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TSMC (TSM)
NYSE:TSM
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TSMC
(NYSE:TSM)
72Outperform
Positive Factors
Revenue Growth
TSMC continues to guide for mid-20% revenue growth in USD terms in 2025, on strong AI momentum and a mild recovery across other end-markets.
Strategic Growth Initiatives
TSMC provided updates to its US expansion, with Phase 1 beginning mass production on 4nm node, and infrastructure installation for Phase 2 underway, reflecting progress in its strategic growth initiatives.
Valuation Appeal
TSMC's valuation appears attractive at 14x/11.5x 2025/26E P/E, vs trough of 10x during the 2H22 semis downcycle amid heightened geopolitical tensions.
Negative Factors
Cost Challenges
TSMC is accelerating its US fab plans, with P2 now expected to come online quarters earlier than its prior 2028 timeline, leading to wider GPM drag due to cost inflation and tariff-driven costs.
Earnings Impact
Tariff-related impact is inevitable, leading to a reduction in 2025-26E earnings by 4-5%.
Operational Risks
Integrating another foundry's production lines is highly challenging due to differences in toolsets, configuration, and process flow, requiring significant operational hurdles to be overcome.
TSMC (TSM) vs. S&P 500 (SPY)
Market Cap
$714.08B
Dividend Yield1.17%
Average Volume (3M)19.64M
Price to Earnings (P/E)22.3
Beta (1Y)1.55
Revenue Growth35.45%
EPS GrowthN/A
CountryUS
Employees65,152
SectorTechnology
Sector Strength62
IndustrySemiconductors
Share Statistics
EPS (TTM)2.19
Shares Outstanding5,186,547,000
10 Day Avg. Volume26,960,874
30 Day Avg. Volume19,641,286
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)13.95
Price to Cash Flow (P/CF)N/A
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$219.43Price Target Upside32.91% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering8
TSMC Business Overview & Revenue Model
Company DescriptionTaiwan Semiconductor Manufacturing Company Limited, together with its subsidiaries, manufactures, packages, tests, and sells integrated circuits and other semiconductor devices in Taiwan, China, Europe, the Middle East, Africa, Japan, the United States, and internationally. It provides a range of wafer fabrication processes, including processes to manufacture complementary metal- oxide-semiconductor (CMOS) logic, mixed-signal, radio frequency, embedded memory, bipolar CMOS mixed-signal, and others. The company also offers customer and engineering support services; manufactures masks; and invests in technology start-up companies; researches, designs, develops, manufactures, packages, tests, and sells color filters; and provides investment services. Its products are used in high performance computing, smartphones, Internet of things, automotive, and digital consumer electronics. The company was incorporated in 1987 and is headquartered in Hsinchu City, Taiwan.
How the Company Makes MoneyTSMC makes money primarily through its semiconductor manufacturing services, which involve producing integrated circuits (ICs) for its clients based on their designs. The company's revenue model is based on a 'fabless' foundry model, where clients design the chips and TSMC fabricates them using advanced process technologies. TSMC's key revenue streams include wafer fabrication services, where clients pay for the production of semiconductor wafers, and technology licensing. The company's advanced technology nodes, such as 5nm and 7nm processes, are in high demand, allowing TSMC to charge premium prices for these cutting-edge manufacturing capabilities. TSMC's significant partnerships with major tech companies like Apple, AMD, and NVIDIA contribute to its earnings, as these companies rely heavily on TSMC's expertise and capacity to produce their high-performance and specialized chips.
TSMC Financial Statement Overview
Summary
TSMC exhibits strong financials with excellent revenue growth and profitability. The income statement highlights significant margin improvements and robust demand. The balance sheet is healthy with low debt and high equity, while cash flow indicates solid earnings conversion to cash.Income Statement
TSMC demonstrates outstanding revenue growth and profitability with a consistent upward trajectory. Gross Profit Margin and Net Profit Margin have significantly improved, showcasing operational efficiency. Revenue growth remains robust, indicating strong market demand and competitive positioning.95
Very Positive
Balance Sheet
The balance sheet is very strong, with a low Debt-to-Equity Ratio indicating conservative financial management. A high Return on Equity (ROE) emphasizes effective use of shareholder capital. The Equity Ratio is healthy, suggesting substantial equity financing.90
Very Positive
Cash Flow
Cash flow performance is impressive, with a solid Free Cash Flow Growth Rate and strong Operating Cash Flow to Net Income Ratio. The company demonstrates a healthy conversion of earnings into cash, supporting ongoing investments and financial flexibility.88
Very Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 3.14T | 2.89T | 2.16T | 2.26T | 1.59T | 1.34T | Gross Profit |
| 1.80T | 1.62T | 1.18T | 1.35T | 819.54B | 711.13B | EBIT |
| 1.48T | 1.32T | 921.47B | 1.12T | 649.98B | 566.78B | EBITDA |
| 2.20T | 1.98T | 1.45T | 1.59T | 1.09T | 918.55B | Net Income Common Stockholders |
| 1.31T | 1.17T | 838.50B | 992.92B | 592.36B | 510.74B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 2.70T | 2.42T | 1.69T | 1.59T | 1.21T | 802.15B | Total Assets |
| 7.13T | 6.69T | 5.53T | 4.96T | 3.73T | 2.76T | Total Debt |
| 986.98B | 986.46B | 956.26B | 888.17B | 749.07B | 365.19B | Net Debt |
| -1.72T | -1.14T | -509.17B | -454.64B | -315.92B | -294.98B | Total Liabilities |
| 2.53T | 2.37T | 2.05T | 2.00T | 1.55T | 910.09B | Stockholders Equity |
| 4.60T | 4.29T | 3.46T | 2.95T | 2.17T | 1.85T |
| Cash Flow | Free Cash Flow | ||||
| 922.43B | 870.17B | 286.57B | 520.97B | 262.72B | 301.19B | Operating Cash Flow |
| 2.04T | 1.83T | 1.24T | 1.61T | 1.11T | 822.67B | Investing Cash Flow |
| -1.01T | -864.84B | -906.12B | -1.19T | -836.37B | -505.78B | Financing Cash Flow |
| -351.21B | -346.30B | -204.89B | -200.24B | 136.61B | -88.62B |
TSMC Technical Analysis
Neutral
165.10
Price Trends
172.00
Negative
187.83
Negative
182.49
Negative
Market Momentum
-3.92
Negative
52.77
Neutral
92.10
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSM, the sentiment is Neutral. The current price of 165.1 is above the 20-day moving average (MA) of 156.59, below the 50-day MA of 172.00, and below the 200-day MA of 182.49, indicating a neutral trend. The MACD of -3.92 indicates Negative momentum. The RSI at 52.77 is Neutral, neither overbought nor oversold. The STOCH value of 92.10 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for TSM.
