TSMC target price raised to NT$600 on strong demand from Apple

09/19/2020 10:12 PM
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Taipei, Sept. 19 (CNA) An Asian brokerage has raised its target price on shares of contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) to NT$600 (US$20.58), citing strong demand for iPhone production.

In a research note, the Asian securities house said that with Apple Inc. poised to unveil its iPhone 12 series that uses TSMC's A14 processor, the chipmaker's earnings will grow in the second half of the year on strong demand.

In addition, Apple is expected to launch its iPhone 12 Lite next year, which will also boost TSMC's bottom line, as that model will also use the A14 processor, the brokerage said.

The securities house said it was raising its target price on TSMC shares from NT$530 to NT$600, the highest among the foreign brokerages that follow the chipmaker, and maintaining its "buy" recommendation on the stock.

On Friday, TSMC shares closed down 1.00 percent at NT$444.00 on the Taiwan Stock Exchange, as investors cut their holdings in the stock, taking cues from volatility among U.S. tech stocks the previous day.

The Asian brokerage said that with the launch of the 5G iPhone 12 models, Apple's orders for TSMC's A14 processors are expected to increase to 90 million units from the current estimate of between 75 million and 80 million.

In addition, Apple's latest iPad models, unveiled earlier this week, also use the A14 processor, which means a further boost of TSMC's shipments, the brokerage said.

Furthermore, when the iPhone 12 Lite is rolled out next year, A14 processor shipments to Apple will jump, the brokerage said.

In 2021 and 2022, TSMC is expected to continue to see high demand from Apple, when the U.S. tech giant unveils its new iMac desktop computer and MacBook notebook computers, the brokerage said.

Moreover, TSMC is expected to produce the Apple Silicon chip, Apple's self-designed processor, over the next two years, the brokerage added.

Based on those factors, the brokerage said, it was raising its forecasts for TSMC's earnings per share by 1 percent, 7 percent, and 3 percent for 2020, 2021 and 2022, respectively, to NT$18.81, NT$22.17 and NT$25.81, from NT$13.32 in 2019.

(By Jeffrey Wu and Frances Huang)

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