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Quarterly Earnings ​

Q4 2024 ​

As a reminder, six factors determine TSMC's profitability: leadership technology development and ramp-up, pricing, cost reduction, technology mix, capacity utilization and foreign exchange rate.

Underpinned by our technology leadership and broad customer base, we now forecast the revenue growth from AI accelerators to approach a mid-40% CAGR for the five-year period starting off the already higher base of 2024. We expect AI accelerators to be the strongest driver of our HPC platform growth and the largest contributor in terms of our overall incremental revenue growth in the next several years.

For the five-year period starting from 2024, we expect our long-term revenue growth to approach a 20% CAGR in US dollar term, fueled by all four of our growth platforms, which are smartphone, HPC, IoT and automotive.

Building on the successful result of our earlier engineering wafer production, we were able to pull ahead the production schedule of our first fab in Arizona. Our first fab has already entered the high-volume production in 4Q '24, utilizing N4 process technology with a yield comparable to our fabs in Taiwan. We expect a smooth ramp-up process. And with our strong manufacturing capability and execution, we are confident to deliver the same level of manufacturing quality and reliability from our fab in Arizona as from our fabs in Taiwan.
Our plans for the second fab and third fab in Arizona are also on track. These fabs will utilize even more advanced technologies such as our N3, N2 and A16, based on our customers' needs.

We believe N2, N2P, A16 and its derivative will further extend our technology leadership position and enable TSMC to capture the growth opportunity going into the future.

And secondly, the US fab cost, it is more expensive in the US, mainly because of several reasons. Number one, the smaller scale, right? Now number two, the higher price in the supply chain; and number three, the very early stage of the ecosystem. So if you add all these up, as we said, 2% to 3% dilution from our overseas fabs every year in the next 5 years.

Let me answer the second question first. Do we charge a little bit higher? Yes, we did, because we have a value of geographic flexibility, right? And you guys know Made in USA is a premium product. Yes, we discussed with our customers, and they all agreed and happy to work with TSMC so that we can -- because of the cost structure over there, so it's a little bit higher price over there.

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