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Notwithstanding fears of a global recession, demand for microprocessors is likely to exceed supply in the coming years. According to New York-based management consulting firm AlixPartners, the semiconductor shortage that erupted with the 2020 crown pandemic will continue to slow production in 2024. So far, major car suppliers and car makers expect the huge supply problems to ease over the course of this year and end in 2023.
Unlike many other market watchers, we assume that the chip shortage will continue to dominate in 2024. (Fabian Piontek, consultant at AlixPartners)
On the other hand, the lack of chips, which is likely to remain a major problem in many sectors such as automotive, mechanical engineering and electronics in the foreseeable future, is driving high prices and correspondingly flourishing business for large-chip manufacturers.
A leap in sales and profits at TSMC
One of the biggest beneficiaries of the high demand for chips is Taiwan Semiconductor Manufacturing Company, or TSMC for short (WKN: 909800 / ISIN: US8740391003), as shown by the latest business data. In the second quarter of 2022, annual sales increased by almost 44%. to 534 billion Taiwanese dollars (17.9 billion dollars).
The gross margin was 59.1%, the highest level in 26 years. The result was a profit of 237 billion Taiwanese dollars, an increase of more than three-quarters compared to the previous year. As a result, analysts’ estimates of margin and profit were clearly overestimated.
The world’s leading chipmaker, with Apple as its top customers, expects revenues to continue to grow despite global economic concerns. According to the company’s forecast, in 2022 sales should increase by about 35 percent. The previous forecast assumed an increase of about 30 percent.
Revenues of $ 19.8 billion to $ 20.6 billion are earmarked for the current third quarter. The analysts’ consensus forecast so far was US $ 18.5bn.
Industry pundits see this rise in the forecast as a sign that global demand for chips will remain higher than many previously feared due to supply chain problems and economic concerns.
2023 will continue to be a year of growth. (CC Wei, CEO of TSMC)
Supply chain problems slow down the development of production
TSMC is regarded as the world’s leading contract manufacturer of chips and wafers, base boards for electronic semiconductors. The largest company in Asia expects investments to be postponed to next year due to supply chain problems and the current uncertainty. According to their own statements, investments are likely to be at the lower end of the $ 40bn to $ 44bn target. TSMC and competitors such as Samsung, Globalfoundries and the US chipmaker Intel are currently pushing for additional capacity expansion.
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On the stock exchange, TSMC’s share price more than tripled between March 2020 and January 2022, setting a new record of EUR 126.80. Then prices dropped to 72 euros in early July, but were able to rise to 85 euros in mid-July.
If the recent catch-up movement continues, the 200-day (€ 97) line must be raised to generate a new buy signal. Given the long-term price history, the chances of a further price increase are excellent. Because despite a sharp drop in the past few months, TSMC shares still have an impressive price increase of an average of 23 percent per year over a ten-year period. The stocks are therefore still one of the most promising stocks in the tech sector.
If you want to bet not only on TSMC, but also on 25 stocks that could open up significant profit potential in the future, you can take a look at the following index certificate (WKN: DA0AB5 / ISIN: DE000DA0AB55) on the Vision 25 Index. In addition to TSMC, the index also includes, for example, Microsoft, Varta and Biontech.
Image Credit: TSMC Press Photo
The chip crisis is uninterrupted: the benefits of this tech giant appeared for the first time on marktINSIGHTS.