GEMS FIRST TO MARKET

Research evidence excerpt

GEMS FIRST TO MARKET

Global Equity Research AC Global Equity Research

07 July 2026 J P M O R G A N

gr_publications@jpmorgan.com

Ahead of TSMC’s 2Q26 earnings conference, we are raising our FY26/27/28E EPS estimates by 5%/10%/16% and raising our

Jun-27 PT to NT$3100 (20x 12m forward earnings), to reflect stronger near-term profitability, better visibility on AI demand,

stronger capacity build and firmer pricing into 2028. TSMC’s stock has lagged the TWSE index by 8% in the last three months

due to (1) increased concerns on market share losses in leading edge, (2) concerns on TSMC being too conservative on

capacity expansion, and (3) more attractive price increase narratives in higher beta parts of the supply chain such as tier-2

foundries, wafers, MLCC etc. On the upcoming earnings conference call, we expect TSMC to push back strongly against

market share loss and show clear intent to expand capacity meaningfully in 2027-29. In addition, near-term GMs are also likely

to remain strong, nudging 70% levels. We also expect broader price hikes in 2027, given the widening supply-demand gap, and

a stronger Datacenter AI CAGR (we now estimate 69% CAGR from 2024-29E, including higher accelerator estimates and

sharply increased AI CPU numbers). The stock is likely to continue to move up, along with EPS upgrades, but do not expect it

to significantly outperform the broader Asian semis at this point in the semi cycle.

Asia Power Equipment (Stephen Tsui, CFA), South Korea, India

Addressing investors’ concerns on pricing, policies, over-capacity and delay in transmission build-

out

We have observed rising investor skepticism regarding the upcycle for Asian power equipment companies. In this note, we

summarize investors’ key questions and our responses.