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TSMC’s US$100 billion wipeout does not change analysts’ bullish outlook for Taiwan’s semiconductor giant

  • Despite the recent stock rout for the world’s largest contract chip maker, investors expect TSMC shares to climb 50 per cent over the next year
  • Chairman Mark Liu has forecast 30 per cent revenue growth this year, and the company occupies an important position in the global supply chain

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Signage for Taiwan Semiconductor Manufacturing Co at the company’s headquarters in Hsinchu on January 11, 2022. Photo: Bloomberg
Bloomberg
The share price slump that’s erased about US$100 billion from the market value of Taiwan Semiconductor Manufacturing Co (TSMC) this year means little to the legion of analysts who see the stock as a screaming buy.

TSMC shares are expected to climb about 50 per cent to a record high 12 months from now, according to sell-side analyst estimates compiled by Bloomberg, as macro headwinds buffeting the sector ease and investors return their focus to the company’s fundamentals.

Fund managers are also starting to view an end in sight to the rout, and chairman Mark Liu’s Wednesday forecast for 30 per cent revenue growth this year bolsters this case.

While the scale of TSMC’s drop is notable, having shed more than a tenth of its share value, it is still about half the fall seen in 2022 in the global semiconductor benchmark index. The company occupies a powerful position in the global technology supply chain as the most advanced maker of chips for giants from Apple Inc to Nvidia Corp.

“Buyers may return as soon as non-fundamental factors disappear,” said Alex Huang, manager of Capital Hi-Tech Fund in Taipei. He sees a prospect of inflationary concerns and the war in Ukraine, which have both weighed on semiconductor makers, changing for the better in the second half of the year.

Being the largest and the most liquid stock on Taiwan’s equity market also made TSMC an easy selling target for some foreign investors, according to Huang. The US$475 billion company accounts for about 27 per cent of Taiwan’s entire equity market value.

“While many worry about a cyclical correction, we forecast share gain and robust pricing which will ensure TSMC grows uninterruptedly this year and also in 2023 and 2024,” Sanford C Bernstein analysts including Mark Li wrote in note earlier this month.

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