[News] TSMC Earnings Conference: Q1 Revenue Estimated to Drop 6.2%, Expects Over 20% Annual Growth

TSMC reported its Q4 2023 financial results, disclosing consolidated revenue of NT$625.53 billion, net income of NT$238.71 billion, and diluted earnings per share of NT$9.21 (US$1.44 per ADR unit). The figures show a flat year-over-year performance in revenue, with a 19.3% decrease in net income and diluted EPS. However, compared to Q3 2023, Q4 demonstrated a robust 14.4% increase in revenue and a 13.1% rise in net income. All financials adhere to TIFRS on a consolidated basis.

In US dollars, Q4 revenue amounted to $19.62 billion, marking a 1.5% YoY decrease but a significant 13.6% increase from the preceding quarter. Key margins for the quarter include a gross margin of 53.0%, operating margin of 41.6%, and a net profit margin of 38.2%.

Notably, in Q4, 3-nanometer shipments constituted 15% of total wafer revenue, 5-nanometer accounted for 35%, and 7-nanometer contributed 17%. Advanced technologies, encompassing 7-nanometer and beyond, comprised 67% of total wafer revenue, highlighting TSMC’s commitment to cutting-edge semiconductor production.

Outlook for 2024: Anticipating a 6.2% Q1 Revenue Decline and Gross Margin of 52-54%; Full-Year Revenue Estimated to Grow 21% to 26%

TSMC foresees a approximately 6.2% quarter-on-quarter decline in revenue for the first quarter of 2024, with President CC Wei expressing optimism for healthy growth throughout the year. The full-year revenue growth is projected to surpass the 20% benchmark in the semiconductor foundry industry, ranging between 21% and 26%.

TSMC CFO Wendell Huang noted that the demand for high-performance computing remains robust. However, due to seasonal factors of the smartphone industry, Q1 2024 revenue is estimated to be around $18 billion to $18.8 billion, representing a 6.2% decline when calculated at the midpoint. The gross margin is anticipated to be approximately 52% to 54%, maintaining a level comparable to the fourth quarter of the previous year, while the operating profit margin is expected to be around 40% to 42%.

CC Wei stated that the semiconductor industry’s revenue, excluding memory, is expected to grow by 10% this year. Foundry industry revenue is also projected to grow by 20%. Leveraging its leading process technology, TSMC anticipates its revenue growth in 2024 to outpace the industry standard, ranging from 21% to 26%.

Regarding the 3-nanometer manufacturing process, CC Wei mentioned that mass production has commenced in the second half of 2023, contributing approximately 6% to the annual revenue. With the impetus from smartphone and high-performance computing demands, the revenue share of the 3-nanometer process is expected to increase to 15% in 2024.

Capital Expenditure: A 16% Decrease in 2023, Estimated to Fall to $28-32 Billion in 2024

TSMC disclosed a total capital expenditure of $30.45 billion for the full year of 2023, a 16.1% decrease from the $36.29 billion spent in 2022. TSMC projects capital expenditures for 2024 to range between $28 billion and $32 billion.

(Image: TSMC)