The bullish chorus on Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is growing even louder, as a stock rally puts its market capitalization closer to the US$1 trillion milestone.
A flurry of Wall Street brokerages this week have lifted their price targets for TSMC, citing surging artificial intelligence (AI) related demand and potential price hikes to drive up earnings.
Goldman Sachs Group Inc is the most bullish, increasing its price target by 19 percent to NT$1,160, as it sees 3 and 5-nanometer chip manufacturing prices advancing by a “low single digit percentage.”
Photo: Grace Hung, Taipei Times
JPMorgan Chase & Co said TSMC might “lift its 2024 revenue guidance and potentially move up its capex to the higher end of the guidance range,” and expects AI to contribute 35 percent of total sales by 2028.
Citigroup Inc and Morgan Stanley also raised their price targets on a stronger earnings outlook.
The foundry sector leader has emerged as a major beneficiary of the widening adoption of AI, with its cutting-edge technology and valuation making it a favorite play among global investors. TSMC has also prospered from being the main advanced-chip supplier of Nvidia Corp — recently crowned the world’s most valuable company.
TSMC shares yesterday rose 4.03 percent to close at a new high of NT$981 in Taipei trading, after hitting an intraday high of NT$984, in the wake of a 3.51 percent rise in Nvidia stock on Wall Street overnight.
The Taiwanese chipmaker last week overtook Berkshire Hathaway Inc to become the eighth-largest company globally in terms of market capitalization, based on the firm’s American depositary receipts (ADRs). The ADRs’ 73 percent gain this year has boosted TSMC’s market value to US$932 billion, shy of the US$1 trillion threshold.
“We now see even more attractive risk-reward for TSMC amid the growing, positive sentiment around AI,” Goldman analysts including Bruce Lu (呂昆霖) wrote in a note on Tuesday. “With the ongoing proliferation of AI, we see TSMC among the key beneficiaries.”
Separately, TrendForce Corp (集邦科技) yesterday said that TSMC is considering price hikes for advanced process technology nodes in the second half of this year, in a bid to absorb higher utility and construction costs for its overseas fabs.
TrendForce did not give precise forecast about how much TSMC would increase prices. Speculations have been circulating that the price hikes for 3-nanometer chips could be around 5 percent since early this month.
TSMC chairman C.C. Wei (魏哲家) told reporters on June 4 that there was room for price upticks as the firm offered the most cost-effective chips to customers.
Strong appetite for 3, 4 and 5-nanometer technologies — which are used to produce advanced chips for devices with AI features and to make high-performance computing chips for data centers — gives TSMC leeway to negotiate for better prices, the Taipei-based researcher said in a report.
The chipmaker’s manufacturing equipment to produce 3, 4 and 5-nanometer chips are operating at full capacity and would exceed 100 percent in the third and fourth quarters, TrendForce said.
The order visibility could even go further to next year, it added.
Smaller foundry companies Powerchip Semiconductor Manufacturing Corp (力積電子) and Vanguard International Semiconductor Corp (世界先進) are also expected to see their factory utilization improve to between 70 percent and 80 percent later this year, but they are unlikely to raise prices as demand for mature technology remains muted, TrendForce said.
Additional reporting by Lisa Wang
INVESTOR RESILIENCE? An analyst said that despite near-term pressures, foreign investors tend to view NT dollar strength as a positive signal for valuation multiples Morgan Stanley has flagged a potential 10 percent revenue decline for Taiwan’s tech hardware sector this year, as a sharp appreciation of the New Taiwan dollar begins to dent the earnings power of major exporters. In what appears to be the first such warning from a major foreign brokerage, the US investment bank said the currency’s strength — fueled by foreign capital inflows and expectations of US interest rate cuts — is compressing profit margins for manufacturers with heavy exposure to US dollar-denominated revenues. The local currency has surged about 10 percent against the greenback over the past quarter and yesterday breached
MARKET FACTORS: Navitas Semiconductor Inc said that Powerchip is to take over from TSMC as its supplier of high-voltage gallium nitride chips Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday in a statement said that it would phase out its compound semiconductor gallium nitride (GaN) business over the next two years, citing market dynamics. The decision would not affect its financial targets announced previously, the world’s biggest contract chipmaker said. “We are working closely with our customers to ensure a smooth transition and remain committed to meeting their needs during this period,” it said. “Our focus continues to be on delivering sustained value to our partners and the market.” TSMC’s latest move came unexpectedly, as the chipmaker had said in its annual report that it has
Rick Cassidy, the chairman of Taiwan Semiconductor Manufacturing Co's (TSMC, 台積電) US subsidiary, TSMC Arizona Corp, plans to retire, but the company has yet to name a successor. After Cassidy made his intention to retire known, TSMC Arizona held a special general meeting and approved a resolution that Cassidy would not continue as chairman and would not remain as a director, TSMC said in a statement filed with the Taiwan Stock Exchange last night. The meeting also approved a plan to appoint TSMC Arizona president Rose Castanares as a director, the company said, adding that Cassidy has been named as an advisor
SECURITY WARNING: The company possesses key 3-nanometer technology, and Taiwan should prevent it from being transferred to China, a lawmaker said The Ministry of Economic Affairs yesterday said it would conduct a “strict review” of any proposed acquisition of Taiwanese tech company Source Photonics Co (索爾思光電), following media reports that a Chinese firm was planning to buy the company in the Hsinchu Science Park (新竹科學園區). Local media reported that Suzhou Dongshan Precision Manufacturing Co (東山精密), China’s largest printed circuit board manufacturer, had announced plans to acquire Source Photonics for 5.9 billion yuan (US$823.1 million). The ministry said it has not received an application from Source Photonics and has formally notified the company that any buyout would constitute a change in its ownership structure. The
RSS