Key Takeaways
- Taiwan Semiconductor reported Q3 net sales of $33.1 billion, exceeding analyst estimates of $31.5 billion.
- AI-driven demand bolstered quarterly net income to $15.10 billion, a 39% YoY increase.
- The company forecasts Q4 revenues between $32.20 billion and $33.40 billion, reflecting continued strong demand in AI technologies.
Taiwan Semiconductor’s Strong Q3 Performance
Taiwan Semiconductor Manufacturing Co. (NYSE: TSM) experienced a notable rise in its stock on Thursday, following an impressive third-quarter earnings report that exceeded analyst expectations. The company has capitalized on strong global demand for its advanced processor technologies crucial for artificial intelligence applications. As a contributor to industry giants like Nvidia and Apple, TSMC’s performance underscores its vital role in the tech ecosystem.
In Q3, TSMC reported net sales of $33.1 billion (approximately 989.9 billion New Taiwanese dollars), representing a year-over-year growth of 30.3%. This figure surpasses the analyst consensus estimate of $31.5 billion and also marks a 6.0% increase from the previous quarter. The net income reached $15.10 billion, with a corresponding earnings per share of $2.92, both significantly higher than the expected $2.59.
The revenue breakdown reveals a strong reliance on advanced technologies, with 3-nm chips constituting 23%, 5-nm at 37%, and 7-nm at 14%. High-Performance Computing and Smartphones contributed 57% and 30% to the net revenue, respectively. Geographically, North America generated 76% of the company’s total net revenue, while the Asia Pacific region accounted for only 9%.
The company’s profitability improved, with gross margins expanding by 170 basis points to 59.5%, exceeding guidance, while the operating margin also grew to 50.6%. However, free cash flow diminished, attributed to reduced operating cash flow, although capital expenditures for the quarter were reported at $9.70 billion.
Management highlighted the robust demand for its advanced process technologies. CEO C.C. Wei remarked on the unexpected strength of AI demand, pointing to rising requests for increased capacity from customers eager to meet market needs.
For Q4, TSMC expects revenues in the range of $32.20 billion to $33.40 billion, above the analyst consensus of $31.97 billion. The forecast includes anticipated gross margins of 59% to 61% and operating profit margins between 49% and 51%. TSMC’s stock has seen a year-to-date increase of over 54%, reflecting investor confidence in the company’s future performance amidst an evolving AI landscape.
The content above is a summary. For more details, see the source article.
