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TSMC VS Nvidia, AMD, Intel. How to choose semiconductor stocks?


The general pattern of the semiconductor industry, the overall trend and target price of TSMC in 2021, how the Nvidia(NVDA), AMD, and Intel(INTC) semiconductor stocks are laid out, what is the decisive factors, and whether there is a predictable time point, we conducted a more systematic discussion. 

The big picture of the semiconductor industry


The semiconductor industry is cyclical. Since the second half of 2019, global semiconductors have entered a new round of the business cycle. This is very important. Only when you understand this reason can you hold stocks with peace of mind. The following analysis is based on the time dimension.

In the short term, looking at one to three months now, with the outbreak of the epidemic again, the production capacity of 8-inch wafers are in short supply, the semiconductor industry chain is out of stock, wafer foundry, packaging, and testing links have seen price increases, and production capacity is in short supply. High economic situation,

In the mid-term, let's look at 3 to 6 months. The semiconductor industry's prosperity continues to rise. The downstream demand for new energy vehicles, photovoltaic equipment, and cloud computing centers continues to improve. Apple and other mobile phone manufacturers start the 5g supercycle, and multiple downstream are booming at the same time. , This means that the upstream will still be in short supply,

It is expected that TSMC will begin to intervene in automotive semiconductors and may start to increase production around May this year to solve the shortage of automotive semiconductors due to reductions in production by global automakers. At this time, the trend of automotive chip prices is expected to ease.

Looking at the mid-term 6 to 12 months, in a very ideal state, with the help of vaccines, the epidemic can be effectively controlled.

At the 5g base station side, the number of base stations and a single base station will bring market growth. Also, the use of semiconductors in automotive electronics will become more intensive, and the industry chain leader is expected to fully benefit.

Let's look at the long-term. It is from 12 months to 24 months. Other 5g-related products have begun to explode. The product penetration rate of the Internet of Things concept is rapidly increasing. This mainly depends on the manufacturer's future investment, capital expenditure, and foundry. Leading TSMC, Samsung continues to hit record highs,

TSMC recently announced that capital expenditures this year will reach 25-28 billion U.S. dollars, which is much higher than the originally expected 22 billion U.S. dollars. 80% of this investment will be used for advanced manufacturing processes because TSMC knows that in a few years, the semiconductor industry will welcome At the turning point, the performance of the semiconductor sector will increase the trend of differentiation and the competitive landscape will undergo major changes. Technical barriers are the core influencing factors.

This big investment is recognized by the market, which means that the industry leader and the entire market continue to be optimistic about the high growth in the next few years. It will also drive the entire industry chain to continue to increase. From the above, everyone can know how good this track is. The principle of individual stock selection is to use the track investment logic, leading companies as the main.

Let's analyze the specific leading company, the first company, AMD stock,


On AMD’s issue, analysts’ opinions are very inconsistent, ranging from 13 U.S. dollars to 120 U.S. dollars, which are similar to Tesla’s. Here is a statement in advance that I am a long investor in AMD, but this does not prevent me. To figure out the logic behind AMD,

Let's look at the risks that have caused AMD's stock price to come under pressure, including the following aspects,

1. AMD wants to generate synergy through the acquisition of Xilinx, the market is doubtful, and its huge scale contains serious integration risks.

2. AMD is still in the expansion period. The company has not repurchased any stocks and paid dividends. In this case, AMD’s investment-grade S&P credit rating is BB+, which is average.

3.AMD relies heavily on TSMC and global foundries, and other external foundries for chip production, especially in the area of ​​TSMC, the competition for its capacity allocation is heating, TSMC's capacity needs to be booked long in advance, AMD is currently insufficient incapacity,

It is related to the previous layout, so there is no way to add orders now.

TSMC will release a certain amount of production capacity specifically for Intel. This is of course not good news for rival AMD. Although AMD will remain ahead of the benchmark Intel in advanced manufacturing processes in 2021, the latter announced earlier this year that it will outsource After the release, AMD once again competed with Nvidia and Intel, and TSMC took the initiative in bargaining.

4. The recent AMD CPU and GPU supply is tight. LISA Su pointed out that this is not only a manufacturing problem but also a supply chain problem.

5. Intel’s CEO transformation, analysts gave AMD a negative rating, downgraded from "market performance" to "underperformance", and lowered the target price from $80 to $75, because AMD was at the expense of Intel, Gain market share,

Although AMD is currently leading in all aspects, considering the strong R&D strength of Intel and Nvidia and the cost advantage of scale, this momentum may not be sustainable.

