What drove TSMC's gross profit growth in Q3 2024?

TSMC's gross profit growth in Q3 2024 was driven by several key factors:

1. **Strong Revenue Growth**: TSMC's total revenue for Q3 2024 was $24 billion. This significant increase in revenue, particularly in the high-performance computing (HPC) segment which grew by 28% sequentially, contributed to the growth in gross profit. The HPC segment, which accounts for 52% of TSMC's net revenues, is primarily driven by the surge in demand for AI chips.
2. **Advanced Technology Nodes**: The demand for advanced chips, especially those produced using the 3-nanometer and 5-nanometer technologies, has been a major growth driver for TSMC. These nodes are used in high-end applications such as AI and smartphones, which have been experiencing robust growth. The 3-nanometer process, for instance, is used in the latest iPhone models and new application processors from companies like Mediatek and Qualcomm.
3. **Optimized Production and Yield Management**: TSMC's ability to manage production lines and yield rates effectively has been critical in meeting the high demand for its advanced chip technologies. The company has reported good yield rates and well-managed production lines, which have helped maintain profitability despite the increased cost of production.
4. **Market Leadership and Diversified Customer Base**: TSMC's dominant position in the advanced chip market, with key clients such as Apple and Nvidia, has provided a stable and growing customer base. The company's diversified customer base, which includes a significant contribution from North American-based customers, has helped spread the demand for its products and reduced dependency on a single market or customer.

In summary, TSMC's gross profit growth in Q3 2024 was primarily driven by strong revenue growth, particularly in the HPC segment, the contribution of advanced technology nodes, optimized production and yield management, and its strong market position with a diversified customer base.