TSMC Order Cut Rumors: Keep Calm and Ignore the Rumors.

News or rumors of Nvidia, AMD, Broadcom cutting down CoWoS orders at TSMC have been flying around since last week (Taiwan media, some sell-side analysts).

• TSMC guided for AI revenues doubling in 2025. Nvidia’s CEO clarified that CoWoS-S orders are declining because CoWoS-L is increasing. This transition has been known for over 1 year.

• Nvidia’s CEO clarification here: "as we move into Blackwell, we will use largely CoWoS-L. Of course, we're still manufacturing Hopper, and Hopper will use CowoS-S. We will also transition the CoWoS-S capacity to CoWos-L".

• TSMC is converting CoWoS-S to L and adding capacity in Tainan Science Park phase 2 & 3. In 2024, CoWoS-L was ~10% of CoWoS output, increasing to 50-60% in 2025.

• I estimate (calculations below) TSMC’s revenue to increase at 23% Cagr to 2027 or reaching US$169bn in 2027. 70% of revenue growth will be driven by AI. Other HPC chips (CPU, Switch) and Smartphone should contribute ~15% of revenue growth each.

• The stock is trading at 18.6x 2025 and 15.6x 2026 Consensus EPS. This is cheap for the 33% EPS growth in 2025 and 19% in 2026. That’s Consensus. 2026 is too low.