$Taiwan Semiconductor (TSM.US)$"Not to disappoint everyone", the second-quarter performance is fully blooming, with sales, net profit, and gross margin all exceeding expectations.

Global chip manufacturing giant Taiwan Semiconductor released its Q2 2024 financial report on Thursday, July 18th.

1) Main financial data

Sales: The net revenue for Q2 is NT$673.51 billion, a YoY increase of 40.1%.

Net Income: Q2 net income was NT$247.85 billion, exceeding the market's expected NT$235 billion, a YoY increase of 36.3%.

Operating Profit: Q2 operating profit was NT$286.56 billion, estimated at NT$274 billion, a YoY increase of 42%.

Gross Margin: Q2 gross margin reached 53.2%, up 0.1 percentage points from the previous quarter, with an estimated range of 51%-53% for Q1.

2) Outlook

Sales: The estimated Q3 sales are US$22.4 billion to US$23.2 billion, raising the annual US dollar sales growth to above 20% middle range, from the previous range of 21%-26% to 24%-26%.

Operating margin: The Q3 operating profit margin is expected to be between 42.5% and 44.5%, with a market estimated at 42.1%.

Gross margin: The Q3 gross margin is expected to be between 53.5% and 55.5%, with a market estimated at 52.5%.

Capital expenditure: Raising the lower limit of annual capital expenditure, the expected annual capital expenditure will be US$30 billion to US$32 billion, an increase from a previous guideline of US$28 billion-32 billion, with a market estimatur of US$29.55 billion.

3) Shareholder returns

Cash dividend of NTD 4 per share will be paid on October 9, 2024.

Since the rise of the AI trend at the end of 2022, taiwan semiconductor's stock price has risen by more than 100%, setting multiple new record highs. The company's market cap recently broke through the $1 trillion mark, and its stock price has increased by more than 70% this year.

Revenue rebounded with the share of HPC platform revenue exceeding half.

Looking at the revenue level specifically, TSMC's Q2 advanced process revenue rebounded from the previous quarter, with a combined contribution of half of Q2's revenue from the 3nm and 5nm processes.

Revenue from advanced processes (including 7nm and more advanced processes) accounted for 67% of the total quarter's wafer sales, up from 65% the previous quarter. 35% of revenue came from the 5nm process, 15% from the 3nm process, and 17% from the 7nm process.

3nm process, as TSMC's most advanced chip-making process technology, is an important factor in driving growth potential. The company has also stated that it plans to start mass production of the 2nm process in 2025.

Brady Wang, Vice President of Counterpoint Research, predicts that the 3nm process capacity will grow by more than twice YoY in 2024.

On the platform level, the AI chip OEM business continues to maintain strong momentum, while the smartphone business is steadily recovering with the boost in iPhone shipments.

The revenue from high-performance computing platforms accounts for the highest proportion, reaching 52%, a significant increase of 28% compared to the previous period; the revenue from smartphone business accounts for 33%, autos business accounts for 5%, IoT accounts for 6%, and DCE business accounts for 2%.

Regarding the issue of tight CoWoS production capacity, the director and president of Taiwan Semiconductor, Wei Zhengjia, said during a conference call that the demand for CoWoS packaging technology is still very strong, and Taiwan Semiconductor is continuously expanding its production capacity, expecting to achieve supply-demand balance by 2025-2026. He also said, "As previously mentioned, CoWoS production capacity will at least double this year, and we are doing everything we can to expand production."

"As mentioned before, the CoWoS production capacity will at least double this year, and we are doing everything we can to expand production."

Editor/ping