Morgan Stanley devalued Global Foundries to Equal Weight from Overweight, pointing out expected wafer rates stress from rivals like TSMC and Chinese factories.
The Wall Street titan highlighted problems regarding the possibility for an excess out there, particularly as China remains to broaden its production capacities.
GFS shares dropped 1% in premarket trading Monday.
Morgan Stanley experts indicated a decrease in usage prices for Vanguard in the 4th quarter of 2024, as the firm sheds market share to Chinese rivals. Moreover, TSMC is anticipated to reduced rates for fully grown node wafers (over 7nm) by 2-3% in 2025 to alleviate antitrust threats and stabilize its cost walk in groundbreaking innovation.
Consequently, rate 2 factories might lower rates by 4-5% to preserve their market settings.
For circumstances, if TSMC’s 28nm wafer is valued at $3,000 in 2024, it is forecasted to be up to $2,900 in 2025. In contrast, China’s factories like SMIC have actually currently minimized their 28nm wafer rates to the $2,200-2,300 array, which recommends that UMC and Global Foundries might decrease their rates from the existing $2,800 to around $2,500-2,600 in 2025.
Accordingly, Morgan Stanley has actually modified its expectation for Global Foundries, keeping a favorable sight of the firm “but with slower end market recovery and competitive overhang, there is a lack of catalysts near term,” experts led by Charlie Chan claimed.
They have actually cut their 2025 quotes, taking into consideration a slower healing in the mobile/IoT markets and even more secure as opposed to speeding up development in the auto field, with extra threats emerging from wafer rates competitors.
Analysts have actually likewise reduced their GFS cost target to $43 from $53.
Moreover, they have actually reduced their UMC ranking to Equal Weight as a result of the margin disadvantage in 2025 and minimized their cost target to NT$ 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,” experts kept in mind.
Meanwhile, Chan and his group stated an Underweight ranking on Vanguard, SMIC, and PSMC and an Overweight ranking on TSMC.
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