Core Insights - The proliferation of artificial intelligence (AI) is driving exponential growth in power demand across various sectors, from large-scale data centers to edge devices, injecting new vitality into everyday applications [2] - Energy efficiency is crucial for the sustainable growth of AI, as the power consumption of AI accelerators has tripled in five years, and deployment scale has increased eightfold in three years [4] Group 1: TSMC's Strategic Focus - TSMC is prioritizing advanced logic and 3D packaging innovations to address the challenges posed by increasing power demands [6] - The roadmap for TSMC's logic scaling is robust, with N2 expected to enter mass production in the second half of 2025, and N2P planned for next year [6] - Enhancements from N3 and N5 continue to increase value, with speed improvements of 1.8 times and power efficiency improvements of 4.2 times from N7 to A14, while power consumption decreases by approximately 30% per node [6] Group 2: Technological Innovations - N2 Nanoflex DTCO has optimized high-speed, low-power dual-unit designs, achieving a 15% speed increase or a 25-30% reduction in power consumption [8] - Dual-rail SRAM combined with Turbo/Nomin mode has improved efficiency by 10%, while memory computing (CIM) technology offers 4.5 times TOPS/W and 7.8 times TOPS/mm² performance compared to traditional 4nm DLA [9] - AI-driven design tools, such as Synopsys' DSO.AI, enhance power efficiency by 7% in the APR process and 20% in analog design integration with TSMC's API [9] Group 3: Packaging and Integration Advances - TSMC's 3D Fabric technology has shifted towards 3D packaging, including SoIC for die stacking and InFO for mobile/HPC chipsets [9] - The efficiency of 2.5D CoWoS has improved by 1.6 times with a reduction in micro-bump pitch from 45µm to 25µm, while 3D SoIC shows a 6.7 times efficiency improvement [10] - HBM integration technology has advanced, with TSMC's N12 logic substrate providing 1.5 times the bandwidth and efficiency of HBM3e DRAM substrates [12] Group 4: Overall Efficiency Gains - The effectiveness of Moore's Law remains evident, with logic scaling from N7 to A14 achieving a 4.2 times efficiency increase, and CIM technology improving by 4.5 times [17] - Packaging efficiency has improved by 6.7 times from 2.5D to 3D, while photonic technology has enhanced efficiency by 5-10 times [17] - AI has significantly boosted production efficiency, with improvements ranging from 10 to 100 times in various processes [17]

TSMC (2330.TW) Conference Call Summary Company Overview - **Company**: Taiwan Semiconductor Manufacturing Company (TSMC) - **Ticker**: 2330.TW - **Event**: Goldman Sachs Communacopia + Technology Conference 2025 - **Date**: September 8-11, 2025 - **Presenters**: Wendell Huang (CFO), Jeff Su (Head of Investor Relations) Key Industry Insights 1. **Advanced Node Capacity**: - TSMC's advanced node peak capacity is expected to be higher than previous nodes due to increased demand from smartphone and high-performance computing (HPC) sectors [2][3] - N2 technology is projected to contribute 11.5% of wafer revenue in 2026, significantly higher than N3's 5.1% in its first year [3] 2. **N3/N5 Capacity Growth**: - TSMC maintains over 90% tool commonality between adjacent advanced nodes, allowing for flexible capacity adjustments to meet AI demand [2][7] - The company plans to convert capacity from N7 to N5 and N5 to N3 to support strong AI demand, leading to tight capacity in advanced nodes [7] 3. **Advanced Packaging Expansion**: - TSMC is allocating 10-20% of capital expenditures to advanced packaging, which is expected to grow faster than the corporate average [2][8] - Advanced packaging is projected to account for over 10% of revenue in 2025, up from 8% in 2024, with increasing adoption in non-AI applications [8] 4. **Long-term Gross Margin (GM) Target**: - Despite overseas expansion plans, TSMC's long-term GM target of 53%+ remains achievable [2][9][11] - The company plans to mitigate GM pressure through geographical diversification, cost efficiency, and leveraging government support [11] 5. **Revenue Growth Forecast**: - TSMC reaffirms a close to 20% compound annual growth rate (CAGR) for the 2024-2029 period, with potential upside driven by strong N2 demand and tightness in N3 and N5 nodes [12] Financial Metrics - **Market Capitalization**: NT$32.2 trillion / $1.1 trillion - **Revenue Projections**: - 2024: NT$2,894.3 billion - 2025E: NT$3,667.9 billion - 2026E: NT$4,211.2 billion - 2027E: NT$4,873.4 billion - **EPS Projections**: - 2024: NT$45.25 - 2025E: NT$60.36 - 2026E: NT$68.49 - 2027E: NT$77.56 - **Price Target**: NT$1,370.00 (upside of 10.5%) [18] Investment Thesis - TSMC is positioned as a leading global foundry with over 60% market share, benefiting from its technology leadership in AI, 5G, HPC, and EV sectors [13][15] - The stock is rated as a "Buy" due to its attractive valuation and long-term growth prospects [14][15] Key Risks 1. Deterioration in end-demand recovery affecting capacity utilization [16] 2. Slower customer node migrations impacting revenue [16] 3. Delays in 5G penetration affecting semiconductor growth [16] 4. Poor yields or execution leading to profitability issues [16] 5. Increased competition affecting pricing and margins [16] 6. Unfavorable foreign exchange trends or cost increases impacting margins [16] Conclusion TSMC's strong positioning in advanced technology nodes and packaging, along with a robust growth forecast, supports a positive investment outlook despite potential risks associated with market dynamics and competition.

