3-nanometer shipments account for 15% of total wafer revenue.
TSMC today announced that for the second quarter ending June 30, 2024, consolidated revenue was NT$ 673.51 billion, net income was NT$ 247.85 billion, and diluted earnings per share were NT$ 9.56 (US$ 1.48 per ADR).
Compared to the same period last year, second-quarter revenue increased by 40.1%, with net income and diluted earnings per share both growing by 36.3%. Compared to the first quarter of 2024, second-quarter revenue increased by 13.6%, and net income grew by 9.9%. All figures are compiled in accordance with TIFRS.
In US dollar terms, the second-quarter revenue was US$ 20.82 billion, a year-on-year increase of 32.8% and a sequential increase of 10.3%. This result is slightly above the company's guidance range of US$ 19.6 billion to US$ 20.4 billion.
TSMC attributes its sequential revenue growth in the second quarter to strong demand for its industry-leading 3nm and 5nm technologies, although ongoing seasonality in smartphones slightly offset this growth.TSMC's second-quarter gross margin and operating profit margin were 53.2% and 42.5%, respectively, slightly higher than the expectations set in mid-April. The gross margin increased by 0.1% from the previous quarter, mainly due to cost improvements and favorable foreign exchange rates, but was slightly offset by the dilution of profit margins brought about by the ramp-up of N3 capacity.
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From a technical perspective, the 3nm process technology accounted for 15% of TSMC's total wafer revenue in the second quarter, while 5nm and 7nm accounted for 35% and 17%, respectively. Advanced technologies (7nm and below) generated 67% of TSMC's total wafer revenue in the second quarter of 2024.
In the second quarter, high-performance computing device order revenue accounted for 52% of TSMC's total, with a sequential increase of 6%, while smartphone chip order revenue declined by 5% to 33%. In the second quarter of 2024, revenue from the Internet of Things, automotive, digital consumer electronics, and other sectors accounted for 6%, 5%, 2%, and 2% of TSMC's total revenue, respectively.
In the second quarter of 2024, sales from North American customers accounted for 65% of TSMC's total revenue, followed by revenue from China, the Asia-Pacific region, Japan, and EMEA (Europe, the Middle East, and Africa), accounting for 16%, 9%, 6%, and 4%, respectively. China was the only region to achieve continuous growth, higher than the previous quarter's 9%.
TSMC Senior Vice President and Chief Financial Officer, Wen-Deh Huang, said, "In the second quarter, our strong business growth was driven by the market's robust demand for our industry-leading 3nm and 5nm technologies, but the ongoing seasonal factors in smartphones partially offset this growth. As we enter the third quarter of 2024, we expect the strong demand for our cutting-edge process technologies from smartphones and AI-related products to support our performance."
TSMC expects revenue for the third quarter of 2024 to be between $22.4 billion and $23.2 billion, with a median year-over-year growth of 32%. The gross margin and operating profit margin for this quarter are expected to be between 53.5%-55.5% and 42.5%-44.5%, respectively. TSMC has also narrowed its capital expenditure forecast for this year to between $30 billion and $32 billion.
Since the surge of artificial intelligence at the end of 2022, the stock price of the world's largest advanced chip manufacturer has more than doubled and set a series of historical highs, as the company's market value once broke through the $1 trillion mark.TSMC's 3nm Chip Monthly Output Expected to Exceed 100,000 Units
According to industry insiders, in the second half of this year, TSMC's monthly output of 3nm chips is expected to increase from the current 100,000 units to 125,000 units. The increase in production is the result of this pure-play foundry rapidly expanding its capacity to meet the demands of major customers such as Apple, Intel, Qualcomm, and MediaTek.
Semiconductor equipment company sources have revealed that TSMC's 5nm and 3nm process capacities are fully utilized, with the 3nm capacity already in short supply.
Furthermore, sources have indicated that TSMC's 2nm fabs located in Hsinchu Science Park in northern Taiwan and Kaohsiung in southern Taiwan are advancing towards mass production. The foundry is expected to start mass production of the 2nm process technology from the fourth quarter of 2025, with a target monthly capacity of 30,000 wafers.
Industry experts anticipate that after the Kaohsiung fab starts production, TSMC's monthly output of 2nm wafers will reach between 120,000 to 130,000 units. The introduction of the N2 technology is expected to increase TSMC's top foundry pricing from $19,000-21,000 per 3nm wafer to $25,000-26,000 per 2nm wafer.
TSMC supply chain sources have disclosed that, in response to ongoing geopolitical concerns and the high uncertainty of the global political economy, TSMC has taken measures to strengthen cost and profit control. This includes leveraging its competitive advantages to raise foundry pricing while reducing equipment procurement costs.
TSMC's 5/4nm chip orders are fully booked, with prices adjusted at the beginning of this year. Meanwhile, although TSMC's 7/6nm capacity is only around 80%, the depreciation costs have been amortized, resulting in stable prices and considerable profits. Additionally, sources have revealed that TSMC is negotiating price reductions with major material and equipment suppliers in Europe, the United States, and Japan. Through these two strategies, TSMC's profitability has stabilized.
TSMC's 2nm process manufacturing will primarily take place in its fabs located in the Baoshan New District and Kaohsiung New District in Taiwan. TSMC has stated that its N2 technology development is on schedule and progressing smoothly. N2 technology is the company's first-generation nanosheet transistor technology, achieving a full-node leap in performance and power consumption. Mass production is expected to commence in 2025.
Sources have stated that TSMC will also introduce a backside power rail solution suitable for HPC applications in the second half of 2025 and will start mass production in 2026.*Statement: This article is the original creation of the author. The content of the article represents the author's personal views. Our reposting is solely for the purpose of sharing and discussion, and does not represent our endorsement or agreement. If there are any objections, please contact the backend.
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