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
UNCERTAINTY: Investors remain worried that trade negotiations with Washington could go poorly, given Trump’s inconsistency on tariffs in his second term, experts said The consumer confidence index this month fell for a ninth consecutive month to its lowest level in 13 months, as global trade uncertainties and tariff risks cloud Taiwan’s economic outlook, a survey released yesterday by National Central University found. The biggest decline came from the timing for stock investments, which plunged 11.82 points to 26.82, underscoring bleak investor confidence, it said. “Although the TAIEX reclaimed the 21,000-point mark after the US and China agreed to bury the hatchet for 90 days, investors remain worried that the situation would turn sour later,” said Dachrahn Wu (吳大任), director of the university’s Research Center for
Alchip Technologies Ltd (世芯), an application-specific integrated circuit (ASIC) designer specializing in artificial-intelligence (AI) chips, yesterday said that small-volume production of 3-nanometer (nm) chips for a key customer is on track to start by the end of this year, dismissing speculation about delays in producing advanced chips. As Alchip is transitioning from 7-nanometer and 5-nanometer process technology to 3 nanometers, investors and shareholders have been closely monitoring whether the company is navigating through such transition smoothly. “We are proceeding well in [building] this generation [of chips]. It appears to me that no revision will be required. We have achieved success in designing
PROJECTION: KGI Financial said that based on its foreign exchange exposure, a NT$0.1 increase in the New Taiwan dollar would negatively impact it by about NT$1.7 billion KGI Financial Holding Co (凱基金控) yesterday said its life insurance arm has increased hedging and adopted other moves to curb the impact of the local currency’s appreciation on its profitability. “It is difficult to accurately depict the hedging costs, which might vary from 7 percent to 40 percent in a single day,” KGI Life Insurance Co (凱基人壽) told an investors’ conference in Taipei. KGI Life, which underpinned 66 percent of the group’s total net income last year, has elevated hedging to 55 to 60 percent, while using a basket of currencies to manage currency volatility, the insurer said. As different
Taiwanese insurers are facing difficult questions about the damage of recent swings in the New Taiwan dollar. Regulators might have a partial solution: letting firms change how they calculate the value of foreign currency assets. The Financial Supervisory Commission (FSC) is considering allowing insurers to use six-month average exchange rates when they calculate risk-based capital in their semiannual reports, a shift from the current system where insurers use exchange rates on the final day of reporting. The change could ease pressure on the US$1.2 trillion insurance sector, whose huge exposure to foreign assets came into the spotlight earlier this month after a
RSS