TSMC's profit increased by 57% compared to the same period last year, reaching a historic high, with revenue growth of 38.8%. The company had expected fourth quarter revenue to be between $26.1 billion and $26.9 billion.
As the world's largest chip foundry, TSMC produces advanced processors for customers such as NVIDIA and Apple, and benefits from the trend of artificial intelligence.
TSMC's high-performance computing division covers artificial intelligence and 5G applications, driving sales in the fourth quarter and contributing 53% of revenue. The HPC revenue of this department increased by 19% compared to the previous quarter.
Counterpoint Research Deputy Director Brady Wang told CNBC, "The surge in demand for AI chips in the fourth quarter has exceeded expectations." He added that the demand for advanced chips in Apple's latest iPhone 16 models has also driven revenue growth.
This Taiwan based company announced its December revenue for the first time last week, with a total annual revenue of NT $2.9 trillion, setting a sales record for the company since its listing in 1994.
Wendell Huang, Chief Financial Officer and Vice President of TSMC, stated during Thursday's earnings conference call that "we have observed strong customer demand for AI related products in 2024." He added that revenue from AI accelerator products will account for "nearly a dozen percent" of total revenue in 2024.
Huang Renxun added, "Even after more than doubling in 2024, we expect revenue from AI accelerators to double by 2025, as strong growth in AI related demand will continue to be a key driving factor for AI applications
However, due to US restrictions on China's advanced semiconductor exports and uncertainty about President elect Donald Trump's trade policies, TSMC may face some resistance in 2025.
According to Reuters, TSMC Chairman and CEO David Wei stated that the company's philosophy is to maintain a low profile and therefore will not attend Trump's inauguration ceremony.
However, Mr. Wang from Counterpoint predicts that 2025 will be another year of strong development for TSMC, with significant revenue growth due to the increasing demand for diverse and diverse applications of artificial intelligence.
TSMC's stock listed in Taiwan rose 81% in 2024, with a 3.75% increase in Thursday trading price.
The Five Key Points of the Law Society
1. Fourth quarter financial report: Single quarter revenue of 868.46 billion yuan, gross profit margin of 59%, EPS of 14.45 yuan
TSMC released its Q4 2024 financial report, with a consolidated revenue of NT $868.46 billion, setting a new quarterly high with a quarterly increase of 14.3% and an annual increase of 38.8%; After tax net profit was 374.68 billion yuan, also setting a new high for single quarter profit, with a quarterly increase of 15.2% and an annual increase of 57%, equivalent to earning 4.072 billion yuan every day in the fourth quarter; Net profit per share is 14.45 yuan.
If calculated in US dollars, the revenue for the fourth quarter of 2024 is 26.88 billion US dollars, an annual increase of 37% and a quarterly increase of 14.4%.
In the fourth quarter of 2024, the gross profit margin was 59%, the operating profit margin was 49%, and the after tax net profit margin was 43.1%.
2. Q1 Outlook: Revenue of $25~25.8 billion, gross profit margin of 57~59%, profit margin of 46.5~48.5%
Based on an evaluation of the current business situation, TSMC Electric said it will release its outlook for the first quarter of this year, estimating a revenue of $25 billion to $25.8 billion in US dollars for the first quarter, with an average quarterly decrease of 5.5%, which is in line with market estimates; Assuming an exchange rate of NT $32.8 to US $1, the estimated gross profit margin is 57-59% and the profit margin is 46.5-48.5%. The high standard gross profit margin remains unchanged, while the profit margin slightly declines.
3. Overall performance outlook for this year: Strong growth with estimated revenue growth of nearly 24-26% in US dollars
TSMC has announced that 2025 will continue to be a year of strong growth for TSMC. It is estimated that this year's US dollar revenue will grow by nearly 24-26%, with a compound annual growth rate of 20% over the next five years.
Wei Zhejia expects that semiconductor industry inventory will return to a relatively healthy state this year, and estimates that semiconductor industry output will increase by about 10% annually. TSMC, based on strong customer demand for AI and a moderate recovery in other end markets, is expected to see revenue growth of nearly 20% this year.
4. Capital expenditure: Estimated capital expenditure of $38-42 billion this year
TSMC's estimated capital expenditure for 2025 will be between $38 billion and $42 billion, setting a new historical high with an average of $40 billion.
TSMC announced actual capital expenditure of $29.76 billion for 2024, slightly lower than the original estimate of $30 billion; TSMC's actual capital expenditure for the first three quarters of 2024 was $18.53 billion, and its capital expenditure for the fourth quarter was approximately $11.23 billion.
5. CoWoS cutting orders? Wei Zhejia: Rumors abound, continuous expansion to meet customer needs
TSMC says it will make an appearance, foreign investors are concerned about whether CoWoS's order cuts will slow down production expansion? Chairman Wei Zhejia responded by saying that there were many rumors and that the company continued to expand production to meet customer demand, directly dispelling related rumors and gossip.
Wei Zhejia revealed that the mass production of the most advanced process must be closely followed by research and development, which is why the most advanced process must be mass-produced in Taiwan first. Therefore, the most advanced process has nothing to do with N-2 in Taiwan.
As for communication with US officials, Wei Zhejia said, 'We have close communication with current and future government agencies, that's all I can say.'.
