Earnings Summary: Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) Q3 2024 Financial Results
Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) reported its financial results for the third quarter of 2024, exceeding analysts' expectations and showcasing robust growth in revenues and earnings per share.
Key Financial Metrics
| Metric | Q3 2024 | Year-Over-Year Change | Quarter-Over-Quarter Change | Wall Street Consensus | Actual vs. Consensus |
|---|---|---|---|---|---|
| Revenue | $23.50 billion | +36% | +12.9% | $23.09 billion | Beat |
| Earnings Per Share (EPS) | $1.94 | — | — | $1.80 | Beat |
| Net Income | NT$325.26 billion | +54.2% | — | NT$300.2 billion | Beat |
Interpretation : TSMC's strong performance in the third quarter was driven by increased demand for advanced processing technologies, particularly through AI-related applications. Revenue and EPS significantly surpassed expectations, reflecting TSMC's dominant market position and operational efficiency.
Revenue by Segment
| Segment | Contribution to Revenue | Quarter-Over-Quarter Growth |
|---|---|---|
| High-Performance Computing (HPC) | 51% | +11% |
| Smartphone | 34% | +16% |
| Internet of Things (IoT) | 7% | +35% |
| Automotive | 5% | +6% |
| Digital Consumer Electronics (DCE) | 1% | -16% |
| Others | 2% | +8% |
Interpretation : The significant growth in the IoT segment highlights TSMC's successful diversification into emerging markets, while smartphones continue to be a major revenue contributor thanks to strong demand for 3nm and 5nm technologies.
Key Developments and Operational Highlights
- Began production of Apple's A16 chips in its Phoenix, Arizona plant, strengthening its foothold in U.S.-based semiconductor manufacturing.
- Surpassed revenue guidance of $22.4 billion-$23.2 billion, emphasizing robust demand across core technologies.
- Advanced technologies (3nm, 5nm, 7nm) accounted for 69% of wafer revenue, indicating a strong market response for sophisticated semiconductor solutions.
Executive Comments
According to Wendell Huang, TSMC’s Senior VP and Chief Financial Officer, the third quarter was bolstered by significant demand in smartphone and AI sectors, affirming the strategic focus on 3nm and 5nm technologies.
Forward Guidance
TSMC has provided optimistic guidance for Q4 2024, expecting revenues between $26.1 billion to $26.9 billion, significantly above the $24.86 billion Wall Street consensus. Anticipated gross and operating profit margins are projected at 57%-59% and 46.5%-48.5%, respectively, assuming an exchange rate of NT$32 for one USD.
Stock Price Movement
Following the earnings release, TSMC's shares saw a pre-market trading increase of approximately 8.1%, reflecting investor confidence fueled by the company's better-than-expected financial results and positive forward guidance.
Summary : TSMC's third-quarter performance underscores its strategic prowess in responding to market demands for high-tech solutions, particularly its focus on AI and smartphone technologies, setting a positive tone for the upcoming quarter.
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