However, recently, AMD has made great progress in increasing the sales of server processors. It has captured some of Intel’s market share. It is estimated that AMD’s market share has increased from 5% to 8%, which may be reflected in the financial report.

Its share reached a double-digit percentage in the second quarter of 2020, and eventually even occupied a 20% market share at the end of the year.

AMD showed two new processors on CES, which once again took advantage of the test. The key is this MILAN chip.

Based on 7nm manufacturing, not 5nm,

In terms of 7nm, AMD booked relatively sufficient production capacity with TSMC early. If AMD's new chip performance meets the demands, and AMD attracts more markets from Intel's share this year, then he may add billions of dollars from the data center market. AMD will switch to the 5nm Zen 4 microarchitecture in the future, which will undoubtedly help it widen the gap with Intel.

To sum up, I think that AMD is still racing against time. Before Intel's product strength increases, it will try to grab as much market share as possible.

In terms of AMD stocks, pay special attention to the announcement of the latest financial report on January 26, 2021. I am still more optimistic about this financial report. Now the suppression of AMD's stock price may be an opportunity. The above is just my personal opinion, for your reference only.

AMD

Next, we will analyze Intel stock,


Intel executive personnel changes, CEO Shi Wang will officially step down on February 15th, Intel accelerates its transformation and is replaced by VMware CEO, PAT GELESINGER. PAT GELESINGER has worked in the Intel processor and server business for 30 years, which is 20 years. Former Intel’s first CTO in history, and later moved to the CEO of EMC and VMWARE.

I believe that Intel’s new CEO technology is born. Although it cannot turn the situation alone, it should have a better expectation in the short term.

According to the news, Intel employees broke the news that the company has discontinued the production of 7nm chips, but it seems that only individual 7nm products are outsourcing. Changing the CEO seems to be the right decision. Intel is deploying a large strategy, relying on large volume to let TSMC OEM, Intel can focus on design without being too disconnected from the market, customers remain stable,

Even if it loses part of its market share, TSMC currently does not have enough capacity to support AMD, so the market will temporarily seek a second place and the impact on Intel’s revenue will be limited Intel has gained valuable time.

Wafer fabs are also crucial to U.S. stocks. The strategic position of semiconductors is so important and is the core competitiveness of the United States. The general policy of U.S. semiconductor policy is to gradually return, so the biggest variable should be the government's support. Is it TSMC? There will be core technologies to assist Intel

This still needs to be observed, it still depends on TSMC’s wisdom, if in the end, Intel’s process cannot achieve a breakthrough,

It is good for TSMC and AMD in the long term. In the short term, Intel's volume is too large. The first thing to solve is the production capacity problem. At present, TSMC cannot provide enough support.

In terms of Intel stock price, I continue to hold it. Please also note that January 28, 2021, is the announcement of the latest financial report.

intel

Let's analyze TSMC stock below,


TSMC’s fourth-quarter 2020 financial report announced on January 14 showed that revenue and gross profit margin reached new highs. The high-performance growth market caused TSMC’s stock price to rise by 13% intraday to reach 134 US dollars per share, measured by market value. TSMC is almost equal to the total market value of Intel, Nvidia, and AMD.

Now, almost all important companies will change with the latest layout of TSMC’s production capacity, affected by the sanctions of SMIC,

The number of transfers to TSMC’s stock has greatly increased, causing TSMC’s production capacity to be squeezed, and the shortage of chips is unlikely to improve quickly.

Because all chips, from the initial semiconductor silicon to processing into chips, takes about 90 days. The global chip manufacturing industry has been struggling to cope with the sudden surge in demand. Even if the factory is built, it takes up to a year to test and, Can be put into production after identification,

Analysts said that the shortage of automotive chips may last as long as six months. From the above analysis, it can be seen that TSMC is in a very good position, but now that the production capacity is saturated, the market's imagination for TSMC will change. small,

Since TSMC's production capacity cannot be broken in a short period, is there any other way to increase profit margins? This is not easy, here is the reason


1. First of all, the yield rate is already very high, and there is not much room for greatly increasing the yield rate.

2. For the first time in 10 years, TSMC has canceled the preferential policy of a 3% discount on 12-inch wafers for major customers. This is good and can increase revenue.

3. When other manufacturers announced that they would adjust the price of the 8-inch wafer foundry in 2021, TSMC stated that it would not increase the price.

