New Street Research analysts believe that TSMC’s prospects are still bright amid the turmoil in the semiconductor market and chip manufacturers and designers facing reduced orders.
Unfavorable factors in the industry have caused TSMC to lower its revenue guidance twice this year, but analyst Pierre Ferragu believes that the company’s revenue can reach as high as 100 billion US dollars by 2025.
The report said that among all chip companies, TSMC management was the most cautious in its forecasts on the earnings call, admitting that its initial estimate of inventory adjustments in the semiconductor industry was shorter than expected. The inventory adjustment incentivizes TSMC’s customers to order more silicon wafers as they rush to meet demand. However, as long as the market is oversupplied, orders remain low, further increasing capital expenditures as its machines cannot produce at full capacity.
But Ferragu said the chip industry’s troubles could end next year. TSMC’s profit and loss statement will rebound in 2024, the analyst said in a note released on Friday. He added that 2025 could be a banner year for the company, with TSMC’s revenue hitting $100 billion for the first time.
TSMC’s annual revenue as of December 2022 is US$75.9 billion. The company expects full-year 2023 revenue to fall about 10% to $68.31 billion. Ferragu agreed with that estimate, also predicting TSMC’s 2023 net sales of $68 billion.
Looking forward, the analyst believes that product demand is about to recover, with the growth of enterprise computing chip products used to run data centers and other infrastructure needs increasing. In addition, TSMC is currently manufacturing products using the 3-nanometer chip process and plans to switch to 3-nanometer chip technology in 2025.
