Taiwan Semi's Monopoly Help It Defy Industry Downcycle, Bullish Analyst Predicts 38% Potential Upside

Needham analyst Charles Shi reiterated a Buy on Taiwan Semiconductor Manufacturing Company Ltd TSM and a $110 price target as he thinks the stock is in the bottoming process.
Shi's recent conversations with investors suggest the buy-side consensus for TSMC's 2023 revenue growth rate is now ~5%, down from ~10% around two months ago.
In this report, Shi revisits assumptions on TSMC's capacity, utilization, ASP, and CapEx to stress-test his numbers.
The analyst concludes that a mid-teen revenue growth and MSD EPS growth are achievable for TSMC despite the cyclical headwinds ahead.
Shi writes that TSMC's near-monopoly position in 5nm and 3nm, likely to ramp meaningfully in 2023, will help the company defy the industry's down cycle.
Daiwa analyst Rick Hsu upgraded TSMC to Buy from Outperform with a price target of NT$645, up from NT$550.
Hsu sees revenue growth in 2023 for the company despite an "industry-wide correction."
The analyst raised estimates on TSMC's share gains and pricing power.
Hsu sees TSMC's revenue "as likely counter-cyclical, thanks to its advanced-tech dominance leading to order-share gain and pricing power to help minimize price erosion."
Price Action: TSM shares traded higher by 0.75% at $79.41 on the last check Wednesday.
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