Taiwan Semiconductor Manufacturing (TSM), the world’s leading chip foundry, on Thursday delivered mixed results for the fourth quarter. However, it guided higher for sales in the current quarter. TSM stock rose in early trading.
Taiwan Semiconductor earned 97 cents per American depositary receipt on sales of $12.68 billion in the December quarter. Analysts expected the company to earn 94 cents a share on sales of $12.91 billion. On a year-over-year basis, earnings rose 33% while sales climbed 22%.
“Our fourth-quarter business was supported by strong demand for our industry-leading 5-nanometer technology, driven by 5G smartphone launches and HPC (high performance computing) related applications,” Chief Financial Officer Wendell Huang said in a news release. “Moving into first quarter 2021, we expect our business to be supported by HPC-related demand, recovery in the automotive segment, and a milder smartphone seasonality than in recent years.”
For the first quarter, Taiwan Semiconductor expects to generate sales of $12.7 billion to $13 billion. The midpoint of $12.85 billion is higher than Wall Street’s consensus estimate of $12.38 billion.
In premarket trading on the stock market today, TSM stock climbed 2.5%, near 122.60. During the regular session Wednesday, TSM stock dropped 3.1% to 119.23.
Chip-Gear Stocks Jump On TSM Capex Plans
Taiwan Semi also guided to higher spending on semiconductor manufacturing equipment in 2021. That news is positive for chip-gear stocks such as ASML (ASML), Applied Materials (AMAT), KLA (KLAC) and Lam Research (LRCX). Those major semiconductor-equipment vendors saw their shares jump in early trading Thursday.
Taiwan Semi expects 2021 capital expenditures of $25 billion to $28 billion, up 54% year over year at the midpoint. Analysts on average were modeling for capex of $20 billion to $22 billion for 2021, Cowen analyst Krish Sankar said in a note to clients Thursday.
Taiwan Semi produces chips for such fabless customers as Apple (AAPL), Advanced Micro Devices (AMD), Nvidia (NVDA) and Qualcomm (QCOM).
TSM Stock Ranks Second In Industry Group
On Dec. 1, TSM stock broke out of an ascending base at a buy point of 102.54, according to IBD MarketSmith charts. It hit an all-time high of 126.29 on Jan. 8.
TSM stock ranks second out of 32 stocks in IBD’s Electronics-Semiconductor Manufacturing industry group. It has an IBD Composite Rating of 98 out of 99, according to the IBD Stock Checkup tool. 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.
TSM stock is on several IBD stock watchlists. They include the IBD 50, Global Leaders, Spotlight and Leaderboard lists.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
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