UBS raised its price target for Taiwan Semiconductor Manufacturing Company on Monday, citing strong artificial intelligence chip demand and expectations for continued revenue growth.
The brokerage believes TSMC, the world’s largest contract chipmaker, is well positioned to benefit from rising demand for advanced processors used in AI systems.
UBS Raises TSMC Price Target
UBS increased its TSMC price target to T$3,400 from T$3,000.
The bank also maintained its Buy rating on the semiconductor stock, reflecting confidence in the company’s long-term growth outlook.
UBS expects strong demand for advanced chips to continue supporting TSMC’s sales and earnings over the coming years.
AI Chip Demand Supports Stronger Growth
The brokerage raised its forecast for TSMC’s 2026 sales growth.
Demand from the artificial intelligence industry remains one of the main drivers behind the stronger outlook.
TSMC manufactures some of the world’s most advanced semiconductors, including high-performance processors used in AI data centres, smartphones and computing systems.
The company’s leading position in advanced chip production has helped it benefit significantly from the rapid expansion of artificial intelligence investment.
TSMC Could Raise Chip Prices
UBS also said TSMC could increase prices by early 2027.
A potential price increase would reflect strong customer demand, limited advanced chip capacity and the rising cost of expanding production.
Higher prices could help TSMC maintain profit margins while funding new factories and advanced manufacturing technology.
Capital Spending Expected to Increase
UBS expects TSMC to increase capital expenditure between 2026 and 2028.
The additional spending would allow the company to expand manufacturing capacity and reduce concerns about potential supply shortages.
TSMC has experienced exceptionally strong demand for its most advanced chips in recent years.
As a result, the company is actively investing in new production capacity to meet customer orders and prevent supply constraints.
Higher Spending Could Ease Supply Concerns
UBS analysts said a larger capital spending commitment would be important for reassuring TSMC customers.
Many technology companies remain concerned about limited semiconductor supply and the risks of relying heavily on a single manufacturer.
Greater capacity could reduce those concerns and limit the need for customers to seek alternative suppliers.
UBS also expects stronger demand for central processing units, AI accelerators and edge AI applications to support further expansion.
Edge AI refers to artificial intelligence processing performed directly on devices instead of relying entirely on remote data centres.
TSMC Remains a Key AI Supplier
TSMC is the world’s largest contract semiconductor manufacturer by production capacity.
The company produces chips designed by major technology businesses but does not generally sell processors under its own brand.
Its ability to manufacture cutting-edge semiconductors has made it a critical supplier to the global AI industry.
Demand has grown so rapidly that TSMC is working to expand capacity and reduce the risk of a future supply shortfall.
Q2 Earnings Call to Focus on Spending Plans
UBS expects TSMC to provide additional details about its capital expenditure plans during its second-quarter earnings call.
Investors will also be watching for comments about potential competition from Samsung Foundry, Intel and Terafab.
These rivals are investing heavily in semiconductor manufacturing as they attempt to challenge TSMC’s dominance in advanced chip production.
TSMC Q2 Earnings Date Approaches
TSMC is scheduled to report its second-quarter financial results on July 16.
According to Investing.com forecasts, the company is expected to report earnings per share of approximately $3.80.
Revenue is projected to reach around $40.06 billion.
The earnings report could provide further evidence of how strongly AI chip demand is supporting TSMC’s growth and future investment plans.
