TSMC: Tread Carefully Along The Semiconductor Tide

1
2
Favorite

TSMC: Tread Carefully Along The Semiconductor Tide

seekingalpha02-08

TSM will be able to make healthy, steady gains in the next few years due to several factors: dominance, valuation, nature of market & general economic momentum.TSM has healthy valuations, with analyst...

Source Link

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Report

Comment（2）

ehhxinyi
·02-08
Share your opinion about this news…
Reply
Like
Report
ehhxinyi
·02-08
o Ml The The mmulu N
Reply
Like
Report

Most Discussed

7x24

All

Terms and Conditions·Privacy Policy

Company: TTMF Limited. Tech supported by Xiangshang Yixin.

Email：uservice@ttm.financial

{"i18n":{"language":"en_US"},"data":{"share":"https://ttm.financial/m/news/2409277011?lang=en_US&edition=fundamental","thumbnail":"","is_english":true,"pubTime":"2024-02-08 01:28","share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","id":"2409277011","market":"us","top_or_hot":-1,"title":"TSMC: Tread Carefully Along The Semiconductor Tide","media":"seekingalpha","content":"<div>\n<p>TSM will be able to make healthy, steady gains in the next few years due to several factors: dominance, valuation, nature of market & general economic momentum.TSM has healthy valuations, with analyst...</p>\n\n<a href=\"https://seekingalpha.com/article/4668221-tsmc-tread-carefully-along-the-semiconductor-tide\">Source Link</a>\n\n</div>\n","source":"seekingalpha","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>TSMC: Tread Carefully Along The Semiconductor Tide</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nTSMC: Tread Carefully Along The Semiconductor Tide\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-02-08 01:28 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4668221-tsmc-tread-carefully-along-the-semiconductor-tide><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>TSM will be able to make healthy, steady gains in the next few years due to several factors: dominance, valuation, nature of market & general economic momentum.TSM has healthy valuations, with analyst...</p>\n\n<a href=\"https://seekingalpha.com/article/4668221-tsmc-tread-carefully-along-the-semiconductor-tide\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"03145","symbol_name":"华夏亚洲高息股","start_time":0,"source_url":"https://seekingalpha.com/article/4668221-tsmc-tread-carefully-along-the-semiconductor-tide","article_id":"2409277011","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2409277011","pubTimestamp":1707326888,"columns":[],"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"TSM will be able to make healthy, steady gains in the next few years due to several factors: dominance, valuation, nature of market & general economic momentum.TSM has healthy valuations, with analyst","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"03145":"华夏亚洲高息股","LU0353189763.USD":"ALLSPRING  US ALL CAP GROWTH FUND \"I\" (USD) ACC","LU2264538146.SGD":"Fullerton Lux Funds - Global Absolute Alpha A Acc SGD","GFS":"GLOBALFOUNDRIES Inc.","BK4550":"红杉资本持仓","BK4141":"半导体产品","BK4551":"寇图资本持仓","LU0979878070.USD":"FULLERTON LUX FUNDS - ASIA ABSOLUTE ALPHA \"A\" (USD) ACC","DCF":"Dreyfus Alcentra Global Credit Income 2024 Target Term Fund, Inc","LU1852331112.SGD":"Blackrock World Technology Fund A2 SGD-H","SSNLF":"三星电子","IE00B1BXHZ80.USD":"Legg Mason ClearBridge - US Appreciation A Acc USD","LU0316494557.USD":"FRANKLIN GLOBAL FUNDAMENTAL STRATEGIES \"A\" ACC","BK4512":"苹果概念","IE00BFSS8Q28.SGD":"Janus Henderson Balanced A Inc SGD-H","LU1951198990.SGD":"Natixis Thematics AI & Robotics Fund H-R/A SGD-H","LU0708995401.HKD":"FRANKLIN U.S. OPPORTUNITIES \"A\" (HKD) ACC","LU1951200564.SGD":"Natixis Thematics AI & Robotics Fund R/A SGD","BK4170":"电脑硬件、储存设备及电脑周边","X":"美国钢铁","IE00BKDWB100.SGD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A5H\" (SGDHDG) ACC","LU0256863811.USD":"ALLIANZ US EQUITY \"A\" INC","IE0009356076.USD":"JANUS HENDERSON GLOBAL TECHNOLOGY AND INNOVATION \"A2\" (USD) ACC","IE00B7KXQ091.USD":"Janus Henderson Balanced A Inc USD","BK4006":"钢铁","LU1923623000.USD":"Natixis Thematics AI & Robotics Fund R/A USD","LU0348723411.USD":"ALLIANZ GLOBAL HI-TECH GROWTH \"A\" (USD) INC","BK4516":"特朗普概念","UMC":"联电","AMD":"美国超微公司","BK4554":"元宇宙及AR概念","LU0109391861.USD":"富兰克林美国机遇基金A Acc","CAGR":"California Grapes