2024 High Conviction: TSMC (2330 TT) Is Perfectly Poised for Revenue and FCF Growth Acceleration

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1.1k Views05 Dec 2023 15:27

Boomeranged on Thu, 6 Jun 2024 13:42

Given that we have reached the peak of the Capex cycle, along with normalisation in its internal working capital, and with revenue growth set to accelerate, we are likely to see a significant net cash build-up over the next few years which is likely to support higher-than-expected dividends and increased optionality such as share repurchases.

SUMMARY

TSMC looks set for a significant recovery in top-line growth in 2024F, driven by continued faster-than-expected demand for its 3nm volume production leading to significantly improved overall ASP.
This should be supported by a concurrent improvement in the inventory cycle at major clients, helping recover TSMC’s utilisation back to historic norms.
Lower capital intensity, improving internal inventory levels, and accelerating top-line growth should all combine to drive record levels of Free Cash Flow generation during 2024F.

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