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Taiwan Semiconductor Manufacturing Co Ltd 2330

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Stock XTAI Rating as of
TWD 1,005.00 0.00 (0.00%)
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As of Delayed Price Closed
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Company Report

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TSMC: Raising Valuation by 45% on Potential Price Hike, and Incremental AI PC and Datacenter Demand

Phelix Lee

We raise our fair value estimate on Taiwan Semiconductor Manufacturing, or TSMC, to TWD 1,380 per share from TWD 950 (USD 213 per ADR from USD 146) owing to higher pricing expectations, stronger artificial intelligence demand, and plausible upward revision in its full-year revenue guidance. As a result, we increase our revenue and EPS expectations for 2024 to 2028 by up to 9% and 17%, respectively. In addition, we lowered our WACC to 8.2% from 9.3% as TSMC is closer to opening overseas plants to mitigate geopolitical risks in East Asia. Even after a 60% year-to-date share price rally, we view TSMC is undervalued as potential price hikes without much additional capital expenditure would disproportionately improve free cash flow.

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Price vs Fair Value

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2330 is trading at a 32% premium.
Price
TWD 1,005.00
Fair Value
TWD 1,579.00
Uncertainty
Medium
1-Star Price
TWD 4,873.00
5-Star Price
TWD 411.00
Economic Moat
Ybcks
Capital Allocation
Xhpcwgfl

Bulls Say, Bears Say

Bulls

TSMC should consistently earn higher gross margins than competitors thanks to its economies of scale and premium pricing justified by cutting-edge process technologies.

Bears

Although TSMC is the foundry leader, each generation of process technology matures and commoditizes quickly, forcing the company to deal with pricing pressure.

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Trading Information

Previous Close Price
TWD 1,005.00
Day Range
TWD 1,000.00–1,010.00
52-Week Range
TWD 516.00–1,010.00
Bid/Ask
TWD 1,000.00 / TWD 1,005.00
Market Cap
TWD 26.06 Tril
Volume/Avg
20.0 Mil / 39.5 Mil

Key Statistics

Price/Earnings (Normalized)
30.99
Price/Sales
11.60
Dividend Yield (Trailing)
1.29%
Dividend Yield (Forward)
1.59%
Total Yield
1.29%

Company Profile

Taiwan Semiconductor Manufacturing Co. is the world's largest dedicated chip foundry, with over 60% market share. TSMC was founded in 1987 as a joint venture of Philips, the government of Taiwan, and private investors. It went public as an ADR in the U.S. in 1997. TSMC's scale and high-quality technology allow the firm to generate solid operating margins, even in the highly competitive foundry business. Furthermore, the shift to the fabless business model has created tailwinds for TSMC. The foundry leader has an illustrious customer base, including Apple, AMD, and Nvidia, that looks to apply cutting-edge process technologies to its semiconductor designs. TSMC employs more than 73,000 people.
Sector
Technology
Industry
Semiconductors
Stock Style Box
Large Growth
Total Number of Employees
76,478
Website
https://www.tsmc.com

Competitors

Valuation

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Metric
2330
INTC
GFS
Price/Earnings (Normalized)
 30.9924.7925.00
Price/Book Value
 7.171.252.51
Price/Sales
 11.602.393.98
Price/Cash Flow
 19.297.6711.02
Price/Earnings
2330
INTC
GFS

Financial Strength

Metric
2330
INTC
GFS
Quick Ratio
 2.100.911.59
Current Ratio
 2.391.572.18
Interest Coverage
 80.730.87—
Quick Ratio
2330
INTC
GFS

Profitability

Metric
2330
INTC
GFS
Return on Assets (Normalized)
 16.16%2.83%5.33%
Return on Equity (Normalized)
 26.16%5.22%8.90%
Return on Invested Capital (Normalized)
 19.14%3.23%6.62%
Return on Assets
2330
INTC
GFS
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Semiconductors Industry Comparables

Screen With Investor
1-Day Chart
Name
Price
Morningstar Rating for Stocks
Capital Allocation
Economic Moat
Market Cap
NVIDIA Corp
NVDA
RwbbtbrgdPzbc$3.2 Tril
 Broadcom Inc
AVGO
CngsztscxnLmw$804.9 Bil
 Taiwan Semiconductor Manufacturing Co Ltd ADR
TSM
LgczyybxcQyzh$798.1 Bil
 Advanced Micro Devices Inc
AMD
NkbzsdlwnKzrtqyc$264.9 Bil
 Qualcomm Inc
QCOM
DvkcgqkvDpbyt$227.5 Bil
 Texas Instruments Inc
TXN
DzzcxwwznLvkf$181.1 Bil
 ARM Holdings PLC ADR
ARM
ZcxrvdzlKlst$176.3 Bil
 Micron Technology Inc
MU
VkdmrvnPnb$151.7 Bil
 Intel Corp
INTC
FsqhgnyxNmf$132.9 Bil
 Analog Devices Inc
ADI
LsknpmhygVhtg$114.1 Bil

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