Core Insights - TSMC is expected to dominate the high-end chip manufacturing market in the U.S., posing challenges for Intel and SMIC [2][3] - TSMC's expansion plans include significant investments in the U.S. and Taiwan, with a focus on advanced manufacturing processes [4][9] Global Capacity Layout - TSMC's wafer fabrication capacity will remain primarily in Taiwan, but additional capacity in the U.S. and Europe will provide a buffer against disruptions in Taiwan [3] - TSMC plans to build 11 new fabs and 4 packaging plants in Taiwan, potentially requiring more investment than the $165 billion planned for U.S. facilities [9] U.S. Expansion Plans - TSMC has committed to investing $165 billion in six chip fabs, two advanced packaging plants, and a research center in Phoenix, Arizona [4] - The first Arizona fab is already operational, while the second fab focusing on 3nm technology is completed and expected to ramp up production [6] Advanced Process Developments - TSMC anticipates that 2nm technology will see higher initial tape-out numbers compared to 3nm and 5nm, driven by demand from smartphones and high-performance computing (HPC) applications [11] - The A16 process is set to begin mass production in the second half of 2026, offering significant improvements in transistor density and energy efficiency [11] Financial Performance - TSMC reported record revenue of $30.07 billion for Q2, a 44.4% year-over-year increase, with net profit reaching $12.8 billion [14] - The company has a substantial cash reserve of $90.36 billion, supporting its ambitious capital expenditure plans in the U.S. and Taiwan [14] AI Chip Revenue Contribution - TSMC's HPC devices generated approximately $18 billion in sales, a 66.6% increase year-over-year, indicating a shift in revenue drivers from smartphones to AI-related products [16][19] - AI chip manufacturing and packaging contributed $8.78 billion in revenue, suggesting that AI could soon account for half of TSMC's total sales [19]

TSMC (2330.TW) Earnings Call Summary Company Overview - **Company**: Taiwan Semiconductor Manufacturing Company (TSMC) - **Ticker**: 2330.TW - **Market Cap**: NT$29.3 trillion / $997.4 billion - **Enterprise Value**: NT$27.4 trillion / $932.3 billion - **12-Month Price Target**: NT$1,370.00 - **Current Price**: NT$1,130.00 - **Upside Potential**: 21.2% Key Industry Insights - **Advanced Node Demand**: TSMC's outlook on advanced node demand is increasingly positive, particularly driven by AI customers showing no signs of demand slowdown [2][20] - **Revenue Contribution**: Expected revenue contribution from N2 is anticipated to be significantly higher than N3 during the initial ramp-up stage, especially in the first two years, driven by both smartphone and HPC applications [2][21] - **Capacity Management**: TSMC plans to improve productivity through node conversions (e.g., N7 to N5, N5 to N3) to meet the strong demand for N5/N3 nodes [3][20] Financial Performance Highlights - **2Q25 Results**: - Revenue: NT$933.8 billion, up 11.3% QoQ and 38.6% YoY [18][39] - Gross Profit: NT$547.4 billion, with a gross margin of 58.6% [18][39] - Net Income: NT$398.3 billion, EPS of NT$15.36, up 10.1% QoQ and 60.6% YoY [18][39] - **2025 Revenue Guidance**: Raised to 30% YoY growth from mid-20% previously, supported by strong demand from AI and HPC applications [19][40] Pricing and Profitability - **Pricing Strategy**: TSMC is negotiating pricing for 2026, with expectations of a higher magnitude of price hikes due to strong demand for advanced nodes [4][23] - **Gross Margin Target**: Management maintains a long-term gross margin target of 53% and higher, with expectations for gross margin to reach 57.9% by 2026 [4][17][23] Future Projections - **Revenue Forecasts**: - 2025 Revenue: NT$3,667.9 billion (up from NT$3,581.1 billion) [6][42] - 2026 Revenue: NT$4,211.2 billion (up from NT$4,073.7 billion) [6][42] - **EPS Growth**: EPS estimates for 2025 have been raised to NT$60.36 from NT$56.38, reflecting a 7.1% increase [40][42] Capacity and Demand Dynamics - **CoWoS Demand**: Continued strong demand for CoWoS (chip on wafer on substrate) amid AI growth, with management focused on narrowing the supply-demand gap [24] - **Tight Capacity Outlook**: Anticipated tightness in N5 and N3 capacity over the next several years, with ongoing conversions from N7 to N5 and N5 to N3 to alleviate this [20][24] Conclusion - TSMC's strong performance in 2Q25 and positive outlook for advanced nodes, particularly driven by AI demand, positions the company favorably for future growth. The raised revenue guidance and pricing strategies indicate robust demand and operational efficiency, reinforcing the investment thesis for TSMC.

