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Analysis of Taiwan Semiconductor Manufacturing (TSM)
19 Jun 2022 (32 views)  

TSM is the leading manufacturer of advanced chips in the world. It benefited from the sanctions imposed by America on China chip companies, which are their competitors. The manufacturers who need the advanced chips have to buy them from TSM and Samsung. 

(TSM) is the largest manufacturer of semiconductor chips. While Intel earns more revenue, TSM makes around 90% of advanced chips produced globally. TSM also controls more than half of the global semiconductor foundry market, by revenue.

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The high for TSM was $140.6 in January 2022. It has since dropped by 40% to the current price of $85 on 17 June 2022.

The  PE ratio (TTM) is 19.86 and the dividend yield is 2.29%. These are acceptable, but not great. The forward PE ratio is 16.03, which suggest that the profit for the current financial year will see a 15% to 20% increase. 

However, I am reluctant to invest in TSM for three reasons:

a) Being located in Taiwan, there is political risk in the event of conflict with China.
b) It is highly dependent on one large customer - Apple.
c) It has recently invested in a large factory in America. This will reduce their margins due to high operating cost and lack of talents. 

SMIC in China have similar financial fundamentals and appear to be a better bet.

I have a large investment in SMIC but no investment in TSM.

Note - I am giving a personal opinon. This is not "investment advice".

Tan Kin Lian
 

 


Analysis of Taiwan Semiconductor Manufacturing (TSM)
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TSM is the leading manufacturer of advanced chips in the world. It benefited from the sanctions imposed by America on China chip companies, which are their competitors. The manufacturers who need the advanced chips have to buy them from TSM and Samsung. 

(TSM) is the largest manufacturer of semiconductor chips. While Intel earns more revenue, TSM makes around 90% of advanced chips produced globally. TSM also controls more than half of the global semiconductor foundry market, by revenue.

Link

The high for TSM was $140.6 in January 2022. It has since dropped by 40% to the current price of $85 on 17 June 2022.

The  PE ratio (TTM) is 19.86 and the dividend yield is 2.29%. These are acceptable, but not great. The forward PE ratio is 16.03, which suggest that the profit for the current financial year will see a 15% to 20% increase. 

However, I am reluctant to invest in TSM for three reasons:

a) Being located in Taiwan, there is political risk in the event of conflict with China.
b) It is highly dependent on one large customer - Apple.
c) It has recently invested in a large factory in America. This will reduce their margins due to high operating cost and lack of talents. 

SMIC in China have similar financial fundamentals and appear to be a better bet.

I have a large investment in SMIC but no investment in TSM.

Note - I am giving a personal opinon. This is not "investment advice".

Tan Kin Lian