Shi added TSMC to the Needham Conviction List, replacing FormFactor, Inc (NASDAQ: FORM).
Shi saw a positive risk-reward as he updated the bull-bear debate.
Shi’s bullish call on TSMC’s double-digit growth in 2023 met with pushback.
Investors have expressed uneasiness about TSMC’s 1H23 despite the general optimism about 2H23 and 2024.
Shi adds demand-side analysis to better capture cyclicality factors in our supply-side model.
Shi looked at TSMC’s wafer shipments dated back to 1997 and concluded that a correction is incoming in Q123 to bring wafer shipments from above-trend to below-trend.
The greater the fall in 1H23, the stronger the rebound in 2H23, as 20+ year history shows TSMC’s unit growth always means revert.
TSMC’s 2023 wafer shipments could fall by over 10%, but ASP will rise by more than 20%, setting the stage for ~10% growth next year, he added.
Price Action: TSM shares traded higher by 1.66% at $64.98 on the last check Monday.
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