October 22, 2021

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7 Reasons Why Taiwan Semi (TSM) Is Taking Flight


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This story originally appeared on Zacks

Taiwan Semi TSM, the world’s largest 3rd party chip manufacturer, just notched another record quarter. TSMC’s best-in-class fabricating capabilities shined through the global chip shortage to meet the seemingly boundless demand in the space.

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The technology market’s reliance on TSMC has provided it with exceptional pricing power and significant growth in its advanced chip segments (5nm and 7nm), which now make up the majority of its topline and continue to fuel margin expansion.

The iPhone’s AAPL recently renewed 5G supercycle from its latest iPhone 13 release was a sizable tailwind for Taiwan Semi this past quarter. High-performance computing chips have also been a significant growth driver since the pandemic began as hyperscaling datacenters meet demand from rapidly digitalizing nascent spaces like cloud computing, artificial intelligence, the internet of things (IoT), and so much more.

The company raised its guidance for fiscal 2021 as chip fabricating demand proves to be perpetual. This large-scale chip manufacturer is only getting bigger, with its newly announced Japan plant, which would begin scale production in 2024 around the same time as its Arizona factory.

Taiwan Semi is positioned to continue taking market share in this chip fabrication space, with unmatchable manufacturing abilities that are constantly advancing. Management also stated that chip supply will be tight for the next few quarters but should ease as we enter the back half of 2022. Any way you look at this, TSM is a winner.

TSM shares rallied 2.35% in the session and provided bullish fuel to the entire semiconductor space, which had been under some pressure in recent weeks.

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