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Taiwan Semiconductor Stock Higher After 3rd-Quarter Profit Beat

Taiwan Semiconductor shares rose on Thursday after the world’s biggest chipmaker posted stronger-than-expected third-quarter earnings.
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Taiwan Semiconductor (TSMC)  stock rose on Thursday after the world’s biggest chipmaker posted third-quarter profit ahead of estimates.

Profit climbed 14% to NT$156.3 billion (US$5.57 billion), topping the consensus analyst estimate of NT$149.4 billion (US$5.32 billion) compiled by S&P Global Market Intelligence.

Revenue jumped 16% from a year earlier to $414.67 billion new Taiwan dollars (US$14.8 billion).

TSMC American depositary receipts ended up $2.58, or 2.35%, at $112.56.  They eased 11% in the past month amid the chaos of the global chip shortage.

Last month, Goldman Sachs chose the company as one its top six Chinese semiconductor players.

TSMC will likely gain 80% market share in the three-nanometer-processor market by 2023, Goldman analysts said in a report cited by CNBC. 

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That will offer the company “dominant pricing power,” they said, giving it the potential to soar 66% beyond Goldman’s price target.

Morningstar analyst Phelix Lee puts fair value for TSMC at $133.

“TSMC affirms auto-related [chip] shortages should ease in third-quarter 2021, but it doesn't change our view that broader semiconductor supply … will remain tight in 2022,” he wrote in July.

“TSMC remains an attractive buy for being the main long-term beneficiary of increasingly intricate semiconductors and computing systems.

“We think once TSMC shows it can maintain gross margins above 50% after equipment in new capacity begins to incur depreciation, … the stock would converge with our fair value.”

Lee assigns TSMC a wide moat based on its “cost advantage and intangible assets, which are realized from its leading position in process technology.”