The global semiconductor “market wind direction” TSMC’s law will make a big debut on Thursday (12th). Wall Street analysts pointed out that TSMC’s release of hands is “bad”, highlighting that semiconductors are not far from bottoming out. Now may be a good time for TSMC to buy .
Wafer foundry leader TSMC (2330-TW)(TSM-US) announced on Thursday that its profit last year exceeded 1 trillion yuan for the first time, earning 39.2 yuan per share.
However, TSMC said that due to inventory adjustments and sluggish consumption factors, it is estimated that the revenue in the first quarter of this year will be between 16.7 billion and 17.5 billion US dollars, a quarterly decrease of about 16% to 18.2%, and the gross profit margin will fall between 53.5% and 55.5%. Between, lower than the 62.2% in the fourth quarter of last year.
In addition, TSMC estimates that US dollar revenue in the first half of the year will decline by 4-9% compared with the same period last year, mainly due to weak terminal demand and weakening data center demand.
TSMC President Wei Zhejia speculates that the semiconductor cycle will bottom out sometime in the first half of 2023 and will return to growth in the second half of the year.
Despite TSMC’s warning that revenue will decline, Wall Street analysts are still optimistic about TSMC’s strong position. TSMC’s market outlook will still outperform its competitors. It is predicted that semiconductors are not far from bottoming out. Now may be a good time to buy TSMC.
TSMC ADR (TSM-US) soared all the way after the opening on Thursday, and closed up 6.38% to US$87.00 per share, the conversion price was 529.83 yuan, and the discount premium rate was 8.91%.
According to FactSet data, among the 39 analysts researching TSMC, 35 have given a “buy” rating to the stock, 4 have given a “hold” rating, and the average target price is set at $145.64 per share.
Needham analyst Charles Shi commented that TSMC’s reduction of capital expenditure to US$32 billion to US$36 billion is in line with its expectations, and the convergence of profit margins is not surprising, but a 20% increase in R&D expenses is surprising.
Shi predicts that TSMC’s performance will bottom out in the second quarter, and now may be a good time to enter the market.
Haitong International Securities analyst Jeff Pu mentioned: “TSMC’s performance guidance for the first half of the year is basically in line with analysts’ expectations, and its full-year financial forecast is better than expected. Growth in the second half of the year will be affected by AMD (AMD-US)、Nvidia (NVDA-US) and Apple (AAPL-US) and other customer demand support. “
Citi Research analyst Laura Chen has a “buy” rating on TSMC stock. Chen pointed out that TSMC still holds a strong position in the market despite its belief that the PC and smartphone markets are weak, and the data center market may also be weak.
Chen mentioned: “Due to its market share growth and product increase, I believe TSMC will lead the entire semiconductor market. TSMC expects the semiconductor market (excluding memory) to decrease by about 4% annually, and the wafer manufacturing industry is expected to decline by 3%. Against a backdrop of uncertain demand, we are waiting for better recovery prospects in 2024.”
Overseas capacity expansion will now be in focus, especially in the U.S. and Japan, said Bloomberg Industry Research (BI) analyst Charles Shum, as TSMC struggles to meet customers’ diverse needs and rise to the challenge of growing competition from Samsung and Intel . Rapidly rising depreciation and operating costs, coupled with increased uncertainty about a recovery in smartphone demand, are limiting TSMC’s gross margins.