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MarketScreener Homepage  >  Equities  >  Taiwan Stock Exchange  >  Taiwan Semiconductor Manufacturing Company Limited    2330   TW0002330008

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED

(2330)
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End-of-day quote. End-of-day quote Taiwan Stock Exchange - 10/30
432 TWD   -1.14%
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What a Small Chip Fab Really Buys -- Heard on the Street

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05/15/2020 | 03:32pm EDT

By Dan Gallagher

Anyone in the business of making chips knows that little things can make a big difference.

Taiwan Semiconductor Manufacturing, better known as TSMC, currently makes chips with circuitry measuring 5 nanometers thick. That is about twice the diameter of a strand of human DNA, and is the most advanced chipmaking process in production today. It will be put to use in the new fabrication plant the company is now planning to build in Arizona, with the explicit blessing of the U.S. government.

But despite the impressive-sounding specs, the project TSMC announced Friday morning will actually be rather limited in scale and impact. The company says it will spend a total of $12 billion on the project over an eight-year period starting next year; TSMC's capital expenditures this year alone are expected to top $15 billion. And by the time the plant is fully up and running in 2024, 5 nanometers won't even count as top of the line anymore. TSMC disclosed on its earnings call last month that its 3-nanometer process is expected to be in volume production by the second half of 2022.

Nor will the project do much for the U.S. government's widely touted efforts to bring more of the high-tech supply chain onshore. TSMC says the Arizona facility will produce about 20,000 silicon wafers a month. That is just one-fifth the size of its largest fabs currently running in Taiwan and wouldn't even be close to meeting the needs of the company's largest U.S. customers. Mark Li of Bernstein estimates that Apple alone requires 60,000 to 100,000 wafers a month. He also says that TSMC's history with other fabs built outside of its home base in Taiwan suggest the Arizona facility will be a "margin drag" unless government incentives or higher prices can make up the difference.

What the new facility does buy TSMC is a better seat at the table. Chipmaking has become a high-profile weapon in the trade war between the U.S. and China. That point was driven home Friday morning when the Commerce Department released new rules that add further restrictions to chip products sold to Huawei and its subsidiaries. The rule would appear to sharply limit TSMC's ability to supply chips to Huawei, since they are mostly made with equipment from U.S. companies such as Applied Materials, KLA and Lam Research. Those three stocks averaged a drop of 5% Friday morning.

TSMC's U.S.-listed shares fell Friday as well, though it is highly likely the company's Arizona project will help shield it from some of the fallout. Citi's Atif Malik wrote to clients that the timing of the two announcements was likely "strategic and part of a compromise" that would allow TSMC to keep producing some chips for Huawei while also being subject to the new regulations. Pierre Ferragu of New Street Research believes the new export controls are a way to give the Trump administration more negotiating leverage to limit Huawei's "commercial ambitions" as opposed to killing the Chinese tech giant outright.

Chipmakers might just be pawns in a geopolitical game, but TSMC's latest move could keep it from being a sacrificed one. A little fab can go a long way.

Write to Dan Gallagher at dan.gallagher@wsj.com

 


Stocks mentioned in the article
ChangeLast1st jan.
AMP LIMITED 19.53% 1.53 End-of-day quote.-20.10%
APPLE INC. -5.60% 108.86 Delayed Quote.48.29%
APPLIED MATERIALS, INC. -0.45% 59.23 Delayed Quote.-2.97%
BASE CO., LTD. -2.14% 5950 End-of-day quote.120.10%
BASE,INC. -5.94% 11240 End-of-day quote.540.46%
BYD COMPANY LIMITED -1.60% 154.1 End-of-day quote.296.65%
KLA CORPORATION -2.36% 197.18 Delayed Quote.13.35%
LAM RESEARCH CORPORATION -3.16% 342.08 Delayed Quote.16.99%
TAIWAN SEMICONDUCTOR CO., LTD. -5.07% 44.9 End-of-day quote.-16.23%
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED -1.14% 432 End-of-day quote.30.51%
THE NEW HOME COMPANY INC. -5.93% 5.08 Delayed Quote.9.01%
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Financials
Sales 2020 1 342 B 46 935 M 46 935 M
Net income 2020 512 B 17 920 M 17 920 M
Net cash 2020 405 B 14 165 M 14 165 M
P/E ratio 2020 21,9x
Yield 2020 2,48%
Capitalization 11 202 B 392 B 392 B
EV / Sales 2020 8,05x
EV / Sales 2021 7,23x
Nbr of Employees 48 752
Free-Float 93,6%
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Technical analysis trends TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED
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TrendsNeutralBullishBullish
Income Statement Evolution
Consensus
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Mean consensus OUTPERFORM
Number of Analysts 27
Average target price 521,69 TWD
Last Close Price 432,00 TWD
Spread / Highest target 62,0%
Spread / Average Target 20,8%
Spread / Lowest Target -12,0%
EPS Revisions
Managers
NameTitle
Che Chia Wei Vice Chairman & Chief Executive Officer
Te Yin Liu Chairman
J. K. Wang Senior Vice President-Operations
Jen Chao Huang Chief Financial Officer
Renzhao Huang Chief Financial Officer
Sector and Competitors
1st jan.Capitalization (M$)
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED30.51%395 697
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INTEL CORPORATION-26.02%180 763
BROADCOM INC.10.64%143 602
QUALCOMM INCORPORATED39.82%142 658
TEXAS INSTRUMENTS12.71%134 194