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TSMC (TSM)
NYSE:TSM
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TSMC
(NYSE:TSM)
Rating:77Outperform
Price Target:―
Positive Factors
AI demand
TSMC is optimistic about AI demand, significantly driving semiconductor demand despite macro uncertainties.
Technology leadership
TSMC's 2025 Technology Symposium in North America reinforced a positive view about its unwavering focus on technology leadership and manufacturing excellence.
Negative Factors
Overseas fab spending
Higher overseas fab spending is expected to lead to greater gross margin dilution of 3-4% annually in a few years.
Tariff impact
Tariff-related impact is inevitable, leading to a reduction in 2025-26 earnings by 4-5%.
TSMC (TSM) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$924.29B
Dividend Yield1.3%
Average Volume (3M)11.39M
Price to Earnings (P/E)27.0
Beta (1Y)1.61
Revenue Growth35.45%
EPS Growth47.97%
CountryUS
Employees65,152
SectorTechnology
Sector Strength86
IndustrySemiconductors
Share Statistics
EPS (TTM)2.14
Shares Outstanding5,186,523,000
10 Day Avg. Volume11,103,989
30 Day Avg. Volume11,388,031
Financial Highlights & Ratios
PEG Ratio2.11
Price to Book (P/B)6.97
Price to Sales (P/S)0.00
P/FCF Ratio34.75
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$223.71Price Target Upside1.64% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering8
TSMC Business Overview & Revenue Model
Company DescriptionTaiwan Semiconductor Manufacturing Company Limited (TSMC) is a global leader in the semiconductor industry, specializing in the manufacture of integrated circuits and semiconductor devices. As the world's largest dedicated independent semiconductor foundry, TSMC provides a comprehensive range of production processes and technologies to clients in various sectors, including consumer electronics, automotive, telecommunications, and computing. The company is renowned for its advanced process technologies, such as the 5-nanometer and 3-nanometer processes, which are critical for producing high-performance and energy-efficient chips used in a wide array of electronic devices.
How the Company Makes MoneyTSMC generates revenue primarily through its semiconductor manufacturing services, offering foundry services to a diverse client base that includes leading technology companies and semiconductor design firms. The company's revenue model is anchored in high-volume production of advanced chips, leveraging cutting-edge process technologies to meet the demands of sectors such as mobile and high-performance computing. A significant portion of TSMC's income is derived from long-term contracts with major clients, including notable partnerships with technology giants like Apple, AMD, and Qualcomm. These relationships enable TSMC to secure consistent orders and optimize its production capacity. Additionally, TSMC invests in continuous research and development to maintain its technological edge, further enhancing its ability to command premium pricing for its leading-edge manufacturing capabilities.
TSMC Earnings Call Summary
Earnings Call Date:Apr 17, 2025
(Q1-2025)
| % Change Since: 45.51%|
Next Earnings Date:Jul 17, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a strong position in AI demand and strategic expansion plans, particularly in the U.S., which are positive indicators. However, there are concerns related to revenue declines in Q1, margin dilution from overseas expansion, and decreased smartphone and IoT revenues. Despite these challenges, the company maintains a strong financial position and has set optimistic guidance for Q2.Q1-2025 Updates
Positive Updates
Strong AI Demand and Revenue Growth
AI-related demand continues to grow robustly, with revenue from AI accelerators expected to double in 2025. The company is working to double CoWoS capacity to meet strong demand.
Revenue Guidance for Q2 2025
TSMC expects Q2 2025 revenue to be between $28.4 billion and $29.2 billion, which represents a 13% sequential increase or a 38% year-over-year increase at the midpoint.
Advanced Technology Contributions
3-nanometer process technology contributed 22% of wafer revenue in Q1, while 5-nanometer and 7-nanometer accounted for 36% and 15%, respectively. Advanced technologies accounted for 73% of wafer revenue.
Expansion Plans in the U.S.
TSMC announced an additional $100 billion investment plan to expand its capacity in Arizona, including three additional wafer manufacturing fabs and a major R&D center.
Strong Financial Position
TSMC ended Q1 with cash and marketable securities of TWD2.7 trillion (approximately $81 billion).
Negative Updates
Revenue Decline in Q1 2025
Q1 2025 revenue decreased 3.4% sequentially in NT dollars and 5.1% in U.S. dollars, impacted by smartphone seasonality despite growth in AI-related demand.
Margin Dilution Concerns
Gross margin decreased by 0.2 percentage points to 58.8% in Q1 due to earthquake impacts and overseas expansion costs. Margin dilution from overseas fabs is expected to grow more pronounced throughout the year.
Smartphone and IoT Revenue Decline
Smartphone revenue decreased 22% and IoT revenue decreased 9% quarter-over-quarter in Q1.
