TSMC(US:TSM)2026-01-04 11:34Summary of Key Points from the Conference Call Industry Overview - Focus on AI: The semiconductor industry in 2026 is heavily centered around AI, with strong demand for AI accelerators (XPU) leading to supply constraints in various components like CoWoS, memory, and logic wafers [1][20] - Concerns about AI Bubble: There are growing concerns among investors regarding the sustainability of AI investments, with discussions on whether the current AI boom is a bubble [1][20] Company-Specific Insights TSMC - Top Pick: TSMC is identified as the top investment pick due to its strong position in GPU and ASIC markets, which mitigates risks associated with potential AI bubbles [6][54] - Revenue Growth: Projected revenue growth of 23% in 2026 and 20% in 2027, with a 20% EPS CAGR [56][57] - Capex Plans: TSMC's 2026 capital expenditure is projected at USD 47 billion, a 15% increase YoY, with a decreasing capex/revenue ratio due to faster revenue growth [3][56] - AI Revenue Contribution: Expected to rise from 14.4% of total revenue in 2024 to 27.3% in 2026 [59] MediaTek - Temporary Headwinds: MediaTek faces temporary challenges in the mobile segment due to high memory prices affecting its TV SoC and other products [7][73] - AI ASIC Upside: Anticipated upside from AI ASIC projects, with projections indicating that TPU will contribute significantly to MediaTek's earnings in 2026 and 2027 [7][73] Samsung Electronics - Valuation Increase: Target price raised from KRW 130,000 to KRW 140,000, driven by higher valuation multiples [13] - Market Position: Samsung is expected to gain market share in HBM, with demand projected to double in 2026 [50] SK Hynix - Target Price Increase: Target price raised from KRW 650,000 to KRW 750,000, reflecting improved valuation multiples [13] Micron - Target Price Increase: Target price raised from USD 270 to USD 330, driven by higher valuation multiples [14] KIOXIA - Underperform Rating: KIOXIA rated as Underperform with a target price of JPY 7,000 [15] UMC and Vanguard - Underperform Ratings: UMC rated Underperform with a target price of NT$ 32.00, while Vanguard rated Market-Perform with a target price of NT$ 90.00 [17][19] Geopolitical Considerations - China's Memory IPOs: The potential IPOs of YMTC and CXMT are significant as they mark China's entry into the memory market, although they are not expected to alleviate supply shortages in 2026 [5][49] - Technological Lag: China is projected to lag behind TSMC by approximately 5 years in semiconductor technology, with SMIC's recent advancements not matching TSMC's capabilities [5][53] Market Dynamics - CoWoS and HBM Growth: CoWoS and HBM shipments are expected to rise significantly, with CoWoS capacity projected to increase from 724K wafers in 2025 to 1,250K in 2026 [22][46] - Memory Price Trends: Memory prices are expected to normalize by late 2026, but strong demand driven by AI will keep prices at healthy levels [8][42] Conclusion - The semiconductor industry is poised for significant growth driven by AI, with TSMC, MediaTek, Samsung, and SK Hynix positioned favorably. However, geopolitical risks and potential supply constraints from new entrants in the memory market warrant careful monitoring.