a broad customer base [12] - TSMC is investing heavily in N2, N2P, and A16 technologies, with N2 on track for volume production in 2025 and A16 scheduled for the second half of 2026 [16][17] Management Commentary on Operating Environment and Future Outlook - Management highlighted strong demand for AI-related and high-end smartphone products, leading to increased capacity utilization for 3nm and 5nm technologies in H2 2024 [12] - The company expects 2024 to be a strong growth year, with revenue growth slightly above the mid-20s percentage range in USD terms [12] - TSMC is confident in achieving a long-term gross margin of 53% and higher, despite challenges such as N3 ramp dilution, higher electricity prices, and global manufacturing expansion [8] Other Important Information - TSMC introduced N2P, an extension of the N2 family, with volume production scheduled for H2 2026, and A16, featuring Super Power Rail (SPR), which offers significant power and performance improvements [17] - The company is working with OSAT partners to increase CoWoS capacity to meet customer demand, with advanced packaging margins approaching corporate averages [50] Q&A Session Summary Question: AI Accelerator and CoWoS Capacity - TSMC expects supply-demand balance for AI accelerators and CoWoS to be reached by 2025 or 2026, with CoWoS capacity growing at a 60% CAGR over the next few years [20][22] - The company plans to more than double CoWoS capacity in 2025, following a similar expansion in 2024 [23] Question: Gross Margin Outlook - Gross margins are expected to improve in H2 2024, with long-term gross margins achievable at 53% and higher, despite dilution from overseas fabs and cost inflation [24][26][29] - Subsidies and ITC credits will offset some costs, with $1.5 billion in subsidies received in 2023, mainly from Japan [31] Question: Pricing Strategy and Leading-Edge Demand - TSMC's pricing strategy is strategic and varies by customer segment, with HPC customers willing to pay more for leading-edge nodes compared to smartphone customers [33][35][38] - Leading-edge capacity is expected to remain tight through 2025, with strong demand for N3 and N5 technologies [38] Question: Geopolitical Risk and Overseas Expansion - TSMC is continuing its overseas expansion plans in Arizona, Kumamoto, and potentially Europe, with no changes to its strategy despite geopolitical risks [39][41] - The company does not anticipate tariffs on shipments to U.S. customers, as customers typically bear import tariffs [42] Question: Advanced Packaging Profitability - Advanced packaging margins are improving and approaching corporate averages, with TSMC working with OSAT partners to increase capacity [48][50] Question: N2 and A16 Capacity Planning - N2 and A16 are expected to be larger nodes than previous generations, with strong demand from AI customers migrating aggressively to these technologies [52][55] - N3E is expected to improve returns and gross margins as it ramps, with dilution from N3 expected to decrease over time [56][58] Question: Node-to-Node Conversion Strategy - TSMC may convert more N5 tools to N3 to meet strong demand, with tool commonality between N5 and N3 exceeding 90% [61][63] Question: CoWoS Technical Constraints - Migration from CoWoS-S to CoWoS-L and CoWoS-R may alleviate some capacity constraints, but overall CoWoS supply remains tight [64][67] Question: N2 Revenue Contribution and Margin Dilution - N2 revenue contribution in 2026 is expected to be larger than N3 at a similar stage, with faster gross margin dilution recovery [69][71] Question: Edge AI and Advanced Packaging - Edge AI customers are expected to adopt 3D IC or SoIC solutions in the next two years, with smartphone customers also considering these technologies [72][74] Question: Smartphone and PC Silicon Content - AI functionality is expected to increase die sizes by 5%-10%, with unit growth likely to accelerate in two years [76][78] Question: Demand Volatility and Capacity Planning - TSMC is managing demand volatility through a disciplined capacity planning process, with generative AI demand seen as more sustainable than previous cycles [80][84] Question: Super Power Rail (SPR) and Data Center Demand - SPR technology is expected to significantly reduce system-level power consumption, particularly for data center customers [86][88] Question: A16 Capacity Expansion Bottlenecks - Key bottlenecks for A16 capacity expansion include land, electricity, and talent availability [89][91] Question: Product Launch Cadence and Capacity Planning - TSMC is prepared for accelerated product launch cadences announced at Computex, with capacity planning aligned with customer needs [93][95] Question: Fan-Out Panel-Level Packaging - TSMC is exploring fan-out panel-level packaging, but the technology is not expected to mature for at least three years [96][99]

Taiwan Semiconductor Manufacturing Company on Thursday beat revenue and profit expectations in the second quarter, as demand for advanced chips used in AI applications continue to surge.Here are TSMC's second-quarter results versus LSEG consensus estimates:Revenue: 673.51 billion New Taiwan dollars ($20.82 billion), vs. NT$657.58 billion expectedNet income: NT$247.85 billion, vs. NT$238.8 billion expectedTSMC reported net revenue rose 40.1% from a year ago to NT$673.51 billion, while net income increased 36 ...