International, Inc.","IE0004445239.USD":"JANUS HENDERSON US FORTY \"A2\" (USD) ACC","LU0541502299.USD":"ALLSPRING  EMERGING MARKETS EQUITY \"I\" (USD) ACC","LU0053666078.USD":"摩根大通基金-美国股票A（离岸）美元","IE00B19Z9505.USD":"美盛-美国大盘成长股A Acc","LU1988902786.USD":"FULLERTON LUX FUNDS GLOBAL ABSOLUTE ALPHA \"I\" (USD) ACC","BK4567":"ESG概念","LU0889565833.HKD":"FRANKLIN TECHNOLOGY \"A\" (HKD) ACC","LU0082616367.USD":"摩根大通美国科技A（dist）","BK4533":"AQR资本管理(全球第二大对冲基金)","TSM":"台积电","IE00B1XK9C88.USD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A\" (USD) ACC","LU0353189680.USD":"富国美国全盘成长基金Cl A Acc","BK4566":"资本集团","LU1989764664.SGD":"CPR Invest - Global Disruptive Opportunities A2 Acc SGD-H","LU0061474960.USD":"天利环球焦点基金AU Acc","NVDA":"英伟达","LU1989764748.USD":"东方汇理环球颠覆性机遇A2 Acc"},"translate_title":"TSMC：小心引领半导体潮流","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"X":1,"UMC":1,"TSM":1,"SSNLF":1,"GFS":1,"DCF":1,"CAGR":1,"AMD":0.76,"NVDA":0.76,"03145":0.6},"content_text":"TSM will be able to make healthy, steady gains in the next few years due to several factors: dominance, valuation, nature of market & general economic momentum.TSM has healthy valuations, with analyst consensus giving it a strong buy.However, the risk factors present such as competition with massive IBMs, the dependence on semiconductors to drive AI and political tensions must be accounted for.shih-wei/E+ via Getty Images Taiwan Semiconductor Manufacturing Company (NYSE:TSM) is a foundry that manufactures integrated circuits and semiconductor chips for fabless technology companies including major hardware (OEMs). It offers chip fabrication, packaging and testing services through its advanced foundry capacity. TSM manufactures and tests chips based on clients' custom specifications, leveraging its leading-edge fabrication technologies and facilities. It also uses its large-scale manufacturing of fabrication processes to optimise transistor technology that produces the chips. I believe that TSM will make healthy, steady gains in the next few years due to several factors: dominance, valuation, nature of market & general economic momentum. Factor 1: Dominance over the industry Semiconductor Market Share (X) TSM leads the way in foundries. It holds a 59.5% foundry revenue share in a $129 billion industry in Q3 2023, with Samsung Electronics Co., Ltd. (OTCPK:SSNLF) behind at 16.1%, and United Microelectronics Corporation (UMC) and GLOBALFOUNDRIES Inc. (GFS) at 6% both 6%. With a 3-firm concentration ratio of 76%, this industry is evidently dominated by several key players. Gross Margins of Companies (Author) Another salient point is its gross margins. The above shows the average of the estimated ranges of gross margins of each company. This can be explained by TSM's production volumes, as well as the efficiency of production amongst pure-play foundries. As stated in TSM's Q423 management report published on January 18, 2024, their revenue increased 14.4% sequentially, \"supported by the continued strong ramp of our industry-leading 3-nanometer technology\". While other companies such as global foundries operate on 55nm processes at best, TSM remains the only foundry that has incorporated 3nm processes in its mass production. This explains their great appeal to technology giants. Furthermore, TSMC's management expects gross margin to rise well above 50% further in the coming years - reflecting assimilation of advanced leading-edge nodes and better absorption of rising capital and technological investments in driving sustained growth. This forms the bedrock for TSMC's competitiveness against peers. Factor 2: Healthy Valuation Comparable Comps Data (CapIQ) Comparable Comps Trading Multiples (CapIQ) In terms of positives, TSM's TEV/EBITDA ratio is 10.6x, higher than the mean of 10.1x and the peer median of 8.4x. TSM also has a TEV/Forward Total Revenue and P/TangBV of 7.2x and 4.7x respectively, the highest in its comparables. These indicate that TSM is valued relatively highly to its book value, and investors have good perceptions of their business. However, Its NTM forward P/E is 16.13x, below average out of its comparables. Given that most companies in these comparables are mature, stable and experience the similar industry sentiments, one other reason for this low value is undervaluation. Comparable Comps Analysis (CapIQ) I calculated each