Taiwan Semi Announces Major Global Expansion and Capital Investment Plans for 2024 After Q4 Beat

Taiwan Semiconductor Manufacturing Company Ltd TSM reported a fourth-quarter revenue of $19.62 billion, down by 1.5% year-on-year, beating the consensus of $19.45 billion. EPS of $1.44 beat the consensus of $1.37.

In the fourth quarter, shipments of 5 nm accounted for 35% of total wafer revenue, and 7 nm accounted for 17%. 

Advanced technologies, defined as 7 nm and more, accounted for 67% of total wafer revenue. The 3 nm accounted for 15% of total wafer revenue.

The gross margin contracted by 920 bps to 53.0% due to lower capacity utilization and higher electricity costs. The operating margin declined by 1,040 bps to 41.6%. 

Also Read: US's Domestic Semiconductor Ambitions Take a Hit as Samsung Shelves Production Plans

TSMC held $54.9 billion in cash and equivalents. Its board approved a third-quarter 2023 cash dividend of NT$3.50/share vs. NT$3.00 for the second quarter of 2023 and NT$2.75 for the third quarter of 2022.

"Our fourth quarter business was supported by the continued strong ramp of our industry-leading 3-nanometer technology," said Wendell Huang, VP and CFO of TSMC. 

"Moving into first quarter 2024, we expect our business to be impacted by smartphone seasonality, partially offset by continued HPC-related demand." 

Outlook: The Apple Inc  AAPL and Nvidia Corp NVDA supplier expects first-quarter revenue of $18.0 billion – $18.8 billion vs. consensus of $18.26 billion. It expects a gross margin of 52% – 54% and a 40% – 42% operating margin.

TSMC expects a full-year 2024 capital budget of $28 billion – $32 billion vs $30.45 billion reported in 2023. 

TSMC looks to expand its global manufacturing footprint, with construction at its fab plant in Germany likely to begin in the fourth quarter of this year, Reuters reports.

It expects full-year 2024 revenue to grow in the low to mid-20% range in U.S. dollar terms versus the consensus of $84.01 billion.

Price Action: TSM shares traded higher by 6.27% at $109.40 premarket on the last check Thursday.

Also Read: TSMC Fastracks Completion Of US Plant As Samsung Gets Aggressive With Foundry Ambitions

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