TSMC at NT$3,200: Analyst Tsai Ming-Yen Calls Taiwan Correction a Buying Window

TSMC could reach NT$3,200 or more once the current consolidation ends, according to Capital Investment Advisory Chairman Tsai Ming-Yen, who pegs the foundry's 2028 earnings per share above NT$170 and applies a 20x multiple to get there. He made the call on the 5th at TrendForce's "AI Next – 2027 Tech Industry Forecast" seminar in Taipei, days after a sharp correction rattled Taiwan's market and investor confidence with it.

His broader case starts with valuation. Citing domestic brokerage estimates, Tsai said listed and OTC companies in Taiwan should post profit growth of about 31% next year, with signs of further upward revisions after recent earnings reports. On that earnings base, the market's P/E has compressed from roughly 20x on this year's profits to about 17x. On next year's earnings, it sits at just over 14x.

That is not expensive, in his view. It offers considerable downside support after the pullback.

What broke the uptrend?

TSMC's technical picture has soured. Tsai noted the stock's uptrend line — established after the tariff pause in April last year — has been broken, a signal that the market has begun to harbor doubts about demand. He expects the consolidation phase to run long, and he advised investors not to rush in. Wait for a bottoming signal, he said, before positioning.

Still, he stressed a critical point: raw material supply remains unable to meet market demand. Demand has not disappeared.

On the AI bubble question, Tsai reached for hard numbers. The semiconductor sector of the U.S. S&P 500 was initially estimated to deliver second-quarter profit growth of about 60% this year. Analysts revised that up to 130%. Actual growth came in at 180% — the engine behind this year's tech stock rally.

Recent data show semiconductor profits will still more than double over the next two quarters. But the pace of upward revisions has slowed, which suggests the market may have already priced in some of next year's orders and profit growth. That is the near-term pressure point, not any collapse in end demand.

What did TSMC's COO say about capacity?

Tsai quoted TSMC Chief Operating Officer Y.J. Hou directly: customer capacity requests went from 1-to-1 to 1-to-2, and eventually to 1-to-9. That escalation, he said, is precisely why the stock market rallied in the first half of this year.

Longer term, he sees AI demand growing faster than the market originally expected, with AI agent applications driving rapid expansion of computing demand. The main bottlenecks sit in equipment, power and policy support — not insufficient end demand.

For institutional estimates of TSMC itself, the picture Tsai laid out looks like this:

• TSMC EPS: about NT$150 next year per institutional estimates; above NT$170 in 2028 per his own forecast
• Target price: above NT$3,200, based on a 20x P/E on 2028 earnings
• Taiwan market P/E: about 17x on this year's earnings, just over 14x on next year's
• Listed/OTC profit growth: about 31% next year per brokerage estimates he cited

Why December and January matter

Timing, Tsai argued, favors patience now and exposure soon. He cited Bloomberg statistics showing that since 1987, the January Effect — the December-through-January window each year — has delivered the highest probability of gains and the largest advances of any stretch on the calendar.

With the U.S. midterm elections, which he called the biggest variable, now over, year-end institutional window-dressing and the January Effect lie directly ahead.

"Now that most of the bad news has played out, we think there is an opportunity for a rebound," Tsai said.

He framed the year in vivid terms. This year's Taiwan market was a Mercedes — a dark horse. Next year, the baton passes to the "bighorn sheep that excels at climbing," an animal that keeps ascending even at high altitude.

What are the risks?

Tsai did not mince words about the cause of the correction. The Middle East conflict pushed up oil prices, fueling inflation concerns and expectations of higher interest rates. Unless the conflict is fully resolved, oil price volatility remains a live market risk.

He also drew a pointed historical parallel. This year's tech stock rally resembles the 1998-2000 internet tech bubble period, when market valuations climbed to historic extremes. A near-term correction, on that reading, is not surprising.

His prescription for investors: wait for a bottoming signal, prioritize tech giants with strong free cash flow and core names in the AI supply chain, and ride the rebound from year-end into early next year.

Taken together, Tsai's argument is that non-economic negative factors have largely played out, Taiwan's market has returned to a reasonable valuation range, and the combination of year-end window-dressing and the January Effect gives a rebound after a near-term bottom a high probability — with TSMC's climb toward NT$3,200 hinging on whether the 1-to-9 capacity requests of this year translate into the earnings growth of 2028.