Taiwan Semiconductor Manufacturing Company Ltd. TSMC reported strong revenue and earnings growth for the second quarter, which came in above estimates, buoyed by robust demand for AI chips used in hyper-performance computing. The company also issued upbeat guidance for the third quarter.
TSMC’s Key Q2 Numbers: Hsinchu, Taiwan-based TSMC reported consolidated second-quarter revenue of NT$673.51 billion ($20.82 billion), up 40.1% year-over-year. Sequentially, the top line expanded by 13.6%. In dollar terms, the revenue growth was 32.8% year-over-year and 10.3% quarter-over-quarter.
Revenue topped the NT$657.58 billion LSEG consensus estimates, according to CNBC.
The sequential revenue growth was aided by strong demand for 3-nanometer and 5-nm technologies, partly offset by continued smartphone seasonality, the company said.
High-performance computing and smartphone end markets accounted for 52% and 33% of net revenue, respectively. IoT, automotive, digital consumer electronics and others made up of 5%, 2% and 2%, respectively. HPC revenue climbed 28% sequentially, while smartphone revenue declined 1%.
North American-based customers contributed 65% of the total revenue, China 16%, Asia-Pacific 9%, Japan 6% and EMEA 4%.
Net income and earnings per share climbed a more modest 36.3% each to NT$247.85 billion and NT$9.56 per share ($1.48 per ADR unit), respectively. On a quarter-over-quarter basis, net income rose 9.9%. Analysts, on average, expected a net profit of NT $238.8 billion.
Margin Profile: The company said in a statement that its gross margin, operating and net profit margin were at 53.2%, 42.5% and 36.8%, respectively. Here’s how margins compare to the prior-year period.
| Q2’24 | Q1’24 | Q2’23 | |
| Gross Margin | 53.2% | 53.1% | 54.1% |
| Operating Margin | 42.5% | 42.0% | 42.0% |
| Net Profit Margin | 36.8% | 38.0% | 37.8% |
Source: Company release
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Shipments of the most advanced 3-nanometer processor node tech accounted for 15% of the total wafer revenue, while 5-nm and 7-nm processors made up 35% and 17% of the revenue, respectively. These advanced and more advanced technologies together made up 67% of the total wafer revenue.
Look Ahead: Chairman and CEO C.C. Wei said on the earnings call that “I also try to reach the supply and demand balance, but I cannot. Today, the demand is so high I had to work very hard to meet customer demand,” CNBC said.
“I hope sometime in 2025 or 2026, I can reach the balance.”
The top brass expects business to be supported by strong smartphone and AI-related demand in the third quarter, adding that they continue to expect 2024 to be “a strong growth year for TSMC.”
The company guided third-quarter revenue of $22.4 billion to $23.3 billion, up from the $17.3 billion reported a year ago.
TSMC recently hit the $1-trillion market-cap mark amid an AI-fueled rally, but the stock has comes off its recent peak. Wednesday, the NYSE-listed ADR of the company ended down 7.98% at $171.20, according to Benzinga Pro data, weighed down by comments from Republican presidential nominee Donald Trump regarding his stance on Taiwan, and the Biden administration’s warning of further China chip curbs, which clouded the outlook for the sector.
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