TSMC Reports October Revenue Up 24.7%

TSMC announced its October revenue figures, marking a 24.7% month-on-month increase and a 29.2% year-on-year growth, setting a new record. Analysts indicate that while the company faces temporary limitations in shipping chips below the N7 process to mainland China, its competitive edge remains strong, bolstered by growing demand in AI applications.

Following the October revenue disclosure, TSMC's financial guidance from its October earnings call predicts fourth-quarter revenue to range between $26.1 billion and $26.9 billion, reflecting an 11.04% to 14.45% quarterly growth, with a midpoint of 12.75%. However, November and December revenues are expected to decline slightly, averaging between $2.605 billion and $2.733 billion per month, a decrease of 13% to 17%.

Gross profit margins for Q4 are anticipated to improve by approximately 0.5 percentage points, driven by higher capacity utilization and cost optimizations. These factors are expected to offset challenges such as increased electricity costs and the ramp-up of N3 production.

Looking ahead, reports suggest that Intel plans to expand outsourcing of its Lunar Lake and Arrow Lake chipsets to TSMC's N3 process in 2025. These chipsets, featuring two TPU cores, are designed for high performance and efficiency, reducing power consumption by at least 100 watts. This development positions Intel to maintain its competitive edge in the AI-driven PC market.

TSMC has also redefined its "Wafer Foundry 2.0" model to encompass packaging, testing, and mask production for all IDM (Integrated Device Manufacturer) activities, excluding memory manufacturing. Under this definition, the wafer foundry industry's market size approached $250 billion in 2023 and is projected to grow by 10% in 2024. Strong AI and smartphone-related demand are expected to drive TSMC's 2024 revenue growth, with estimates revised upward to nearly 30%.

Analysts anticipate that AI processors will continue fueling TSMC's growth from 2024 to 2026, with rising shipments in both server and edge computing markets. The company's growth momentum is attributed to advancements in HPC (High-Performance Computing), as well as contributions from its N5 and N3 process nodes, further strengthening its position in advanced semiconductor manufacturing.