Finest Quarter Ever as HPC Income Share Exceeds 52% on AI Demand

Taiwan Semiconductor Manufacturing Co. this week stated its income for the second quarter 2024 reached $20.82 billion, making it the corporate’s finest quarter (a minimum of in {dollars}) thus far. TSMC’s high-performance computing (HPC) platform income share exceeded 52% for the primary time in a few years because of demand for AI processors and rebound of the PC market.

TSMC earned $20.82 billion USD in income for the second quarter of 2024, a 32.8% year-over-year enhance and a ten.3% enhance from the earlier quarter. Maybe extra exceptional, $20.82 billion is the next outcome than the corporate posted Q3 2022 ($20.23 billion), the foundry’s finest quarter thus far. In any other case, when it comes to profitability, TSMC booked $7.59 billion in web revenue for the quarter, for a gross margin of 53.2%. This can be a first rate bit off of TSMC’s file margin of 60.4% (Q3’22), and comes as the corporate continues to be within the means of additional ramping its N3 (3nm-class) fab traces.

In the case of wafer income share, the corporate’s N3 course of applied sciences (3nm-class) accounted for 15% of wafer income in Q2 (up from 9% within the earlier quarter), N5 manufacturing nodes (4nm and 5nm-classes) commanded 35% of TSMC’s earnings within the second quarter (down from 37% in Q1 2024), and N7 fabrication processes (6nm and 7nm-classes) accounted for 17% of the foundry’s wafer income within the second quarter of 2024 (down from 19% in Q1 2024). Superior applied sciences all collectively (N3, N5, N7) accounted for 67% of whole wafer income.

“Our enterprise within the second quarter was supported by sturdy demand for our industry-leading 3nm and 5nm applied sciences, partially offset by continued smartphone seasonality,” stated Wendell Huang, Senior VP and Chief Monetary Officer of TSMC. “Transferring into third quarter 2024, we count on our enterprise to be supported by sturdy smartphone and AI-related demand for our modern course of applied sciences.”

TSMC often begins ramping up manufacturing for Apple’s fall merchandise (e.g. iPhone) within the second quarter of the yr, so it’s not shocking that income share of N3 elevated in Q2 of this yr. But, protecting in thoughts that TSMC’s income usually elevated by 10.3% QoQ, the corporate’s shipments of processors made on N5 and N7 nodes are exhibiting resilience as demand for AI and HPC processors is excessive throughout the {industry}.

Talking of TSMC’s HPC gross sales, HPC platform gross sales accounted for 52% of TSMC’s income for the primary time in a few years. The world’s largest contract maker of chips produces many sorts of chips that get positioned underneath the HPC umbrella, together with AI processors, CPUs for consumer PCs, and system-on-chips (SoCs) for consoles, simply to call a couple of. But, on this case TSMC attributes demand for AI processors as the primary driver for its HPC success. 

As for smartphone platform income, its share dropped to 33% as precise gross sales declined by 1% quarter-over-quarter. All different segments grew by 5% to twenty%.

For the third quarter of 2024, TSMC expects income between US$22.4 billion and US$23.2 billion, with a gross revenue margin of 53.5% to 55.5% and an working revenue margin of 42.5% to 44.5%. The corporate’s gross sales are projected to be pushed by sturdy demand for modern course of applied sciences in addition to elevated demand for AI and smartphones-related purposes.