On January 18th, TSMC released its fourth quarter financial report for 2023. According to financial report data, TSMC's revenue in the fourth quarter of 2023 was 625.5 billion New Taiwan dollars, which was basically unchanged year-on-year; The net profit was NT $238.7 billion, although a year-on-year decrease of 19.3% compared to the same period last year, it was better than the market expectation of NT $224.1 billion; The earnings per share are 9.21 New Taiwan Dollars. In 2023, TSMC achieved a revenue of NT $2161.74 billion, a decrease of 4.5% compared to the same period last year; The net profit margin was 38.8%, a decrease from 44.9% of the previous year. Diluted earnings per share were NT $32.34, a decrease of 17.5% from NT $39.2 in the previous year.
In the fourth quarter of 2023, TSMC's advanced technology (7nm and below) accounted for 67% of the total wafer revenue; TSMC's 3nm process technology contributed 15% of the total wafer revenue in the fourth quarter of 2023; 5nm and 7nm account for 35% and 17% respectively. Specifically, in terms of revenue from various platforms, in 2023, the smartphone business and high-performance computing (HPC) business accounted for 38% and 43% of the total revenue, respectively; The Internet of Things (IoT), automobiles, and digital consumer electronics (DCE) account for 8%, 6%, and 3% of revenue, respectively. From a regional perspective, revenue from customers in North America accounts for nearly 70% of total net revenue, while revenue from China, Asia Pacific, Japan, and EMEA (Europe, Middle East, and Africa) account for 12%, 8%, 6%, and 6% of total net revenue, respectively.
TSMC Vice President and Chief Financial Officer Huang Renzhao stated that our business experienced sustained strong growth in the industry leading 3nm technology in the fourth quarter. As we enter the first quarter of 2024, some of our business will be affected by seasonal smartphone demand, but some of the impact will be offset by sustained demand for high-performance computing. Based on the current business outlook of the company, the management predicts that the revenue for the first quarter of 2024 will be between $18 billion and $18.8 billion; The expected gross profit margin will be between 52% and 54%; The expected operating profit margin is between 40% and 42%. The annual revenue in 2024 will increase by 20-25% year-on-year, and the compound growth rate of revenue in the coming years will be between 15-20%; The capital budget will be between $28 billion and $32 billion.
According to a report by Xinxi, due to factors such as the epidemic, the delivery time of its advanced and mature process equipment has been extended. Last year, TSMC lowered its capital expenditure twice, from an initial estimate of 40 billion to 44 billion US dollars to nearly 40 billion US dollars, and then again to 36 billion US dollars. According to a report from Taiwan's Economic Daily cited by Interface News, on January 18th, TSMC held a legal briefing, attended by TSMC Chairman Liu Deyin and President Wei Zhejia. TSMC's financial report shows that the actual US dollar capital expenditure in the fourth quarter of last year was about 5.24 billion US dollars, a new low for a single quarter last year. The cumulative US dollar calculated capital expenditure for the entire year of 2023 is about 30.45 billion US dollars, a decrease from the previous year and lower than the company's October expectations, still reaching a low margin of 32 billion US dollars.
According to the performance briefing held by TSMC on the 18th, cited by the First Financial Times, Wei Zhejia, the output value of the semiconductor industry (excluding the memory industry) is expected to grow by more than 10% in 2024, and the wafer foundry industry will grow by 20%. Driven by the demand for artificial intelligence and HPC, the annual revenue will grow by 21% to 25% in US dollars, which means that AI and HPC are TSMC's focus of work this year. It is reported that about 70% to 80% of TSMC's capital expenditure this year is spent on advanced process technology, 10% to 20% on mature and special process technology, and 10% on advanced packaging testing and mask production. According to Caixin News, TSMC expects its customers to maintain strong demand for 3nm technology for many years; And the development of 2nm process technology is progressing smoothly, with plans to start mass production in 2025. The 2nm process technology will help TSMC seize future opportunities related to AI.
In addition, TSMC is also continuously increasing its production capacity. According to the latest industry report cited by IT Home, TSMC is actively increasing its production capacity plan for system level integrated single chip (SoIC), with plans to increase monthly production capacity to 5000-6000 units by the end of 2024 to meet the strong demand for artificial intelligence (AI) and high-performance computing (HPC) in the future. AMD is the first customer of TSMC's SoIC, with its latest AI chip product MI300 paired with SoIC and CoWoS packaging; Another major customer, Apple, is also interested in SoIC. Apple plans to combine SoIC with thermoplastic carbon fiber board composite molding technology, and is currently conducting small-scale trial production. It is expected to be mass-produced in 2025-2026 and is intended for use in products such as Mac and iPad. The manufacturing cost is more advantageous than the current plan.