Zhitong Finance APP learned that in the context of continued tension in the international situation and the sharp drop in demand for electronic products, analysts are lowering the profit expectations of the semiconductor industry at the fastest speed since 2008. However, the performance of TSM (TSM.US) is not depressed. The contradiction of
means that as the world's largest foundry manufacturer, TSMC on Thursday is increasingly under pressure to announce a performance that meets expectations. Although TSMC's market cap has evaporated $319 billion since its January high, analysts are still raising the company's sales and profit expectations this year. However, if this optimism proves wrong, market expectations and the stock price may drop significantly.
Analysts and investors said last week the U.S. announced new chip control measures could cause TSMC to lose customers or suspend some production in China, increasing the existing risks of high inventory levels and potential global recession. But these factors may not be fully reflected in performance expectations.
Morningstar analyst Phelix Lee said: "We do not rule out the possibility that TSMC will be forced to suspend some of its business with its Chinese customers. In the long run, this is an undervalued stock, but I am cautious because there is too much resistance in the short term."
Lee said that mainland China accounts for about 12% of TSMC's revenue. In contrast, according to data compiled by Bloomberg, about 30% of SK Hynix revenue comes from China, while Samsung Electronics accounts for about 13%.
Citi said the potential impact of China's export ban will be one of the key issues that investors are concerned about.
Most advanced process nodes of TSMC are targeting U.S. customers such as Apple (AAPL.US), Qualcomm (QCOM.US), AMD (AMD.US) and NVDA (NVDA.US). However, as more businesses are restricted, its customers' business in China may also be negatively affected in the long term."
Since February, analysts have lowered TSMC's average target price by more than 20%, as investors have reassessed global demand for smartphones, personal computers and cars amid rising recession risks.
However, analysts did not lower their earnings expectations, partly because the company's market share in advanced chips continues to increase and prices continue to rise. But as global chip supply grows oversupply, analysts may soon be forced to take action.
Shin Kong Investment Trust Co. Chairman Quincy Liu said: "With the introduction of the latest US ban, inventory adjustments may take longer than previously expected. Stock adjustments may drag on for a long time, thus delaying the recovery of demand."
It is understood that TSMC's stock price has plummeted 35% this year, of which the 8% drop on Tuesday set a record, becoming the biggest loser in the evaporation of Asian market value this year.
According to data compiled by Bloomberg, the company's stock's expected price-to-earnings ratio is about 10.6 times, the lowest level in more than a decade. The company's current share price is also lower than most components of Philadelphia Semiconductor Index .
