TSMC_ Catalyst Driven Idea

Summary of TSMC Conference Call Company and Industry - Company: TSMC (Taiwan Semiconductor Manufacturing Company) - Industry: Greater China Technology Semiconductors Key Points and Arguments 1. Role in AI Semiconductor Supply: TSMC is a key supplier for global cloud AI semiconductors, including NVIDIA's AI GPUs, indicating its significant position in the AI semiconductor market [1][6] 2. Upcoming Analyst Meeting: TSMC will host its 4Q24 analyst meeting on January 16, 2025, where it will disclose its 4Q24 earnings and 1Q25 guidance, which are critical for assessing AI demand sustainability [2][6] 3. Revenue and Margin Guidance: The market anticipates TSMC to provide conservative guidance for 1Q25 revenue and gross margin, with expectations of low-20% year-over-year growth in USD for 2025 and gross margins above 53% [2][6] 4. Scenarios for Guidance Outcomes: - Scenario 1: Guidance beats consensus, leading to a 4% stock price increase. - Scenario 2: Guidance aligns with consensus, resulting in a 2% stock price increase. - Scenario 3: Guidance falls below consensus, causing a 5% stock price decrease [3][4] 5. Base Case Expectation: The base case is Scenario 2, with a 60% probability assigned, expecting TSMC to over-deliver and raise its 2025 guidance in subsequent quarters [4][6] 6. Stock Price Projections: Projected stock prices based on scenarios are NT$1,170 for Scenario 1, NT$1,148 for Scenario 2, and NT$1,068 for Scenario 3 [5] Additional Important Content 1. Market Capitalization and Trading: TSMC's current market capitalization is NT$29,170,363 million, with an average daily trading value of NT$39,889 million [7] 2. Earnings Per Share (EPS) Forecast: EPS is projected to be NT$32.34 for FY23, NT$45.60 for FY24, NT$59.93 for FY25, and NT$76.86 for FY26 [7] 3. Valuation Methodology: The valuation is based on a residual income model with key assumptions including a cost of equity of 9.2% and an intermediate growth rate of 10% [9] 4. Risks: Potential risks include pricing pressures from major clients, lower visibility on AI demand, and increasing costs of overseas fabs [11] This summary encapsulates the critical insights from TSMC's conference call, highlighting its strategic position in the semiconductor industry, upcoming guidance expectations, and potential stock market implications.