TSMC(US:TSM) Capital Securities·2025-10-21 08:34Investment Rating - The industry investment rating is "Positive" [1][33] Core Insights - TSMC's Q3 2025 performance exceeded guidance, with revenue of $33.1 billion, a year-on-year increase of 40.8% and a quarter-on-quarter increase of 10.1%. The gross margin was 59.5%, surpassing the previous guidance range [5][6] - Driven by AI demand, TSMC raised its annual capital expenditure lower limit to between $40 billion and $42 billion, with approximately 70% allocated to advanced process technologies [8][27] - TSMC is optimistic about AI demand, projecting a compound annual growth rate of around 45% from 2024 to 2029, indicating stronger demand than previously expected [8][27] Market Performance - From October 13 to October 17, the Shanghai Composite Index fell by 1.47%, while the electronic sector (Shenwan) dropped by 7.14%, underperforming the market by 5.67 percentage points [12][14] - Year-to-date until October 17, the Shanghai Composite Index rose by 14.56%, while the electronic sector increased by 38.80%, outperforming the market by 24.24 percentage points [12][14] Sector Breakdown - During the same period, the semiconductor sector fell by 6.53%, consumer electronics by 9.10%, and other electronic sub-sectors also experienced declines [16][19] - Year-to-date, the semiconductor sector has risen by 40.91%, while consumer electronics increased by 40.55% [17][19] Stock Performance - The top five gainers in the electronic sector from October 13 to October 17 included Aibisen (+23.35%), Ruineng Technology (+15.49%), and Galaxy Magnetics (+13.26%) [23][24] - The top five decliners included Deli Technology (-18.16%), Xinyi Chang (-17.82%), and Guangfeng Technology (-16.67%) [25][26] Investment Recommendations - Based on TSMC's outlook on future AI demand, the domestic AI industry chain companies are expected to benefit significantly from the growth in AI demand. Recommended companies include Industrial Fulian, Huadian Co., SMIC, Northern Huachuang, and Zhaoyi Innovation [27]