Key Takeaways
- TSMC shares rose 3% today after Taiwan’s Commercial Times reported that the company is preparing to raise prices for its CoWoS AI chip packaging by up to 20%.
- The increase would land on customers like Nvidia and AMD, and it shows that demand for TSMC’s advanced packaging is still bigger than its capacity.
- Analysts expect TSMC’s earnings per share to more than double from 2025 to 2027, yet the stock trades below its five-year average forward P/E.
- The next big test is TSMC’s fourth-quarter report and 2027 guidance in mid-January.
Taiwan Semiconductor Manufacturing (TSM) stock is up 3% today after Taiwan’s Commercial Times reported that the chipmaker is preparing to raise prices for its CoWoS advanced packaging by up to 20%.
CoWoS puts AI processors and high-bandwidth memory into a single package, so the bill lands on customers like Nvidia (NVDA) and Advanced Micro Devices (AMD).
A price hike on the bottleneck
According to the report, which cites supply-chain sources:
- Foundries and outside packagers are preparing CoWoS price increases of 10% to 20%.
- Demand for advanced packaging has spread from AI GPUs to server CPUs and custom AI chips.
- Equipment lead times have stretched to six to eight months, from three to six.
Pricing power on top of a record quarter
It comes less than two weeks after TSMC’s record third quarter, when revenue of $46.7 billion topped the high end of its own guidance. Its gross margin had already climbed from 51.6% in 2021 to 59.9% in 2025…
…and it hit 66.4% in the third quarter, up from 59.5% a year earlier.
The hike itself is small money. Advanced packaging was about 8% of revenue in 2025, and management expects slightly over 10% this year, so even a full 20% would add only around 2% to sales.
But management has said its recent price increases mostly covered rising costs, with the margin gains coming from full fabs and productivity. A packaging hike of up to 20% would be TSMC charging for scarcity, and customers short on capacity have little choice but to pay it.
TIKR tracks 21 analysts on TSMC. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on TSMC, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See TSMC’s Analyst Ratings
The multiple hasn’t kept up
Analysts already expect TSMC’s earnings per share to more than double, from $10.65 in 2025 to $23.39 in 2027.
A hike worth a couple percent of sales won’t move those numbers much on its own.
Still, that 2027 estimate is up 16% since the end of June, and the stock trades at about 17x forward earnings. That’s below its five-year average of 18x and far from its 25x peak in July 2024.
The risk is TSMC’s own build-out: $60 billion to $64 billion of capex this year, mostly for capacity that arrives in 2028 and 2029.
My take: if Nvidia and AMD will pay up to 20% more to get their chips packaged, AI demand isn’t cooling. And at 17x, investors aren’t paying much for TSMC’s growth.
Of course, TSMC hasn’t confirmed the hike, and the bigger test comes in mid-January, when it reports fourth-quarter results and gives its 2027 guidance.
So what is TSMC stock actually worth?
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Disclaimer:
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