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Taiwan Semiconductor Earnings Edge Estimates, But Outlook Light

Taiwan Semiconductor Manufacturing Co. (TSM), the world’s largest contract chipmaker, on Thursday narrowly beat Wall Street’s target for first-quarter earnings. But its sales guidance for the current quarter was a little light. TSM stock fell after the report.




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Taiwan Semiconductor, better known as TSMC, earned 96 cents per U.S. share in the March quarter. Analysts expected the chip foundry to earn 95 cents a share in the period. On a year-over-year basis, TSMC earnings rose 28%.

Last Friday, TSMC reported better-than-expected first-quarter sales of $12.92 billion, up 25% year over year.

For the June quarter, TSMC expects revenue of $12.9 billion to $13.2 billion. The midpoint of $13.05 billion is below Wall Street’s consensus estimate of $13.15 billion. In the second quarter last year, TSMC generated sales of $10.38 billion.

TSM Stock On Leaderboard List

On the stock market today, TSM stock dropped 2.1% to 118.35. TSM stock has been consolidating for the past nine weeks at a buy point of 142.29, according to IBD MarketSmith charts.

In the first quarter, shipments of 5-nanometer semiconductors accounted for 14% of total wafer revenue at TSMC, while 7-nanometer chips accounted for 35%. Circuit widths on chips are measured in nanometers, which are one-billionth of a meter.

Demand for high-performance computing, or HPC, chips boosted TSMC’s first-quarter business. But this was balanced by milder smartphone chip sales than usual for the season, the company said.

“Moving into second quarter 2021, we expect our revenue to be flattish, as HPC-related demand will continue to grow, offset by smartphone seasonality,” Chief Financial Officer Wendell Huang said in a news release.

TSMC makes chips for a host of leading fabless chip designers, including Apple (AAPL), Advanced Micro Devices (AMD) and Nvidia (NVDA).

After hitting a record high of 142.19 on Feb. 16, TSM stock fell 24% in a tech stock sell-off before beginning to recover.

Recently it has faced resistance at its 50-day moving average line, according to Leaderboard analysis. TSM stock is on IBD’s Leaderboard watchlist.

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

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