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TSM Stock: Why You Should Still Go Long On Taiwan Semiconductor

The article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology – Senior Analyst at I Know First.

The new sanctions against Huawei means Taiwan Semiconductor was forced to stopped taking new foundry orders from it.
This is a near-term headwind. Huawei is the no. 2 largest foundry customer of Taiwan Semiconductor. Huawei accounts for 15% to 20% of Taiwan Semiconductor’s revenue.
TSM is still a buy because other Chinese phone vendors like Xiaomi, Oppo, and Lenovo can eventually make up for the lost business from Huawei.
• TSM also touts lower valuation ratios than its foundry customers Advanced Micro Devices and Nvidia. This is just wrong because TSM operates on a higher net income margin.
Taiwan Semiconductor boasts an excellent balance sheet. Its total cash is $18.86 billion while its total debt is only $7.3 billion.

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The article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology – Senior Analyst at I Know First.

Taiwan Semiconductor Manufacturing Company’s stock has a 1-year price return of more than 38%.
I’m still endorsing TSM as a buy. The recent out of court settlement with GlobalFoundries insured that chip foundry customers of Taiwan Semiconductor have nothing to worry about.
Smartphone sales are peaking but stronger PC shipments is a tailwind for Taiwan Semiconductor.
The absence of competition from GlobalFoundries is a tailwind for TSM.
Next year’s rollout of 5-nm process will increase TSM’s chip manufacturing lead over Intel and Samsung.

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The article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology – Senior Analyst at I Know First.

Taiwan Semiconductor Manufacturing Company’s stock is down -22.78% from its 52-week high. TSM has upside potential from its big lead in semiconductor production process nodes.
The protracted delay of Intel’s 10-nanometer and 7-nanometer process nodes is a tailwind for TSMC.
TSMC is currently 7-nanometer node process foundry. It can command a higher contract price on any firm who wants to sell 7-nm processors.
TSMC has a small tailwind from IBM’s 7-nm datacenter chip. If this deal goes well, other ARM-based server builders might also hire TSMC as their exclusive foundry partner.
Intel’s difficulty in upgrading its factories to build 10-nm x86 processors could inspire AMD to request TSMC TO fast-track production of its 7-nm Ryzen processors with TSMC.