TSMC Sees US$100 Billion Wipeout But Analysts Remain Bullish

The share price slump that’s erased about US$100 billion from the market value of Taiwan Semiconductor Manufacturing Co. this year has failed to deter analysts who remain bullish about the company’s prospects. 

According to a Bloomberg survey of sell-side analysts, TSMC shares are expected to rise about 50% from current levels to reach a new record high.

Analysts believe that the general economic headwinds affecting the semiconductor industry are easing and that investors will return to focusing on the company’s fundamentals.

The same is true for fund managers predicting an end to the turmoil. Against this backdrop, TSMC Chairman Mark Liu has forecasted revenue growth of at least 30% this year, boosting their previsions.

Of the 37 analysts surveyed by Bloomberg, 34 gave a “buy” rating, 3 gave a hold rating, and none recommended a sell. Their average price target for TSMC (2330-TW) for the next 12 months is NT$816.75. TSMC closed at NT$541 in Taipei on Thursday.

TSMC’s market capitalization has evaporated by about a tenth this year. However, it is still down only about half of the global semiconductor index, underscoring its position in the global technology supply chain.

Alex Huang, manager of the Capital High-Tech Fund, said buyers will likely come back soon as non-fundamental factors dissipate. He predicts that inflationary concerns and the Russia-Ukraine War, which have weighed on semiconductor stocks recently, will abate in the second half of the year.

Sanford C Bernstein analyst Mark Li and others said earlier this month that although many people are worried about a correction in the economy, they still predict that TSMC shares will rise. The reason is that strong pricing will allow TSMC to continue to grow this year and into next year and beyond.

J.P. Morgan analysts, such as Gokul Hariharan, remain cautious and maintain their Buy rating on TSMC. However, they added that although TSMC’s current stock price already reflects the downturn, it is not yet possible to grasp the potential downside of the 2023 forecast.

Analysts, such as Charlie Chan from Morgan Stanley, said late last month that the market’s nervousness meant it was a good time to buy TSMC, as the company’s prospects still look safe.