line item to billions of USD, getting a valuation of $48.45 and $99.79 respectively. In general, these rather low values using EV/Revenue and EV/EBITDA could be attributed to how the industry has been underperforming as a whole in the past 2 years, thereby giving underwhelming values for revenues, EBITDA and enterprise value. This is further explored under \"Risk Factors\". TSM's historical and forecasted EPS (NASDAQ) TSM's EPS has taken a hit in the past year, with the EPS falling from an all-time high in 2022 Q4 to a low of 1.21 in 2023 Q3. However, for every quarter, the reported EPS has consistently beaten the analyst consensus estimate. This constant outperformance explains the healthy increase in forecasted EPS. For my discounted cash flow (DCF) model, I assumed a credit rating of AA. Using the 10-year US Treasury Constant Maturity Rate as my Risk-Free Rate, with no preferred stock and no size premium included, the WACC comes to 11.4%. Discounted Cash Flow (Author) Discounted Cash Flow Analysis (Author) Sensitivity Analysis (Author) Given the industry, I assumed prospective strong revenue growth for the next 6 years till 2030, with Communications Technology falling under \"Technology\" in the Sensitive Morningstar super sector that has \"moderate correlations to business cycles\". I assumed a healthy terminal growth rate of 4.0% as the base case. This gives me a base case share price of $139.31 USD, a 15% upside. The average analyst consensus for TSM is $138.6, based on 7 analysts from Goldman Sachs, Needham & Co, Barclays Capital etc. One thing to note is that the data used from Capital IQ was derived from the actual TSM stock (TWSE:2330), not its ADR counterpart. Hence, the currency exchange (0.032 USD per 1 TWD) and the ADR to Stock ratio of 5:1 were accounted for in my calculations. Factor 3: Nature of Market The semiconductor industry is one with immense potential, seeing the vast range of end products it powers. Revenue in the market is projected to reach US$613 billion in 2024, with an annual growth rate (CAGR) of 6.30%, leading to an impressive market volume of US$736.4 billion by 2027. Why so? TSM's Revenue Statistics (TSMC Management Report) With all the hype about AI simulation and development, NVDA and AMD are at the forefront of innovation. TSM is the sole provider of processor chips to these 2 companies, which could be attributed to its \"pure-play\" foundry ideology is a solid moat as it can focus on facilitating their clients' product development instead of being a direct competitor unlike IDM companies. Dominant foundries do not need to worry much about competition. So long as the trend of technological development remains strong, fabless companies will need increasingly more chips as processing power to advance their technologies. Hence, demand by the biggest companies like NVDA and AMD will only provide more business to \"pure-play\" foundries, heavily relied on for its manufacturing. Factor 4: Momentum TSM Daily Price Chart (Webull)Indicators for Price Chart (Webull) Using technical analysis, it can be seen that the 200-day moving average DMA has a gradually rising gradient. Furthermore, the 50 DMA crossed the 150-day around 15th December, with both having positive gradients. This shows that the last 50-day prices were on average higher than the last 150-day prices. A similar sentiment on momentum is indicated by the moving average convergence divergence line (MACD), which sharply intersects the signal near 10th January 2024. However, the relative strength index RSI exceeded 70 during that period, indicating the presence of overbuying. Yet, considering that the accumulation distribution line (ADL) has risen greatly in the same period as the RSI increase and MACD intersection, it shows stronger buying than selling pressure in a market that is gaining appeal. Potential Risk Factors Like all companies, TSM faces various risks. I list these risks in order of urgency: Firstly, competition with IBMs. The above factors paint TSM a rosy picture as a group B market leader, but IDMs can also take some of TSM's manufacturing market share. TSM's biggest threats are SSNLF & INTC. Both are vying for market dominance, but in 2 different ways. For INTC, it is trying to innovate to outperform TSM from an advancement standpoint. It launched an \"advancing 5 nodes in 4 