Bank of America reaffirmed a Buy recommendation on Taiwan Semiconductor Manufacturing Co. following the company's technology symposium in Taiwan, maintaining a price objective of 2,560 Taiwan dollars.
In a research note, analyst Haas Liu said the firm believes "recent concerns are overdone," citing TSMC's expanding scale and continued technological advantage at leading-edge process nodes as widening the gap with competitors.
Capacity plans at advanced process nodes
BofA pointed to TSMC's capacity targets on 3nm and 5nm, where the foundry is aiming for 25% compound annual growth in capacity from 2022 through 2027. The bank's note details that TSMC expects 3nm capacity to reach 190,000 wafers per month by the fourth quarter of 2026 and to increase further to 230,000 wafers per month by 2027.
The research note contrasted those figures with Samsung's SF3 and Intel's 18A process plans, which BofA estimates will amount to roughly 20,000 to 25,000 wafers per month at low yields and primarily for internal use. That differential, the bank argues, substantially reduces the likelihood that Apple will move its M-series chip production away from TSMC.
Next-generation N2 ramp and technology transfer
Looking beyond 3nm, BofA highlighted TSMC's N2 road map, where the foundry is targeting a 70% compound annual capacity growth rate from 2026 to 2028. The company plans a near-simultaneous rollout of five fabrication facilities and aims to accelerate technology transfer times by 20%.
The note adds that N2 achieved its targeted defect density levels two quarters earlier than the timetable set during the 3nm ramp, an indicator BofA views as supportive of TSMC's execution profile.
Advanced packaging and yield differentials
On the packaging front, TSMC is expanding CoWoS and SoIC capacity aggressively, targeting 80% and 90% compound annual growth rates, respectively, through 2027. BofA emphasized that TSMC's CoWoS yield is already above 98%.
By contrast, the bank noted that Intel's competing EMIB-T approach remains at pilot yields in the 80% to 85% range. BofA warned that this yield gap creates execution risk for Intel if it cannot achieve a 95% mass-production yield by mid-2027.
Implications for customers and competitors
Taken together, BofA's assessment rests on TSMC's planned capacity expansion, faster-than-expected defect reductions at new nodes, and high packaging yields as concrete advantages shaping competitive dynamics. The bank's maintained price target and Buy rating reflect its view that these operational metrics blunt near-term competitive concerns.
Note: This article summarizes the conclusions contained in Bank of America's research note and the capacity and yield projections cited therein.