--- title: "Taiwan Semiconductor Q2 financial report exceeds expectations in all aspects, will focus on expanding production of advanced processes, and raise full-year capital expenditure" description: "Taiwan Semiconductor announced its second-quarter financial report for 2024, achieving double-digit growth in revenue and profit, exceeding market expectations. Revenue mainly comes from advanced proc" type: "news" locale: "en" url: "https://longbridge.com/en/news/209203718.md" published_at: "2024-07-18T09:05:03.000Z" --- # Taiwan Semiconductor Q2 financial report exceeds expectations in all aspects, will focus on expanding production of advanced processes, and raise full-year capital expenditure > Taiwan Semiconductor announced its second-quarter financial report for 2024, achieving double-digit growth in revenue and profit, exceeding market expectations. Revenue mainly comes from advanced process products, with the 3nm process showing the largest revenue increase and expected to continue growing. The demand for mobile phones and AI-related products will also drive the demand for advanced processes. Taiwan Semiconductor's stock price has also risen. Taiwan Semiconductor plans to increase capital expenditures, focusing on expanding production capacity for advanced processes On July 18, TSMC announced its financial report for the second quarter of 2024, with core financial indicators showing double-digit growth both year-on-year and quarter-on-quarter. In the second quarter, TSMC achieved revenue of NT$673.51 billion, a year-on-year increase of 40.1% and a quarter-on-quarter increase of 13.6%, surpassing market expectations of NT$658.14 billion; Net profit was NT$247.8 billion, up 36.3% year-on-year and 9.9% quarter-on-quarter, exceeding market expectations of NT$235 billion; Operating profit reached NT$286.56 billion, a year-on-year increase of 41.9% and a quarter-on-quarter increase of 15.1%, surpassing market expectations of NT$274 billion. Additionally, the gross profit margin for the second quarter was 53.2%, higher than the market expectation of 52.6%; operating profit margin was 42.5%, and net profit margin was 36.8%. **Both actual revenue and actual gross profit margin, operating profit margin have exceeded the upper limit of TSMC's previous forecast range**. During the April earnings call, TSMC forecasted its second-quarter USD revenue to be between $19.6 billion and $20.4 billion. Calculated at an exchange rate of 1 USD to 32.3 NTD, this translates to revenue of approximately NT$633 billion to NT$658.92 billion; the estimated gross profit margin for the second quarter was 51%-53%, and the operating profit margin was 40%-42%. TSMC's US stock market maker saw a short-term rally in after-hours trading, with the pre-market increase expanding to 3.86% at the time of writing. **▌3nm Process Shows High Growth Potential** Advanced process products remain the revenue backbone. In the second quarter, **TSMC's advanced process** (7nm and below) accounted for 67% of wafer revenue, an increase of 2 percentage points from the previous quarter (65%). TSMC stated that 3nm process products contributed to performance, accounting for 15% of wafer revenue this quarter; 5nm and 7nm accounted for 35% and 17%, respectively. Benefiting from the introduction of 3nm technology in Apple's iPhones, this part of TSMC's business officially started in the third quarter of last year. It can be seen that in the second quarter of this year, among all product lines, **revenue growth of the 3nm process was the highest, achieving a doubling quarter-on-quarter growth**. Currently, the main application scenario for the 3nm process is high-end smartphones. With more high-performance computing (HPC) customers such as Qualcomm and MediaTek adopting 3nm technology in 2024, its growth is expected to continue **▌Mobile and AI-related products are expected to continue driving demand for advanced processes** Currently, HPC (High-Performance Computing) has firmly replaced the mobile business, becoming the core of TSMC's performance. In the second quarter, this business saw a significant increase in revenue by 28% compared to the previous quarter, followed closely by the DCE business, which includes Digital Consumer Electronics such as T-Con, PMIC, WiFi chips, targeting applications like set-top boxes and smart TVs, with a revenue growth of 20% compared to the previous quarter. Image Source: TSMC Financial Report Image Source: TSMC Financial Report The above graphs clearly show the growth of TSMC's various