Taiwan Semiconductor Manufacturing Company (TSM)

QUOTE AND NEWS
Motley Fool  Feb 24  Comment 
A press release from Samsung suggests it is in the lead against Taiwan Semiconductor.
Motley Fool  Feb 17  Comment 
NVIDIA comments on its relationship with a critical supplier.
Market Intelligence Center  Feb 11  Comment 
After Tuesday’s trading in Taiwan Semiconductor Manufacturing Co Ltd (TSM) MarketIntelligenceCenter.com's option trade-picking algorithms uncovered a trade that offers a 7.33% or 17.16% (for comparison purposes only), while providing 6.29%...
Forbes  Feb 10  Comment 
In trading on Tuesday, the iShares PHLX Semiconductor ETF (SOXX) is outperforming other ETFs, up about 2.1% on the day.  Components of that ETF showing particular strength include shares of Micron Tech (MU), up about 6.8% and shares of Taiwan...
Market Intelligence Center  Feb 10  Comment 
With bullish technical indicators and a 5 STARS (out of 5) strong buy ranking from Standard & Poor’s, Taiwan Semiconductor Manufacturing Co Ltd (TSM) could be an attractive play for investors according to MarketIntelligenceCenter.com's patented...
Motley Fool  Feb 6  Comment 
Why I don't believe this rumor about Huawei's next flagship phone.
Market Intelligence Center  Jan 23  Comment 
After Thursday’s trading in Taiwan Semiconductor Manufacturing Co Ltd (TSM) MarketIntelligenceCenter.com's patented algorithms uncovered a trade that offers a 6.86% return or 14.30% on an annualized basis (for comparison purposes only), while...
Benzinga  Jan 16  Comment 
On CNBC's Stock Pops & Drops, Guy Adami highlighted how Yelp Inc (NYSE: YELP) traded 3.98 percent lower on a day when it was upgraded by Evercore ISI. He added that the stock has to hold the $49 price level; otherwise it is going to the low...




 

Taiwan Semiconductor Manufacturing Company (Traditional Chinese: 台灣積體電路製造股份有限公司, abbrev. TSMC; NYSE: TSM (ADR) LSE: TMSD TSEC:2330) is the world's largest dedicated independent semiconductor foundry. The company manufactures chips on behalf of other companies - usually either "fabless" semiconductor companies which just design microprocessors, or integrated device manufacturers (IDMs) such as Intel (INTC) or Texas Instruments (TXN), who provide full products to end-users and often have their own manufacturing capability. Semiconductors, such as integrated circuits (ICs) and transistors, are the individual "on-off" switches that make up an electronic device. Working in tandem, semiconductors constitute an mp3 player, computer processor, or wireless network adapter.

Fabless high-tech companies such as ATI (now AMD), Broadcom, NVIDIA, and OmniVision Technologies design the ICs manufactured by TSM. Foundries like TSM occupy a specific part of the semiconductor supply chain, and the high labor and capital equipment costs in the production of semiconductors creates a niche for these companies. TSM serves both fabless and vertically integrated semiconductor manufacturers, and it has 77% share of the North American market.[1] Unlike some rivals, it is focused on miniaturizing its technology in the long-term while promoting larger wafers to its customers to earn short-term profits. However, TSM's short-term position is threatened by weak demand for consumer goods that use semiconductors in a credit crunch or slowdown in consumer spending. As a result, the company has begun shaving down capital investment for the near term to avoid having idle plants.[2]

Business Overview

TSM is a manufacturer of semiconductor chips. Its factories are primarily concentrated in Taiwan, with some capacity in China and the United States as well.[3] In addition to pure manufacturing, TSM has also expanded into other value-added services, such as aiding in the design of ICs, and other downstream activities, such as testing of chips and assembly of semiconductors into its end-use state. These activities are typically still upstream of those of their clients and thus clients are not competitors.

Business & Financial Metrics[4]

In 2009, TSM generated a net income of $93.58 billion on revenues of $266.57 billion. This represents a 26.3% decrease in net income on a 16.0% drop in revenues from 2008, when the company earned $127.01 billion on $317.41 billion in revenues.

Business Segments[5]

TSM operates through a single reportable segment.

Trends/Forces

First mover advantage in technology is the basis of past success and future strategy

While competition against other foundries is tight, TSM's scale gives it resources to deploy new technology and encourage adoption amongst its customers. It has a lead over competitors in the less than .13 micron scale manufacturing processes.[6] Its technology lead gives it a quality advantage, which leads to pricing premiums over competitors such as UMC.[7] This pricing premium contributes to its industry leading gross margin, at about 40%, double that of competitor UMC.[8]

TSM has advantages in scale and capacity

TSM's many fabs and past capital investment make it capable of creating more wafers than the competition. Hypothetically speaking, TSM's competitors would not be capable of manufacturing additional semiconductors if a large order was placed or a contract was won, simply because there is not enough excess capacity. Throughout the industry, the big 4 competitors typically achieve approximately 80-90% utilization of capacity[9], but TSM's 10-20% spare capacity is dramatically larger in absolute size. In addition, its scale gives it the capability to negotiate supply deals, particularly since it has spread out its suppliers of silicon wafers over 5 companies, which supply approximately 90% of the company's wafers.[10]

Competition

  • United Microelectronics (UMC) - The industry's number #2 company by revenues, UMC and TSM are the industry's traditional duopoly. Looking forward, UMC is attempting to chart a different course than TSM, not supporting a 450mm (18 inch) wafer launch, electing to stick with 300mm (12 inch) wafers for the time being.[11]
  • Semiconductor Manufacturing International (SMI) - SMI is a relative upstart in the industry, but gained share rapidly due to cost efficiencies after basing its fabrication plants in China.
  • Chartered Semiconductor Manufacturing (CHRT) - CHRT is Singapore's chief semiconductor company, and offers a similar full-service approach to TSM through cooperation with its sister company, STATS ChipPAC.

There are also several other smaller manufacturers with foundry capabilities, but TSM has the largest share in the market, with over 2 times the revenue of nearest competitor UMC.

References

  1. Taiwan Semiconductor Manufacturing Company FY 2007 20-F "Markets and Customers " pg. 15
  2. Taipei Times "TSMC posts record quarterly profits" February 1, 2008
  3. Taiwan Semiconductor Manufacturing Company FY 2007 20-F "Our Facilities" pg. 13
  4. TSM 2009 20-F pg. 2  
  5. TSM 2009 20-F pg. F-47  
  6. Taiwan Semiconductor Manufacturing Company FY 2007 20-F "Manufacturing Capacity and Technology" pg. 13
  7. Morningstar Analysis "Taiwan Semiconductor Manufacturing" April 28, 2008]
  8. Taiwan Semiconductor Manufacturing Company FY 2007 20-F "Selected Financial and Operating Data" pg. 2
  9. ThinkEquity Foundry Industry Report, February 20, 2008
  10. Taiwan Semiconductor Manufacturing Company FY 2007 20-F "Raw Materials" pg. 20
  11. Electronic Engineering Times "UMC tips roadmap, questions 450-mm" June 10, 2008
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki