Investors are celebrating Taiwan Semiconductor (NYSE: TSM) fourth-quarter earnings report, signaling a return to revenue growth in the semiconductor sector after a cyclical slowdown. While Q4 results were relatively modest, they surpassed estimates, boosting TSMC’s momentum.
Navigating Post-Pandemic Challenges
After the pandemic-induced slump in demand for electronics like computers and an oversupply of chips, most industry players faced lackluster results. However, TSMC, the world’s largest semiconductor foundry, now demonstrates that this challenging period is behind them.
Q4 Highlights: Surpassing Estimates
In Q4, the company reported a slight revenue decrease of 1.5% to $19.62 billion but exceeded forecasts of $19.45 billion, marking a 13.6% increase from the previous quarter. The quarterly gross profit margin dipped from 62.2% a year ago to 53%, reflecting lower production capacity utilization. Despite this, earnings per share remained better than expected at $1.44, compared to the anticipated $1.37.
TSMC Forecasts Quarterly Improvements Throughout 2024
TSMC continues to ramp up production of 3-nanometer chips, constituting 15% of its revenue compared to zero a year ago. This focus on advanced technology is expected to strengthen its competitive edge. The company forecasts Q1 revenue between $18 billion and $18.8 billion, showing a sequential decrease but a year-over-year return to growth.
Competitive Edge and Reasonable Stock Prices
Management anticipates quarterly business improvements throughout 2024, projecting full-year revenue growth in the low to mid-20% range. This outlook is based on a lower sales base in 2023, allowing for a favorable comparison.
Keep a Close Eye on TSMC in the US Technology Stock Market
Taiwan Semiconductor boasts significant competitive advantages in chip production, and its stocks trade at reasonable prices. Investors keen on navigating the US technology stock market should keep a close eye on TSMC.
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