According to a report by Securities Times on the 7th, Macquarie Securities pointed out in its latest report that according to supply chain investigations, most of TSMC's customers have agreed to increase contract manufacturing prices in exchange for reliable product supply, which will further drive TSMC's gross profit margin.
Given the growing profit prospects year by year, in addition to maintaining TSMC's "better than the market" rating, Macquarie has also raised the target price of TSMC radio stocks by 28% to NT $1280, with a potential increase of over 27% compared to the current price. Macquarie believes that driven by the trend of artificial intelligence development, TSMC's demand visibility is higher than the historical average. As TSMC creates value for customers, the bank believes that the company will be able to increase pricing.
Macquarie Semiconductor Industry Analyst Lai Yuzhang stated that due to the fact that most TSMC customers have agreed to increase their OEM prices in exchange for stable and reliable supply, the gross profit margin will continue to rise year by year in the future.
Recently, according to industry chain news, TSMC will raise prices for its most advanced 3-nanometer process technology starting from 2025. Among them, the price of AI products will increase by 5% to 10%, while the price of non AI products will increase by 0% to 5%. As for 5 nanometers, it is also expected to increase the quotation due to increased production costs.
According to Lai Yuzhang's estimation, TSMC's gross profit margin will climb to 55.1% by 2025; In 2026, it will approach 60%, reaching 59.3%; And this year, with the improvement of production efficiency, the gross profit margin has been adjusted to 52.6%.
With the long-term trend of AI driving and the increase in gross profit margin, TSMC's profit compound annual growth rate (CAGR) from 2023 to 2026 will reach 26%. Based on this, Lai Yuzhang will increase TSMC's post tax net profit per share (EPS) by 5%, 2%, and 1% from 2024 to 2026, respectively.
In addition, regarding the highly anticipated capital expenditures in the market, Lai Yuzhang believes that based on continuous investment in advanced processes, especially 3 nanometers and 2 nanometers, TSMC's projected capital expenditures for 2025 and 2026 will be raised to $35 billion and $37 billion, respectively.
Lai Yuzhang expects TSMC to achieve an annual 2-nanometer production capacity of 5000 pieces by the end of 2024, and to significantly expand its production capacity to 90000 pieces by the end of 2027.
Currently, the global market has high expectations for TSMC, and foreign institutions have raised TSMC's target price. Among them, HSBC has set a target price of NT $1370, Goldman Sachs has set a target price of NT $1160, Citigroup has set a target price of NT $1150, Barclays has set a target price of NT $1096, Morgan Stanley and Morgan Chase have all set a target price of NT $1080.
According to a survey of 29 analysts, TSMC's revenue in the second quarter is expected to increase by 36% year-on-year, the fastest growth rate since the fourth quarter of 2022. Bloomberg industry research predicts that the company's revenue will be 10% higher than the market expectation, leading the performance of the foundry industry in Taiwan, China.
Industry insiders analyze that, according to past practice, TSMC will not arbitrarily launch a price increase plan. This price increase may be based on market demand, production capacity, and cost considerations. Against the backdrop of large customers frantically booking production capacity, TSMC's 3nm family process capacity continues to be tight and has become the norm. There are reports that four major manufacturers, including Apple, Qualcomm, Nvidia, and AMD, have significantly reduced TSMC's 3nm family process capacity, leading to a surge in customer queues all the way to 2026.
Recently, with TSMC's market value approaching the $1 trillion mark, bullish sentiment has become increasingly high. Several Wall Street securities firms raised TSMC's target price last month, citing a surge in demand for artificial intelligence and potential price hikes in 2025 that could boost TSMC's profits.
The most optimistic is Goldman Sachs, which has raised its target price by 19% to NT $1160, as it expects the manufacturing prices of 3-nanometer and 5-nanometer chips to rise by a "low single digit percentage". JPMorgan Chase has stated that TSMC may increase its revenue outlook for 2024 and may also raise its capital expenditures to the upper end of the guidance range. The bank expects the contribution of artificial intelligence to TSMC's total sales to be 35% by 2028. Citigroup and Morgan Stanley have also raised their target prices, citing a positive profit outlook.
As of the close of the US stock market on Friday, TSMC closed at $183.99, a slight increase of 0.82%, with a total market value of $954.4 billion (approximately RMB 6.95 trillion).
Industry insiders predict that with inventory clearance and demand recovery, the prosperity of the power semiconductor industry will continue to rise in the second half of the year. Guotai Junan also stated in a recent study that the bottom of the semiconductor cycle has emerged, inventory has returned to a reasonable level, and prices of various products have increased by varying degrees since the first quarter of this year. The variety of price increases is gradually spreading from electronic components to wafer foundries, while major foundries such as TSMC and Huahong are stabilizing their prices, with a turnover rate of over 80%.
For advanced packaging, it is becoming an important development direction for future integrated circuit manufacturing. Against the backdrop of the slowing development of Moore's Law, advanced packaging achieves tighter integration of chips through innovative packaging methods, optimizes electrical connections, and meets the performance requirements of technologies such as artificial intelligence and high-performance computing.
Western Securities stated that advanced packaging consists of four key elements: bumping, RDL, Wafer, and TSV, and possessing any of these technologies can be considered advanced packaging. The expansion of advanced packaging brings development opportunities to local equipment manufacturers.
Daily Economic News, Comprehensive Securities Times, Public Information