TSMC(US:TSM) Shenwan Hongyuan Securities·2026-01-20 10:44Investment Rating - The report indicates a positive investment outlook for the semiconductor industry, particularly driven by AI and high-performance computing (HPC) demand [1]. Core Insights - TSMC's revenue for December and the entire year showed a year-on-year growth of 20% and 32% respectively, with Q4 exceeding market expectations due to strong demand from AI and HPC sectors [1][4]. - TSMC's gross margin for Q4 2025 was reported at 62.3%, surpassing previous guidance, attributed to better-than-expected cost improvements and favorable exchange rates [5]. - The report highlights a robust capital expenditure forecast for TSMC in 2026, estimated at $52-56 billion, with 70%-80% allocated to advanced processes, reflecting a commitment to meeting structural demand in AI and HPC [5]. Summary by Sections AI Sector - The AI sector continues to see strong spending, with TSMC's advanced process utilization remaining high due to demand from AI servers and HPC applications [1][4]. - The report notes that the growth in AI applications has mitigated declines in consumer electronics chip demand [4]. Advanced Process Manufacturing - TSMC's guidance for Q1 2026 includes revenue expectations of $34.6-35.8 billion and a gross margin of 63%-65%, indicating resilience in advanced process demand despite seasonal slowdowns [5]. - The report emphasizes that TSMC's advanced process capacity utilization remains robust, driven by AI and HPC applications [1][5]. Server Management Chips - The report highlights that the revenue for server management chips from the company Xinxin reached a new high in December, with a year-on-year growth of 18% [8]. - Xinxin's revenue for 2025 is projected to grow by 41%, driven by strong demand from AI servers and improved supply chain conditions [8]. PCB and EMS - PCB manufacturers such as XinXing and JingShuo reported year-on-year revenue growth of 27% and 25% respectively, attributed to increased shipments of high-end server and high-speed application boards [1]. - EMS companies like Hon Hai and Wistron experienced significant revenue growth, with year-on-year increases of 32% and 142% respectively, driven by AI server demand [1].