Don’t Sell Foundries Like TSMC on Headlines. February Numbers and Past Experience Offer Solace

Our fair value estimates for: United Microelectronics Corp, or UMC (TWD 52); Taiwan Semiconductor Co, or TSMC (TWD 990), and Semiconductor Manufacturing International, or SMIC (HKD 21), are unchanged amid war in Ukraine and raw material markets' volatility. We believe foundries’ inventory of raw materials and gases, and their long-term agreements with suppliers help cushion most short-term supply shocks and buy time for securing alternative sources if the conflict drags on. Today’s risk aversion serves as an entry point for TSMC, in our view.