Overview: TSMC, LVMH, LRCX, V, and ASML
I thought it would be beneficial to conduct reviews of the companies I cover from time to time. Below is a summary of the most significant news and events from the past six months, as I see it, for the first group of companies. Additionally, I will add charts to compare the current prices with my fair price estimates.
I would like to remind you that the fair value (fair price) is reassessed after quarterly reports. Fair-to-Current Price: 🟢 green - undervalued, 🔵 blue - fairly valued (+/- 5% is “fairly”), 🟡 yellow - overvalued.
🟢 TSMC (TSM)
Next earning report: Jan 16, 2025 (confirmed)
Strong Fourth Quarter Results: TSMC reported fourth-quarter revenue of NT$868.42 billion ($26.36 billion) for Q4 2024, marking a 39% increase compared to the same period last year. This growth was driven by high demand for AI chips.
Investment in Innolux Factory: The company invested 17.14 billion yuan in the Innolux Nanke No. 4 factory to double its advanced packaging capacity in 2025. This strategic acquisition aims to enhance TSMC's capabilities in Chip on Wafer on Substrate (CoWoS) technology, which is crucial for high-performance computing and AI applications.
Expansion of 2nm Plants: TSMC plans to launch its 2nm Plant 1 and Plant 2 in early 2025, with significant advancements in semiconductor technology that promise better performance and energy efficiency. The construction of additional plants for future processes is also underway.
Collaboration with Amkor Technology: TSMC will partner with Amkor Technology to boost production at its Arizona facility, focusing on meeting the needs of major clients like Nvidia, Microsoft, and Amazon as part of its U.S. expansion strategy.
Doubling CoWoS Capacity: TSMC aims to double its CoWoS production capacity to 75,000 wafers per month in 2025 to meet increasing demand from AI chip clients, especially Nvidia, which is expected to consume a significant portion of this capacity.
Sustainability Initiatives: TSMC launched its "Eco Plus!" program aimed at enhancing ecological conservation and sustainability within its operations - commitment to environmental responsibility in semiconductor manufacturing.
Impact of U.S.-China Trade Policies: TSMC faces challenges from U.S. government restrictions on technology exports to China, which could affect its key customer relationships and overall market dynamics in 2025.
🟡 LVMH (EPA: MC)
Next earning report: Jan 24, 2025 (estimated)
Sale of Off-White Brand: LVMH announced the sale of the luxury streetwear brand Off-White to Bluestar Alliance LLC. This brand, founded by Virgil Abloh, was 60% owned by LVMH since 2021. The sale aims to allow Off-White to continue its cultural and creative under new management.
Investment in Db Bags: LVMH's Luxury Ventures Fund made a minority investment in the Norwegian brand Db Bags. The funds will be used to expand Db's presence in the U.S. and Asia, marking LVMH's first investment in Norway and supporting Db's growth and design innovation plans.
10-Year Partnership with Formula 1: LVMH announced a historic 10-year global partnership with Formula 1, set to begin in 2025. This partnership will involve several of LVMH's brands, including Louis Vuitton and Tag Heuer, enhancing the luxury group's visibility in the sports sector.
Launch of the 2025 LVMH Prize: Applications opened for the 2025 edition of the LVMH Prize for Young Fashion Designers. This competition supports emerging designers from around the world, offering significant financial support and mentorship to winners.
Acquisition of Stake in Moncler: LVMH signed an agreement to acquire up to 22% of Double R, which owns a stake in Moncler. This strategic move is part of LVMH's efforts to strengthen its position in the luxury fashion market.
Focus on Sustainability: LVMH continues to emphasize sustainability across its brands, launching initiatives aimed at reducing environmental impact and promoting responsible sourcing within its supply chains.
Expansion Plans: LVMH announced the launch of LVMH Shares, an international employee shareholding plan aimed at 70% of its global workforce. It will be deployed in 11 locations and regions in Europe, North America, and Asia. With its preferential subscription conditions, this plan is an opportunity to involve employees in the Group’s development. It also shows appreciation for their everyday work and commitment.
🟢 Lam Research (LRCX)
Next earning report: Jan 29, 2025 (estimated)
Share Repurchase Program: Lam Research announced a $1 billion share repurchase program - confidence in its financial health and commitment to returning value to shareholders.
Management Changes: At the recent annual meeting, shareholders approved all director nominees and ratified the appointment of Ernst & Young LLP as the independent auditor for fiscal year 2025 - continuity in corporate governance.
Challenges from Key Customers: The company faced concerns following a weak outlook from Micron Technology regarding NAND flash memory demand, which could impact Lam Research's revenue since it is a major supplier of NAND equipment.
Positive Market Outlook: Analysts remain optimistic about Lam Research's growth potential, anticipating a rebound in capital expenditures starting in late 2025 due to increased demand for enterprise solid-state drives.
Increased Focus on AI Demand: Lam Research is focusing on growth opportunities tied to AI and advanced semiconductor technologies, which are expected to drive future revenue growth.
🔵 Visa (V)
Next earning report: Jan 30, 2025 (confirmed)
New Cyber Protection Charge: Visa plans to introduce a new charge for cyber protection services in Europe in 2025. This move aims to enhance security offerings and generate additional revenue streams while addressing growing concerns about online fraud.
Expansion of Value-Added Services: Visa is focusing on expanding its value-added services (VAS) and new flows, which now account for over 30% of its revenue. These services are expected to drive further growth in the coming years.
Partnership with Pismo: Visa is enhancing its capabilities through the Pismo platform, which will improve its fraud detection and risk management services. This partnership aims to strengthen Visa's position in the payments industry by leveraging advanced technology.
Regulatory Challenges: Visa continues to face regulatory concerns that may impact its operations and growth potential.
Strategic Focus on AI and Innovation: Visa is investing in AI to improve transaction processing and customer experiences. This focus on innovation is seen as crucial for maintaining a competitive advantage in the rapidly changing payments industry.
🟢 ASML Holding (ASML)
Next earning report: Jan 29, 2025 (estimated)
Revenue Growth Target for FY25: ASML set a revenue target of €30-35 billion for FY25, increasing from €28 billion in FY24. The company expects a CAGR of approximately 11% through FY30, indicating strong long-term growth prospects. But personally, I have some concerns regarding China:
Securities Class Action Lawsuit: ASML is facing a class action lawsuit related to securities law violations. This legal challenge may impact investor confidence and the company's reputation as it navigates the litigation process.
Increased R&D Spending: ASML's annual R&D spending rose from €1.1 billion in 2014 to approximately €4.7 billion in 2024 - commitment to innovation and maintaining its leadership in semiconductor technology.
Challenges from Geopolitical Tensions: The company has faced challenges due to geopolitical tensions affecting demand for its equipment, particularly in the context of U.S.-China relations and export restrictions on advanced semiconductor technologies.
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