Investment Rating - The report maintains a "Buy" rating for the company, indicating a strong expectation for future growth [4]. Core Insights - The company reported Q2 2025 revenue of $30.07 billion, a year-on-year increase of 44.4% and a quarter-on-quarter increase of 17.8%. The gross margin was 58.6%, up 5.4 percentage points year-on-year but down 0.2 percentage points quarter-on-quarter. Net profit reached $12.8 billion, reflecting a year-on-year increase of 60.7% and a quarter-on-quarter increase of 10.2% [2]. - The company has raised its full-year revenue growth guidance to approximately 30%, driven primarily by demand for advanced processes. In Q2 2025, revenue from N3, N5, and N7 processes accounted for 24%, 36%, and 14% of total wafer revenue, respectively, totaling 74% [3]. - The company is expected to benefit significantly from the growing demand for AI chips, with projections for net profits of $49.686 billion, $60.379 billion, and $66.768 billion for the years 2025 to 2027, respectively [4]. Summary by Sections Performance Review - In Q2 2025, the company achieved revenue of $30.07 billion, with a gross margin of 58.6% and net profit of $12.8 billion [2]. Operational Analysis - The decline in gross margin is attributed to the appreciation of the New Taiwan Dollar (TWD), which impacts revenue when converted from USD. A 1% appreciation in TWD results in a 1% revenue loss and a 40 basis points loss in gross margin. In Q2 2025, TWD appreciated by 4.4%, leading to a 180 basis points decline in gross margin, with further expected appreciation causing an additional 260 basis points loss [3]. - The company anticipates the first-generation N2 process to enter mass production in H2 2025, with subsequent processes expected in 2026 and 2028 [3]. Profit Forecast, Valuation, and Rating - The company is positioned as a leader in the wafer foundry industry, with a competitive edge in advanced processes, expected to benefit from the rise in AI chip demand. The projected net profits for 2025, 2026, and 2027 are $49.686 billion, $60.379 billion, and $66.768 billion, respectively [4].

Group 1: Company Insights - TSMC's N3 capacity is very tight and will remain so for the next few years, with N5 also experiencing tight capacity. High demand is noted as many AI applications are still using N4 and will transition to N3 in the next two years [1][9][10] - The company has a competitive advantage with its giga fab clusters, where 85-90% of the equipment is similar across different processes, facilitating capacity switching [1][10] - The semiconductor opportunity in humanoid robots is still in early stages, with significant potential expected in the medical sector. It is suggested that the opportunity in robotics could be ten times that of electric vehicles (EVs) [1][19] Group 2: Demand and Supply Dynamics - AI demand is increasingly strong, with CSP CEOs acknowledging this trend. The company is working to narrow the supply-demand gap rather than achieving a balance [2][15] - The growth in edge AI is expected to take one to two years for customers to complete new designs and products, with a moderate increase in shipment volumes but a 5-10% increase in die size anticipated [3] - The company is seeing strong demand for N3, N5, and future N2 processes, with many AI data centers being announced recently [12] Group 3: Financial Guidance and Margins - The company is adopting a conservative approach to its financial guidance due to potential tariff impacts and other uncertainties, despite aiming for higher revenue targets [4] - The company expects to maintain a gross margin of 53% or higher, with various factors influencing this margin, including exchange rates [5][11] - Capital expenditure (CAPEX) guidance remains unchanged, reflecting a cautious stance due to macroeconomic uncertainties, but the company is open to increasing investment if opportunities arise [14][21] Group 4: Future Technologies and Innovations - The company is focused on advanced packaging technologies and will expand production based on customer demand. Various technologies are being developed to support customer needs [16][17] - The return on investment (ROI) for N2 is expected to be higher than for N3, with production ramp-up anticipated in the second half of this year and revenue expected to begin in the first half of next year [13] - The company is not overly concerned about potential overcapacity in mature processes, as it is developing specialized processes based on customer demand [18]

