All eyes are now on Taiwan Semiconductor Manufacturing Co. (TSMC), which has been named a "top pick" by US investment firm Morgan Stanley. This comes after reports that the Taiwan-based company's stock recently soared to new highs.
As per Bloomberg, the circuit manufacturing services saw the most increase in nearly three months after the US investment bank forecasted a return to growth for the electronics industry in the second half of 2023.
As shown by various trade data, TSMC led the majority of companies in Asia's chip industry sector. Earlier this year, the semiconductor manufacturer closed deals after deals with other processor and device manufacturers.
Earlier this week, Nvidia Corp. ordered TSMC to produce the RTX 40 graphics cards, using a 4-nanometer process.
Asia's Most Valuable Listed Corporation?
According to the same Bloomberg report, Morgan Stanley named TSMC Asia's most valuable listed corporation. Furthermore, the investment bank deemed the company a top pick, describing it as a "future technology enabler." TSMC rose 3.7% in Taipei.
After an observed rapid market correction, processor equities such as TSMC, GlobalWafers Company, and MediaTek have reached trough valuations, according to Morgan Stanley industry experts.
Meanwhile, the long-term trends of 5G, intelligent systems, and electric vehicles, all of which require semiconductors, are not changing. Following CNBC, a chip recovery will be aided by falling prices for tech products and logistics, as well as the reopening of economies, particularly in China. Another reason is a slower increase in foundry production capacity.
The same report tells us that investors should place a priority on investing in big players with pricing power, businesses with long-term growth potential, and enterprises that will profit from China's localization of the semiconductor industry, analysts recommended in the report.
Largely secular growth stocks have long-term potential and are less dependent on current economic conditions.
More About the TSMC Bounce
TSMC reported its revenue for August 2022 to have been roughly $218.13 billion back in August. This represents an increase of 16.8% from July 2022 and a rise of 58.7% from August 2021. The Taiwan-based manufacturer is anticipated to perform better over the next few weeks as it recovers from a global chip shortage.
In other reports, Apple is said to have agreed to TSMC's price increase for the M3 chip found in the upcoming Mac mini and MacBook and the rumored iPhone 15 lineup. This came after the iPhone manufacturer refused to accept the price increase.
Based on a 9to5Mac report, TSMC has informed its clients, including Apple and Nvidia, that it intends to increase the price of chip wafers up to 8 inches by 6% and up to 12 inches by 5%.
The A17, a new Bionic chip that uses the 3nm process, is reportedly being developed by TSMC at the moment. The rumored Apple iPhone 15 flagship smartphone will reportedly be powered by this upcoming chip by 2023.
