TSMC: Record quarter thanks to Nvidia, Intel, Apple, Mediatek and Qualcomm

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The world's largest chip contract manufacturer TSMC from Taiwan surprises with even better figures than forecast. The company generated revenue of 23.5 billion US dollars in the third quarter of 2024 – 36 percent more than a year earlier. Net profit increased even more: by 51% to a good 10 billion US dollars.

Apart from price increases, the biggest revenue driver is lucrative 3-nanometer wafers, whose production is picking up speed with TSMC's second generation N3E. The first N3B generation is said to have suffered from an insufficient chip yield. For the first time, the 3 nm share is 20 percent. The largest 3nm customer is Apple with its ARM processors for iPhones, Macbooks and Macs.

Intel now also buys 3 nm chips from TSMC for the Core Ultra 200 Lunar Lake and Arrow Lake, albeit still using the old N3B process. The first 3 nm mobile processors for smartphones will soon be coming from Qualcomm and Mediatek.

TSMC benefits from the AI boom via Nvidia

The 5 nm class remains at a high level. This also includes the improved N4, N4P and N4X processes, which TSMC officially markets as 4 nm. Nvidia is likely to be the largest customer with its AI accelerators of the Hopper and Blackwell generations as well as the GPUs for GeForce graphics cards.

TSMC rates all processes from the 7 nm generation onwards as advanced. These production generations account for a high 69 percent of total chip production.

The increase in profits accompanied by an increase in the gross margin from 53.2 to 57.8 percent within just three months is also due to alleged price increases. Allegedly because TSMC never comments on wafer prices – but there were rumors that are now reflected in the figures.

Sales distribution by process

A roundabout way of calculating how much chip production accounts for: According to TSMC, the 7, 5 and 3 nm classes (including 6 and 4 nm) account for around 440–445 billion Taiwan dollars (NTD) – here the chip manufacturer does not provide any US dollar figures. With the remaining 31 percent, chip production would have to come to a good 640 billion NTD, which would correspond to 85 percent of total sales (759.7 billion in NTD).

If current exchange rates are used, chip production would end up with a turnover of just under 20 billion US dollars. The 5 nm class would be at 8.4 billion. This breakdown shows why TSMC has little interest in car manufacturers: they only account for five percent of turnover. In Dresden, TSMC produces chips with structure widths of 28 to 12 nm, whereby 12 nm represents an improved 16 nm process and belongs to the same class. TSMC recently generated the equivalent of 3 billion US dollars in turnover with these chips.

How much money TSMC earns with various manufacturing processes
Revenue	Revenue [NTD, in billions, rounded]	Converted revenue [USD, in billions, rounded]
Total revenue	759,7	23,5
Total chip production	640	20*
3 nm class	128	4*
5 nm class	269	8,4*
7 nm class	109	3,4*
16 nm class	51	1,6*
28 nm class	45	1,4*
40 nm and beyond	16	0,5*
Remains**	120	3,8*
*estimated at current exchange rate **including chip packaging

Packaging share growing

The remaining 15 percent (around 3.8 billion US dollars) comes mainly from packaging. Advanced packaging, in which several chiplets are joined together on a common carrier, is particularly lucrative.

TSMC is currently continuously increasing its packaging capacity, primarily to produce more AI accelerators for Nvidia. In the second quarter, the share of TSMC's remaining revenue, including packaging, was still 10 percent.

The increase in profits, accompanied by an increase in the gross margin from 53.2 to 57.8 percent within just three months, is also due to alleged price increases. Allegedly because TSMC never comments on wafer prices – but there were rumors that are now reflected in the figures.

In the current fourth quarter, TSMC expects sales of between 26.1 billion and 26.9 billion US dollars. The stock market reacted enthusiastically to the figures: The share price shot up by almost 9 percent after the announcement.

(mma)