Group 1 - TSMC (TSM.N) is experiencing strong demand for its N3, N5, and future N2 technologies [1] - The company is actively working to bridge the gap between demand and supply [1]

Core Viewpoint - TSMC is leveraging its N7 capacity to support N5 production, indicating a strategic move to optimize resources and meet demand in advanced semiconductor manufacturing [1] Group 1 - TSMC is utilizing its existing N7 production capacity to enhance the output of its more advanced N5 nodes, which is crucial for maintaining competitiveness in the semiconductor industry [1] - This strategy reflects TSMC's commitment to maximizing efficiency and meeting the growing demand for high-performance chips [1] - The decision to support N5 with N7 capacity may also indicate a response to market dynamics and customer needs in the technology sector [1]

Investment Rating - The report assigns an "Overweight" rating to TSMC with a price target of NT$1,275.0 by December 2025 [4][6]. Core Insights - TSMC's 2Q25 sales were NT$934 billion, reflecting an 11% quarter-over-quarter increase and a 39% year-over-year increase, driven by strong demand for N3 and accelerated AI shipments [3][4]. - The company is expected to raise its FY25 revenue guidance to high 20% growth in USD terms, supported by robust AI demand and minimal order reductions from major clients like Apple [3][6]. - For FY26, TSMC is projected to achieve 14% year-over-year revenue growth, driven by price hikes and strong demand for N2 and N3 processes [3][6]. Summary by Sections Financial Performance - TSMC's June revenue was NT$264 billion, down 18% month-over-month but up 27% year-over-year [3]. - The 2Q GM is expected to fall within the company's guidance range of 57-59%, despite the TWD appreciating by 11% [3]. Future Outlook - For 3Q25, TSMC is expected to guide for 3-6% quarter-over-quarter revenue growth, primarily due to ongoing strong demand for N3 and N4/N5 [3]. - The company anticipates a decline in GM due to the impact of TWD appreciation [3]. Key Topics for Earnings Meeting - Key discussion points for the upcoming earnings meeting include demand visibility for AI, growth expectations for 4Q25, and the potential impact of TWD appreciation on GM [3][4]. Valuation - The price target of NT$1,275 is based on approximately 20x 12-month forward P/E, reflecting positive demand drivers and a stronger ramp for N2 in 2026 [6][7].

Core Viewpoint - The global wafer foundry industry is expected to see a 26% year-on-year revenue growth and a 9% quarter-on-quarter growth in Q4 2024, driven primarily by strong AI demand and the ongoing recovery of the Chinese market [1][3]. Summary by Sections Industry Performance - The advanced process capacity utilization remains high, driven by AI and flagship smartphone demand, particularly for TSMC's N3 and N5 processes [1][3]. - The overall utilization rate for global (excluding China) mature process foundries hovers between 65%-70%, with 12-inch processes recovering faster than 8-inch processes due to weaker demand in automotive and industrial sectors [1][3]. Demand Recovery - Non-AI demand is gradually recovering, particularly in consumer electronics and PC semiconductor sectors, supported by pre-production demand related to U.S. tariffs and demand driven by Chinese subsidies [1][3]. - Advanced packaging demand remains strong and stable, with TSMC actively expanding its CoWoS-L and CoWoS-R capacities, alleviating previous market concerns regarding capacity and order adjustments [1][3]. Company-Specific Insights - TSMC's revenue share reached a record 67% in Q4 2024, up from 64% in the previous quarter, primarily due to high capacity utilization in advanced processes [4]. - Samsung Foundry experienced a slight quarter-on-quarter revenue decline in Q4 2024, attributed to lower-than-expected demand for Android smartphones, leading to a decrease in its market share from 12% to 11% [5]. - SMIC's performance in Q4 2024 met expectations, with revenue growth driven by the recovery in consumer electronics and domestic localization efforts, although overall capacity utilization decreased from 90.4% to 85.5% [6]. - UMC's performance in Q4 2024 was stable, supported by occasional urgent orders in consumer electronics, but faced pricing pressure and a negative impact from a January earthquake [7]. - GlobalFoundries reported stable performance in Q4 2024, with strong wafer shipments offsetting seasonal weakness in the smartphone sector, driven by automotive demand and growth in communication infrastructure [8]. Analyst Commentary - The strong performance of the wafer foundry industry in Q4 2024 is largely attributed to the surge in AI and flagship smartphone demand, maintaining high capacity utilization in advanced processes [9].