Key Takeaways
- Taiwan Semiconductor Manufacturing shares rose 5% today after a report that it’s weighing making 3D DRAM memory chips at Nvidia’s request.
- Memory swings far harder than contract chipmaking: SK hynix posted a 77% gross margin over the last 12 months but an operating loss in 2023.
- Analysts expect TSMC’s EPS to nearly triple from 2025 to 2028, and Thursday’s rout pushed its forward P/E below its five-year average.
Taiwan Semiconductor Manufacturing (TSM) is up 5% today after The Information reported that it’s weighing a move into advanced memory chips because Nvidia (NVDA) asked it to.
That would put TSMC up against SK hynix (SKHY), Samsung and Micron in a market known for its booms and busts. It’s also a rebound: TSMC fell 10% on Thursday as the chip rout deepened.
Nvidia wants more memory
TSMC has reportedly started planning to make vertically stacked 3D DRAM for Nvidia.
Tight memory supply has pushed hardware costs sharply higher. A fourth supplier would give Nvidia leverage in a market three companies have dominated for a long time.
TIKR tracks 35 analysts on TSMC. How many say “Buy”?
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The earnings outlook still looks great
None of this will show up in TSMC’s numbers for years. Analysts expect its normalized EPS to climb from $10.65 in 2025 to $29.82 in 2028.
TSMC had no news of its own in Thursday’s selloff, so I see no reason for those estimates to come down. At Thursday’s close, the drop left it at 16x forward earnings, below its five-year average of 18x.
Memory is a bumpier business
TSMC’s gross margin stayed above 50% every year from 2021 to 2025.
Memory makers ride much bigger waves. SK hynix’s gross margin was 77% over the last 12 months. Yet in 2023 it posted an operating loss of 7.7 trillion won.
SK hynix has a more direct stake, too. In 2024 TSMC agreed to make the base logic dies for SK hynix’s next-generation high-bandwidth memory. A TSMC memory push would turn that partner into a rival for Nvidia’s business.
Frankly, I’d watch the memory plan more than I’d buy on it. Going big in commodity memory would mean taking on SK hynix’s swings. The reason to own TSMC today is the foundry business, and the stock is still below its usual multiple even after today’s jump.
Of course, this is still only a report. The next hard numbers come with TSMC’s October sales next week and its 2027 guidance in mid-January.
So what is TSMC stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
