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.