Company Guidance
During TSMC's first quarter 2025 earnings call, the company provided guidance for the second quarter of 2025, projecting revenue between $28.4 billion and $29.2 billion, representing a 13% sequential increase and a 38% year-over-year increase at the midpoint. Gross margin is expected to be between 57% and 59%, while operating margin is anticipated to be between 47% and 49%. The company also expects to accrue a tax rate of around 20% for the second quarter due to taxes on undistributed retained earnings, with a full-year tax rate forecasted between 16% and 17%. TSMC noted potential impacts on margins due to overseas fab expansions, particularly in Arizona, contributing to a 2% to 3% margin dilution impact for the full year, potentially widening to 3% to 4% in the latter stages of their five-year expansion plan. Despite these challenges, TSMC remains confident in achieving a long-term gross margin of 53% or higher, supported by its technology leadership and strategic expansions.TSMC Financial Statement Overview
Summary
TSMC exhibits strong financial health with impressive revenue growth, high profit margins, and a robust balance sheet. Its low leverage and high equity ratio ensure financial stability, while healthy cash flow generation supports investments and shareholder returns.Income Statement
TSMC shows strong financial performance with a consistent increase in total revenue, reaching TTM (Trailing-Twelve-Months) revenue of 3,140,917,320,000. The company maintains a high gross profit margin, currently at 57.43%, and net profit margin at 41.69%, indicating efficient cost control and profitability. The revenue growth rate from the previous annual report is 8.52%, showing positive growth. EBIT and EBITDA margins are robust at 47.12% and 69.93%, respectively, highlighting strong operational efficiency.85
Very Positive
Balance Sheet
TSMC has a healthy balance sheet with a solid equity base, reflected in an equity ratio of 64.51%. The debt-to-equity ratio is low at 0.21, indicating low leverage and financial stability. Return on equity (ROE) is strong at 28.45%, showcasing effective use of shareholders' equity to generate profits. The high stockholders' equity and low total debt contribute to the company's strong financial position.80
Positive
Cash Flow
TSMC's cash flow statement reveals strong cash generation with a free cash flow of 922,432,414,000 in the TTM period. The free cash flow growth rate is 6.00% from the previous annual report, indicating positive cash flow trends. The operating cash flow to net income ratio is 1.55, showing good cash conversion efficiency. The free cash flow to net income ratio is 0.71, reflecting the company's ability to generate cash relative to its net income.78
Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 3.14T | 2.89T | 2.16T | 2.26T | 1.59T | 1.34T |
| Gross Profit | 1.80T | 1.62T | 1.18T | 1.35T | 819.54B | 711.13B |
| EBITDA | 2.22T | 1.98T | 1.52T | 1.59T | 1.09T | 918.55B |
| Net Income | 1.31T | 1.17T | 838.50B | 992.92B | 592.36B | 510.74B |
Balance Sheet | ||||||
| Total Assets | 7.13T | 6.69T | 5.53T | 4.96T | 3.73T | 2.76T |
| Cash, Cash Equivalents and Short-Term Investments | 2.70T | 2.42T | 1.69T | 1.59T | 1.21T | 802.15B |
| Total Debt | 986.98B | 1.05T | 956.26B | 888.17B | 749.07B | 365.19B |
| Total Liabilities | 2.57T | 2.37T | 2.05T | 2.00T | 1.55T | 910.09B |
| Stockholders Equity | 4.60T | 4.29T | 3.46T | 2.95T | 2.17T | 1.85T |
Cash Flow | ||||||
| Free Cash Flow | 922.43B | 870.17B | 286.57B | 520.97B | 262.72B | 301.19B |
| Operating Cash Flow | 2.04T | 1.83T | 1.24T | 1.61T | 1.11T | 822.67B |
| Investing Cash Flow | -1.01T | -864.84B | -906.12B | -1.19T | -836.37B | -505.78B |
| Financing Cash Flow | -362.13B | -346.30B | -204.89B | -200.24B | 136.61B | -88.62B |
TSMC Technical Analysis
Positive
220.09
Price Trends
186.44
Positive
184.00
Positive
187.55
Positive
Market Momentum
7.76
Positive
70.87
Negative
55.07
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSM, the sentiment is Positive. The current price of 220.09 is above the 20-day moving average (MA) of 206.20, above the 50-day MA of 186.44, and above the 200-day MA of 187.55, indicating a bullish trend. The MACD of 7.76 indicates Positive momentum. The RSI at 70.87 is Negative, neither overbought nor oversold. The STOCH value of 55.07 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSM.
TSMC Risk Analysis
TSMC disclosed 26 risk factors in its most recent earnings report. TSMC reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
TSMC Peers Comparison
Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | $292.30B | 31.86 | 55.21% | 1.07% | 16.46% | 21.29% | |
81 Outperform | $166.15B | 15.41 | 42.21% | 2.32% | 16.15% | 32.28% | |
81 Outperform | $207.93B | 94.99 | 3.90% | ― | 21.71% | 99.00% | |
80 Outperform | $135.99B | 20.63 | 36.37% | 1.07% | 6.12% | -5.66% | |
77 Outperform | $924.29B | 26.95 | 32.11% | 1.30% | 35.45% | 47.97% | |
63 Neutral | $32.30B | 6.54 | -12.31% | 1.93% | 5.64% | -21.98% | |
47 Neutral | $91.95B | ― | -18.66% | 2.36% | -3.97% | -562.40% |
* Technology Sector Average
Performance Comparison
TSM
TSMC
220.09
49.41
28.95%
AMD
Advanced Micro Devices
138.43
-21.82
-13.62%
AMAT
Applied Materials
180.18
-51.90
-22.36%
ASML
ASML Holding
813.36
-202.08
-19.90%
INTC
Intel
22.55
-8.00
-26.19%
QCOM
Qualcomm
155.71
-42.11
-21.29%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.