亚洲半导体与设备及全球存储器 台积电4Q25：高预期下仍强劲超出预期

TSMC 4Q25: High expectations but still a strong beat TSMC is “very nervous”, but we will give TSMC the benefit of the doubt & alsoassume AI demand is real.Raising 2026 capex to US$52-56B from US$41B last yearwould be a "big disaster" if not done carefully, TSMC admitted. We believe AI demandacceleration happened not long ago but TSMC has been talking to customers & customers'customers over the past 3-4 months to gain their confidence. TSMC thus raised AI revenueCAGR to mid-to-high 50% & its own revenue CAGR to approach mid-20% from 2024 to29. As TSMC is not always right but has been more right than wrong, we thus also assumeAI deserves the capex hike. Mark Li+852 2123 2645 Edward Hou, CFA+852 2123 2623 Yipin Cai, CFA+852 2123 2669 Margin is the real surprise.TSMC reiterated the gross margin (GM) drag from overseasproduction (2-3% initially & 3-4% later) but raised long-term GM guidance to 56% & higherand ROE to high-20% through cycles. More importantly GM standing at 62.3% in 4Q25 &mid-point guidance of 64% in1Q26 is significantly above consensus, thanks to cost control,favorable FX & higher utilization. N2 was guided to be 2-3% GM headwind this year, but N3crossing over corporate average & operating leverage from revenue growth are offsettingfactors. Considering them all, we see 2026 full-year GM likely not far away from 1Q26guidance & may be well above expectation. With 2026 revenue growth guided to be closeto 30% also above expectation, we see a significant upside risk to earnings. We expect firmer pricing, largely to offset higher input costs.The CFO detailing costburdens in prepared remarks suggested that. With the need for more capacity & their ownhigh margins, customers very likely will be receptive too. The CFO however made it clearprice hikes in the past few years were just to cover cost increases & margins improvedmostly on high utilization & capacity sharing across multiple nodes (e.g. using idle N7capacity for N3/5). We believe that remains the principle for the future. 2026-28 capex was guided to be significantly higher than in 2023-25 (US$101B),but may not be as high as US$200B totally,as when asked TSMC clarified it's higherbut doesn't necessarily reach US$200B. We believe the recent demand acceleration madeTSMC hike 2026 capex, but future capex is still subject to the sustainability of AI demand. Notable supply addition won’t come until 2028, suggesting higher clean roominvestment this year.Productivity improvement will bring more output, but the capex hikewill bring "almost none" to this year's capacity addition, a little to 2027 & more in 2028-29.We believe the demand acceleration makes clean room a bottleneck & a meaningful part ofthis year's capex hike is to address that. Despite strong AI demand, the forecast of 14% foundry growth this year impliesnon-AI demand is underwhelming.This is based on Foundry 2.0 which TSMC definesto include backend services too. The definition makes it difficult to compare withother forecasts but clearly non-AI demand is lackluster. TSMC benefits from high-endsmartphone exposure & indicated no customer behavior changes from high memory pricesyet, but we believe the pressure will be more acute for tier-2 foundries and MediaTek. Overall this very strong print should set a positive tone for this earnings season.We're particularly impressed with margins. Outperform. EXHIBIT 4:4Q25 gross margin improved 2.9pts QoQthanks to cost improvement, more favorable FX &higher utilization rate. 1Q26 is guidance midpoint forecasted by companySource: Company report (guidance) and Bernstein analysis EXHIBIT 7:HPC continued the secular growth, but somehow at a slower rate in 4Q25. EXHIBIT 8:Revenue contribution from Smartphone therefore expanded to 32% while that from HPC edged down to55% in 4Q25. EXHIBIT 9:The combined revenue of 3nm, 5nm & 7nm contributed 77% of TSMC's revenue in 4Q25, up from 74% in3Q25. EXHIBIT 10:Revenue from 3nm grew most among all technology platforms, up by 24% QoQ in 4Q25. EXHIBIT 11:North America contributed 74% of TSMC’s total revenue in 4Q25, down 2pts sequentially. INVESTMENT IMPLICATIONS TSMC: We rate TSMC OutperformOutperform with price target of NT$1,800.00. MediaTek: We rate MediaTek Outperform with price target at NT$1,640.00. UMC: We rate UMC Underperform with price target at NT$32.00. Vanguard: We rate Vanguard Market-Perform with price target at NT$90.00. BERNSTEIN TICKER TABLE