Q1: What is TSMC's long-term strategy for US expansion, especially regarding latest node investments?

A:
- TSMC's strategy for overseas expansion is driven by customer needs and government support.
- The company will continue to ramp up new technologies first in Taiwan due to the proximity to R&D.
- TSMC maintains open communication with both current and future US administrations.
- The company views IDM fabs as customers and partners, not potential acquisition targets.

Q2: How should we think about gross margins in this cycle? Can TSMC reach over 60% gross margin?

A:
- Gross margins depend on six factors, with utilization being a key driver.
- Reaching 60% or higher gross margin is not impossible if utilization is extremely high.
- US fabs are more expensive due to smaller scale, higher supply chain costs, and early-stage ecosystem.
- Overseas fabs are expected to cause 2-3% dilution annually for the next five years.

Q3: What's the outlook for traditional applications like PCs and smartphones in 2025?

A:
- PC and smartphone markets are expected to see mild growth in 2025.
- AI functionality in smartphones will increase silicon content and potentially shorten replacement cycles.
- Advanced technologies are needed to integrate AI functions, driving demand for TSMC's leading-edge nodes.

Q4: How is TSMC managing the impact of new US export restrictions on China's AI business?

A:
- Initial analysis suggests the impact is manageable and not significant.
- TSMC is applying for special permits for affected customers, especially in non-AI areas like automotive.

Q5: What is TSMC's perspective on the large addressable market for AI custom chips mentioned by hyperscalers?

A:
- TSMC confirms that AI demand, including for custom chips, is very strong.
- Both ASIC and GPU solutions for AI require leading-edge technology, which TSMC provides.

Q6: Why hasn't TSMC raised its long-term gross margin target above 53%?

A:
- Overseas fab expansion will impact margins by 2-3 percentage points annually for the next five years.
- Macroeconomic uncertainties may affect end-market demand.
- TSMC aims to earn a healthy return to support continued investment and deliver profitable growth.

Q7: How is TSMC working to mitigate the cost gap between overseas and Taiwan fabs?

A:
- TSMC is continuously improving cost structures in both Taiwan and overseas fabs.
- The company is exploring new methodologies to minimize the cost gap.
- While working to narrow the gap, overseas fabs will still have higher costs than Taiwan fabs.

Q8: What is TSMC's outlook for CoWoS capacity ramp in 2025?

A:
- TSMC is working hard to meet customer demand for CoWoS capacity.
- There have been no order cuts; instead, demand continues to increase.
- The company is actively working to increase CoWoS capacity.

Q9: Is there potential for AI-related demand to exceed or fall short of TSMC's 2025 forecast?

A:
- TSMC hopes for upside but is focused on supplying enough capacity to support demand.
- The company forecasts AI-related revenue to double in 2025 after more than tripling in 2024.
- Long-term AI-related revenue growth is projected at around 40% CAGR over five years.