TSMC: 2nm Wafers Can Outperform The Already Strong Ramp In 3nm Wafers (Archive)

This 5-Minute Pitch was originally published on Seeking Alpha before the launch of the Hunting Alphas website. It is shared here to showcase my previous work and track record. New 5-Minute Pitches published on this site will not be disseminated anywhere else.

Elevator Pitch

• The 2nm wafer technology ramp-up can potentially accelerate revenues and gross margins even more than what was seen in the 3nm ramp-up.
• TSMC is capacity-constrained. Capex investments to alleviate these constraints are positive for long-term growth that is likely to maintain and extend technological and market share leadership.
• Valuations are at a deserved premium vs. historical levels and peers. TSMC has better revenue and earnings growth prospects than before and is increasing its edge as a market leader.
• Relative technicals vs. the S&P500 are bullish as a sharp reaction off weekly support followed by a basing pattern is a recipe for further upside and outperformance.
• Despite the bullish drivers, let's not forget that the semiconductor market is still cyclical. Currently, TSMC's growth is at the upper end of longer-term cyclical growth averages. But the bottom-up drivers are constructive.

Read the full article here.