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Guilfoyle on the Biggest Threat to Taiwan Semiconductor

Chip foundry makes Taiwan an even bigger target for Beijing's aggressive moves.

Ahead of Taiwan Semiconductor’s earnings report earlier this week, Real Money’s Stephen “Sarge” Guilfoyle discussed the stock, calling it a long-term investment.

“I am long this name, and I am up but not because the stock has been great,” Guilfoyle wrote recently on Real Money ahead of the company’s latest results. “I am up because I am a sentient being, and the shares have bounced off of the SAE support level all year long. That said, Taiwan Semi is performing. The biggest threat is geopolitical in nature.”

That threat has become more bellicose in recent weeks. "As Beijing (mainland China) watches its economy grind to an awful slowdown, led by a still to be determined how deep collapse in debt riddled real estate markets ... one tactic taken up my the mainland has been to regularly harass the independently governed isle of Formosa (Taiwan) militarily." Guilfoyle wrote. "How Important is Taiwan? On it's own, very important. As home to Taiwan Semiconductor? Invaluable."

The pandemic has caused a massive and prolonged shortage of semiconductor chips. The supply chain bottleneck is not improving as demand for some products has risen. The average lead times have lengthened for a ninth consecutive month to a whopping 21.7 weeks in September, according to data from Susquehanna Financial Group.

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On Thursday, Taiwan Semiconductor reported a nearly 14% rise in profit to NT$156.3 billion ($5.56 billion) in the July to September quarter. TSMC's revenue for the quarter climbed 22.6% to $14.8 billion, within the company's prior estimated range of $14.6 billion to $14.9 billion.

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