Summary of Key Points from the Conference Call Industry Overview - **Industry Focus**: Semiconductor and Semiconductor Capital Equipment (SPE) sector - **Market Forecast**: Wafer Fab Equipment (WFE) market is projected to grow by 2% YoY in CY2025, 11% in CY2026, and 8% in CY2027, driven by increased demand for generative AI and improved capital expenditure (capex) from device makers [2][6][15] Core Insights - **WFE Market Growth**: The WFE market grew approximately 9% YoY in 2024 and is expected to expand further due to rising demand for complex technologies such as DRAM interconnect etching and 3D NAND flash memory layers [6][15] - **Semiconductor Shipments**: Global semiconductor shipments increased by 28% YoY in September 2025, marking 25 consecutive months of growth, driven by advanced logic chips and HBM for generative AI [6][15] - **Advanced Packaging Technologies**: The Taiwan advanced packaging equipment sector is expected to see structural growth, with significant demand for CoWoS and CoPoS technologies, particularly in AI applications [7][24][47] Technology Developments - **CoWoS and CoPoS**: CoWoS capacity is forecasted to reach 105k and 125k wafers per minute (wfpm) by the end of 2026 and 2027, respectively. CoPoS is anticipated to succeed CoWoS by 2028, potentially increasing average selling prices (ASP) by 50-100% due to its complexity [7][24][47] - **HBM-TCB Technology**: Flux-based TCB is expected to dominate until 20-Hi HBM5, with a shift to HCB anticipated due to physical limitations. Hanmi is expected to maintain a significant market share in TCB technology [8][49] Stock Recommendations - **Preferred Stocks**: - **Japan**: Tokyo Electron (8035 JT) and Advantest (6857 JT) are favored due to their exposure to the growing WFE market and increased test times [8][49] - **Taiwan**: Grand Process Tech (3131 TT) is preferred over Scientech (3583 TT) and All Ring Tech (6187 TT) based on advanced packaging ramp-up timelines [7][47] Additional Insights - **Capex Trends**: TSMC's capex is projected to increase to $48 billion in 2026 and $52 billion in 2027, driven by generative AI demand and technology transitions [24][47] - **Memory Chip Market Dynamics**: The memory chip market is expected to experience a stronger and longer-lasting upcycle, with rising prices for DRAM and NAND chips due to supply constraints and increased demand for AI applications [24][25] - **Chinese Semiconductor Market**: Preference for SPE makers and foundries is noted, with expectations of sustained capex and domestic demand, while fabless companies may face margin pressures [25][49] Conclusion - The semiconductor industry is poised for significant growth driven by advancements in AI and technology, with specific focus on WFE and advanced packaging technologies. Stock recommendations reflect a positive outlook on companies well-positioned to benefit from these trends.

