Taiwan Semiconductors’ Board Approves $2.9B Spend To Expand Capacity


Taiwan Semiconductor Mfg. Co. announced today that its Board of Directors held a special meeting and passed two resolutions. One of the resolutions that was approved was a $2.9 billion spend to increase capacity.

Taiwan Semiconductor Mfg. Co.’s (TSM) Board also approved the issuance of 2.6 million common shares of employee restricted stock awards (RSAs) for this year that will be submitted for approval to this year’s Annual Shareholders’ Meeting.

Earlier this month, TSM stated during its 1Q earnings call that it expects to invest $100 billion over the next three years to increase chip manufacturing capacity, support semiconductor manufacturing, and maintain R&D of other advanced technology processes. This capex spend also includes $30 billion in FY21 and TSM expects to spend around 80% of it on advanced process technologies including 3-nanometer (nm), 5-nm, and 7 nm. (See Taiwan Semiconductor Mfg. Co stock analysis on TipRanks)

On April 15, Susquehanna analyst Mehdi Hosseini upgraded his price target from $83 to $85 and reiterated a Sell on the stock. Hosseini said that while the rise in capex will fuel the rise in revenues, the analyst also expected higher depreciation and operating expenses to drag down the compounded annual growth rate (CAGR) for EPS.

Overall, the Street is sidelined on the stock with a Hold consensus rating based on 2 Buys, 2 Holds, and 1 Sell. The average analyst price target of $83 implies 29.3% downside potential from current levels.

According to the TipRanks Smart Score system, TSM scores a 9 out of 10 indicating that the stock is highly likely to outperform the market.

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