HSBC Increases Price Target for TSMC Stock
HSBC has notably elevated the price target for Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE: TSM) to NT$1,600.00, an increase from NT$1,535.00, all while maintaining a Buy rating for the stock.
Positive Outlook on 2nm Chip Technology
The revision in price target underscores a promising outlook for the semiconductor giant's upcoming 2-nanometer (2nm) chip technology, projected to start contributing to revenue in the latter half of 2025. This development is anticipated to reshape TSMC's revenue landscape significantly.
Higher Selling Prices Expected
Analysts at HSBC express optimism due to the expected higher average selling price (ASP) premium of over 30% for the 2nm chips compared to the existing technologies. The firm notes that better customer interaction with 2nm products compared to 3nm chips is likely to enhance utilization rates, leading to improved gross margins (GM) in the fiscal years 2025 and 2026.
Revenue Projections and Comparisons
The projected revenue for TSMC's 2nm chips is a staggering TWD568 billion for the fiscal year 2026, marking the first full year of their anticipated contribution to the company's earnings. Remarkably, this figure exceeds Street consensus estimates by a substantial 40%. For context, the 3nm chips are estimated to generate TWD160 billion in their first full year, which is in 2023.
Revised Gross Margin Estimates
In response to these bullish projections, HSBC has adjusted its gross margin estimates for TSMC for the fiscal years 2024 to 2026 to 55.8%, 59.2%, and 60.1% respectively. These adjustments are notably higher than prior estimates of 54.7%, 57.1%, and 57.2%.
Expectation of Continued Growth
The adjusted estimates also surpass consensus expectations of 54.0%, 55.3%, and 55.9% for the same fiscal periods. Analysts further suggest that TSMC's gross margin could notably reach 60% in the second half of 2025, indicating a robust growth trajectory for the company.
Frequently Asked Questions
What factors influenced HSBC's decision to raise TSMC's price target?
HSBC's decision was driven by positive expectations surrounding TSMC's upcoming 2nm chip technology and higher projected revenues and gross margins.
When is TSMC expected to start generating revenue from 2nm chips?
TSMC is projected to begin generating revenue from its 2nm chips in the second half of 2025.
How does the ASP of 2nm chips compare to existing technologies?
The average selling prices (ASP) of the 2nm chips are expected to be over 30% higher than those of existing technologies.
What are the projected revenues for TSMC's 2nm chips in 2026?
The anticipated revenue for TSMC's 2nm chips in 2026 is TWD568 billion, exceeding the average market expectations.
How might TSMC's gross margin trend in the upcoming years?
Analysts project TSMC's gross margin to increase to 60% by the second half of 2025, reflecting strong performance expectations.
