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TSMC Too High to Buy: Here's Semi Stock Cramer Would Buy

Following a surge in Taiwan Semi at Intel's expense, Jim Cramer looks at the chip stocks and the name he would buy here.

Taiwan Semiconductor soared as much as 10% on the Taiwan stock exchange on speculation it could be a large part of Intel's "contingency plans." 

During its second quarter earnings call, Intel said it faces delays on the manufacture of the chips, citing an issue in the manufacturing process. Intel plunged as much as 16% when the stock opened for trading Friday after its earnings report.

Intel has traditionally built its chips in-house, but CEO Bob Swan hinted that a necessary change could be in store. 

“To the extent that we need to use somebody else’s process technology and we call those contingency plans, we will be prepared to do that….That gives us much more optionality and flexibility. So in the event there is a process slip, we can try something rather than make it all ourselves,” Swan told analysts during the earnings call.

While TSMC wasn’t named, many analysts on Wall Street see TSMC as a likely candidate due to its status as a foundry. The company makes chips designed by other technology firms. Apple is among TSMC’s current clients. 

While Jim Cramer thinks TSMC is "up too much" to buy at this level, he does see the move in chip stocks as an opportunity to buy Broadcom. Find out why in the video above. 

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