TSMC(US:TSM)2025-10-19 15:58Summary of TSMC Conference Call Company Overview - Company: Taiwan Semiconductor Manufacturing Co Ltd (TSMC) - Ticker: 2330.TT - Rating: Outperform - Price Target: NT$1,444.00 (approximately USD 290.00) Key Industry Insights - AI Demand: TSMC reported stronger AI demand compared to three months ago, indicating a positive trend in the semiconductor industry driven by AI applications [2][43] - Capex Guidance: TSMC narrowed its 2025 capital expenditure (capex) guidance to the upper half of its previous range, now set at USD 40-42 billion, reflecting a cautious approach to ensure demand sustainability [2][20] - Revenue Growth: TSMC's revenue for 4Q25 is expected to show a year-over-year growth of approximately 35% at the midpoint of guidance, despite being sub-seasonal [10][11] Financial Performance - 3Q25 Results: TSMC's revenue reached NT$989.9 billion, a 6% increase quarter-over-quarter, with gross profit rising by 7.5% to NT$588.5 billion [9] - Margins: Gross margin improved to 59.5%, up 0.8 percentage points from the previous quarter, attributed to cost reductions and higher utilization rates [17] - Earnings Per Share (EPS): Reported EPS for 3Q25 was NT$17.44, a 13.6% increase from the previous quarter [9] Market Dynamics - Customer Behavior: TSMC noted no significant changes in customer behavior, although the revenue guidance for 4Q25 is considered sub-seasonal, indicating potential market fluctuations [11] - Geographic Revenue Contribution: North America accounted for 76% of TSMC's total revenue in 3Q25, while revenue from China decreased sequentially [37][40] Technology and Capacity - Node Technology: The combined revenue from 3nm, 5nm, and 7nm technologies contributed to 74% of TSMC's total revenue in 3Q25, highlighting the importance of advanced nodes in driving revenue [31] - HPC Revenue: High-Performance Computing (HPC) revenue grew by 5% quarter-over-quarter, indicating strong demand in this segment [23] Investment Implications - Outperform Rating: Analysts maintain an Outperform rating for TSMC, with a price target of NT$1,444.00, reflecting confidence in the company's growth trajectory and market position [43][48] - Risks: Potential risks include market-wide multiple contraction, competition from Intel, and geopolitical uncertainties that could impact operations and demand [49] Additional Insights - Cost Management: TSMC's ability to manage costs effectively has been a significant factor in maintaining margins despite external pressures [9][17] - Future Outlook: The company is expected to continue its cautious approach to expansion and capex, balancing growth opportunities with cost management [3][20]