To The Moon

$Taiwan Semiconductor Manufacturing(TSM)$ 4Q2024 Earnings Highlight:

1. CoWoS demand growth, denial of order cuts

• Strong demand driver: Demand for CoWoS technology is growing significantly, with a surge in orders from customers such as NVIDIA, and CoWoS-L demand is expected to grow 1018% year-on-year in 2025.

• Capacity expansion plan: TSMC expects to increase its monthly capacity to 75,000 wafers by the end of 2025 to cope with the continuously growing market demand.

2. Strong performance in packaging and memory markets, strong demand in FY25

• Packaging business expansion: strong demand for HPC and AI chips, advanced packaging business revenue share increased from 8% to over 10%. over 10% revenue share by 2024, demand expected to grow 113% by 2025.

• Memory market growth: AI and cloud computing drive rapid growth of HBM (High Bandwidth Memory), working with multiple suppliers, but it will take 6-12 months to fully contribute revenue.

3. Technology and process progress

• Advanced process leadership: 3nm and 5nm processes contributed 26% and 34% of Q4 total revenue respectively, with advanced processes accounting for 74% of total revenue.

• 2nm technology breakthrough: 2nm process is expected to be mass-produced in the second half of 2025, and the upgraded N2P will be launched in the second half of 2026, with significant improvements in performance and energy efficiency.

• Progress of global plant expansion: Q4 mass production of 4nm plant in Arizona, with yield comparable to that of Taiwan plant; plant expansion in Europe and Japan is progressing as planned.

4. AI Revenue Contribution

• Significant growth: AI-related revenues accounted for the mid-teens percent of total median revenues in 2024 and are expected to double to $29 billion in 2025.

• Strong market demand: the AI gas pedal market is expected to grow at a CAGR of 40% from 2024-2029, with tech giants NVIDIA, Apple and others continuing to expand orders.

5. Finance and Capital Expenditures

• Revenue growth: Q4 2024 revenue grew 14.3% YoY; overall revenue in 2025 is expected to grow 20% to $113 billion.

• CapEx expansion: CapEx of $29.76bn in 2024, up 34% YoY; expected to grow to $38-42bn in 2025 for technology innovation and capacity expansion.

• Gross margin volatility: Q1 2025 gross margin estimated at 57%-59%, slightly diluted by 2nm ramp, CoWoS expansion and overseas plant impact.Q1 2025 sales estimated at $25bn-$25.8bn, AI business partially offsetting smartphone seasonal decline

6. Future market outlook

• Deepening of global layout: Multi-regional factories will be put into operation, expanding market coverage and strengthening competitive advantages.

• Continuous innovation drive: technological breakthroughs in silicon photonics, AI, and advanced packaging will provide the company with long-term stable growth momentum.

Through capacity expansion, technology leadership and the pull of AI demand, TSMC's position in the global semiconductor industry continues to be solid, and future performance is expected to realize strong growth.