Core Viewpoint - Taiwan Semiconductor Manufacturing Company (TSMC) has shown strong performance in a volatile market, achieving a 17.7% year-to-date gain, outperforming the broader Zacks Computer and Technology sector which rose 10.9% [1][4]. Performance Comparison - TSMC's stock has outperformed several peers, including ASML Holding, ON Semiconductor, and Marvell Technology, which have seen declines of 0.5%, 25.1%, and 30.6% year-to-date, respectively [2]. AI Boom and Growth Potential - The ongoing AI boom positions TSMC as a key player in a multi-year growth cycle, with AI-related revenues tripling in 2024 and expected to double again in 2025, achieving a 40% compound annual growth rate over the next five years [5][7]. - TSMC is investing between $38 billion and $42 billion in capital expenditures for 2025, focusing 70% on advanced manufacturing processes to meet rising AI chip demand [8][11]. Financial Performance - In Q2 2025, TSMC's revenues surged 44% year-over-year to $30.07 billion, with EPS increasing by 61% to $2.47, driven by demand for 3nm and 5nm chips [12][10]. - TSMC raised its revenue growth guidance for full-year 2025 to 30%, up from mid-20% projections, with Q3 revenue expectations between $31.8 billion and $33 billion [13]. Valuation - TSMC's stock trades at a forward 12-month price-to-earnings (P/E) multiple of 22.27, lower than the sector average of 27.47, making it appealing for long-term investors [15]. Near-Term Challenges - TSMC faces near-term challenges, including a 25% electricity price hike in Taiwan, softness in key markets like PCs and smartphones, and higher costs associated with global expansion [18][19][20]. - Geopolitical tensions, particularly U.S.-China relations, pose strategic risks due to TSMC's significant revenue exposure to China [21]. Conclusion - TSMC remains a cornerstone of the semiconductor industry with strong capabilities in advanced chip manufacturing and exposure to AI demand, but short-term headwinds suggest a cautious approach, recommending a hold position for now [22].

Semiconductor stocks sent the emerging-market equity benchmark lower as Trump’s threat to raise tariffs on the sector and an investigation into a theft of trade secrets at TSMC spooked investors https://t.co/QXqkmq96oD ...

I am a full-time investor and independent research analyst with years of hands-on experience managing my own capital in the stock market. My primary focus lies in identifying undervalued breakout opportunities, companies that sit at the crossroads of deep value and explosive growth potential, particularly in technology, AI, fintech, and cloud infrastructure. I specialize in uncovering businesses that are misunderstood, overlooked, or on the brink of major re-ratings. My approach blends rigorous fundamental ...

Summary of Key Points from the Conference Call Industry Overview - The discussion centers around the semiconductor packaging industry, specifically focusing on NVIDIA Corporation (NVDA) and its proposed technology shift from CoWoS (Chip-on-Wafer-on-Substrate) to CoWoP (Chip-on-Wafer-on-PCB) packaging technology [1][2]. Core Insights and Arguments 1. **CoWoP Technology Proposal**: NVDA is considering replacing CoWoS with CoWoP, which utilizes advanced PCB technologies like mSAP and SLP to enhance performance by eliminating the ABF substrate layer [1]. 2. **Potential Benefits of CoWoP**: - Simplified system structure leading to reduced transmission losses and improved NVLink interconnect range [1]. - Enhanced thermal management and lower power consumption [1]. - Decreased substrate costs, which have been increasing with each generation [1]. - Possible reduction in backend testing steps [1]. 3. **Commercialization Challenges**: The likelihood of CoWoP being commercialized in the medium term is assessed as low due to significant technological hurdles, including the need for finer line/space dimensions and the current limitations of PCB technology [2]. 4. **Current Roadmap Conflicts**: NVDA's established roadmap, which includes CoWoS-L and CoPoS, appears contradictory to the new direction of CoWoP, indicating a potential preference for more mature technologies [2]. 5. **Supply Chain Implications**: If CoWoP is adopted, it could negatively impact ABF substrate players as the value add from substrates may diminish, while PCB makers with advanced capabilities could benefit [7][8]. 6. **Testing and Foundry Impact**: CoWoP may alter the testing landscape by reducing the number of testing steps but could increase demand for board-level testing, which may lead to a shift in testing equipment spending [11][12]. Additional Important Insights 1. **Market Participation**: There is limited participation from high-value packaging players like TSMC in the CoWoP development, which may hinder its commercialization prospects [5]. 2. **Material Considerations**: The high current and voltage requirements of PCBs may exclude certain materials, suggesting that improved versions of mSAP will likely be used for platform PCBs [9][10]. 3. **Investment Requirements**: Significant investments in clean rooms, automation, and lithography tools will be necessary for the successful implementation of CoWoP, indicating a high barrier to entry for new players [8]. 4. **NVIDIA's Leadership**: Regardless of the success of CoWoP, NVDA is positioned as a leader in datacenter AI infrastructure, continuing to innovate in packaging technologies and system-level approaches [13]. Companies Discussed - **NVIDIA Corporation (NVDA)**: Focused on advanced packaging technologies and AI infrastructure [20]. - **TSMC**: Noted for its limited engagement in the CoWoP technology development [12]. - **ABF Material Vendors**: Companies like Ajinomoto and Ibiden may face negative impacts from the shift to PCB-based technologies [7]. - **PCB Manufacturers**: Unimicron is highlighted as a strong player due to its involvement in advanced PCB technologies [8][10]. This summary encapsulates the key points discussed in the conference call, providing insights into the potential shifts in the semiconductor packaging landscape and the implications for various stakeholders.

