Taiwan Semiconductor Beats Q3 Earnings Target, Guides Higher

 Taiwan Semiconductor Beats Q3 Earnings Target, Guides Higher

Taiwan Semiconductor Manufacturing (TSM), the world’s largest chip foundry, on Thursday beat expectations for third-quarter earnings. It also guided higher for the current period. TSM stock rose on the news.




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Taiwan Semi earned $1.08 per U.S. share in the September quarter, up 17% from the year-earlier period. Analysts expected earnings of $1.04 a share, according to FactSet. The company’s sales increased 23% to $14.88 billion.

For the fourth quarter, Taiwan Semi forecast revenue of $15.4 billion to $15.7 billion. The midpoint of $15.55 billion topped Wall Street’s estimate of $15.43 billion, according to FactSet. Its sales in the year-earlier period were $12.93 billion.

Taiwan Semi expects a gross profit margin of 51% to 53% in the fourth quarter. Its gross margin in the third quarter was 51.3%, an improvement from 50% in the second quarter.

TSM Stock Rises

On the stock market today, TSM stock climbed 2.4% to close at 112.56.

“Our third-quarter business was mainly supported by strong demand across all four growth platforms, which are smartphone, HPC (high-performance computing), IoT (Internet of Things) and automotive-related applications,” Chief Financial Officer Wendell Huang said in a news release.

He added, “Moving into fourth quarter 2021, we expect our business to be supported by strong demand for our industry-leading 5-nanometer technology.”

In the third quarter, shipments of 5-nanometer chips accounted for 18% of total wafer revenue at Taiwan Semi. Meanwhile, 7-nanometer chips accounted for 34% of wafer revenue. Advanced technologies, defined as 7-nanometer and more advanced technologies, accounted for 52% of total wafer revenue. Circuit widths on chips are measured in nanometers, which are one-billionth of a meter.

Taiwan Semi makes chips for a host of fabless semiconductor firms including Apple (AAPL), AMD (AMD), Nvidia (NVDA) and Qualcomm (QCOM).

Taiwan Semi A Laggard

Despite the positive third-quarter results, Taiwan Semi noted some softening in smartphone and PC demand heading into the fourth quarter. That could weigh on near-term sentiment for TSM stock, Cowen analyst Krish Sankar said in a note to clients. He rates TSM stock as market perform.

Since hitting a record high of 142.20 on Feb. 16, TSM stock has been an underperformer. It has an IBD Relative Strength Rating of 27 out of 99.

TSM stock ranks No. 18 out of 39 stocks in IBD’s chipmaker industry group, according to IBD Stock Checkup. It has a middling IBD Composite Rating of 59 out of 99. IBD’s Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.

Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.

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