businesses. It is worth noting that **the market generally believes that TSMC's AI business is included in these two businesses (HPC and DCE)**. Research firm Counterpoint previously estimated that in 2023, TSMC's AI chip revenue accounted for approximately 13% of its HPC revenue, and is expected to reach around 15.4% in 2024. Counterpoint has suggested that AI-enabled smart devices mentioned in DCE may be related to this part of the AI business. Furthermore, in the second quarter, **the mobile market, which accounts for 33% of the performance, still shows no significant signs of recovery, with a revenue decline of 1% compared to the previous quarter, being the only part of the business that declined, significantly dragging down performance**. TSMC's Senior Vice President and Chief Financial Officer, Wendell Huang, stated: "In the second quarter, the strong growth of our business **was driven by robust demand for 3nm and 5nm technologies**, but the continued seasonal factors in mobile partially offset this growth. **Entering the third quarter of 2024, it is expected that the strong demand for advanced process products from mobile and AI-related products will support performance**." **▌Raising Capital Expenditure Again, Expansion Focus on 3nm/2nm Processes, COWOS Packaging** **TSMC has provided positive performance outlook and a capital expenditure plan that exceeds market expectations—** TSMC Chairman and CEO C.C. Wei stated that TSMC's 2024 sales growth guidance in US dollars has been raised to above the mid-20% range; expected third-quarter sales of $22.4 billion to $23.2 billion; gross margin of 53.5% to 55.5%, with market estimates at 52.5%; operating margin between 42.5% and 44.5% Capital expenditures for the full year of 2024 are expected to be between USD 30 billion and USD 32 billion. The previous capital expenditure guidance was USD 28 billion to USD 32 billion, with the market estimating USD 29.55 billion. **More resources will continue to be allocated to high-demand advanced process capacity and AI products.** TSMC stated that **demand for the 3nm process is very strong, and more 5nm processes may be converted to 3nm**. The construction of the N2 factory (2nm process chip production line) is progressing smoothly, with N2 process planned for mass production in 2025. **In 2025, COWOS packaging capacity will double compared to 2024**, and COWOS packaging capacity will remain tight in 2025. According to DIGITIMES, industry insiders revealed that in the second half of this year, TSMC's 3nm chip monthly output will increase from the current 100,000 pieces to 125,000 pieces to meet the demand of major customers such as Apple, Intel, Qualcomm, and MediaTek. According to sources from semiconductor equipment companies, TSMC's 5nm and 3nm process capacities are already fully loaded, especially the 3nm capacity is in short supply. TSMC's current 5/3nm process capacity utilization rate has reached 100%, with the fastest mass production of 2nm expected in the fourth quarter of 2025, with a target monthly capacity of 30,000 pieces. With the future volume production in the Kaohsiung plant, the combined monthly capacity of Hsinchu and Kaohsiung is expected to reach 120,000 to 130,000 pieces ### Related Stocks - [TSM.US - Taiwan Semiconductor](https://longbridge.com/en/quote/TSM.US.md) ## Related News & Research | Title | Description | URL | |-------|-------------|-----| | Stratechery 创始人深度访谈：预警 2029 年大规模 “芯片荒”，SaaS 模式将终结，广告才是 AI 终极商业闭环 | Ben Thompson 警告，台积电保守扩产或致 2029 年全球芯片短缺，巨头需分担建厂风险。在对巨头点评中，他认为 Meta 执行力最佳；谷歌混乱但有韧性；亚马逊自研芯片策略面临风险。展望未来，他指出在数字世界高度发达后，“现场” 体 | [Link](https://longbridge.com/en/news/276001569.md) | | 反超三星、利润率盖过台积电：SK 海力士是如何问鼎 AI 存储领域 “隐形霸主” 的？ | SK 海力士过去 12 个月市值飙升 340%，已从债权人控制的 “僵尸公司” 逆袭为 AI 产业链定价者。其凭借 HBM 先发优势，在 AI 需求爆发的浪潮下，深度绑定英伟达与微软，拿下全球过半 HBM 份额；市占率超越三星，利润率超越台 | [Link](https://longbridge.com/en/news/275576275.md) | | 特朗普暗示违法征收的关税不退了，美财长称今年关税收入将 “基本保持不变” | 美国总统特朗普暗示不会退还被最高法院裁定违法的关税，预计 2026 年关税收入将保持不变。特朗普计划签署行政令，对全球商品加征 10% 进口关税，取代被推翻的关税。财长贝森特表示，政府将利用替代法律权力维持关税收入，强调国家安全和财政收入不 | [Link](https://longbridge.com/en/news/276494362.md) | | 美财政部让步，拟修订主权财富基金税收提案，此前遭私募业警告 | 美国财政部正就一项针对主权财富基金和公共养老基金征税方式进行全面改革的提案作出让步。相关提案此前由美国国税局提出，拟更新税法第 892 条，将这些基金持有的多数美国债务投资归为商业活动，这将令其面临被征税的风险。此前，私募信贷和私募股权公司 | [Link](https://longbridge.com/en/news/276491732.md) | | Adamas Trust Pref Share ADAMM 7.875 Perp 01/15/25｜10-K：2025 财年营收 6.02 亿美元 | | [Link](https://longbridge.com/en/news/276492616.md) | --- > **Disclaimer**: This article is for reference only and does not constitute any investment advice.