Taiwan Semiconductor Manufacturing Company (TSM) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue reached NT$673.51 billion (US$20.82 billion), up 10.3% sequentially and 32.8% year-over-year, driven by strong 3nm and 5nm demand, partially offset by smartphone seasonality.

• Net income attributable to shareholders was NT$247.85 billion, a 9.9% increase from 1Q24 and 36.3% higher than 2Q23.

• EPS for Q2 2024 was NT$9.56, up 9.9% sequentially and 36.3% year-over-year.

• Advanced technologies (7nm and below) contributed 67% of wafer revenue; HPC surpassed 50% of revenue for the first time.

• Dr. C.C. Wei was elected Chairman and CEO by the Board of Directors in June 2024.

Financial highlights

• Gross margin was 53.2%, slightly higher than 1Q24 and within guidance; operating margin stood at 42.5%, up 0.5 percentage points sequentially and year-over-year.

• Net profit margin was 36.8%, compared to 38.0% in 1Q24 and 37.8% in 2Q23.

• Free cash flow for Q2 2024 was NT$171.99 billion, down from NT$255.01 billion in 1Q24 but a significant improvement from negative free cash flow in 2Q23.

• Cash and marketable securities ended at NT$2,048.64 billion; CapEx was US$6.36 billion in Q2.

• Accounts receivable turnover improved to 28 days; inventory days dropped to 83.

Outlook and guidance

• Q3 2024 revenue expected at US$22.4–23.2 billion, up 9.5% sequentially and 32% YoY at midpoint.

• Q3 gross margin guided at 53.5%–55.5%, operating margin at 42.5%–44.5%.

• 2024 revenue growth forecast raised to slightly above mid-20s% in USD terms.

• Long-term gross margin of 53%+ remains achievable, with potential for higher if utilization is strong.

• Anticipates strong demand from smartphone and AI-related applications.