TSMC stock: TSMC challenges chip sector weakness

TSMC The world’s largest contract chipmaker (TSM) beat Wall Street’s third-quarter target on Thursday and guided higher for the current period. The news came as other chipmakers warned of weakening demand. TSM stock rose in early trade.


TSMC reported $1.79 per share on sales of $20.23 billion in the September quarter. Meanwhile, analysts polled by FactSet expected TSMC to report earnings of $1.65 a share on sales of $19.44 billion. Compared with the same period last year, TSMC’s earnings rose 67%, while sales rose 36%.

For the quarter, TSMC forecast sales of $19.9 billion to $20.7 billion. The midpoint of $20.3 billion was above analysts’ consensus estimate of $19.84 billion. In the same period last year, it had sales of $15.85 billion. Additionally, its guidance implied a 28% increase in sales in the fourth quarter.

TSMC makes chips for fabless semiconductor companies such as AMD (AMD), apple (AAPL), Nvidia (Nvidia), Qualcomm (QCOM) et al.

TSM stock gains on quarterly report

In premarket trading today, TSM shares were up 2.8% at 65.88.

“Our third-quarter business was supported by strong demand for our industry-leading 5-nanometer technology,” Chief Financial Officer Wendell Huang said in a news release.

He added: “Going into the fourth quarter of 2022, we expect our business to be flat as end-market demand weakens and ongoing inventory adjustments from customers are balanced by continued ramp-up of our industry-leading 5-nanometer technology.”

The width of circuits on a chip is measured in nanometers, or billionths of a meter.

In the third quarter, 5nm chip shipments accounted for 28% of TSMC’s total wafer revenue, and 7nm chips accounted for 26%. TSMC defines 7nm and smaller nodes as advanced technology.

TSMC is called “the last man”

AMD, Nvidia and other chipmakers have lowered their sales and earnings targets in recent weeks.

“Given the current industry backdrop, TSMC’s strong third-quarter 2022 results could earn it the ‘last man’ moniker,” Josep Bori, head of thematic research at GlobalData, said in a note to clients. “From the profit warnings from Intel and Nvidia, to the recent negative outlooks from Samsung, AMD, Kioxia and Micron, it’s clear that semiconductor demand is losing steam. However, TSMC managed to deliver growth and offered a higher-than-market outlook. “

TSM stock is No. 1. According to the IBD Stock Checkup, 15 of the 33 stocks in the IBD semiconductor manufacturing group are listed. In addition, it has an IBD composite score of 62 out of 99.

But Wedbush Securities analyst Matt Bryson reiterated his outperform or buy rating on TSM stock.

“While TSMC is clearly not immune to macro impacts, we continue to think the company is better positioned to address any issues, as continued share gains are largely tied to the company’s leadership in advanced nodes,” Bryson said in a statement. Report to him said the client.

Follow Patrick Seitz on Twitter @IBD_PSeitz More coverage on consumer technology, software and semiconductor stocks.

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