TSMC Q1 2024 Revenue: NT$5.926 Trillion, Up 16.5% YoY

On April 10th, Taiwan Semiconductor Manufacturing Company (TSMC), a prominent player in semiconductor foundry services, disclosed its financial performance for March 2024. Consolidated revenue for the month reached NT$195.211 billion, marking a notable 7.5% increase from February and a substantial 34.3% surge compared to March 2023. The cumulative revenue for the first three months of 2024 amounted to approximately NT$592.644 billion, reflecting a robust 16.5% growth over the corresponding period last year.

TSMC's previously provided guidance anticipated first-quarter revenue ranging from $18 billion to $18.8 billion USD. Considering the prevailing exchange rate of 1 USD to NT$31.1, this translates to NT$584.68 billion to NT$599.8 billion in revenue, representing a decrease of 8% to 4% compared to the fourth quarter of 2023. Gross margin is projected to range between 52% and 54%, with an operating profit margin of 40% to 42%.

Based on the cumulative revenue data for the first quarter of 2024, TSMC's performance surpasses its earlier guidance.

TSMC recently announced receiving $6.6 billion USD in subsidies and $5 billion USD in loans from the U.S. Department of Commerce. Additionally, TSMC declared the construction of its third wafer fab in Arizona, increasing its total investment to $65 billion USD. As per the current progress, the first fab is on track to commence 4nm production in the first half of 2025. The second fab, alongside the previously announced 3nm technology, will introduce the world's most advanced 2nm process technology utilizing next-generation Nanosheet transistor structures, expected to commence production in 2028. The third fab is projected to commence chip production with 2nm or more advanced process technology before 2030.

TSMC also announced its intention to apply for up to a 25% investment tax credit from the U.S. Department of the Treasury for eligible capital expenditures related to the Arizona fab. TSMC reaffirms its commitment to long-term financial goals, including a USD revenue compound annual growth rate of 15% to 20%, gross margin above 53%, and a return on equity exceeding 25%.

Some foreign institutions noted that while the recent 7.3-magnitude earthquake in Hualien impacted some production capacity and gross margins, the surge in orders from the artificial intelligence market for advanced processes, coupled with potential electricity price hikes, is anticipated to increase revenue in the second quarter by 4% compared to the same period in 2023, maintaining the long-term gross margin target of 53%.

Foreign institutions also estimated a 26% and 29% annual revenue increase for 2024 and 2025, respectively. Furthermore, besides AI in cloud computing, revenue contributions are expected from N3 and N2 nanometer processes supporting edge computing AI. With expanded overseas production reducing customer concerns over geopolitical risks, these institutions reiterated their investment rating for TSMC, with a target price of NT$950 per share.