Taiwan Semi (TSM) PT Raised to NT$618 at Morgan Stanley on Higher Wafer Prices

Morgan Stanley analyst Charlie Chan raised the price target on Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE: TSM) to NT$618.00 (from NT$580.00) ahead of earnings to account for higher wafer ASP. Despite expecting near term upside, the analyst cites the growing risks of semi inventory correction as a reason to stay on the sidelines.

The analyst reiterated an Overweight rating, stating "We believe the logic semi market will enter oversupply in 2022. Growing inflation will put pressure on consumer tech demand in 2022. Recently, stay-at-home tech demand has continued to fade, while Chinese smartphone demand appears not to have recovered. On the supply side, wafer foundry capacity has been growing at >10% Y/Y in recent quarters. The piling up of semi inventory is evidence of the logic semi oversupply. TSMC’s semi customers and their end-market channels are building up inventory – a tech supply chain rebalancing may trigger a semi inventory correction at some point."

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