TSMC's Long-Term Outlook Supported by Ambitious Expansion in Multiple Sites; Shares Attractive

We maintain our fair value estimate on Taiwan Semiconductor Manufacturing, or TSMC, at TWD 850 per share (USD 140 per ADR at current foreign exchange rates) after making minor changes to our model. TSMC’s expansion plans around the globe bolster our confidence in the company’s long-term outlook not only in high performance computing, or HPC, but also in automotives, hence we still view TSMC’s shares as very undervalued. The company’s conservative capital spending budget and recent weak operational data in the supply chain suggest TSMC’s share price may have bottomed—and we believe market sentiment may improve once more positive economic data from China are reported.