Taiwan Semiconductor Manufacturing (TSM -2.01%), a pivotal player in the global semiconductor industry, released its earnings for Q4 2024 on January 16, 2025.
The results demonstrated robust growth across several key metrics. TSMC reported earnings per share (EPS) of $2.24, outpacing the analyst prediction of $2.20. Revenue similarly exceeded forecasts, totaling $26.88 billion against an expected $26.24 billion.
The quarter was marked by strong demand for TSMC's advanced technology nodes, leading to positive financial outcomes amid broader industry challenges.
| Metric | Q4 2024 | Q4 Estimate | Q4 2023 | Y/Y Change |
|---|---|---|---|---|
| EPS (US$) | $2.24 | $2.20 | $1.43 | +57.0% |
| Revenue (US$ Billion) | $26.9 | $26.24 | $19.6 | +37.0% |
| Gross Margin | 59.0% | N/A | N/A | N/A |
| Operating Margin | 49.0% | N/A | N/A | N/A |
| Net Income (NT$ Billion) | 374.7 | N/A | 238.7 | +57.0% |
Source: SEC filings. Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in 2024-10-17 earnings report.
Business Overview and Strategic Focus
Taiwan Semiconductor Manufacturing is renowned for its technological prowess in semiconductor manufacturing. It operates globally, serving diverse industries like mobile devices, high-performance computing, automotive electronics, and the Internet of Things (IoT).
The company's dedication to advanced technology, especially in processes like 3-nanometer and 5-nanometer nodes, positions it at the forefront of the semiconductor sector. TSMC's strategic focus includes expanding its global footprint and strengthening technological capabilities to cater to various high-demand sectors, enhancing diversification and reducing dependency risks.
Key success factors for TSMC include maintaining its edge in technology and leveraging its global market presence. It invests heavily in manufacturing and technological advancements to ensure leadership in the semiconductor industry, focusing on cutting-edge logic, mixed-signal, radio frequency, and embedded memory semiconductors.
Quarterly Highlights and Financial Achievements
The fourth quarter showcased significant achievements for TSMC, reflecting well on its strategy.
Revenue rose 37% year-over-year, driven by robust demand for advanced technology processes. These processes represented 74% of the total wafer revenue, with 3-nanometer technology alone contributing 26%. Operating profit margin increased significantly, reaching 49%, which surpassed management's guidance of 46.5%-48.5%. The gross margin also hit the higher end of expectations at 59%, reflecting strong internal efficiencies and high demand.
Revenue growth was attributed in part to demand for high-performance and mobile applications. CEO Wendell Huang noted that 3-nanometer and 5-nanometer technologies led the successful quarter. Advanced technologies and their adoption reflected TSMC's prowess in catering to high-end customer needs and technological trends.
While geopolitical tensions, especially between the U.S. and China, posed challenges, TSMC managed its global presence strategically. Rising electricity costs in Taiwan also emerged as a concern, yet the company effectively managed these pressures, sustaining its profitability margins. No significant one-time events were stated, nor changes in dividends for this quarter.
Future Outlook
Looking ahead, TSMC has offered a cautious yet optimistic outlook for the first quarter of 2025. Management forecasts revenues between $25.0 billion and $25.8 billion, balancing slowdowns in smartphone demand with an uptick in artificial intelligence-related products. Gross and operating profit margin expectations suggest a potential alignment with Q4 2024 figures, indicating stability amidst global challenges.
The company's capital expenditure plan between $38 billion to $42 billion for 2025 underscores its commitment to growth and technological advancement. This investment aims to expand capacity, especially in international locations like Arizona, Kumamoto, and Dresden, thus maintaining its leadership. In summary, TSMC plans to leverage its strengths to navigate future uncertainties and continue capturing market opportunities.
