TSMC’s aggressive expansion of production: using capital expenditures to build an AI “moat”, a stock price correction is a buying point (Morgan Stanley)
AI semiconductor business revenue is expected to grow at a compound annual growth rate of 70%-80%, and demand is strong enough to fill idle production capacity in any non-AI field.
AI semiconductor business revenue is expected to grow at a compound annual growth rate of 70%-80%, and demand is strong enough to fill idle production capacity in any non-AI field. The market is worried about the dilution of gross profit margin caused by the 2nm process, but Morgan Stanley believes that there is short-term pressure on gross profit margin but the impact is limited, and the certainty of strong demand for AI is far greater than the risk caused by fluctuations in gross profit margin. Investors are advised to buy when the stock price weakens due to lower-than-expected gross profit margins. One sentence conclusion: TSMC is using "sky-high" capital expenditures to build its absolute dominance in the next five years. Any short-term worries in the market will create "get on board" opportunities for long-term investors. Positive/negative: Positive for TSMC (2330.TW/TSM.US) and Japan’s semiconductor equipment sector (LASR, etc.). Market concerns about 2nm gross margins may be overdone, while the value of long-term demand for AI has not yet been fully priced in. Catalysts: 1) The specific performance of 3Q26 performance and gross profit margin; 2) The yield rate and customer order volume of the 2nm process are climbing; 3) Whether the capital expenditure plan for 2027 will be further increased.