4. The appreciation of the Taiwan dollar will have a negative impact. According to TSMC’s calculations, every 1% appreciation of the Taiwan dollar will affect the gross profit margin by four percentage points.

Judging from the above points, TSMC may give fewer surprises this year than last year, so how will the stock price perform this year?

Let’s make a prediction. Looking at the financial statements of TSMC, last year’s q4, eps was 5.51 Taiwan dollars, plus the data in table 14.47, and the cumulative eps in 2020 is 19.98 Taiwan dollars. Compared with the 13.32 in 2019, this increase is 50%.

According to the calculation of the increase in capital expenditure and production capacity this year, eps in 2021 will reach approximately 23 to 25 Taiwan dollars. This year, the increase is 15.12% to 25.12% based on 19.98 Taiwan dollars. Compared with last year's 50%, the growth rate is Will slow down,

The historical stock price growth of TSMC has been very slow. The rapid increase in stock price last year is a special case. According to the eps growth rate, the price space obtained is about 150 to 180 US dollars.

This means that if we assume that TSMC’s valuation is reasonable now, then by the end of this year, TSMC’s price will be around US$150 to US$180.

Bernstein analyst Mark Li raised the target price from $77 to $149 and the rating was upgraded from neutral to outperform.

All the data tell everyone, don’t be afraid of TSMC’s high stock price. The price given by the institution is of reference significance. As long as you hold it firmly, the probability will be this price in one year.

Regarding the recent performance of TSMC’s stock price, there are several points worth noting.


First, short-term selling pressure. This is every time TSMC hits a record high, the number of people who make good shipments will increase.

Second, at the end of the Lunar New Year, will there be a legal person checkout market next? The money was recovered before the New Year, so the wait-and-see atmosphere is strong, and the price-chasing buying has weakened.

Third, the most important point still depends on the attitude of foreign capital. It will follow the foreign capital dynamics. At present, the proportion of foreign capital holdings has not changed much, and there are no obvious major moves.

Fourth, if the U.S. stock market adjusts, TSMC will not be able to take care of itself. This U.S. stock has performed well. The historical performance of the Lunar New Year market, which has the most abundant capital in a year, is also good.

Let's summarize. At present, I think that TSMC may adjust to cancel the previous increase. After that, TSMC's stock price will move relatively smoothly. We do not rule out the possibility of continuing to pull back but don't worry, the stock price will rise, and the overall trend is good. , Just hold it,

In terms of capital, TSMC has become a long-term goal for more and more capital. Some funds have a share swap requirement, and there are also opportunities to switch to TSMC and hold it after buying. It will not be too long to hold for 10 years.

 
tsmc

Finally, let’s analyze NVIDIA stock


The trend of Nvidia is mainly affected by the tight chip production capacity. In the short term, the tight production capacity limits sales. Nvidia's rtx3000 supply may not improve until May. It turned out that production capacity will be restored from February to March. Was pushed back further,

However, this kind of shortage should give Nvidia pricing power. Citi now believes that analysts’ previous estimates may be conservative. It has asked Nvidia’s sales to increase by 55% year-on-year to reach $4.8 billion, and its profit growth in the January quarter was 48. %, reaching $2.8 per share,

Perhaps many people will be concerned about Nvidia’s next quarterly guidance for the new financial report. The company will release its financial report on February 11 in 2021.

Please note that in any case, this is a super white horse stock. In the past 12 quarters, Nvidia's earnings have exceeded expectations 11 times. The only thing that is not conducive to Nvidia stock is that its premium valuation is the highest among its peers, but it The record in terms of sustained growth and profitability is also the best,

NVIDIA is also investing heavily in high-growth areas such as artificial intelligence and autonomous driving, which will bring huge dividends.

Nvidia’s stock price, now the price of 515 US dollars has not been said far, it is not a bargain to sell, about 500 US dollar is a good position to open, this

The analyst here also gave Nvidia's 12-month target price of 599 USD, which is the 12-month target price. It may be pulled back to 450 USD or even 400 USD. 

nvidia

All the above sharing is my personal opinion, at my own risk. Most of me speak with data and try to be objective and fair.

Many good companies don’t have to buy the stocks of companies you don’t like. 


The values ​​are different. Don’t buy the ones you don’t like. If you buy them, you can’t hold them. If the investment logic changes, you can exchange for stocks. , Investment is decision-making, and the foundation behind the difference in decision-making is the level of cognition established by a person in the process of growth. 

Stock market investment is risky, Investment needs to be cautious.

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