Taiwan Semiconductor Manufacturing Co. has had a tough year. Its stock fell 15% as TSMC’s substantial investments in the United States and growing fears about potential US tariffs for semiconductor imports grew.
It is unclear whether the chipmaker will be exempted from tariffs that a Trump administration may impose.
The investor sentiment was also affected by the broader shift in market away from artificial intelligence stocks, which drove semiconductor share prices to new highs of 2023.
This combination of uncertainty in politics and the sector rotation has weighed down on TSMC’s performance.
Analysts at JPMorgan are still optimistic regarding the firm’s market position and resilience.
Hariharan, despite ongoing uncertainty, reaffirmed a Overweight rating for TSMC, with a target price of 1,500 New Taiwan Dollars (NT$).
JPMorgan: Tariffs will have a limited effect on TSMC earnings
Gokul Hariharan, an analyst at J.P. Morgan, downplayed any risk that tariffs would have a significant impact on TSMC earnings. He stated that most of TSMC’s exports were directed outside of the United States.
We believe that a tariff reciprocal on Taiwan direct exports to the US will have little effect on TSMC as most exports go to other areas. Hariharan stated in a study that the US would have the biggest impact if it imposed an indirect tariff on Taiwanese semiconductors as part of the goods they import into the US.
Hariharan is confident that TSMC can adjust costs to mitigate any adverse impact on earnings, even in the worst case scenario.
He also suggested that the commitment of the company to expand US manufacturing might make it less susceptible to tariffs specific to certain sectors.
No role in Intel rescue plan, says JPMorgan
In recent weeks, another major question that has surrounded TSMC was whether or not it could play a part in rescuing Intel’s struggling foundry.
Reports indicated that TSMC was exploring the idea of a joint-venture with Nvidia or Broadcom in order to assume some of Intel’s chip manufacturing operations.
JPMorgan, however, believes that this is a highly unlikely scenario.
Hariharan said that TSMC only would enter such an agreement under “extremely extenuating conditions” or if “very lucrative financial benefits were offered.”
Intel is in a difficult situation. While it may dampen hopes of an immediate injection of cash, those who are optimistic about its stock might welcome Intel’s control over the foundry.
Intel is working hard to gain its former position as the leading manufacturer of semiconductors. It touts its new 18A Process as an important breakthrough.
JPMorgan believes that Intel will continue to rely upon TSMC to produce chips due to the delays with mass production of 18A.
In Taiwan, the stock price closed Friday at NT$952, down 0.6%. Its ADRs rose 0.1% during premarket trade.
The Invezz article TSMC Stock under Pressure from Tariff Concerns, But Analysts Stay Bullish first appeared on Invezz
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