Taiwan Semiconductor Manufacturing Company, the world’s largest chipmaker, said Tuesday it had discovered “unauthorized activities” of employees suspected of stealing trade secrets related to its most advanced computer chips.TSMC, which makes chips for major firms like Apple and Nvidia, reportedly fired several workers after uncovering the security breach “during routine monitoring” and contacted Taiwanese authorities.The Taiwan High Prosecutors Office said it had arrested three people involved in the alleg ...

Group 1: Industry Trends - The latest jobs data in the United States indicates a shift in focus towards wage growth among employees, which may create opportunities for artificial intelligence to enhance efficiency and offset rising costs [2][3][5] - The introduction of President Trump's America's AI Action Plan emphasizes the U.S. commitment to maintaining dominance in artificial intelligence, which could lead to significant rewards in the technology sector [3][4] Group 2: Company Focus - Taiwan Semiconductor Manufacturing (TSM) - Taiwan Semiconductor Manufacturing (TSM) is positioned to benefit from the trend of onshoring semiconductor manufacturing in the U.S., potentially creating new labor opportunities despite higher domestic labor costs [4][7] - TSM's current forward P/E ratio of 21.7x is significantly lower than competitors like NVIDIA, which has a P/E ratio of 31.6x, suggesting TSM may be undervalued relative to its crucial role in the semiconductor supply chain [9][11] - Recent institutional investment in TSM, including a $2.7 billion stake by Jennison Associates, reflects confidence in the company's future prospects and alignment with U.S. manufacturing goals [6][7] Group 3: Competitive Positioning - TSM plays a critical role in the supply chain for major companies like NVIDIA, providing essential manufacturing equipment and materials, which could justify a higher valuation for TSM [10][11] - The potential for increased automation in semiconductor manufacturing could lead to wage growth for employees while allowing companies like TSM to enhance efficiency and reduce costs [5][8]

Core Viewpoint - Taiwan Semiconductor Manufacturing Company (TSMC) has detected unauthorized activities leading to potential trade secret leaks and has initiated strict disciplinary actions and legal proceedings against involved personnel [2][3]. Group 1: Company Actions - TSMC has a zero-tolerance policy towards actions that compromise trade secrets and has taken strict disciplinary action against personnel involved in the unauthorized activities [2]. - The company has launched legal proceedings as part of its response to the detected trade secret leaks [2][3]. - TSMC has conducted swift internal investigations due to its comprehensive monitoring mechanisms [4]. Group 2: Industry Context - TSMC is the world's largest semiconductor manufacturer and plays a crucial role in producing advanced chips, including the 2-nanometer chip, which is among the leading-edge manufacturing processes in the semiconductor industry [3][5]. - Major tech companies, such as Apple and Nvidia, are clients of TSMC, highlighting its significance in the tech supply chain [3]. Group 3: Ongoing Investigation - The case is currently under judicial review, limiting TSMC's ability to provide further information on the matter [3]. - Reports indicate that several former employees are suspected of attempting to obtain critical proprietary information related to 2-nanometer chip development while still employed at TSMC [4].

