Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) shares rose 3.79 percent last week ahead of the company’s earnings conference on Thursday, outperforming the broader market’s 2.07 percent increase.
Yuanta Securities Investment Consulting Co (元大投顧) has retained its “buy” rating on the stock, with a 12-month target price of NT$584, expecting TSMC to maintain its tech leadership in the semiconductor industry.
The target price represents a 33.33 percent upside from the stock’s closing price of NT$438 on Friday in Taipei trading.
Photo: I-Hwa Cheng, Bloomberg
“Although TSMC is not immune to inventory adjustments in the short term, we are still optimistic about its leadership position and expect the advanced process technologies to boost its medium and long-term operational momentum,” Yuanta said in a client note on Friday.
“TSMC’s outlook is still good with stable profit prospects compared to second-tier foundries,” it said, adding that any significant correction in the near term would represent an opportunity to accumulate the stock for the long term.
TSMC on Friday reported third-quarter revenue of NT$613.14 billion (US$19.36 billion), up 14.79 percent from the previous quarter and an increase of 47.85 percent from a year earlier.
The contract chipmaker’s record quarterly revenue came as major customer Advanced Micro Devices Inc (AMD) on Thursday said that third-quarter sales would miss a prior forecast amid weaker-than-expected demand for PCs. In August, Nvidia Corp, another major customer, predicted that sales would fall short of its expectations for the latest quarter, largely due to weakness in the gaming market.
TSMC is scheduled to report its third-quarter earnings result on Thursday, and the market’s focus is to be on the chipmaker’s capacity utilization, the progress in its advanced process technologies and plans for price hikes, Yuanta said.
Additionally, investors are expected to observe whether TSMC retains its revenue growth forecast of an annual compound rate of 15 to 20 percent over the next few years, while also paying attention to the chipmaker’s capital spending estimate for next year and when its customers’ inventory adjustments might end, the note said.
“We expect the inventory adjustments triggered by the declining end-market consumer demand to impact TSMC’s sales from the fourth quarter this year to May next year,” Yuanta said.
Sales would resume growth from the third quarter next year, driven by the 5G, artificial intelligence and high-performance computing trends, with a significant contribution from 3-nanometer process technology, it said.
Many IC design companies have reportedly received TSMC’s notices of price hikes. If true, the benefits of price increases would gradually emerge from January next year to help boost TSMC’s average selling prices by about 3 percent, contributing to 9.1 percent sales growth annually next year, Yuanta said.
TSMC’s capital spending for next year is forecast to fall by 5 to 10 percent in US to between US$36 billion and US$38 billion, Yuanta said, citing the long lead times for equipment delivery and inventory adjustment risk.
STRONG INTEREST: Analysts have pointed to optimism in TSMC’s growth prospects in the artificial intelligence era as the cause of the rising number of shareholders The number of people holding shares of chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) hit a new high last week despite a decline in its stock price, the Taiwan Depository and Clearing Corp (TDCC, 台灣集保) said. The number of TSMC shareholders rose to 2.46 million as of Friday, up 75,536 from a week earlier, TDCC data showed. The stock price fell 1.34 percent during the same week to close at NT$1,840 (US$57.55). The decline in TSMC’s share price resulted from volatility in global tech stocks, driven by rising international crude oil prices as the war against Iran continues. Dealers said
PRICE HIKES: The war in the Middle East would not significantly disrupt supply in the short term, but semiconductor companies are facing price surges for materials Taiwan’s semiconductor companies are not facing imminent supply disruptions of essential chemicals or raw materials due to the war in the Middle East, but surges in material costs loom large, industry association SEMI Taiwan said yesterday. The association’s comments came amid growing concerns that supplies of helium and other key raw materials used in semiconductor production could become a choke point after Qatar shut down its liquefied natural gas (LNG) production and helium output earlier this month due to the conflict. Qatar is the second-largest LNG supplier in the world and accounts for about 33 percent of global helium output. Helium is
China is clamping down on fertilizer exports to protect its domestic market, industry sources said, putting an additional strain on global markets that were already grappling with shortages caused by the US-Israeli war on Iran. China is among the largest fertilizer exporters — shipping more than US$13 billion of it last year — and it has a history of controlling exports to keep prices low for farmers. Shipments through the war-blocked Strait of Hormuz account for about one-third of the sea-borne supply. This month, Beijing banned exports of nitrogen-potassium fertilizer blends and certain phosphate varieties, sources said. The ban, which has not
AMAZING ABUNDANCE: Elon Musk has announced plans for a new facility in Texas which would manufacture chips for Tesla and SpaceX to use in robotics and AI Elon Musk said his Terafab project — a grand plan to eventually manufacture his own chips for robotics, artificial intelligence (AI) and space data centers — would be built in Austin and jointly run by Tesla Inc and Space Exploration Technologies Corp (SpaceX). Musk, the chief executive officer of the two companies, said he would start off with an “advanced technology fab” in Austin that would have all of the equipment necessary to make chips of any kind. The project would call for one day supporting 1 terawatt (TW) of computing power per year, the amount Musk expects the companies to
RSS