$TSM (-0.24%)

Expectations pulverized

Taiwan Semi is a true indicator for the semiconductor industry, which is why I have already reported on it many times in the past and commented positively on the company.

The last time was just three months ago, when the share underwent another major correction:

Trotz Zöllen, trotz Sorgen: Taiwan Semi übertrifft alle Erwartungen

Since then, the share price has risen from USD 148 to USD 245. So today we are taking a closer look at how likely it is that the rally will continue, or whether this could be the end of the line.

Yesterday, the company again presented very strong Quartalszahlen results.

Sales increased by 44% over the year to USD 30.7 billion. At the same time, the gross margin improved from 53.2 % to 58.6 %, the operating margin from 42.5 % to 49.6 % and the net margin from 36.8 % to 42.7 %.

At NT$ 398.3 billion, profit was well above expectations of NT$ 376. Converted, this corresponds to a profit of USD 13.5 billion or USD 2.47 per share and a 61% jump in profits.

Forecast raised...

In addition, the forecast for sales growth has been raised from a "mid-20% range" to 30%.

This is no great surprise, as I had already anticipated this in an earlier analysis:

Forecasters currently expect sales growth of 21% in the current financial year. I am somewhat more optimistic, as I do not see any tangible reasons why the momentum should slow down to this extent.

I expressed a similar view on earnings in my last analysis:

Consensus estimates currently call for a 31% jump in earnings to USD 9.02 per share. After a jump in profits of over 50% in the first quarter and in view of the forecast for Q2, there is a good chance that the consensus estimates are too low.

The consensus estimates now call for a 43% jump in earnings to USD 9.88 per share. The forecasters have therefore had to make significant improvements.

Taiwan Semi therefore has a forward P/E of 24.9.

...and still too low?

For a company with such a market position and growth rates, this is justifiable. The only fly in the ointment is that the valuation is now well above the long-term average of 20.

In absolute terms, there is further upside potential, but not in relative terms.

The question of whether the share price will be higher in six months' time will probably depend primarily on whether expectations can be exceeded once again - and on the political environment.

The results in the first two quarters suggest that the consensus estimates are still too low. After all, a 61% jump in profits was achieved in the first half of the year.

Taiwan Semi share: chart from 18.07.2025, price: USD 245 - symbol: TSM | Source: TWS

With the breakout above the previous all-time high, a Kaufsignal with extrapolated price targets of USD 259 and USD 292 was triggered.

However, if the share falls below USD 226, a correction towards USD 206 or USD 193 must be expected

Source:

https://www.lynxbroker.de/boerse/boerse-kurse/aktien/taiwan-semiconductor-manufacturing-adr-aktie/taiwan-semiconductor-manufacturing-adr-analyse/?a=3355991664&utm_medium=email&utm_source=newsletter&utm_campaign=newsletter-boersenblick&newsletter=true&mc-rss-cache-bypass=2025072107&goal=0_d93daae099-1bcbff70c4-410756260#taiwan-semi-gewinnexplosion-voraus

If you look at the stagnation of the share, despite the importance of the mechanical engineering company, you might ask yourself: Why isn't the share performing? I asked myself the same question and therefore made some basic assumptions. We look at the fair value, once conservatively and then the base case. This is what we came up with:

And what can we say: in the conservative DCF model, ASML is pretty close to fair value . This means that the current valuation leaves hardly any room for further growth; any increase in value would have to come primarily from the company growing into the current valuation.

The base case looks somewhat different: Here, the share is slightly undervalued. Looking at more optimistic scenarios, the value even moves towards EUR 900+.

According to Morningstar, the fair value is even EUR 820, which is perhaps a small consolation for those who are worried.

The share also had to cope with a lot of negative news. The EUV sales ban to China, the tariffs and customer problems are clearly noticeable in such a complex company. If you would like to take a closer look at the figures and their impact, there may be a post, depending on who is interested. $ASML (-1.02%)
$NVDA (-0.17%)
$TSM (-0.24%)

$ASML (-1.02%)
$ASML (-1.27%)
$ASMLF

• Revenue: €7.69B (Est. €7.51B) ✅; +23% YoY
• EPS: €5.90 (Est. €5.22) ✅;+47% YoY
• Gross Margin: 53.7% (Est. 51.9%) ✅; +220bps YoY
• Net Bookings: €5.54B (Est. €4.80B) ✅; -0.5% YoY

Guidance

• FY25 Revenue Growth: ~15% YoY (Prior: €30-35B)
• FY25 Gross Margin: ~52% (Prior: 51%-53%)
• Q3 Revenue: €7.4B-€7.9B (Est. €8.21B)
• Q3 Gross Margin: 50%-52% (Est. 51.4%)

Comment from the CEO:

• "Tariffs were slightly less negative than we expected."
• "We are preparing for growth in 2026, but cannot confirm this due to the increasing uncertainty."
• "Gross margin was above forecast due to higher upgrade business and one-off promotions."

• "The introduction of EUV and High NA is progressing as planned; the first EXE:5200B system has been delivered."

