Morgan Stanley devalued Global Foundries to Equal Weight from Overweight, mentioning anticipated wafer charges stress from rivals like TSMC and Chinese factories.
The Wall Street titan highlighted issues relating to the likelihood for an extra on the market, notably as China stays to broaden its manufacturing capacities.
GFS shares dropped 1% in premarket buying and selling Monday.
Morgan Stanley consultants indicated a lower in utilization costs for Vanguard within the 4th quarter of 2024, because the agency sheds market share to Chinese rivals. Moreover, TSMC is anticipated to diminished charges for totally grown node wafers (over 7nm) by 2-3% in 2025 to alleviate antitrust threats and stabilize its price stroll in groundbreaking innovation.
Consequently, fee 2 factories would possibly decrease charges by 4-5% to protect their market settings.
For circumstances, if TSMC’s 28nm wafer is valued at $3,000 in 2024, it’s forecasted to be as much as $2,900 in 2025. In distinction, China’s factories like SMIC have truly presently minimized their 28nm wafer charges to the $2,200-2,300 array, which recommends that UMC and Global Foundries would possibly lower their charges from the prevailing $2,800 to round $2,500-2,600 in 2025.
Accordingly, Morgan Stanley has truly modified its expectation for Global Foundries, retaining a positive sight of the agency “but with slower end market recovery and competitive overhang, there is a lack of catalysts near term,” consultants led by Charlie Chan claimed.
They have truly reduce their 2025 quotes, considering a slower therapeutic within the cellular/Connected Devices markets and much more safe versus rushing up growth within the auto subject, with additional threats rising from wafer charges opponents.
Analysts have truly likewise diminished their GFS price goal to $43 from $53.
Moreover, they’ve truly diminished their UMC rating to Equal Weight on account of the margin drawback in 2025 and minimized their price goal to NT$ 52 from NT$ 60.
“We are not Underweight UMC given its 12nm is progressing well at Intel’s fab, and is likely to start mass production in late 2026,” consultants saved in thoughts.
Meanwhile, Chan and his group said an Underweight rating on Vanguard, SMIC, and PSMC and an Overweight rating on TSMC.
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