Analyst Note| Phelix Lee |
We maintain our fair value estimate of TSMC at TWD 760 per share. The upside from a higher five-year revenue CAGR forecast of 14% from 13.7% is largely offset by higher capital expenditures from 2021 to 2023 of USD 100 billion from our previous forecast of USD 80 billion. On the chip shortage, TSMC expects it to persist into most of 2022, but automotive-specific backlogs should ease in third-quarter 2021. We believe TSMC is well-positioned to enjoy favorable pricing as chip supplies won't fulfill demand until second-half 2022 when TSMC and peers’ new facilities ramp up. Overall, we think TSMC remains an attractive buy as it's the main beneficiary of devices and computing systems adopting increasingly intricate semiconductor technologies in the long run. Rumors of Samsung encountering production problems reinforce our view TSMC will continue to widen its lead compared with other foundries, supporting our wide moat rating.