✌️

$NVDA (-0.17%)
$AMD (+2.51%)
$TSM (-0.24%)

As the earnings season starts again, here is a summary of the most important figures next week.

$JPM (-0.25%)
$C (-0.85%)
$WFC (-0.99%)
$BLK (+0.77%)
$JNJ (+1.39%)
$GS (+1.41%)
$BAC (-0.26%)
$AA (+0.42%)
$ASML (-1.02%)
$PLD (+2.46%)
$UAL (-1.61%)
$KMI (+1.61%)
$PEP (+2.1%)
$ABT (+1.64%)
$Netflix
$TSM (-0.24%)
$USB (-0.03%)
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$AXP (-0.48%)
$MMM (+0.14%)

$TSM (-0.24%) The second largest position in my portfolio after the broadly diversified ETFs is a real giant that many private investors hardly know - even though it is in almost every iPhone, Nvidia chip and Apple Mac: Taiwan Semiconductor Manufacturing Companyin short TSMC. I currently hold 35 ADRs, bought at €103.37, which now stand at €194.10 - an increase of around +87 % or 3.175,50 € in my portfolio. So it's time for a thorough portfolio check: What makes TSMC special? Should I buy more now? Or is it better to sell? Hold? Or perhaps slowly add to it with a savings plan?

The business model - Invisible, but indispensable

TSMC is not a traditional tech company with its own brand or products - but the pacemaker of the semiconductor world. pacemaker of the semiconductor world. As a pure contract manufacturer, TSMC produces chips for almost all the big names: Apple (approx. 25 % share of sales), Nvidia (11 %)AMD, Qualcomm, Broadcom and many more. This means that TSMC does not design any chips itself, but instead converts the customers' circuit diagrams into silicon - with a precision that hardly anyone else can match. This makes TSMC the world market leader in the foundry market with a market share of over 60%.

Particularly in the area of state-of-the-art production (3 nm, soon 2 nm), there is practically no competition. Samsung is getting closer technologically, but suffers from yield problems. Intel is also trying its hand as a foundry with "IDM 2.0", but is still miles away from TSMC. And Chinese suppliers such as SMIC are lagging generations behind - and are also being held back by US sanctions.

In short: If you want to be at the forefront - be it for iPhones, AI GPUs or autonomous cars - there is no way around TSMC.

Facts, figures and data - Impressive margins and growth

TSMC generated sales of around NT$ 2,894 billion in 2024, an increase of 34% after a slight decline in 2023. Net profit is over NT$ 1,173 billion. The gross margin remains at almost 59 % strong, the net margin is stable at around 40 % - which is an announcement in the industry.

In the DCF model with conservative assumptions (8 % growth, 10 % WACC, 3 % terminal growth), I arrive at an intrinsic value of around 236 billion US dollars - which is significantly below the current market capitalization of ~US$500 billion. But: The model is deliberately cautious. If you calculate more optimistically (12% growth, 8% WACC), you will quickly arrive in the region of $450-600 billion - i.e. where the market currently places TSMC.

Opportunities - Why TSMC remains indispensable

• AI boom: Nvidia & Co. need masses of chips. They come from a single source: TSMC.
• Apple: Every A processor comes from TSMC. Even the M chips in Macs.
• Technological advantageTSMC is the only manufacturer that mass produces 3 nm. 2 nm is scheduled for 2025/26.
• Global expansion: New plants in the USA, Japan and soon Germany - politically supported and strategically sensible.
• Strong balance sheetAlmost debt-free, with stable free cash flows and a reliable dividend.

Risks - The sword of Damocles is China

The biggest risk is obvious: Taiwan. A military conflict with China would have a massive impact on TSMC - in the worst case scenario, the factories would be shut down or destroyed to prevent them falling into Chinese hands. This is a low-probability, high-impact risk - but it is real.

On top of that:

• US export controlsthat force TSMC to impose restrictions (Huawei ban, delivery bans to China).
• Concentration on Apple and Nvidia - together account for over 35% of sales. Should one of the two jump ship or stumble, this would have an impact.
• CompetitionIntel and Samsung are catching up, albeit slowly. TSMC must maintain its lead - technologically and logistically.

My assessment - buy, hold, sell?

TSMC is a technical monopoly for the time being. No one can produce chips of this quality and quantity. The demand for AI, high-performance computing, smartphones, IoT and automotive chips will continue to grow in the coming years - and TSMC is the biggest beneficiary.

At the same time, the political risks are real. Anyone buying TSMC must be aware of this: In the worst-case scenario - should there be a war over Taiwan - the share price could plummet massively. That is the price for the growth potential.

Personally, I think so.

• I am up 87% and have TSMC as a strategic core position in my portfolio.
• I wouldn't buy more at the current level - the valuation is too sporty for me, especially in relation to the political risk.
• A savings plan? Conceivable. Especially when the share price starts to deflate again.

For me, TSMC remains a "buy the dip" candidate. Should the share price fall significantly again - e.g. due to general market panic or political uncertainty - I would consider buying more. Until then: keep your feet still, collect the dividend and watch the growth.

Not investment advice - just my personal opinion.