Taiwan Semiconductor handed down one of the first big earnings reports of Q4 today, showcasing the semiconductor giant’s fantastic end to 2021. 🙌
The company bested earnings and revenue estimates, delivering $1.15/share (vs. $1.12 estimated by FactSet analysts) and sales of $15.74 billion (just above the company’s expected range.) In other notable figures, the company’s operating margins improved by 0.5% to 41.7%.
$TSM also rose the bar for next quarter with expectations of generating $16.6-17.2 billion in revenue. That figure was reported despite the company’s expected tight capacity in 2022, mainly because of high demand. To combat the chip shortage, Taiwan Semiconductor indicated it would invest $40 billion to expand its chip capacity.💰💰
You may be unfamiliar with Taiwan Semiconductor (TSMC for short), but it’s the world’s largest foundry biz. In fact, it blows the competition out of the water. 🌊 In 2020, TSMC took home more than half of all semiconductor foundry revenue. That’s because the world’s largest brands rely on TSMC to craft their silicon: Apple, Intel, Qualcomm, AMD, Nvidia, and others are among the company’s clientele.
TSMC’s automotive biz has become a surprise sweet spot. Automotive is a small segment demonstrating big growth in recent quarters from other companies as well. In $TSM‘s case, the company reportedly took on a number of new contracts for automotive chip deliveries in 2022. Its automotive revenues jumped 10% YoY from Q4. 🚗
The positive earnings and outlook sent $TSM shares on a tear today as the stock came within inches of its all-time high. 🚀 🚀 TSMC closed the day up 5.26%, which valued the company at $725 billion. At this valuation, TSMC jumped over Nvidia and Berkshire Hathaway to become the 9th-biggest company in the world. 🌎 Sheeesh.
Although that upbeat earnings energy is unlikely to last, the company has help set the stage for continued outperformance from semiconductor companies in 5G, HPC, smartphone, IoT, and automotive industries. All-in-all, Taiwan Semiconductor has guided its long-term revenue growth to 15-20%/yr for the next several years. Other semis will likely follow in raising their own expectations.