Investment Rating - The report maintains a "Buy" rating for key suppliers including Hon Hai, Luxshare, Largan, AAC, and Cowell, indicating a positive outlook for these companies in the context of Apple's production strategy and potential tariff impacts [16][18][19][20][21][22]. Core Insights - iPhone production for 2025 is expected to be 227 million units, a slight decrease of 1% year-on-year, with adjustments made for promotional activities in China and increased production of older models [1][2]. - The iPhone 17 series is projected to have a total production of 90 million units in the second half of 2025, with specific model breakdowns indicating a stable demand compared to previous series [3][4]. - Apple is strategically positioning its production in India and Vietnam to mitigate tariff risks, although uncertainties remain regarding tariff negotiations in India [7][9][10]. Summary by Sections iPhone Production Outlook - iPhone shipments in 4Q24-1H25 were stronger than expected due to early pull-ins related to tariff concerns and price cuts in China [1]. - Production assumptions for 3Q25 are set at 57.5 million units, reflecting a 3% year-on-year increase, while 4Q25 is projected at 76 million units, a 7% decrease year-on-year [2]. iPhone 17 Series Details - The iPhone 17 series production is estimated at 90 million units, with model-specific forecasts indicating a slight increase in the i17 Air model compared to its predecessor [3][4]. - The EMS split for the i17 series shows Hon Hai and Luxshare involved in four models, with a production ratio of approximately 6:4 [4]. Tariff and Pricing Strategy - Apple has chosen India as a secondary production hub for iPhones and Vietnam for other products, with potential tariffs from the US impacting pricing strategies [7][9][10]. - Price adjustments for iPhone models may occur post-tariff implementation, but global price increases are expected to be moderate to alleviate impacts on the US market [10]. Component and Technology Developments - The report highlights advancements in Apple's in-house ICs and new architectures for the iPhone 17 and 18 series, including higher computing power and improved camera technologies [6][11]. - TSMC's N2 process adoption is expected to significantly impact the supply chain, with projections indicating a demand of at least 180kwpa for N2 in 2026 [11][12]. Investment Opportunities - The report identifies strong investment opportunities in companies like Hon Hai, Luxshare, Largan, AAC, and Cowell, citing their favorable positions in the supply chain and potential for earnings growth [16][18][19][20][21][22].

Summary of TSMC Conference Call Company and Industry - **Company**: TSMC (Taiwan Semiconductor Manufacturing Company) - **Industry**: Semiconductors, specifically focusing on automotive semiconductors and AI technologies Key Points and Arguments Tesla Foundry Orders - TSMC's key customer, Tesla, has signed a **US$16.5 billion** chip contract with Samsung Electronics, which is expected to have limited impact on TSMC's earnings per share (EPS) assumptions for 2027 [2][4] - The new AI5 chip, set to launch in January 2026, will be manufactured using TSMC's **3nm process node** and is projected to deliver **4-5 times** higher performance than its predecessor, AI4 [2] - Future manufacturing of Dojo 3 ASIC chips may be challenging for Samsung due to the complexity of TSMC's system on wafer technology [2] China Smart/AI Car Development - TSMC is positioned to benefit from the growth of smart and AI cars in China, with Alchip being a key design service partner for Li Auto, designing a **5nm autonomous chip** [3][10] - The contribution of auto semiconductors to TSMC's revenue was **5%** in Q2 2025, with an estimated **2-3%** of total revenue linked to China’s smart/AI car market [12] Business Impact and Revenue Projections - The shift of some Tesla orders to Samsung is expected to result in a **1% loss** of TSMC's projected revenue for 2027, assuming a **US$2 billion** foundry opportunity per year [6] - TSMC will continue to produce cloud AI semi chips for Tesla and x.AI, which may contribute an additional **0.5%** to TSMC's 2027 revenue [6] Strategic Insights - TSMC does not aim to capture **100% market share** in leading-edge foundry services, as customers typically require a second source for better pricing and support [5] - TSMC's pricing flexibility is limited compared to its peers due to its technology leadership, and it is cautious about entering captive foundry relationships [5] Valuation and Market Outlook - TSMC is rated as **Overweight** with a target price of **NT$1,388**, representing a **20% upside** from the closing price of **NT$1,160** on July 31, 2025 [8] - The company is expected to maintain a strong EPS growth trajectory, with projected EPS of **NT$84.20** for 2027 [8] Risks and Considerations - Potential risks include increased competition leading to pricing pressures, slower-than-expected demand for AI semiconductors, and challenges in maintaining high gross margins [17][21] - Upside risks involve stronger-than-expected demand for AI chips and successful project wins in the hyperscaler market [18] Other Important Content - TSMC remains a top pick in the semiconductor sector, with a favorable industry outlook driven by advancements in AI and automotive technologies [12] - The conference call highlighted the importance of strategic partnerships and technological advancements in maintaining TSMC's competitive edge in the semiconductor market [10][12]

Technology & Production Challenges - CoWoP faces significant uncertainties and challenges in mass production and commercialization [1] - Implementing SLP in CoWoP is far more challenging than Apple's use case, involving approximately 10,000 times the system power, less than half the line width and spacing, more than three times the layer count, and 100 times the area [2] - Expectation that CoWoP will reach mass production and be deployed in Rubin Ultra by 2028 seems overly optimistic without concrete test data [3] Strategic & Competitive Landscape - Apple invested in SLP R&D as early as 2013, with mass production starting in 2017, requiring four years of collaboration across the supply chain [1] - Nvidia may not possess stronger control over technology and the supply chain than Apple did during SLP adoption [2] - TSMC is developing CoPoS, targeting mass production around the same time as CoWoP (post-2028), potentially prioritizing it due to its focus on manufacturing efficiency [3] - Introducing two major, unproven technologies (CoWoP and CoPoS) within the same year carries considerable risk, posing a challenge to CoWoP's 2028 mass production goal [3]