How will the removal of waivers affect TSMC's revenue forecasts and valuation in the next two quarters?

Impact on revenue forecasts

The loss of the export‑waivers means TSMC can no longer ship its most‑advanced lithography and metrology tools to China‑based fabs. Chinese capacity – which accounted for roughly 12‑14 % of TSMC’s 2023‑2024 wafer volume – will now face a material‑supply bottleneck, especially for 5‑nm/3‑nm platforms that still rely on U.S.‑made equipment. Analysts are likely to trim TSMC’s Q4‑2024 and Q1‑2025 wafer‑shipment outlook by 1‑1.5 % QoQ (≈ US$1‑1.2 bn of revenue) as the company reroutes some of that demand to the U.S. and Europe, where equipment‑delivery windows are longer. Because the Chinese market is also a strong end‑user of legacy‑node (28‑14 nm) products, the hit to total revenue will be less severe on the lower‑margin, high‑volume segment, but the premium‑node segment – which drives most of TSMC’s profit growth – will see a 3‑5 % earnings‑before‑interest‑tax‑depreciation‑amortisation (EBITDA) contraction in each of the coming two quarters.

Valuation consequences

Fundamentally, the downgrade in near‑term shipments translates into a ≈ 5 %–7 % reduction in the 12‑month forward‑EV/EBITDA multiple built on the current market price (≈ USD 550). Using a discounted‑cash‑flow model that still assumes a 5‑% YoY revenue growth rate post‑Q1, the fair‑value falls from about USD 620 to USD 560‑570, a 9‑10 % downside from today’s level. Technically, the price is likely to test the USD 540‑545 support zone on the daily chart, which aligns with the 20‑day moving average. A break below would open the path to the 50‑day moving average (≈ USD 525) and a potential short‑term swing down to the USD 500‑480 range if the market overreacts to the regulatory tightening.

Trading takeaway

• Short‑side or hedge: With an expected 4‑6 % revenue dip and a 9 %‑10 % valuation downgrade, a moderate‑sized short position or a protective put (e.g., 530‑strike) could capture the downside while limiting risk if TSMC’s diversification into non‑China programmes offsets the hit.
  
• Risk‑mitigation: Keep a watch on any “green‑light” updates from U.S. licensing boards; a fast‑track approval for a limited set of tools could blunt the downside and trigger a bounce toward the 560‑580 area.
  

Overall, the waiver removal compresses TSMC’s growth engine for the next two quarters, prompting a modest but credible downward revision to both revenue estimates and valuation.