Investment Rating - The report maintains a "Buy" rating for TSMC (2330.TW) with a 12-month price target of NT$1,190.00, indicating a potential upside of 40.5% from the current price of NT$847.00 [1] Core Insights - TSMC's 2025 outlook is better than previously feared, with the company maintaining its full-year revenue and capex guidance despite concerns over potential end demand slowdown due to tariffs [2][19] - The company has not engaged in discussions regarding joint ventures or technology transfers, alleviating investor concerns that have affected valuations [2] - There are incremental negatives regarding gross margin (GM) guidance, with expectations of GM dilution widening to 3-4 percentage points due to overseas expansion and inflationary pressures [3][21] Revenue and Earnings Forecast - Revenue projections for TSMC are as follows: NT$2,894.31 million for 2024, NT$3,655.51 million for 2025, NT$4,192.55 million for 2026, and NT$5,035.09 million for 2027, reflecting a growth rate of 33.9% in 2024 and 26.3% in 2025 [6][18] - EPS estimates are NT$45.25 for 2024, NT$59.07 for 2025, NT$66.09 for 2026, and NT$78.06 for 2027, with a projected EPS growth of 39.9% in 2024 and 30.5% in 2025 [6][18] Margin and Profitability - The report indicates a slight decrease in GM forecast for 2027, revised down to 57.1% from 57.8%, due to higher operational costs and inflation [3][21] - EBITDA margins are projected to be 68.6% in 2024, 67.9% in 2025, and 68.8% in 2026, with net income margins expected to be 40.5% in 2024 and 41.9% in 2025 [13][18] Market Position and Competitive Landscape - TSMC's market capitalization is NT$22.0 trillion (approximately $675.7 billion), with an enterprise value of NT$20.1 trillion (approximately $618.7 billion) [5] - The company is ranked third in M&A within the semiconductor industry, indicating a strong competitive position [5] Capital Expenditure and Investment Strategy - TSMC's capex guidance for 2025 is set between US$38-42 billion, reflecting ongoing investments to meet robust demand, particularly in AI-related sectors [19][36] - The company is accelerating its expansion in the US, with plans to build multiple wafer fabs and advanced packaging facilities to cater to US-based customers [37]