Taiwan Semiconductor Manufacturing Co Ltd (NYSE:TSM) Q3 2024 Earnings Conference Call October 17, 2024 2:00 AM ET

For the period ending September 30, 2024

October 17, 2024 2:00 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Jeff Su

Good afternoon, everyone, and welcome to TSMC's Third Quarter 2024 Earnings Conference Call. This is Jeff Su, TSMC's Director of Investor Relations and your host for today. TSMC is hosting our earnings conference call via live audio webcasts through the company's website at www.tsmc.com, where you can also download the earnings release materials. If you are joining us through the conference call, your dial-in lines are in listen-only mode.

The format for today's event will be as follows. First, TSMC's Senior Vice President and CFO, Mr. Wendell Huang, will summarize our operations in the third quarter 2024, followed by our guidance for the fourth quarter 2024. Afterwards, Mr. Huang and TSMC's Chairman and CEO, Dr. C.C. Wei, will jointly provide the company's key messages. Then we will open the line for a question and answer session.

As usual, I would like to remind everybody that today's discussions may contain forward-looking statements that are subject to significant risks and uncertainties, which could cause actual results to differ materially from those contained in the forward-looking statements. Please do refer to the safe harbor notice that appears in our press release.

And now I would like to turn the call over to TSMC's CFO, Mr. Wendell Huang, for the summary of operations and the current quarter guidance.

Wendell Huang

Thank you, Jeff. Good afternoon, everyone. Thank you for joining us today. My presentation will start with the financial highlights for the third quarter of 2024. After that, I will provide the guidance for the fourth quarter of 2024.

Third quarter revenue increased 12.8% percent sequentially in NT, as our business was supported by strong smartphone and AI-related demand for our industry-leading 3-nanometer and 5-nanometer technologies.

Gross margin increased by 4.6 percentage points sequentially to 57.8%, mainly reflecting a higher capacity utilization rate and cost improvement efforts. Due to operating leverage, total operating expenses accounted for 10.4% of net revenue. Thus, operating margin increased by 5 percentage points sequentially to 47.5%. Overall, our third quarter EPS was 12.54 NT and ROE was 33.4%.

Now let's move on to revenue by technology. 3-nanometer process technology contributed 20% of wafer revenue in the third quarter, while 5-nanometer and 7-nanometer accounted for 32% and 17% respectively. Advanced technologies, defined as 7-nanometer and below accounted for 69% of wafer revenue.