Advanced Process Nodes Will Power A Vibrant Semiconductor Future

Taiwan Semiconductor’s upward price target revision reflects sustained AI-driven demand, robust future valuation support, and expectations for strong revenue growth from next-gen silicon and 2nm platform adoption, lifting fair value from NT$1375 to NT$1396.

Analyst Commentary

• Bullish analysts cite robust and sustained demand for artificial intelligence (AI), positioning TSMC as the sector's structural winner and preferred stock.
• Strong 2027 valuation support underpins rising price targets despite near-term macro caution, particularly in the broader tech hardware sector.
• Rapid revenue growth in AI is expected, driven by significant increases in compute die silicon content per package and the transition to custom HBM base dies, with TSMC not requiring major unit volume expansion to achieve ambitious targets.
• The N2 (2nm) platform is highlighted as a critical catalyst for future growth, particularly heading into 2026.
• While F/X headwinds and a softer smartphone market present short-term challenges, leading-edge process adoption and TSMC's strategic importance to industry peers support positive long-term outlooks.

What's in the News

• The U.S. has revoked TSMC's Validated End User (VEU) status for its Nanjing site, potentially restricting critical equipment shipments to its Chinese facility, although TSMC is working with the U.S. government to maintain operations (Bloomberg).
• TSMC is reducing the use of Chinese chipmaking equipment in its advanced factories to avoid risk of U.S. restrictions, and its exemption from recent U.S. tariffs underscores the importance of its U.S. investments (Nikkei, Bloomberg).
• Legal and internal actions are intensifying around trade secret protection, with arrests and indictments for stealing TSMC technology to benefit competitors like Tokyo Electron; TSMC is further planning to market a proprietary trade secret management system internationally (WSJ, FT, Reuters).
• Robust AI and semiconductor demand have helped TSMC’s market value surpass $1 trillion for the first time, while major clients like Nvidia increase chipset orders and AMD points to higher U.S. production costs (Bloomberg, Reuters).
• Competitive dynamics in advanced node manufacturing remain fierce: Samsung is delaying 1.4nm plans while prioritizing 2nm yields; Intel faces production setbacks on its 18A process, both moves reflecting ongoing struggles to challenge TSMC’s technological leadership (DigiTimes, Reuters).

Valuation Changes

Summary of Valuation Changes for Taiwan Semiconductor Manufacturing

• The Consensus Analyst Price Target remained effectively unchanged, moving only marginally from NT$1375 to NT$1396.
• The Discount Rate for Taiwan Semiconductor Manufacturing remained effectively unchanged, moving only marginally from 8.95% to 8.82%.
• The Future P/E for Taiwan Semiconductor Manufacturing remained effectively unchanged, moving only marginally from 20.66x to 20.91x.