TSM Stock Forecast: Sustainable Growth Within Geopolitical and Macroeconomic Volatility

I Know First Research Team LogoThis TSM Stock Forecast article was written by the I Know First Research Team.


  • The stock price stays under geopolitical pressure
  • TSM holds a staggering 58% of the global foundry market share
  • Attractive financial performances with an undervalued price
(Source: flickr.com)


TSM Stock Forecast: Established in 1987 and headquartered in Hsinchu Science Park, Taiwan, Taiwan Semiconductor Manufacturing Company TSMC (NYSE: TSM) pioneered the pure-play foundry business model with an exclusive focus on manufacturing customers’ products. TSMC’s foundry business model has enabled the rise of the global fabless industry, and since its inception, TSMC has been the world’s leading semiconductor foundry. 

TSMC is the world’s largest contract chipmaker and serves a global customer base that is large and diverse and includes a wide range of applications. These products are used in a variety of end markets including mobile devices, high-performance computing, automotive electronics, and the Internet of Things (IoT). Such strong diversification helps to smooth fluctuations in demand, which in turn allows TSMC to maintain higher capacity utilization and profitability levels, and generate healthy returns for future investment.

Geopolitical Factor

There is always tension about investing in Taiwan companies because of China. Despite the fact that the degree of China’s aggressive statements towards Taiwan has decreased over the past month, this uncertainty is getting on the nerves of investors all the time creating occasional buying opportunities. In my view, it is unlikely that China would be willing to take a substantial risk for the purpose of unifying One China. From my perspective, the window of opportunity for China to annex Taiwan has passed, primarily due to the significant influence of TSM, a leading player in the semiconductor industry. TSM’s integral role in global technological progress has made it indispensable in the production of advanced products worldwide. TSM currently holds a staggering 58% of the global foundry market share, surpassing Samsung Electronics, which accounts for approximately 18%. This competitive advantage is truly remarkable.

China heavily depends on semiconductor imports despite generating only 10% of its revenues from the industry. Its efforts to reduce reliance on companies like TSM are hindered by importing over $300 billion worth of chips. China currently lacks the capacity to achieve chip production self-sufficiency, even with its long-term plan. TSM’s expansion and economic partnerships give it a significant advantage over China’s less advanced competitors. Analysts predict that even after the plan, China will only meet 35% of its chip demand. Losing its chip supply would severely hinder China’s progress and recovery. Achieving self-reliance in chip production remains a distant goal for China.

Positioning in the Period of the Macroeconomic Turbulence

Despite macroeconomic turbulence and uncertainty in the technology sector, the company continues to post positive revenue growth. In total, the revenue increased by 4% and reached $508 632 973 for the three months ended March 31, 2023. The company’s revenue is divided into two categories: Wafer and Others, with Wafer accounting for 88% of the total revenue. All regions, except Taiwan and the United States, demonstrate significant double-digit growth. Specifically, Japan experienced a growth rate of 40%. The United States and China regions contribute the dominant share to TSM’s revenue, at 60% and 15% respectively, while the shares of other regions do not exceed 10%.

TSM Stock Forecast: revenue
(Figure 1 – TSM’s Revenue)

High-Performance Computing and Smartphones are the two biggest platforms generating revenue, accounting for 44% and 34% respectively. In the same period, High-Performance Computing revenue increased by 12%, while Smartphone revenue decreased by 11%. Additionally, we observe significant growth in the Automotive sector, which saw a 52% increase or $12 291 432 in revenue.

The company’s management anticipates an ongoing impact on the business in the second quarter due to customers’ inventory adjustments. Considering the current business outlook, second-quarter revenue is projected to range between USD 15.2 billion and USD 16 billion, indicating a 6.7% sequential decline at the midpoint. Assuming an exchange rate of USD 1 to TWD 30.4, the gross margin is expected to fall within the range of 52% to 54%, while the operating margin is estimated to be between 39.5% and 41.5%.

TSMC showcased its latest technological developments at the 2023 North America Technology Symposium. They highlighted progress in 2nm technology and introduced new members of their 3nm technology family, including N3P, N3X, and N3AE. TSMC also discussed their advancements in CMOS RF technology with N4PRF and highlighted their 3DFabric advanced packaging and silicon stacking solutions. The symposium featured an Innovation Zone spotlighting start-up customers and attracted over 1,600 attendees. TSMC CEO, Dr. C.C. Wei, emphasized the company’s commitment to enhancing process technologies for continuous innovation.

TSM Stock Forecast: Profitability margins
*Data source: gurufocus.com
(Figure 2: TSM vs Semiconductors Industry in TTM)

According to GuruFocus, TSM is considered one of the most efficient companies in the Semiconductors industry, with an ROE of 36.85% which is better than 95.21% of companies in the same industry. Furthermore, TSM’s Operating Margin of 49.47% is higher than 98.40% of companies in the industry.

We can select several comparable companies to TSM and perform a relative valuation

(Figure 3: Relative Valuation of TSM Stocks)

TSM’s current P/B ratio of 4.71 and P/S ratio of 6.36, P/E ratio of 14.22, and P/CF ratio of 8.94 indicate that TSM stocks are undervalued.

TSM Stock Forecast: Piotroski F-Score and Altman Z-Score
*Data source: gurufocus.com

The Altman Z-score, which determines the result of a credit test, stays in the Green zone. At the same time, TSM looks interesting in terms of the Piotroski F-Score. Piotroski F-score is a number between 0 and 9 that is used to assess the soundness of a company’s financial position. A score of 7 may indicate that the company’s stock is undervalued and can be interpreted by investors as a good signal to buy the stock.

TSM Stock Forecast: Conclusion

It is reasonable to consider TSM as a buy stock. Taiwan Semiconductor Manufacturing is recognized as one of the most efficient companies in the Semiconductors industry. Periodically, the negative geopolitical environment creates opportunities to purchase the stock at a lower price. Furthermore, at the company level, management is committed to making significant efforts in improving technological processes for continuous innovation, ensuring long-term competitiveness

TSM Stock Forecast: IKF forecast

It is worth paying attention that the stock-picking AI of I Know First has a high signal on the one-year market trend forecasts, supporting my position for the TSM stock forecast. The light green for the short-term forecasts is mildly bullish, while the darker green is a strong bullish signal for the one-year forecast.

Past Success with TSM Stock Forecast

I Know First has been bullish on TSM’s stocks in past forecasts. On our premium article, the I Know First algorithm issued a bullish TSM stock forecast. The algorithm successfully forecasted the movement of TSM’s stocks on the 1-year time horizon. TSM’s stocks rose by 20.44% in line with the I Know First algorithm’s forecast.

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Please note-for trading decisions use the most recent forecast.