TSMC: USD 6.6 Billion in Chips Act Grant Is a Slight Positive

We retain our fair value estimate of TWD 950 per share (USD 151 per ADR) for Taiwan Semiconductor Manufacturing after the firm received preliminary approval for up to USD 6.6 billion in grants and USD 5 billion in loans under the Chips Act. We intend to finalize our forecasts after TSMC’s earnings call on April 18, during which management will likely provide more information on the grant. Regardless of the Chips Act funds, TSMC is undervalued as the firm’s dominant position in cutting-edge chips is sometimes overshadowed by geopolitical risks, which is partially addressed in this grant.