Taiwan Semiconductor Manufacturing Company (TSMC) hits record high at close, boosted by AI, prompting foreign investors to raise target prices.

In the atmosphere of a sharp drop in the US stock market yesterday, the Taiwan stock market opened lower and fluctuated, closing down 10.31 points. However, the guardian of Taiwan's tech industry, TSMC, soared to a historical high of NT$820 with better-than-expected revenue performance. Foreign institutional investors were busy raising their target price before its investor conference on the 18th, optimistically eyeing the NT$1,000 mark.

With CPI higher than expected and no hope for a rate cut in June, both stocks and bonds fell, yet cryptocurrencies rose against the trend.

US Grants $6.6 Billion, Second Only to Intel

TSMC announced on April 8th that under the CHIPS and Science Act, its TSMC Arizona facility in the United States will receive up to $6.6 billion in direct grants. The company also revealed plans to establish its third wafer fab in TSMC Arizona to meet strong customer demand with the most advanced semiconductor process technology in the U.S.

Although building a plant in the U.S. may impact gross margin and profitability, TSMC stated that the U.S. investment will not alter its commitment to maintaining its long-term financial goals, including a revenue compound annual growth rate of 15% to 20% in U.S. dollars, a gross margin of over 53%, and a return on equity greater than 25%.

The $6.6 billion subsidy received by TSMC this time is second only to the $8.5 billion received by Intel, a U.S.-based company.

Revenue Exceeds Financial Estimates, Foreign Institutions Raise Target Prices

TSMC released its March 2024 revenue report yesterday, as per announcement. The combined revenue for March 2024 was NT$195.21 billion, up 7.5% from the previous month and 34.3% from the same period last year. The accumulated revenue from January to March 2024 was approximately NT$592.64 billion, a 16.5% increase year-on-year.

According to UDN, various foreign institutions have raised TSMC's target prices:

• Goldman Sachs: NT$975
• JPMorgan: NT$900
• Bank of America: NT$880
• Morgan Stanley: NT$860-1,080
• UBS: NT$875-1,000

TSMC is expected to hold an investor conference on April 18th to announce its Q1 2024 financial results and Q2 performance outlook. The latest reports from foreign institutions suggest that due to strong AI demand, TSMC's Q2 revenue is estimated to increase by 4% quarter-on-quarter, while the gross margin may slightly decline due to the impact of earthquakes.