TSMC Sees Big Share Price Target Boost On Back Of Intel Orders, A.I. Demand

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Ahead of the Taiwan Semiconductor Manufacturing Company’s (TSMC) upcoming earnings call for the first quarter, Japanese financial research firm Nomura is out with its fresh take on its present situation and future expectations. TSMC’s crucial place in the global semiconductor industry – which places it at the heart of the chip supply chain for firms unable to fabricate their silicon – also means that its financials are a barometer for the performance of the broader semiconductor industry. With the current mania surrounding artificial intelligence, the earnings report is quite important as it allows the industry to see the number of orders flowing through the fabs in Taiwan.

For its part, Nomura’s report is full of optimism about TSMC, and the latest share price target of NT$975 marks a hefty upgrade over the previous target of NT$700 and ties in place with Goldman Sachs’ TSMC share price target as the second highest for non Taiwan based analysts.

TSMC’s Future Growth Will Be Driven By CPU, A.I. Product Sales Believes Nomura

According to Nomura, the two key catalysts that TSMC’s investors need to be aware of moving forward are central processing unit (CPU) products and artificial intelligence chips. This marks a complete shift for TSMC’s business model, which until very recently had benefited tremendously from the growth in global smartphone usage.

TSMC is Apple’s primary supplier of smartphone processors, and after the Californian company’s partnership with Samsung soured due to poor product quality, it expanded and developed its ties with the Taiwanese chip maker instead.

Nomura’s current TSMC share price target is NT$975, and the firm has maintained its Buy share price rating for TSMC in its latest note. The big boost in the share price target, from an earlier NT$700, not only marks a 40% growth but is also accompanied by an upward revision to other financial metrics.

According to Nomura, orders from Intel that seek to reduce the risks of Intel’s advanced 18A process and a deeper need of understanding for 2-nanometer products for TSMC’s key customers, such as AMD, can serve as key catalysts for TSMC’s future growth. The note outlines that Intel’s Nova Lake processors will use the 2-nanometer process, implying that the product volume shipped by TSMC will be sufficient to make a hefty mark on the income statement. Intel’s CEO Patrick Gelsiner has already confirmed that the Arrow Lake chips will rely on TSMC’s N3 process technology family to an extent.

As for the remaining financial metrics, Nomura raised TSMC’s 2024 full year revenue estimate by 2.5%. Nomura expects that A.I. related revenue will grow between 12% and 16% from 2024 to 2025. Its earnings per share estimate for TSMC for the full year 2024 was also raised from NT$37.42 to NT$38.82.

TSMC will start expediting its 2-nanometer over the next couple of years, with a recent announcement in partnership with the U.S. government sharing the firm’s willingness to make these products in America. Its Q1 2024 EPS analyst EPS estimates currently sit at $1.30, and recent revenue figures for March showed that sales jumped by 34.3% annually, with analysts attributing the boost to strong A.I. demand.

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