TSMC(US:TSM) GOLDEN SUN SECURITIES·2024-02-20 16:00Investment Rating - The report initiates coverage with a "Buy" rating for TSMC (TSM.N) [2][3]. Core Insights - TSMC is the global leader in wafer foundry with a market share exceeding 50%, maintaining a gross margin of 54% in 2023 and a net profit of 837.8 billion NTD, reflecting a net profit margin of 39% [1][19]. - The company has five major business platforms, with High-Performance Computing (HPC) showing rapid growth, achieving a revenue CAGR of 30% from 2019 to 2023, increasing its share from 30% to 43% [1][13]. - TSMC's advanced process technologies, particularly in 5nm and 3nm nodes, are expected to drive future revenue growth, with 3nm projected to contribute 15% of revenue by 2024 [1][27]. Summary by Sections 1. Global Wafer Foundry Leader - TSMC holds a dominant position in the global wafer foundry market with a market share of over 50%, and its total revenue increased from 1,070 billion NTD in 2019 to 2,161.736 billion NTD in 2023, representing a CAGR of 19% [11][19]. - The company has established a strong customer base, including major fabless firms like Apple, MediaTek, AMD, and Qualcomm, with Apple contributing over 20% of revenue [1][18]. 2. HPC: AI Demand Surge - The demand for AI computing power is expected to be sustainable, with projections indicating a need for the equivalent of 20 million H100 GPUs and over 116 million A30 GPUs by 2030 [1]. - TSMC is the primary provider of packaging for AI computing chips and is actively expanding its CoWoS capacity, with AI-related sales expected to grow at a CAGR of 50% in the coming years [1][2]. 3. Smartphone Market Recovery - The smartphone market is anticipated to see moderate growth in 2024, driven by high-end AI smartphones and foldable screens, which will increase demand for advanced SoC processes [2][3]. - TSMC's revenue from 3nm technology is expected to continue rising due to these trends [2]. 4. Financial Forecasts and Valuation - Revenue projections for TSMC from 2024 to 2026 are estimated at 2,612.464 billion NTD, 3,133.680 billion NTD, and 3,658.199 billion NTD, reflecting year-on-year growth rates of 21%, 20%, and 17% respectively [2]. - Net profit forecasts for the same period are 986.285 billion NTD, 1,187.255 billion NTD, and 1,396.295 billion NTD, with growth rates of 18%, 20%, and 18% respectively [2].