TSM Stock: Taiwan’s semiconductor chip sector defies weakness

Taiwan Semiconductor Manufacturing ( TSM ), the world’s largest contract chipmaker, beat Wall Street targets for the third quarter on Thursday and led to an all-time high. The news comes amid warnings from other chipmakers about weakening demand. TSM stock rose in early trading.


Taiwan Semiconductor, known as TSMC, earned $1.79 per share on sales of $20.23 billion in the September quarter. Meanwhile, analysts polled by FactSet expected TSMC to post earnings of $1.65 on sales of $19.44 billion. Year-over-year, TSMC’s revenue increased 67 percent, while sales grew 36 percent.

For the current quarter, TSMC forecasts sales of $19.9 billion to $20.7 billion. Top analysts consensus estimate of $20.3 billion is $19.84 billion. It generated $15.85 billion in sales last year. Additionally, the guidance indicates a 28 percent fourth-quarter sales growth.

Taiwan manufactures semiconductor chips for fabless semiconductor companies. AMD (AMD), Apple (APL) Nivea (NVDA), Qualcomm (QCOM) and others.

TSM’s stock increases every quarter

In premarket trading today on the stock market, TSM stock rose 2.8% to 65.88.

“Our third quarter business was supported by strong demand for our industry-leading 5-nanometer technologies,” Chief Financial Officer Wendell Huang said in a news release.

“Moving into the fourth quarter of 2022, we expect our business to be flat as our customers’ inventory demand weakens due to the continued advancement of our industry-leading 5-nanometer technologies,” he added.

Circuit widths on chips are measured in nanometers, which are one-billionths of a meter.

In the third quarter, shipments of 5-nanometer chips accounted for 28% of TSMC’s total wafer revenue, while 7-nanometer chips accounted for 26%. TSMC describes 7 nanometer and smaller nodes as advanced technologies.

TSMC is called ‘the last man standing’

In recent weeks, AMD, Nvidia and other chip makers have lowered their sales and revenue targets.

“TSMC’s strong Q3 2022 results could earn it the ‘last man standing’ moniker against the current sector backdrop,” said Josep Bori, director of thematic research at GlobalData, in a note to clients. “From Intel and Nvidia’s profit warnings to recent negative outlooks from Samsung, AMD, Kyoxia and Micron, it’s clear that semiconductor demand is slowing. However, TSMC managed to deliver growth and deliver an outlook that exceeded market expectations.”

TSM stock ranks 15th out of 33 stocks in the IBD Semiconductor Manufacturing industry group, according to IBD’s Stock Check. Additionally, the median IBD composite rating is 62 out of 99.

But Wedbush Securities analyst Matt Bryson reiterated his Outperform or Buy rating on TSM stock.

“While TSMC is not immune to macro influences, we continue to see the company outperforming on all fronts with continued stock gains that are highly correlated with the company’s leadership on advanced nodes,” Bryson said in the note. Customers.

Follow Patrick Seitz on Twitter @IBD_PSeitz For more stories on consumer technology, software and semiconductor stocks.

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