TSM Stock: Taiwan Semiconductor defies weakness in chip sector

Semiconductor manufacturing in Taiwan (TSM), the world’s largest contract chipmaker, beat Wall Street’s third-quarter targets on Thursday and edged higher for the current period. The news comes amid warnings from other chipmakers about weakening demand. TSM stock rose after the report.


Taiwan Semi, better known as TSMC, earned $1.79 per US share on sales of $20.23 billion in the September quarter. Meanwhile, analysts polled by FactSet expected TSMC to earn $1.65 a share on sales of $19.44 billion. Year-over-year, TSMC’s profits jumped 67%, while sales rose 36%.

For the current quarter, TSMC forecasts sales of $19.9 billion to $20.7 billion. The midpoint of $20.3 billion beats analysts’ consensus estimate of $19.84 billion. A year ago, it generated sales of $15.85 billion. Its forecast implies sales growth of 28% in the fourth quarter.

Taiwan Semiconductor produces chips for fabless semiconductor companies such as AMD (AMD), Apple (AAPL), Nvidia (NVDA), Qualcomm (QCOM) and others.

TSM stock rises in quarterly report

Trading today, TSM stock rose 3.9% to close at 66.62.

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

He added: “Looking to the fourth quarter of 2022, we expect our business to be flat as end-market demand weakens, and the continued adjustment of customer inventory is balanced by the ramp-up. continued power of our industry-leading 5-nanometer technologies.”

Circuit widths on chips are measured in nanometers, or one billionth of a meter.

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

TSMC called ‘last man standing’

In recent weeks, AMD, Nvidia and other chipmakers have lowered their sales and profit targets.

“TSMC’s strong Q3 2022 results could earn it the moniker ‘last man standing’ given the current industry backdrop,” said Josep Bori, director of thematic research at GlobalData, in a note to clients. “From Intel and Nvidia’s earnings warnings to more recent negative outlooks from Samsung, AMD, Kioxia and Micron, it’s clear that demand for semiconductors is losing momentum. growth and provide prospects that exceed market expectations.”

TSM stock ranks 15th out of 33 stocks in IBD’s semiconductor manufacturing industry group, according to IBD Stock Checkup. Additionally, it has a mediocre IBD composite rating of 62 out of 99.

But Wedbush Securities analyst Matt Bryson reiterated his outperform, or buy, rating on TSM stock.

“While TSMC is clearly not immune to macro effects, we continue to believe the company is better positioned to address any issues in light of continued market share gains largely driven by the company’s leadership. ‘business on advanced nodes,’ Bryson said in his note to clients.

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


Labor shortage prompts warehouse automation

Semiconductor stocks seek bottom as market deteriorates

Microsoft could be the “next shoe to drop” in the face of a weakening PC market

See stocks on the leader list near a buy point

MarketSmith: research, charts, data and coaching in one place

Add Comment