Core Viewpoint - TSMC's upcoming earnings call on Thursday is highly anticipated, with foreign investors focusing on five key topics: the impact of the New Taiwan Dollar appreciation on operations, potential changes in capital expenditures for the year, the status of advanced process and packaging capacity, the outlook for artificial intelligence (AI), and the effects of the "Inflation Reduction Act" [1][2]. Group 1: Currency Impact - The appreciation of the New Taiwan Dollar is a major concern for investors, particularly regarding its impact on TSMC's fundamentals. Morgan Stanley estimates that a 10% appreciation in Q2 will reduce TSMC's gross margin by over 3%, lowering the expected gross margin for the second half of the year from 58%-59% to 55%-56% [1]. - Morgan Stanley has also revised TSMC's earnings per share (EPS) estimates down by 6% and 12% for this year and next, resulting in new EPS figures of NT$55.01 and NT$64.61, respectively [1]. Group 2: Capital Expenditures - Goldman Sachs anticipates no major surprises in TSMC's earnings call regarding capital expenditures, maintaining a target range of USD 38 billion to 42 billion for the year and a projected revenue growth of 28.7% [2]. - The company is expected to maintain its USD revenue growth target of 20% year-over-year [2]. Group 3: Advanced Process and AI Outlook - In terms of advanced processes, Goldman Sachs predicts that TSMC's pricing for processes below 5nm will increase by 3% annually, while CoWoS packaging prices will rise by 5%. The demand for 2nm processes in smartphones may exceed expectations, driving growth for TSMC next year [2]. - Citigroup forecasts that GPUs will continue to dominate the AI market, with ASICs also showing growth. Starting in the second half of 2026, AI chips are expected to transition to 3nm processes, leading to significant increases in average selling prices and enhanced computing power [2]. - JPMorgan notes that TSMC's fundamental demand momentum is more optimistic compared to three months ago, driven by strong AI demand and limited reductions in Apple orders, projecting a 29% year-over-year revenue growth for TSMC this year [2]. Group 4: Inflation Reduction Act - Morgan Stanley believes that the "Inflation Reduction Act" will increase semiconductor tax credits from 25% to 35%, benefiting TSMC, which qualifies for this incentive. Additionally, TSMC's commitment to investing in U.S. fabs may enhance its chances of obtaining tariff exemptions, thereby alleviating profit pressures from U.S. expansion [3].