TSMC Risk Analysis
TSMC disclosed 26 risk factors in its most recent earnings report. TSMC reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
TSMC Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $123.13B | 19.65 | 35.19% | 1.05% | 4.45% | -10.01% | |
78 Outperform | $254.81B | 32.12 | 55.21% | 0.84% | 16.46% | 21.29% | |
74 Outperform | $164.31B | 15.73 | 41.96% | 2.29% | 12.13% | 36.17% | |
73 Outperform | $157.01B | 96.34 | 2.89% | ― | 13.69% | 91.75% | |
72 Outperform | $714.08B | 22.30 | 32.11% | 1.17% | 35.45% | ― | |
59 Neutral | $10.72B | 10.22 | -6.67% | 3.02% | 7.42% | -11.38% | |
46 Neutral | $87.43B | ― | -18.66% | 2.49% | -3.97% | -562.40% |
* Technology Sector Average
Performance Comparison
TSM
TSMC
165.10
28.10
20.51%
AMD
Advanced Micro Devices
96.64
-63.56
-39.68%
AMAT
Applied Materials
151.55
-51.99
-25.54%
ASML
ASML Holding
677.27
-227.64
-25.16%
INTC
Intel
20.05
-10.99
-35.41%
QCOM
Qualcomm
148.56
-17.32
-10.44%
TSMC Earnings Call Summary
Earnings Call Date: Apr 17, 2025 | % Change Since: 8.85% | Next Earnings Date: Jul 17, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a strong position in AI demand and strategic expansion plans, particularly in the U.S., which are positive indicators. However, there are concerns related to revenue declines in Q1, margin dilution from overseas expansion, and decreased smartphone and IoT revenues. Despite these challenges, the company maintains a strong financial position and has set optimistic guidance for Q2.Highlights
Strong AI Demand and Revenue Growth
AI-related demand continues to grow robustly, with revenue from AI accelerators expected to double in 2025. The company is working to double CoWoS capacity to meet strong demand.
Revenue Guidance for Q2 2025
TSMC expects Q2 2025 revenue to be between $28.4 billion and $29.2 billion, which represents a 13% sequential increase or a 38% year-over-year increase at the midpoint.
Advanced Technology Contributions
3-nanometer process technology contributed 22% of wafer revenue in Q1, while 5-nanometer and 7-nanometer accounted for 36% and 15%, respectively. Advanced technologies accounted for 73% of wafer revenue.
Expansion Plans in the U.S.
TSMC announced an additional $100 billion investment plan to expand its capacity in Arizona, including three additional wafer manufacturing fabs and a major R&D center.
Strong Financial Position
TSMC ended Q1 with cash and marketable securities of TWD2.7 trillion (approximately $81 billion).
Lowlights
Revenue Decline in Q1 2025
Q1 2025 revenue decreased 3.4% sequentially in NT dollars and 5.1% in U.S. dollars, impacted by smartphone seasonality despite growth in AI-related demand.
Margin Dilution Concerns
Gross margin decreased by 0.2 percentage points to 58.8% in Q1 due to earthquake impacts and overseas expansion costs. Margin dilution from overseas fabs is expected to grow more pronounced throughout the year.
Smartphone and IoT Revenue Decline
Smartphone revenue decreased 22% and IoT revenue decreased 9% quarter-over-quarter in Q1.
Company Guidance
During TSMC's first quarter 2025 earnings call, the company provided guidance for the second quarter of 2025, projecting revenue between $28.4 billion and $29.2 billion, representing a 13% sequential increase and a 38% year-over-year increase at the midpoint. Gross margin is expected to be between 57% and 59%, while operating margin is anticipated to be between 47% and 49%. The company also expects to accrue a tax rate of around 20% for the second quarter due to taxes on undistributed retained earnings, with a full-year tax rate forecasted between 16% and 17%. TSMC noted potential impacts on margins due to overseas fab expansions, particularly in Arizona, contributing to a 2% to 3% margin dilution impact for the full year, potentially widening to 3% to 4% in the latter stages of their five-year expansion plan. Despite these challenges, TSMC remains confident in achieving a long-term gross margin of 53% or higher, supported by its technology leadership and strategic expansions.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.