years\" goal in 2021, and has just begun 3nm process production. They also announced their 1.8nm processes being on trial, where production will commence in late 2024, much ahead of TSM and SSNLF. For SSNLF, it is pursuing early orders of 2nm processes from TSM's best clients by offering large discounts. TSM and SSNLF are leading the way in less than 7nm node production. However, these 3 companies are racing to churn out 2nm processes by 2024 and 2025. INTC even announced trial production of 1.8nm processes, a technology that TSM has yet to uncover. While reports indicate that TSM's updated 3nm processes can still outperform its current 2nm and 1.8nm counterparts, the 3nm technology along with FinFETs will eventually hit a ceiling that these newer technologies can surpass. The bar is set exceptionally high for the top AI companies. Thus, even slight misses in earnings can lead to sensitive feedback from investors, resulting in great volatility from an unsystematic standpoint. Secondly, AI may not always push growth in the semiconductor industry. AI has definitely boosted the industry in 2023, considering the slump in 2023 of global economic woes and weak recovery post COVID-19. However, several top companies have stated that expectations of AI driving growth may be overestimated. For instance, TSM's most recent earnings call stated that \"while we have recently observed an increase in AI-related demand, it is not enough to offset the overall cyclicality of our business.\" Lastly, while the industry in general is recovering from underperformance, global uncertainties, especially related to China-Taiwan tensions, can hit TSM hard if government intervention takes place. While such a conflict will certainly shake up the entire world's economies, any slight action taken by China to interfere with TSM will likely cause investors to lose confidence in them. Thus, while this is a common risk cited in company reports, it applies more to TSM. Thus, these conditions would indicate that TSM will perform poorly: If Intel manages to innovate processes that are proven to be faster than that of TSM, and are ramping up investments in chips through these processes; If SSNLF manages to get large-scale clients such as from NVDA and AMD away from TSM for 2nm processes in the future; If general excitement towards AI dies down, causing the industry and especially TSM to be affected; If a China-Taiwan conflict takes place and restrictions on manufacturing is enforced on TSM. Conclusion Things such as managing high inventory levels, trying to overcome the underwhelming revenue growth levels, scaling up R&D to stay ahead of its competitors and navigating political uncertainty will be issues to watch. TSM certainly cannot rest on its laurels in the years to come. I believe that after the recent spike in stock price, it will taper off to the $100-$120 range for a few months, and eventually see steady growth rates thereafter, given the factors raised.  Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[{"id":271608932565184,"gmtCreate":1707348716418,"gmtModify":1707348720860,"author":{"id":"3565918108676470","authorId":"3565918108676470","name":"ehhxinyi","avatar":"https://static.tigerbbs.com/8f63708282559218648c6ee1375e5b29","vip":1,"crmLevel":9,"crmLevelSwitch":0,"idStr":"3565918108676470","authorIdStr":"3565918108676470"},"htmlText":"Share your opinion about this news…","listText":"Share your opinion about this news…","text":"Share your opinion about this news…","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/271608932565184","repostId":2409277011,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":271609509298464,"gmtCreate":1707348711774,"gmtModify":1707348716071,"author":{"id":"3565918108676470","authorId":"3565918108676470","name":"ehhxinyi","avatar":"https://static.tigerbbs.com/8f63708282559218648c6ee1375e5b29","vip":1,"crmLevel":9,"crmLevelSwitch":0,"idStr":"3565918108676470","authorIdStr":"3565918108676470"},"htmlText":"o Ml The The mmulu N","listText":"o Ml The The mmulu N","text":"o Ml The The mmulu N","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/271609509298464","repostId":2409277011,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"hasMoreComments":true,"newsSizeData":{"likeSize":1,"commentSize":2,"repostSize":2,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false}}