Source: Semiconductor Industry Watch. At yesterday's Conputex conference, Dr. Lisa Su released the latest roadmap. Afterwards, foreign media morethanmoore released the content of Lisa Su's post-conference interview, which we have translated and summarized as follows: Q: How does AI help you personally in your work? A: AI affects everyone's life. Personally, I am a loyal user of GPT and Co-Pilot. I am very interested in the AI used internally by AMD. We often talk about customer AI, but we also prioritize AI because it can make our company better. For example, making better and faster chips, we hope to integrate AI into the development process, as well as marketing, sales, human resources and all other fields. AI will be ubiquitous. Q: NVIDIA has explicitly stated to investors that it plans to shorten the development cycle to once a year, and now AMD also plans to do so. How and why do you do this? A: This is what we see in the market. AI is our company's top priority. We fully utilize the development capabilities of the entire company and increase investment. There are new changes every year, as the market needs updated products and more features. The product portfolio can solve various workloads. Not all customers will use all products, but there will be a new trend every year, and it will be the most competitive. This involves investment, ensuring that hardware/software systems are part of it, and we are committed to making it (AI) our biggest strategic opportunity. Q: The number of TOPs in PC World - Strix Point (Ryzen AI 300) has increased significantly. TOPs cost money. How do you compare TOPs to CPU/GPU? A: Nothing is free! Especially in designs where power and cost are limited. What we see is that AI will be ubiquitous. Currently, CoPilot+ PC and Strix have more than 50 TOPs and will start at the top of the stack. But it (AI) will run through our entire product stack. At the high-end, we will expand TOPs because we believe that the more local TOPs, the stronger the AIPC function, and putting it on the chip will increase its value and help unload part of the computing from the cloud. Q: Last week, you said that AMD will produce 3nm chips using GAA. Samsung foundry is the only one that produces 3nm GAA. Will AMD choose Samsung foundry for this? A: Refer to last week's keynote address at imec. What we talked about is that AMD will always use the most advanced technology. We will use 3nm. We will use 2nm. We did not mention the supplier of 3nm or GAA. Our cooperation with TSMC is currently very strong-we talked about the 3nm products we are currently developing. Q: Regarding sustainability issues. AI means more power consumption. As a chip supplier, is it possible to optimize the power consumption of devices that use AI? A: For everything we do, especially for AI, energy efficiency is as important as performance. We are studying how to improve energy efficiency in every generation of products in the future-we have said that we will improve energy efficiency by 30 times between 2020 and 2025, and we are expected to exceed this goal. Our current goal is to increase energy efficiency by 100 times in the next 4-5 years. So yes, we can focus on energy efficiency, and we must focus on energy efficiency because it will become a limiting factor for future computing. Q: We had CPUs before, then GPUs, now we have NPUs. First, how do you see the scalability of NPUs? Second, what is the next big chip? Neuromorphic chip? A: You need the right engine for each workload. CPUs are very suitable for traditional workloads. GPUs are very suitable for gaming and graphics tasks. NPUs help achieve AI-specific acceleration. As we move forward and research specific new acceleration technologies, we will see some of these technologies evolve-but ultimately it is driven by applications. Q: You initially broke Intel's status quo by increasing the number of cores. But the number of cores of your generations of products (in the consumer aspect) has reached its peak. Is this enough for consumers and the gaming market? Or should we expect an increase in the number of cores in the future? A: I think our strategy is to continuously improve performance. Especially for games, game software developers do not always use all cores. We have no reason not to adopt more than 16 cores. The key is that our development speed allows software developers to and can actually utilize these cores. Q: Regarding desktops, do you think more efficient NPU accelerators are needed? A: We see that NPUs have an impact on desktops. We have been evaluating product segments that can use this function. You will see desktop products with NPUs in the future to expand our product portfolio.
According to the supply chain investigation, most of Taiwan Semiconductor's customers have agreed to increase the outsourcing price, driving Taiwan Semiconductor's gross margin and profitability performance better than expected and climbing year by year, especially in gross margin performance, which is expected to approach 60% by 2026.
Given the prospect of increasing profitability, Morgan Stanley maintained its "outperform" rating on Taiwan Semiconductor and raised its target price to NT$1,280, making it the second highest-priced foreign stock.
According to statistics, the target price given to Taiwan Semiconductor by foreign investors is almost consensus if it's over one thousand NT dollars. The descending order is: HSBC with NT$1,370, Morgan Stanley with NT$1,280, Goldman Sachs with NT$1,160, Citigroup with NT$1,150, Barclays with NT$1,096, JPMorgan and Morgan Stanley both with NT$1,080, UBS with NT$1,070, and Bank of America with NT$1,040.
In fact, after Taiwan Semiconductor's stock price surpassed NT$1,000, it has drawn increasing attention from the global market. Lai Yu-chang, a semiconductor industry analyst at Morgan Stanley, pointed out that as most of Taiwan Semiconductor's customers have agreed to raise foundry prices in exchange for stable and reliable supply, the gross margin will gradually increase in the future.
According to Lai Yu-chang's estimation, the gross margin of Taiwan Semiconductor will rise to 55.1% in 2025 and even approach 60% in 2026, reaching 59.3%. This year, the gross margin has increased to 52.6% due to production efficiency improvement.
As AI continues to trend upward in the long term, coupled with the rising gross margin, the compound annual growth rate (CAGR) of Taiwan Semiconductor's earnings from 2023 to 2026 is expected to reach 26%. Lai Yu-chang also raised the after-tax net profit per share (EPS) of Taiwan Semiconductor for 2024-2026 by 5%, 2%, and 1%, respectively, with adjusted EPS reaching NT$39.2, NT$51.2, and NT$65.3, respectively.
Based on strong profit growth and a relatively low P/E ratio (only 19.6 times, much lower than TSMC's 34.9 times, ASML's 32.9 times, etc.), Lai Yu-chang raised the applicable P/E ratio of Taiwan Semiconductor to 25 times, giving it an "outperform" rating and raising its target price from NT$1,000 to NT$1,280, a 28% increase, making it the second highest-priced foreign stock.
In addition, with regard to the capital expenditure that the market is concerned about, Lai Yu-chang believes that based on continuous investment in advanced processes, especially 3nm and 2nm, the predicted capital expenditures for Taiwan Semiconductor in 2025 and 2026 have been raised to US$35 billion and US$37 billion, respectively.
Lai Yu-chang also expects that Taiwan Semiconductor will complete the annual production of 5,000 pieces of 2nm chips by the end of this year (2024), and the production capacity will expand substantially to 0.09 million pieces by the end of 2027.
Editor/Jeffy