The Taiwanese manufacturer of semiconductor wafers TSMC recorded a slight decrease in sales and profits last year. However, its shares have grown by more than 50 percent in the past twelve months. Market value of Taiwan Semiconductor Manufacturing Company, which has taken the second place of the Alpho TOP 20 Asian Brands, has risen by nearly 270 percent over the past five years.
The history of TSMC has been written since 1987. It is headquartered in Hsinchu Science Park, Taiwan. TSMC pioneered the pure-play foundry business model with an exclusive focus on manufacturing its customers’ products. By choosing not to design, manufacture or market any semiconductor products under its own name, the Company ensures that it never competes with its customers.
„Based on this founding principle, the key to TSMC’s success has always been to enable its customers’ success,“ the company website says. TSMC’s foundry business model has led to the rise of the global fabless industry and, since its inception, TSMC has been a world-leading semiconductor foundry. In 2023, the Company manufactured 11,895 different products using 288 distinct technologies for 528 different customers.
The annual capacity of the manufacturing facilities managed by TSMC and its subsidiaries exceeded 16 million 12-inch equivalent wafers in 2023. These facilities include four 12-inch wafer GIGAFAB fabs, four 8-inch wafer fabs, and one 6-inch wafer fab – all in Taiwan – as well as one 12-inch wafer fab at a wholly owned subsidiary, TSMC Nanjing Company Limited, and two 8-inch wafer fabs at wholly owned subsidiaries, TSMC Washington (previously called WaferTech) in the United States and TSMC China Company Limited.
TSMC’s shares are currently trading at around NT$870, giving it a market value of NT$22.54 trillion (about US$700 billion). The company’s market value has increased by almost 270 percent over the past five years. The development in the last 12 months is also quite interesting. Shares of TSMC have appreciated by nearly 53 percent, with growth of 46.5 percent since the beginning of this year alone.
But it certainly cannot be said that the last five years have been characterized by continuous growth in TSMC shares. The first major price jump occurred during the first wave of the coronavirus pandemic, when TSMC shares rose by about 55 percent during 2020. After that, they stagnated until the end of 2021.
2022 saw TSMC’s stock fall in value by approximately 30 percent. But the recovery came the very next year, and it can be said that it was only during the first two months of 2024 that TSMC shares surpassed the all-time highs from the beginning of 2022. Today, they are trading less than 30 percent above them.
Stock performance in 2022 was surprising given TSMC’s financial results. Sales and profit increased by tens of percent year-on-year (sales by more than 40 percent, net profit by almost three quarters) and reached the highest level in company´s history. So it seems that the stock market has somewhat corrected the boom of the previous two years.
The year 2023 brought a slight decrease in sales (by about 4.5 percent) and net profit (by almost 18 percent). However, the first quarter of this year indicated that TSMC’s economic results could surpass 2022. The company’s sales rose by 16.5 percent year-on-year, and net profit by almost nine percent. According to the development of TSMC shares so far this year, investors are also expecting a good year.
But it doesn’t mean that TSMC won’t face any risks during 2024. The biggest one concerns the ongoing geopolitical tension in the region, and the uncertainty surrounding the development of the global economy cannot be neglected as well.
Oleh Shalenyk, Financial Analyst of Alpho
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