Taiwanese investors skeptical as firm hikes Powerchip Semiconductor target price

Powerchip Semiconductor Manufacturing Corp. (PSMC) is experiencing a stock price decline, causing some investors to sell their shares. However, a state-backed investment firm has issued a "strong buy" rating and significantly increased its target price for the company's stock. The firm's latest report highlights a potential turnaround for PSMC, citing the growing impact of niche memory products and an improving memory market supply-demand structure.

The report predicts that PSMC could become a major beneficiary of the current niche memory market trend. It notes a substantial 114% increase in DDR3 spot prices, far exceeding the rise in DDR4 8Gb prices, indicating a market "squeeze effect." Additionally, DRAM prices are expected to surge by 50% in the third quarter, with SLC NAND prices also continuing their high growth trajectory, boosting the company's profitability. SK Hynix forecasts a widening memory supply-demand gap by 2027, which should help maintain high memory prices.

Based on these positive factors, the investment firm forecasts PSMC's earnings per share (EPS) to reach NT$90.31 next year. They raised the target price from NT$200 to NT$285, an increase of 42.5%. This new target price suggests an upside potential of over 84% compared to the stock's closing price of NT$154.5 on July 24.

However, the optimistic forecast has sparked lively online debate. Many netizens expressed reservations about the investment firm's price target. Some jokingly referred to the company as "Huabengdian" (a pun on its Chinese name, implying it collapses when hyped), with comments like "the more they call for it, the more it collapses." Others suggested that such news signals an opportune time for existing shareholders to sell, and some even questioned the accuracy of the target price, proposing a much lower figure. The general sentiment among online commenters leans towards skepticism, with fears that the positive news might trigger another memory sector downturn.