Taiwan Semiconductor Manufacturing (NYSE:TSM) is reportedly planning to implement a price hike ranging from 3% to 6% for its advanced process manufacturing starting in January 2024. With these price increases, TSMC aims to drive profits and counterbalance the higher costs associated with electricity and capital expenditures that it has been facing. TSM stock has been showing uneven growth, with its 33% rise year-to-date representing only a 7.1% rise year-over-year.
Furthermore, the Taiwanese chipmaker will take various factors into account when determining the percentage of price hikes for the advanced process output. These factors include the production process method employed, the size of the order, and the location of the factory where the products are manufactured.
Some of the company’s key customers, such as Apple (AAPL), Nvidia (NVDA), and Broadcom (AVGO), are expected to be among those directly impacted by the increased costs.
Investors are likely disappointed that during TSMC’s recent annual general meeting, the company stated that it expects its capital expenditure (capex) for 2023 to be towards the lower end of the projected range of $32 billion to $36 billion. Furthermore, TSMC reiterated its revenue forecast for the first half of 2023, predicting a decline of 10%. This forecast reflects the ongoing challenges faced by the semiconductor industry, characterized by sluggish chip demand.
However, TSMC remains optimistic about its performance in the second half of this year as it anticipates an improvement in semiconductor demand. Furthermore, TSMC expects a positive impact from the recovery of the Chinese market following the pandemic.
Is TSM Stock a Good Buy?
TSMC’s strong foothold in the semiconductor market, particularly in advanced processors, is a promising aspect. Furthermore, TSMC’s efforts to expand production by opening new factories globally are expected to contribute to its ability to maintain its leading positions.
Taiwan Semiconductor has a Strong Buy consensus rating based on four unanimous Buys assigned over the last three months. At $121.33, the average TSM stock price target implies upside potential of 23.74%.
Investors looking for the most accurate and profitable analyst for TSMC could follow Needham analyst Charles Shi. Copying the analyst’s trades on this stock and holding each position for one year could result in 67% of your transactions generating a profit, with an average return of 10.91% per trade. Importantly, the analyst reaffirmed his Buy rating on TSM stock about five days ago.
