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Taiwan Semiconductor Manufacturing Co Ltd ADR TSM

Rating as of

Morningstar’s Analysis

Valuation
Currency in USD
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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

TSMC’s Possible New Fabs Affirm Our View It Is a Key Beneficiary in Electronics Upgrades

Phelix Lee Equity Analyst

Analyst Note

| Phelix Lee |

We maintain our fair value estimate for TSMC at TWD 760 per share with our forecasts unchanged. On the chip shortage, TSMC affirms auto-related shortages should ease in third-quarter 2021, but it doesn't change our view that broader semiconductor supply, especially industrial microcontrollers will remain tight in 2022. To us, TSMC remains an attractive buy for being the main long-term beneficiary of increasingly intricate semiconductors and computing systems. We think once TSMC shows it can maintain gross margins above 50% after equipment in new capacity begins to incur depreciation expenses when production starts, the stock would converge with our fair value.

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Company Profile

Business Description

Taiwan Semiconductor Manufacturing Company, or TSMC, is the world's largest dedicated chip foundry, with over 58% market share in 2020 per Gartner. TSMC was founded in 1987 as a joint venture of Philips, the government of Taiwan, and private investors. It went public as an ADR in the U.S. in 1997. TSMC's scale and high-quality technology allow the firm to generate solid operating margins, even in the highly competitive foundry business. Furthermore, the shift to the fabless business model has created tailwinds for TSMC. The foundry leader has an illustrious customer base, including Apple and Nvidia, that looks to apply cutting-edge process technologies to its semiconductor designs.

Contact
No. 8, Li-Hsin Road 6, Hsinchu Science Park
Hsinchu, 300-78, Taiwan
T +886 35636688
Sector Technology
Industry Semiconductors
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 31, 2021
Stock Type
Employees 56,831

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