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
MULTIFACETED: A task force has analyzed possible scenarios and created responses to assist domestic industries in dealing with US tariffs, the economics minister said The Executive Yuan is tomorrow to announce countermeasures to US President Donald Trump’s planned reciprocal tariffs, although the details of the plan would not be made public until Monday next week, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. The Cabinet established an economic and trade task force in November last year to deal with US trade and tariff related issues, Kuo told reporters outside the legislature in Taipei. The task force has been analyzing and evaluating all kinds of scenarios to identify suitable responses and determine how best to assist domestic industries in managing the effects of Trump’s tariffs, he
TIGHT-LIPPED: UMC said it had no merger plans at the moment, after Nikkei Asia reported that the firm and GlobalFoundries were considering restarting merger talks United Microelectronics Corp (UMC, 聯電), the world’s No. 4 contract chipmaker, yesterday launched a new US$5 billion 12-inch chip factory in Singapore as part of its latest effort to diversify its manufacturing footprint amid growing geopolitical risks. The new factory, adjacent to UMC’s existing Singapore fab in the Pasir Res Wafer Fab Park, is scheduled to enter volume production next year, utilizing mature 22-nanometer and 28-nanometer process technologies, UMC said in a statement. The company plans to invest US$5 billion during the first phase of the new fab, which would have an installed capacity of 30,000 12-inch wafers per month, it said. The
Taiwan’s official purchasing managers’ index (PMI) last month rose 0.2 percentage points to 54.2, in a second consecutive month of expansion, thanks to front-loading demand intended to avoid potential US tariff hikes, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. While short-term demand appeared robust, uncertainties rose due to US President Donald Trump’s unpredictable trade policy, CIER president Lien Hsien-ming (連賢明) told a news conference in Taipei. Taiwan’s economy this year would be characterized by high-level fluctuations and the volatility would be wilder than most expect, Lien said Demand for electronics, particularly semiconductors, continues to benefit from US technology giants’ effort
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his
RSS