Taiwan Semi Just Announced Its New A14 Tech. Should You Buy TSM Stock Now?
Taiwan Semiconductor Manufacturing (TSM) is the largest integrated circuit foundry in the world. It takes proprietary circuit designs from other companies and then produces them using advanced processes. Given this dominance in the foundry market, Taiwan Semi is often considered one of the most globally important semiconductor companies.
TSM stock has had an underwhelming year so far, down roughly 17% in the year to date and nearly 30% off its 52-week high. Taiwan Semi shares appear to be recovering, up about 8% over the last five sessions.
TSMC Reveals New A14 Process
TSMC unveiled its latest logic process technology, A14, at its North American Technology Symposium in Santa Clara, California. This technology will improve smartphones' onboard artificial intelligence (AI) capabilities and enhance the development of AI applications.
The A14 technology will not be utilized in production until 2028. The N2 process will be entering production later this year and compared to the N2 process, A14 is 15% faster in terms of speed, has 20% greater logic density, and is 30% more power efficient. A14's name refers to 14 angstrom, or 1.4 nanometers, while the N2 is 2 nanometers.
At present, market heavyweights such as Apple (AAPL), Advanced Micro Devices (AMD), Nvidia (NVDA), and Intel (INTC) are all expected to use the N2 process for their chips.
'TSMC's cutting-edge logic technologies like A14 are part of a comprehensive suite of solutions that connect the physical and digital worlds to unleash our customers' innovation for advancing the AI future,' said TSMC CEO C.C. Wei.
During the Symposium, TSMC also introduced new logic, specialty, and 3D chip stacking techniques that can be used in high-performance computing, smartphones, self-driven automotive, and AI functionality in electronics and other appliances.
TSMC's Q1 Results
TSMC reported its first-quarter results on April 17, posting EPS of $2.12 for Q1 2025, surpassing analyst expectations. The company achieved revenue of $25.53 billion, marking a 41.6% year-over-year increase. However, revenue fell short of the previous quarter, showing a 3.4% decline.
The gross margin for the quarter stood at 58.8%, while the operating margin reached 48.5%, and the net profit margin was 43.1%. Advanced technologies like 3-nanometer and 5-nanometer processes contributed significantly to wafer revenue, accounting for 73% of total revenue.
Looking ahead, TSMC expects Q2 2025 revenue to range between $28.4 billion and $29.2 billion, supported by strong demand for its cutting-edge 3-nm and 5-nm technologies. Gross profit margin is projected to be between 57% and 59%, while operating profit margin is anticipated to range from 47% to 49%. The company remains cautious about potential risks from tariff policies but is optimistic about sustained growth in AI-related demand.
Analyst Ratings on TSM Stock
Analysts are very fond of the blockbuster semiconductor stock. TSM has a consensus 'Strong Buy' from analysts with a mean price target of $229.38, reflecting upside potential of 40% from the current price level.
The stock is under the watch of 11 analysts and has received eight 'Strong Buy' ratings, two 'Moderate Buy' ratings, and one 'Hold' rating.
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