On Sunday, Goldman Sachs maintained a Conviction Buy rating on shares of Taiwan Semiconductor Manufacturing Co. Ltd. (2330:TT) (NYSE: TSM) and increased the price target to NT$1,355.00 from NT$1,320.00. The firm anticipates another robust year of revenue growth for TSMC in 2025, projecting a 26.8% year-over-year increase following a 29.4% rise in 2024, all measured in USD terms.
The positive outlook is attributed to sustained strong demand for leading-edge nodes, particularly driven by the momentum from artificial intelligence (AI) applications. Goldman Sachs also notes a more favorable competitive landscape for TSMC, as rivals Samsung (KS:005930) Foundry and Intel (NASDAQ:INTC) Foundry encounter difficulties transitioning to more advanced manufacturing nodes.
The firm expects TSMC to implement a mid-high single-digit percentage price increase for its 3nm and 5nm nodes and a more than 10% price hike for its CoWoS (chip on wafer on substrate) technology starting in 2025. These price adjustments are likely a response to the strong demand and competitive advantages TSMC holds in the market.
Goldman Sachs forecasts that these strategic price increases will contribute to TSMC's gross margin expansion. The firm projects that TSMC's gross margin (GM) will climb to 59.3% in 2025, an improvement from the anticipated 56.1% in 2024. This growth reflects the company's ability to leverage its technological leadership and pricing power in the semiconductor industry.
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