TSMC (2330.TW) Earnings Call Summary Company Overview - **Company**: Taiwan Semiconductor Manufacturing Company (TSMC) - **Ticker**: 2330.TW - **Market Cap**: NT$38.5 trillion / $1.3 trillion - **Enterprise Value**: NT$36.8 trillion / $1.2 trillion - **12-Month Price Target**: NT$1,720.00 - **Current Price**: NT$1,485.00 - **Upside Potential**: 15.8% Key Highlights from the Earnings Call Industry and Market Dynamics - **AI Demand**: TSMC's management expressed a significantly more positive outlook on AI demand compared to three months ago, indicating exponential growth in AI token demand every three months. The long-term AI revenue CAGR guidance remains at mid-40%, with potential for upward revision in the future [2][25][27]. - **Non-AI Market Recovery**: The non-AI segment has shown signs of recovery after bottoming out, contributing to overall revenue growth [22]. Financial Performance - **3Q25 Results**: - Revenue: NT$989.92 billion (up 6.0% QoQ, 30.3% YoY) - Gross Profit: NT$588.54 billion (GM: 59.5%) - Operating Income: NT$500.69 billion (OpM: 50.6%) - Net Income: NT$452.30 billion (EPS: NT$17.44, up 13.6% QoQ, 39.0% YoY) [21][40]. - **4Q25 Guidance**: Revenue expected to be in the range of US$32.2-33.4 billion, with GM guidance of 59-61% and OpM of 49-51% [39]. Capacity and Technology Developments - **Advanced Packaging (CoWoS)**: TSMC is increasing capacity for CoWoS, expecting a 61% CAGR in capacity and a 54% CAGR in shipments from 2025 to 2027. The annual capacity is projected to reach 1,740k wafers by 2027 [3][31]. - **N2 Technology**: N2 is on track for volume production in 4Q25, with significant demand expected from smartphones and AI/HPC applications. Projections indicate N2 will account for 9.0% of wafer revenue in 2026, higher than N3's initial ramp-up share [23][24]. Financial Guidance Revisions - **Revenue Guidance**: TSMC raised its 2025 revenue guidance to mid-30% YoY growth (in USD), up from 30% previously, driven by strong AI demand [4][22]. - **Capex Guidance**: Slightly increased to US$40-42 billion from US$38-42 billion, with a reduction in GM dilution guidance from overseas fab expansion to 1-2 percentage points [4]. Earnings Revisions - **EPS Revisions**: EPS estimates for 2025, 2026, and 2027 have been raised by 4.9%, 6.9%, and 8.5% respectively, reflecting stronger 3Q25 results and favorable FX rates [44][45]. Risks and Considerations - **Potential Upside in AI Revenue**: Management indicated that while the AI revenue CAGR guidance remains unchanged, there is potential for upward revision, with further details expected in early 2026 [25][27]. - **Market Conditions**: Investors should consider the potential impact of macroeconomic conditions and competition in the semiconductor industry on TSMC's performance [8]. Conclusion TSMC's earnings call highlighted robust growth driven by AI demand, a recovery in non-AI markets, and significant advancements in technology and capacity. The company has raised its revenue and EPS guidance, reflecting a strong outlook for the coming years.

Summary of TSMC (2330.TW) Conference Call Company Overview - **Company**: Taiwan Semiconductor Manufacturing Company (TSMC) - **Ticker**: 2330.TW - **Market Cap**: NT$33.7 trillion / $1.1 trillion - **Enterprise Value**: NT$32.0 trillion / $1.0 trillion - **12-Month Price Target**: NT$1,600 (up from NT$1,370) [40][41] Key Industry Insights - **AI Demand**: AI is expected to be a significant growth driver for TSMC, with Nvidia projecting the AI infrastructure market to reach $3-4 trillion by 2030, implying a 42.3% CAGR from $600 billion in 2025 [2][23]. - **Revenue Growth**: TSMC's total revenue is projected to grow at a CAGR of at least 17.2% from 2026 to 2030, even with muted non-AI growth [2][24]. Financial Performance and Forecasts - **Earnings Revisions**: TSMC's earnings forecast for 2025-2027 has been raised by 2-9%, reflecting higher N2 capacity and favorable foreign exchange rates [1][36]. - **Revenue Projections**: - 2025E: NT$3,695.5 billion - 2026E: NT$4,307.5 billion - 2027E: NT$5,187.1 billion [4][16]. - **Gross Margin**: Expected to improve to 58.5% in 2025, 58.2% in 2026, and remain at 58.2% in 2027 [22][36]. Capacity and Demand Insights - **N2 Capacity**: Revised up to 1,230k wafers in 2027, driven by demand from AI and HPC customers [1][20]. - **Capex**: Increased to $44 billion for 2026, reflecting higher N2 capacity [21][36]. Valuation Metrics - **P/E Ratio**: Projected to be 19.6 in 2025, decreasing to 15.3 by 2027 [10]. - **EPS Growth**: Expected to grow from NT$45.25 in 2024 to NT$84.84 in 2027 [4][16]. - **Dividend Yield**: Projected to increase from 1.9% in 2025 to 2.2% in 2027 [4]. Strategic Outlook - **Long-term Growth**: TSMC is positioned to capture long-term structural growth opportunities in sectors such as 5G, AI, HPC, and EV [41]. - **Market Position**: TSMC's technology leadership and execution capabilities are expected to enhance its competitive position against peers [41]. Conclusion - **Investment Recommendation**: The company maintains a Buy rating with a target price of NT$1,600, reflecting a 22.6% upside potential [40][41].

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]