TSM earnings call for the period ending December 31, 2024.
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Taiwan Semiconductor Manufacturing (TSM 2.66%)
Q4 2024 Earnings Call
Jan 16, 2025, 1:00 a.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Jeff Su — Director of Investor Relations
[Foreign language] Good afternoon, everyone, and welcome to TSMC’s fourth quarter 2024 earnings conference call. This is Jeff Su, TSMC’s and your host for today. Today’s event is being webcast live through TSMC’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 fourth quarter 2024, followed by our guidance for the first quarter 2025. 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 both the floor and the line for the 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 refer to the safe harbor notice that appears in our press release. And now, I would like to turn the microphone over to TSMC’s CFO, Mr. Wendell Huang, for the summary of operations and the current quarter guidance.
Wendell Huang — Vice President, Chief Financial Officer
Thank you, Jeff. Good afternoon, everyone. Thank you for joining us today. My presentation will start with financial highlights for the fourth quarter of 2024.
After that, I will provide the guidance for the first quarter of 2025. Fourth quarter revenue increased 14.3% sequentially in NT, supported by strong demand for our industry-leading 3-nanometer and 5-nanometer technologies. Gross margin increased by 1.2 percentage points sequentially to 59%, mainly reflecting a higher capacity utilization rate and productivity gains, partially offset by the dilution of 3-nanometer ramp-up. With operating leverage, total operating expenses accounted for 10% of net revenue.
Thus, operating margin increased by 1.5 percentage points sequentially to 49%. Overall, our fourth quarter EPS was TWD 14.45 and ROE was 36.2%. Now let’s move on to revenue by technology. 3-nanometer process technology contributed 26% of wafer revenue in the fourth quarter.
Five-nanometer and 7-nanometer accounted for 34% and 14%, respectively. Advanced technologies, defined as 7-nanometer and below, accounted for 74% of wafer revenue. On a full year basis, 3-nanometer revenue accounted for 18% of 2024 wafer revenue; 5-nanometer, 34%; 7-nanometer, 17%. Advanced technologies accounted for 69% of total wafer revenue, up from 58% in 2023.
Moving on to revenue contribution by platform. HPC increased 19% quarter over quarter to account for 53% of our fourth quarter revenue. Smartphones increased 17% to account for 35%. IoT decreased 15% to account for 5%.
Automotive increased 6% to account for 4%. DCE decreased 6% to account for 1%. On a full year basis, HPC increased 58% year on year. Smartphone, IoT, automotive, DCE increased 23%, 2%, 4%, and 2%, respectively, in 2024.
Overall, HPC accounted for 51% of our 2024 revenue. Smartphone accounted for 35%. IoT accounted for 6%, and automotive accounted for 5%. Moving on to the balance sheet.
We ended the fourth quarter with cash and marketable securities of TWD 2.4 trillion or USD 74 billion. On the liability side, current liabilities increased by TWD 184 billion, mainly due to the increase of TWD 71 billion in accounts payable, an increase of TWD 99 billion in accrued liabilities and others. In terms of financial ratios, accounts receivable turnover days declined by 1 day to 27 days, while inventory days decreased by 7 days to 80 days primarily due to shipment of N3 and N5 wafers. Regarding cash flow and capex.
During the fourth quarter, we generated about TWD 620 billion in cash from operations, spent TWD 362 billion in capex, and distributed TWD 104 billion for the first quarter ’24 cash dividend. Overall, our cash balance increased TWD 241 billion to TWD 2.1 trillion at the end of the quarter. In U.S. dollar terms, our fourth quarter capital expenditures totaled TWD 11.2 billion.
