Group 1: TSMC's Investment and Pricing Strategy - TSMC plans to invest $165 billion in capacity expansion in the U.S., which may increase its chances of tariff exemptions [1] - TSMC's management indicated that potential semiconductor tariffs could suppress electronic product demand and reduce company revenue [1] - Due to inflation and potential tariff costs, TSMC expects profit margins from overseas factories to erode by 3-4 percentage points in the later years of the next five years [1] Group 2: Wafer Pricing and Currency Impact - TSMC is expected to increase wafer prices by 3%-5% globally due to strong demand for advanced processes and structural currency trends [2] - U.S. customers are reportedly locking in higher quotes for 4nm capacity at TSMC's U.S. factories, with plans to raise wafer prices by at least 10% [2] Group 3: 2nm Capacity Expansion - TSMC plans to start mass production of 2nm technology in the second half of 2025, with significant demand anticipated [5] - The projected capacity for 2nm will be 10k wafers per month (kwpm) in 2024, increasing to 40-50 kwpm in 2025, and reaching 90 kwpm by the end of 2026 [5] - Major clients for 2nm technology will include Apple, AMD, and Intel, with Apple expected to adopt the technology in Q4 2025 [5][6] Group 4: AI and Cryptocurrency Demand - By the end of 2026, AI ASICs will begin utilizing 2nm capacity, with increased usage expected in 2027 [6] - The contribution of cloud AI semiconductor business to TSMC's revenue is projected to rise from 13% in 2024 to 25% in 2025, and further to 34% by 2027 [12] Group 5: B30 GPU and Market Demand - TSMC's Blackwell chip production is expected to align with the demand from NVL72 server rack shipments, with a projected shipment of 30,000 racks in 2025 [10] - The design of the Chinese version of the B30 GPU is anticipated to be similar to the RTX PRO 6000, with demand continuing to grow [12] - If the B30 can be sold in China, it could account for 20% of TSMC's revenue growth in 2026 [12]

Investment Rating - The report maintains an "Overweight" (OW) rating for TSMC based on strong demand in the AI supply chain [2][3][4]. Core Insights - TSMC's CoWoS capacity is projected to grow over 30% year-over-year, reaching approximately 90-95k by 2026, which is positive for both Nvidia and AI ASIC supply chains [2][3][4]. - There is strong demand for AI applications in China, but hardware supply constraints are a significant bottleneck [3][4]. - The report highlights a bullish sentiment among investors regarding AI, with key concerns focused on potential demand issues and alternative investments beyond Nvidia [2][3]. Summary by Sections TSMC Capacity and Demand - TSMC's CoWoS total capacity is expected to be around 90-95k in 2026, indicating a 33% growth from 70k at the end of 2025 [2][3][8]. - The CoWoS-L capacity may expand to 68k, reflecting strong demand for Blackwell and Rubin chips [2][3][8]. AI Supply Chain Insights - Chinese AI developers are aware of Nvidia's B30 chips, with foundry wafer orders totaling 2 million units in the second half of 2025, but no confirmed purchase orders have been made [3][4]. - If B30 shipments to China are not realized, developers may shift to Huawei chips, although availability remains uncertain [3][4]. ASIC Design Services - Alchip is expected to be the sole source for Trainium3 XPU, with revenue anticipated to ramp up significantly in 2026 [4][5]. - Marvell's focus will be on "XPU-attach" chips, and the longevity of Trainium2 will impact its growth in 2026 [4][5]. AI Capex and Market Sentiment - The top four US hyperscalers are projected to generate $550 billion in operating cash flow in 2025, supporting ongoing investments in AI-related data centers [31][32]. - The report anticipates a 43% year-over-year growth in cloud capex for 2025, up from a previous forecast of 39% [41][42].