Taiwan Semiconductor Manufacturing Company (TSMC) recently concluded its earnings call for the second quarter of 2024, where it presented its financial data and future outlook. The company reported a 13.6% increase in revenue compared to the previous quarter, largely attributed to the revenue growth from its 3nm and 5nm processes. Although the smartphone market's seasonal factors partially offset this growth, TSMC's performance remained strong.

The gross margin for the second quarter improved to 53.2%, supported by favorable exchange rates, despite the ramp-up of 3nm process capacity. Operating expenses accounted for 10.5% of revenue, and the operating profit margin increased to 42.5%. Earnings per share for the quarter stood at 9.56 New Taiwan dollars, marking a 26.7% year-over-year growth.

In terms of process technology, the 3nm (N3) process contributed 15% of the wafer revenue, with 5nm and 7nm processes accounting for 35% and 17%, respectively. The high-performance computing (HPC) sector saw a 28% quarter-over-quarter growth, reaching a 53% share, surpassing the 50% mark for the first time. The smartphone sector experienced a 1% quarter-over-quarter decrease, with a 33% share. The Internet of Things (IoT) and automotive sectors saw respective increases of 6% and 5%, while data center equipment (DCE) grew by 20%.

TSMC's cash reserves reached $63 billion, with short-term liabilities at $23 billion, mainly due to increased accounts payable. The increase in liabilities was largely due to the issuance of $12 billion in corporate bonds. Inventory turnover decreased, primarily due to higher shipments of 3nm wafers. The company's cash flow for the quarter was $37.8 billion, with $20.6 billion allocated for capital expenditure and $9.1 billion for dividends.

For the third quarter, TSMC anticipates revenue to be between $22.4 billion and $23.2 billion, representing a 9.5% quarter-over-quarter growth and a 32% year-over-year increase. With an exchange rate assumption of 1 USD to 32.5 New Taiwan dollars, the gross margin is expected to be between 53.5% and 55.5%, and the operating profit margin is projected to be between 42.5% and 44.5%.

TSMC plans a capital expenditure between $30 billion and $32 billion for the full year, with 70% to 80% allocated to advanced processes, 10% to 20% for specialty processes, and 10% for advanced packaging and masks. The company emphasized that the higher capital expenditure is aimed at supporting customer demand and maintaining a technological edge.

TSMC also forecasts a strong year in 2024, with a projected revenue growth of slightly over mid-20%. The company remains optimistic about the demand for AI-related businesses and highlights the importance of higher energy-efficient processes. TSMC is committed to supporting customer development through its technological capabilities and providing value in the long term.

Additionally, TSMC discussed its next-generation technology, SPR (Super Power Rail), an innovative backplane power supply solution that enhances performance and density while maintaining density and flexibility. The company expects this technology to enter mass production in the second half of 2026, further solidifying its technological leadership.

During the Q&A session, TSMC addressed various topics, including capacity planning, gross margin expectations, the impact of government subsidies, the prospects for advanced packaging, and future shipments for smartphones and PCs. The company expressed confidence in achieving higher gross margins through strategic pricing and cost management, supporting the long-term development of its clients.