Analysts at Morgan Stanley predict that Taiwan Semiconductor Manufacturing Company (TSM, Financial) could continue achieving a compound annual growth rate (CAGR) of 15%-20% in revenue over the next five years. This growth is primarily driven by the rising demand for artificial intelligence (AI) chips and outsourcing by integrated device manufacturers.
The analysts expect TSMC's gross margin to increase slightly from 55% in the third quarter to 55.5% in the fourth quarter, spurred by robust demand for AI chips and increased production of Apple's 3-nanometer chips.
Following a successful wafer price adjustment, TSMC is anticipated to maintain a gross margin of around 55% from 2025 onwards, with the new pricing taking effect next year. Given the forecasted price increases of at least 10% for AI chips, 6% for other high-performance computing chips, and 3% for smartphone chips, the average price increase for 2025 is expected to be 4%-5%, resulting in a 2-3 percentage point rise in gross margin.
