Is TSMC's revenue growth sustainable beyond 2024?

TSMC's revenue growth appears sustainable beyond 2024, based on several key factors:

1. Robust Demand for Advanced Technologies: TSMC's growth has been driven by strong demand for its advanced 3nm and 5nm technologies, which account for 74% of total wafer revenue. The demand for these cutting-edge processes is likely to continue, supporting sustained revenue growth.
2. Strategic Expansion: TSMC's strategic expansion into global markets, including significant investments in the U.S. and Arizona, is expected to bolster its production capacity and mitigate risks associated with geopolitical tensions. These investments are likely to translate into increased revenue as production scales up.
3. AI and Advanced Computing Demand: The growing demand for AI and advanced computing chips is a key growth driver for TSMC. This trend is expected to continue, fueled by the increasing semiconductor content in smartphones, GPUs, and IoT devices.
4. Capacity and Production Scale: TSMC's ability to meet high customer demand, including from major clients like Apple, Nvidia, and AMD, indicates a strong market position and the ability to capitalize on ongoing demand. The company's capacity-constrained situation for advanced nodes suggests that it is well-positioned to benefit from sustained demand.
5. Financial Health and Growth Projections: TSMC's financial health, with a strong market position, expanding operating margins, and a return on equity (ROE) of 30.3% in FY24, supports the notion of sustainable growth. The company's growth projections, including a five-year revenue CAGR of approximately 20% fueled by AI-related revenue growing at a mid-40s CAGR, are indicative of a forward-looking sustainable growth trajectory.
6. Technological Advantages: TSMC's leadership in the semiconductor manufacturing space, with control over 50% of global semiconductor production and an overwhelming 90% of the advanced node market, ensures it remains a key player in the industry, capable of sustaining its growth trajectory.

In conclusion, while TSMC may face challenges such as geopolitical tensions and regulatory constraints, its strong market position, technological advancements, strategic expansions, and sustained demand for its products suggest that its revenue growth is likely to be sustainable beyond 2024.