Unleash Innovation 2024 Second Quarter Earnings Conference July 18, 2024 Unleash Innovation © 2024 TSMC, Ltd 0 TSMC Property Agenda • 2Q24 Financial Results and 3Q24 Outlook Wendell Huang, CFO • Q&A Unleash Innovation • Welcome Jeff Su, IR Director • Key Messages Wendell Huang, CFO C.C. Wei, Chairman & CEO © 2024 TSMC, Ltd 1 TSMC Property Safe Harbor Notice • TSMC's statements of its current expectations are forward-looking statements subject to significant risks and uncertainties and actual results may dif ...

Loading... Loading... Taiwan Semiconductor Manufacturing Co. Ltd. TSM is announcing its second-quarter earnings on Thursday. Wall Street expects $1.38 in EPS and $20 billion in revenues as the company reports before market hours. The stock is up 67.23% over the past year, +69.12% YTD. Let's look at what the charts indicate for Taiwan Semiconductor (aka TSMC) stock, and how the stock currently maps against Wall Street estimates. TSMC Price Charts Bearish Ahead Of Q2 Earnings Taiwan Semiconductor stock faces ...

AI is driving strong demand for Taiwan Semiconductor and its high-profile customers.Shares of Taiwan Semiconductor Manufacturing (TSM 0.44%), also known as TSMC, rose 63% in the first six months of 2024, according to data provided by S&P Global Market Intelligence. TSMC is the world's biggest microchip manufacturer, and its list of customers includes several of the largest semiconductor companies. It's been producing impressive financial results as the semiconductor industry rebounds from a cyclical slowdow ...

Shares of the world's top third-party chip foundry have almost doubled year to date.Taiwan Semiconductor Manufacturing  (TSM 0.44%) has had a great 2024, as it's up more than 80%. With that kind of performance in the rear-view mirror, many investors may wonder if they've missed the boat.Possibly not: Several positive trends are on the horizon, and this could be the start of something even bigger.Taiwan Semiconductor is a key part of AI proliferationTaiwan Semiconductor is the world's largest contract chip m ...

Former U.S. President Donald Trump speaks during a campaign rally at the Butler Farm Show in Butler, Pennsylvania, on July 13, 2024.Former U.S. President Donald Trump, who is vying for another White House mandate, said he thinks Taiwan should pay the U.S. for defense, claiming that the country "doesn't give us anything."His comment was in response to a question on whether he would defend Taiwan against China, as part of an interview with Bloomberg Businessweek published on Monday.Beijing considers democrati ...

Taiwan Semiconductor Manufacturing Company Ltd. (TSM) is scheduled to report second-quarter 2024 results on Jul 18.Robust demand for advanced technologies, solid momentum among customers, increasing design wins, and a strong presence in the domestic and international markets are expected to have favored the company in the quarter-to-be reported.For the second quarter, Taiwan Semiconductor expects revenues between $19.6 billion and $20.4 billion. The Zacks Consensus Estimate for the same is pegged at $20.2 b ...

Semiconductors have been the success story of Wall Street over the past two years. Much of the gain that the technology sector has made since the onset of 2023 has been based on the AI optimism-led semiconductor boom. The rising demand for electronics also ensures their status as profitable holdings for investors.Per the Semiconductor Industry Association, global sales for semiconductors are expected to reach $611.2 billion in 2024, rising 16% year over year. In 2025, it is likely to rise 12.5%. The chip-ma ...

Core Viewpoint - Taiwan Semiconductor Manufacturing Co. Ltd. (TSM) is currently perceived as overvalued despite its strong operational developments and future growth prospects in AI-related revenue [1][10]. Operational Developments - TSM is expanding its operations internationally, with plans to build three fabrication facilities in Arizona over the next five years and two plants in Japan within three years [2]. - The company is also collaborating with a European Semiconductor Manufacturing Company in Germany, targeting production by the end of 2027 [2]. - TSM is developing a new chip-manufacturing technology called A16, expected to enter production in the second half of 2026 [2]. - Price increases for advanced process manufacturing have been implemented, ranging from 3% to 6%, with major clients like Nvidia, Apple, and Qualcomm accepting these increases [2]. - TSM anticipates its AI-related revenue to double in 2024 and grow at a 50% compound annual rate over the next five years, potentially reaching over 20% of total revenue by 2028 [2]. Financial and Valuation Analysis - Despite a recent contraction in revenue and net income, TSM's revenue grew by 16.5% year-over-year in the first quarter, with net income increasing by 8.9% [3]. - TSM holds over 60% of the global semiconductor foundry market, significantly ahead of Samsung's 14%, providing a strong competitive advantage [4]. - Analysts forecast a revenue CAGR of around 16% and an earnings per share CAGR of approximately 24% over the next five years, indicating potential margin expansion [5]. - The current price-sales ratio is around 11, while a more reasonable ratio would be around 7, suggesting the stock is overvalued at present levels [7]. Conclusion - TSM is strategically positioning itself for long-term success, but current valuations may lead to short-term to medium-term downside risks for new investors [10].