TSMC customer, agree to price hike?

In its latest individual stock report, Morgan Stanley pointed out that, according to the supply chain survey, most of Taiwan Semiconductor's customers have agreed to raise the foundry prices, driving Taiwan Semiconductor's gross margin and profit performance better than expected and climbing year by year, especially in terms of gross margin performance, which is expected to approach nearly 60% by 2026. Given the growing profit prospects year by year, in addition to maintaining an "outperform" rating on Taiwan Semiconductor, Morgan Stanley has raised the target price to NT$1,280, making it the second highest target price among foreign investors. Currently, the consensus target prices given to Taiwan Semiconductor by foreign investors are mostly above NT$1,000, ranked from high to low as follows: HSBC NT$1,370, Morgan Stanley NT$1,280, Goldman Sachs NT$1,160, Citigroup NT$1,150, Barclays NT$1,096, Morgan Stanley and JP Morgan both NT$1,080, UBS NT$1,070, Bank of America NT$1,040. In fact, after Taiwan Semiconductor's stock price surpassed NT$1,000, global market attention has significantly increased; and Morgan Stanley's semiconductor industry analyst Lai Yuzhang pointed out that, as most of Taiwan Semiconductor's customers have agreed to raise foundry prices in exchange for stable and reliable supply, driving future gross margin to climb year by year. According to Lai Yuzhang's estimation, Taiwan Semiconductor's gross margin will climb to 55.1% in 2025, and will approach nearly 60% in 2026, reaching 59.3%; while this year, with the improvement in production efficiency, the gross margin has already been raised to 52.6%. With the long-term trend driven by AI, coupled with the rising gross margin, Taiwan Semiconductor's profit compound annual growth rate (CAGR) from 2023 to 2026 is expected to reach 26%, and Lai Yuzhang has raised Taiwan Semiconductor's earnings per share (EPS) for 2024 to 2026 by 5%, 2%, and 1% respectively, with adjusted EPS reaching NT$39.2, NT$51.2, and NT$65.3. Based on strong profit growth, and a relatively low price-to-earnings ratio (only 19.6 times, much lower than TSMC's 34.9 times, and ASML's 32.9 times, etc.), Lai Yuzhang has raised Taiwan Semiconductor's applicable price-to-earnings ratio to 25 times, giving it an "outperform" rating, and raising the target price from NT$1,000 to NT$1,280, a 28% increase, making it the second highest target price among foreign investors. Furthermore, regarding the capital expenditure that the market is concerned about, Lai Yuzhang believes that, based on continuous investment in advanced processes, especially 3nm and 2nm, Taiwan Semiconductor's capital expenditure forecast for 2025 and 2026 has been raised to USD 35 billion and USD 37 billion. Lai Yuzhang also expects that by the end of this year (2024), Taiwan Semiconductor will complete the capacity of 5,000 wafers per month for 2nm, and by the end of 2027, the capacity will be significantly expanded to 90,000 wafers per month